One of the best commentators on conference calls is Steve Wynn (Nasdaq: WYNN) and suffice to say, he has a few zingers in his last conference call. His company’s stock has gotten hammered some 16% today and over half since early 2014.
Some notable quotes from his conference call:
It is impossible for us to predict how long [the downtrend in business conditions] that will last. We’re not in a position to answer those kinds of questions intelligently. We’re only in a position to react intelligently to what we see.
He goes on a speech about how the company will always be able to manage its debts and affairs, and also about how dividends will only be given from cash that has historically been earned:
So as we look backwards for the fourth quarter and especially during the last four months, and understand what’s happening, both in Las Vegas because of the Asian impact on Baccarat, and we look back and then we extrapolate and try predict the future, or at least understand what most likely will be the future, it is foolhardily and immature and unsophisticated to issue dividends on borrowed money. We only distribute money that’s free cash flow based upon our earnings that trail.
…
Dividends are nothing and – we don’t say that because we have a business, that we now have a $0.50 dividends forever. That’s baloney and any company that does that is irresponsible. We distribute the money that we make after we make provisions for capital expenditures and all of our other obligations, to creditors and to our employees. And then we distribute aggressively whatever is free and easy to distribute after that.
The note about issuing dividends from borrowed money should resonate with most oil and gas producers in Canada these days – the only reason why most of them are issuing dividends is simply because they’d get their shares jettisoned from the huge pool of income funds. It would also be an admission of defeat and a negative signal to the market.
On a dialog on the conference call with his own president of the Las Vegas casino (which in my humblest opinion had a dinner buffet that was remarkably worth the US$45-ish that I paid for it):
If you were to ask me, since we’re making forward-looking statements, what will the second quarter look like in Las Vegas? Weak. Do you hear me? Weak. So I’m trying to lower expectations here. This notion of a big recovery is a complete dream. I don’t think Las Vegas is experiencing a great recovery. I think it’s still very patchy and I think that that’s probably our non-casino revenue in the first quarter was flat. I’d be thrilled if it was flat in the second quarter.
It is very rare when you get a CEO making such refreshingly honest statements. There’s a bunch of other commentary here, but I will leave that as an exercise to the reader.
Business notwithstanding, there is a whole bunch of drama going on over at WYNN at the present time, including the divorce of the CEO spilling over onto the business side of things.