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Executives

Virginia E. Shanks – Executive Vice President and Chief Marketing Officer

Carlos A. Ruisanchez – Executive Vice President and Chief Financial Officer

Anthony M. Sanfilippo – President and Chief Executive Officer

Analysts

Felicia Hendrix – Barclays Capital

Joseph R. Greff – JPMorgan Securities LLC

Chad Beynon – Macquarie Capital Inc.

Shaun C. Kelley – Merrill Lynch, Pierce, Fenner & Smith, Inc.

Susan A. Berliner – JPMorgan Securities LLC

Rich A. Hightower – International Strategy & Investment Group, Inc.

Carlo Santarelli – Deutsche Bank Securities, Inc.

Pinnacle Entertainment, Inc. (PNK) Q4 2012 Earnings Call February 13, 2013 10:00 AM ET

Operator

Thank you, Vincent, and good morning, and welcome to Pinnacle Entertainment's 2012 Fourth Quarter Earnings Discussion. You'll hear from Ginny Shanks, Chief Marketing Officer and Carlos Ruisanchez, our Chief Financial Officer, and also take your questions after we pass some short comments.

2012 was another remarkable year as we continue the transformation of Pinnacle Entertainment. We’ve outlined in today’s press release a number of highlights. In addition to record full year-over-year financial improvements, I am especially pleased that we continue to strengthen our overall operating capabilities. We have a very talented team that extends throughout our organization.

I like to spend a few moments on the Ameristar transaction. The combination of our two companies makes sense in many ways. As we begun the process of getting to know one another, I’ve been very pleased with the cultural component of our two companies. We both have a focus on our team members, guests and shareholders. Both companies are committed to outcomes with a long-term view on creating shareholder value. Our early assessment is, the merging of our two companies will be a very good fit. We are extremely excited about the possibilities in front of us.

I’ll turn the call over to Ginny and Carlos to provide you some thoughts before we take your questions, Ginny.

Virginia E. Shanks

Thank you, Anthony and good morning. I am going to spend the next few minutes talking about guest behavior trends seen during the quarter and then provide some additional color around the L'Auberge Baton Rouge. First in terms of what we saw in the fourth quarter on a same store basis, excluding Baton Rouge. Overall trip frequency declined or spend per visit stayed fairly consistent with prior year, meaning guests visited less often but the amount they spent on visiting our properties was similar to what we saw during the same quarter last year.

The majority of this softness occurred within the retail segment across the enterprise. These trends continued in the January with similar patterns to what we saw in the fourth quarter. That being overall visitation softness and declines largely seen in the retail segment.

As business level softened in the latter part of the year, we adjusted our marketing spend. For the quarter, marketing reinvestment was down 70 basis points versus prior year excluding Baton Rouge. When we factor in the Baton Rouge property, reinvestment increased slightly at 10 basis points in the quarter from 2011. For full year 2012, our focus on improving the effectiveness of our marketing spends led to an overall 60 basis points reduction in the investments.

Let me now turn to L’Auberge Baton Rouge and provide some color on what we are seeing 120 days post opening. First, we have seen very strong trial with over 100,000 guests now in the property’s database. All the Retama properties now have the universal card functionality and we are seeing the benefits across the property play in Baton Rouge with over 26% of the gaming revenue coming from mychoice members at other Pinnacle properties.

It’s important to note that this Baton Rouge have not materially impacted well yet their home properties. Also showing our ability to attract new guests in the fourth quarter, the Baton Rouge market grew 58% over prior year. We are also seeing encouraging cash revenue trends driven by the quality of the restaurants and the hotel.

Overall, we’re very pleased with visitation trends and look to keep our focus on driving additional regional play, continuing our brand awareness efforts and hosting high profile of them throughout 2013 remains a priority. It’s important to remember that cultivating the IT business takes time and we’re confident that we can reach our goals based on the quality of the properties extremely favorable guest response and the infrastructure we have in place with an experienced teams, branch offices and a network of independent agents. In closing, despite softness in the fourth quarter, 2012 was a very good year with record results from Lake Charles and St. Louis, the opening of L'Auberge Baton Rouge and the addition of the Heartland Poker Tour. I will now turn the call over to Carlos.

Carlos A. Ruisanchez

Thank you Ginny, Anthony and good morning to all on the call. While the fourth quarter had a lot of noise in the main trends in the quarter were somewhat soft. We have made a lot of progress throughout our business in the fourth quarter and in the full year of 2012. There are many noteworthy highlights in 2012 including record overall results in revenue, EBITDA, discretionary cash flow, and adjusted EPS. We opened L'Auberge to overwhelmingly positive reviews from our guests. We recently completed the acquisition of our majority interest in Retama Park in Texas and last year we acquired the Heartland Poker Tour, as Ginny mentioned. In addition, the divested non-core Boomtown Reno operations and entered into an agreement to sell the Atlantic City lane interest.

In March of 2012, we refinanced L'Auberge which extended maturities at lower rates and we purchased almost 7% of our shares outstanding, where we have tremendous conviction in the value of our company and we are very pleased we have purchased shares at those very compelling levels. And finally as you all know, we announced the Ameristar acquisition at the end of the year, which will be a transformational event for our company once completed. Strategically and operationally 2012 was a very solid year.

Turning to our development pipeline and some other topics of interests, on River Downs as noted in the release, we’re well in our way with the redevelopment of River Downs in Cincinnati, demolition of the grandstand and related facilities will be completed shortly, and we expect to begin construction of the new gaming entertainment center this quarter. We plan to open that in the second quarter of 2014.

In the fourth quarter, there was a $4.7 million non-recurring non-cash accelerated depreciation charge associated with the demolition of the building that we’re clear to make way for the new gaming entertainment center. We are excited about the prospects of this project and look forward to the addition to our portfolio of a market-leading property next year.

At Lumiere, we have now satisfied our commitments to the City of St. Louis under the redevelopment agreement which was put in place over five years ago before opening that property. As part of the amended redevelopment agreements, we contributed cash, donated some lands for the overall benefit of the City of St. Louis.

In the quarter, we took approximately a $10 million charge to account for these contributions, which satisfied a remaining $37 million commitment under the redevelopment agreement. At River City in St. Louis, the first space of the $82 million expansion, the 1,600 space parking garage opened in the fourth quarter and alleviated parking shortage at the property. The next two phases are progressing rapidly with a multi-purpose event center expected to come online by the summer and the hotel is scheduled to open in the third quarter 2013.

As we noted in the release, the projects is on budget and actually ahead of schedule. On Asian Coast Development, as noted in the release ACDL continues to make progress on the development of the Ho Tram strip. Phase 1A of MGM Grand Ho Tram Beach is substantially complete and work continues on the Greg Norman designed golf course in the second hotel tower of the MGM Grand.

As previously disclosed, ACDL is engaged with the government of Vietnam to amend its investment certificate.

The opening of the resort for operation is subject to receiving the amended investment certificate with some sort of pumping by its lenders, our working capital and depending on the lengths of the delay, additional capital, the fundings from operations. During the quarter, ACDL raised $30 million from Harbinger Capital affiliates in December 2012. Pinnacle did not participate in that capital raise and as such our equity interest in ACDL was reduced to approximately 24% on a fully diluted basis.

We’ve retained the option to invest our pro rata share of the $30 million capital raise which could offset the dilution we incurred of exercise. In accordance with GAAP in light of the layout of paving the amendment investment certificate, beyond the expected opening date for Phase 1A of the MGM Grand Ho Tram, we have taken a non-cash charge in the quarter of $25 million against the carrying value of our investments in ACDL.

We remain believers for the prospects of MGM Grand Ho Tram Beach, when it eventually opens. The product that’s been built is spectacular and we will post some photos today in our website so that you can see that for yourself.

In summary, we are excited about 2013, and the past we have chartered for our company. The Ameristar acquisition will transform our company by increasing scale, diversity and opening up opportunities in the future. We believe we have a strong financial profile, room for further operational improvements and a bright future ahead.

With that I will turn the call back to Anthony.

Anthony M. Sanfilippo

Carlos, thank you very much. April, we will take any questions that callers may have.

Question-and-Answer Session

Operator

(Operator Instructions) And your first question comes from Felicia Hendrix.

Anthony M. Sanfilippo

Good morning Felicia.

Felicia Hendrix – Barclays Capital

Good morning. At L'Auberge du Lac, I know you had low hold there, but the flow-through at the property looked lower than usual, even adjusting for this. So I'm just wondering, would you contribute that to the room remodel disruption and if so, should we expect similar results through the first half of 2013 when that is getting completed and then also just wondering are you going to start Phase II right after you finish Phase I?

Anthony M. Sanfilippo

Yeah, we would say that when you take that many rooms out of service in a quarter, it does have an impact. We’ve said it both in the release and in Ginny's comments that we saw a bit softening in the business, we’ve made adjustments to that. I would say the team that we have in Lake Charles are very focused on margin flow through and making sure that we're managing the business as efficiently as possible while making sure we take care of our guests that are there. I think it is a reasonable assumption with that many rooms that are out of service, that it could have an impact on flow through in this given quarter. We’re trying to get this next phase done before the summer season hits and then we would not continue with rooms until after Labor Day, next September.

Felicia Hendrix – Barclays Capital

Okay. That's helpful, thanks. And then at my favorite property, Belterra, you talked about temporary elevated repair and maintenance operating expenses there. I was just wondering if you could discuss that and did that account for all the higher costs at that property? Because if you just took the numbers at face value, you might make the conclusion that you might be promoting more than normal in that market?

Carlos A. Ruisanchez

Hi Felicia, this is Carlos. Yeah, we had roughly about probably $0.5 million worth of unusual recurring expenses at Belterra due to some things that broke down beyond their expected life along with (inaudible) pipe broke and flooded some rooms and that’s clearly not normal.

It’s not expected that there have been. However there certainly there is the environment in that market as you have seen from the numbers that are out there. It certainly, it’s gotten more competitive as you have additional competition that come online. We continue to focus on the resort getaway teams that we’ve been holding now for sometimes and there are certainly some amenities that we are upgrading and we are in the process of that – which will have – will come online by the spring here and that will help us compete more effectively, but that market has been soft and certainly that trend has continued into the early part of the year.

Anthony M. Sanfilippo

Let me add to that. We really believe our strategy is right there and this is a unique property. When you look at what’s in Ohio, what’s in Kentucky, this is a wonderful property. Our buffet that we’re remodeling is 11 years old. It was never remodeled, it was actually embarrassing, the best way to say it. And we will have that completed by the end of the March. We also have a stadium, which is a concept we have in multiple properties. We are putting that into the property that will be done by late spring, early summer and we really think in light of what’s happening around is that we have the unique product offering of a full service resort and we’re focused on attracting guests, that’s where they want to be.

Carlos A. Ruisanchez

Right. I know it’s been a property we haven’t brought up in a while Felicia, but it is a property that we think is unique compared to others that you might see within the competitive desk. And then we believe and we’ve started on River Downs, we are completely rebuilding River Downs. We think that will be a complementary property in Cincinnati. It will be a local concept for people who want to come and play in the afternoon, grab something to eat, play in the evenings and then have a full resort experience in our ways. We’ll find both of those properties beneficial, but we haven’t revealed the plans yet. We are excited about what we are building and the capital spend that we are building it for and we think it will be added value to our company when it opens up in the spring of 2014.

Felicia Hendrix – Barclays Capital

Thank you. And just last and final question, just with the second request from the FTC that you just got, are there any concerns there?

Anthony M. Sanfilippo

Well, it’s part of a process that we are going through to complete the transaction. So, the process of going through both regulatory and governmental review is part of the process. So we still fully expect to close by the end of the third quarter, possibly even sooner depending on how the process rolls on.

Felicia Hendrix – Barclays Capital

Okay, thank you very much.

Anthony M. Sanfilippo

Thanks Felicia.

Operator

Your next question comes from Joe Greff.

Anthony M. Sanfilippo

Good morning Joe.

Joseph R. Greff – JPMorgan Securities LLC

Good morning everybody.

Carlos A. Ruisanchez

Hi, Greff.

Joseph R. Greff – JPMorgan Securities LLC

A question for you on Baton Rouge; expenses were a little bit higher, and I know the property's been open for four months. When you look at the cadence of operating expenses or margins throughout the quarter, was there a noticeable change within the operating expense structure, say December month three in the quarter versus October, month one in the quarter? Then corporate expense, corporate expense came in a little bit below. Is that a good run rate to use going forward from your $4.4 million per quarter? Thank you.

Anthony M. Sanfilippo

Thanks Joe. Let me start with that Baton Rouge and then I’ll have Carlos talk about our corporate expenses which obviously we're very proud that we've been able to materially right-size our corporate operation over time. Baton Rouge it was mentioned, we are very proud of. We have opened a terrific facility that the guests that have come to that facility rave about it and a side note internally, we on a regular basis give measurements for guest service and right out of the box it's the highest-rated property in our company, which means that our management team has done a number of things very well there in preparing that property to receive guests. So we feel great about the quality of the property.

We feel wonderful about the service that we are giving to our guests. When we opened up that property, we opened it with a certain structure in mind to make sure that we accommodated the guests that came in, we had a lot of guests that came in on the very front end. And we’ve continued to adjust both in our labor as well as other expenses to make sure that it's in line with the volume of business that we see today. We are very much focused on moving forward with why that property was built. It was to attract more of the high-end or VIP business and those that we're looking to attracted from they’re not laying down, they are doing what they can to try to keep that business.

So we see the ramp-up period that’s being a period of 12 months to 18 months, where as we get trial, there people are saying, we love this product. We love how you service us and we love coming to L'Auberge and Baton Rouge. So this specifically answer your question. We had a lot from the standpoint of market awareness with a lot of advertising on the front-end. We just didn't assume that everyone was going to know that property was there and our marketing awareness has shifted now after a four months period and we believe that we are much more in line with the appropriate operating costs, for the level of business that we have today and we’ll keep that adjusted as we look to drive additional business there.

What we're not doing, it would be crazy on our part, is if we started to discount that business, we’re very much focused what we originally told you all that we were going to do and that is worth appealing for about 90 miles radius around Baton Rouge where we believe we have a product that competes with any other high-end product within about 2 to 3 hours drive to Baton Rouge.

Now the other thing I’ll just add, that we feel pretty good about the air lift, that comes into Baton Rouge’s commercial airlift. And Baton Rouge is a vibrant and growing city. So from a longer-term point of view, we are very bullish on what we had in Baton Rouge.

Carlos A. Ruisanchez

So as it relates to the corporate overhead, you know we've been roughly close to $5 million or so, there is some variability throughout the year. Certainly under pre- Ameristar, we’ve invested that’s a decent run-rate out there and post-Ameristar we have come down at the end, but we can have this discussion after that transaction closes.

Joseph R. Greff – JPMorgan Securities LLC

Okay. Great and then one final question related to ACDL, one what is the net current value of your investments at the end of the 4Q, net of this $25 million non-cash write-down?

And then obviously I am presuming if you had an update with respect to amending the investments to just get a little more expectations for timing. You had put that in the press release this morning, but can you talk about you have a sense of timing there at all or any elaboration other than when you talked about earlier and what’s in the press release would be helpful? And that’s all from me, thank you guys.

Carlos A. Ruisanchez

Sure, thanks. As it relates to the carrying value, we actually invested roughly about $111 million all in that investments. We’ve capitalized interests which had that carrying value go up to $116 million or so in accordance with GAAP and this would brief it down to the low 90s when you pick that into account. As it relates to the investment certificate, clearly there has been a lot of work that continues to take ways.

Look currently Vietnam is intact, which is their New Year and as a result, government is shutdown for that period of time. Our hope is that this will get results very quickly and originally the company ACDL expected to be open respectively by now. Clearly, that hasn’t and the linchpin is going to be getting the investments that we can imagine.

Anthony M. Sanfilippo

And I will add to that Joe that Carlos in his, earlier comments said that we would be posting photos of MGM Grand Ho Tram today on our website. And we decided to do that, because it’s just so spectacular. When you see the photos, I think all of you will be pleasantly surprised at the quality of the facility and the beauty of the facility, coupled out with MGM has done a wonderful job in preparing staff to open up.

So the place is ready to go, this last step really has to do with amending investment certificate, ACDL is responsible for that and we stay in touch with them but that is our responsibility and Carlos explained that there is sort of a holiday period at this point, but they are focused on at the highest priority to amend the investment certificate so that the project can move forward and open.

Joseph R. Greff – JPMorgan Securities LLC

Thank you.

Anthony M. Sanfilippo

Thank you, Joe. We’ll move on April to the next question.

Operator

The next question is from Chad Beynon.

Chad Beynon – Macquarie Capital Inc.

Had a strong year. First, just wanted to touch on St. Louis, Ginny kind of noted some mychoice performance at some of the other markets, we've seen a significant disruption at Maryland Heights and the removal of the total rewards program for patents there and I know it's early but can you talk about any growth in your mychoice database in St. Louis and any other detail on player fields or anything else that can help us think about some additional business that you're getting from that change there? Thanks.

Virginia E. Shanks

I'm not trying to attribute to the change but we continue to attract new members into mychoice to stay focused on making sure that we have a very compelling royalty program, we're getting ready to have our mychoice events, our renewal events in April this year. I think the program continues to grow even more exciting. So as we have said before we run on our rates, we focus on those things that are unique and compelling with Lumiere and with River City and then bring those together into the mychoice umbrella,

So that program continues to grow and I wouldn’t speculate upon its growth based on what’s going on in the market, I think more about what we do within our marketing efforts to attract those guests really 12 months out of the year.

Carlos A. Ruisanchez

And hopefully with how we spare this to get to the property, it really is, part of it is being part of a loyalty program that our guests feel like has value and then, a big part of it we don't talk a lot about it is the experience they get when they visit our properties.

Virginia E. Shanks

And then it's important to note it was mentioned that the parking garage opened at River City over the Thanksgiving again and that obviously has been a good addition to the properties as we enter into the winter months.

Chad Beynon – Macquarie Capital Inc.

Okay, thanks. And then maybe a follow-up on that, could you talk about kind of an updated strategy on social gaming or online gaming as you would potentially grow your mychoice database and then pending the closure of Ameristar you would potentially double the members in your loyalty program, kind of an update there on the Heartland Poker Tour social gaming and online gaming strategy?

Virginia E. Shanks

Take the Heartland Poker Tour and then that kind of leads into our online strategy, so Heartland poker tour is on very good footing, we have spent a lot of time kind of putting that business back together, anticipate a very strong year this year in the land-based tournaments. In terms of that brand, we have talked about that when we acquired Heartland Poker Tour that, that would be the poker brand in which we would move forward with both in offline and online. As we think about online obviously, we are operating in a place refined environment.

So we're in the process of creating our strategy and then building up that strategy for a play-for-fun online casino where Heartland would be our poker brand housed within that and then where it goes from there is obviously based on what happens with real money gaming. It’s too early to talk about having the royalty program in a combined company basis, we do anticipate having one royalty program, that would be the best of all between Ameristar and Pinnacle and that would be designed during really post the integration process and then most likely put in place in 2014 as one loyalty programs, again with both best of all.

And then in terms of a social media that continues to be an important aspect of our marketing channels, we now have all our websites on mobile to just getting ready to launch the reservation functionality within the mobile devices and all my choice members can actually, we have what we launched earlier this year or I should say in 2012, we call it my connecting and just feasibly what it is let’s say online mobile community if you will where members within our top three tiers can go on, they can chat directly with the General Managers of the property, owners and members can chat directly with Anthony, they can talk as a community together.

So we think that just really reinforces kind of the emotional benefit as mychoice and the access that our mychoice members have with our senior leadership team.

Chad Beynon – Macquarie Capital Inc.

Thank you.

Anthony M. Sanfilippo

Thank you very much. April, next question?

Operator

Your next question is from Shaun Kelley.

Shaun C. Kelley – Merrill Lynch, Pierce, Fenner & Smith, Inc.

Hi, good morning guys. I just want to go back to Ginny, some of your prepared remarks on the consumer. Obviously, the slowdown is something that I think we’ve all seen in the numbers and wondering if you could just provide a little bit more color on, just any sense from the consumer as you guys have probably polled or talked to them a little bit about why trips might be down as much as they are and what kind of might be going on with the consumer psyche?

Virginia E. Shanks

We have not polled consumers I think, consumers like many of us are reacting to what happened with the payroll tax and what the paycheck ramifications that have been in the month of January. There was obviously uncertainty in the fourth quarter as the election in the fiscal cliff and all that with playing out and as well as we do, this is the trend that's not unique to us, it seem within our industry and seen outside of our industry.

So I think it's somewhat of an absorption of what has happened with the last three to four months, then we remained focus on having the right levels of marketing reinvestment and not chasing business that may not be in an environment we're right now ready to respond, would be very focused on making sure marketing efforts are well defined and within the appropriate financial parameters.

Shaun C. Kelley – Merrill Lynch, Pierce, Fenner & Smith, Inc.

That's helpful. And then I guess one specific one on St. Louis, I think Ameristar in their release mentioned that the competitor’s property was out of service for some period of time in that market, which may have helped them out a little bit, any sense to whether or not that’s something you guys are a little bit more cautious on going forward just in terms of as transition to that property kicks off if that something may way and you guys you are not as worried about that is they probably are getting the location?

Anthony M. Sanfilippo

Yes Shaun, we will continue to say we run around rates and that if the competitor acts in a manner to attract, a broad base of guests that they got to make that decision. We beneath stated it extremely well. We are very focused on who our guests are, what each property focuses on from an offering standpoint and we are just not in the mass marketing come one, come out property, that’s not what we are.

Shaun C. Kelley – Merrill Lynch, Pierce, Fenner & Smith, Inc.

Okay, thanks Anthony. Just one last one on the normal guests, specifically it’s kind of a hit on the crux of the question, I mean I think what most investors are probably concerned with is whether or not, you will be putting, looking to put more investment into the property or if more investment is required? Is there anyway you can give us a sense, I mean obviously I think we know that in the projects very close to actual physical completion, does they need more funding at this point and would you guys be on the hook for that or get your stake diluted further from this point? Is that something you guys can give us a little color on?

Anthony M. Sanfilippo

Yeah. I would like you to look at those photos sometime today, so that you can see the product that’s been developed there. I think and I know Shaun that you have spend time in Asia, but I think people will be amazed at what’s been there. We are very prudent in making sure that any investment we make whether it’s with Asian Coast Development or anything else, that it’s pretty volatile. We wantthis property open up.

We are an investor and we have got an agreement to manage the second property there. We have come to no conclusions on would we participate in a capital call or would we not, that would depend on the conditions at the time. Getting the investment certificate is really critical. The ability to get that investment certificate that then allows the property to open up is really the gate that ACDL needs us to deliver for us to have a level of confidence to continue to be an investor in that project.

Shaun C. Kelley – Merrill Lynch, Pierce, Fenner & Smith, Inc.

Great, thanks for taking my question.

Anthony M. Sanfilippo

Thanks Shaun.

Operator

Your next question is from Susan Berliner.

Susan A. Berliner – JPMorgan Securities LLC

Hi, good morning.

Anthony M. Sanfilippo

Good morning, hey, Sue.

Susan A. Berliner – JPMorgan Securities LLC

Hi, I guess on the development I was wondering what the results those for out of Ohio, if that changes your plans at all for your casino and also if you have any updated thoughts on Ameristar, Lake Charles property if it would change on anything with regards to the development?

Anthony M. Sanfilippo

Well, so let me start with – the first thing that you’ve asked about, we have been very thoughtful about the level of capital investment that we are putting into River Downs and Cincinnati; one we have a terrific location that is just right of major Interstate. We like the population basin we are going to appeal to, we have paid close attention to win per units been at other properties.

We are focused on a 1600 Michigan VLT facility. We think we are building the right facility and we think that's going to be of the right quality as well as we think it's going to be quite well. We think it will exceed 15% return on invested capital, which is our threshold.

The second question on Lake Charles, Ameristar is in charge and they are managing that process and we're going through the appropriate process for us to close on the transaction and before we close it's their responsibility to complete the project as they've committed to.

Susan A. Berliner – JPMorgan Securities LLC

Great. And I just have one other question with regards to the timing of I guess the small capital rates or I should say the bank debt as well as the bond that you guys are looking for Lake Charles for Ameristar, when should we expect the financing?

Carlos A. Ruisanchez

The financing likely end up being sometime in the second quarter, it all depends on timing of regulatory approvals. Obviously, we don’t want to pump things ahead of time and carry double interest. So we will see – I would expect that there sometime in the second quarter middle to latter part of it is when we will go out to broader syndication.

Susan A. Berliner – JPMorgan Securities LLC

All right, thank you.

Carlos A. Ruisanchez

Great thank you.

Operator

Your next question is from Rich Hightower.

Anthony M. Sanfilippo

Hello.

Rich A. Hightower – International Strategy & Investment Group, Inc.

Hey guys, good morning. Just a quick follow-up on ACDL, I am wondering if we can get a little more color on how the $25 million write-down was calculated? I think it’s about 23% write-downs compared to 2011 that you guys invested and is that solely related to the timing of the investment certificate or is there something else going on in the numbers there?

Carlos A. Ruisanchez

No. What I would tell you is, this was driven by the accounting needs in doing valuation which takes a roughly high discount rate to cash flows to end of the sentiment, I would frankly focus less on the amount per se more than sentiment. Clearly the property is opening up later than expected and as a result of that, we thought it would be prudent to take a write-down with valuations on that for which there is back-up for, but the prospect of the property once opened in our view they really don’t change. It’s more a question of timing and what happens between now and then.

Rich A. Hightower – International Strategy & Investment Group, Inc.

Okay, great. And then are there any potential other sources of bank funding or is it limited to the syndicate of Vietnamese banks, is there any flexibility there?

Anthony M. Sanfilippo

Okay, to be honest we’ve been in discussions as it relates to the working capital facilities that we need to secure, some of that will – can be based on timing and as you can imagine, getting the investments sort of get amendment is a key part of that process. So we do believe there will be other sources of capital one the investments as they get amended in the current syndicate of banks restarts funding what they have done under the community facility that they have in place.

Rich A. Hightower – International Strategy & Investment Group, Inc.

All right, thanks guys. I appreciate it.

Carlos A. Ruisanchez

Sure.

Anthony M. Sanfilippo

April, we have time for one last caller.

Operator

Your last question comes from Carlo Santarelli.

Carlo Santarelli – Deutsche Bank Securities, Inc.

Hey guys, good morning.

Anthony M. Sanfilippo

Hey, Carlo.

Carlo Santarelli – Deutsche Bank Securities, Inc.

Just quickly one strategic question and then I have one quick for Ginny. Anthony, Carlos, when you guys obviously have been pretty aggressive with your share buyback recently, as we get closer to closing the Ameristar transaction, how are you guys thinking about your usage of capital heading in to that?

Anthony M. Sanfilippo

As we have mentioned, on the call that we had when we announced Ameristar, our leverage clearly will be higher than it is today upon the closing of that transaction and we will be focused first and foremost in the integration and second in paying down debts. As mentioned in the release, we have suspended the buyback looking to preserve capital to put at the Ameristar transaction and we’ll evaluate it. The program is still authorized by the Board, we will evaluate things as they go, but the focus will be on integration of paying down debt upon closing.

Carlo Santarelli – Deutsche Bank Securities, Inc.

Understood. And then with respect to maintenance capital outlays, anything changing meaningfully for 2013?

Anthony M. Sanfilippo

Yeah, I will say that one of the things we're very proud of and one of the things that we've been very pleased with as we have taken a good look at the Ameristar property is both companies have been diligent and responsible in making sure that the properties were well maintained. We will continue to be both diligent and responsible and making sure we don’t have properties that are in this repair or don’t fulfill the expectations are guests will have or do have when they come to the property.

Carlo Santarelli – Deutsche Bank Securities, Inc.

Great, thanks. And then Ginny just one quick follow-up, with respect to the marketing plans and obviously given that the fourth quarter results from a regional gaming perspective in general and what we’ve kind of see and stagnate into January, how flexible are you guys with respect to your coordinating around your plans, i.e. what is the lag time between when you could effectively institute something based on the volumes that you happen to be seeing?

Virginia E. Shanks

We can react fairly quickly or actually I should say pretty quickly. We have forecasting tools, so we can anticipate the business volumes for those properties that have hotel demand or there is trends that you can look out into the future and therefore adjust accordingly versus waiting for business volumes and then reacting. So I would just answer it more specifically that we can react and really much react we can proactively just the marketing spend based on the business volumes that we're seeing with future demand whether it be hotel events, those kinds of things, response rate. So we're pretty nimble when it comes to that.

Carlo Santarelli – Deutsche Bank Securities, Inc.

That's very helpful. Thank you all.

Anthony M. Sanfilippo

Thank you Carlo, and I'd like to thank everyone for joining us on this call. I want to especially thank those team members that are listening and potential future team members. We are very excited about what the future holds for us all and for those that are investors, thank you for believing in Pinnacle Entertainment. We will continue to do everything we can to be a company you're all proud of and feel very good about your investments. Thank you all.

Operator

Thank you for joining today's conference call. You may now disconnect.

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