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Isle of Capri Casinos, Inc. (ISLE)
F2Q09 Earnings Call
December 2, 2008 11:00 am ET
Virginia McDowell - President, Chief Operating Officer
Dale R. Black - Chief Financial Officer
James B. Perry – Chief Executive Officer
Lawrence Klatzkin - Jefferies & Co.
Rishi Parekh – KBC Financial
Steven Wieczynski - Stifel Nicolaus & Company, Inc.
Justin Sebastiano - Morgan Joseph
Tom Shandell - FIA
James Kahler - Bank of America Securities
Charlie [Rashad] - FMH Capital
David Raney – Agra Capital
Dana [Spaggs] – Callidus Capital
Welcome to the Isle of Capri Casino, Inc.’s second quarter conference call. (Operator Instructions)
Previous Statements by ISLE
» Isle of Capri Casinos, Inc. F2Q10 (Qtr End 10/25/09) Earnings Call Transcript
» Isle of Capri Casinos F1Q10 (Qtr End 07/26/09) Earnings Call Transcript
» Isle of Capri Casinos, Inc. F3Q09 (Qtr End 1/25/09) Earnings Call Transcript
These statements may be significantly impacted either positively or negatively by various factors including, without limitation, licensing or other regulatory approvals, financing sources, development and construction activities, costs and delays, permits, weather, competition, and business conditions in the gaming industry. Such risks are more fully discussed in Isle of Capri’s filings with the Securities and Exchange Commission. The information set forth herein should be considered in light of such risks. Isle of Capri does not assume any obligation to update the information contained in this conference call.
Also, this conference call could contain non-GAAP financial measures such as EBITDA. Following this call a reconciliation of non-GAAP financial measures to GAAP financial measures will be posted on the Isle of Capri website.
We are joined on the call today by Jim Perry, Executive Vice Chairman and Chief Executive Officer, Virginia McDowell, President and Chief Operating Officer, and Dale Black, Chief Financial Officer. With that, I would like to turn the call over to Virginia McDowell.
The National Bureau of Economic Research made it official yesterday when they declared that the United States has officially been in a recession for about a year. We are witnessing historically low evaluations for even some of the strongest and most highly regarded companies in a volatile market which continues to behave irrationally.
In a nation where the 24-hour news cycle has had a chilling effect on consumer confidence and created a nation of armchair economists, this certainly does not come as news.
In our press release issued this morning we note that we are coping with the first overall declining gaming market that we have experienced in three decades. Despite this economic uncertainty, however, we believe that we are implementing the right measures to emerge as a stronger company when the economy improves.
We have learned over those nearly 30 years that we have been in the business that it makes no sense to look back and dwell on events that we can’t control, but instead look forward and focus on issues and opportunities within our control: our capital structure, our balance sheet, and the experience we create for our customers.
For nearly 18 months Isle has implemented margin improvement programs at both the site and corporate levels, eliminated unprofitable programs, and restructured our corporate office. Earlier this calendar year we introduced the strategic plan that focused on introducing a two-brand strategy, executing against a series of key operating initiatives, and focusing on organic growth opportunities designed to increase free cash flow.
Because of the continuing pressure on the economy we understand that it is more important than ever that we deliver an entertainment experience of value to our local and regional customers. None of our customers have to get on a plane to reach our properties.
And despite a recession that has resulted in declining revenues, our research indicates that nearly all of our properties have shown significant improvements in creating a clean, safe, friendly, and fun gaming experience. Amazingly, seven of our properties showed improvement in over 20 of the 25 attributes that we measure, and our customer courtesy scores across the company also showed significant improvement in the second quarter versus the first.
Our general managers and their teams are doing exactly what they should be in order to create value. They are looking forward and building a platform for improved results. They are justifiably proud of what they have accomplished in very trying times and we are proud of them.
And with that, I will turn the call over to Dale.
Dale R. Black
Just to get some of the housekeeping stuff out of the way, at the end of the quarter some of our balance sheet statistics and everything.
We had $85.5 million of cash at the end of the quarter. Our total debt was $1.485 billion consisting of the revolver at $114.0 million, $865.0 million on the term loan, $500.0 million in bonds, and $6.0 million in other debt.
Our leverage, as calculated under the credit agreement, at the end of the quarter is about 7.1x and interest coverage is about 2.2x. Debt capacity at the end of the quarter is approximately $100.0 million.
Capitalized interest in the quarter was about $500,000, bringing the total year-to-date to $900,000.
I think everything else from a financial standpoint we pretty much covered in the press release so we will turn it over to questions now.