Another sloppy quarter from a regional gamer. We're not feeling great about the next few quarters either.
PNK 3Q09 CONF CALL
Property commentary
- Market share at Lumiere grew to 19% in 3Q09 from 15% last year
- Bossier city benefitted from higher hold to the tune of $200k in EBITDA
- Belterra admissions increased 2.2%, despite spend per visitor decreasing. Hotel occupancy also increased
- Boomtown New Orleans revenues look to have stabilized on October, finally
- Reno market continued to experience decline, but it looks like gaming revenues are stabilizing
- Argentina was impacted by H1N1, currency, and inflation
- Corporate expense - down 14% YTD and 2.3% in the quarter
Balance sheet
- Have about $145MM of net cash
- Amended credit facility in July for a price of 50bps incremental spread, 50 bps upfront fees, and a 15% reduction in committment
- Issued $450MM of new debt and used proceeds to repay their most restrictive bonds and bank outstanding
- Bottom line they increased liquidy and financial flexibility to pursue their development pipeline
- They still need an extension on the credit facility, hopefully by the end of the year
Contruction Update
- River City cash budget $357MM of which $228MM was already spent
- Sugarcane Bay cash budget is $391MM
- Baton Rouge asked for more extensions which were granted. Allowed them to get a max price contract by 1Q2010. Will start construction in May 2010
Q&A
- Heighted competition in some markets, elaborate
- Penn opened a new riverboat near Belterra
- Indiana Downs also opened a new permanent facility vs a temporary tent
- In New Orleans had several weak months over the summer due to the economy and promotions offered on the Mississippi Gulf Coast. (Like Beau Rivage)
- Lake Charles, they do $400/ day while Delta Downs does $300/ day. Delta Downs was aggressive on the promotional side - Dan Lee got defensive regarding BYD's comments about lack of demand to expand at Lake Charles.
- Entire Reno market still hurting from Indian gaming in CA
- Timing of CapEx spend on Baton Rouge and Sugarcane
- Sugarcane to be $425MM next year
- Baton Rouge near $60MM
- Maintenance capex of $40
- Plan to have the R/C rolled over before they start construction of Sugarcane
- Not seeing much cost reduction in construction
- When would Baton Rouge open? Contract calls for opening with 18 months of contruction so the earliest they can open is late 2011. Think that that is a reasonable time
- Very honest on cannabilization on Lumiere when River City opens. Think that they can do $120-130MM across the 2 properties at marturity
- Slower growth in Southern Louisiana due to being at capacity (re: L'Auberge)
- Trends in Oct at L'Auberge? Continued at the 3Q09 pace, but Dan is more optimistic about Nov & Dec
- Will order the steel by year end for Sugarcane Bay - assume that the extension of the bank line will be done by then
- Hope that both Sugarcane Bay and Baton Rouge do a 15% cash on cash return.. won't break out the property's results (meaning L'Auberge / Sugarcane since Sugarcane is really just an expansion)
- Good luck on that
- L'Auberge should open in 2011