Q3 2026 Wynn Resorts Limited Earnings Conference Call - WYNN RESORTS LTD

Financial Performance:

• Las Vegas: Generated $158.8M adjusted property EBITDA on $575.2M revenue (27.6% margin); unfavorable hold cost ~$24M, while REVPAR and ADR both rose 3% and retail lease revenues increased 8%.
• Boston: Produced $50.1M adjusted property EBITDA on $194.7M revenue (25.8% margin); OPEX per day was $1.11M, down 4.4% YoY due to labor strike headwinds.
• Macau: Delivered $255.3M adjusted property EBITDA on $919.2M revenue (27.8% margin); VIP hold exceeded theoretical expectations by ~$12.3M.
• Balance Sheet & Liquidity: Maintained $4B in global cash and revolver availability ($2.5B Macau, $1.5B US); total CapEx spent was $201.6M, with $62.2M equity contribution to Wynn Al Marjan Island (cumulative contribution >$1.12B).
• Capital Return: Repurchased $58.1M of stock; Macau Board approved $150M interim dividend (up from $125M); US Board declared $0.25/share cash dividend payable Nov 30.
• CapEx Outlook: Las Vegas CapEx expected to decline in 2027; Macau 2026 expansionary CapEx projected between $350M-$400M.

Guidance and Future Outlook:

• Q4 2026: Outlook is strong driven by overlapping market drivers: F1, robust convention calendar, and NFL season; F1 pacing ahead of 2024/2025 in rate and occupancy.
• 2027 Outlook: Group and convention business for 2027 is pacing ahead of 2025/2026 levels at this point; Las Vegas pricing power remains strong with no signs of consumer degradation.
• New Opens: Wynn Al Marjan Island (UAE) targets September 2027 opening; Wynn Palace Theater/Events Center and Enclave tower in Macau targeted for 2028/early 2029; Encore Tower remodel in Las Vegas on track for H1 2027.
• Long-term Strategy: Focus remains on Al Marjan Island; future U.S. development (Texas, Georgia) considered but requires careful capital deployment due to iGaming risks and cannibalization.

Business Segments and Product Lines:

• Las Vegas: Completed renovation of XS Nightclub; opened Cliff House Grill at Wynn Golf Club; continuing to ramp full staffing for new restaurants (Zero Bond, Satayano's).
• Macau: Construction commenced on three projects (Enclave, Theater, Events Center); Enclave will add 432 suites to the 99% occupancy Wynn Palace.
• Boston: Resolved union framework; ratification vote imminent; property operations maintained standards during the September strike.
• UAE (Al Marjan Island): Finishing work and guest room fit-out underway; pre-opening hiring advanced; construction costs substantially locked in.

Market and Competitive Landscape:

• Las Vegas: Strong pricing power driven by new demand drivers (Raiders, Sphere, F1, Convention Center); REVPAR outperformed market; retail sales indicators suggest high-end consumer health.
• Macau: Acknowledged complex economic environment; focus on long-term adaptation rather than short-term market fluctuations; non-gaming revenue growth expected as room supply constraints are addressed.
• UAE: Al Marjan Island will be the only integrated resort globally for a substantial period; demand exceeds supply across local and regional markets.
• Competition: Market share remains healthy in Nevada relative to pre-COVID levels; no immediate new competitors in Al Marjan vicinity.

Risks and Challenges:

• Macau Economy: Complex and adapting; potential volatility from tax policies, capital controls, and geopolitical dynamics, though Golden Week performance was consistent with prior year.
• Boston Labor: Resolved strike via framework agreement; long-term earnings power threatened by iGaming, historical horse racing, and lottery competition in Massachusetts.
• Al Marjan Geopolitics: Ongoing regional conflict creates uncertainty; management adjusts underwriting based on conflict intensity but remains bullish on long-term returns.
• Seasonality: Q3 summer season remains a headwind due to fewer demand drivers compared to Q4; holding patterns can fluctuate due to specific player behavior.

Management Commentary and Tone:

• Tone: Confident and resilient despite Q3 headwinds; emphasized team execution and disciplined cost management.
• Strategic View: Management rejects binary market narratives for China/Macau; views Las Vegas as benefiting from a "higher floor" of demand drivers; committed to long-term capital discipline.
• Capital Allocation: Prioritize self-funding growth (Macau projects) and shareholder returns while managing Al Marjan CapEx; stock seen as undervalued.

Analyst Questions and Answers:

• Las Vegas Growth: Management confirms pricing power and strong comps for 2027; attributes strong RevPAR to yield management and base business stability rather than just leisure recovery.
• Macau Accounting: Subscription agreements (capital fund) will be booked on the balance sheet rather than OpEx, improving EBITDA; no immediate change in high-end vs. super-high-end customer dynamics.
• Al Marjan Operations: Handover of zones to operations begins post-New Year; rooms sales announcement expected soon; hiring/onboarding timeline set for the three months preceding the Sept 2027 opening.
• U.S. Development: Texas and Georgia identified as potential future markets; Nevada tax environment viewed as stable and respectful of the gaming industry.
• Q4 Expectations: No specific guidance given for Q4 EBITDA; management highlights the strength of the demand drivers (F1, NFL) but acknowledges tough comps from prior strong performance.

Other Key Points:

• Wynn Al Marjan Cost: Budget increased by $600M; Wynn's 40% share of remaining equity requirement estimated at $465M-$590M.
• Market Share: Nevada market share remains robust compared to pre-pandemic levels despite drop fluctuations caused by player marker repayment behaviors.
• Boston Labor Resolution: Agreement deemed "fair and economically feasible" with union leadership; ratification vote scheduled immediately following the call.
• International Travel: International leisure business represents <20% of total mix; growth driven by World Cup; Europe and Mexico were key drivers for summer.
• Non-Gaming Focus: Macau's long-term challenge is room supply; non-gaming revenue growth is expected to increase as room inventory expands via the Enclave project.