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    WYNN RESORTS (WYNN)

    Q1 2024 Earnings Summary

    Reported on May 7, 2024 (After Market Close)
    Pre-Earnings Price$97.23Last close (May 7, 2024)
    Post-Earnings Price$97.85Open (May 8, 2024)
    Price Change
    $0.62(+0.64%)

    What went well

    • Strong Performance in Las Vegas: Wynn Las Vegas continues to experience healthy top-line trends, with April's drop, handle, and RevPAR all up year-over-year on difficult comps. Group bookings are pacing to have their best year ever over 2023, which was their best year, and 2025 and 2026 are pacing nicely. The company retains strong pricing power due to its unique position in the market.
    • Robust Recovery in Macau: Wynn's Macau operations delivered adjusted property EBITDAR of $340 million in the quarter, with mass drop per day in April increasing 30% versus April 2019. The company focuses on product and service to attract the best guests, maintaining strong margins despite competition.
    • Significant Growth Opportunities: Wynn has multiple development projects underway, including the construction of Wynn Al Marjan Island in the UAE with a total budget of around $4 billion, where Wynn's capital contribution will be approximately $900 million. They are also exploring potential developments in New York City and Thailand, which could meaningfully increase their EBITDAR and free cash flow in the future.

    What went wrong

    • The company is pursuing multiple large-scale development projects in regions like the UAE, New York, and Thailand, which may overextend resources and expose the company to development and regulatory risks.
    • Regulatory uncertainties surrounding the Wynn Al Marjan project in the UAE could lead to delays or challenges in obtaining necessary approvals, impacting the project's timeline and financial returns.
    • Increased competition in Macau may pressure margins and require heightened promotional activities, potentially impacting profitability.

    Q&A Summary

    1. Thailand Opportunity
      Q: Can you discuss the potential in Thailand?
      A: Craig Billings indicated that while it's very early, Wynn Resorts needs to understand the regulatory and licensing structures in Thailand to ensure they align with best-in-class jurisdictions. He finds the market interesting due to its great infrastructure and strong tourism sector. He expects the process to be competitive but is confident in Wynn's capabilities.

    2. Al Marjan Project Funding
      Q: What's the capital commitment for Al Marjan development?
      A: Craig Billings stated that the total budget for the Al Marjan project is around $4 billion. Wynn's capital contribution will be approximately $900 million, depending on construction leverage. They anticipate a 50-50 debt-to-equity financing structure, with Wynn owning 40% of the equity.

    3. Las Vegas Outlook
      Q: Are you seeing any softening in Las Vegas demand?
      A: Craig Billings reported no signs of skittishness in Las Vegas. They feel great about their pricing power relative to the rest of the Strip. Bookings have returned to 2019 levels, with group bookings pacing to have their best year ever over 2023. Future years, 2025 and 2026, are also pacing nicely.

    4. Macau Competitive Landscape
      Q: What's happening with competition and promotions in Macau?
      A: Craig Billings noted that Macau is always competitive, but Wynn focuses on product and service to attract the best guests. While he doesn't comment on others' promotional activities, their reinvestment can vary by 50 to 75 basis points in any quarter. Their core strength remains in product and service, reflected in their Q1 results and margins.

    5. Macau OpEx Management
      Q: How are Macau operating expenses trending?
      A: Julie Cameron-Doe explained they are disciplined in managing OpEx, with Q1 OpEx per day at $2.63 million, still below Q1 2019 levels and only up 3% sequentially. They expect revenue mix to be the key driver of margins going forward and anticipate some quarter-to-quarter variation. Potential exists for some quarters to be slightly inside or outside that OpEx figure.

    6. Las Vegas Development Plans
      Q: Will you develop your excess land in Las Vegas?
      A: Craig Billings acknowledged they have substantial land in Las Vegas but are currently focused on other projects like the UAE, New York, and observing Thailand. They're considering the adjacent land as a potential development opportunity but want to see how other things play out.

    7. Las Vegas Occupancy Strategy
      Q: Can Vegas occupancy go higher as rates rise?
      A: Craig Billings stated they balance occupancy and rate to drive strong revenue while maintaining a great guest experience. Running occupancy close to 99% could degrade the on-property experience. In Macau, higher occupancy is achievable due to on-the-day bookings, but Vegas dynamics are different.

    8. Macau Mass Hold Percentage
      Q: Is mass hold normalizing at Wynn Macau?
      A: Craig Billings explained that recent high hold percentages are due to normal game fluctuations and the volume of high-end play. Over time, hold percentages will normalize.

    9. Regulatory Approvals for Al Marjan
      Q: Do you need further approvals for Al Marjan casino?
      A: Craig Billings stated that regulatory requirements must be met before opening, and they expect to receive necessary approvals in due course. The GCGRA is actively licensing and issuing gaming regulations.

    10. Las Vegas Monthly Performance
      Q: How did Las Vegas perform monthly in Q1?
      A: Craig Billings noted that February was the strongest month of the quarter, followed by March and January.

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