In an effort to evaluate performance and as a follow up to our YouTube, we compare how the quarter measured up to previous management commentary and guidance.

OVERALL:  BETTER - ASCA delivered another beat bolstered by the perfect storm of mild weather, an extra leap year day, a favorable calendar, and great margins


Here is the report card evaluating actual results against management's previous assertions.  



    • SAME:  Customer confidence hasn't changed much. People are still cautious in their spending habits.
    • BETTER:  Adjusted EBITDA set an all-time company record at 32.7%. 
    • SAME:  After 3 years of the bridge being closed, ASCA's customers have adapted to the closures and have found different routes to access the property.  While net revenues saw a small decline, EBITDA improved by $1MM YoY and margins were 240bps higher YoY
    • WORSE:  Stock comp was $5.4MM, above company guidance of $4.5MM-5MM
    • SAME:  Capital spend came in at the lower end of its guidance ($31-36MM).  ASCA spent $16.9MM for its Springfield site, in-line with its $16MM guidance.  Total 2012 capex (excluding Lake Charles project) remains unchanged at $85-90MM.
    • SAME:  Interest expense was in-line but as a result of the planned construction of Ameristar Lake Charles and the recent debt offering, and based on current interest rates, ASCA raised FY 2012 net interest expense guidance to $109-114MM from $103.5-$108.5MM previously.  
    • BETTER:  Corporate expense was $12.1, lower than ASCA's guidance of $12.5-13MM.
    • BETTER:  Reduced debt by $29.8MM in Q1, higher than the $20-25MM guidance 
    • BETTER:  Took tax elections that will lower quarterly blended tax rate 3-4% points for future quarters


Weather and calendar proved helpful, but ASCA shows the days of margin improvement are not quite over



"Mild winter weather, highly efficient operations and leap year contributed to a quarter where we eclipsed $100 million in Adjusted EBITDA for the first time, as well as established all-time records for Adjusted EBITDA margin and Adjusted EPS."

- Gordon Kanofsky, Ameristar's Chief Executive Officer 




  • Everything that could have gone right this quarter did go right for them
  • 1Q is usually their strongest quarter, so that's something that investors need to take into account
  • A good chunk of Council Bluff's growth came from taking more marketing share in a growing market
  • Low tax rate was due to some tax elections they took 
  • Reduced the add-on rate on their R/C given their lower leverage rate in the Q
  • 3.33x interest coverage vs. 2.0 covenant
  • Sr Leverage 2.72x vs. max of 4.0x
  • Pro-forma for notes issuance:
    • 4.94x Leverage
    • 2.13x Sr Leverage 
    • 3.15x Interest coverage
  • Don't expect to borrow much under the R/C in 2012 to fund the Lake Charles project.  Houston is 142 miles away from their property.  Hope to get regulatory approval to commence construction in July. 
    • Demographics similar to St. Louis market
    • 1.5MM more adults in Lake Charles than St Louis (including Houston) and income is 40% higher
    • Total # of competitors are the same
    • Think that any Texas gaming legalization is low probability and far away.  Ballot initiative would be needed to legalize gaming and they believe that would occur during a Presidential election which is 4 years away
  • Springfield MA office will be staffed by a government relations employee.  They are very excited about their location and have broad support from the city of Springfield.


  • Kansas City:  they were very well-prepared for the new competition.  They benefited from weather and leap year- so it's a bit too short of a time line to draw a conclusion of the competitive impact.  They are the farthest away from Kansas Speedway.
  • They stretched their max leverage when they did the stock buyback.  They are generating a lot of cash over the next 24 months.  Therefore, their leverage should max out at around 5x, right before opening Lake Charles.  They can also do a pro-forma of their first quarter performance of the property - which would bring leverage down to where they are today.
  • $80-85MM of normal maintenance capex for the year
  • Think that there is tremendous opportunity to grow the market in Lake Charles.  Thinks that L'Auberge is also going to be ok and that they will create a resort cluster.  There will likely be some cannabalization but it's more likely to hit other properties in that market.
  • Customer sentiment now:  Consumers have had lower utility bills offset by higher gas bills.  People are still being guarded by what they are spending. Hard to say that there is an economic boom going on. 
  • April's calendar isn't as good as last year.  So don't get too excited about the regional #s when they come out.
  • Any impact from the shut down of Grand Vicksburg?
    • No - it was too small to matter
  • East Chicago bridge situation is moving very slowly. Their customers in that market have learned how to adjust since the closure 3 years ago. They just completed a major room renovation in the property. Their main competitor in that market doesn't have a hotel. If the bridge gets rebuilt that will help them but they are not relying on that happening.



  • 2Q12 Outlook: 
    • D&A: $26.5-27.5MM
    • Interest expense: $28-29MM (including non-cash interest of $1.3MM)
    • Tax rate: 39-41%
    • Non-cash stock comp: $3.5-4MM
    • Corporate expense: $12-13MM
    • Share count: 34.3
    • Capex: $20-25MM
  • 2012 Outlook:
    • D&A: $105-110MM
    • Stock Comp: $14.8-15.8MM
    • Interest expense: $109-114MM (non-cash interest expense: $5.3-5.8MM)
    • Capex: $160-165MM (including $75MM related to Lake Charles)
    • Corporate expense: $52-53MM
    • Share count: 34.5
  • "We are excited about our recently announced plans to develop our ninth property -- a $500 million casino hotel spa project in Lake Charles, La. We intend to construct a high-quality property that will cater to patrons from southwest Louisiana and east Texas, including the Houston metropolitan area, which is one of the country's largest and most underserved gaming markets."
    • ASCA plans to develop a "casino with approximately 1,600 slot machines and 60 table games, a hotel with approximately 700 guest rooms (including 70 suites), a variety of food and beverage outlets, an 18-hole golf course, a tennis club, swimming pools, a spa and other resort amenities, and approximately 3,000 parking spaces, 1,000 of which will be in a garage"
    • Mid-2014 opening
  • "Council Bluffs...continued to benefit from market share growth in a strong market."
  • "The year-over-year improvement in net income was mostly attributable to efficient revenue flow-through, a $15.7 million reduction in the income tax provision due to certain income tax elections and the absence of non-operational professional fees in the current period. We anticipate the tax elections will lower our quarterly blended tax rate by three to four percentage points for future quarters." 
  • Debt: $1.9BN with $285MM available on their R/C
  • Net Leverage Ratio: 4.88x vs. 6.5x
  • "On April 26, 2012, we issued $240.0 million principal amount of 7.50% Senior Notes due 2021. These notes were issued under the same indenture as the $800.0 million principal amount of 7.50% Senior Notes due 2021 that we issued in April 2011. The new notes were sold at a premium to the principal amount, resulting in a yield to maturity of 6.88%. The net proceeds from this offering were $244.0 million, of which $236.0 million was used to repay all the outstanding indebtedness under our revolving credit facility.... After applying the proceeds to the outstanding revolving credit facility, we had $496.0 million available for borrowing under the revolving credit facility."
  • Capex: $31MM 
    • "In January 2012, we spent $16.9 million (including fees and commissions) to purchase approximately 40 acres of land in Springfield, Massachusetts as the site for a possible future casino resort"

DECK: Legal Victory Not What it Seems

DECK awarded a huge legal victory for which it will probably never see a penny. But the implications for the brand are positive given current sentiment. 


The good news is that Deckers won two lawsuits in the Northern District of Illinois totaling $686 million to the company. The bad news is that it is against 3,007 China-based web sites selling fake Uggs. Even if the defendants were US companies, this would be held up in appeals for years. But the fact that they are Chinese? Let's not hold our breath. 


But on the plus side, DECK was granted a permanent injunction, which will help its counterfeit policing activities, and will also be given any cash that has been seized from 'hundreds of financial accounts' linked to the counterfeiting, including funds held by PayPal. 


Perhaps most important is that this hardly helps the short case about the brand losing relevance. We've yet to see such severe penalties surrounding brands that no longer matter. DECK Is one of our favorites post the 1Q sell-off. 

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Total GGR grew 22% to HK$24.3 billion, toward the high end of our HK$23.5-24.5 billion estimate.  Market shares are below.  Galaxy was the clear winner this month, despite the opening of Sands Cotai Central (SCC) on April 11th.  LVS had a better finish to the month but April market share still came in below recent trend despite the opening of SCC.  We do believe that LVS held low in the month but also that the VIP volumes were probably disappointing.  






In preparation for MGM's FQ1 2012 earnings release Thursday morning, we’ve put together the recent pertinent forward looking company commentary.



MGM abandons plans for casino in Mass. town (March 27)

  • "The unique nature of MGM's plans for an all-inclusive world-class resort of the Brimfield site, and our growing understanding of the needed scope for its infrastructure, simply do not allow us to pursue the comprehensive MGM resort originally envisioned here."
  • MGM would pursue "other potential development sites" in the western part of the state

MGM Q4 Conference Call (February 22)

  • "In 2012, we expect to spend approximately $350 million in capital excluding MGM China: included in those capital plans for this year is the continuation of the room remodel project at MGM Grand; the room remodel of the Spa Tower later on this year here at Bellagio; the conversion and investment in the Michael Jackson show with Cirque du Soleil at Mandalay coming online late 2012, early 2013; and the Blue Man Group show at Monte Carlo coming on this year."
  • "We expect our corporate expense to moderate and be in the mid $30 millionish area in 1Q before stock compensation expense. Our stock compensation expense in 1Q is estimated to be approximately $10 million. Our depreciation expense in the quarter, we estimate to be approximately $235 million to $240 million, and our interest expense in the fourth quarter was $274 million, including approximately $6 million from MGM China and about $24 million in amortization expense."
  • "We estimate that our interest expense in the first quarter will be approximately $285 million, including roughly about the same amount, $6 million, for MGM China, and about the same amount of $24 million in amortization expense."
  • "And as we pointed out in the release, we've received preliminary approval from roughly 62% of the lenders on our Amend and Extend transaction of our credit facility, we expect to initially achieve roughly about 150 basis points in rate improvement on the extending portion of that facility."
  • "As a reminder, our average borrowing cost is – on our outstanding debt – approximately 8%, so for every 1% improvement in rate that we can achieve, that's an incremental $125 million in interest rate and incremental free cash flow to our company."
  • "For 2012 we have over 100% of our planned convention room nights already booked [at Aria]. Aria's leisure segment business is also improving; our production numbers in domestic leisure are on par with Bellagio's as awareness in United States continues to build. We are making progress in the international leisure market as well and see an opportunity for further improvements in that market."
  • [MGM Macau] "We opened our new MGM VIP in-house area in mid-December and while it's still very early, we have seen initially strong increases in volume. CapEx was $45 million in 2011 and will be approximately $80 million in 2012. Of this, $45 million is allocated to build out the undeveloped space on our second floor with the balance being applied to rejuvenating capital works."
  • "We have plans to open a Hakkasan. Hakkasan is going to spend a tremendous amount of money at the MGM to replace Studio 54 that's been there for over 10 years."
  • "On the ADR side, we mentioned this a few times last year, we said the first quarter would be the toughest comp, because there was a big, big convention here last year and we have to overcome that, but even still because of recent bookings, we believe our RevPAR will be up in the first quarter, up a couple of percent, 2%, 3%, but growing. In fact the second quarter looks particularly strong and we think our RevPAR is going to grow nicely throughout the year, even on top of the good growth that we had in 2011."
  • "Just to mention a few coming up, we have Floyd Mayweather fighting in May at the MGM and then Manny Pacquiao the next month in June. Madonna is coming back; she's going to be here in October and we have several of these type of events throughout the year, which we know has a material impact on ADR and casino revenue."
  • "We're seeing very strong pace throughout the year, and our convention base is extremely solid and when you combine that to the growing FIT and leisure bookings, we're seeing a broad-based retail improvement in rooms revenue."
  • "Can you achieve mid to high single-digit growth there [FY 2012 REVPAR]? Yes."
  • [Sands Cotai Central impact] "We will be able to sustain and maintain our position as we've continued to do as we just keep on executing on our strategies."
  • "We're up over a 50% for the overall year in 2011 and I think that's a good way to kind of model the incremental flow through going forward."
  • [I-poker] "It's hard to say exactly when or if. I do believe it will be passed at the federal level, and I do believe it will be passed this year."
  • "We still have roughly about $180 million sitting in a trust account in New Jersey and are continuing to work through that process and are working on the sale of our interest in Borgata as well on top of that $180 million. So that's clearly another lever that will go to reduce debt and provide that additional lever."
  • "It's unlikely that we would sell any of our operating assets."
  • "We're projecting for 2012 kind of the same convention room mix as we kind of finished up 2011 with. And I think what it will come down to is the in-the-year for-the-year of bookings which in 2011 were exceptionally strong. And if we can come anywhere close to that, we think we can drive better rates in 2012 than 2011; 2013 and 2014 pace right now looks exceptionally strong both in terms of rate and room nights booked and we still have more work to do there as well, but we're gratified by what we see this early on, and 2013 and 2014 looks very strong....the 2013 rate is strong and 2014 is even stronger."
  • [International hotel mgmt contracts] "Branco which is the company that has, for a fee, lent the name MGM to MGM China goes in cash flow from $15 million last year to $30 million this year."
  • "There's no added first class room inventory on the horizon in Las Vegas for quite some time."


In preparation for HYATT's FQ1 2012 earnings release Thursday morning, we’ve put together the recent pertinent forward looking company commentary.




  • "As we think forward, occupancies are close to peak levels. And with really limited supply especially in the U.S., we think rate could be a higher driver of RevPAR growth over time."
  • "We feel good about select, which was largely only present in the U.S.  We should have a few select hotels open in Latin America and India later this year."
  • "As we think forward, our primary objective is to use the cash to grow the business. We don't have a dividend policy or any program relative to share buybacks at this point because we believe that over the next 12 to 18 months using the cash to grow the businesses is what's going to be the prime driver of capital deployment."
  • "While it's our intended policy at this point where we don't pay dividends or share buybacks, we're going to take a look at that because... we don't necessarily need to run the company with a billion dollars of cash."
  • "Our stated strategy is to recycle a lot of assets we own."
  • "Year-over-year property taxes will be high largely because we got credits in 2011."
  • "Q: If the full service urban Hyatt branded hotel experienced a mid-single digit RevPAR growth rate that was driven two-thirds by price, would you expect the flow through to be 50%, 60%? 
    • A: Yeah, I mean hypothetically speaking, I would say in that range.....the other thing you bear in mind is our food and beverage and other revenue, which tends to be higher outside the U.S. than inside."
  • "New York has got some headwinds in the form of the financial sector, more anecdotically than what we're seeing in the business. But from our perspective, even if there is a bit of a speed bump in terms of the financial sector, the fact that we have an improved product in that market, we believe overtime we can continue to grow market share."
  • "Largely in the sub-urban and secondary cities...  that's where over time recycling out of the capital becomes important. We have been placing a lot of emphasis on the urban centers"
  • [170 hotel pipeline] "It's a 60/40 skew in the full service/select. The full service takes three to five years. Select is two to four years depending on where it is.  I'd say it's skewed towards international relative to North can look at it over five years and this year we said we're going to open a little north of 20 hotels [excluding conversions and acquisitions]"
  • "Our presence in Europe, despite being limited, is really focused around key markets. We are present in France... Germany... We've got some presence in the UK. But there are markets like Spain... where we don't have presence, and over time, our intent is to have hotels in Spain and other markets."


  • "While the outlook for industry prospects seems to be improving over the last couple of months, there are still potential headwinds in the short-term from both Europe and a challenging financial services sector. As a frame of reference, roughly 10% of our overall adjusted EBITDA comes from continental Europe, including owned, leased and managed hotels."
  • "While it's difficult to forecast transient business for 2012, we do know that rate increases on corporate negotiated volume accounts in North America are up as expected in the mid single-digit percentage range for 2012 versus 2011."
  • "RevPAR growth in the quarter was negatively impacted by approximately 150 basis points due to
    bathroom renovations at several Hyatt Place properties. These bathroom renovations will continue through 2012, but are likely to have a lower level of impact to RevPAR from quarter-to-quarter."
  • "For 2012, we expect our effective tax rate to be in the low to mid 30% range before discrete items. Keep in mind that quarterly effective tax rates may be somewhat volatile due to the impact of discrete items. While discrete items by nature are very difficult to predict and can have either a positive or negative overall effect on the effective tax rate, we do not presently anticipate the impact to discrete items in 2012 to be at the same magnitude that we saw in 2011."
  • "Our expectation for this year is approximately $350 million in capital expenditures... includes $65 million which was carried over and... approximately $250 million on maintenance capital expenditures and projects from which we expect to generate a return. This includes conversion or renovation cost for the hotels we've acquired from LodgeWorks, as well as the extended-stay hotels we acquired last May. And approximately $35 million on new investments and properties that will be developed by us or in conjunction with partners over the next few years."
  • [Group bookings] "Our pace for 2012 is in the low-to-mid single-digits. We have 70% of the business we expect already booked at rates higher than where we end the year. Pace for 2013 and 2014 is also positive. We at this point have about 40% of the expected business for 2013 booked and about 25% of the business for 2014 booked at rates higher than what we're booking for 2012."
  • "There's been a proclivity to push decision making closer to the date of the events, which is clearly reflected in the quarter-for-the-quarter production that we've seen over the course of our quarter production that we've seen over the course of our past year and that's kind of what we are taking into this coming year, which is a real focus on continuing to book in the quarter-for-the-quarter business."
  • "The other thing that we're focused on that we've talked about in the past is more urban representation for select service. We have very, very little urban representation for our select-service brands. That's going to change this coming year as we start to open select-service properties that are under construction in some major cities."
  • "On the Rio front, we have been actively engaged in a lot of work around design and securing all the various entitlements that we need to be able to proceed with the project... We're in discussions with a number of potential sources of financing both potential partners but also financial debt financing... Our current plan is to be able to complete that project well ahead of the Olympics, so that we are there and ready to serve those guests coming into the city."
  • "We expect to be active on both the purchase and the sales side... As we look forward over the next couple of years, we do expect transactional activity to grow."
  • "So, my outlook for New York long-term is very bullish. I recognize that there is more supply coming into New York than in most markets around the country."

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