Welcome to the Wynn Resorts’ Fourth Quarter 2020 Earnings Call. [Operator Instructions] This call is being recorded. [Operator Instructions] I will now turn the line over to Craig Billings, President and Chief Financial Officer. Sir, you may begin.

Thank you, operator. And good afternoon, everyone. On the call with me today are Matt Maddox and Marilyn Spiegel in Las Vegas. Also on the line are Ian Coughlan; Linda Chen; Ciaran Carruthers; Frederic Luvisutto; and Brian Gullbrants. I want to remind you that we may make forward-looking statements under safe harbor federal securities laws, and those statements may or may not come true. I will now turn the call over to Matt Maddox.

Thanks, Craig. And good afternoon everyone. Thanks, for joining today. We clearly made progress in the fourth quarter of this year as all of our properties were actually EBITDA positive. It's a real testament to the team the way we've been able to streamline our cost structure and take more of the revenue to the EBITDA line. And in fact, I think, our company is in the best position it's ever been in to translate revenue into EBITDA as more of the business comes back because it's going to. We continue to anticipate that we're going to see growth month over month in each of our markets and we are well positioned with the way that we've streamlined our business. If you look at Macau, we generated $39 million of EBITDA for the quarter. And Macau is continuing to see progress. The government, there has been very thoughtful and very cautious as to the way that it's been allowing people into Macau. And we feel confident that that growth is going to continue. One of the positives of 2020 was that we've been able to spend a lot of time thinking about the future of Macau and really what the growth drivers are going to be going forward. And it's crystal clear that the growth drivers for Macau are really the sweet spot of our company and that's the premium segment – premium mass, in particular. So, we spent a lot of time reconfiguring our properties over the last six months to cater to that customer. We've turned restaurants, buffet into a hotpot restaurant. We've taken Michelin star restaurants and created a more premium mass environment. In fact, we've taken some of our large villas that we don't anticipate we'll be using for the junket business, and we've turned them…

Thanks, Matt. Similar to the past few calls, I'd like to start with a few points on liquidity and operating expense. As of January 31, our global cash and liquidity position was $3.39 billion. In Macau, we had approximately $2.24 billion of available liquidity as of January 31. In the U.S., we had total available liquidity of approximately $1.15 billion on January 31 with a substantially lower daily cash burn globally compared to Q3 2020. Meanwhile, we continue to be focused on operating expenses. Compared to the fourth quarter of 2019, our global property and corporate operating expenses per day excluding gaming tax of $4.6 million, decreased nearly 40% year-over-year compared to $7.6 million in Q4 2019, with our FTE count decreasing by approximately 8,700 or 34%. We expect a meaningful portion of these savings to drive operating leverage as business volumes return. In Macau as Matt noted, we generated $39.4 million of EBITDA in the quarter with particular strength around the December holiday season. Our EBITDA was driven by encouraging gaming and non-gaming performance, as well as a continued focus on cost controls. Gross gaming revenue in Q4 2020 was approximately 32% of Q4 2019 levels led by the premium mass segment. With respect to cost controls, our OpEx again, excluding gaming tax was $2.2 million per day. This is down from approximately $3 million per day in Q4 2019, and only up modestly from $2 million per day in Q3 2020 due primarily to an increase in variable costs as business volumes return. At Wynn Las Vegas, we generated $21 million of adjusted property EBITDA from a business that remains heavily weighted to weekend occupancy. In the casino, we saw broad-based strength across key segments with slot handle and table drop reaching 85% and 72% of Q4 2019…

Thank you. [Operator Instructions] Our first question is from Carlo Santarelli. [Deutsche Bank] Go ahead. Your line is open.

Hey guys. Thank you. Craig, I'll start with you first. You talked obviously a lot about some of the cost cuts and noted, I think on a segment level basis, some of the declines in Macau obviously, and not adjusting for any hold or anything else that obviously would have influenced the numbers a little bit. It looks like the year-over-year was down about 25% in terms of how you guys think about the permanent reductions relative to some of the variable stuff that will come back. How are you thinking about kind of the run rate as business levels normalize in terms of permanence?

A good question Carlo. I think, we'll see as the market progresses and volume starts to come back, you can see that we had a slight uptake in the quarter as we moved from kind of zero at the mid – at the earlier portion of the year into that kind of 30% of Q4 2019 levels of volumes. So a decent chunk of those are permanent, but I must, of course caution you. It's not the same as the U.S., right? Staffing flexibility, just isn't the same as the U.S. So some of those will come back, but we feel like we're appropriately sized and the cost base is appropriately sized for the business volumes that we have today.

Great. Thank you for that. And then Matt or Ciaran, one of the guys from Macau, if you guys could kind of provide, and I know it's not an easy answer, but any thoughts that you have around kind of the cadence of sort of visa loosening and what you guys are potentially hearing as it pertains to that topic?

Ian, why don't you take that one?

So we were very happy with the cadence of running from October golden week into the Christmas and Western New Year period, where we had two weeks of extremely strong occupancy and great play on the floor, particularly in premium mass. And quite frankly, there was a lot of anticipation about Chinese New Year, and clearly we had a number of outbreaks in China during January, late December and January that have curtailed a lot of travel and understandably the authorities and the PRC have been working hard to contain the outbreaks. The cases have dropped from the 100s to the teens. So that's very positive, but it has impacted the booking cycle for Chinese New Year. We do have a lot of player interest still in Chinese New Year. We have a number of our bigger players reserving suites and villas. And they will potentially travel, but certainly it's affected bookings throughout town. So we're probably looking at more like an October golden week situation than the Christmas and Western New Year period. However, we believe that it's a temporary setback, a very temporary setback as winter is ending. The recent outbreaks have been contained and vaccines are starting to get rolled out. They're getting rolled out obviously by the millions in China, but locally in Macau, we've just received our first delivery of a 100,000 vaccines. And in late March, we have a further delivery and distribution of another 100,000 were a small population. In terms of visas opening up more and more people being allowed access into Macau. That's obviously very fluid and very linked to containment in China, but there has behind the scenes being a pickup in number one optimism, and number two discussions between the authorities and the Greater Bay Area between Hong Kong, the PRC and Macau about the reestablishment of a travel bubble. So people are looking to the future. There is light at the end of the tunnel. This is a temporary setback, cadences frankly demand is out there and we're priming our properties to take full advantage of that. We command the luxury sector and we believe that we're ready to take more than our fair market share. We proved in Q4, we built market share up to nearly 16% and we believe that there is more market share for us to take, particularly given that we've commanded the luxury sector. And those are the customers that are coming back.

Great, Ian. Thank you so much, guys.

Our next question is from Joe Greff from JPMorgan. Go ahead. Your line is open.

Hello everybody. Matt, you spent a decent amount of time in your opening remarks talking about the opportunities in the premium mass segment. Can you talk about how the premium mass segment that the volumes in the fourth quarter compared relative to, or how they did relative to overall mass table troubleshooting with them, on my math here down 51% year-over-year, which by the way was better than, I guess the one cooperator who's reported fourth quarter results so far. And I'm presuming the premium mass is better than that. And can you talk about what's driving that improvement versus the base mass or versus I think we all probably understand what's going on with the VIP and certainly with the junkets. And then you also mentioned related to premium mass [ph], and you also mentioned that, I guess, expectations about month over month improvement. So is the premium mass performance in January, did that exceed December? And did you see that trend that sequential improvement month over month throughout the fourth quarter?

Yes, sure, Joe. I don't want to say that we are seeing that in January because as Ian pointed out, there were some restrictions that were put in place, continued restrictions in China as there were some small outbreaks in COVID, but the way that it was handled and pretty much quickly put out has been extraordinary. I was on the phone on a zoom call actually with someone in Shanghai last night who was just talking about it's life as usual. I mean, we're back, we're going to clubs, we’re going out, they're really ready to travel and go to Macau. And so there's a real sense of optimism when you're talking to people in China and we are very well positioned for that customer, that is the premium segment. Yes, the premium segment did better than the core mass segment. I don't want to get into the exact numbers, but it was not down 50% as the overall mass was. But what you know about our business Joe is where we do not need 50,000 people a day walking through our facilities to get back to our EBITDA target. We require significantly less people because we cater to the higher end customer, and those are going to be the customers in our opinion, that are going to be traveling first. They're going to be the ones that are coming back first, and we're targeting that segment. And we think that we're going to get more market share in the premium mass segment than we have in the past.

Thank you for that.

Our next question is from Shaun Kelly with Bank of America. Go ahead. Your line is open.

Hi, good afternoon, everyone. One of the – maybe you switched to Las Vegas for a quick question. You give some great commentary on how well the casino performance has been. And I think it's been decently consistent around town. And I just wanted to get your thoughts on, we don't ask a lot about the casino block specifically for when, but was wondering if you'd give us a little bit more high – kind of high level color on how important is that casino and rated play business for win in Las Vegas, any directional sense of how important that is and what you guys could do to maybe lean into that just to maybe stabilize things and continue to perform like you kind of already are.

Hi, this is Marilyn. And I can't stress enough how important that casino businesses to us. We have really leaped in. And we have seen that casino segment of the hotel be stronger and stronger and resilient. And so our casino hosted play almost the vast majority of our play is rated play. The casino host team has done an unbelievable job in getting these guests to return over and over. The events that we planned, the database that we have really, the improvements that we made in 2020 for all those tools have really come through exceptionally strong. And in those areas where we have unhosted rated business, we launched win rewards in December, and that has been so far a very smooth launch. And we're looking forward to having enough of those players come. Really Superbowl will be the first opportunity that we've had to do that. So the casino marketing team has been the stars of the COVID situation. And so they're driving the bus right now.

I mean, if you look at just the market – gaming market share, we used to be around 8% to 9% of the market, say 2018, 2019, and now we're closer to 15% of the market and that's not by accident. I think all the measures that we've taken to make sure that this place as it's restaurant open, it is fun. It feels – it is very safe. The staff continue to be highly motivated and focused on service. We've been taking share in the domestic high end. It's a fact. We've been seeing players that we've never seen before. And we're going to continue to lean into that segment because I actually think that we're very well positioned to take market share.

Thank you both. And then maybe it's just my follow-up, to switch over to Wynn Interactive. Just, could you give us a status or a little bit of a thought process around marketing? It sounds like you've already made some progress and have lined up a lot of strong partners to get some of these states launch. When is the right time to kind of lean in on the marketing spend? Have you already, or do you really expect that’s going to be kind of back half loaded as you mentioned Craig, when maybe the players are ready to receive that message around some of the seasonality?

Sure. Well, first of all, it's incredibly important to make sure that your product is in a state where you feel like you can scale it. So, we're making – we're doing product drops really every two weeks. And our focus there is making sure that we can achieve market parity in order to do that. I would say that's our number one focus. And it consumes 40% of our time on Wynn Interactive. Then the other key component as you rightly point out are kind of two parts of marketing performance marketing, where you are actually kind of driving installs through ad networks, through Facebook, et cetera. And we certainly have begun to hit the gas on that component of our marketing because you can do it in a very targeted way. The second component of marketing is really third-party relationships and third-party partnerships, mass media, if you will. And that's a little bit of a chicken or the egg, because before you engage in large scale mass media, you want to make sure that your product is where you want it to be, and for us, that's a high standard given our brand. And you want to make sure that you are in enough states to where any bleed that you are experiencing into states where it's not legal is acceptable. And so, you should expect to see a lot more from us on the third-party mass media marketing side, over the course of 2021. But we're doing performance marketing today in order to begin to scale the product.

Thank you very much.

Our next question is from Thomas Allen with Morgan Stanley. Go ahead your line is open.

Hi, how is it going? Just in terms of Macau can you just update us on your latest thinking on the VIP business and maybe structural risk there? Thank you.

Yes, sure. So, we've been focused on the future of Macau and clearly, we're leaning in on the premium mass segment and on the mass segment. The VIP business is not going away. But it is definitely going to be less, whether it's 20% of 2019 or 35% of 2019 in the future, it's hard to say. But it's going to exist, it's evolving, it's consolidating. And so we'll still be a player in VIP, it will still be a large contributor to our company and to our bottom line. But we're really focused on the premium mass segment. Ian, do you have anything to add on that?

Just looking back to December, our VIP got back to 35% of December in 2019 numbers. So it's certainly not a small contributor. It still continues to grow and get better. The pace of recovery is obviously slower than the premium mass. But even in January we had a lot of activity from our big players. So people in our premium direct program. So it’s certainly not faded away completely. It is growing. And it is tied to the health of the general market. The pace of recovery is just a bit slower. So it will continue to be part of our business.

I do think that there will be significantly less VIP players as junkets consolidate and fall out, but there will still be very large VIP players. And our focus is on that direct business and on the very high end, as opposed to having lots of junket operators trying to drive lots of VIP customers. It's really more about – it's really about the premium VIP segment. And that's where we've been focused,

Very helpful color. And then just on the interactive side, now that you are in three states, any updated thinking about just how competitive the market is and any concerns there? Thank you.

The market is quite competitive clearly. But, I think, that – I have been surprised at the size of the market. I think Michigan has been a really interesting test case for how quickly it's ramped and the size of both the sports and the online gaming. So yes, it's tough competition, but I think, the market is larger than we anticipated. And there's going to be plenty of room for great brands and great product. And this, we think 2021 is going to be our year to really get into this.

Thank you. Good luck.

Thanks.

Your next question is from Stephen Grambling with Goldman Sachs. Go ahead, your line is open.

Hi, thanks. Just as a follow-up on that, the comment around consolidation VIP if we were to go back to 2015, 2016, it seemed like a similar expectation was out there for continued restriction, VIP play. Then that business came back very strong in 2017, 2018. How would you compare and contrast what is happening now versus then? And how quickly could you pivot back if you saw liquidity ramp back up? In other words, do you need to reconfigure again, or is it as simple as slotting the junkets back in?

That's a good question. I think, to ramp VIP back up, it's actually not that complicated. You can just slot junkets in. But we really think that Macau is transforming much more into a tourist destination focused on more than just gaming. And so our focus is on the non-gaming side. It's on the premium mass side. I really don't anticipate the VIP market snapping back like it did after 2016. I think it will definitely be there. It will definitely be a large market, but the growth driver is going to be on the premium mass side and the mass side.

Understood. And then moving back to Las Vegas and you had some good commentary on convention bookings. Maybe if we peel back the onion a little bit, what have you seen or heard about corporate demand since the vaccine results were announced and rollout started? And has, I guess, feedback driven the healthy passport strategy, or is that more regulated tourism?

No, that feedback is really win-driven because everyone is very cautious and no one really knows what they can do. So, they look at current restrictions and rooms and they say, you can't have more than 250 people. How can we hold a convention? So, there's more questions than answers. And what we're trying to do is solve those questions. And so, we'll have to get our state comfortable that we can exceed the current limits and we can continue to have more people in one room by doing the things that we're doing. And I do think that's one of the reasons we haven't seen a lot of fallout quite yet in the back half of the year, because a lot of corporates are still waiting to see if there will be solutions for people to get back together in a large way and we're trying to provide those. So, of the 170,000 room nights, we have booked, of course, there's going to be cancellations. And there's going to be wash and it's hard to predict. But people are more sanguine now about the back half of the year than I've seen on the corporate side. And we're just trying to show the way with our COVID testing lab and our vaccination center.

Fair enough. Thanks so much. Best of luck.

Operator, I think, we have time for one last question.

Okay. Our final question is from David Katz with Jefferies. Go ahead your line is open.

Hi good afternoon, everyone. Thanks for taking my question. In the context that we often discuss the prospects of concession, explorations and how that rolls, and that information that's knowable obviously is extremely difficult. Thoughts or strategies, how do you sort of deal with that? And is there a realistic, more realistic possibility that this is sort of a deferred circumstance that maybe more than a couple of years away?

David I'll answer that question the same way we do each quarter, which is we continue to heavily invest in the community. We're known as good corporate partners. We're known as one of the top employers. And what we want to do is provide real value for Macau and for the Greater Bay Area. So, we understand our place there. We're good partners with everyone in Macau and in the Greater Bay Area. And we're going to continue to do that and work closely with the government as they determine what the concession renewal process will be.

Got it. Thank you. You've covered a lot. I appreciate it. Thank you.

You are welcome.

All right. Thank you everybody for joining us. We'll see you next quarter.

That concludes today's conference. Thank you for participating. You may disconnect at this time.