Welcome to the Wynn Resorts Q1 2022 earnings call. All participants are on a listen only until the question and answer session of today's conference. To ask a question, press star one 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 would now like to turn the call over to Julie Cameron-Doe, Chief Financial Officer. Please go ahead. Thank you, operator, and good afternoon, everyone. On the call with me today are Craig Billings and Brian Gullbrants in Las Vegas. Also on the line are Ian Coughlan, Linda Chen, Ciaran Carruthers, Frederic Luvisutto, and Jenny Holaday. 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, Julie, and good afternoon, everyone. Thanks for joining us today. I'd like to start by welcoming our new CFO, Julie, who you just heard from, to the company and to her first earnings call with us. For those who don't know Julie yet, I think you'll enjoy getting to know her. Welcome. Before we get to the specifics of the quarter, I wanna take a moment to thank our outstanding team of 27,000 colleagues globally for their unrelenting focus on delivering the industry's best design, development, and service. That dedication was again recently recognized by Forbes Travel Guide with 24 five-star awards, the most of any independent hotel company in the world. Turning now to the quarter and starting in Las Vegas, the team at Wynn Las Vegas had another great quarter despite the impact of Omicron in January. The property generated $159 million of EBITDA with broad-based strength across casino, hotel, food and beverage, and retail, all well above pre-COVID levels. You may recall from the Q4 call that we expected the quarter to improve month-over-month and expected occupancy to reach the mid-80s% in March. In fact, we actually hit 91% hotel occupancy in March, which contributed to an all-time record EBITDA result during the month. Encouragingly, March strength has continued into Q2, and our forward bookings also show no signs of a slowdown with our booking pace at pre-COVID levels on substantially higher ADRs. Now, everyone on the call knows that Las Vegas as a market has experienced a rapid rebound over the past years. We certainly have been a beneficiary of that, but we're also benefiting from our own efforts of the past several years. Even during difficult times, we invested in our people and our products. We opened Delilah. We completed a refresh of the lounges adjacent to the Lake of Dreams. We opened Casa Playa, and we remodeled the Wynn Tower rooms. We look at every inch of this market-leading property and ask ourselves, "How can we make it better? How can we make it return more?" It's a dedication to our craft that makes me incredibly proud, and it's what drives enduring results. Turning to Boston, Encore had a strong quarter across the casino, resulting in $55 million of EBITDA in Q1, again, despite the impact of Omicron in January. As we also discussed on the Q4 call, we expected the quarter to improve progressively month-over-month, and that's exactly what we experienced with EBITDA in March, approximately 60% higher than January. That positive momentum has continued into Q2, with April EBITDA topping an already strong March. We spent a great deal of time during Q1 refining the plans for our upcoming development project across the street from the property. Design and planning for that project is on schedule. We're excited for our next phase of growth in Boston. In Macau, the market continued to experience subdued visitation during the Q1, particularly in the back half of the quarter, and this has continued into Q2, with market-wide GGR in April only reaching 11% of April 2019 levels. Our year-to-date results have reflected that in roll, drop, and hotel occupancy. Encouragingly, during periods where the market is accessible, we see demand return very rapidly, with hotel occupancy in the 65%-75% range during portions of the recent May holiday. Longer term, we remain excited about the prospects for Macau with so much latent demand in the region. The market is evolving, and we are prepared to adapt and grow our business as we embrace those changes. The concession process continues to move forward according to the pre-established timeline with the amended gaming law currently progressing through the legislative assembly. We continue to be pleased with the process and with the content of the amended law. At Wynn Interactive, we increased net gaming revenue by 23% sequentially, despite materially lower user acquisition spends. The strategy we implemented late last year to manage the business with a long-term shareholder-friendly view is working with our overall EBITDA burn rate declining to $31.5 million in Q1, better than the $40 million range we discussed on our last call. With the Massachusetts Senate passing a sports betting bill several weeks ago and now in reconciliation with the House, we're looking forward to the potential for a significant catalyst for WynnBET in the Commonwealth. Lastly, we have moved quickly into design on our project in the UAE, and I grow more excited about the opportunity with each iteration of that design. The island, which is really a blank canvas for us, presents amazing opportunities to do what we do best. From offshore large-scale water and light spectacles akin to the Lake of Dreams in Las Vegas, to a room product that takes advantage of the unique aspects of a beachside setting, I'm confident we are going to deliver something special to a market that is accustomed to paying a premium for luxury experiences. With that, I will now turn it over to Julie to run through some additional details from the quarter. Thank you, Craig. First of all, it's a privilege to be here, and I'm delighted to be working with Craig again, as well as with his talented team. Turning back to the business, at Wynn Las Vegas, we generated $159.4 million of adjusted property EBITDA on $441.2 million of operating revenue during the quarter. Overall, our hotel occupancy was 77% in the quarter, with 62% occupancy in January, improving to 91% in March. Importantly, we've stayed true to our luxury brand and continue to compete on quality of product and service experience. With our overall ADR reaching $432 during Q1 2022, 28% above Q1 2019 levels. Our other non-gaming businesses saw broad-based strength across F&B and retail, which were also well above pre-pandemic levels. In the casino, our Q1 2022 slot handle was 49% above Q1 2019 levels, and our table drop was 36% above Q1 2019 levels, despite still suppressed international play due to COVID-related travel challenges. The team in Vegas has done a great job of controlling costs without negatively impacting the guest experience, delivering adjusted property EBITDA margin of 36.1% in the quarter. This was up 1,100 basis points compared to Q1 2019 on a hold adjusted basis. OpEx, excluding gaming tax per day, was $3 million in Q1 2022, approximately $160,000 per day below Q1 2019 levels due to lower headcount and broad-based cost efficiencies in areas that do not impact the guest experience. We remain committed to maintaining a cost structure that appropriately balances margins and our exacting service standards. In Boston, we generated adjusted property EBITDA of $55.2 million in Q1 2022, with EBITDA margin of 29%, driven by strength across the casino in both slots and tables. Consistent with our regional peers, Omicron, along with bad weather, temporarily disrupted our performance at Encore Boston Harbor in January. As Craig noted earlier, we exited the quarter generating EBITDA in March that was 60% above January. We've remained very disciplined on the cost side, with OpEx excluding gaming tax per day of approximately $1 million in Q1 2022. This was a decrease of over 20% compared to $1.3 million per day in Q4 2019, and flat relative to Q4 2021. Looking ahead, as we noted last quarter, we expect OpEx to increase modestly due to higher payroll related to contractual labor agreements coming into effect in Q2, which will add around $45,000 per day to our OpEx base. We are well-positioned to drive strong operating leverage as we continue to grow the top line over time. Our Macau operations delivered an EBITDA loss of $5.5 million in the quarter on $298.4 million of operating revenue, as the COVID situation in the region has continued to suppress demand. While business in Q1 was challenging, we remain disciplined on costs and CapEx, a prudent approach which positions us to drive strong operating leverage as the business recovers over time. Our OpEx, excluding gaming tax, was approximately $2.1 million per day in Q1, a decrease compared to $2.2 million in Q4 2021, excluding non-recurring items. Turning to Wynn Interactive. In Q1, the business generated approximately $727 million in total turnover. Top line growth, combined with decreases in marketing spend and other OpEx, drove an improvement in our EBITDA burn rate to $31.5 million in Q1 2022, from $79.4 million in Q4 2021. Turning to the balance sheet, our liquidity position remains very strong, with global cash and revolver availability of $3.4 billion as of March 31. This was comprised of $1.5 billion of total cash and available liquidity in Macau and $1.9 billion in the U.S. Pro forma for the sale leaseback transaction we announced in February, we have approximately $5 billion of consolidated global cash and liquidity. Finally, our CapEx in the quarter was $96 million, primarily related to the Wynn Las Vegas room remodel and the theater renovation. With that, we will now open up the call to Q&A. Operator? Thank you. To ask a question, press star one on your touch tone phone, unmute your phone, record your name clearly after the prompt. I will introduce you for your question. Please limit yourself to one question and one follow-up question. To withdraw your question, press star two. Our first question is from Carlo Santarelli from Deutsche Bank. Go ahead, your line's open. Hey, guys. Good afternoon, and thank you for the remarks. Craig, Julie, whoever wants to kind of handle, I was wondering, obviously the Las Vegas results, especially on the room side, have been incredibly strong. Could you guys talk a little bit about how from an ADR comparison perspective relative to kind of the Q1 of 2019 period, the cash versus comp mix has changed? Sure. Brian, do you wanna take that one? Yeah, sure. W e really, if you look at it, the Omicron wave really impacted our Q1, specifically in January. We've also had a higher group mix, which at previously contracted rates has adjusted the rate and impacted the rate slightly. Our March ADR has come roaring back. It's certainly above '19 levels. So there really hasn't been much of a macro impact. With respect to '19, we continue to grow rate significantly, and as far as volumes, we're right on pace with '19 volumes. The cash versus comp mix, it's not really a material driver, Carlo, of the change that you're seeing in ADR. The quality of growth in cash ADRs has been very, very substantial. In fact, as Brian mentioned, the slight ADR dip that we had in the quarter versus Q4 2021, some of that actually has to do with group business coming back, which as we talked about before, that comes back at rates that were contracted some time ago. Right, Craig. To the point I was actually kind of moving towards or driving at. Just in terms of kind of the customer that you're seeing and kind of cash & comp mix speaks to it. Is it still like kinda as it was, which is kind of the same customer from 2019 is spending more, or are you starting to see kind of different channels, different customers that they're coming in and kinda contributing to the mix, and maybe those customers weren't previously in your loyalty program and not necessarily previously casino guests? Yeah, it's a good question. I guess what I would say is this, besides the obvious shift in international mix because of COVID, what we've seen is a very strong domestic casino growth. We've seen that for a few different reasons. One is market-wide growth, as I alluded to in my prepared remarks. The other is we spent much of 2019 reconstituting both our database strategy and our loyalty program and relaunching that loyalty program. If you look at the Vegas statistics, we've taken share in casinos since 2019, and that is certainly showing up in room mix and quality of room mix. The last thing I would say is that the cash leisure and transient customer is also very, very strong relative to 2019, but that's not really a mix shift point. Understood. Thank you, guys. Thanks, Carlo. Our next question is from Joe Greff from JP Morgan. Go ahead, your line's open. Hey, Joe. Good afternoon, everybody. Hello, Julie. I have a similar question to Carlo on room rates on the Las Vegas Strip. Can you talk about the group mix in the 1Q and the anticipated group mix for the balance of the year? Kind of where I'm going with this, Craig, is as group becomes a bigger, presumably bigger proportion of the total for the rest of 2022, does that have an impact on how you can yield on an overall blended rate basis for the portfolio given some of the group that might be coming back from years prior at contractually lower than market rate right now? In the last three quarters, I'll kind of round up for the Q3 of 2022, I mean at $400 ADR or above. is that sustainable if you have a higher proportion of group mix? I'll start, and then I'll ask Brian to comment as well. Certainly it gives us the ability to yield. It's also important to note that a decent chunk of our group business at this point is in a shorter booking window than it historically has been, which obviously gives us the opportunity to price that much closer to today's ADRs than historical ADRs. Brian, do you wanna talk about pacing, Q1? Sure. We've really continued to improve pacing. In fact, right now we're actually pacing above 2019 levels on the group side. We had a little bit of a lull with Q1 in booking pace because of the short-term impact of Omicron, but it has come roaring back. Now we have, I think, substantial pricing opportunities as we move forward in the other segments due to the strong base, in fact, one of the strongest bases we've ever seen. Great. My final question is, can you talk about CapEx for the rest of the year, in the U.S. and overall, including Macau? Sure. Hi there. I'll take that. It's Julie here. So as I mentioned in my prepared remarks, we've spent $96 million in the quarter, which was primarily in Las Vegas on the room remodel and the renovation of the theater. We've got about $50-$60 million left on the room remodel, and that should complete in June. We've got around $55-$65 million to come on the theater renovation, and that should open in the fall. We're really excited about the show, and we expect it to be a great revenue driver in the Q4. In addition, in terms of maintenance CapEx, we're looking at around the $75-$85 million mark annually in Vegas and $25-$35 million annually in Boston, and that's really the maintenance CapEx. In terms of Macau, I mentioned in my prepared remarks our prudent approach in Macau to OpEx and CapEx, given the operating environment there. What that means from a maintenance CapEx perspective is we're looking at approximately $10 million per quarter across both properties. we'd see that returning back to normal levels as the market comes back there. Thank you. Thanks, Joe. Our next question is from Shaun Kelley from Bank of America. Go ahead, your line's open. Hi, good afternoon, everyone. Julie, welcome to the call. M y question would just be about margins, if we could start there. T hinking about the domestic properties, obviously it seems like at both Las Vegas and Boston, you saw material sequential improvement. Can you just help us think about margin leverage you were able to see or drive as the quarter progressed? I mean, maybe not specific numbers, but just directionally, did those exit rates, were those on par with or materially better than what kind of the quarter as a whole did? Just to give us a sense of kinda how to think about the balance of the year or at least the Q2. Sure. Thanks. I'll take that. In Vegas, look, I mean, I think across the board, you'll see we're running the business efficiently, and you will see permanent cost saves versus 2019 at any given revenue level. Where margins shake out in terms of specific levels, that's really gonna depend on top line revenue and the mix of that revenue. As I said, our costs are well controlled. Our STOs are down meaningfully relative to revenue levels, and we're really well positioned to continue to generate strong operating leverage in Las Vegas. We've seen significant margin improvement since pre-COVID times, and we feel comfortable about that and our ability to continue to drive that operating leverage there. In Boston, you'll see the margin generated in Boston is really reflective of the earnings power of the business at these revenue levels. W e mentioned January was impacted by Omicron. Obviously we ended the quarter stronger than we started it. We mentioned I mentioned in the prepared remarks, we are seeing some additional labor costs come through, that will sort of impact that. Overall, we're pretty happy with the margin we're generating in Boston, and we think that's reflective of the current cost structure and including the payroll increase at these revenue levels. Great. Thank you. As my follow-up, could you give us the latest thinking or parameters around how the online piece or Wynn Interactive should progress as we move through the year? Just what are our thoughts around losses? I know they came in materially below what we were expecting for the quarter, and obviously a very big sequential improvements. Just any guidelines or parameters there as the year progresses would be helpful. Sure. So we've been pleased with the business over the course of the quarter. W e really do believe in the industry longer term. Sports is where the majority of the addressable market is today, Sean, and it's also where a lot of the irrational behavior is taking place, though I will say that irrationality seems to be ebbing as valuations have come down. I think that's good for everybody. We've always viewed Massachusetts as an important bootstrapping event for WynnBET, and if you look at some of our competitors and their market share in states where they have a physical presence, it's clear that bricks and mortar is an advantage. With a bill in reconciliation between the House and the Senate in Massachusetts now, we're preparing to be there day one, and that'll be an important event for the business. With Massachusetts looming, it's difficult for me to give you a sense for what the burn rate over the remainder of the year will be, but I would say in the absence of Massachusetts, the burn will be at or below the quarter that we just experienced. Thank you very much. Got it. Next question from David Katz from Jefferies. Go ahead, your line's open. Hi, this is Cassandra. I'm asking on behalf of David Katz. Thank you for taking my question. If we could expand on that Wynn Interactive question a little bit more. With irrationality ebbing as you describe, where do you think this business could ultimately be? Is there any long-term kind of market share target or EBITDA target? Yeah, thank you for the question. This is really a business of building player cohorts, right? Every day you're out acquiring customers, and you build those player cohorts. Those player cohorts age out over time, and they deliver EBITDA to you. What we're focused on is continuing to build our player base and age that player base out and ultimately drive operating leverage out of the business and build the business. The next step for us in light of real uncertainty in the market with respect to user acquisition behavior is to get to the EBITDA breakeven point. Then longer term, there's really two primary catalysts for us. The first is Massachusetts, which I mentioned, is hopefully pending with a bill that we anticipate will be signed by the governor if it emerges from the reconciliation process. Then, of course, any additional online gaming states where we feel like we have a distinct advantage based on brand. It's really too early to talk about market share targets or EBITDA targets. I think the focus for us is recognizing the ultimate potential total addressable market, our position in that market, and reaching that total addressable market in a prudent way that is ultimately shareholder-friendly. Stay tuned. Got it. Thank you. If I may have a quick follow-up. Encore Boston Harbor, I know you've laid out a roadmap three years ago, and it's probably outdated, but how is that property trending now versus kind of your expectations, and how should we think about return to the additional CapEx spent there? Well, look we opened that property, and it opened initially very soft. We went to work very, very quickly, as we generally do, to turn that property around. With both Brian and Jenny's extremely good work, we've been very successful. W e're run-rating in the mid-200s at this point, and we feel like that's quite an accomplishment in light of the environment certainly that we went through during COVID. The next stage for growth in that business is really two things, database growth, which we have a lot of opportunity to do, and then the development that we'll do across the street, which will add a whole bunch of additional parking where we are parking constrained on weekends. We would look at something like a 15%-20% return on that CapEx. Got it. Thank you very much. Our next question is from Thomas Allen. Go ahead, your line's open. Thank you. On the UAE development, there have been a bunch of articles over the past few weeks kind of asking if maybe there'll be more competition around the market. What are you hearing on the ground there? Yeah, Thomas, it's a great question. I can't really opine on what the other Emirates may do with regard to legalization. That's really in their hands. I would point out that we not only compete, but actually punch well above our weight in the most competitive market in the world, Las Vegas. We don't really our underwrite of that opportunity presumed that there would be competition, but I can't tell you that we know of any now. It's not within my purview to forecast what the Emirates may do, what the other Emirates may do. Okay. Helpful. Thanks. Then just as we think out through the rest of the year, can you just help us think about any, like, calendar shifts or seasonality we should be thinking about, especially around Boston, right? Because we never really had a full year pre-COVID of what Boston would look like. I think we all presumed that summer should be the busiest period. Just anything around seasonality and kind of timing shifts we should think about as we think through the rest of the year. Thanks. Yeah, sure. Actually, winter, if you look particularly at Q4, winter in Boston proved to be pretty substantial for us, right? Because everyone is inside as opposed to out, given the environment in winter in Boston. We're still feeling out seasonality, to be honest. Even in the midst of of 2021, we were still a little bit touch and go with COVID. Certainly, we had a very, very strong winter there. Seasonality in Vegas is as you would expect. this market extremely well. All right. Thank you. Next question from Robin Farley from UBS. Go ahead, your line's open. Great. Thanks. I don't know if you have said officially whether you would be interested in a New York property, in a New York casino license? Thanks, Robin. Yeah, we are interested in any gateway city that is conducive to the scale and quality of development that Wynn Resorts does. We are interested in New York, and we are active there, but not in a position yet to talk about anything in particular. Okay. If I could ask a follow-up on your comments on Vegas and how should we think about kind of steady state margin in Vegas? I guess you opened a conference center, a convention center there during the pandemic. When we think about margin relative to pre-COVID, I guess what would you suggest for kind of steady state, including that conference center now? Well, Julie touched on this earlier in a very quantitative fashion. What I would say qualitatively is we're constantly balancing our FTE, our full-time employee count against our own standards and our customers' standards for quality. Thus far, we've been very successful at doing that. We announced, I think it was this time last year, some permanent cost saves, and we're adhering to those. At the same time, with the business really coming back, we're driving a tremendous amount of operating leverage, but with that comes some incremental variable costs. we don't really guide. us well, Robyn. We don't really guide to margins or forward-looking numbers. What I would say is that there is a chunk of cost savings that have occurred over the course of the past several years that are absolutely permanent. Beyond that, you'll see fluctuations based on variable costs, which means it's heavily tied to whatever revenue level we're doing. Okay. If I could ask one last clarification on the group you said is pacing ahead of 2019 levels. When you look at what you have in 2023, I don't know if there was kind of some lost ground during Omicron is what we've heard from others. Do you have more group kind of cumulatively on the books for 2023 than you did versus 2019? Or is there still some kind of ground to be caught up? We're actually, thank you. We're actually pacing ahead right now for 2023 as well. We feel very confident in where we are, pending all that's going on in the world. Right now, everything's looking pretty good. Okay, great. Thank you. Sure. Operator, we'll take one last question. Thanks. Our next question is from Stephen Grambling. Go ahead, your line's open. Hey, thanks for taking the question. Maybe turning to Macau, I guess I'm curious, as you look at that market, what are some of the growth opportunities to consider there from an investment standpoint if the concession process goes through smoothly? What are you thinking about for the VIP rooms in particular? Thanks. Thanks, Stephen. I'll start, and then I'll ask Ian to comment as well. I said this on the last call. Macau is really the most fascinating aspect of our portfolio right now. The market, the equity markets obviously aren't appreciating that, but that's fine. That happens from time to time. W e started a journey towards being a very good, very aggressive mass marketer with the opening of Palace. We're pretty good at it. If you look back at 2019, some 80+% of our EBITDA in Macau came from sources other than VIP. We're really proud of that. We feel very well equipped to compete just in general with the reopening of the market. The market obviously is going to reopen as a more mass-centric market and with the best product and the best service in the market. We feel good about our ability to compete. What I find fascinating is we've seen throughout the course of COVID new customers come to Macau, different customer motivations than perhaps historically we've seen, shopping motivation, leisure motivation, things like that. P art of the reason that that's the case is because Hong Kong hasn't been accessible. That really piques our interest when we think about what the future development of Macau might be from a non-gaming perspective. We're under no illusion that we're talking about a Las Vegas style non-gaming market. It's just a very, very different dynamic there. The ability to adapt and change our business as the market changes and adapts or even lead that, which we've historically done here in Las Vegas, is something that I personally find both fascinating and a very, very interesting investment, incremental investment opportunity. Ian, would you add anything? Hi. Thanks, Craig. Hi, Steven. We have two undeveloped land parcels at Wynn Palace totaling 11 acres. We also have another acre and a half in the existing property. We have three opportunities to build very meaningful product offers for the future. We're in the process right now of determining what exactly will benefit Macau for the long term. We're awaiting the tender documentation to see what government feels about what's required for the future, and we will blend our own needs with that. There's great opportunity for us to expand our business considerably in Macau. We also, with our two existing properties being 15 years old and five years old, they're impeccably maintained. We've constantly reinvested in them. We're ready when Macau bounces back, and it will bounce back. It's just a matter of when. We will be ready for that, and the long-term future in Macau, as Craig has pointed out, is exceptional. Sorry, Stephen, you also asked about junket space. W e think about it differently at each of the two properties. At the downtown property, where we anticipate that the core customer motivation will be gaming over the longer term, we have some prime real estate in the form of former junket space that we think will be incredibly competitive in mass. Palace is a little bit of a different story because we may have the opportunity to do some more unique things there, some longer term, more blue sky thinking. we're obviously not making that investment now, but we certainly have the real estate to do it, and we'll take advantage of that when the time comes. As one quick follow-up, if I may. Just, there's been a lot of back and forth in the press about the lawsuits associated with VIP and who's responsible for what in the event of certain customer losses. I'm wondering if you could just shed some light on that and any risk that we should be thinking through that may be outstanding or not. Thank you. Yeah, sure. This is one of those topics, we have them every couple calls, where the sell side tends to really underappreciate nuance and instead paints with a very, very broad brush. The reality is that we haven't accrued for any material exposure, and each individual claim comes down to a really detailed analysis around clear proof of a deposit in your particular property, the statute of limitations on a claim, and a number of other very, very nuanced legal points. We don't expect material exposure at this time. Perfect. Thanks so much. You got it. Okay. Well, with that, we'll now close the call. Thank you, everyone, and we look forward to talking to you again next quarter. Thanks, everybody. That concludes today's conference. Thank you for participating. You may disconnect at this time.