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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.