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Takeaway: Despite still difficult market conditions, ASCA met our and consensus expectations. Management continues to deliver strong margins.

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

  • IN-LINE:  Despite still difficult market conditions, ASCA met our and consensus expectations.  Management continues to deliver strong margins.

ST. CHARLES ROAD DISRUPTION

  • SAME:  Road disruption on main street affected the property for most of the quarter and there is now preparatory work for the Interstate 70 bridge project.
  • PREVIOUSLY:  "We also have had some road disruption in the St. Charles area. They have been repaving project on Main Street, which is one of the main roads running right in front of our property, and that will be finished in mid-September and also the state is doing some preparatory work for the Interstate 70 bridge project that will begin later this year in earnest."

EAST CHICAGO

  • WORSE:  Low table hold and increased promotional spending (+600k YoY) due to a highly competitive market drove down results.  But ASCA said that promotional campaign has since been dialed back. 
  • PREVIOUSLY:  "We have found ways to profitably grab market share in the Northwest Indiana market and are exhibiting tight cost controls not only at that property but company wide."

AMERISTAR LAKE CHARLES  

  • SAME:  Construction began on July 20.  Target spend of $560-580 million remains unchanged.  ASCA has the flexibility to add a 2nd hotel if market conditions warrant it.  Following an initial ramp-up period, the project is expected to generate a 15% ROI.  ASCA will fund the project through a combination of cash from operations and borrowings under our revolving credit facility.  The resort is expected to open 3Q 2014. 
  • PREVIOUSLY: 
    • We now having to include the purchase price of Creative, we expect to spend about $560 million to $580 million excluding capitalized interest and pre-opening expenses."
      • "The budget factors that have gone into this decision include rightsizing some of the food and beverage outlets with the expectation that at some point, a second hotel tower will be warranted and developed at the property."
      • "We don't expect much borrowing under the revolver in 2012, as we believe we can fund much of the CapEx for Lake Charles out of free cash flow. We anticipate the full project funding will be split about 50/50 between free cash flow and revolver borrowing."

MASSACHUSETTS CASINO

  • SAME:  ASCA does not expect the final decision on Massachusetts to be made until early 2014.
  • PREVIOUSLY:  "So my expectation is it'll probably still be late 2013 at the earliest – probably, the time that they would make license selections. It could stretch into the first half of 2014."

ASCA 3Q REPORT CARD - ASCA2