BYI delivers another beat with a bright outlook
“Our third quarter financial and operating results are showing the payoffs from multiple investments as we execute on our growth initiatives. Bally continues to have a bright future as we partner with our customers to innovate the gaming experience.”
- Richard M. Haddrill, the Company’s Chief Executive Officer
CONF CALL NOTES
- In June, they will begin placing Michael Jackson
- 22% share of new openings this quarter
- 21% ship share in Ohio, which they will recognize in the June Q
- Have 7,500 iVIEW DMs deployed with 9 applications
- Game sales: 2936 units were sold in NA, 635 of which were opening and expansion units and 2,301 replacement units
- Had higher conversion kit revenues in the quarter which also helped margins
- Anticipate game sales gross margin will decline slightly in the 4Q given the number of new openings. However, they still maintain that margins will reach 48-49% in the next few quarters.
- Strong recent success with cash connection products (WAP) helped game operations revenues.
- Systems revenue: Maintenance was $19.6MM. Anticipate that 4Q systems margin will return to the higher end of their historical margin of 70-75%.
- March 31: $35.7MM of cash
- Expect to increase their buyback authorization in the next few months if needed
- Made good progress in Italy - they had finished their trials before going live. However, the delays in approvals have lead some customers to seek other suppliers for their VLTs.
- Progress in Australia has been slower than expected but they did ship more units sequentially
- Continue to make good progress in Illinois. Had good discussions with customers there, have signed several contracts and feel their products are well positioned for the market. They expect to begin initial VLT shipments in Illinois 2H CY2012.
- Developing iVIEW DM account wagering applications
- Sees great systems growth ahead for the next few years
- General industry trends seem to be improving
- Still pursuing acquisitions in the area of technology where they can leverage their expertise
- Canadian systems update: moving along exactly as planned. They are already generating service revenues and will begin recognizing go-lives at the end of calender 2012.
- Expects systems margins, depending on mix, to trend in the 70-75% range
- Expect to reduce cost of game cabinets over the next 6-9 months which is why they think that they can get to that 48-49% margin without taking ASP increases into account. Conversion kits also helped.
- Cannibalization is really hard to measure, but they assume it will be relatively low given that they don't have a lot of WAP games out there
- Game performance on Grease is very strong and exceeding their expectations. Expectation of success, based on prior experience, is getting 750 of each title out. They still think that those expectations are reasonable.
- ASP delta on international vs. domestic games is about $1k - depending on how many Mexican units they ship
- September is usually the weakest replacement quarter; the others are harder to predict. They do not think that March was a pull-forward quarter.
- The vast majority of their WAP units this Q were Grease
- There is no change to the Michael Jackson schedule based on Grease. It's expected to be out about 30 days ahead of schedule. They just want to get it out in the field as soon as possible.
- This quarter was their largest DM installation quarter. They expect that trend to continue.
- Their core games are doing well. They have shifted a little more of their R&D to WAP than their core premium game segment. Overall premium segment yield hasn't really changed QoQ. They are always releasing conversions for their premium cabinets.
- Hope to have one or more poker partners announced within 60-90 days or sooner. Partners are important to enhance liquidity.
- As they get more video content, and as most international markets are video based, it will help them grow internationally
- See their operating margin getting into the 25% range over the next 3-4 quarters.
- The impairment was 2-2.5 cents - so adjusted EPS would have been 69 cents
- Conversion revenue was up slightly YoY but more so QoQ. Conversion revenue is still relatively small for them, so this is an opportunity for slow and steady growth for them.
- The Eldorado computation ran for 3 weeks from the beginning of April
- The write-off of $1.75MM was included in their SG&A line
- I-gaming strategy:
- They are converting BYI content to be internet ready
- Growing their mobile content
- Platform to link the information from their I-gaming customer to their land-based systems
- Games like Michael Jackson and Grease should produce ample revenue to offset the cost of the IP. Look for them to do a few IP titles per year.
HIGHLIGHTS FROM THE RELEASE
- Raised the low end of the range for FY12 EPS guidance by 12 cents to a range of $2.37 to $2.45 compared to the Street at $2.42
- “This quarter’s operating results are a testament to our continuing progress in all major business areas. Our ALPHA 2 Pro Series titles are performing well..., our gaming operations installed base is expanding driven by products like GREASE, and our Systems business continues to move forward at a healthy pace both in terms of product improvement and the number of new customers joining the Bally Systems family every month."
- “We continue to thoughtfully allocate capital to invest in our growth, as well as to enhance shareholder value. This quarter represents the 18th quarter in a row that we have repurchased stock. Since December 31, 2011, we purchased approximately 1.2 million shares of common stock for $54 million at $45.69 per share, of which $41 million was in our third quarter, all while remaining under two turns of leverage.”
- "As of today, the Company has approximately $57 million available under its Board-authorized share repurchase plan."
- Product sales:
- New devices: 4,147 (international: 29%)
- ASP: $17,073
- "ASP... increased... primarily as a result of product mix and an increase in ASP from international sales"
- "Gross margin increased... primarily due to mix and cost reductions on certain models of the Pro Series line of cabinets. Additionally, the prior year included certain write-downs related to older technology platforms."
- Gaming operations:
- "GREASE, our latest wide-area progressive, reached an install base of 127 units, with better-than-expected initial performance. Overall wide-area progressive revenues set a quarterly record, and overall wide-area progressive revenue-per-day exceeded $100 per unit during the quarter.”
- "Revenues increased...to a quarterly record... driven by growth in the installed base of premium and wide-area progressive games, as well as placement of games at the recently opened Resorts World Casino New York"
- Maintenance revenues increased to a record $20MM
- Gross margin decreased...YoY "primarily as a result of the change in mix of products. Specifically, hardware sales were 36% of systems revenues, and software and service sales were 30%, as compared to 34% for hardware and 31% for software and services in the same period last year."
- "SG&A increased $6 million primarily due to an increase in payroll to support key new markets and includes a
$1.8 million impairment on notes receivable related to development financing"
Conclusion: On 1/12, we said after doubling in 2011, LIZ would double again in 2012. No change to our view. LIZ remains one of our top long ideas for 2012. Earnings came in light, but are misleading given better than expected top-line strength in addition to April-to-date comps that suggest underlying demand remains consistent if not accelerating at Kate Spade and Lucky. While corporate cost reductions are occurring at a more measured pace, we think slightly higher costs will be more than offset by stronger sales and brand related profitability.
Following this morning’s quick take on earnings, the two factors we expected to get more detail on the call were April-to-date comps and progress of corporate cost reduction efforts. We got some version of both the result of which is net positive.
First, in an effort to gauge the underlying demand at the brand level, April-to-date comps surprised to the upside at both Kate and Lucky. While specific detail wasn’t provided, Kate is running up “strong double-digit” and Lucky “up positive against very high levels a year ago.” In looking at March and April combined, it appears that underlying demand remains consistent if not accelerating at Kate Spade and Lucky. Given the continued level of demand, we are tweaking our revenue assumptions higher at both brands. Juicy is running down -10% in-line with expectations.
As for corporate cost reductions, the higher end of the prior range of $70-$75mm was confirmed. It sounds like new CFO George Carrara is trying to set realistic expectations; however, we’ve dialed back our assumptions here by $5mm as not to get ahead of what will essentially be 6-months of impact. Additionally, one of the only other deltas on the quarter came in the form of Bill McComb announcing that the recently hired co-COO of Juicy was returning to AlixPartners and to his prior role as a consultant. While my initial gut reaction is negative, the fact that Dave Bassuk can focus more on cost reduction efforts with George in this role than at Juicy alone is actually a more critical role at this time in the company’s evolution.
All in, while we are taking up our revenue assumptions modestly, we are keeping our F12 EBITDA estimates at $140mm and taking up our F13 EBITDA estimates to $215mm. The story is pressing forward and remains one of our top long ideas for 2012.
Below are the Key Takeaways from the call this morning as well as commentary around the any changes to the forward looking commentary that was provided on the fourth quarter call headed into F12.
Note: Commentary below is from the LIZ Fourth quarter conference call, comments in red reflect any deltas on the margin following this morning’s Q1 update:
Full Year Guidance (provided on the prior quarter call relative to this morning’s update):
“We’re forecasting adjusted EBITDA of $125mm to $140mm” no change
Kate Spade: “we will again anniversary growth at kate spade, with comps this year projected to be in the teens, and 2012 total revenue growth to be expected to exceed 30%” no change
Lucky: “Lucky Brand, where we have planned comps to be around the 10%-plus mark” no change
Juicy: “Juicy Couture projected to deliver a flat comp in H1 and a 10%-plus comp in H2” no change
Corporate Cost Reductions: “a transformation in our corporate infrastructure to better and more cost-effectively serve our brand portfolio. We showed you back in November that the adjusted EBITDA of this group will be negative $70mm to negative $75mm in 2012” Narrowed to $75mm
“We’re working to get that number down to a range between minus $55mm to minus $60mm in 2013” no change
“longer-term goal of it costing between $45mm and $50mm of adjusted EBITDA per year” no change
Key Highlights from the Call:
Kate: +38% in Q1, April-to-date up strong double-digit
Lucky: +21%, April-to-date in line and up against high levels a year ago
Juicy: -4%, April-to-date -10%
Still forecasting strong trend in 2H
Leann very happy with accessories business for holiday 2012
All brands had margin expansion in Q1
- 2-yr of stair step down
- Said they would provide more detailed information re the corporate expense reductions next qtr, weren’t ready to disclose this qtr
- George sees a very clear path to $60mm in 2013
- $40-$45mm long-term still viable
George Biggest Opportunity:
- Most excited about corporate transformation opportunity – cost outs
Kate Store Openings:
- ~25 stores for Kate and Jack (20 for Kate and 5 for Jack)
- 35-40 next year, outlet has been surprisingly strong to upside
- Thinking about testing and learning about larger footprint stores
- Wholesale opportunity - thinking about it very carefully
- Have great strategic partners
- "There is absolutely growth to be had," but don't want to repeat overpenetration that Juicy experienced
- Expect to be announcing children's licensee soon
- AUR, Traffic, Transaction, all up driving comps
- "our buys are hurting our ability to comp" because they are low
- Want to continue to AUR progress that they've been seeing
- NOT planning to take inventory in aggressively
- May deliveries are deeper, expect sales to pick up later 2Q and into 2H
Juicy Int'l Demand:
- Very strong up ~40% in Middle East
- Accessories comping up +9% while rest is down -10% in April
SG&A - Marketing Spend:
- Still planning to take marketing spend up across all 4 quarters
- In Q1, Juicy and Kate is where spend went up the most
- In Q1 the incremental impact is a high single-digit number
Adelington Design Group Margin 1x Margin Impact:
- Negative ~$1mm on ~$4mm in sales related to DKNY
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Conclusion: Ichiro Ozawa’s exoneration affords him an opportunity to derail fiscal consolidation efforts in Japan – a key risk as relates to potential sovereign downgrades and a subsequent increase in bank capital requirements.
“OZAWA RISK” IS REAL
The title of this note is intended to be a pun on the name “Ichiro” – a name made popular in America by eventual hall-of-famer Ichiro Suzuki, who has manned the right field for my hometown Seattle Mariners for the past 11yrs. Unfortunately for Ichiro’s home country, Japan’s precarious fiscal and monetary policy situation have not and will not be relieved any time soon.
Taking a short-to-intermediate-term perspective, today’s exoneration of the other famous Ichiro in Japan (Ozawa) may move the country one step closer to the key intermediate-term catalyst in our Japan’s Debt, Deficit and Demographic Reckoning thesis: a sovereign downgrade to the single-A level and a subsequent increase bank capital requirements.
As mentioned in our 100-page slide deck, Japan’s VAT remains the key area of focus in the near term by the major international ratings agencies. To the extent the VAT isn’t passed/ Japan succumbs to further partisan gridlock and continues favoring short-term politics at the expense of the long-term health of the country, we would expect to see two or more of the agencies downgrade Japanese sovereign debt at some point over the NTM (though pinpointing timing can be difficult). The current session of the Diet ends in JUN, meaning that Japanese bureaucrats have until then to at least send a signal to the ratings agencies that they are indeed committed to fiscal retrenchment.
As it stands now, Ozawa, who remains one of the most influential members of the ruling Democratic Party of Japan (w/ influence over up to a third of the party by some estimates), opposes the DPJ’s VAT hike bill. His exoneration means he is now free to stir the pot and rally support to defeat the bill from within. Further, his platform centers on expansionary fiscal policy, which, in addition to wanting a shot at regaining full control of the Diet via a snap election, is preventing the LDP from coming to the table to negotiate with the DPJ on its VAT hike proposal.
A successful bid to slow discussions is a risk to the JGB market; during his 2010 attempt to overthrow then-PM Naoto Kan 10yr yields jumped +28bps over brief span of eight days, as market participants feared a long-term acceleration in supply. Needless to say, there’s a lot more at stake this time around. Keep “Ozawa risk” on your radar as it relates to Japan’s probability of being the next domino to fall in our Sovereign Debt Dichotomy theme, as it is unclear to us how much more patience the ratings agencies will have regarding Japan’s woeful fiscal outlook.
As always, we stand ready to answer any questions regarding our thesis; in the event you may have missed them come through, the relevant follow-up analyses are hyperlinked below:
- MAR 2: Japan’s Debt, Deficit and Demographic Reckoning
- MAR 6: Shorting the Pusuit of Inflation – FXY Trade Update
- APR 3: Digging Deeper Into Japanese Sovereign Debt Risk
- APR 11: Will Pressure bust Pipes in Japan?
MARKET RISK UPDATE
As we concluded in our APR 11 note titled “Will Pressure Bust Pipes in Japan”, risk in the JGB marketplace has been receding fairly dramatically in recent weeks – consistent with our view that you’re unlikely to see any material moves in this historically-bulletproof market in the absence of the catalysts above.
While the Nikkei 225 Index is now broken from an immediate-term TRADE duration, the data would suggest that’s not necessary on the strength of JGB risk, but rather recent yen strength (+3.6% from its cyclical trough on MAR 14):
Japanese CDS (5yr tenor), have come in materially in recent months, falling -22% (-27bps) over the last two months vs. a regional median decline of -2.8%:
Japanese L/T yield spreads have actually tightened in recent months:
Japan’s latest LT/ bond auction posted stellar results; the 20yr sale was met with a bid-to-cover ratio of 3.3x (highest since OCT) and a sequentially-declining average yield of 1.71%. There still aren’t any signs of decreased demand for new JGB issues:
The one risk we would flag is the combination of Japanese bank CDS widening alongside the underperformance of their public shares. Still, in the face of ebbing risk in the JGB market, it can be argued that this is a natural byproduct of weakness in Japanese equities and equities globally:
Net-net-net, JGB risk is clearly taking a back seat for now, and as Keith has remarked in the past, “credit risk is not a factor until bonds start going down in price”. That said, however, we have yet to get to and through a few noteworthy catalysts, so we wouldn’t feel comfortable dismissing this risk it in its entirety. We’ll be sure to flag to you in real-time if and when the markets begin signaling to us that intermediate-term JGB sell-off risk is firmly back on the table.
Additionally, we remain long-term bears of the Japanese yen, as we ultimately expect the policy prescriptions that are likely to be introduced to address Japan’s woeful economic outlook and [potential] sovereign debt crisis will lead to JPY weakness vs. peer currencies. You could, however, see some yen strength over the short-to-intermediate term if we prove right on our call for a global growth slowdown to impact liquid asset prices globally over the intermediate term. The chart below highlights the relationship between global interest rate differentials and the yen’s spot price vs. various currencies – a particularly strong relationship we’d expect to continue absent a material increase in near-term Japanese sovereign debt risk.
CRI trumped the high end of its own guidance as well as expectations by more than a dime this morning and provided 2Q EPS guidance 40%-70% above the street. Despite the full year Sales/EPS increase reflecting 1H outperformance, the implied 2H earnings remains 6%-12% below the street. Additionally, we can’t ignore that organic EPS was down year over year and although 2Q revenue guidance suggests a sequential reacceleration in the top line, the incremental Bonnie Togs revenue trails off in 2H which will return organic growth to +MSD from the low teen levels it sits at today.
Below are the Key Takeaways from the call this morning as well as the deltas between the forward looking commentary provided on the fourth quarter call and this morning's F12 guidance update.
Note: Commentary below is from the CRI Fourth quarter conference call, comments in red reflect any deltas on the margin following this morning’s Q1 update:
Financial Guidance (Headed into 2012)
First Quarter Guidance:
"For Q1, which is one of our lighter volume periods, we’re expecting good revenue growth in the range of 11% to 13% over Q1 last year" 1Q12 Revenues +18%
"We expect that adjusted EPS for Q1 will be in the range of approximately $0.38 to $0.43 compared to an adjusted $0.56 last year " 1Q12 EPS $0.56
Full Year Guidance (provided on the fourth quarter call relative to this morning’s update):
"For the full year, we expect net sales will increase 8% to 10%" Increased to +9%-11%
"And adjusted EPS will increase 15% to 20% over this year’s adjusted result of $2.09" Increased to +20%-25%
"If we are successful maintaining our pricing, our operating margin should improve meaningfully in H2 this year" On Track, Margins expected to exceed 10% in F12 vs. ~9% in F11, long term goal of 14% (4-5 years)
"We now expect eCommerce sales to exceed $100mm in 2012" CRI delivered E-Commerce sales of $29 in 1Q12
"We expect improvement in profitability for H2 and for the year" Unchanged- Product costs expected to be down 10% in 2H
"Our goal over the next five years is to grow OshKosh sales to $500mm with a 10% to 12% operating margin compared to the 8.5% operating margin it achieved in 2010" Unchanged
"In 2012, we expect our total CapEx to be in the range of $90mm to $100mm, which we expect to fund from strong cash flow from operations" Unchanged
Key Takeaways from the Call:
Quarter in Review:
- US Sales: +11.3%
- Carter's Brands Sales: +12.4%
- Retail: +29% (Comp +6.7%, ASP +11.4%, # trans +2.6%)
- Ended w 372 stores
- E-commerce sales: $23mm, +$14mm YoY
- Wholesale +3% (units -7%, ASP +11%)
- Fall bookings planned +LSD-MSD
- OshKosh Sales: +5.7%
- Retail: +7% (Comp +4.7%, ASP +11.7%, # trans -0.3%)
- Ended with 168 stores
- Wholesale: +1% (units -16%, ASP +20%)
- Fall bookings planned -LSD
- International: now represents 9% of sales vs. 3% last year (Comp +13.6%)
- Existing wholesale business grew by over 20%
- Royalties down $500K relative to last year driven by loss of former Bonnie Togs licensee
Gross Margin: +165bps
- Off-price sales dropped nearly 70% due increased effectiveness of promos
- Greater penetration in DTC positively impact margins
- Canada is a higher gross margin business
- ASP positive across all business segments
SG&A: +31.2% (+278bps as % of sales)
- Increase due to Canada Acq, 45 net new stores, higher 2012 performance compensation, e-comm investments & Marketing spend
EBIT Margin: -153bps
- Higher product costs contributed 14 points of 23% growth
- Timing of Product launch accounted for 12 points of growth
- Canada Acq added 11 pts of growth
- Inventory management offset 15 points of growth
Revenues: +20% vs. +13E
- Growth to be led by Canada, Carter's Retail, E-commerce
EPS: $0.26 to $0.30 vs. $0.18E
Inventories: projecting 2Q ending inventories to be down 10% to 15% in dollars and 10% in units
Sales: Increased to +9%-11% ($2.3bn) vs. prior +8%-10%
- Wholesale sales will be impacted by a meaningful reduction in off-price selling
EPS: Increased to +20%-25% vs prior +15%-20% vs. +19E
EBIT Margin: Expect to be up over 10% this year vs. last year
OshKosh wholesale full year sales excluding off-price planned comparable to LY, total sales guided down -5%
Product Costs expected to be down 10% in 2H
Operating Cash flow at the upper end of $180-$200mm range
Inventories: projecting year end inventories to be flat in dollars and +MSD in units
Expect to open 100 stores in Canada over the next 5 years
On track to launch wholesale brands in Canada at Target in early 2013
Planning growth in sales/profitability in OshKosh in 2012 weighted towards 2H12
- Is pretty much on plan, slightly slower due to the shift in Easter
- On a combined basis, both brand comps tracking +1.5%-2%
- Overall, very much in line with both top line and operationally
- Mall based store performing at the top of comp range
- Mall store first quarter comp was 12%
- First quarter OshKosh costs were up over 28% due to supply chain strategy
- Brand is currently a $400mm business with low operating margin - expect the brand to be $500mm over next next 4-5 years with a 10%-12% EBIT Margin
- Strong Canadian comps driven in part by lower competition
- No major wholesale presence in Canada until Target next year
- Carter's wholesale growth has been inline with expectations
- Off price selling is way down
- Off price selling has represented ~1%-2% of total sales
- Wholesale customers are being conservative on inventory commitments
- Expecting peak revenues at WMT in 2012 near $150mm vs. prior 2008 peak of $146mm
AUR/Unit growth in 2H:
- Biggest challenge in product cost increases was in 2H11, raised prices about 10% as an offset (less than $1.00 given CRI AUR)
- Cost pressures continued into 1H12, Fall pricing will be similar with Fall pricing in 2H11
- Have reinvested some of cost benefits into product which has resulted in sharper price points
- Toughest category in terms of pricing has been sleepwear (most price sensitive)
- Will not be putting all of cost reductions in 2H back into earnings, some into product
- Expecting margin expansion this year- 9% LY should exceed 10% this year
- Looking at prototype designs for new stores
- Staying very close- relationship is excellent
- Hoping they're successful with their new strategy
Gross Margin Swing:
- Big driver was mix shift with greater penetration in DTC
- Canada is a very high GM business
- lower off price sales
Q2 Revenue Drivers
- Expect wholesale to tick up
- Contribution from Canada which is incremental to last yr for one more quarter
- Easter pulled a little bit of volume forward and some of the revenue expected in Q3 may be pulled into Q2
Sales/Square Foot in Carter's Stores:
- Average store basis: $408
- Believe there is upside to the current metric
- Have reduced the density of the store by removing fixtures in the store which improved the flow through/experience in store
Marketing Initiatives for the year
- Direct mail has been working and will build on these in F12
- Continue to build on Social Media
- Have invested in systems around customer relationship management
In an effort to evaluate performance and as a follow up to our YouTube, we compare how the quarter measured up to previous management commentary and guidance.
OVERALL: BETTER - HOT's results came in above the high of company guidance. The outperformance was driven by better results across all segments of their business: owned, leased, and consolidated JV, fees and higher contribution from Bal Harbour.
Here is the report card evaluating actual results against management's previous assertions.
- FY 2012 OUTLOOK
- SLIGHTLY BETTER: HOT raised RevPAR by 1% and lowered some below the EBITDA line items, however, the raise on Adjusted EBITDA and EPS for the year was basically a carry-through of the beat in 1Q
- SUPPLY OUTLOOK
- SAME: Supply continues to be tight and will remain so in the near future.
- SG&A GROWTH:
- WORSE: SG&A growth was taken up by 1% on the low end of HOT’s guidance range. In the quarter SG&A was up 20% YoY or 11% excluding the $3-4MM of non-recurring items and a $3-4MM reversal the company guided to in 4Q. 11% is a lot higher than prior guidance of +3-5%.
- RENOVATION IMPACT:
- SAME: About $5MM in the Q
- BETTER: 2Q12 will be better than 1Q12. Booking windows are returning back to normal. REVPAR is tracking at +4% in April they expect it to come in at +4% in 2Q
- SAME: Canada remains sluggish as it dragged North America REVPAR by almost 200 bps. The strong Canadian dollar has had a negative effect on their big box hotels in Toronto.
- MEXICAN RESORT RECOVERY
- BETTER: HOT's earlier optimism played out well in 1Q as their Mexican resorts 1Q REVPAR grew 17% as US travelers returned
- CORPORATE RATE NEGOTIATIONS
- LITTLE WORSE: Corporate rates are trending up 6%, on the low end of previously given "mid to high single digit" guidance.
- GROUP TRENDS
- SAME: Group was up 5% in 1Q. Management had indicated previously that the group pace was going to be in the mid-single digits in 2012.
- TRANSIENT TRENDS
SAME: "Transient rates continue to climb as momentum remains robust"
- REVPAR OUTLOOK BY REGION
- SAME: Latin America is still expected to be the strongest RevPAR growth region followed by Asia, NA, Europe and ME&A in last place
- FX IMPACT
- SAME: HOT still expects the dollar will be a headwind to pull down REVPAR by 200bps
- NORTH AFRICA AND JAPAN RECOVERY
- SAME: HOT saw big jumps in March RevPAR as the region started to lap some easy comps.
- VACATION OWNERSHIP TRENDS
- SAME: Business remains stable with interval sales and revenues up. HOT reaffirmed its 2012 cash flow target of $125 million
- BAL HARBOUR:
- BETTER: Raised EBITDA forecast by $20MM, which mostly reflects $18MM of higher than expected EBITDA in 1Q12. The company also increased the project’s cash flow expectation by $50MM to $300MM for 2012
- CASH TAXES
- SAME: “Cash taxes in 2012 will be approximately $100 million."
- CAPEX GUIDANCE:
- SAME: “$575 million in 2012, $200 million in maintenance and IT capital, and $375 million in ROI projects.”
- COST GROWTH:
- SAME: "Holding the line on costs" remains HOT's mottoo
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