Takeaway: Another good quarter by a regional gamer and estimates going higher for the first time in years


  • Revenues up ~11% in January, with positive trends that continuing into February
  • Pleased with financial performance in 4Q
  • Seeing improvement in consumer confidence
  • Based on Jan/Feb numbers, consumer seems to have wind behind its back across all geographical areas
  • Sees improving spend per visit and visitation
  • Q4 tables game volumes grew 10% at ASCA properties. Expect them to grow in 2015.
  • Have seen solid improvement in REVPAR at East Chicago (+10%) and St. Charles (+7%).  15% increase in hotel cash revenues in Q4.
  • myChoice program: 9% increase in play and 6% spend per visit
  • Market share:
    • Grew 60bps and expanded EBITDA margins
    • River City - record market share
    • St. Charles: highest since 2010
    • East Chicago- highest since 2008
  • L'Auberge Lake Charles: Q4 and 2014 record EBITDA and performance.
    • December: revenues lower but volumes increased
    • January:  both revenues and volume both increased
  • Belterra Park:  seeing larger % of play from VIP players; have launched expanded advertising campaign in the next 30 days
  • 1st time in 10 years, SS revenue growth
  • Q4 SS EBITDA $152m increased $11.6m (excluding integration costs and Lake Charles costs)
  • Belterra Park posted positive EBITDA in January
  • Lake Charles retention program costs:  halfway through program.  Expect $1m per quarter in Q1 and Q2 2015.
  • Boomtown New Orleans hotel:  have improved results
  • Will make final payment for Belterra Park license in 2Q 2015
  • So far in 2015, have repaid $25m in debt
  • Will issue equity to de-lever.  $1bn prelim estimate lowered to $700m and potentially less.  Reduction due to strong operating performance broad base which has a multiplier effect on leverage and cash flow and other company refinements
    • Not have added risk to profile of company through this change.
    • The issuance of up to 20% of REIT could be large portion of the $700m
  • REIT spin-off: (issue shares up to 20% of REIT pre-spin without tax consequences), straight equity, equity-linked securities options
    • Submitted Private letter ruling to IRS in December.  
    • Expect REIT in 2016

Q & A

  • 1Q so far, revenues continue to build
  • Lake Charles:  
    • Golden Nugget attracting a different and new customer 
    • Optimistic on market expansion
    • Seeing myChoice customers grow as well
    • L'Auberge hotel doing well
    • Not changed marketing strategy
  • Lower G&A:  expect 2015 to be south of $80m (mid 70s or so)
  • How much has PNK spent on REIT transaction? $1m in quarter. $2-3m overall.
  • REIT:  Need approval from IRS and gaming regulators. Will be diversified REIT.
  • New Orleans smoking ban: sees upside from that
    • Some discussion of smoking ban in other Louisiana markets but see no progress there
  • Table game initiative:  still early 
    • National casino advertising 
    • Expansion of table games
  • East Chicago: putting in a restaurant called Stadium (will be there in April).  And doing some gaming changes as well.  Construction starting on Cline Avenue Bridge is a positive
  • Maintenance capex:  close to $80m run rate but $100m in 2015
  • Term Loan B outstanding:  $782m ; should see it go lower as you go forward

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