Welcome to the Wynn Resorts Second Quarter 2023 Earnings Call. All participants’ are in a listen-only mode until the question-and-answer session of today’s conference. [Operator Instructions] This call is being recorded, if you have objection you may disconnect at this time. I will now turn the line over to Julie Cameron-Doe, Chief Financial Officer. Please go ahead.

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

Thanks, Julie. Afternoon, everyone, and thanks for joining us today. Well, what a quarter. Who would have thought just six months ago that we would be run rating $2.2 billion of property EBITDA. To put that in context, peak annual property EBITDA for the company was $2 billion in 2018. Yet, here we are today. We have a more diversified business with the addition of Encore Boston Harbor; we have a business in Macau that is running structurally higher margins into a resurging market; a business in Las Vegas that is more relevant than ever and is producing nearly double its 2018 EBITDA on much higher margins; and we have a very substantial growth opportunity in the UAE, the most exciting new gaming market in decades. I see tremendous value in our business, and I know our brightest days are ahead of us. Our path is the clearest it has been in years, and our team is committed and energized. Turning to the quarter, and starting in Vegas. Wynn Las Vegas delivered $224 million of adjusted property EBITDAR. On a hold-normalized basis, our EBITDA was up 3% on a very difficult year-over-year comp. We saw strength all over the place; the casino, the hotel, the restaurants, retail, you name it. All supported by a consumer that seems more than willing to continue spending on unique luxury experiences. Now, we obviously have a very particular customer type, skewing heavily to luxury; and we continue to closely monitor whether or not interest rates and inflation begin to impact that consumer, but so far, so good. In fact, drop, handle and RevPAR are all up year-over-year in July. And that's obviously before we get into the latter portion of the year, which has a number of tailwinds from city-wide programming. Turning to Boston,…

Thank you, Craig. At Wynn Las Vegas, we generated $224.1 million in adjusted property EBITDAR on $578.1 million of operating revenue during the quarter, delivering an EBITDA margin of 38.8%. Slightly lower-than-normal hold negatively impacted EBITDAR by around $2 million in Q2 and hold-normalized adjusted property EBITDAR was up 3% year-over-year. Our hotel revenue increased 6% year-over-year to $177.8 million, a new second quarter record on the back of an increase of 24,000 occupied room nights. Due to rooms that were out of service for renovations in Q2 2022. ADR, occupancy and RevPAR were all up slightly, compared to Q2 2022, despite the increase in available room nights, highlighting the appeal of our newly renovated room product. Our other non-gaming businesses saw broad-based strength across food and beverage, entertainment, and retail. In the casino, our GGR increased around 2% year-over-year, driven by a 14.8% year-over-year increase in slot handle and table drop that was roughly flat. Turning to Boston, we generated adjusted property EBITDAR of $69.1 million, an all-time property record. EBITDAR margin was 31.1%, up 80 basis points year-over-year. We saw broad-based strength across casino and non-gaming during the quarter. In the casino, we generated $193 million of GGR, a property record, with strength in both tables and slots. Our non-gaming revenue grew 3.8% year-over-year to $55.1 million with particular strength in hotel and food and beverage. We've stayed very disciplined on the cost side with OpEx, excluding gaming tax per day, of approximately $1.15 million in Q2 2023, up 3.6% year-over-year on increased business volumes and down 1% sequentially. As you may have seen in the press, we were pleased to recently sign new union agreements that provide our employees with competitive wages, benefits, and a best-in-class working environment that reflects our Wynn service standards. We expect the…

Thank you. [Operator Instructions] Our first question comes from Carlo Santarelli from Deutsche Bank. You may go ahead, sir.

Hey, Craig, Julie, everyone. Thank you for taking my question. So, Craig, just on the Macau front, obviously, the reduction sequentially in daily OpEx was a little bit of a differentiator relative to what we've seen in some peer reports. Can you talk a little bit more about that? And also, it looks as though your implied, commissions, discounts, et cetera, were as a percentage of revenue were down nicely sequentially. Do you expect, kind of, that trend to continue going forward?

Sure, Carlo. well, first, on the OpEx side, I think that we're always modulating OpEx based on business volumes and what we need to get done in any particular quarter. I think the distinction between us and perhaps some of the other folks that have reported that you have seen is that we opened with a full complement of folks. And so we weren't dragging floors, we didn't have rooms out of service, et cetera, et cetera. And so we came out of the gate, with the full OpEx that you're seeing today and any movements between quarters is really going to be a function of in that quarter. On the commissions and discounts, there hasn't been any substantial change to how we do that. So again, that's going to be quite player specific based on the parameters of each player. And so again, I wouldn't read too much into it.

Great. And then if I could, Craig, a follow-up, turning to Las Vegas, obviously, very strong performance on the -- especially on the cost discipline side. Can you talk a little bit? I believe your labor contract actually ended in July. So I wouldn't have expected any impact, but could you talk a little bit about how you guys intend to kind of accrue for what may be a settlement and some new terms going forward or anything that was present in the 2Q perhaps?

Sure. How much time have you got, Carlo?

I've done plenty, plenty, I guess.

Well, first, what I'll say is this, first and foremost, the team at Wynn Las Vegas is the heart and soul of the place. They're very important to me and it's the same reason that we paid everybody, during the closure, during COVID. And if you look over the term of the last union contracts, their contractual wage increases initially outpaced inflation. And then, of course, lagged inflation over the course of the past couple of years. Net-net, over the last contract, they were actually flat versus core CPI. But unfortunately, and it's a reality, rent in Las Vegas has increased more than CPI over that same period. And it's very important to me that our employees can support a stable home environment for their families. So I expect there'll be some back and forth as we work with culinary to find a fair compensation level that supports our folks particularly our non-tip folks and their ability to maintain their housing. It's pretty early in the process, so we're not really even close to quantifying dollars yet or talking about accruals. But rest assured, we'll figure it out in a way that's positive for the business over the medium and long-term.

Thank you.

Thank you. And our next caller is Joe Greff with JP Morgan.

Good afternoon, guys. Craig, when you look back at the 2Q, would you say in Macau, would you say Wynn Macau in the Peninsula was had a meaningful amount of renovation disruptor to the EBITDAR line that you would call out or do you think you were able to effectively shift what would otherwise have been disrupted to either other parts of the casino or to your property in Cotai?

Well, the renovations -- thanks, Joe the renovations that took place were smack dab in the middle of a casino floor. So certainly there was a level of disruption. I think the more macro point would be that a lot of the visitation that has come back, particularly for us, has come back in Cotai. And we've -- if you think about a world where there are no longer any junkets, yet we're holding market share, I'm incredibly proud of what we've been able to do on a combined basis. But certainly, we have work to do in terms of share, downtown. And the business will go as that share goes. It's pretty simple business, you market share times the market minus taxes, minus OpEx equals EBITDA. So our focus is on driving share downtown and really that's the way that we think about the business going forward. And that's why we did the renovations in the first place. So I don't want to give you the impression that the quarter’s results were entirely a function of the renovation, because they're not, but certainly on the margin they were impacted.

Got it. And I'm presuming the renovation was completed at some point in June. If you can confirm that, but would you expect that Cotai and Peninsula would be more in balance going forward similar to 2019? Or do you think visitation dynamics are such where the Cotai region is just going to get a little bit more traction?

Confirmed and the latter.

Got it. Okay. And then you called out, as others did in the 1Q and parts of the 2Q this reporting season, talking about low hold on the mass side. We can see the whole percentages the last couple of quarters versus what you did in 2019 at both properties. What is that a function of? Are players betting side bets or playing differently or is it really just a couple of quarters of aberrations and expected table hold percentages?

Yes, you're right. And historically, by the way, we haven't normalized for mass hold. And that was -- that made sense when the business was more balanced between mass and VIP. So that's something we're going to rethink going forward. But to your question very specifically, it's really a function of two things, and it was most acute at Wynn Macau rather than Wynn Palace. It's a function of volumes and normal course volatility. So you mentioned just normal aberrations and certainly that's part of it, but volume inherently smooths volatility. So when you had tour groups and you had core mass and you had just more bodies coming to Macau, the impact of volatility was inherently muted. And that's just not the case right now. So I would expect continue to see volatility, sometimes it'll be to our benefit and sometimes it'll be to the players.

Great. Thank you.

Thank you. Our next caller is Shaun Kelley with Bank of America. You may go ahead.

Hi, good afternoon, everyone. Thanks for taking my questions. So Craig, maybe one more about Macau, but just wondering if you could give a little bit of color about, sort of, segments of business, what you're seeing across, particularly behavior wise, across premium mass and VIP. And I'm really thinking kind of spend per visit relative to what's left to recover on the visitation side as you look to see things normalize?

Yes, I'm going to not comment on VIP, because it's obviously very patron, specific and VIP volumes are while surprisingly good, still a fraction of what they were previously. On the mass side, we've seen length of stay decline, which makes sense, because during COVID, if you made the commitment to come, you were coming for an extended period, but we've seen spend per customer actually go up. And so frequency has increased. Length of stay has decreased and spend per customer has gone up, which is great because that gives you the opportunity to make efficient use of your rooms, and is generally good for business. But I don't really have a comment on VIP.

Very helpful. And then, maybe one for you or Julie, just wanted to ask about the CapEx comment in the prepared remarks. I believe the call out was around some of the concession commitments and something around $300 million to $400 million. The question is, was that a per year number or is that a total number across kind of 2023 and 2024. And then if you can just remind us how you're thinking about sort of the CapEx versus possible OpEx components related to the -- that concession process. And I know it's a little different for everybody. And I know these plans are moving around some?

Sure. Thanks, Shaun. I'll take that. Yes, that number we've given out the $300 million to $400 million is the ‘23 to ’24. And really, we've done that, I think we've always foreshadowed that the process takes some time, because of all the different approvals that are required. So, you know, we were hopeful that we would get more on this year, but actually now we're looking at, you know, between the $300 million to $400 million over the ‘23 to ‘24 period in total. In terms of how we're thinking about the concession, it's more than half of the commitment we made, more than half of the $2 billion is CapEx related. And we do expect that to be front end loaded. So obviously, with the $300 million to $400 million in the first two years. And then a similar clip to that for a couple of years after that.

And then I would just point out that on the OpEx side, I would just like to remind you that there's a lot of things that we do in the business today that already support nongaming. And so we don't expect all of that to be incremental.

Very clear. Thank you, everyone.

Thank you. Our next caller is Stephen Grambling with Morgan Stanley. You may go ahead, sir.

Hi, thanks. Maybe a clarification on July in Macau. I think you said the run rate was 120% of 2019 levels on hold. Should we think of that as true for hold adjusted win rate comparing versus 2019? And any reason to believe that the $2.2 million in OpEx per day would be similar or different during that month versus the quarter as we build going forward?

The 120 -- sure. The 120% that I referenced was drop. So it has no -- so Wynn obviously has no impact. And OpEx, no expectation of any material changes in OpEx.

And then maybe as a follow-up on capital allocation. I think if we take the $2.2 billion run rate EBITDAR, less the concession spend, some other CapEx in Vegas in the dividend. It looks like there could still be some free cash flow left over. Is that the right way to think about it? And is there appetite in our ability to ramp capital return? Or do you generally think the pandemic has altered how you think about liquidity and leverage?

Julie, do you want to take the first portion of that, and I'll take the second?

About the CapEx?

About the free cash flow.

Sure. Yes, you're quite right. We're now with the $2.2 billion run rate and interest under control and all of that, we have sizable discretionary free cash flow. And so we're very focused on what we'll be doing in terms of delevering, returning to shareholders and of course, all of the exciting projects we have in front of us.

Yes. We're well capitalized at the moment. And I expect we will maintain some extra liquidity until we really see how a few things play out. First is New York. The second is the macro economy and the third is the yield curve. And we're always looking at the markets, the capital markets and thinking about when to refinance and whether to do it dollar-for-dollar or modestly delever. And when to return capital to shareholders, primarily by adding to the dividend. So we're in a bit of a wait-and-see approach at this moment. But if you think about it, we've got a great project in the UAE that is going to be a stunner. We've reinitiated our dividend, and our leverage is well under control. So we feel pretty good about where we are.

Fair enough. Thanks so much.

Sure.

Thank you. Our next caller comes from David Katz with Jefferies. You may go ahead, sir. Q – David Katz: Good afternoon, everyone. Thanks for taking my question. I'm hoping for just a little more insight on margins in Macau. It's been one of the questions that -- trying to figure out what the new normal is or could be longer term as we think about the future, largely driven by revenue mix. I wonder what updated thoughts you may have versus what we would have had 90 days ago. Or more than that when I was over to visit, where it was the prevailing question. Thank you.

Sure, David. Not really. I mean, I think a little bit like what happened in the U.S., we learned to run our business differently. So you mentioned primarily related to business mix. And certainly, that's a component of it. But we're running the business really, really well. The quality of service is as it should be and as it has always been, yet our OpEx has come down pretty meaningfully. And I think it's a testament to Linda and Frederic and Craig Fullalove, our CFO, over there and everything they've been able to do with the business. So really, what you're seeing is particularly at Palace, you can see it in the margin. What you're seeing is the impact of both sides of it with operating leverage coming through from business volumes and pretty robust expense control.

Right. And leaving it to us to decide on the order of magnitude, but it is fair to assume that there still should be some margin upside in Macau still to be captured as volumes return, correct?

Well, I haven't been in an Excel model in probably 15 years. But if I were doing one, I would probably hold margin at Palace relatively constant, just to be conservative. I mean, it's in the low-30s today, which is pretty darn good. And I would assume that Wynn Macau's margin increases as we aggressively fight for share.

Okay, I’ll take it. Thank you very much. Appreciate it.

Thank you. Our next caller is Brandt Montour with Barclays. You may go ahead, sir.

Hey, good evening, everybody. Thanks for taking my question. So in Las Vegas, obviously, a great result there. REVPAR and ADR were flat to up small year-over-year. Just curious, how you're feeling about taking rate from these levels that you're at. Today, obviously, occupancy is pretty full. And looking out in the back half of the year, how do you feel about your comparisons -- sort of cadence, third quarter, fourth quarter, as well as the sort of financial impact or the hotel impact from F1 in the fourth quarter?

Sure. I'll start, and then I'll ask Brian to comment. We have grown ADR pretty meaningfully, certainly since the property reopened from the closure in 2020, and I'm incredibly proud of our ability to do that. It really speaks to the product that we offer. And we've held those rates, and we've continued to have a rate premium to the rest of the town. Our ability to continue to take rate really depends on the macro. And as I mentioned in my opening remarks, the best I can do is kind of give you a clear picture of what we're seeing right now, and it's good. But as I've said before, we have a 2023 playbook for really end 2024 for every scenario. So I'm not really going to forecast whether we think we can continue to take rate given how dependent it is on the overall economy, but we're feeling great about our business. Brian, do you want to talk about pacing?

Sure. Yes. I mean if you look at -- our forward-looking demand indicators are really remaining quite healthy. The room bookings we have are pacing up year-over-year. And as far as group pace, it continues to be strong. We've mentioned it on previous calls, Q3 and Q4 continue with the same pace that we've had thus far this year. So 2023 will wind up being a record group year. And '24 continues to pace ahead of that. So we keep looking for the signs, but lead volume is there, and our team does a great job of converting.

Okay. That's super helpful. And then for Al Marjan, I appreciate the comments. Obviously, an exciting property. Can you give us an update on the casino license and sort of the pathway there and just an update, if you have everything you need for the sort of full plan that you've laid out in your initial projections?

Sure. We have everything we need to operate gaming in Al Marjan. And I think there's confusion here because there's a lack of understanding regarding individual Emirates versus the UAE as a whole. It's clearly a 10, as I think I've talked about before to a state and federal system. So while there may be conversation in other Emirates about legalization or legalization at the federal level, thereby covering all Emirates, I expect that we will have our license for Ras Al Khaimah actually imminently. But there should be no concern that there is a legalization process that needs to occur in order for a broader legalization process in order for gaming to occur in that property.

Crystal clear. Thanks for the comments.

Sure.

Thank you. Thank you. Our next caller is Dan Politzer with Wells Fargo. You may go ahead, sir.

Hey, good afternoon, everyone. Thanks for taking my questions. On prior calls, I think you mentioned that you could get back to a run rate EBITDA -- and I think it was about $26 billion, $27 billion range for GGR. I mean given what you're seeing in terms of mix and margin, is that still achievable? And going back to that July under 20% data point that you gave, is this something that maybe is achievable in the back end of this year?

I mean it depends on the market. Again, the model there is, as I said, pretty straightforward. Your share times the market, minus taxes, minus OpEx. So it really depends on which way the market goes. The market estimate where we think we would get back remains, as you described, probably closer to $27 billion versus $26 billion, based on the share we turned in this particular quarter, but generally, that holds true.

Got it. And then just for my follow-up. In terms of Wynn Macau, you mentioned you're going to be fighting for share there. Is that -- is it fair to say that margins maybe come down a little bit from these current levels? And I guess more broadly, as it relates to premium mass, are you seeing an uptick in promotions within that segment?

On the second question, no, the market has been pretty disciplined, and we're certainly pleased with that. On the first question, I don't think you should expect margin to go down at Wynn Macau. If the subtext of your question was will we need to get promotional in order to drive business to Wynn Macau, no, you should not assume that the margin will go down because we have tremendous operating leverage that comes with each 10 basis points of share at that property.

Got it. Thanks, that’s helpful.

Thank you. Our next caller is Chad Beynon with Macquarie. You may go ahead, sir.

Good afternoon. Thanks for taking my question. I wanted to ask about the Interactive cash burn. You mentioned that that's come down again year-over-year and sequentially. Are you still on track for this to turn profitable in the fourth quarter? And any other kind of insights in terms of where this is going and how the flow-through should look if revenues rise from here during peak season? Thanks.

Sure. I don't think we ever said it would be breakeven in the fourth quarter. But what we are focused on is making sure that it goes down every quarter.

Yes. Just -- I mean the sports betting's a tough business. It's about the game of commodity. They're difficult businesses, but we're very focused on managing this business. We've got a very long-term shareholder-friendly view on it. So that's our focus.

Thank you. And then another one on Macau. You just mentioned the $27 billion GGR number. We did see some sequential growth in the last recent month. But I'm just wondering, as some of the farther out visitors come back to the market, I guess we'd kind of have to look through the database figuring out where all the premium players are in all of China. But does this matter as much for you guys? Or are there enough people in kind of Hong Kong and Guangdong for you to continue to put up numbers? Or do you really need some of those further out markets to open up from a visa and just a visitation standpoint? And are they driving higher spend per trip than what you're seeing in the property right now?

Every customer matters, Chad. It's -- of course, we want to see the underlying regions start to contribute to Macau. Are we dependent on it? No. But certainly, that's going to add incremental heft to the recovery, and that's going to add incremental heft to the total market, which again pushes us further back towards breakeven. Sorry, breakeven with 2019 or equal to 2019.

Makes sense. Appreciate it. Thank you very much.

Sure.

And our next caller is John DeCree with CBRE. You may go ahead, sir.

Thanks for taking my questions. Maybe just a two-part question on Las Vegas. Craig, to the extent you can provide maybe a little bit more color around the visibility you have for the big events like F1 or Super Bowl. And then maybe the second part of that question is when you look at your forward demand indicators for bookings, is -- how much of that kind of year-on-year growth is tethered to those events? And excluding those events, are you still seeing good booking indicators for those maybe less peak periods or less kind of event-driven periods?

Sure. I'll start, and then I'll ask Brian to comment. So Brian's prior comment on booking pace was independent of those events, to answer your -- to answer your last question. F1, Super Bowl, I mean, these are events that are made for us, right? Because we end up picking up the top end of the patrons and customers that come to town for those events. And so we're really excited about it, about where we are and where we sit. Brian, do you want to provide some more color?

Sure. Yes, I think both of these events, specifically F1 and then Super Bowl, definitely played to the strengths of our brand. It's a perfect match. We are getting significant premiums for those two events themselves. And I think we're pacing quite nicely. I know some of our competitors have given more specific data, but I can tell you we're going to do just fine here.

Very good. Thanks for the color guys. Appreciate it.

Thanks, John. And operator, the next question will be our last.

Thank you. And our final question comes from Robin Farley with UBS. You may go ahead.

Great. Thank you for letting me sneak in here at the end. Can you clarify just to sort of make it comparable to previous periods, what the VIP hold added to make EBITDA in Macau?

Julie? Holding back to VIP.

Holding back to VIP. I mean as we said on the call, we held a little bit high on VIP, but that was more than offset by lower mass hold. So we're not actually getting into breaking it out.

Okay. And then...

It was about $20 million. So we have $20 million of high hold on VIP. This is what I was alluding to earlier. We need to -- we're going to start normalizing for mass hold, because so much of our business now is mass. But it's about $20 million in Macau, and low mass hold more than offset that, as Julie said.

Okay. Great. And I appreciate you breaking that out just to make it kind of comparable to previous quarters. So thank you. And then -- and I'm sorry if I missed your comment on this, but have you talked about how much of the margin do you think you can hold on to in Vegas? Thanks.

Well, in the midst of -- in the midst of the dark days of COVID, we put out a permanent cost savings figure, and we've held to that. We certainly, again, learned to run our business differently during COVID. And what I would say is that our business volumes over the course of the past 1.5 years have been absolutely off the charts, and we've held the line and still held true to the brand. So the business kind of is the business now. To the extent that there is a macro -- any macro-driven change to our business volumes or to our ADRs, et cetera, we have a playbook for that, because we just lived it as we went through COVID, and we'll be ready. Again, we're not seeing that. But we're certainly ready for every scenario.

Okay. Alright, great. Thank you very much.

Well, thank you, operator. With that, that concludes the Q2 earnings call. Thanks, everybody, for your attention. We look forward to talking to you again soon.

Thank you for participating on today's conference call. You may now disconnect.