Wynn Resorts Ltd 2026 Q2 Earnings Call

Good afternoon, everyone. On the call with me today are Craig Billings and Brian Gullbrants in Las Vegas. Also on the line are Julie Cameron-Doe, Linda Chen, and Frederic Luvisutto. Please note that we published a presentation to provide more color on the company and recent performance ahead of this call. You can find the presentation on our investor relations website. 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, Craig. Good afternoon, everyone, and as always, thank you for joining us. I'm going to jump right into the quarter, starting here in Las Vegas. Wynn Las Vegas delivered $215 million of EBITDA in the quarter, with particular strength in May. Adjusting for the hold, the property would have produced $219 million of EBITDA. We saw impressive increases in both drop and handle, driving a 5% increase in total casino revenues. We were also pleased to grow RevPAR by 3% and saw retail lease revenue up 8% during the quarter. More recently, the business has seen solid volumes and increases in both slot revenues and RevPAR, though we experienced unusually low hold in the month of July. Looking ahead, we remain positive about the business in Las Vegas.

We are currently on track for another strong F1 weekend and pacing ahead of last year in our transient and leisure business for that event. On the group and convention side, we saw the forward booking pace accelerate as July progressed, the business looks strong heading into both Q4 and 2027. Turning to Boston, Encore Boston Harbor generated $56 million of EBITDAR, with the second quarter setting records for both two Q RevPAR and two Q hotel revenue. Slots also remained an area of strength, with revenues up 1%. More recently, demand in Boston has remained healthy, with slot handle running slightly ahead of last year. In Macau, the team delivered particularly solid results in the quarter. The business generated $306 million in VIP normalized EBITDA, with unfavorable VIP hold negatively impacting us by nearly $9 million. Volumes were up nicely in the quarter, with mass drop up 5%.

Far, in the third quarter, rolling volumes and mass drop were down slightly year-on-year as we absorbed the now well-publicized impact of the World Cup, coupled with usual seasonality. We saw drop pickup in the back half of July as the region entered the summer holiday season, and those improving trends continued into early August. Last quarter, we announced The Enclave, a new 432 all-suite hotel, and expect to commence construction on that tower before the end of the year. This quarter, I'm pleased to announce that we will also begin construction on our long-planned and previously announced event center and theater at Wynn Palace in the coming weeks after receiving our revised land contract from the government in July. The event center and theater are expected to be completed in 2028, and The Enclave is expected to be open in 2029.

Taken together, these projects reflect a clear and confident investment in the future of the Macau market and our commitment to support its diversification efforts. Shifting to Wynn Al Marjan Island, construction is progressing rapidly. We are now actively progressing through the interior fit out of the hotel rooms with mechanical, electrical, and finishing work all moving along in sequence. In addition to construction, pre-opening hiring and operations planning are advancing very well. As development of Wynn Al Marjan Island progresses, regional conflict-related disruptions initially impacted global supply chains and continue to impact the shipping insurance markets. This has required certain materials and equipment to be resourced, rerouted, or expedited to ensure the project's construction timeline. In addition, we experienced certain other disruptions associated with the movement of staff and consultants and other non-recurring issues. These disruptions have impacted both the timing and cost of the project.

On timing, we now expect the project to open its doors to the public in September 2027. With respect to budget, we are increasing the total project budget for Wynn Al Marjan Island by approximately $600 million. Of that, approximately half is directly attributable to disruption from the regional conflict. Material cost increases, shipping cost increases, and the pre-opening and capitalized interest costs associated with the extended construction timeline it created. The remaining portion reflects remeasurement, trade coordination, and other costs you'd expect on a project of this scale and duration, independent of anything happening in the region. I traveled to the UAE in June and saw the progress firsthand. The site, the team, and the surrounding market. My flights were full and day-to-day activity in Dubai was healthy.

What we are building in the region is one of a kind, and the quality of work on site is truly extraordinary. We continue to believe this will be the most exciting integrated resort opening globally in over a decade, and we remain as committed to and confident in the UAE as ever. I'll now hand it over to Craig Fullalove to run through some additional details on the quarter.

Thank you, Craig, and good afternoon again. Let me walk you through the financials for the quarter, starting here in Las Vegas. Wynn Las Vegas generated $215.2 million of adjusted property EBITDA on $643.2 million of operating revenue for a 33.5% margin. Unfavorable hold was a modest headwind, costing us just over $3.6 million in the quarter. On the cost side, OpEx, excluding gaming tax, ran at $4.5 million per day, up 6.2% year-on-year. That increase reflects higher business volumes, some contractual wage increases, and our continued investment in the types of offerings that matter most to our premium customers. The openings of Zero Bond and Casa Playa last quarter, as well as PISCES, which opened only midway through Q2 of last year.

We believe the best way to earn and retain the highest value customers in Las Vegas is to continually raise the bar on what we offer them. That's what you're seeing in those numbers. Over to Boston, Encore delivered $56.1 million of adjusted property EBITDA on $209.3 million of revenue for a 26.8% margin. OpEx per day came in at $1.19 million, up just 2.9% versus the second quarter of last year. That's despite real ongoing labor pressure in that market. The team in Boston is incredibly disciplined on costs and flow-through, and they continue to find smart efficiencies across the business while delivering a premium offering that is discernibly different from other properties in the region. Now, over to Macau. The team delivered $297 million of adjusted property EBITDA on $1 billion of operating revenue, a 29.6% margin.

VIP hold ran below our theoretical expectation this quarter, representing a negative impact of just over $8.6 million. On costs, OpEx, excluding gaming tax, was approximately $2.9 million per day, up 9% year-over-year, but flat quarter-over-quarter. Similar to Las Vegas, that increase is partially driven by deliberate additional investment in the premium customer experience, including the recently opened Chairman's Club expansion that completed last quarter, as well as normal course cost of living adjustments alongside variable costs associated with higher business volume seen across several of our segments in the quarter. On Macau CapEx, Craig touched on the recent approval for construction to commence on the event center and theater at Wynn Palace, both of which are key concession-related projects in Macau. In addition to our announcement of the Enclave Hotel Tower last quarter. We look forward to getting construction underway very soon.

Spend on these projects in 2026 will be limited to some piling and early development works. All in, we now expect our 2026 expansionary CapEx in Macau to land in the $350 million-$400 million range. Turning to the balance sheet, our liquidity position remains excellent. $4 billion of global cash and revolver availability as of June 30th, split roughly as $2.3 billion in Macau and $1.7 billion in the U.S. That strong cash generation gives us the flexibility to keep returning meaningful capital to shareholders on both sides of the Pacific. On the Macau side, the Wynn Macau board approved a 2025 final dividend of $150 million, up from $124 million in the prior period, which was paid in the second quarter.

We continue to view the dividend there as the cornerstone of our capital return policy to shareholders and will continue to revisit that dividend level with the board over time. At the Wynn Resorts level, our board has approved a cash dividend of $0.25 per share, payable on August 28th to stockholders of record as of August 14th. In terms of total CapEx for the quarter, we spent approximately $153 million, primarily related to the Encore Tower and spa remodels and the construction of the Cliff House Grill in Las Vegas, as well as the hotel refurbishment at Wynn Macau, which we completed at the end of the quarter, plus normal course maintenance across the business. Separately, we contributed $48.1 million of equity to the Wynn Al Marjan Island project during the quarter, bringing our cumulative contribution to just over $1.06 billion.

We've also continued drawing on the Marjan construction loan with $1.4 billion drawn to date. As Craig mentioned, we have increased the expected budget for Wynn Al Marjan Island, which at our 40% share, will equate to approximately $240 million of required equity. Our equity for the remainder of the project, including Janu, is expected to be approximately $525 million-$650 million. With that, we'll open the call up to Q&A.