Business trends still slow in Vegas. Increase in LV promotional environment.
MGMT COMMENTARY
- 1Q revenues increased in casino, F&B, and hotel
- Revenue environment still challenging; customer discretionary dollars still low despite uptick in casino visitation
- Highest occupancy / cash revenues in 1Q
- SS LV margins: 32.7%
- 1Q LV EBITDAM: $111m
- $7.4m in mgmt fees earned from Graton
- Graton will hold conference call on May 12
- North Fork project: no additional updates
- Macro environment:
- Las Vegas Strip: continues to improve
- LV Locals 1Q: growth in population, employment, housing prices, retail sales
- Existing LV home prices remain 40% below peak.
- Cautiously optimistic on future of LV market
- Red Rock: $35m F&B upgrade at Red Rock; will also upgrade suites and spa
- Green Valley Ranch: will upgrade F&B, suites, spa, and high-limit rooms
- Owns 57% of Fertita Interactive
- 1Q 2014: STN recorded -$4.8m in investment; attributable to marketing and operation plans in NJ
- On-line gaming slower than expected start
- 1Q capex $21m; $110-120m expected for 2014 (includes Fertita Interactive)
- Debt: $2.15bn (excludes $112m non-resource land loan)
- 5.1x leverage ratio
Q & A
- Promotional environment at Graton: little bit of step-up in promotions from Cash Creek and Thunder Valley
- LV promotional environment: select competitiors have gotten more aggressive i.e. point multipliers. STN's promotional allowances down for 5th consecutive quarter
- Genting project: will start construction in Q4 2014
- Shops at Summerlin will open in October; traffic will increase for Red Rock; will benefit F&B
- No comments on acquisition strategy
- LV locals: Higher-end performing better than lower-end
- Promotional environment in NJ i-gaming: very aggressive; reinvestment rates are double/triple than what you see at land-based properties; do not see cash flow positive for 2014 in i-gaming
- Benefited from strong 1Q Strip convention calendar at Red Rock and Green Valley. Strong REVPAR: up mid-single digits; some attribution from government rooms
- NJ I-gaming payment processing: improving but significant challenges in geolocation issues. Also lack of awareness across the state- more on the casino side than poker side.
- Graton money owed to STN: total of a little over $48m. Refinance is one option.