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.