Release Date: August 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Wynn Resorts Ltd (WYNN, Financial) reported the best second quarter EBITDAR in the company's history at $572 million.
- Wynn Las Vegas delivered a second quarter record of $230 million in adjusted property EBITDAR, up 3% year-on-year.
- Encore Boston Harbor generated $62 million of EBITDAR with record slot handle and strong table drop.
- Wynn Macau's long-term outlook remains very bright with strong mass table drop and 99% hotel occupancy in July.
- Construction on the Wynn Al Marjan Island development in the UAE is progressing rapidly, with significant equity contributions and promising future potential.
Negative Points
- Lower-than-normal table games hold negatively impacted EBITDAR by around $5 million in Q2 at Wynn Las Vegas.
- Macau operations experienced slightly lower market share and mass hold quarter-over-quarter.
- Increased OpEx due to union-related payroll increases and higher variable costs impacted margins.
- The luxury retail segment in Macau has been underperforming, consistent with broader market trends.
- The competitive promotional environment in Macau has intensified, impacting market share.
Q & A Highlights
Q: Craig, you spoke a little bit about Las Vegas, the comfort you're seeing, the trends in July, acknowledging, obviously, August booking window short, September, some group on the books and fourth quarter, probably very limited visibility at this point outside of the group bookings. How would you characterize kind of the back half of the year? And could you talk a little bit about that group footprint that's already in place?
A: Sure, Carlo. I'll start, and then I'll ask Brian to talk a bit about group in Q3, Q4. Yeah, I noticed subsequent to one of our peers reporting the other day that there were some thoughts around Q4, some concerns around Q4. As you said, actually, the booking window is relatively short other than for group and then certain special events, F1 in particular. And so we don't -- we're not seeing anything of concern per se with respect to Q4. F1 specifically, which I know was mentioned extensively again on a peer's call, F1, there really top-notch operators. And unlike last year, when they heavily marketed throughout the year, they just started their big marketing push for the race this month, August. So I'm sure the race will be well executed. Our experience during last year's F1 and more recently during the Super Bowl tells us that we will be the place to see and be seen during the race. And so we're confident that we'll do just fine and get more than our fair share. Brian, group in Q3 and Q4? And any other thoughts on the back half of the year?
Brian Gullbrants: Sure. Thanks, Greg. Carlo, Q3 continues to pace very well. It's solid. August and September look even better than July. And when we look to Q4, pacing well for the year will be the best year we've ever had in group and convention and '25 seems to be pacing actually ahead of that, all with strong ADR growth. So the sales team has done a phenomenal job, and our yield management team and revenue management continues to yield because of that strong base, so it helps all segments. So I think we're in solid shape, and we're encouraged by what we're seeing.
Q: Craig, if I could ask a follow-up. You guys have repurchased year-to-date as of [6/30]. It looks like about $80 million of stock. I think you said $68 million in the quarter in the release. When you look at kind of current valuations looked at many different ways, but obviously, just about any way you cut it, the embedded implied valuation for the domestic assets at the very least is seemingly compelling from a buyback perspective, acknowledging there is significant capital going out the door related to UAE. How do you think about kind of perhaps accelerating some of the buyback activity?
A: Thanks, Carlo. Well, as you know, you've followed the company for a long time. We're not programmatic buyers of the stock, and we tend to buy back more when it is particularly cheap. So you're right to that end, we did purchase in the quarter, and we continued to purchase into July and actually the first few days of August, actually. We still have some $365 million of capacity under the Board authorization. We're really balancing all of our liquidities needs between capital deployment for growth, the UAE, potentially other greenfield markets, delevering slightly and returning capital to shareholders through dividends and share repurchases. Fortunately, we're in a position to do all of that. And so as you rightly know, it's really a question of quantum and we'll continue to be opportunistic about it.
Q: Craig, earlier, you had mentioned that you saw a nice rebound in market share in July. That was more of a directional comment than one with any specific numbers associated with that. Would you say that the share is back to the GGR share that you saw in the 1Q? Or is it really more approaching that level? And then related to that, Craig, are you seeing in July and August to date, as you're seeing GGR share improve, are you seeing an associated lift in the non-gaming revenues as well?
A: Thanks, Joe. Well, to your second question first, there's always a relationship given the way that the gap requires you to book rooms revenue associated with the casino. There's always a relationship between casino volumes, quality of customers and room rates. With respect to retail, the retail component of nongaming, I think the situation with respect to luxury retail in China is hopefully well understood. I think you've seen a lot of the large luxury retailers come out and make commentary on the topic. And of course, Macau and Hong Kong are not immune. I think what we've experienced is pretty consistent with our peers who have comparable retail footprints. To the first question that you raised, we're not going to provide specific numbers, but we were pleased with the bounce back in July. And as you know, market share can bounce around here and there over the course of any given year or any given quarter. And as I said in my prepared remarks, you can't take market share to the bank. So what we don't want to do is completely blow out our reinvestment levels and pursue a market share that doesn't drive meaningful flow-through. So we are being disciplined with respect to reinvestment and being aggressive in terms of going out and getting business.
Q: With respect to your UAE project, I heard all the things that you said, including the timeline for completing the debt financing. When do you think we'll actually have specific regulations out there and specifically when you get a license? I know it's been a while now.
A: Sure. Thanks, Joe. Well, first of all, we were delighted with the public announcement of the GCGRA, the federal regulatory body for gaming. If you -- for, I guess, you and everybody else on the call, if you haven't, take a look at their website, we encourage you to do that. The members of that body are some of the luminaries of the industry and very, very experienced regulators. The establishment of the GCGRA creates hopefully creates incremental clarity for investors and financing sources. It certainly has on the financing -- on the bank financing side. And then you'll also note that they recently awarded a lottery license for the UAE, and I think that, that hopefully again, gives folks comfort. I assume that they will be moving forward next to the next step in our licensure. I don't have a specific timeline for you, but you can see all the momentum that's happening there.
Q: Craig, you've been in and around the industry for -- and seen multiple cycles. I guess with all the concerns mounting over the consumer, what are you on watch for in your business as perhaps a leading indicator? And how do you think about the operating leverage of the business now versus history in terms of being able to flex if the market changes?
A: Yeah, good question. Thank you. What do you look for
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
