Wynn Resorts' CEO Discusses Q4 2011 Results - Earnings Call Transcript

Wynn Resorts (WYNN)

Q4 2011 Earnings Call

February 02, 2012 4:30 pm ET

Executives

Matt Maddox - Chief Financial Officer, Principal Accounting Officer and Treasurer

Stephen A. Wynn - Founder, Chairman, Chief Executive Officer, Chairman of Wynn Macau Limited and Chief Executive Officer of Wynn Macau Limited

Marilyn Spiegel - Principal Executive Officer and President

Ian Michael Coughlan - President of Wynn Macau

Robert Gansmo - Vice President and Chief Financial Officer

Analysts

Carlo Santarelli - Deutsche Bank AG, Research Division

Joseph Greff - JP Morgan Chase & Co, Research Division

Shaun C. Kelley - BofA Merrill Lynch, Research Division

Mark Strawn - Morgan Stanley, Research Division

Jon T. Oh - Credit Agricole Securities (USA) Inc., Research Division

Kenneth Fong

Harry Curtis - Nomura Securities Co. Ltd., Research Division

Steven E. Kent - Goldman Sachs Group Inc., Research Division

Robin M. Farley - UBS Investment Bank, Research Division

Cameron Philip Sean McKnight - Wells Fargo Securities, LLC, Research Division

Thomas Marsico

Presentation

Operator

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Good afternoon, and welcome to the Wynn Resorts Fourth Quarter 2011 Earnings Call. Joining the call on behalf of the company today are Steve Wynn; Marc Schorr; John Strzemp; Matt Maddox; Marilyn Spiegel; Scott Peterson; and on the phone, Ian Coughlan, President of Wynn Macau; Robert Gansmo, CFO of Wynn Macau. Now I'd like to turn the call over to Mr. Maddox. Please go ahead, sir.

Matt Maddox

Thank you, and I thank everyone for joining us this afternoon for our fourth quarter conference call. Before we get started, I just need to remind everybody we will be making forward-looking statements under the Safe Harbor and Federal Securities Laws, and those statements may or may not come true. With that, I'm going to turn it over to Steve Wynn for opening remarks.

Stephen A. Wynn

Well, today is a particularly delightful day for us because about 1.5 hours ago, we opened up to the rest of the world our brand-new Wynn Resorts website, which we've taken a great deal of time to make beautiful and special and ultra-user-friendly. And anybody who's on the call wants to see our best effort, go look at our new website and check out Garth Brooks. He does a video of himself, a lot of great things on the website, but it's brand new and we launched it an hour ago. Mike and -- Mr. Weaver and our company and everybody else have been on this for months, and we're very proud of the product.

And as far as the last quarter and the last year, we've got 2 hotels, really, the Encore Wynn complex with 4,700 rooms and 1,000 rooms in Macau. And between the 2 of them, they managed to produce a cash flow and EBITDA of $1,630,000,000, which is not bad for 2 buildings, and we're very proud of our staff for the good job they did.

I checked with the gaming control board, and interestingly enough, our casino win in Las Vegas at $776 million last year was the all-time historical record for a gaming license facility in the state of Nevada's history. It exceeded the previous record of $764 million, which coincidentally, and delightfully enough, was held by Wynn Las Vegas in 2007. So in all in all, it was a good year, a lot of international business in America, a robust and wonderful season in Macau. And I guess, you've got the numbers, ask the questions. We're all ears.

Question-and-Answer Session

Operator

[Operator Instructions] Your first question comes from the line of Carlo Santarelli with Deutsche Bank.

Carlo Santarelli - Deutsche Bank AG, Research Division

I have 2 questions. First, I wanted to discuss with you guys how you're thinking about the balance sheet and cash flow here over the near term. If we assume to put the bulk of CapEx for Cotai, it's probably a few years away yet. And then my second question is, it looked to me in the quarter like OpEx, nongaming OpEx, at Wynn Macau went up. I'm wondering if there was actually any incremental expense creep there? Or if that more had to do with the distribution of where you maybe played lucky on a rev share basis or with your junket customers.

Stephen A. Wynn

Linda, you want to answer that question or Ian? Linda's on a collection trip. You can do it.

Matt Maddox

Sure. On the -- for the quarter in Macau, you saw operating expenses, excluding taxes and commissions, go up to $1.5 million from $1.350 million. The vast majority of that was bad debt expense, which was, for the year, fairly flat, but it bumps along throughout the quarter. So what you saw in the quarter was a little bit of a pickup. And so that was really the story in Macau. And there's a little bit of incremental payroll expense as well. In terms of our balance sheet and cash flow, I think what we've done in the past, it continues to be a good indication of what we'll do in the future, we look for new projects, we find them, finance them conservatively, build them. And with our free cash flow, we've had a very generous dividend policy, and that every year that's decided on a case-by-case basis by our board of directors.

Operator

Your next question comes from the line of Joe Greff with JPMorgan.

Joseph Greff - JP Morgan Chase & Co, Research Division

Steve or Ian, this question is for either 1 of you or both of you. In Macau, can you talk about the competitive dynamic there? We saw last night with 1 of your competitors have some initial success in what they would consider their junket re-affiliation initiative. Are you seeing either any direct or indirect competitive pressures from that? And then I have a couple of follow-ups from that.

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