AMERISTAR 1Q09 EARNINGS CALL:
- Very confident that the impressive margin trends are sustainable throughout the course of the year
- Amendment should insure compliance with debt covenants through Nov 2010
- Black Hawk Colorado - 3 important regulatory changes
- Operate 24/7 vs 18/7
- Increase max bet limits from $5 to $100 which will allow them to expand table games (introduce craps & roulette)
- Hotel to open on schedule & on budget in Fall 2009 - 540 rooms
- Anticipate a slight decrease in market share in 2Q09, since last year they strategically launched a marketing campaign to gain share. Although share may decline, margins should be better
- Transition to nimbler and stronger organization should position them well in a recover
- Guest service shows that they are stable or improving along all metrics
- Loss limit removal in Missouri is a big net positive, even after the higher state gaming tax rate
- Amendment will cost roughly $2MM per month in incremental interest
Q&A
- How much further can they improve margins/sustainability?
- Confident that they continue to drive y-o-y improvement but unclear of what each Q's margins will be
- Confident that they can exceed past margins in Black hawk with new regulations and hotel openings
- $60MM left to spend to complete Blackhawk as of March 31, 2009
- Will open the hotel in several stages but be 100% open by YE
- Hotel will probably will be a little dilutive for the first few Q's will add deprecation of $1MM per month
- They add table games and not have a big difference in slots
- ASCA no longer focuses on market share, they have a profitability strategy
- Using their hotel in St Louis to grow profitability
- Dividend reinstatement? Thoughts?
- Once they are done with Blackhawk they will have plenty of FCF to de-lever quickly despite dividend payments
- Would like leverage to be below 4.75x before year end 2009, ultimately they need to adjust composition of Sr debt (reduce it and issue non-sr)
- East Chicago, what drove the massive improvement in performance?
- Horseshoe opening last fall hurt them
- Just operating in a similar manor as the rest of their properties (New GM)
- Will average $12MM per Q on corporate excluding stock comp expense going forward
- Is the smoking ban discussion in Indiana off the table?
- Pretty much - today is the last day to do anything
- How much cage cash do they need to run the company?
- Need 60-65MM of cash on hand to operate - not just cage cash though, includes working capital