ISLE F3Q 2014 CONF CALL NOTES

Still have time to blame the weather but cost cutting is a positive step

 

 

CONF CALL

  • One of most brutal weather years ever
  • Weakness in December moved into January
  • Improved EBITDA margins at half of the portfolio
  • Davenport sale:  $12m reversal in tax provision
  • 6.6x leverage ratio

Q & A

  • February trends: same as Jan
  • Upper end of customer database: trends remain ok
  • Retail spending in FQ3: -3%, consistent with previous Qs
  • Pompano: better results due to more favorable racing schedule, poker room doing well; looking at opportunities for expansion; net of promotional, higher in every customer segment; retail play down a little bit; some pressure from opening of Dania Jai Alai.
  • MS: revenue battle ongoing; impact on new competitor in Natchez; competition from Arkansas
  • Bettendorf: down in-line with the Quad City market
  • Promotional environment: MS esp Vicksburg aggressive in free-play (ISLE market share up)
  • Cape Girardeau: ramp was slower; taking out labor/food costs to match with lower volumes
  • Firm sale? No comment on rumors.
  • Potential to go land-based in Bettendorf
  • MO, IA, CO:  most impacted by weather
  • 135% increase in # of days impacted by weather
  • In markets not impacted by weather, revenue trends flat or a % of points lower
  • Golden Nugget Q4 opening in Lake Charles: as much as 70% supply increase to market.  Will be a battle
  • Higher promotions line: promotions up in Cape Girardeau due to comps, also in Nemacolin; but advertising $$ lower
  • Philly license will be awarded in April   
  • How to get out of negative EBITDA in Nemacolin: revenue decline based on seasonality; PA market tough; trying to mitigate $10 entry fee; cut wages; repaired games 
    • In dialogue with govt to see if entry fee can be eliminated
  • Cash equivalents:  A1, P1 paper or better
  • Cage cash: $40-50MM
  • Lake Charles: employment relatively stable 
  • May have flooding concerns as winter ends
  • Nemacolin: Pay $150k rent,  pay a % fee if revenue > $35MM
  • Apart from Bettendorf project, primary focus is on delevering
  • Maintenance capex run rate: $40-50MM (closer to $40s)
  • D&A run rate:  $80-85MM

Another French Revolution?

"Don't be complacent," writes Hedgeye Managing Director Neil Howe. "Tectonic shifts are underway in France. Is there the prospect of the new Sixth Republic? C'est vraiment possible."

read more

Cartoon of the Day: The Trend is Your Friend

"All of the key trending macro data suggests the U.S. economy is accelerating," Hedgeye CEO Keith McCullough says.

read more

A Sneak Peek At Hedgeye's 2017 GDP Estimates

Here's an inside look at our GDP estimates versus Wall Street consensus.

read more

Cartoon of the Day: Green Thumb

So far, 64 of 498 companies in the S&P 500 have reported aggregate sales and earnings growth of 6.1% and 16.8% respectively.

read more

Europe's Battles Against Apple, Google, Innovation & Jobs

"“I am very concerned the E.U. maintains a battle against the American giants while doing everything possible to sustain so-called national champions," writes economist Daniel Lacalle. "Attacking innovation doesn’t create jobs.”

read more

An Open Letter to Pandora Management...

"Please stop leaking information to the press," writes Hedgeye Internet & Media analyst Hesham Shaaban. "You are getting in your own way, and blowing up your shareholders in the process."

read more

A 'Toxic Cocktail' Brewing for A Best Idea Short

The first quarter earnings pre-announcement today is not the end of the story for Mednax (MD). Rising labor costs and slowing volume is a toxic cocktail...

read more

Energy Stocks: Time to Buy? Here's What You Need to Know

If you're heavily-invested in Energy stocks it's been a heck of a year. Energy is the worst-performing sector in the S&P 500 year-to-date and value investors are now hunting for bargains in the oil patch. Before you buy, here's what you need to know.

read more

McCullough: ‘My 1-Minute Summary of My Institutional Meetings in NYC Yesterday’

What are even some of the smartest investors in the world missing right now?

read more

Cartoon of the Day: Political Portfolio Positioning

Leave your politics out of your portfolio.

read more

Jim Rickards Answers the Hedgeye 21

Bestselling author Jim Rickards says if he could be any animal he’d be a T-Rex. He also loves bonds and hates equities. Check out all of his answers to the Hedgeye 21.

read more

Amazon's New 'Big Idea': Ignore It At Your Own Peril

"We all see another ‘big idea’ out of Amazon (or the press making one up) just about every day," writes Retail Sector Head Brian McGough. "But whatever you do, DON’T ignore this one!"

read more