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Going Global

This note was originally published at 8am on February 07, 2013 for Hedgeye subscribers.

“We have to remember we're in a global economy. The purpose of fiscal stimulus is not simply to sustain activity in our national economies, but to help the global economy as well, and that's why it's so critical that measures in those packages avoid anything that smacks of protectionism."

-Prime Minister Stephen Harper 


Next week Keith and I will be taking the show on the road to London.  Our top notch sales team has set up a great schedule and we will be engaging with 20+ of the largest investment firms in London.  Without a doubt, it will be interesting to get a sense for sentiment, outlook and flows from another continent. At the end of the week, we may even peak our heads into a pub.  (If you are a London based fund, we still have a few slots left so email sales@hedgeye.com if you want to set up a meeting.)


Canadian Prime Minister Stephen Harper knows a thing or two about free market capitalism.  In fact, Harper went so far as to export the head of his central bank, Mark Carney, to England.  As the newly anointed Governor of the Bank of England, Carney is already feeling the heat in British Parliament this morning in his first grilling.  On the topic of the Bank of England independence, Carney minutes stated:


“There is no question about my independence as governor of the Bank of England. There is a governance structure that has been put in place, there is an absolutely clear structure.”


So, if the politicians of England were looking for a patsy, it would seem, at least for now, Carney is not their man.


The benefit for Carney is that the U.K. appears to be starting to see stabilizing growth, even as the rest of Europe is still struggling.  The most recent British data point is December industrial trade production that was up 1.1% from November to December.  Certainly that’s not a growth statistic to get overly excited about, but on the back of U.K. home prices that were up 1.3% in January and January services PMI that was reported at 51.5.  Meanwhile, the Eurozone in total reported a PMI of 48.6, which signifies contraction.


Not surprisingly, the New York Times has been critical of Prime Minister David Cameron’s decision to get the fiscal house in order as a path to long term sustainable growth.  In fact, in a recent article titled, “God Save The British Economy”, Adam Davidson argues that Cameron’s decision to cut government spending to eliminate crowding out of the private sector has hurt the British economy vis-à-vis the American economy.


The funny thing is that in the fourth quarter of 2012 while the British economy shrank -0.3% sequentially, the U.S. economy didn’t fare much better at a -0.1% sequential decline.  Meanwhile, the U.K. has been steadily improving its fiscal situation with a debt-to-GDP of 88% versus the U.S. at 107%.  Whether you are a Keynesian or not, in the long run we all likely agree that the less government money that is used to service government debt, the better an economy will fare.


While I am on the topic, today is set to be an interesting day in Europe with the beginning of the two day EU summit kicking off in Brussels. Undoubtedly, a key topic will be the recent strength of the Euro, especially versus the Japanese Yen.  Perversely as both the Europeans and Japanese actively try to devalue, with both rhetoric and policy, it should be increasingly positive for the U.S. dollar and consumption in the U.S.  Consumption, of course, is 70% of the U.S. economy. 


In the short run, though, U.S. equities are starting to price in stabilization of economic growth.  To us, this looks like a spot to reduce some equity exposure and cover bonds and gold, especially with the SP500 up a quick 5%+ on the year and the VIX at 13.4.  Meanwhile, insiders, based on a report out yesterday, are selling at a level of 9.2:1, the highest level since the equity sell off in 2011.


On a company level, I wanted to highlight our short call yesterday on Gulf Port Energy, with the ticker GPOR.  Energy is followed by Senior Analyst Kevin Kaiser and put together a very thoughtful presentation of some 60 pages that walks through the history of the company and a sum-of-the-parts valuation.  The nut of it all is that we think GPOR is one of the better shorts in energy for the following reasons:


-          Sentiment is extremely positive with 15 buys and 1 hold, and the stock is trading at literally a 52-week high;

-          Former majority shareholder Wexford Capital has exited their entire position in GPOR;

-          Consensus numbers appear too high for this year and next (as evidenced by yesterday’s pre-release);

-          GPOR is expensive trading at $94 EV / proven reserves ($/boe) versus the peer group at $16; and

-          Our NAV valuation gets us to ~$22 per share versus the current stock price of ~$40.


Obviously, when you make a short call on a stock it raises the ire of some and interest of others. The beautiful thing about being Hedgeye is that we have no banking, trading, or asset management.  We get paid to simply generate compelling investment ideas and do great research.  A simple enough concept, though a concept not always embodied in the hallowed halls of Wall Street 1.0.


As Sigmund Freud once said:


"Flowers are restful to look at. They have neither emotions nor conflicts."

The Hedgeye research team is many things, but wall flowers they are not. Thankfully, we are also not conflicted.


Our immediate-term Risk Ranges for Gold, Oil (Brent), US Dollar, EUR/USD, USD/YEN, UST 10yr Yield, and the SP500 are now $1651-1686, $115.14-117.86, $79.41-79.99, $1.34-1.36, 91.93-94.31, 1.96-2.05%, and 1492-1517, respectively.


Keep your head up and stick on the ice,


Daryl G. Jones

Director of Research


Going Global - Chart of the Day


Going Global - Virtual Portfolio


VIP volume growth was huge as we expected and outlook positive, but luck was just average.    



"With RWS fully opened, Genting Singapore continued to look for opportunities to grow the Company.  As we gradually build up capacity in the Marine Life Park, our EBITDA margins will continue to be constrained for the first half of 2013. As major capital expenditure for Singapore IR tails off in the second half of 2013 and the attractions business more settled, RWS will achieve a more steady-state profit margin. The global economic outlook appears more positive this year and we are cautiously optimistic of the performance of RWS. The Group continues to actively pursue ventures within our core expertise in the gaming, hospitality and leisure/entertainment sectors that will provide medium term growth and long term value to our shareholders."


-Genting release




  • November: new Jurong Hotel (500 rooms, will open 2H 2015)
  • Marine Life Park: since opening, it has surpassed 600,000 visitor mark;  
  • GGR: +25% QoQ; suggesting close to S$1BN
  • VIP RC: hit highest level since Q1 2011 



  • 4Q VIP Hold rate: 3% vs. 3.82% last year
  • VIP outlook: much more optimsitc than 4-5 months ago
  • China: new leadership; more settled environment
  • Non-gaming business doing very well; encouraged by MLP visitation #s
  • VIP mix:  a lot of new players; 
  • Trade receivables:  aging has been the same but provision has been increased; nothing out of the ordinary (mostly on the older receivables)
  • Mass win rate: 24%; win % has been creeping up due to change in table mix
  • Mass revenues QoQ and YoY: up low single digit
  • Chinese customers overwhelming the casino
  • Did not see a significant increase in rebates/commissions 
  • VIP/Mass breakout:
    • net gaming revenue: 42%/58%
    • gross gaming revenue: 56%/44%;  (51%/49% (for FY 2012))
  • Marine Life Park (MLP): has priced admission fee low in the first few months to drive interest; current capacity is only 2,000 people at one time; at the end of 2013, they will raise prices and increase capacity. 
  • The docking area for MLP still has not opened but they hope to open it in the next few months
  • EBITDA margin will stabilize in the 2nd half of 2013
  • Korea will not open up to local gaming; probably won't see anything happen in the next 2 years
  • Japan: optimistic on legalization; a bill will probably reach the Diet in Fall 2013
  • Mass:  Small decline in local business
  • There will be more low cost carriers from Southeast Asia to Singapore
  • Why not hike dividend?
    • Still looking at couple of new/existing projects--probably will not need cash (if Japan opens) until 2 years down the road
  • VIP (12-18 month basis):  trend is good
  • Other EBITDA of S$13MM:  investments
  • Non-gaming EBITDA growth:  slower growth than the non-gaming revenue growth due to MLP
  • Jurong hotel: should not cost more than S$150MM
  • Receivables comfort zone: S$1.1-1.2 billion 
  • Villas are well-received by gaming customers
  • International Marketing Agents (IMA) haven't been doing much business: only 2% of rolling volume.  



  • RWS Adjusted EBITDA S$356.1MM and revenue of  S$791.4MM
  • Comparing to the fourth quarter of 2011, the business volume in the premium players segment improved significantly by 56%. However, this was offset by weaker win percentage in the premium players business.
  • Non-gaming revenue continues to show healthy growth of 19%
    • Hotel business: occupancy of 91% and ADR of S$447
    • The daily average visitation to Universal Studios Singapore (“USS”) increased to 11,100 visitors with average spending of S$86. 
    • The much anticipated Marine Life Park (“MLP”) opened in November 2012, drawing an average daily visitation rate of 7,100 within a short period of 40 days. 
  • Adjusted EBITDA was affected by higher impairment loss on trade receivable and higher operating costs incurred for the opening of MLP.
  • On 23 November 2012, Tamerton Pte Ltd, a wholly-owned subsidiary of Genting Singapore was awarded a hotel site at Jurong Town Hall Road, Singapore. The hotel will help to provide over 500 rooms that will contribute significantly to non-gaming revenue, and more importantly provide a source of ready visitors to the attractions and gaming facilities at RWS. Set to open in 2015, it will be the first hotel to open in the Jurong Lake precinct
  • The Casino Regulatory Authority of Singapore has approved our application for the renewal of our casino licence agreement for another three years commencing 6 February 2013
  • During the financial year ended 31 December 2012, the Group invested in a portfolio of quoted securities, unquoted equity investment and compounded financial instruments amounting to a net total of S$973.4 million. 
  • FY2012 Capex: S$503.6MM
  • Introduced a tax extempt dividend of 1 cent per share, subject to shareholder approval at the next Annual General Meeting of the Company

CAGNY Day 2 – Sticking with the Theme of Bad Companies Getting Better – HSH Carries the DAY

HSH carries the day, and looking back on our assessment of Day 1 we see some similarities between KRFT and HSH, so you can see that we are looking at companies that have the ability to effect change on the margin.  That lens does a disservice to a name like HSY that is simply executing very well, but aren’t doing anything “interesting” relative to the recent past.


Kellogg’s (K)

The company is focused on four pillars of growth – global cereal, global snacks, regional frozen foods and emerging markets.  Company believes that cereal can be a growth category, but needs to expand the definition of when cereal is consumed (expand in and out of the bowl).  Keebler plus Pringles can be a leader in global snacking – frozen food is just a regional business at this point.  Supply chain issues that have plagued the company are in the rear view mirror.  5% cost inflation versus 4% savings, very manageable and smallest gap in years actually turns to a tailwind in 2H.  U.S. consumer remains under pressure, but any weakness can be offset with Pringles synergies – good visibility into 2013 numbers.  The Pringles integration is going well – huge global brand, and now the second biggest brand in K portfolio.  Pringles’ top line growth in ’12 exceeded company’s expectations and heavy lifting is behind the company.  Good, solid, if unsexy story.


Philip Morris International (PM)

The company provided a look back at 2012 – a year that saw the company gain share in every region and deliver at the high end of expectations across multiple metrics.  The company sees a “rational excise tax environment” – I am not necessarily sure such a thing exists (Philippines).  The European Union proposal on tobacco products is flawed and not supported by science (according to PM) – while I agree, not sure hoping for rational behavior on the part of national or supra-national entities is a sound strategy.  PM is not hopeful that EU operating environment improves meaningfully in 2013 given some of the conditions it sees as necessary for improvement.  Asia has been a spectacular growth vehicle for the company – Indonesia in particular.  The company is expecting a 20-25% volume decline in the Philippines due to excise tax increase, but limited operating income impact – tough to model that one right now.


Campbell Soup (CPB)

Campbell Soup – it all starts with stabilizing the core and returning soup and simple meals to profitable growth – that is the base that allows the rest of the strategic vision to be executed.  I think citing some recent numbers for the soups and simple meals ignores the fact the segment has a demographic issue (soup skews older) that isn’t quickly corrected, if at all.  I do have to applaud the company for some recent innovations and line extensions – that’s the cost of doing business in packaged food and the company had been trying to avoid that cost for a long time.  North American beverages have now become the problem child – input cost inflation and competitor activity.  The company sees input costs moderating in ’13.  Arnott’s is focusing on improved execution after a difficult year.  Company has in place a new innovation process (not sure it actually had an old process).  Bolthouse Farms is exceeding both top line and bottom line expectations thus far – not sure chopped carrots are the wave of the future for the company.


Nestle (NESN VX)

Presentation focused on Zone Americas – very “informal” presentation (no slides) that probably could have used a little more structure and fewer personal anecdotes.  The size and diversity (and success) of Nestlé’s business didn’t do Chris Johnson (Head of Zone Americas) any favors – he bounced from business to business and geography to geography.  I think the intention was to provide a “clean” overview of a complex business, but it came out as a bit of a hodge-podge, without any clear sense of what makes the company best in class.  Mr. Johnson did highlight the weakness of the frozen category – no real news there.  He also admitted to challenges in ice cream, and has spent more time on what’s wrong (probably in an effort to seem “balanced”) than what is going right (the bulk of the portfolio).   Given the quality of the “source” material, the company could have really “played a blinder” here and instead missed the mark.


Hillshire Brands (HSH)

Hillshire is the old Sara Lee, but only in the sense that the company has some of the brands – company has moved headquarters and is in the process of reinventing itself after years of neglect (sounds a little like KRFT in that regard).  Most impressive slide of presentation – company was shrinking, now it is growing – testament to the fact that brands do respond to marketing.  “Give the brands some attention” could have been the title of the presentation.  The company still has room to grow relative to the household penetration of both its categories and its brands.   The company was one of the leading innovators in the lunch meat category then “took the next few years off”.  Long-term target is increasing MAP (media, advertising and promotional) spending to 5% of sales – used to be 3.5%.  Brands can wither and die if you don’t feed them – advertise.  The company may be limited by the category in which it competes, but management here seems to get it.  I wonder if, after management does the fixer-upper thing, they just don’t sell the house?


Bunge (BG)

From field to food to fuel – getting the crops from where grown to where consumed is what Bunge does, and that is a powerful long-term thesis, in my view.  The company is in a growth business – leveraged to population growth, urbanization and the growth of the global middle class.  All of that combined leads to growth in global agricultural trade – BG is an “expert in managing physical flows”.  BG does sugar ethanol, not corn ethanol (very small) – corn ethanol assets and investments is one of our concerns with respect to ADM.  The world is shifting to South America to meet demand shortfall, which should lead to high utilization of BG’s assets in that region.  “As income grows, diets contain more vegetable oil and more protein” – right in BG’s wheelhouse – soybean meal.  Importantly, trade will increase more rapidly than demand because of a disparity in where the crops are grown versus where the population and demand growth is located.  The company will reach its cost of capital this year, with sugar being below – expect sugar to catch up in ’15.


Hershey’s (HSY)

The company has been about predictable, profitable and sustainable growth, so makes sense that the presentation leads in with those words.  One thing most investors might not know is that HSY is more than just U.S chocolate – after many years of missteps, company is on pace to deliver $1 billion of sales outside the U.S and Canada by 2014.  Global confectionary category has been growing at 5% per year and is fundamentally advantaged.  Impulse nature of category means very high checkout conversion rate so very profitable for retailers and HSY and as category leader, HSY has been driving the category and has outpaced the growth of the category.  Hershey makes it seem easy, but advertising and supporting the base and growing from a position of strength just makes sense.


Coca-Cola Enterprises (CCE)

No big surprises out of CCE – the dominant theme was growing its successful portfolio of iconic brands and returning cash to shareholders on its history of solid, balanced growth. It maintains its long-term growth targets of 4-6% net sales; 6-8% operating income; and high single digit EPS. CCE noted such risks as the macroeconomic environment, commodity cost inflation (COGS at 4% in 2013), changing consumer tastes (towards health), new and existing taxes on products and packaging, and lapping the Olympics. CCE is targeting higher volume growth over pricing in 2013 with an increased marketing spend to drive its core brands and entrance into the discount channel (Lidl and Aldi), albeit with distinctive packaging. Its target of $500MM in share repurchases by the end of 2013 and dividend boost by 25% should continue to attract investors.   



Robert  Campagnino

Managing Director





Matt Hedrick

Senior Analyst


Today we bought the iShares Dow Jones US Home Construction ETF (ITB) at $22.17 a share at 3:08 PM EDT in our Real-Time Alerts. We thought this morning's Housing Starts were better than manic media views (single homes +0.8% sequentially) and tomorrow we have a catalyst - Existing Home Sales. Buying back Housing on the signal. #HousingsHammer is still in play.



TRADE OF THE DAY: ITB - image001

UA: Our Short Case On UA

Takeaway: Shorting UnderArmour is one of our top ideas at current levels. Revenue and profit growth should decouple, and the market is likely to care.

Conclusion: Shorting UnderArmour is one of our top ideas at current levels. Revenue and profit growth should decouple, and the market is likely to care. Timing matters on this one, as the company set itself up for a 1Q beat. Then we think the story should start to unfold. 



This type of idea definitely gives us initial pause given that we are such big believers in the UnderArmour Brand. But the reality is that a Brand ≠ Company ≠ Stock. And in this instance, we think that the Company is at a critical crossroads to get the Brand to the next level, and that will come at the expense of the stock – at least over the intermediate term.


Since the inception of UnderArmour, the company has grown Operating Profit about in line with sales. But we think that in order to capture the three areas of growth that are critical to maintaining UA’s top line trajectory – specifically a) women, b) International, and c) footwear – it needs to step up capital investment (specifically SG&A) and dilute margins.


Let’s be clear about something, this is perfectly normal for a company going through different stages of maturation. It’s not the result of gross mismanagement in the past.  Nonetheless, it is a growing pain that is apparent to us. Even if the margin dilution is only temporary, history shows us that a meaningful gap between revenue and EBIT growth creates clear multiple risk from current levels.

UA: Our Short Case On UA - chart1UA

UA: Our Short Case On UA - chart2UA


Let’s take a brief look at each of the three areas of growth:

1)      Women: Even though less than a third of UA apparel sales go to women, the brand has arguably done a good job in marketing to female consumers compared to Nike – which took the better part of 25-years to get to where it is today (still not perfect). But the challenge with women is that the level of competition in the athletic space has stepped up so severely. Brands like Lululemon highlight not only the product quality differences that women want, but also the different way women like to shop. Go into a Dick’s Sporting Goods (where the average dude shops) versus a Lululemon (nice atmosphere, great attention to color and fit, free alterations, complimentary yoga classes). We’re not saying that UA needs to become LULU. But are simply pointing out that more brands that already have wallet share for the average women – like Victoria’s Secret – are staking their claim in this space.
UA: Our Short Case On UA - chart3ua  


2)      International: About 7% of UA sales come outside of the US today, but about half of that is from Canada. As it relates to success outside the US we’re most interested in gauging sales outside of North America. While that’s not disclosed, we think that it is around 2-3% of total sales at best. There are a few things that make growing in Europe and Asia difficult.

  1. Sports Differences: First off, in the US, there are around a dozen sports an athletic brand can use with which to establish a link to the consumer. There’s Football, Basketball, Baseball, Hockey, Golf, NASCAR, Soccer, UFC, Boxing , Track, Tennis, and Extreme Sports. Outside of the US, there’s pretty much one – Soccer/Football. The problem there is that Nike and Adidas absolutely dominate this sport, with up to 90% of the market fairly evenly divided between them. There are brands like Puma and Umbro that are players in the market. But breaking in here is absolutely fierce. Nike and Adidas will defend their share – violently if necessary.
    UA: Our Short Case On UA - chart4ua
  2. No Attachment Product: It’s difficult to establish credibility in apparel in Europe and Asia without being equally as credible in footwear (like Nike) or in Fashion apparel (like Adidas). UA has neither.
  3. Lack of Homogeneous Markets: In the US, it’s pretty much the same experience for both the Consumer, the Retailer, and the Brand’s Salesforce for a shopping experience in LA, NY, Miami, or Chicago. That makes the US relatively easy to sell into.   But in Europe, every country is absolutely different, and even countries are vastly different based on region (think Northern vs. Southern Italy). Throw China into the mix, and it gets even more complex. The simple point is that the cost of building this business is steep.

    One might argue that this means that there are growth opportunities to go along with the higher costs. We’re the first to agree.   But unfortunately, costs need to come 1-2 years before the revenue is realized. That’s where we think we are today.

3)      Footwear: For the past 3.5 years UA has had Gene McCarthy, one of the most decorated brand builders in the footwear business, running its footwear operation. But after all this time, look at the chart below…It shows US athletic footwear market share. Do you see that little red bar a couple notches behind Private Label? That’s Under Armour. After all this time, UA still cannot pierce the 1% share mark in footwear.
UA: Our Short Case On UA - chart5ua


The problem here is that if we were to ask ten people what the single greatest opportunity is for UA over the next 3-5 years, we think that nine of them would say ‘footwear’. The bigger problem is that we asked this question 3 years ago and people still said ‘footwear’. This category has been a perennial opportunity for UA. Our sense is that only two things can unlock an opportunity. 1) leadership, or 2) capital.

We don’t think that there’s been a leadership problem under McCarthy. That leads us to think that there’s been a capital problem, and that if UA wants to succeed in this category it will need to step up its capital commitment to this  area and realize a Reebok-ish 8-9% EBIT margin (leading up to the Adibok merger Reebok had share between 6-10% in any given year – and a perennial goal of 20%).


What If We’re Wrong?

A major caveat here is that our fundamental call on the margins (or decelerating top line growth) needs to be right in order for this stock call to play out. The stock is sitting at about 33x the consensus estimate for 2013. While that’s still lofty, it’s far from unreasonable for a great Brand with no debt and blue sky opportunity if it can execute on its growth plan with no hiccups (which would sustain 20%+ EBIT growth).  If it is able to accelerate growth in these businesses, a 35-40x multiple on $2.00 in EPS power would not be unheard of. That’s a $70-$80 stock over 2-3 years. Definitely a nice return from its current $50. We don't think it will happen without a correction. But we need to be cognizant of plan B.


If We’re Right

If we’re right, and the market realizes that margins need to come down to sustain growth, then we could see estimates pushed back by a year, and a re-rating to something in the neighborhood of 20x EPS on $1.50. That gets us to about a $30 stock, or 40% downside, over a more compressed time frame.  


A VERY Important Point On Timing

We think that UA has the wind at its back headed into 1Q (March) earnings. The company managed to get the consensus down to $0.03 in the seasonally-weakest quarter – which compares to $0.14 last year and our estimate of $0.09. We don’t want to be pressing a short into a beat – even if it is an insignificant quarter. We’d either wait until the 1Q print, or until the trading factors change and tell us to get involved sooner.  




"Similar to other operators in the regional gaming industry, our results were impacted by softness in consumer spending, including the effect of payroll and income tax modifications early in the calendar year.  In addition, last winter was one of the mildest on record in the Midwest, while in contrast this winter we have had some measurable weather disruptions at key times, including New Year's Eve weekend." 


- Virginia McDowell, president and chief executive officer



  • Pleased that they are attracting customers from surrounding states at Cape Girardeau
  • Just over $1MM of pre-opening and development expenses impacted the quarter's operating loss
  • $10MM R/C, $491M on T/L, $350MM senior sub notes, $4MM of other debt
  • 5.7x leverage per covenant calc
  • $800k capitalized interest
  • Last year 4Q was a 14 week quarter



  • There's no particular market that they are dying to get into; aside from AC, there are no markets that they are avoiding like the plague
  • PA Gaming Control Board expects to announce the winner by year end.  If they win, they can roll their $25MM commitment into a loan to the property or into another part of the properties capital structure aside from equity.
  • Carrutherville and Missouri in general were impacted by bad weather over NYE's weekend. They did have some impact from Cape Girardeau (5-10% impact) at Carruthersville. They are now shifting how they are marketing the Cape property.
  • They would like to explore options to make Betterdorf a land based facility but they are far away from pulling the trigger
  • Renovation and upgrade to the floor in Boonville is coming later too
  • They opened in Cape Girardeau with stronger margins than they expected. They didn't do a lot of marketing. Wanted to see what the organic market was. In the past month they just started marketing to their database. Boonville and Waterloo are good comps for this property margin wise.
  • Thoughts on online and social gaming?  Think that they do a good job on the social front on Facebook and Twitter. Social is more of a marketing tool vs. true social gaming. They don't think that online gaming in the US will be very successful on a state by state basis. Not front burner issue for them.
  • The payroll tax increases coupled with delays in early filers have impacted them in the lower end of the database and in their retail play since the first of the year
  • Mississippi has been hit the hardest since they had the highest unemployment to start with
  • Confident that Iowa will look at the impact of cannabilization before looking at any new licenses
  • Any of their assets can be had at the right price. But there is nothing that they are looking to shed as non-core.



  • Consolidated EBITDA of $41.9MM
  • Cape Girardeau opened on October 30, 2012..."The property's appearance and experience has been extremely well received by customers, and our focus is now on the continuing ramp up in operational performance at the property."
  • "During the quarter...we completed the rebranding of our Vicksburgfacility to a Lady Luck and completed renovations to our main hotel tower in Lake Charles. We also began construction on Lady Luck Nemacolin and completed the sale of our Biloxi property on November 29, 2012.  We are beginning to see the positive impact from the capital projects we have completed, and are confident our strategy to revitalize our asset base is working."
  • "We are also very excited to have entered into an agreement with Tower Entertainment, LLC in Philadelphia, to manage its proposed, $700 million, luxury casino entertainment complex, The Provence, subject to the project being selected by the Pennsylvania Gaming Control Board."
  • Black Hawk: "Results were positively impacted by the continued impact of recent capital improvements at the properties and targeted marketing promotions."
  • Iowa results were negatively impacted by "inclement weather during the period"
  • Lake Charles: "The renovation of the hotel rooms in the main tower was completed during the period, causing some construction disruption that negatively impacted revenues; however, we were able to offset the impact through improvements to the cost structure, primarily from the consolidation of our operations to a single facility, after the sale of our second casino vessel in late fiscal 2012."
  • "Our new Cape Girardeau facility contributed $16.1 million in net revenues and $2.9 million in Adjusted EBITDA during the quarter and we are experiencing a steady ramp up in operations as we have increased our database marketing programs at the property." 
  • "Boonville results were negatively impacted by inclement weather over New Year's weekend"
  • "Caruthersville was impacted by both weather and the opening of Cape Girardeau."
  • "Results in Vicksburg were impacted by construction disruption early in the quarter and increased marketing costs associated with the Lady Luck rebrand launch."
  • "In Natchez, a new competitor opened in the market in December."
  • "In Lula, we were able to mostly mitigate continuing competitive challenges with approximately $1.1 million of decreases in gaming taxes, marketing and operating expenses." 
  • "Expect to open Lady Luck Nemacolin during summer 2013. The facility is planned to include 600 slot machines, 28 table games, an Otis & Henry's Bar & Grill, and a Lone Wolf Bar.  The Company currently expects the total project to cost approximately $57 million to $60 million, including the $12.5 million license fee." 
  • Cash: $67.8MM and total debt: $1.1BN
  • Capex: $34MM of which $19MM related to Cape Girardeau, $3.4MM related to Nemacolin
  • Capex 4Q13: $45-50MM, "including maintenance capital and construction costs in Nemacolin of approximately $25 million to $30 million"

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