BYD YOUTUBE

In preparation for the BYD Q2 earnings release tomorrow, we’ve put together the pertinent forward looking commentary from BYD’s Q1 earnings call and subsequent conferences/releases.

 

 

Acquisition of Imperial Palace Casino Resort Spa

  • “We plan to invest approximately $44 million in certain capital improvement projects over the next year.”
  • “The IP did produce approximately $41 million in EBITDA on an LTM basis through May of 2011. This is on par with our Delta Downs operation. However, we believe that the EBITDA potential of this property is even higher. Based on our preliminary diligence, we believe that there is a minimum of $5 million in synergies achievable in the first year.”
  • “We will initially be funding the transaction using a portion of the $560 million of availability we have under our credit facility. The non-extended portion of our credit facility matures in May of next year. To address that maturity and create the company’s desired liquidity, we will utilize availability under the extended portion of our credit facility, as well as execute approximately $300 million in capital market transactions.”
  • “I think the market in first quarter grew in the 2% range and we see it continuing...to grow slowly as the economy continues to grow.”
  • “These $5 million worth of synergies are ones that we can get early in the process and we are comfortable that we can achieve... I think we view this as kind of the minimum level of synergies because there are the opportunities... in terms of cross marketing, getting the benefit from being part of a larger company in terms of centralized services and things of that nature.”
  • “This property actually has grown EBITDA I think over the last 12 months quite dramatically, and they’ve seen some pretty good improvement in the EBITDA. Once again, some of that has been revenue growth, some of that has been efficiencies I think they’ve worked out of the property.”
  • “And I really think that, and part of the strategy behind this acquisition is, we can meaningfully grow IP’s market share by tapping it into the B Connected program because obviously our customers are visiting the Gulf Coast or spending time there or spending dollars and we just don’t have anything to provide them in that region.”
  • “Relative to our other properties in the region...we believe benefit the most is Treasure Chest. Folks that live in the New Orleans area frequent on a very regular basis, as a getaway, the Biloxi market, it’s only about 90 minutes away. And so it really gives us a really neat marketing opportunity between a very strong local property and kind of that regional destination.”
  • “The Shreveport market has been under significant pressure relative to market growth as a result of the continued expansion of Native American gaming in the state of Oklahoma. Oklahoma is clearly closer, and the tribes have built very substantial facilities to compete for that Dallas/Fort Worth metroplex customer. So, it is interesting to think that another license could be really successful in that market.”
  • “I think insurance will be one of the opportunities we have and that we’ve identified potentially once we get in and look at... to save money. So, I think relative to where they are today, there is probably a stepdown, and then ...insurance markets are kind of stable at this point, to slightly increasing. But there will be benefits, we believe, from them benefiting from a corporate-wide insurance program.”
  • [IP depreciation run-rate estimate] “We’re using $20 million.”
  • “In terms of the timing of the $44 million, it will be ...probably 10 or 12 months. In terms of the room product, the property has been going through an ongoing room renovation product, and so the rooms are in various stages of kind of renovation there. And the slot product, our preliminary review of the slot product is it’s current and we think it’s competitive for what’s in the marketplace, and don’t see the need for any significant capital dollars in the slot product.”
  • “This property is a clear number two in the market. And once again its physical plant is a clear number two, it’s very competitive with the Beau Rivage, and gets a similar customer type to the Beau Rivage. So, I think you could at look at the market and put these – the Beau Rivage, and the IP property – at the top of the market, and then tier down from there.”
  • “I think the ongoing maintenance requirements are probably $5 million to $8 million.”
  • “The extended credit facility is at LIBOR plus 350. The non-extended portion is LIBOR plus 1.625%. Our current blending rate at the company overall is right around 5%.”
  • “In terms of secured capacity, you have to remember, we get the benefit of the gain from Dania to count as EBITDA. So, covenants are not an issue at all with respect to this transaction and even absent, if you look at it without the Dania transaction, it’s still deleveraging from the perspective of secured covenants, so covenants are not an issue for us at this point."

 

Youtube from Q1 Conference Call

  • “The second quarter is off to a good start as well as our properties reported solid results in April. Our results for the first 4 months of this year give us confidence that we have reached a turning point. Based on these results, we expect to continue seeing year-over-year growth in our wholly-owned business through the remainder of the year….Most major shows in 2011 have reported solid growth from last year, and based on current bookings, we expect that trend to continue through the second quarter.”
  • “We took an important first step in this direction when we reached an agreement to sell Dania Jai-Alai for $80 million. This asset was no longer consistent with our current growth strategy, and by selling it, we raised a significant amount of capital that can be used to pay down debt and reduce our leverage. I’d also note that Dania represented a $4 million drag on our annual earnings. Between the elimination of this operating loss and reduced interest expense from the reduction of debt, we expect this transaction to be immediately accretive to earnings, adding about $0.06 annually to our earnings per share.”
    • “We have already received $5 million of the sales proceeds in the form of a non-refundable deposit. We expect to receive the remaining $75 million towards the end of September when the transaction is expected to close.”
  • “Though the promotional environment remains elevated, it is clear that the aggressive advertising and promotional campaign launched by our largest local’s competitor has not shifted guests away from our properties. Our customers continue to enjoy the exceptional customer service and compelling value offered by our brand.  So there will be enhanced marketing I think. As you enter the summer, it’s natural. I don’t think you’re going to see us react to that. We’re going to remain fairly disciplined on that front. If the current trends hold, we expect to show year-over-year growth in the Las Vegas Locals region in each of the remaining quarters in 2011.”
  • “Jet fuel prices are up sharply and fierce competition on Hawaiian air routes limits our ability to pass along these increases in the form of higher ticket prices. While increased costs will remain a factor, we are optimistic that positive trends will continue in the Downtown business in the second quarter.”
  • “Economic conditions in the Midwest are improving, and we expect Blue Chip and Paradise to post year-over-year growth in the quarters ahead.”
  • "We have started to see frequency improve at the high end of the database. I would say to you that spend per visit, is no worse than flat, and in some of our markets, including some of our properties in Las Vegas, spend per visit is starting to grow.”
  • “Borgata’s CapEx for the year would be about $40 million And then at Boyd, we indicated we expected our capital expenditure program for the year to be about $50 million.”
  • [Borgata table hold] “We think the 13% level is probably the right level for the next year or two, and it’ll eventually, I think, trend back up a little bit.”
  • [Leverage ratio after Dania] Secured leverage ratio will probably improve by about 60 basis points, and the total leverage ratio will probably by almost a full turn, 90 basis points.”