• It's Here!

    Etf Pro

    Get the big financial market moves right, bullish or bearish with Hedgeye’s ETF Pro.

  • It's Here

    MARKET EDGES

    Identify global risks and opportunities with essential macro intel using Hedgeye’s Market Edges.

Regional markets not a great place to be.


"Even in this uncertain economic environment, I am confident that we are doing the right things and continuing to refine the type of customer experience that will benefit our business and drive profitability moving forward...We are facing the challenges of increased competition in some of our key markets, the possibility of still prolonged economic hardship, and our need to continue to raise the bar on the customer experience while maintaining fiscal responsibility during a period of uncertainty.  In spite of these challenges, I believe we are moving in the right direction for a future of increased profitability." 

- President and Chief Executive Officer Virginia McDowell 

CONF CALL NOTES

  • 3 cent a share impact in the Q from flooding. 
  • Capex was $200k for the quarter
  • $28MM was outstanding on the R/C. Leverage was 6.4x for covenant purposes

Q&A

  • Believe anything that changes the center of gravity in Blackhawk will help them
  • Florida - feel like the existing proposed legislation has put the existing facilities at a big disadvantage.  Want full parity if the bill passes.  Hope to participate should table games and a lower tax rate come to FL. 
  • MA/NH: Always looking at opportunities but there is nothing to comment on.  Most of the MA candidates are well publicized - i.e. they will not be participating
  • Sale in Iowa- still having conversations with the cities' preferred developers but have opened it up to other players recently 
  • They are fully back to capacity post flooding and road re-opening in the Quad Cities
  • Lake Charles - they do get a modest amount of money if the deal doesn't go through.  

HIGHLIGHTS FROM THE RELEASE

  • "Properties in Lula, Natchez and Vicksburg, Mississippi continued to be affected by the impact of Mississippi River flooding earlier in the year as business was slow to return to pre-flood levels.  In Lula, the Company operated with only one of the two casinos until September 2, 2011.  These factors led to both decreased net revenues and increased marketing expenses associated with the effort to return business to normal levels. The Company estimates that the impact on second quarter EBITDA was approximately $2.0 million."
  • "In Black Hawk...Recent renovations to the casino floor, a new Asian-themed restaurant and expanded poker facilities, along with improved marketing efforts led to increased market share and ...increase in EBITDA."  
  • "In Boonville and Waterloo, cost containment efforts led to increased EBITDA"
  • "In the Quad Cities, increased competition caused by the opening of the Des Plaines, Illinois casino, as well as road construction at the entrance of the Davenport casino, led to decreased EBITDA" 
  • "Costs increased in Lake Charles during the quarter due to expenses associated with realigning the casino floor, as well as refurbishments including new carpet and paint throughout the entire facility, which are expected to be substantially complete by the end of the calendar year."
  • "Our spend per customer grew by about 7% during the quarter, as we focused on marketing to our best customers and controlling the things we can control in a tough economy.  While our volumes were down slightly, due in part to conditions in Mississippi, this strategy still had a net positive impact on our revenues, largely driven by more business from our upper segment database customers, partially offset by decreased visitation by customers in our lower segments."
  • "We recently implemented the initial trial of our enhanced customer loyalty program at our property in Pompano.  This new program, which we expect to roll out across the portfolio and have fully implemented by early 2013, will give our customers more control over their rewards, more options for ways to use their points and more incentive for repeat visitation to our properties."  
  • "We will also be introducing a new buffet concept in Boonville that we plan to extend across the portfolio.  We are also currently completing the design for the refurbishment of our Lake Charles hotel.  Lastly, we are beginning the conversion and rebrand our Vicksburg property as a Lady Luck Casino.  The $4.5 million project will be completed in several phases, which we expect to be substantially complete by late spring 2012."
  • Cape Girardeau, Missouri:  "made substantial progress including completion of the primary feeder road to the property, basin and floating floor construction and is currently erecting structural steel at the site. We still expect to open the facility in December 2012."
  • Nemacolin Woodlands Resort, Pennsylvania: "Appeal of the award has been filed by a competing party. The plaintiff's briefs have been filed.  The timeline for ultimate resolution of the matter is not known at this time."
  • Lake Charles, Louisiana:  "Relating to the potential sale of the smaller of the Company's two riverboats in Lake Charles, on November 19, 2011 voters in Bossier Parish, Louisiana approved the ballot referendum, which would allow for the construction of a new casino to be built by the potential buyer. Additionally, the Company recently reached an agreement with the buyer to extend the option period to December 30, 2011 from November 30, 2011. If the option is exercised, terms call for the transaction to be finalized within 30 days after exercise."