• It's Coming...

    MARKET EDGES

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

Regional recovery? Not yet

"Consistent with other regional gaming companies, the quarter presented a difficult operating environment in our markets, as the combination of continuing economic challenges, changes in payroll tax rates and the delay in income tax refunds led to softer business levels at our casinos.  In addition, when compared to the extremely mild winter in fiscal 2012, there was significant impact from weather-related disruptions in the fiscal 2013 quarter.  Finally, the fourth quarter of fiscal 2012 contained an extra 14th week compared to 13 weeks in this year's quarter.  Adjusting for the extra week in fiscal 2012 and last year's insurance recoveries, we believe our results were in-line with other regional casino operators."

-ISLE CEO Virginia McDowell 

CONF CALL

  • Continues to invest marketing dollars to Cape Girardeau 
  • Cape Girardeau ramp slower than expected 
  • Boonville casino floor renovations will be completed in June
  • Debt: $1.16 billion; ($155MM outstanding on revolver; Senior 5 7/8% Notes: $350MM; Senior Notes 7.75%: $300MM; Subnotes $350MM; $4MM other debt

Q&A

  • Slight uptick in spend per visit from rated players; overall visitation was down (flat-to-slightly down visitation for rated players)
  • Other than Bettendorf project, not much in terms of large scale developments
  • Bank line: $150MM drawn on $300MM revolver; $90MM excess capacity; covenant leverage: 6.4%-6.5%
  • If you take out extra week impact, results still lower YoY
  • Wouldn't buy back stock until leverage goes to 5x
  • No comments on selling company
  • Drew customers from Caruthersville due to increased marketing spend at Cape G.  But will rationalize that spend going forward.
  • More conservative on insurance costs going forward 
  • Houston market remains underpenetrated
  • Weather impact: Davenport closed for 8 days due to flooding
  • Mississippi: cashed $9.5MM in tax refund checks last year; this year, it was <$7.5MM
  • Philly casino: at most, capital investment would be $25MM
    • Expect a decision by regulatory authority by the end of the year
  • SSS April was down 4-5% across regional markets; overall regional trends pretty steady
  • May trends: no change in consumer behavior or patterns