ISLE F2Q 2015 EARNINGS CALL NOTES

Solid flow through but is it sustainable?

PREPARED REMARKS

Virginia McDowell, CEO

 

Q2 Operating Results Highlights: 

  • Increase in visitation
  • 2nd quarter in uptick of retail (non-rated) customer play up nearly 6%,
  • 3% increase in rated play driven by
    • 5% increase in "A" segment customers
    • 3% increase in "C' segment customers
    • flat YoY in lowest rated segment
  • QoQ and YoY increase in market share
  • Hopeful in improving lower-end segment as an indicator of a rising tide

Eric Hausler, CFO

  • Net revenues +3%
  • EBITDA Flow through 87%, due to flat cost structure
  • Special Items:
    • $1.2 million favorable Waterloo property tax relief
    • $3.0 million Referendum 68 in Colorado
  • 10 properties higher net revenues
  • 11 properties higher EBITDA margins
  • Capex: $28-$31 million additional in remainder FY15 due to South Tower renovation at Bettendorf

Q&A

Q: Colorado - how think about property positioning longer term?

  • View as positive as ISLE property is one of the first casinos on the mountain. Any increase in demand to Blackhawk area, ISLE should capture share.

Q: Consumer improvement?

  • Feel good/optimistic about improvement in upper end of data base and spend.

Q: Customers feeling better about lower gas prices?

  • Not necessarily see correlation to lower gas prices, helps sentiment.  However, unemployment rate in ISLE markets now equal to 2007/2008 - pre-recession levels.

Q: Bettendorf - future development, moving to land based?

  • Continue to look to land based opportunity, project fully scoped, could move in the spring 2015, will have an update in spring 2015 when have final plans, designs, fully-baked.

Q: Lake Charles Golden Nugget - any marketing data points around opening?

  • Lost a number of employees, because ISLE did not have a retention plan. PNK had a retention plan.  Have a marketing plan, promotions, advertising on billboards leaving Houston to Lake Charles. 

Q: Weather - November trends how impact ISLE?

  • Current trends interesting, not do anything about weather, focus on programs and marketing plans.

Q: Florida, compact renewal, gaming expansion?

  • 5 year exclusivity expires mid-2015, while complex situation, catalyst for new regulations, ISLE working with lobbyists to ensure parity of gaming regulations and tax rates.  FL legislation session begins in March.

Q: Houston - key market & Lake Charles plans?

  • New positioning, Farmers Market restaurant/buffet, new interior fixtures.

Q: Balance Sheet, Cash & Revolver?

  • Have bonds that become callable in March, will evaluate as able and continue to pay down revolver.

Q: Database & low-end improvement?

  • Seeing improvement across all properties, optimizing mail marketing, retail (unrated play) was up 5%, but lowest segment was flat.

 


Did the US Economy Just “Collapse”? "Worst Personal Spending Since 2009"?

This is a brief note written by Hedgeye U.S. Macro analyst Christian Drake on 4/28 dispelling media reporting that “US GDP collapses to 0.7%, the lowest number in three years with the worst personal spending since 2009.”

read more

7 Tweets Summing Up What You Need to Know About Today's GDP Report

"There's a tremendous opportunity to educate people in our profession on how GDP is stated and projected," Hedgeye CEO Keith McCullough wrote today. Here's everything you need to know about today's GDP report.

read more

Cartoon of the Day: Crash Test Bear

In the past six months, U.S. stock indices are up between +12% and +18%.

read more

GOLD: A Deep Dive on What’s Next with a Top Commodities Strategist

“If you saved in gold over the past 20 to 25 years rather than any currency anywhere in the world, gold has outperformed all these currencies,” says Stefan Wieler, Vice President of Goldmoney in this edition of Real Conversations.

read more

Exact Sciences Up +24% This Week... What's Next? | $EXAS

We remain long Exact Sciences in the Hedgeye Healthcare Position Monitor.

read more

Inside the Atlanta Fed's Flawed GDP Tracker

"The Atlanta Fed’s GDPNowcast model, while useful at amalgamating investor consensus on one singular GDP estimate for any given quarter, is certainly not the end-all-be-all of forecasting U.S. GDP," writes Hedgeye Senior Macro analyst Darius Dale.

read more

Cartoon of the Day: Acrophobia

"Most people who are making a ton of money right now are focused on growth companies seeing accelerations," Hedgeye CEO Keith McCullough wrote in today's Early Look. "That’s what happens in Quad 1."

read more

People's Bank of China Spins China’s Bad-Loan Data

PBoC Deputy Governor Yi says China's non-performing loan problem has “pretty much stabilized." "Yi is spinning. China’s bad-debt problem remains serious," write Benn Steil and Emma Smith, Council on Foreign Relations.

read more

UnderArmour: 'I Am Much More Bearish Than I Was 3 Hours Ago'

“The consumer has a short memory.” Yes, Plank actually said this," writes Hedgeye Retail analyst Brian McGough. "Last time I heard such arrogance was Ron Johnson."

read more

Buffalo Wild Wings: Complacency & Lack of Leadership (by Howard Penney)

"Buffalo Wild Wings has been plagued by complacency and a continued lack of adequate leadership," writes Hedgeye Restaurants analyst Howard Penney.

read more

Todd Jordan on Las Vegas Sands Earnings

"The quarter actually beat lowered expectations. Overall, the mass segment performed well although base mass lagging is a concern," writes Hedgeye Gaming, Lodging & Leisure analyst Todd Jordan on Las Vegas Sands.

read more

An Update on Defense Spending by Lt. Gen Emo Gardner

"Congress' FY17 omnibus appropriation will fully fund the Pentagon's original budget request plus $15B of its $30B supplemental request," writes Hedgeye Potomac Defense Policy analyst Lt. Gen Emerson "Emo" Gardner USMC Ret.

read more