Q4 2024 Wynn Resorts Ltd Earnings Call

Welcome to the Wynn Resort's fourth quarter 2024 earnings call. All participants are in a listen-only mode until the question-and-answer session of today's conference. To ask a question...

Speaker Change: Press star 1 on your touchtone phone. Record your name and I will introduce you. Please limit yourself to one question and one follow-up question. This call is being recorded. If you have any objections, you may disconnect at this time. I will now turn the line over to Julie Cameron Doe, Chief Financial Officer. Please go ahead.

Speaker Change: Thank you operator and good afternoon everyone. On the call with me today are Craig Billings and Brian Gilbrath in Las Vegas. Also on the line are Linda Chen and Frederick Lubicuto.

Speaker Change: Please note that we've published a presentation to provide more colour on the company and recent performance ahead of this call. You can find the presentation on our Investor Relations website. This will become a regular fixture along with our earnings release going forward.

Speaker Change: I want to remind you that we may make forward-looking statements on the safe harbour federal securities laws and those statements may or may not come true. I will now turn the call over to Craig Billings.

Thanks, Julie, and good afternoon.

As always, thank you for joining us today.

Speaker Change: You know, we've been very active over the past three years, making innumerable positive changes to and investments in our businesses in Las Vegas, Boston, and Macau.

Speaker Change: changes in how we market in our underlying technology and how we deliver service to our best customers.

Speaker Change: in how we build and program food and beverage and retail, in how we program entertainment, in the production of our own unique events, and in how we control expenses. All of these changes made in pursuit of further distancing ourselves from our competitors.

Speaker Change: And you can see the results of these efforts in our 2024 results.

Speaker Change: Yet another record year of adjusted property EBITDAR, including another annual record in Las Vegas.

Speaker Change: Operationally, we are stronger, more nimble, and more results focused than we have ever been.

Speaker Change: Meanwhile, we are expeditiously developing what I believe to be the most exciting development project in the industry in the UAE, a project that will ultimately produce meaningful EBITDA and further diversify our business.

Speaker Change: The opening of that project, coupled with a concurrent reduction in the amount of CapEx we will be deploying in North America, will also mark an important inflection point in our free cash flow profile.

Our future is bright.

Speaker Change: And it is this bright future coupled with the fact that our stock price continues to inappropriately reflect the value of our assets that drove us to repurchase $200 million of stock in the fourth quarter and another $150 million thus far in Q1.

Speaker Change: While industry multiples remain suppressed, while growth capital remains focused on a narrow set of AI and tech companies, and until we believe Wynn El Marjan is appropriately reflected in our valuation, we will continue to repurchase our equity because we believe the return profile on those repurchases is meaningful.

Speaker Change: Now, turning to the quarter and starting here in Las Vegas.

Speaker Change: Demand remained healthy in the fourth quarter, with table games dropped essentially flat against a very tough comp, and slot handle up by 13%.

Speaker Change: Our gaming market share for the quarter grew meaningfully highlighting the strength and quality of what we offer here in Vegas

Speaker Change: Our non-gaming business in Q4 was also strong, though it was impacted by tough year-over-year comparisons during F1 week.

Speaker Change: EBITDA during the event in 2024 was about $20 million lower than in 2023.

Speaker Change: The lion's share of the difference was due to a decline in REV-R stemming from lower overall Las Vegas room rates during that event, though it is important to note that in both years, our ADRs were about 50% higher than those of two closest competing properties here in Las Vegas.

Speaker Change: And our daily EBITDA during the 2024 event remained materially elevated relative to the years before F1 was a fixture in the market.

Speaker Change: The F1 team did a tremendous job with this year's event, and with the event having now settled in, we have a good baseline from which to grow in future years.

Speaker Change: More recently, demand in January looked good with both drop and handle up year-over-year and ADR and S&B covers both up year-over-year.

Speaker Change: Of course, this year we didn't have the benefit of hosting the Super Bowl here in Las Vegas, which impacts February, and that's about a $25 million EBITDA headwind for Q1 vs. 2024.

Speaker Change: Excluding Super Bowl weekend, all of our key volume metrics are up year-over-year.

Speaker Change: Looking further out, we already have our budgeted group in convention room nights for 2025 on the books at Healthy ADRs and transient booking demand over the last two weeks has been extremely robust.

Speaker Change: When coupled with a calendar that is once again chock full of large demand drivers in the market, the setup for 2025 feels good.

Speaker Change: The team at Wynn Las Vegas continues to set the standard, and with new food and beverage openings later this year, including the much-anticipated opening of Zero Bond,

Speaker Change: a planned renovation of the Encore Tower and other relatively modest targeted investments. We will exit 2025 even stronger and with limited remaining CapEx on the horizon.

Speaker Change: Turning to Boston, Encore Boston Harbor generated just shy of 59 million of EBITDA.

Speaker Change: We were encouraged by particular strength in our slot business where Handel was up 6%.

Speaker Change: This helps set a new all-time property record for slot revenue.

Speaker Change: We continue to grow the database and stabilize some of the recently opened food and beverage outlets with the property's best days ahead.

Speaker Change: More recently, demand in Boston has remained healthy through January, led by strong year-over-year growth in slot handle and stable non-gaming revenue against a tough calm.

Speaker Change: Turning to Macau, we generated $293 million of EBITDA during the fourth quarter down about 1% year-over-year and up 11% sequentially.

Speaker Change: While the market in Macau continues to be competitive, we remain disciplined in our focus on maximizing EBITDA and maintaining a healthy margin profile.

Speaker Change: We recently completed the rollout of digital tables throughout WinPALIS and WinMACAL, which will yield OPEX benefits and, when coupled with our data science and machine learning capabilities, should allow us to be more precise and more efficient with reinvestment over the medium term.

Speaker Change: On the CapEx side, we made a number of improvements and optimizations in Macau in the fourth quarter, most notably an expansion of the Chairman's Club at Wynn Macau, a gaming area focused on our best customers.

Speaker Change: We will also soon be adding a variety of food and beverage offerings at Wynn Palace with the opening of our destination food hall, a development that we believe will drive incremental visitation and footfall to Wynn Palace.

Speaker Change: We also continue to advance design work and approvals on the remainder of our concession related CapEx, the event center, the theater, and a production show at Wynn Palace.

Speaker Change: More recently, January was characterized by healthy mass table drop, strong direct VIP turnover, and full occupancy in the hotels, while Chinese New Year saw a more prolonged period of visitation and less concentration on specific days than we saw in 2024.

Speaker Change: In fact, for the 14 days beginning January 29th, and including the days after the holiday period, volumes were healthy with drop and turnover in line with 2024 and slot handle up.

Speaker Change: Hold during the period was choppy, but volume indicators look good.

Speaker Change: Turning to Wynn-Almarjon Island in the UAE, construction is rapidly progressing on the project, with work now reaching the 35th floor of the hotel and over 4.6 million square feet of concrete and steel in place.

Speaker Change: As we discussed at our Investor Day in October, we believe the UAE will be a $3-5 billion gaming market over time, and certainly the most exciting new market for our industry in decades.

Speaker Change: To support this project and the early work we are doing to build our database and brand awareness in the region, we were pleased to announce in early January that we entered into an agreement to purchase Aspinall's in Mayfair, London.

Speaker Change: This small but strategic asset provides a presence in central London, where many of our future Wynn-Almarjon customers spend a meaningful amount of time.

Speaker Change: Lastly, we are actively exploring and well-positioned to capitalize on additional new market opportunities in attractive gateway cities.

Speaker Change: And we have strategic land banks in each of our new markets that provide an embedded long-term growth pipeline.

Speaker Change: Meanwhile, our leverage profile continues to improve as free cash flow grows, allowing us to increase the return of capital to shareholders through the recurring dividend and meaningful share repurchases.

Speaker Change: With that, I will now turn it over to Julie to run through some additional details on the quarter.

Thank you, Craig.

Julie: At Wynn Las Vegas we generated $267.4 million in adjusted property EBITDA on $699.5 million of operating revenue during the quarter, delivering an EBITDA margin of 38.2%.

Julie: EBITDA was down 1% year-on-year and revenues were up slightly on a difficult comp from 2023.

Julie: OPEC's excluding gaming tax per day was $4.4 million in the quarter, up about 1% compared to the prior year.

Julie: The team in Las Vegas continue to exercise strong cost discipline and have largely mitigated the bulk of our union-related payroll and other benefits increases without impacting the guest experience.

Julie: Turning to Boston, we generated adjusted property EBITDA of $58.8 million down year-over-year on a tough comp on revenue of $212.7 million with an EBITDA margin of 27.7%.

Julie: We've stayed very disciplined on the cost side, with OPEX per day of $1.17m, up only 2% year-on-year, despite labour cost pressures in that market.

Julie: The Boston team have also done a great job of mitigating union-related payroll increases with cost deficiencies in areas of the business that do not impact the guest experience.

Julie: Our Macau operations delivered adjusted property EBITDA of $292.8 million in the quarter on $926.6 million of operating revenue, resulting in an EBITDA margin of 31.6% in the quarter.

Julie: Higher than normal VIP holds benefited EBITDA by a little over $12 million in the quarter.

Julie: OPEX excluding gaming tax was approximately $2.59 million per day in Q4, up 1.2% year-on-year. The team has done a great job staying disciplined on costs and we remain well positioned to drive strong operating leverage as the market continues to grow over time.

Julie: In terms of CAPEX in Macau, we're currently advancing through the design, planning and approval stages on several of our concession commitments.

Julie: And as we noted the past few quarters, these projects require a number of government approvals, creating a wide range of potential CAPEX outcomes in the near term.

Julie: As such, we now expect total CAPEX spend in 2025, inclusive of our concession-related commitments and other projects, to range between $250 million and $300 million.

Julie: Moving on to the balance sheet, our liquidity position remains very strong with global cash and revolver availability of $3.5 billion as of December 31.

Julie: This was comprised of 1.8 billion dollars of total cash and available liquidity in Macau and 1.7 billion dollars in the US

Julie: The combination of strong performance in each of our markets globally, with our properties generating nearly $2.4 billion at 2024 adjusted property EBITDA, together with our robust cash position, creates a very healthy consolidated net leverage ratio of just over four times.

Julie: Our strong free cash flow and liquidity profile allows us to reduce leverage while returning capital to shareholders.

Julie: To that end, the Wynn Resorts Board approved a cash dividend of 25 cents per share, payable on March 5th 2025, to stockholders of record as of February 24th.

Julie: As Craig mentioned, we also repurchased 2.14 million shares for approximately $200 million during the quarter, bringing our total share repurchases for the year to 4.35 million shares for an aggregate cost of $386 million.

Julie: These share buybacks, together with our recurring dividend, highlight our focus on, and continued commitment to prudently returning capital to shareholders.

Julie: Finally, we spent approximately $127 million on CapEx in the quarter, primarily related to the villa renovations and food and beverage enhancements in Las Vegas, concession related CapEx in Macau, and normal course maintenance across the business.

Julie: Additionally, we contributed $99 million of equity to the Wynn-Almarjan project during the quarter.

bringing our total equity contribution to date to $631.7 million.

Julie: We estimate our remaining 40% pro rata share of the required equity is approximately $700 to $775 million, fully loaded for capitalised interest, fees and certain improvements on the island.

importantly

Julie: We recently announced we finalised a $2.4 billion financing package for the project from a diverse group of globally recognised lenders.

Julie: This landmark transaction is the largest hospitality financing in the history of the UAE and indicative of the broad support for this project from the financial community and beyond.

Julie: We're very grateful for the support of our lenders, and with the financing now in place, have achieved a significant milestone on the path to opening the project as planned in early 2027.

Julie: With that, we will now open up the call for Q&A.

Speaker Change: Thank you. To ask a question press star 1 on your touchtone phone. Unmute your phone and record your name clearly after the prompt and I will introduce you for your question. Please limit yourself to one question and one follow-up question. To withdraw your question press star 2. Our first question comes from Carlo Santarelli from Deutsche Bank. Please go ahead.

Hey Craig, Julie, everyone.

Carlo Santarelli: Craig, if I could just start with kind of a, I guess, a question that's more focused on Las Vegas. But when you are, you know, giving that headwind, or in this case, the tailwind from kind of favorable hold.

Speaker Change: What win rate are you writing that back to? Is that like a 22% embedded table hold?

Yeah

That's right.

Speaker Change: Okay, so I guess my question is for close to two years now, if you look at the entirety of 2023 and 2024, your whole percentage has been kind of slightly north of 25%. Now I was just wondering

Speaker Change: It seems as though it skews higher more often than not, so I'm kind of wondering if we're doing the right thing at this point by continuing to kind of knock down posted results by a number that you've achieved.

Speaker Change: Well, that's a good question, Carlo, and you're right, we tend to be pretty conservative. I think that's true, by the way, not just in Las Vegas but also in Macau.

based on side bets, tie bets.

Speaker Change: You know, cash that gets dropped at the VIP tables and not just rolling. So I think your point is a valid one, and we certainly will continue to look at it.

Speaker Change: Great, thank you. And then, you know, obviously, one of your peers in Las Vegas last night had very positive comments on January. You guys made positive comments on January and kind of the February period to date, ex-Super Bowl.

Speaker Change: Should we take from those comments that from an EBITDA perspective you are seeing growth in January and February with the exception of that Super Bowl period or?

Speaker Change: Is it still kind of you're seeing top-line growth you're seeing growth in in certain channels And there's some cost pressures that you're trying to offset or is it kind of flowing through to EBITDA at this stage?

Speaker Change: Yeah, well, first of all, you're right. January, as I mentioned in my prepared remarks, January was good and Super Bowl is not comparable. So, you know, what I would say is we were up year-to-year in all of the key volume indicators.

Speaker Change: really, if you took it from a week ago, right, the day before Super Bowl weekend started, we were up across the board. So that to me is what's indicative of what's happening here in Las Vegas from a demand perspective.

Speaker Change: On the expense side, I think you've seen us be pretty good about managing the impact of cost pressures. You can see it in the 2024 results and driving pretty healthy margin.

Speaker Change: So, we feel good about Q1 other than the point that you raised, which is the Super Bowl headwind.

Speaker Change: Great thank you and then I just if I could one quick one on Macau and I know obviously market shares are not something that

Speaker Change: You guys focus on whether it's as it pertains to GGR market share.

Speaker Change: In terms of the competitive environment, you noted in your remarks that it remains competitive. It's always kind of competitive to an extent, but anything you're seeing as you look out to 2025 that would move the needle one way or another in terms of the competitive nature of the market and how it impacts when.

Speaker Change: No, I think it's, you're correct, and we've said it as well, it is a highly competitive market. Competitive but stable. I don't think that there's anything...

Speaker Change: Unusually crazy going on, but you're correct. And again, we've said it many times. We're focused on EBITDA and margin

Speaker Change: and that's what we think about every day. We know what our reinvestment is down to the basis point and we will modulate it as we feel like we need to in order to to drive the best EBITDA result that we can.

Great. Thank you very much.

Sean Kelly: Next we'll go to the line of Sean Kelly from Bank of America. Please go ahead.

Faculty President so much.

Sure.

at the higher end.

Sean Kelly: premium is certainly outperformed base mass during Chinese New Year. That's definitely the case.

And, you know, it could be...

Sean Kelly: Could be the economy, there's a lot of cross-currents in the economy, you know, it's difficult to read, there's been modest stimulus. Obviously the economy has seen stronger days in general, but I think it's fair to say that...

Sean Kelly: the premium customers outperform Base Pass, at least for us. That's not commentary on, obviously, the entire market. And that's fine for us because that's our customer base.

Sean Kelly: Great, and then maybe just as a short follow-up, you mentioned the Prepared Remarks, the acquisition in London, you know, quite a unique opportunity there. Craig, are there more, you know, sort of either bolt-on opportunities like that, places you could look to opportunistically expand the brand short of, you know, kind of...

Sean Kelly: Full Scale IR Development. How do you see that? I know it's probably very unique given, again, sort of the global customer that probably does do business in London, but just, you know, can you broaden that out for us? Because it is unique. It's obviously something you haven't explored before and kind of curious how you're thinking about it. Thanks.

Sean Kelly: Sure, yeah, it is unique and I think you characterized it well. This acquisition was really about establishing a presence in a key global gateway city and a part of the world where when taken together with Wynne El Marjan Island, we're building a meaningful business.

Sean Kelly: So, when you put the two properties together, they're going to serve an area which is home to 2.5 billion people and 40% of the world's millionaires.

Sean Kelly: So you really should think about this as a part of Winn-El-Marjan and in fact the business will report up to Winn-El-Marjan.

Thank you.

Speaker Change: Next we'll go to the line of John Decree from CBRE. Please go ahead.

Hi everyone, congratulations on the quarter and another successful year.

I wanted to ask

Speaker Change: about the gaming customer, the gaming volumes in Las Vegas in the 4Q, I think you know quite a bit stronger than we were expecting. A table drop about flat and the slot handle was up nicely. I think MGM spoke to that as well. So, you know, curious if you could, you know, with that...

Speaker Change: F1 customer kind of stable? Did the F1 customer play more slots or was it kind of strong slot volumes across the whole quarters? Kind of get a sense of, you know, was it a couple events that maybe drove that slot volume or are you just seeing, you know, really good, healthy play in slots all quarter and from your customer base?

Speaker Change: It was it was not F1 in particular it was broad-based broad-based strength across the quarter and to us it's indicative again of healthy demand not just in the market but for what we offer.

Speaker Change: Thanks, Craig. Maybe one on, Marjan, obviously financing is now complete and you're already in full speed ahead, but you know what are kind of major milestones we should think about between now and early 2027? I think topping off might be, you know, targeted for the end of the year. Just curious what we should keep our eye on in terms of major milestones from here.

Speaker Change: Yeah, you're right. Topping off is towards the end of this year. And subsequent to that, we actually will be spending more time with the cell side.

Speaker Change: and interested buy-side folks on Winn-on-Marjon and will likely be arranging a market trip. So that would probably be the next point at which you'll want to be on the lookout because it's important that folks understand.

Speaker Change: Really, all the amazing things that are happening in the UAE and in Dubai in general, the prevalence of high-value food and beverage, of luxury hotels there.

Speaker Change: and really the power of that market, so stay tuned because we'll be we'll be dragging folks out there to the extent that they want to come.

Fantastic. Thanks, Craig. I'll pack my bag.

Speaker Change: Next, we'll go to the line of David Katz from Jefferies. Please go ahead.

I'm calling shotgun.

Thank you. Bye.

Speaker Change: Look, I wanted to ask something just a little longer term, right? You know, Almarjan...

Speaker Change: There is obviously discussion about, you know, whether New York is still, you know, a possibility. Can you just walk across the field of, you know, other opportunities that, you know, you would seriously consider?

Speaker Change: you know in lieu of if New York did not happen or you know where you would turn your attention, might turn your attention next.

Yeah, sure.

you know we're a little bit unique in that we

Speaker Change: build very big battleship style assets, right? We generally don't do small development.

Speaker Change: The U.S. regional gaming market is a tough market. The opportunities left there are primarily infill, and you have the potential cannibalization from online gaming.

Speaker Change: So I think the U.S. regional market is tough. So what do we have before us? We have Marjan. We have a land bank in Marjan, a very substantial land bank in Marjan, and we've seen the power of land banks in new markets.

particularly Macau

in the mid-2000s.

Speaker Change: We are active in Thailand though it's early days. You're right, we're active in New York but we won't be subject to winter's curse in New York and we're being very disciplined in terms of how we think about New York.

Speaker Change: And then we obviously have a very substantial land bank here in Las Vegas. So we have years and years and years of growth ahead of us.

Speaker Change: I often get asked why aren't you moving on the land in Las Vegas right now and the reality is that from a capital perspective

Speaker Change: From a bandwidth perspective within our amazing design and development team, there are only so many things, frankly, that one can do at once. And then, of course, there are opportunities that come along that are time-bound, like if Thailand does move ahead, for example.

Speaker Change: You know, you want to make sure that you're in a position to participate.

So, we have a lot of opportunities.

Speaker Change: You've seen the research you may have published yourself, David Lee. It's a $3-5 billion market, and it's a tremendous opportunity for us. So that's where we're very focused at the moment.

Speaker Change: Understood and if I can just follow up you know I candidly I was thinking about Las Vegas you know given that the land is you know is has been part of the holdings for

Speaker Change: Maybe we could just talk a bit about the sort of puts and takes, and how much do you think about timing and winds positioning there, and what it would take to get that piece of land going?

Speaker Change: Timing has to be right for our global business. We have to think about the entire portfolio and make sure that we can execute it and execute it well.

Speaker Change: The market is just now absorbing capacity from two openings over the course of really the past four years, five years.

Speaker Change: and we have to make sure that we are in a position to do something that addresses an adjacent customer base.

Speaker Change: So we need to make sure that we have our market positioning right

Speaker Change: early studies and early doodles, if you will, on what we think that land could hold. And, you know, at this point I would say stay tuned.

Speaker Change: Again, we would appreciate it if everyone was as focused on Winn-El-Marshad as we are Because that is that is quite the opportunity and we'll see how we proceed from there

Okay, thank you. Sure.

Speaker Change: Next, we'll go to the line of Robin Farley from UBS. Please go ahead.

Robin Farley: Great, thanks. Some others in Vegas have talked about thinking they can grow EBITDA despite the tough comp with Super Bowl last year. I don't know if you have any thoughts on that. I know, you know, obviously you have some renovation disruption at Encore and so maybe that's not how you would see it, but curious for your take on that.

Sure

Robin Farley: Look, what I would say is, excluding Super Bowl weekend, which again was an impossible comp, all of our key volume metrics are out there every year. If we look out, again as I mentioned in my prepared remarks, if we look forward, we've got a great group room base at healthy ADRs.

Robin Farley: We've seen a very strong transient booking demand of late. Actually, over the course of the past ten days, seven of them have been higher than any booking rate.

over the past two years of daily room bookings.

Robin Farley: Retail sales were up 3% in January on incredibly tough comps in our building here and our restaurant and banquets business is flat to last year despite the absence of Super Bowl.

Robin Farley: So, we don't give guidance, but we feel very good about where we are and the setup for 2025.

Robin Farley: Okay, thank you. And then just on Thailand, have you specified which entity would be pursuing something in Thailand?

Robin Farley: We have not, but I can tell you it would happen out of a subsidiary of Wind Resorts Ltd., the U.S. listed entity.

Okay, great, thank you.

Speaker Change: Next, we'll go to the line of Dan Politzer from Wells Fargo. Please go ahead.

Dan Politzer: Hey, good afternoon Craig and Julie. Thanks for taking my question.

Dan Politzer: Another one, I guess, asked a different way on Vegas, right? I mean, table drop, I think it was basically flat ear-to-ear relative to F1 and slot handle. Seems like it's accelerating.

Speaker Change: Craig, I guess relative to three or six months ago, what do you feel like has fundamentally changed, if anything? Because it certainly feels like there's a much more constructive tone here. Is it a different customer base or people coming back and spending more? What kind of do you see relative to maybe prior conservatism?

Speaker Change: Well, I don't think our tone, to be clear, I don't think our tone has changed much. I think we've been saying kind of the same thing for the past two years, which is...

Speaker Change: Trees don't go to the sky, but things look really good. So, you know, we've, I mentioned at the outset of my prepared remarks, all the things that we have done over the course of the past three years to really strengthen our position in this market.

Speaker Change: and certainly you know to a certain extent we go as Vegas goes but we've been we've been outperforming we've been outperforming the market in general you can see that on an EBITDA per room basis

Speaker Change: And really that's across all of the different businesses that sit under this roof, so I don't think a whole lot has changed. I think we have great demand across the board, and you can see that in our results.

Speaker Change: On the smart side, we've actually made some material improvements. We've expanded our high-limit room. We've focused on the mix of games we offer our customers, and we've really leaned into service.

Speaker Change: So when you look at what we're doing on the slot board and slot floor to drive that incremental I would give it to the team and to wind design and development We're building a much better box and continuing to improve on what we do. That's a good point, right? Thank you

Speaker Change: Got it. And then just turning to capital allocation, obviously pretty active in the quarter in terms of the share repurchases and even is it the first quarter?

I mean, is there a leverage threshold?

Speaker Change: through which, you know, to think about the amount of capital you would allocate here, you know, is there a maximum you'd take it up to because it just seems like, you know, obviously these levels, if you liked it at $91 in the fourth quarter, you love it at 80.

Speaker Change: I think that that's a the last portion of your your question is a fair assessment

Speaker Change: We don't publish leverage targets because we will lever in place EBITDA to build new EBITDA. But what I would say is that our leverage levels now are very, very comfortable across the portfolio. Our fixed coupons relative to where rates are now give us incremental comfort.

Speaker Change: And so we're going to continue to support the stock while, you know, we're going to get, while the getting's good, if you will. And we will continue to do that. Julie, would you add anything? I think we've covered it all so far.

Thanks so much.

Sure

Speaker Change: Next, we'll go to the line of Stephen Grambling from Morgan Stanley. Please go ahead.

Stephen Grambling: Hi, thanks. Maybe a couple of follow-ups here. Just one on the buyback. Sounds like you've got, obviously, capacity on whatever that hypothetical upper bound is, and maybe there is one when it's not buying or building a property.

Stephen Grambling: If you don't get the response that you want and the stock kind of stays in place, are there other options you have or would you consider other alternatives to unlock underlying value?

Stephen Grambling: Well, we're not buying back stock for an immediate market response. That's not what we're up to, right? We're buying back stock because we believe

Stephen Grambling: It's a good value in the long term and we're thinking about the long term.

Stephen Grambling: So that, you know, that's my response to the first portion of your question. We've talked...

many, many times before about the fact that we...

Stephen Grambling: are not believers in OPCO-PROPCO and the sale of real estate.

Stephen Grambling: because we view it really as a financing transaction as opposed to unlocking value and the creation of value. So what we're going to do is continue to support the stock with buybacks while the value of Winn-Al Marjan crystallizes.

and while multiples remain suppressed.

Stephen Grambling: to offset some of the wage inflation we've been seeing, and how would you generally characterize net operating expense growth in 2025?

Stephen Grambling: You know, mitigation is, as they say, a river of nickels. It's not one or two or three things that I could outline for you. It's a hundred different things.

Stephen Grambling: And, you know, when we do mitigation, we're very careful to make sure that the customer doesn't feel that.

Stephen Grambling: So, I can't point to one or two particular things. In 2025, we have a much more modest increase in union-related costs. We will figure out how to fade that.

Stephen Grambling: And then, you know, depending upon what happens with inflation, what happens with tariffs, we could have an impact on some input costs, but that's primarily on the food and beverage side, and that really comes down to procurement and sourcing and how we plan and manage our business. So I think it's...

Stephen Grambling: hopefully it's become clear kind of four or five years in now that we know how to manage OPEX without damaging the brand.

Fair enough, thanks so much.

Speaker Change: Next we'll go to the line of Steve Wozinski from Steeple. Please go ahead.

Speaker Change: Hey guys, good afternoon. So Craig, if I can stay on OPEX but switch over to Macau. It came in a little better than what we were kind of thinking or guessing where it would be. Can you maybe help us think about how you're thinking about the cost structure for Macau this year?

Speaker Change: you know maybe kind of what you're thinking from a from an OPEX per day standpoint.

Speaker Change: Yeah, sure, I'm not going to provide OPEX per day guidance, but what I would say is that...

Very similar to Las Vegas

Speaker Change: It's the, you know, it's the day-to-day, hand-to-hand combat of managing op-ecs, staffing, scheduling.

We've called out previously that OPEX can be impacted

Speaker Change: that we have been doing over the course of the past couple of years. And so you can get a little bit of lumpiness from quarter to quarter, but really it comes down to extremely good management.

Speaker Change: Thanks for that, Craig. And then, second question, if I can go back to the buyback real quick and maybe ask this question a little bit differently, but just wondering how you're thinking about balancing the buyback versus...

Speaker Change: with this stock here in the low 80s, let's call it, buying back shares here versus investing capital in new projects. I'm just trying to get a sense for how you're going about that today, Craig, if that makes sense.

Speaker Change: Sure Well, fortunately, we're in a position now from a liquidity perspective and a leverage perspective where we can achieve we can do both

Speaker Change: And so, you know, we obviously Win on Marjan is well-planned. The budget, a significant portion of the budget is bought out. We know exactly where that's going to land. And you saw us extremely active in Q4 and Q1 in the market from a buyback perspective.

Speaker Change: You, Julie, mentioned the amount of system-wide liquidity that we have.

Speaker Change: And so really it comes down to incremental new projects that we might take on. But even if we did so, right, you have to imagine that from a design and development perspective.

Speaker Change: Those take time, and so the capital spent for those is several years out. So as I said again in my prepared remarks, while multiples remain suppressed...

Speaker Change: Well, you know much of the market much of the buy side continues to look to a very select number of stocks to to drive returns Because they're benchmarked against those and we understand that and until we get The realization of value for when I'm our John we're in a position where we can and will buy back

Gotcha. Thanks for that color, Craig. Appreciate it.

Speaker Change: Next we'll go to Lina Brandt-Montour from Barclays. Please go ahead.

Good afternoon, everybody. Thanks for taking my questions.

Just on Las Vegas, the refresh and the renovations.

Speaker Change: I'm curious if you could just flesh out, you know, timing, sort of rooms out of service and the cadence of that work and, you know, is this the kind of thing that we'll be calling out as quantifying any sort of disruption in a couple quarters or do you think you can manage through it?

Speaker Change: Well, I'll start and then I'll ask Ryan to comment as well. So, first of all, we do it in the depths of, we generally do it in the depths of summer when we have the most flexibility and the most capacity.

Speaker Change: We try to do it in a way where we're essentially taking out three floors at a time. The floor that's being renovated and then the one above it and the one below it to minimize disruption. Brian, do you have anything you would add in terms of potential Ipadai impact or rooms out of service?

Speaker Change: Now there may be a slight impact, but we're planning on launching this with WDD at the end of the summer and anticipating about a 12-month process

Speaker Change: to try to reduce the impact at all possible as much as we can.

Speaker Change: And when we, you know, during periods of peak demand, during obvious times when we should be in a position to run very high occupancy, we'll cease the renovation work and essentially utilize the two floors in and around the floor that's being renovated.

Speaker Change: So, the disruption, we won't, we're not going to call out the disruption specifically.

Speaker Change: Okay, that's super helpful. And then I want to ask a question about room rates. You know, I understand that the view is that there hasn't been any sort of trend change, maybe post-election.

Speaker Change: Obviously, the tone of you and your peers has gotten a little bit better post that event. But your room rates are sort of tied to the rest of the market. I'm curious if it felt like in the fall it was a little squishier out there, maybe away from you, and maybe things have gotten a little bit better into the new year. But any kind of commentary on the evolution of the sort of pricing power of the market as a whole over the last six months would be really helpful.

Speaker Change: Yeah, I don't think we're in a position to comment on the market as a whole because we're only 4700 keys out of 150,000 keys. What I would say is that

Speaker Change: Certainly in Q1, you're going to see, in our reported Q1, you're going to see a decline in ADR, but that's really because of the Super Bowl.

Speaker Change: Super Bowl rim rates are absolutely off the charts. Our pricing power throughout Q4 felt incredibly good and continues to feel good as we move into 2025.

Great, thanks everyone.

Speaker Change: Next we'll go to the line of Chad Bynum from Macquarie. Please go ahead.

Hi, good afternoon. Thanks for taking my question.

Speaker Change: Thanks for putting up the slide deck. Wanted to direct the attention to slide 20 where you lay out the CapEx projects.

in Macau, the concession arrangements here.

Speaker Change: Can you just kind of help us think about maybe some returns that you're planning on getting on these investments? The 2026 one is obviously...

Speaker Change: I'm thinking about the financial impact, but I'm just wondering how that kind of fits into the long-term growth strategy and, you know, how that brings in a premium customer at that point.

Speaker Change: Thanks Chad, yeah I'll take this one. We've been talking for some time about the commitment we made with the concession and obviously we've made a commitment of 2.6 billion dollars over the next 10 years.

Speaker Change: We've made a lot of progress on the destination food hall, which is internal to Wynn Palace, so it didn't require us to seek the approval for land use.

Speaker Change: The larger projects that we're doing that do require those approvals, we're still in that process of seeking those approvals, and that's one of the reasons that I've become a bit repetitive of giving my range of CapEx for those things.

You know, we've been very deliberate in how we've identified.

Speaker Change: what we want to build in Macau. We're very, you know, we're very focused on it staying within the Wynn brand and, you know, very much Wynn IP focused.

Speaker Change: Like I said, these projects are going to be completely consistent with our brand and with the non-gaming elements that we've deployed really successfully in Vegas. We've got great experience here in Vegas, proving that innovative non-gaming amenities

on more casual dining options.

Speaker Change: somewhat innovative, and we'll talk more about post-opening. We believe that it will drive incremental footfall and incremental visitation in and of itself. The second trend that I think is clear in Macau is that entertainment really resonates, and that entertainment drives market share.

Speaker Change: I think you can see among some of our competitors, and again, admittedly, we don't have those facilities. You can see among some of our competitors there in Macau that when they program entertainment, they are able to drive incremental market share.

Speaker Change: And so if you look at what we are executing for our concession-related CapEx, it really is entertainment-centric and candidly we're not surprised to see this play out in Macau because we see it in Vegas all the time.

Speaker Change: So while we're not prepared to talk about, you know, specific ROI on any given project, we certainly are comfortable with the thesis that we will drive incremental revenue out of these facilities.

Speaker Change: know, a certain level of wealth where this probably doesn't impact them as much. But just given what's happened with FX recently and, you know, thinking about the breadth of your international customer base, during prior periods or just kind of looking at your database, do you think that FX will have

Speaker Change: any impact on visitation or spend or your customers just at a level where they're probably not thinking about, you know, small changes to their pocketbooks. Thank you. No, not at all. And in fact, if you go back in time, if you go back to, I don't know, pick a year.

Speaker Change: 2017 the year that I joined the company and you looked at BokDrop relative to non-BokDrop you would see that we have done an incredibly good job of growing our business in domestic table games and in slots.

and so

Speaker Change: International business I don't believe will be impacted by FX, but we are less, we are more diversified and less levered to international business than I think we've ever been in the history of the property actually.

Thanks Craig, appreciate it.

Speaker Change: Yes, and our final question comes from Ben Chaykin from Mizzou Health. Please go ahead.

Ben Chaykin: Hey, thanks for taking my questions, Craig, Julie. You know, a few months ago I guess there were some headlines related to the pace at which UAE will potentially allocate gaming licenses, which were very supportive of your positioning. I'm sure you guys are head down. But any color or view on the pace of future competitors to the extent you thought about it? And then one follow-up on Amazon. Thanks.

Ben Chaykin: Sure. Yeah, we've talked about this on prior calls. We don't believe that every emirate will avail themselves of a potential license.

Ben Chaykin: Even the deals dropped, frankly, for a second license. Could be wrong, but we think we have pretty good intelligence.

Ben Chaykin: And so if you just think about the fact that we're opening in March of 2027, you think about the fact that it takes, at a minimum, four years to design and build an integrated resort, you can imagine that we're going to have a very, very healthy lead.

Ben Chaykin: and there's a lot of precedent in our industry if you look around regional markets in the U.S. actually of first-to-market getting

Ben Chaykin: a lot of sticky database and being able to weather a new entrant. Beyond that, again, we provided the projections that we provided for Wynne-Almarjon, assuming a second property.

Ben Chaykin: And in fact, I don't think we would be all that fussed if there was a second property because we believe in the clustering effect and we believe that it would be good for the industry. But as of now, we don't see line of sight on that potential second license.

Speaker Change: That's very helpful. I appreciate it. And then how do you think, just stepping back, how do you think about the most important customer cohorts? Obviously, the acquisition in London is telling, but I guess to dig a little further, is this an existing gambler or is it someone new who wants to pay for a hotel and experiences and who may also gamble if given the opportunity? I mean, I'm sure to some degree it's a if you build it, they will come scenario, but I'm just trying to get a sense of how you think about marketing and distribution of the property. Thanks.

Yeah, that's a really good question.

Speaker Change: My response would be, how much time do you have? I guess if I had to really summarize it, what I would say is this.

Gaming globally is a question of supply and demand.

really, really simple supply and demand. Gaming is a fundamental

Speaker Change: Human Behavior, and when supply and demand are out of balance, it's good to be an operator. When supply and demand are out of balance the other way, then only the strongest survive.

Speaker Change: And so, for the casino component of the business, having the setup that we have, being really the only integrated resort on this half of the planet.

Speaker Change: is very, very beneficial for us, and it's what makes us incredibly bullish.

Speaker Change: The second thing I would say is that the propensity to spend on luxury hotel and on food and beverage in the Emirates is extremely high.

Speaker Change: And so, as you will see from the numbers that we produced at our Investor Day, we firmly believe that this business will be more akin to Vegas than it will be Macau, where we can drive material non-gaming revenues.

Speaker Change: The last thing I would say is that you can think of the cohorts for this property really in three pieces.

Speaker Change: Rosalima has inbound visitation today. Call it by the point we open 2 million folks per year.

Speaker Change: in a market with relatively few amenities and so I would expect that we are going to get at least a single trip out of a large portion of those folks that are already coming to Rossa Hymah.

Speaker Change: The second cohort would be those who live in Dubai, an incredibly bustling, very sophisticated place with extremely high GDP per capita.

Speaker Change: And the third cohort are really destination luxury travelers, including gaming customers. And that's kind of our bread and butter. I mean, anybody who is a high-value customer, particularly with the acquisition we did in London, anybody who's a high-value customer globally, we should know.

Speaker Change: And so, our ability to attract those folks and bring them to win Al Marjan, I like our odds.

Thanks Craig, appreciate it.