BYD Q2 2015 CONFERENCE CALL NOTES

Takeaway: A big beat was in the offing but this was pretty impressive, particularly with the flow through

BYD Q2 2015 CONFERENCE CALL NOTES - byd

 

Conf Call 

  • Consumers growing more confident 
  • LV Locals:  all 4 major Local properties achieved EBITDA and non-gaming gains. Expect roadwork (impacting Suncoast/Sam's Town) to be completed by Labor Day. On a combined basis, the Orleans and Gold Coast generated revenue growth of more than 6% and EBITDA growth of more than 20%. This was the best second quarter EBITDA performance for these properties since 2008.  The release in Gold Coast our growth throughout the business with increases in gaming revenue, non-gaming revenue and cash ADR.
  • Downturn LV:  gaming and non-gaming revs up YoY.  Increase in table games and slot volumes.  2015 visitation has been strong.
  • Midwest/South:  11 out of 12 properties grew EBITDA. IP rev grew $3m and $4m in EBITDA.  IP has delivered 3 straight quarters of double digit EBITDA growth. Treasure Chest- good performance among casual players.
  • Delta Downs:  hit record EBITDA in April.  Flooding in May/June resulted in slightly lower EBITDA in 2Q.
  • Blue Chip:  continue to increase market share
  • Kansas Star:  record 2Q EBITDA (+10% YoY); improved operating margins by 130bps 
  • Atlantic City:  Borgata posted 5th consecutive quarter of EBITDA growth.  Borgata sold 5k additional room nights in 2Q and F&B was up. 
  • Non-gaming grew across the portfolio in 2Q
  • Delta Downs doesn't have enough hotel rooms to meet demand; will be adding 167 hotel rooms/suites
  • Paid down $45m in debt in 2Q. YTD, debt reduction has been $125m
  • 2Q Capex:  $39m ($5m at Peninsula). YTD invested $58m.
  • Delta Downs $45m project:  expect to spend $10m in 2015 and remainder in 2016.
  • 2Q Borgata Capex: $10m
  • FY 2015 GUIDANCE: 2H Wholly-owned net revs same as 1H.  65-75% EBITDA flowthrough.  Expect LV Locals EBITDA to grow 5-5.5% for FY 2015.  Downtown EBITDA to grow 14% in FY 2015. Expect Midwest/South to grow EBITDA to 7-8% YoY. Expect $170m in EBITDA (BYD receives 50%) and increased property taxes for Borgata.
  • Borgata leverage at end of 2Q was 4x
  • Will save $12m in interest expense savings when they do decide to retire Borgata's 9 7/8% notes in the next 12 months

Q & A

  • Nice Cash ADR growth in LV Locals
  • July trending similar to Q2 across all properties
  • Continue to have conversations about acquiring assets
  • Revenue growth in-line with expectations. Strong flowthrough 
  • Consumer is getting stronger
  • Customer spend is up, including unrated play and casual play
  • Buy MGM's part of Borgata? Happy with partnership. Would want the right price to buy their share.
  • No comment on PNK/GLPI deal
  • AC promo environment: normal
  • LV Locals margin opportunity:  still sees more opportunity. Current margins are sustainable.
  • Delta Downs $45m project:  expect to attract younger demographic
  • NOL: just under $982m
  • Maintenance capex for slots:  will stay as is
  • M&A:  Hope to do something at least leverage neutral
  • Downtown charters:  today, they run 4 charters a week (used to run 7/wk). Lower because commercial airlines have increased their lift from Hawaii.  
  • Rated play from Hawaii is up
  • No timing on when they will receive $88m tax refund