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Lakes Entertainment, Inc. (LACO)
Q1 2008 Earnings Call
May 8, 2008 at 3:00 pm ET
Lyle Berman - Chairman and Chief Executive Officer
Timothy Cope - President and Chief Financial Officer
James Kayler - Banc of America Securities
Todd Eilers - Roth Capital Partners
Chris Krueger - Northland Securities
Clint Morrison - Feltl and Company
Rishi Parekh - KBC Financial
Pat McDavis - Analyst
Previous Statements by LACO
» Lakes Entertainment, Inc. Q3 2008 Earnings Call Transcript
» Lakes Entertainment, Inc. Q2 2008 Earnings Call Transcript
» Lake Entertainment Q4 2007 Earnings Call Transcript
I would now like to turn the presentation over to your host for today’s call, Mr. Tim Cope. You may proceed, sir.
Timothy Cope – President and Chief Financial Officer
Thanks Jasmine. Good afternoon, and welcome to Lakes Entertainment’s first quarter 2008 earnings conference call. On the call with me is Lyle Berman, Lake’s Chairman of the Board and Chief Executive Officer.
As we begin our prepared remarks, I’d like to remind everyone that this call may contain forward-looking statements within the meaning of the Federal Securities law, including statements regarding business strategies, and their intended results, and similar statements concerning anticipated future events and expectations that are not historical facts. These forward-looking statements are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements do not guarantee future performance and therefore undue reliance should not be placed upon them.
Lyle will begin our discussion today with a general overview and update on our casino projects. I will then discuss the fourth quarter financial results and recent business events and then we’ll conduct a question-and-answer session. Lyle?
Lyle Berman – Chairman and Chief Executive Officer
Thank you, Tim, and welcome everyone to the Lakes’ first quarter 2008 earnings call. Our first quarter was initially hampered by severe weather in Michigan, but we believe that significantly improved results in the second half of the quarter show that the Four Winds Casino Resort, which we manage on behalf of the Pokagon Band of Potawatomi Indians is on the right path and capable of producing strong results given reasonable conditions. We anticipate the spring and summer months will be strong and provide further evidence that the Four Winds is one of the top destinations in the Great Lakes region. In addition, we continue to refine our targets in terms of customers and demographics in order to provide the best possible guest experience and maximize operating results at Four Winds.
Four Winds customer loyalty program continues to rapidly expand, and our club membership still exceeds our expectations. We have used this data to create direct marketing programs and promotions that have significantly improved the level of play from our guests, increasing the win per guest statistics.
We have also used the same programs to leverage the hotel as well. Year-to-date, we are now running over 97% occupancy. To meet the demands of the higher worth players, we converted the seafood restaurant into a dedicated club member-only lounge, exclusively for members of the top tier of the loyalty program. This change, along with other service initiatives has resonated well with the players and reflects positively in our customer service surveys.
Further, in April, we shifted advertising dollars to introduce Four Winds into the important Chicago market, and we believe our campaign will raise the awareness and help us further penetrate this market. March was clearly our best operating month since opening and April continued on a similar path.
In addition to Four Winds, our Cimarron Casino in Perkins, Oklahoma, which we manage for the Iowa Tribe of Oklahoma, continues along with strong results. The casino which contains 360 Class III slot machines continues to show steady improvement. In the first quarter of 2008, total revenue was up 26% from the prior year. We expect continued solid performance from Cimarron throughout the year.
The Red Hawk Casino project near Sacramento, California, which is the casino development and management project currently under construction with the Shingle Springs Band of Miwok Indians, remains within budget and on schedule for a grand opening in late fourth quarter of 2008.
We are currently in the process of arranging FF&E financing of approximately $65 million. The casino project is approximately 59% complete. Once fully completed, the facility will host a total of 2,100 slot machines and gaming devices, 75 gaming tables, 10 food and beverage outlets, and approximately 3,200 covered parking spaces. We’ll also have a dedicated interchange from US Route 50, which is approximately 74% complete, allowing easy access for our customers to the casino, only a few hundred yards away. We believe the Red Hawk Casino is well positioned to draw from a large customer base with over 4 million people in a 75-mile radius of the casino, achieve a strong ROI, and create shareholder value. You can see webcam shots of current construction on our website at www.lakesentertainment.com.
There is not much news to report on Jamul Indian Village Casino project near San Diego and the Iowa Casino resort near Chandler, Oklahoma. Planning is still ongoing to redesign the proposed Jamul Casino to provide for approximately 1,000 Class II gaming devices along with 25 Class II table games. We are working with the tribe to determine when Casino construction will begin.
For the Iowa Casino resort, which will be our second project with the Iowa Tribe of Oklahoma, we are still waiting on the Bureau of Indian Affairs for approval of the land plan on which the casino resort will be built. After the BIA approval is received, we expect to rapidly receive NGIC approval on our management contract, the last step needed before design, financing and construction of the project begins. Once approval is received, we expect a 12 to 18-month development in construction timeline with an expected opening of Iowa Casino in early 2010. The casino is currently planned to have approximately 1,200 to 1,500 Class III slot machines, 30 to 50 table games, four restaurants and a hotel. There is nothing new to report on our Vicksburg, Mississippi project.