The Wynn Resorts Second Quarter 2023 Earnings Call began with Julie Cameron-Doe, Chief Financial Officer, introducing Craig Billings who reported that the company had achieved a peak annual property EBITDA of $2 billion in 2018. He expressed optimism for the future of the company and reported that Wynn Las Vegas had delivered $224 million of adjusted property EBITDAR in the quarter, with EBITDA up 3% on a difficult year-over-year comparison.

Encore had a strong quarter in both Vegas and Boston, generating record EBITDAR in Vegas and record GGR in the casino in Boston. In Macau, EBITDAR was 72% of pre-COVID levels, with mass table drop increasing 4% relative to 2019, and tenant retail sales increasing 47%. The quality of product and service, the loyalty program, and non-gaming events calendar helped drive a 14.2% market share in the quarter.

Craig mentioned that Macau has seen impressive market-wide GGR momentum in the second quarter, with mass drop per day in July exceeding what was experienced in the second quarter and reaching 120% of daily mass drop in 2019. Wynn Las Vegas generated $224.1 million in adjusted property EBITDAR on $578.1 million of operating revenue during the quarter, with hotel revenue increasing 6% year-over-year to a new second quarter record. The increase in occupied room nights was offset by slightly lower-than-normal hold, but ADR, occupancy and RevPAR were all up slightly compared to Q2 2022.

Wynn's non-gaming businesses saw broad-based growth in the second quarter of 2023, with casino GGR increasing by 2% year-over-year. Boston generated an all-time property record of adjusted property EBITDAR of $69.1 million, with casino GGR of $193 million and non-gaming revenue of $55.1 million. Wynn Macau operations delivered adjusted property EBITDAR of $246.2 million on $769.9 million of operating revenue, with a lower-than-expected hold on the mass table side. The Sumner Tunnel Restoration Project is temporarily impacting business volumes in Q3.

Wynn Resorts experienced a meaningful uptick in visitation and demand during Q2 2023, with strength in mass casino drop, direct VIP turnover, luxury retail sales, and hotel revenue. EBITDAR margin was 32%, an increase of 280 basis points compared to Q2 2019. The team has done a great job of controlling costs, with OpEx decreasing by 29% compared to Q2 2019. CapEx related to Wynn's concession commitments is expected to range between $300 million and $400 million in 2023-2024. Wynn Interactive's EBITDAR burn rate decreased both sequentially and year-over-year to $15 million in Q2 2023. The company has strong liquidity, with global cash and revolver availability of approximately $4.7 billion as of June 30.

Craig Billings discussed the company's strong performance in each of their markets, the Board's approval of a cash dividend of $0.25 per share, and their CapEx in the quarter. He then answered a question from Carlo Santarelli about the reduction in daily OpEx and implied commissions, discounts, etc. as a percentage of revenue. Billings explained that they modulate OpEx based on business volume and opened with a full complement of staff, which was different from other companies.

Craig Billings emphasizes the importance of Wynn Las Vegas' employees and that they were paid during the COVID-19 closure. He explains that the last union contract's wage increases initially outpaced inflation, but eventually lagged behind CPI. He emphasizes the importance of making sure that employees can support their families and that rent in Las Vegas has increased more than CPI, so he expects there to be some back and forth in negotiations with the culinary union in order to find a fair compensation level that supports employees, particularly non-tip employees, and their ability to maintain housing.

Craig Billings discussed the disruption caused by the renovations that took place in the middle of the casino floor in Macau. He noted that visitation had come back primarily to the Cotai property, but that the business would improve if they could increase their share downtown. He also noted that the renovations were completed in June, and that they expect the Cotai and Peninsula properties to be more in balance going forward.

Craig Billings discussed the low hold on the mass side of the Cotai region, attributing it to two factors: a decrease in volume and normal course volatility. He also noted that historically, the business was more balanced between mass and VIP, and that the impact of volatility was muted when there were more people visiting Macau. He concluded that there will continue to be volatility, sometimes to the benefit of the players and sometimes not.

Craig Billings commented on the VIP side, saying that while it is surprisingly good, it is still a fraction of what it was pre-COVID. He then discussed the mass side, saying that length of stay has decreased, but spend per customer has increased, which is beneficial for the business. Julie Cameron-Doe then commented on the CapEx comment in the prepared remarks, saying that the number given out of $300 million to $400 million is for the '23 to '24 period in total.

Craig Billings and Julie Cameron-Doe discussed the July performance in Macau, which had a 120% drop rate compared to 2019 levels, and an expected $2.2 million in OpEx per day. They then discussed capital allocation, noting that there may be some free cash flow left over after factoring in the concession spend, other CapEx in Vegas, and the dividend, and that there may be an appetite to ramp up capital return.

Craig Billings discusses the company's current financial situation, which is well capitalized and has extra liquidity. He also mentions the company's plans to refinance and return capital to shareholders, as well as the progress of their exciting projects in the UAE. He adds that the company has successfully managed to adjust their business to the new environment in Macau and are running the business effectively.

Craig Billings talks about the quality of service and how it has allowed for operating expenses to come down, while still maintaining a margin of low-30s. He then talks about how Wynn Macau is aggressively fighting for market share, with the assumption that their margin increases. Lastly, he talks about how ADR has increased since the property reopened from the closure in 2020.

Craig Billings updates the audience on the status of the Al Marjan property, explaining that they have everything they need to operate gaming, and that there is confusion due to the lack of understanding of the individual Emirates versus the UAE as a whole. Brian Gullbrants then explains that their forward-looking demand indicators remain healthy, and that room bookings and group pace continue to be strong. Brandt Montour concludes the discussion by reiterating that the team is doing a great job of converting leads.

Craig Billings is discussing the potential for the legalization of gaming in Ras Al Khaimah and the ability to achieve a run rate EBITDA of $26-27 billion. He states that the market estimate is closer to $27 billion based on the share they turned in this quarter. He also mentions that Wynn Macau is fighting for share and that the market has been disciplined when it comes to promotions within the premium mass segment.

Craig Billings and Julie Cameron-Doe discussed the Interactive cash burn, and Craig stated that they are focused on making sure it goes down every quarter. Chad Beynon then asked about Macau, and they discussed the $27 billion GGR number and how the return of visitors from farther out markets may be necessary for Wynn Macau to continue to put up numbers.

Craig Billings and Brian Gullbrants discussed the visibility of big events such as F1 and Super Bowl in Las Vegas, and the booking indicators for these events. They noted that the events are a perfect match for their brand, and they are seeing significant premiums for them. They also noted that their booking pace is quite good, independent of the events.

Craig Billings and Julie Cameron-Doe discussed the VIP hold in Macau, which added $20 million to EBITDA. They noted that this was offset by lower mass hold. When asked about margin in Vegas, Billings mentioned that they have put out a permanent cost savings figure and have held to that, despite business volumes being off the charts.

The company has a plan in place in case of any macro-driven changes to their business, such as a decrease in ADRs, due to the experience they had with the COVID-19 pandemic. However, they are not currently seeing any such changes. With that, the Q2 earnings call has been concluded.

This summary was generated with AI and may contain some inaccuracies.