WYNN Wynn Resorts: Earnings conf call summary

Co says it's in an "enviable" position, not only in gaming, but in any industry that is capital intensive.

Gave an overview of its balance sheet (most of this was in the earnings release): Has $1.7 mln in cash and $500 remaining in a revolving credit facility. Has $500 mln of costs remaining for Encore at Wynn Las Vegas and $500 mln of costs remaining for Encore at Wynn Macau. That leaves excess cash on hand of $1.2 bln, which the company says can pay off all of its debt maturities over the next three years. Has $4.9 bln in debt.

On a ratio basis, backing out the excess cash and using ttm EBITDA of $800 mln, debt/EBITDA is ~4.6x. Notes that is fully funded debt before the projects open... Co says seeing more significant softness in October at Wynn Las Vegas, isolated to its mid-week activity. A combination of lower occupancy and less walk-in business has led to lower traffic on casino flow and empty restaurants.

In Macau, September showed some weakening but October has been relatively positive, seeing a bit of a bounce back. Co says it's "reasonably encouraged"... When asked, co said it isn't planning any acquisitions. Does better building its own stuff.

Co says its hasn't repurchased any stock in October. States it's focusing on deleveraging. When asked, said it also hasn't repurchased any of its bonds (analyst said its yields are in the mid-teens). Explains it focuses on near-term maturities first.

Co says economic environment is making it slow down, or refrain from rushing its development plans on the Cotai Strip and for its Las Vegas golf course, especially with two hotels opening in the next 12+ months. Adds needs evidence the marketplace has absorbed the new supply entering now... Co says it has restricted credit as it has increased its bad debt expense. But notes tightening means simply reviewing its credit files. The status of its VIP customers is very high and don't believe it is inducing anyone not to play.

Of the remaining $500 mln for Encore Las Vegas, half will be CapEx in Q4, with the remainder split between the first two qtrs of 2009. Of the remaining $500 mln for Encore Macau, back-end loaded towards the end of 2009. Besides that, co's maintenance CapEx is $25-$30.

Co says that is a good run rate, though it may increase slightly in Las Vegas next year with another hotel. Says it becomes a free cash flow co in about 12 months as the only item left would be maintenance CapEx (assumes no new developments are undertaken).

(Stock last traded $46.50 after hours)

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Posted: 10/30/2008 5:39:18 PM by Global Administrator | with 0 comments

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WYNN Wynn Resorts: Earnings conf call summary

WYNN Wynn Resorts: Earnings conf call summary

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