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Isle of Capri Casinos, Inc. (ISLE)
F2Q10 Earnings Call
December 1, 2008 11:00 am ET
Jill Haynes – Senior Director of Corporate Communications
James B. Perry – Chairman of the Board & Chief Executive Officer
Virginia M. McDowell – President & Chief Operating Officer
Dale R. Black – Chief Financial Officer & Senior Vice President
David Katz – Oppenheimer & Co.
Dennis Forst – Keybanc Capital Markets
Justin Sebastiano - Nollenberger Capital Partners
Dennis Farrell – Morgan Stanley
John Maxwell – Jefferies & Co.
David Hargreaves – Sterne Agee
Andrew Brown – Conning Asset Management
Previous Statements by ISLE
» 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
» Isle of Capri Casinos, Inc. F2Q09 (Qtr End 10/26/08) Earnings Call Transcript
All statements made during this call that relate to future results and events are forward-looking statements that are based on our current expectations. Actual results and events could differ materially from those projected in the forward-looking statements because of risks and uncertainties which are discussed in our annual and quarterly SEC filings and in the cautionary statement contained in our press release. We assume no obligation to update our forward-looking statements.
We are joined on the call today by Jim Perry, Chairman and Chief Executive Officer; Virginia McDowell, President and Chief Operating Officer; and Dale Black, Chief Financial Officer. With that, I’ll turn the call over to Virginia McDowell.
Virginia M. McDowell
We are pleased with the results for the majority of our properties given the ongoing issues with the economy. Despite reductions in consumer spending in most leisure categories, there is still fundamental demand for gaming as evidenced by year-over-year increases in rate of visitation at nearly every Isle property outside of Missouri. The issue continues to be pressure on the top line from patrons spending less per visit and fewer high margin retail players.
This is consistent with Black Friday shopping behavior this year where a national survey indicated more shoppers spending less money with a clear trend to bargain hunting. While we do believe that the economy is on a slow road to recovery, it is important to realize that the economic impact of the recession is still hitting hard in many regional markets judging by increases in the unemployment rate in each of the 14 counties where an Isle property is located.
The national average unemployment rate of 10.2% in October is the highest since April 1983 and three of our properties: Kansas City; Caruthersville; and Lula saw unemployment rates even higher than the national average. Despite the economic pressures we continue to face, we have been successful in overhauling our cost structure. Over the past two years we have introduced aggressive cost cutting programs and enterprise wide initiatives designed to elevate the customer experience and create value as we continue to focus on executing the fundamentals at each of our properties.
While we do search for ways to reduce costs across the company, we also look for specific opportunities to improve the operation of each individual location. We were successful in increasing EBITDA, market share or margins at more than half of our 14 properties year-over-year and are currently running in excess of 25% margins at seven of those properties, in excess of 20% margins at two additional.
Whether the transformation of an underperforming high end restaurant in Waterloo where covers nearly tripled, significant savings in Lake Charles as a result of analyzing telecommunications usage or saving nearly $500,000 in IT costs by moving to shared regional servers at two Lady Luck properties, we successfully increased efficiency and/or profitability without negatively impacting the customer experience. As indicated in the Q2 press however, we continue to address issues in Pompano, Lake Charles and Bettendorf.
We are very pleased to announce the sale yesterday of the remaining two casinos we operated in the United Kingdom and expect the sale of our non-operating assets in the UK to be completed within the next month. We’re also pleased to announce that we have formerly ended our operations in Grand Bahamas and have successfully transitioned the property to a new operator. In addition, we continue to pursue opportunities for future growth including management contracts and accretive tuck in acquisitions and with that I’ll turn it over to Dale.
Dale R. Black
I just quickly want to make sure to talk about a couple of the unusual items in the press release this time. We did record a $6.8 million receivable in the quarter that represents the discounted value of some cost recovery in a contract that the company had related to its former development opportunities in Pittsburgh. Previously all of these things had been expensed and once the casino in Pittsburgh opened we changed our outlook I guess on the collectability on that amount and we’ve been receiving the payments on schedule and now have recorded a receivable.
The other thing that we had this quarter, the other large item was a favorable income tax settlement related to state income tax audit at a couple of our properties that rolled through this quarter. When you cut out the noise I guess in the numbers, our reported income for the quarter was $0.06. If you take out the unusual items our EPS from continuing operations without those items would have been about $0.20 loss compared to a $0.34 loss last year.