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Slumped shoulders conference call. Deteriorating fundamentals finally catch up to PNK. Not many positive takeaways. 


  • Weak consumer demand; broad softness across most markets
  • July:  better than 2Q overall (closer to May rather than June)
    • Broad softness continues in July although there have been some bright spots  (we think Missouri is one of them but offset by Louisiana)
    • We also think PA is tracking nicely for July but that doesn't impact PNK. Overall, our model and channel checks suggest July state revenue reports should look better than expected in most markets.
  • Gained 320bps in market share due to myChoice integration 
  • Visitation down, spend per visit up 4% YoY (driven by high-end);  retail segment and markets where there is competition saw weaker spend.
  • Most of myChoice loyalty integration costs were incurred in 2Q
  • Q2 marketing reinvestment down 40bps YoY
  • Hotel REVPAR grew +6% thanks to new yield mgmt program (ASCA St. Charles REVPAR up double digits)
  • 25% of Belterra Resort customers also visited Belterra Park
  • East Chicago:  highest market share since Q4 2009.  Highest table share since Q4 2011.  Highest slot share since Q3 2008.
  • Strong VIP table play at East Chicago and River City
  • L'Auberge properties:  strong VIP performance; 30bps improvement in marketing reinvestment
  • EBITDA margins relatively flat primarily due to synergies
  • Softness in electronic gaming business
  • Mostly cost-related synergies; expect revenue synergies to come
  • St. Charles/KC/River City:  some disruptions due to loyalty program integration
  • Expect severance charges/expenses for CO referendum in 2H 2014
  • Belterra Park:  slightly under budget, some hotel issues but will not impact construction budget of $20m; rolodex behind expectations
  • Today, new general mgmt at Black Hawk and ASCA KC (both internal transfers)

Q & A

  • Lake Charles:  record table volumes; do not want to quantify EBITDA impact of low hold
  • Rollout of myChoice:  Additional $6m in advertising costs were associated with the integration but will not be incurred in future quarters
  • Very careful with Belterra Park but clearly a slow start.  
  • L'Auberge properties and East Chicago outlook:  continue to see improvements
  • Visitor profile:  declines at lower end segment; continue to see good visitation and spend from VIP segment
  • Missouri approved credit issuance by casinos:  credit will begin at end of August; will be a benefit starting in 3Q
  • PNK evalutes performance on EBITDA, not on market share. But market share has held up despite challenging conditions
  • Visitor priority:  depends on market.  In Lake Charles, they focus both on new and existing customers.  
  • Properties stay well-maintained.  May do some refurb on restaurants.
  • Will continue to pay down debt