Release Date: August 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Chamonix property generated positive EBITDA of $600,000 in the second quarter.
- Gaming revenues at Chamonix more than doubled compared to the previous year.
- Market share in Cripple Creek increased from 21% in January to almost 26% in June.
- American Place revenues were up 34% and EBITDA increased by 84% in the second quarter.
- Extended lease at Grand Lodge for 10 years, ensuring long-term stability.
Negative Points
- Chamonix's EBITDA of $600,000 is below expectations given the investment.
- Mid-week occupancy at Chamonix remains low, affecting overall profitability.
- Sports skins revenue faced a setback due to the loss of one skin and delayed payments.
- Silver Slipper had a rough first quarter, impacting overall performance.
- High marketing expenses are necessary to change the perception of Cripple Creek as a downscale destination.
Q & A Highlights
Q: Can you walk through the monthly progression on EBITDA for Chamonix throughout the quarter and comment on July?
A: In the quarter, EBITDA improved every month since opening. Preliminary figures for July suggest around $1 million in EBITDA, up from June. While this is not yet acceptable given the investment, the trend is positive. Efforts are ongoing to increase mid-week occupancy through targeted promotions and building a mailing list of known gamblers.
Q: What is the new run rate for your sports skins absent the one-timer in Q2?
A: The annual run rate is about $5.6 million, which will increase over the coming years. This assumes no new partners are found.
Q: What are you seeing in terms of group and convention mix to fill midweek rooms in Colorado?
A: We are behind on where we should be. We recently hired a second salesperson and aim to have four or five. Some midweek business has been secured, such as the state VFW convention and a professional dart championship, but there is still a long way to go.
Q: Are there still cost levers to pull at American Place to get the margin over 30%?
A: Yes, particularly in marketing. As we build a better mailing list, we can focus marketing efforts more efficiently. The immediate goal is to increase monthly gaming revenue towards $10.5 million with north of 30% margins.
Q: How much of the $325 million for American Place do you anticipate financing through new bonds?
A: A significant portion will come from internal cash flow, so we don't need the full $325 million in additional financing. Likely, half to 75% will be financed through new bonds. We aim to refinance our bonds with enough extra money to cover the gap.
Q: What does the competitive environment look like in Cripple Creek?
A: Our principal competitor is Triple Crown, which is professionally run. Other competitors include Golden Nugget, which has improved under new ownership, and Century Casino. The real opportunity lies in growing the market, particularly in Colorado Springs, where gaming per capita is about half of what it should be.
Q: Do you have any data on how many people from Denver are making it to Chamonix and their behavior?
A: 21% of our sign-ups are from Denver, indicating they are visiting the property. We are focusing our advertising on likely gamblers and using sophisticated targeting methods to attract more visitors from Denver and other areas.
Q: Are you looking at potentially monetizing any less core assets for financing the permanent American Place?
A: We are always looking at opportunities to improve our portfolio, but we have nothing to report at the moment.
Q: Can you provide some color on CapEx for American Place next year and maintenance CapEx going forward?
A: The commitment is to invest an incremental $325 million. Most of this will be back-ended, with significant spending in the last six months of the two-year construction phase. Maintenance CapEx will be minimal initially, focusing on design fees and minor construction costs.
Q: Are you able to use the escrowed cash for the upcoming coupon payment?
A: No, the escrowed cash is for Chamonix's purposes, but we are confident in making the August 15 payment.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
