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