Wynn Resorts, Limited — 2024 Q1

Thank you, operator, and good afternoon, everyone. On the call with me today are Craig Billings and Brian Gullbrants in Las Vegas. Also on the line are Linda Chen, Frederic Luvisutto and Jenny Holaday.

Thanks, Julie. Good afternoon, everyone, as always. Thanks for joining us today.

Thank you, Craig.

Craig, just in terms of what you're seeing in Macau, obviously, you guys had a strong quarter. Everything seemed to flow through very nicely. In terms of the competitive landscape that you're seeing into May now relative to perhaps what you're seeing last quarter or fourth quarter, more specifically, could you kind of characterize what's [indiscernible] the market at?

Yes. Sure, Carlo. You cut out a little bit there at the end, but I got the gist of your question. Macau has always been and is currently a competitive market. And as you know, we focus on product and service, and we focus on attracting the best guests in the market. So I've seen a lot of the questions and the commentary around promotional activity.

Helpful. And then, Craig, just going back to your remarks on Las Vegas. You made a point of kind of calling out February being the primary driver of the quarter. You then follow that up with drop, handle, RevPAR kind of all up in April and mentioned kind of tougher comparisons along the way.

Sure. Well, first, as it specifically relates to drop and handle, we've almost doubled handle from 2019 to 2023, and a lot of that was share taking. We have table drop that's up almost 50% in the same period so not too shabby. And as you know, I've said on several calls, trees don't grow to the sky.

My first question is on Macau and follows up on Carlos' Macau-related promotional question. If we look at the 1Q, the conversion of gross gaming revenues of Macau to casino revenues was at a better clip than it was in the fourth quarter and all of last year by quarter. How much of that sequential improvement over the last couple of quarters is just a function of maybe a high hold versus maybe you're operating the business differently than maybe some of your peers who are seeing that relationship sequence less favorably for them than it has for you?

Yes. Thanks, Joe. It has a lot to do with the revamp of our loyalty program and the fact that we have given our customers choice in terms of how they want their reinvestment. And so in any given quarter, those choices change. And some of those choices flow to contra revenue and some of those choices flow to OpEx. So that's really the primary driver. It's not indicative of a systemic change in the aggregate reinvestment.

Craig or Julie, I just wanted to ask about maybe the Macau OpEx trajectory. Obviously, you've driven and sounds like you expect to continue to see some pretty great operating leverage there. But it is -- as we're still normalizing in that market, it's probably a little bit tougher for us to get a sense of just sort of underlying core expense growth or inflation. So any comments as things start to annualize and normalize a little bit? How much kind of on a year-on-year basis you'd expect that to level off to maybe in the back half of the year?

Sure. Shaun, I'll take that one.

Super. And just as my follow-up, Craig, to go back to sort of the Las Vegas macro commentary, I mean, I think what many of us struggling with, and I'm sure you're familiar with this in conversations with industry executives, is just -- there have been some comments out there about some leisure -- even at the high end, some leisure pushback when maybe the product mix isn't perfect. And I think -- in some cases, it looks like Wynn is kind of perfect on many of these metrics.

Yes. Sure, Sean. Not really. So if you think about what's happening in Vegas, those who have deployed capital in Vegas over the course of the past 5 years, it actually hasn't been so much -- at least innovative capital. It actually hasn't been so much the industry.

Yes. I mean, everything is pretty much a result of retreated back to what it was in 2019 with respect to bookings. And when you look at the pace of group, we continue to pace to have our best year ever over '23, which was our best year ever, and '25 and '26 are pacing nicely, not just in group, but we're seeing that across the board.

And what it means by 2019 is that it's reverted to a normal -- a very normal booking process.

The booking windows are back to normal, and it's quite nice.

Just one quick one on Las Vegas. Just in terms of your occupancy at that property, I mean you typically run in the high 80s there. I mean you're getting as much rate as it looks like you want. I mean fundamentally, is that property structurally different in that relative to the Macau properties where you run occupancy close to 99%? It just seems like -- I know there's a balance there, but any reason occupancy in Vegas couldn't go higher as you keep pushing rates up modestly?

Sure. So first and foremost, and this is true company-wide, we never want to be in a position where we have to walk someone because we don't have their room type or we don't have their room available for them. Second, at some point, the experience on the property actually degrades if you get to use an extreme 99% occupancy. So we're always balancing occupancy and rate in order to drive strong revenue results but also maintain a great experience on the property.

Got it. And then just switching to Thailand. Maybe could you talk a little bit about that opportunity potentially? I know it's quite early days but just high level in terms of timing, project size, how competitive do you think this process would be? Any incremental color would be great.

Sure. Yes, it's very, very early. I mean, we -- first things first, we need to understand that the regulatory structure, the licensing structure, the bidding structure, et cetera, are all going to be consistent with other jurisdictions that are considered best-in-class. I personally think they will be based on the information that we have to date. But that's really a condition precedent to our further involvement.

First one, maybe, Craig, you've introduced some new renderings and photos of Al Marjan in front of the ATM conference here in Dubai. Curious if you could remind us total capital contribution and budget or construction cost and if that's changed at all since you've kind of updated the renderings for that project.

Sure. The total budget is around $4 billion. If budgets move here and there but no substantial movement, our capital contribution will be, round numbers, call it, $900 million. That heavily depends on the construction leverage. So we're in the midst of figuring that out now. But you can figure something like 50-50 debt to equity and then we would be 40% of the equity.

Got it. Understood. That's helpful. And then maybe one back domestically to get a little granular, perhaps in Las Vegas on the quarter. You called out February. We knew that was going to be an event-driven month. But I was wondering if you could kind of parse out what January and March look like. And I guess some color on April coming out of the quarter quite strong. But as you kind of size up 1Q, any comments about January and March, specifically relative to year-over-year in terms of performance.

Sure. What I would say is this. February, as we called out, it would be -- was, of course, the strongest month of the quarter. And then in rank order, it would be March and January.

I wonder if you could just touch on anything for Al Marjan that has to happen from a regulatory perspective approval at any level. If the construction were done tomorrow before it can actually start operating the casino, just to clarify that.

Sure, Robin. Just like other jurisdictions, there are regulatory requirements that are required before we can open the doors. And so we expect that we will meet those regulatory requirements and receive the necessary approvals in due course.

But is there anything from a perspective in terms of anything that has to be legalized at any level or separate from just what we have to do to meet licensing?

We're not building on spec, put it that way. So I think you've seen -- hopefully, you've seen that they have created a federal regulatory body of the GCGRA in order to license and issue -- license operators and issue regulations associated with gaming. The GCGRA's activities are ongoing, and we are aware of what they are. And we'll get all the necessary approvals in due course.

Just one quick one in Macau. At the Wynn Macau property, your mass hold was around 19% for the second quarter in a row after holding below normal for a long period of time. Do you think the current gaming volumes at this property are enough to have more normalized variability in hold, such as what we've seen in the last few quarters? Any color there would be great.

Sure. And then we held high subsequent to the end of the quarter. It really is just a function of the normal ebb and flow of the game. A lot of that has to do with the volume of high-end play. And so there's really nothing -- there's really not a lot to see there and, over time, hold will normalize.

Operator, we'll take one last question after this one.

Thanks, David. You were chopping up there a bit, but I think I got the gist of your question. I think you were addressing the development opportunities in the land that we have here. But we do -- we have a very substantial land bank in Las Vegas, as you know. And the reality is that we are replacing choices now from a development perspective.

Sure. Yes. So -- the reality is it's many things. So what happens in the macro economy, what happens to borrowing cost, what happens to the cost to build and then what are our other opportunities, how many of those opportunities can be pushed through our design and development team at any given point in time.

Thank you. And thank you, operator. With that, we'll bring this call to a close. We thank you for your interest in the company and look forward to talking to you again next quarter.

Thanks, everybody.