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Regional headwinds continue.  April soft.  Guidance also hurt by the removal of Sioux City from guidance - finally.

CONF CALL

Q1 2014 Results:

  • Difficult weather first 6-7 week = soft revenue
  • Consumer environment, esp low end <$100 losing trips and customers
  • Competition more intense at Charlestown, L'Burg and entire Illinois
  • Property level margins unchanged, despite lower GGR
  • +5% YoY data base customer spend
  • Visitation trends "very concerning" esp. Charlestown & L'Burg
  • Lower EBITDA guidance:  50% is Charlestown & L'Burg
  • Easter Weekend: visitation and GGR trends DOWN 20% YoY!
  • March soft, April continuing with March trends

Remainder of 2014:

Expected a transitional year due to new supply but more challenging year than expected due to persistent customer softness

  • Forecasting constant margins
  • Revised pre-opening expenses
  • Removed Argosy Sioux City from forecast
  • Maintenance CapEx $80M total for the year

2015/2016 - positive outlook based on development pipeline

  • Mahoney on target for early fall opening
  • Plainville expect to open 2Q15
  • Jamul Village expected to open "early 2016"
  • NY Catskills, partner with Cordish $750m Orange County development, filed $1m app w/ NYS, final app due June 30th

Q&A:

  • Ohio Track Expectations:  Dayton & Mahoney Valley no changes to pro forma plan & expectations
  • EBITDAR: rent credit adjustment under master lease in remainder of the year
  • NY Outlook:
    • Catskills: managed 50/50 JV with Cordis, very excited
    • Capital Region: looking, not sure of capital commitment, more difficult due to protection on purse supplement to race tracks.
  • MA Gaming Act recall:  continuing construction, full steam ahead, believe voters will understand 10,000 jobs and revenues to state. 
  • WPD per slot $500 for 1st 2 years until new competition opens
  • Jumal: $200-$250 win/unit/day target
  • IL VLT:  27% of all IL GGR and cannibalizing casino GGR
  • FCF 7% or better on all new development opportunities and expect NY Orange County to hit or exceed target
  • Promoting less in St. Louis than last year - GGR is reported by the state gross not net so net growth will be higher
  • Demand picked up from mid-Feb to mid-March
  • Guidance: toward the end of March to current, demand has softened resulting in lower guidance
  • Project Capex:  budget for full year $72m in Ma, $70m in each of Dayton and Youngstown, Jamul $84m
  • 25% more weather impacted days in 2014 vs 2013 - can't really quantify the impact
  • Weakness is across the demographic spectrum at the <$100 segment
  • No change in enthusiasm for gambling - weakness is purely economic - especially for households <$75k in income
  • Harrah's Tunica:  demand for Tunica hurt by Arkansas. PENN doesn't see a repurposing of the asset.
  • Optimistic on Toledo - one of the worst winters ever in Q1
  • Cosmopolitan - $2b is too high.  PENN has not actively engaged but if they did they would need a partner
  • PENN still looking at a Strip property