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Lakes Entertainment, Inc. (LACO)
Q2 2008 Earnings Call
August 6, 2008 2:00 pm ET
Timothy J. Cope – Chairman of the Board & Chief Financial Officer
Lyle Berman – Chairman of the Board & Chief Executive Officer
Justin Sebastiano - Morgan Joseph & Co., Inc.
Clinton Morrison - Felti & Company
Chris Krueger - Northland Securities
Todd Ellers - Roth Capital Partners LLC
[James Kaler] - Banc of America Securities
[Rishi Pak - KBC Financial]
Analyst for [Samia Quatter] - Jefferies Asset Management
[Howard Briarman - Evergreen Investments]
Previous Statements by LACO
» Lakes Entertainment, Inc. Q3 2008 Earnings Call Transcript
» Lakes Entertainment, Inc. Q1 2008 Earnings Call Transcript
» Lake Entertainment Q4 2007 Earnings Call Transcript
Timothy J. Cope
Welcome to Lake’s Entertainment second 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 would like to remind everyone that this call may contain forward-looking statements within the meaning of the federal securities law, including statements concerning 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’ll then discuss the second quarter financial results, recent business events and then we’ll conduct a question and answer session.
Welcome everyone to Lake’s Second Quarter 2008 earnings call. Considering the very difficult economic environment, we were pleased with our second quarter performance. The Four Winds Casino Resort which we manage on behalf of the Pokagon Band of Potawatomi Indians in New Buffalo Michigan followed up on a strong month of March and exceeded our expectations in the second quarter. Since Four Winds was not open in the prior year period, we cannot measures the effects of the slowdown in the economy, we can tell you that the performance has exceeded on internal projects for the second quarter which is very encouraging. As we celebrate the first anniversary of four winds, we continue to see the performance at the property improve which bodes well for our second year of operations. Four Winds has become in our opinion, one of the top destinations in the great lakes region.
We are consistently refining 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 is continued in its rapid expansion and our club membership is still exceeding 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 used these same programs to leverage the hotel as well. Year-to-date we are now running over 98% occupancy.
In the second quarter, we shifted advertising dollars for a short time to the Chicago market and we believe the campaign produced tangible results in terms of awareness, market penetration and property visit by Chicago land gamers. Additionally, we believe that the investment that we have made in our guest services and employee training programs is also having a positive effect on retaining guests. Our internal research shows that guests rate Four Winds customer service much higher than competitor service and Four Winds guest also indicate an extremely high likelihood to return to the Four Winds in the future.
In addition to Four Winds, our Cimarron Casino in Perkins, Oklahoma which we manage for the Iowa Tribe of Oklahoma continues to see strong results. The casino which contains 360 slot machines, saw total revenue up in the second quarter of 2008 compared to the prior year period. We expect continued solid performance from Cimarron for the rest of 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 scheduled grand opening at the end of this year. We have commitments for $65 million in FF&E financing for this project and are in the process of finalizing this financing. The casino project is approximately 80% complete and the dedicated interchange from US Route 50 which will allow for easy access for our customers to the casino is now approximately 87% complete.
We were very pleased last month with the news of the Shingle Springs Tribe and Governor Schwarzenegger signed an amended compact that will allow for expanded Class III gaming up to 5,000 Class III slots at the casino. We now await ratification of the amended compact from the California State Legislator and approval from the Bureau of Indian Affairs which we expect to receive before the opening of the casino. Upon its opening, the facility will feature approximately 2,000 slot machines and gaming devices, 75 gaming tables, 10 food and beverage outlets and approximately 3,200 covered parking spaces. We believe that Red Hawk Casino is well positioned to draw from a large customer base with over 4 million 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 LakesEntertainment.com.