Disappointing numbers from ISLE; August trending similar to soft July.



"We have again demonstrated the agility of our business by increasing retail play, managing costs and maintaining our average customer spend and visitation.  We did experience a modest decline in our overall number of database customers, as residents in our markets have continued to feel the squeeze of the economic contraction and the unemployment and housing pictures have not improved.  We are confident that our branding and marketing programs have been successful in influencing customers across the portfolio during the quarter, which stands to have a positive impact on profitability upon economic recovery."


--Virginia McDowell, president and COO




  • Nemacolin Woodlands Resorts project: 1st of 2 hearings next week
  • Meeting tomorrow with Nevada Gaming Commission for opportunity in Nevada
  • Non-recurring expenses cost 7 cents per share: attempted equity offering, Rainbow acquisition, and interest rate swap expenses


  • Slot capex for 2011: $20MM (new machines, signage, conversions, etc.)
  • Capex expenditure for this year: $40MM (will spend $8.5MM on BYI system for Pompano and Waterloo)
  • Consumer spending trends:
    • Win per trip and win per guest flat
    • Not marketing to customers in lower-end of database hurt revenues
    • July--softest of the 3 months; in August, similar to July--"bumping along the bottom"
  • Florida
    • net effect of tax change was $545,000 (25 days law was in place)
    • change in tax rate resulted in $1MM in higher revenue but there was a $400,000 charge related to loss of tax benefit (due to lower tax rate) on progressive liability--which is an one-time item
    • Poker will take time to ramp up.
  • Iowa Market: Waterloo results were good; Bettendorf pressured by road construction
  • Increase in retail play--spent more money on broadcast marketing
  • Corporate expense: $8.5 MM run rate
  • Swap: $2MM will run off by end of FY2011 and will trickle down in FY 2012
  • Davenport run rate going forward is similar to FY1Q; road construction will be over in October
  • Vicksburg market: a lot of free play in this market
  • Cape Girardeau project: $125MM estimate; if license awarded, it will take 2 years to build it out
  • Opportunity for margin improvements and EBITDA growth will depend on when unemployment/housing turns around
  • Biloxi: any positive impact from Alabama shutting down?
    • Yes, lower local traffic was offset by more visitors from Alabama
  • No concerns with debt covenants (interest coverage: 2x)
  • Maintenance capital will be much higher this year compared with last year
  • Leverage ratio: 6.8x to 6.9x
  • More promotional allowances at Pompano in FY1Q
  • Available credit facility at end of FY1Q: $125MM

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