CONF CALL
- Made meaningful progress in 4Q
- Gaming and non-gaming growth in LV Locals business
- Revenue growth remains modest
- LV Locals: non-gaming was very strong. Hotel revenues grew more than 13%, driven by higher room rates. F&B grew as well.
- Downtown: Visitation from Hawaii remain strong
- Regionals: stabilizing trends in 3Q continued into 4Q
- Kansas Star: rev and EBITDA grew. Op margins grew 65bps YoY to nearly 44%. Positive trends have continued into January.
- Delta Downs: +15% EBITDA growth in Q4. EBITDA growth continued into December even with entrance of Golden Nugget. +4.5% gaming revenue growth for January. Cautiously optimistic.
- Blue Chip: increased market share by 80bps; grew admissions by 8%. Strong non-gaming (hotel/spa/entertainment) driving strong growth in visitation esp from Chicago area.
- Borgota: quarterly record in slot win, table win, poker and GGR. Hotel rev grew 6% in 4Q. Have kept Water Club open for 17 additional days in 2014 (generating an additional 9,500 occupied room nights)
- Borgata online: generated $2M in EBITDA in 4Q
- Going forward, debt reduction remain a priority
- By end of 1Q, will complete 400 rooms of SunCoast. Next up: 1,000 rooms at Orleans, more than 400 rooms at the IP and nearly 200 rooms at Blue Chip.
- In 4Q, opened bar at SunCoast and California noodle house in downtown LV
- Earmarked $45m to reposition non-gaming (multi-year program)
- 11 more projects planned in 2015
- Continue to evaluate REIT option
- 4Q capex; invested $55mm ($11m Peninsula)
- 2014 capex: $140m (Boyd/Peninsula)
- 7m Borgata capex (2014: $19M)
- Maintenance capex budget: Boyd ($100m), Peninsula ($15m), total: $160m
2015 guidance
- 2015 capex spend to be slightly higher YoY
- Borgata capex: $40m ($25m maintenance, $15m property enhancement)
- D&A: $210-215m ($140-145m - Boyd, $70m Peninsula)
- Borgata D&A: $60m
- Interest expense: $225m (assume no refi)
- $155m - Boyd, $70m - Peninsula
- Borgata interest expense: $60-70m
- Corporate expense: $65m -reflects incremental spending in IT, business analaytics, and marketing
- Deferred rent: $4m
- Pre-opening expense: $10m
- Share-based compensation: $12m
- 112m- share count
- LV Locals: +2-3% EBITDA growth
- Downtown: flat EBITDA
- Midwest/South: flat EBITDA
- Peninsula: +2-3% EBITDA growth
- Borgata: $155/160m EBITDA
- Assume increased real estate tax rate
1Q 2015 guidance
- LV Locals and Downtown on a combined basis flat YoY
- Midwest/South/Peninsula: +2-3% EBITDA growth
- Borgata: $30-35m
Q & A
- Margin improvement: have put in several cost initiatives and more effcient marketing costs....getting tougher and tougher to find improvement in margins
- Downtown Las Vegas ADR: largely driven by Hawaiian packages (60-65%) which are pre-priced. Have some ability to drive rate but not significant since not much cash rooms. Visitation on Fremont Street have increased.
- AC tax settlement: $88m (agreement's been extended. Have 60 days to create a plan by emergency manager.) Fully expect to get that $88m.
- Want to find profitable promotions. Low-end database (casual gamer) certainly more sensitive to promotions
- New acquisition opportunities: LV Locals, Pennsylvania
- Rio Rancho deal in Sacramento progressing as scheduled
- Low gas price boost? Generally, have a halo effect but it's difficult to tell whether consumers will spend more money on gaming
- Spent a couple of million on REIT proposal in 2014
- Unwilling to call a 'trend' at this point
- 4Q Corporate expense: timing related expenses
- Louisiana affected by low oil? Not expect tremendous risk from Houston area. Robust economy in Lake Charles area ($9bn infrastructure developments, offsetting some of the energy decline)
- Asset impairment: multiple assets from portfolio
- Want to combine Boyd and Peninsula debt but want to be ready
- Borgata online: mostly variable cost; could generate $3-5m EBITDA in 2015.