Borgata disappointing (in part to 1x online startup expenses) but overall at the top of guidance. 2014 guidance looks in line. Upcoming catalysts include big refi, Borgata property tax resolution (likely favorable and material), and less bad regional gaming revs.
Las Vegas Locals
Downtown Las Vegas
On Line Gaming
Q2 EBITDA Outlook
Full Year Outlook
Q & A
Consensus estimates, management guidance and commentary, and questions for management in preparation for the earnings release/call tomorrow.
1Q14 CONSENSUS ESTIMATES
• Total revenues: $1,264 million
• Adjusted EBITDA: $293 million
• FFO: $0.30/share
QUESTIONS FOR MANAGEMENT
RECENT MANAGEMENT COMMENTARY
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Takeaway: Q1 strong on easy comp; on balance we like SAM's ability to navigate its growing pains -- the remainder of the year will be more challenging
SAM had a strong quarter of results for what is typically its smallest quarter of revenue in the year: it grew net income 20.3% to $8.3M (albeit on a very easy comp of -7.8%) on net revenue of $183.8B, or +35.2% Y/Y, which beat our estimate of $177.1B (+30.0%).
There were lots of exciting offerings in the quarter: it introduced a new spring seasonal Samuel Adams Cold Snap, late in the quarter launched Samuel Adams Summer Ale; and launched Samuel Adams Rebel IPA. The strong volume performance in the quarter (+32% Y/Y) clearly got a lift from this suite of products (alongside strong performance from Angry Orchard, Twisted Tea and the launch of Twisted Tea Lemonade), however going into the remainder of the year the company will get less of a benefit as it does not plan to launch any more seasonals.
To support these launches SG&A was bumped up significantly in the quarter, to +32.8% or $77.1M, which was also against a light comp of +16.8% in the prior year quarter (avg last year was 23.8%).
We continue to like SAM but are cognizant that Q1 had relatively easy comparisons. We expect SAM’s GM in particular to be challenged over the remaining quarters on more difficult comps and rising input costs. We also expect shipping costs, which fall under Advertising and Promotional Spending (up a significant 41% in the quarter Y/Y) to remain elevated as the company cites less availability of carriers.
We’re seeing strong demand across the portfolio, but cognizant that the company will experience growing pains as it expands its brewing capacity. Rising input costs will also be a headwind and the company must manage its advertising throughout the year after an impressive rollout of new products in Q1.
Takeaway: We reiterate our call for continued consolidation in the “Abenomics Trade” with respect to the intermediate term.
JAPAN GIP MODEL
US GIP MODEL
RECENT JAPANESE HIGH-FREQUENCY ECONOMIC DATA
Industrial Production trends cooling off:
Retail Sales pull-forward ahead of the April 1st consumption tax hike:
Manufacturing PMI tanking as Abenomics fails to deliver the necessary structural reforms that can sustain Japan’s economic recovery:
Services PMI trends decelerating from apparent frictional resistance:
Consumer Confidence tanking as rising inflation takes a healthy bite out of the consumer’s wallet:
Business Confidence following suit as the consumption tax hike is spread throughout the supply chain:
Export growth mirroring the dollar/yen rate to some degree:
Import growth surprisingly cooling in the YTD, but ripping alongside global energy prices in the most recent month:
Inflation continues to accelerate and is poised to gap up as the consumption tax is largely passed on to consumers:
Real wages are feeling the pinch of stingy Japanese corporations and policies to tax & inflate out of Tokyo:
Feel free to ping us with any follow-up questions. Have a wonderful evening,
Associate: Macro Team
Takeaway: 61% YES; 38% NO
Shares for Twitter have been tanking amid the company’s disappointing earnings report. Prices are currently hovering around $38.
That’s why we asked you in today’s poll: Will shares of Twitter ever surpass its record high of $74.73?
At the time of this post, an optimistic 61% of voters leaned YES; 38% NO.
Most every YES voter agreed that “ever” is a long time, but ranged in their approximate time it might happen:
Conversely, one NO voter said, “I agree that ever is a long time, but something new will likely come along and replace Twitter.”
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