Boyd Gaming Corp (BYD) 2006 Q1 法說會逐字稿

Good day ladies and gentleman and welcome to the Boyd Gaming First Quarter Conference Call. My name is Alexis, and I will be your coordinator for today. [OPERATOR INSTRUCTIONS] As a reminder, ladies and gentlemen, this conference is being recorded for replay purposes. I would now like to turn the presentation over to your host for today's call, Mr. Ellis Landau, Executive VP and CFO. You may proceed sir.

Thank you and good afternoon and welcome to our First Quarter 2006 Conference Call. Our presentation today may contain some forward-looking statements. Actual results may vary from what is contained in those statements. Variances may be material, and we will refer you to our public filings for the risk factors you need to know before you invest. Our presentation today includes the use of non-GAAP financial measures, reconciliations for which are contained in our press release and may also be found on our web site. Today's call is being webcast on boydgaming.com and streetevents.com.

Joining me today is Keith Smith, our President, and COO, who will make comments about our first quarter results and our ongoing growth initiatives, and then we will be available to respond to your questions. Bob Boughner who heads our Echelon Resorts project, and Larry Mullins, President and COO of Borgata will also be available to respond to your questions.

A short while ago we issued our press release reporting our first quarter 2006 financial results. We also announced that our Board of Directors increased our dividend payout for our June 1st dividend payment.

First to the results, and very good results they were. We reported adjusted earnings of $0.78 per share, a record quarter, 22% above the first quarter last year, and well above expectations, and that $0.78 was reduced $0.04 by our expensing stock options as we adopted the new accounting rule 123R as of January 1, 2006. So under the old system, adding back in the $0.04, we would have reported an $0.82 quarter.

Looking at it another way, as we reported in our release, last year's $0.64 would have been $0.60 under the new rules, and our first quarter this year would have shown a 30% adjusted EPS increase on an apples-to-apples basis.

It was a great quarter in so many areas. It really shows the value of our diversification and the talent of our excellent operating management. It was the eighth straight quarter of gains in quarter-over-quarter adjusted earnings per share, we are very proud of that.

Our revenues for the quarter were $646 million, that’s up 14% from last year. We operated one additional property this year that is South Coast, which opened at the end of December 2005. South Coast and three of our Central Region stand outs, Treasure Chest, Delta Downs, and Blue Chip accounted for most of the revenue increase.

Our EBITDA for the quarter was $215 million versus $170 million last year -- in last year's 1st quarter. That is a 26% increase in EBITDA, and the gains were widespread throughout our company. Only the Stardust, which is scheduled to close around the end of the year, reported an EBITDA decline, and that was only a few hundred thousand dollars for the quarter. Borgata had a terrific quarter. The property continued to lead the Atlantic City Market in revenues despite operating with 10% fewer slot machines and a closed player lounge for half of the quarter as they prepare for the public space expansion that opens around the end of June. The real impressive news out of Borgata’s first quarter results was that the property’s EBITDA of $65.3 million, an increase of 15% over last year was the property’s second highest ever behind only last summer’s record quarter, that this second best ever EBITDA occurred in January through March, winter, when nobody is supposed to do numbers like that. Borgata’s EBITDA margin was nearly 35% in the quarter with 54% of the revenue increase in the prior year coming to the EBITDA line. Now that it is spring we can take our hats off to the great operating management we have in place at Borgata. We are all looking forward to seeing new records set after the expansion opens in a couple of months.

Our downtown Las Vegas unit had a great quarter. Best first quarter ever. The combination of gains at all 3 properties and efficiencies that we have gotten in our air charter operations produced an impressive 23% increase in EBITDA in the quarter over last year. The Hawaiian economy remains strong and our management in that unit have done a terrific job in running that business and growing our earnings.

Our Las Vegas Local’s group reported an 18% increase in revenue and a 12.3% increase in EBITDA for the quarter versus last year, helped along by the addition of South Coast in this year’s first quarter. Our Local’s business is facing some tough comps against last year’s growth spurt, but continues to grow revenue and EBITDA nicely. Keith will give you some color in a few minutes regarding recent trends in that group.

Our Central Region itself quite diversified from the Great Lakes to the Gulf of Mexico had a great quarter. Blue Chip opened a spectacular new casino at the end of January and had two great months of operations. For the quarter, revenue was up 27% and EBITDA was up 32% from last year. Delta Downs is pretty much back after Hurricane Rita damage. Horse racing has resumed at the property and except for scaled back food service, goes by a tough market for getting employees, things are pretty much back to normal. The property’s expansion combined with one less competitor in the Lake Charles market boosted revenue and earnings in the quarter and Treasure Chest continued to do very well, but not at the same off the charts levels as before Harrah’s reopened in downtown New Orleans in mid February. Its performance is still way ahead of pre-Katrina levels and was a big contributor to our Central Region growth.

With another record quarter under our belts, confidence in our future operations and development and a strong financial position, our Board of Directors boosted our dividend pay out to shareholders. They declared a quarterly dividend of $0.135 per share at the $0.54 annual rate, and an 8% increase over the prior rate, which was at a $0.50 per annual share rate. We started paying dividends in the summer of 2003 at a $0.30 per share annual rate and it is up 80% in less than 3 years. We are all very pleased to see the Board express their confidence in our future in this way.

Looking forward to the second quarter of 2006 we are seeing the usual seasonal slow down from the first quarter. Last year in 2005 the quarter one to quarter two drop in EBITDA was about $11 million, looking for a slightly bigger sequential decline in this year’s second quarter than the first quarter that we saw last year Q1 to Q2 for a couple of reasons.

First Treasure Chest is coming down from the super great level to just a great level post-Harrah’s opening, and that is a good sized number now. And secondly, we expect hit the sun coast as Red Rock Casino trial continues. Positive comps like a full quarter at Blue Chip -- Blue Chips new boat and a wrapping up of South Coast does not quite offset the other things I mentioned. So we think that last years 6.6% seasonal decline in EBITDA Q1 to Q2 will be around 7 - 10% this year, Q1 to Q2. So anyway our second quarter EBITDA estimate at $193 million to $200 million. That translates into estimated adjusted EPS of between $0.58 and $0.62 per share.

Finally, before I turn the presentation over to Keith, I want to mention that with my May 31 retirement on the horizon, this will be my last quarterly conference call. After 35 years in corporate finance, first for Ramada, now Lastar and soon to be -- and for the last 16 years for Boyd Gaming, it has been a great run but it is time for a change and doing a few things that I haven’t had time to do over the years. Truly, the best parts have been the personal relationships both inside and outside the Company as I have enjoyed working with so many of you over the years. I wish you all the very best and hope that our paths will cross some day along the way. And now I would like to turn it over to Keith Smith.

Thanks Ellis and good afternoon everyone. As Ellis described, the Company reported another impressive quarter with record EBITDA and record adjusted earnings. The overall strength of our operating result is reflected in the fact that this is the 8th straight quarter of improved quarter-over-quarter earnings in EBITDA. The improvements are wide-spread. We are very proud that many of our properties are operating at or near record levels, and we are even more proud of the fact that these improved levels of performance have proven to be sustainable. The record first quarter results at Borgata, our Las Vegas locals unit and our downtown unit, combined with our impressive results in our Central Regional properties all reflect an overall strong core operative foundation.

Before I update you on our growth initiatives, I know many of you may be interested in what we are experiencing from the opening of Red Rock Station. While six days of data is too limited to draw any definitive conclusions, thus far we have seen only limited impact on our operations at Sun Coast as a result of the opening.

The first three days, which were mid-week days, showed some softening of the coin end and more of an impact on our table games drive; however, our weekend numbers reflected relatively normal volumes. We are particularly pleased that slots, which accounts for more than 80% of our casino revenue at Sun Coast, have been least impacted. While the impact over the first six days is less than we anticipated, it is still too early to determine what the ultimate impact could be.

In addition to the strong operating results reported in the first quarter, the first quarter also saw several of our growth initiatives put into service. While South Coast completed its first full quarter of operation, it operated without its full complement of amenities. While the Equestrian Center opened in the first quarter, the additional hotel rooms, spa, and pool area were not open until the second quarter.

South Coast continues to ramp up and with the opening of the new rooms and amenities during the second quarter, and with the ultimate completion of the interchange, we expect the property to reach its full potential.

The first quarter also saw the opening of our new state-of-the-art Blue Chip vessel on January 31 and, in the first two months of operation, the property reported strong revenue and earnings gains.

We continue to make excellent progress on both of our Phase 1 and Phase 2 expansions at the Borgata, both of which are on schedule and on budget. The Phase 1 public space expansion is expected to be open by the end of June and will add much needed capacity to our slot, table game, and poker operations, as well as our dining experiences. This added capacity is extremely important at the Borgata which operates at near capacity levels much of the time. We will be aggressive in introducing these new amenities and will use it as an opportunity to re-launch the Borgata brand.

Our Phase 2 expansion of the 800 room and suite Water Club at the Borgata will also add much needed room capacity when it opens in late 2007, and will also provide us another opportunity to re-launch the Borgata.

Here in Las Vegas, we continue to work forward on Echelon Place. Our focus during the first quarter and the remainder of 2006 is on the design work and on team building. The design work is progressing according to schedule and Bob Boughner has assembled a top-notch development team. Overall, we are making excellent progress for a goal of breaking ground about this time next year.

Also in Las Vegas in the first quarter, we purchased a 40-acre parcel of land to continue to grow and expand our highly successful Las Vegas Locals franchise. The land is fully entitled and we expect to break ground on the project in the middle of 2007. The land is located in the fast growing area of North Las Vegas and we are in the beginning phases of the design and development process.

Beyond these projects, we continue to pursue growth opportunities in properties and in markets, which are strong and growing and where we can be market leaders. We’ll continue to be thoughtful about where, when, and how we grow. We are extremely proud of our strong operations and of our strong development pipeline, and our outlook for the future.

Thank you for your time and with that, I will turn it back to Ellis.

Thank you, Keith, and we are ready to take questions now.

[OPERATOR INSTRUCTIONS] Your first question comes from the line of Jay Colgan. You may proceed, sir.

I’ve got a few questions about South Coast and the Las Vegas Local’s market to try and start things off. In regards to the press release, you mentioned that you had some modest gains, I believe it was, in regards to things for revenue and EBITDA. I was wondering, considering the market looked like it grew on a same-store basis even a little bit faster than that, why South Coast might have actually cannibalized some of the demand that your existing properties, and should we expect that to kind of fade as we get in the second and third quarters and beyond. And then also, I was just kind of wondering if you can talk a little bit more about how you see the cash flow ramp at this property given some of the positive surprises and some of the not so positive surprises that you discussed here today and elsewhere with respect to that property.

Let me answer the first part of that question. The Coast brand is an extremely strong brand and it has been around for quite a while. It has a very loyal customer base and a very loyal customer following. I think as we open new properties, it is natural for your customers to go visit your new property, so we did see some migration from our existing Coast properties to visit South Coast. I think we are seeing many of them return to their home properties, but there clearly was visitation as you would expect in most situations like that.

And also we offered South Coast to our Sam’s Town customers. We wanted them to have the opportunity to see the property and there was a mailing there too, so there is an initial trial basis, some, as Keith mentioned, some migration over to the new property. We don’t expect that to be that long-term because we do expect growth in that area, first from the natural growth that is occurring in the southern part of the Las Vegas valley and also because of the completion of the property, many things are being added as we speak as we mentioned in the press release and just a natural ramping up of the business there and that will I think then mitigate what you saw with some of the visitation from other coast properties and from Sam’s Town to South Coast.

I guess just kind of a follow-up to that. I mean, is it fair to say that the 7, 8, or 9 million in cash flow that it looked like the property generated without you guys breaking out it officially, for the quarter, on a cash flow basis that that ramp should really start to accelerate in the next couple quarters. And, is that in line with your expectation or is it just starting a little bit below expectations primarily because of the access issues?

I think that we do expect it to ramp up as we pointed in the release, there’s a number of things that are being added to the property, particularly rooms. The Equestrian Center came on during the first quarter, the pool, spa, and those items will complete the property. It did open before it was fully complete. The access issues -- so we do expect it to ramp up and it is our expectation that we see quarterly EBITDA improve. The access issues will continue to some extent. There is some help there in the sense that Las Vegas Boulevard is being improved and that should allow access off the north and south. The major point is that interchange that we expected to have opened when began the project, but it has been delayed. We do feel, as we pointed out in the release, that for the property to reach its full potential, we do need that interchange. So there will be sometime until we get to that and that is expected sometime later next year.

Your next question comes from the line of Larry Klatzkin with Jeffries and Company. You may proceed sir.

Going back to the Coast. I’m coming out that you know are doing a margin under 25%, but it’s a start up and you had road and other things going on. I mean when you say it hits its true level mid next year, is that true level you guys are looking for somewhere like $100 million? Could you give us what your goal is?

We haven’t made a forecast on that Larry, as you know, we’ve talked about mid teen’s returns -- it’s a $600 million investment, so you can see at the point at which we’d be pleased with our investment and, we do expect the property to get there when it is complete, when it ramps up and builds its customer base, and when the access issues are solved and the property is accessible as it should be. So, we clearly do have a tremendous confidence in that property as many of the things that we’ve said over the past couple of years since we got involved with Coast was at the South End of the valley is a terrific growth area there is the access when it is complete will be excellent. There is a number of timeshares and other developments going on in that area. The amenities including Equestrian Center are excellent for that property and we have every confidence that property will get to the level that we expect.

All right. This year, is it possible you guys do better-- do 60 or is that or my own - is that just aggressive given the ramp up and everything else?

We’d rather not make any specific forecast, just leave it at that we said about our confidence with the property will achieve its goals eventually.

Okay, you’re saying since the Harrah’s New Orleans opening of February 17th, you really haven’t seen any dramatic fall or what kind of things have you seen in March and April?

Talking about the Harrah’s in New Orleans?

Yes, at Treasure Chest.

As we mentioned the EBITDA rate, revenue and EBITDA rate pre-Harrah’s opening was truly exceptional. You saw that in our last quarterly release. It came down from those lofty levels a bit when Harrah’s opened, so we did see some effect. And -- but it is still doing very well as you see in the numbers of the Central Region. We talked about the strong role that Treasure Chest played in that terrific 50% earnings growth that we had in the Central Region.

All right. Corporate went up from 10 to 13-1/2 should we continue the new corporate level given the bigger company now or is that extra high for some of the things you’ve been doing like in expansions and stuff like that?

Yes, what you have Larry is that most of the -- much of the stock option expense shows up in that number. So, now that we’re expensing stock options and the number is over $5 million in stock options expense but wasn’t -- most of that was in corporate and that’s what bumped that number up, so take that to a pretty much to a new run rate as long as you include the stock options thing in there.

All right, so we’ll leave it there, okay. So that includes the stock option, okay.

Yes.

As far as Pinnacle buying the licenses of Harrah’s, do you see any indications whether they might expand the facility in Lake Charles and what that effect would be on you?

We -- of what we read -- what the same things you’ve read and speculated the same way, so we have no idea what is going to be done. We are doing very well at Delta Downs now and I think we’ve done very well with Pinnacle in the market and successful with Auberge and we continue to do well even as Auberge does better.

Okay, and then last thing. Depreciation level and capital expenditures for the quarter -- really for the year going forward? Depreciation you gave out for the quarter.

Yes, depreciation. We gave a lot of guidance in depreciation last quarter. That really hasn’t changed. It does go up a bit through the year as we brought on Blue Chip at the end of January, we’re bringing on South Coast, so the depreciation will ramp up, but the guidance we gave at the last quarter is unchanged. And then the second was was CapEx you mentioned. That really hasn’t changed either. We mentioned about $125 million or so outside of Echelon and it’s just to finish up our projects. You saw we spent about 30 or so in the -- make sure I have the right number -- between Blue Chip and South Coast we spent about $36 million and those numbers are along the way to that 125 we mentioned, clearly no change.

All right, thanks, last question. Would the dollar amount of option expense -- I know its $0.04, but do you have a more exact number?

Yes, the total number was $5.8 million of which almost a half million of that was in pre-opening expense so the amount that is in outside of pre-opening was about $5.3 million.

Your next question comes from the line of Celeste Brown with Morgan Stanley. You may proceed.

Can you talk to the longer terms of sustainability of that higher levels at Treasure Chest. I know obviously you’re seeing some impact from Harrah’s but there’s been some debate as to where people are going to be moving to and living in the area and sort of what you think the impact is on your property over the longer term? Is it higher longer term or lower term?

I think the level we have reached I think will be sustainable for some time. I don’t think that changes are occurring that quickly in the market place there as it affects other things happening. We are seeing some openings along the Mississippi Gulf Coast. That does not seem to impact us that much or principally a casino for the New Orleans market. And, I think everybody that’s back in New Orleans is there already in terms of competition. And I think that, for quite some time, we can expect to see these [indiscernible] operate pretty much as it is operating now. Now as there are structural changes in the economy there, we may see some changes, but nothing is moving quickly enough that we would expect that to occur in the near term.

Your next question comes from the line of Harry Curtis of JPMorgan. You may proceed sir.

Just a follow up on Larry’s question about Corporate. If you look at Corporate before options expense it, actually it looks like it was down about 2 million from the prior 3quarters. Can you give us a sense of is that a sustainable decline?

The number was 13 million and about -- it was before we added in the options. After the options, it was about $9.5 million, which is lower than it has been running. It will probably run a little higher level than that. From quarter-to-quarter, there may be other things that have gotten in there that are -- they’re hard to peg one quarter to the other because they’re just things that occur in the Corporate Division that are not necessarily smoothed over over time. So I think -- as a follow-up to Larry, it is good to point out that the number in the 9s is probably a little bit low. There may have been other things in there. Options brought it down to that -- taking out the options would bring it down to that 9-1/2 number, but you’re right, as a sustainable level, it probably runs a bit higher along the lines of [what we’re spending] recently.

Okay. And then as a follow up to South Coast, can you give us a sense of what the occupancy of the hotel was in the first quarter and to what degree you plan on filling up the expanded facility with group bookings and how those forward bookings look for the balance of 2006.

We are not going to be giving out any individual occupancies at the various properties. I really do not want to get into that. The occupancy was good. I am not going to indicate that it was not. It was -- but, as far as specific levels, I don’t think we will be giving those out. In terms of future plans for bookings, I think it’ll be a combination of the tourist market and group business, use by the Equestrian Center and so forth.

Well, specifically, what I was trying to get at was your confidence level in wanting to add more rooms. What indicators did you have?

Well, we are going up to over 1,300 rooms with the second tower. There are no plans to add beyond that. The types of things we’ll look at will be a demand level that we see in Towers 1 and 2. That will take some time to determine but we do have the footings in for a third tower and we’re ready to go when the demand is there but we’ll have to see how it evolves a combination of group business and general FIT tourist business to see when it makes sense to build on.

Your next question will come from the line of David Anders of Merrill Lynch. You may proceed, sir.

Thank you very much. Just to be clear on the recurring earnings per share. Did that exclude the accelerated depreciation with Stardust but that -- is that number is buried inside to depreciation amortization of 57 million that’s on your table for EBITDA analysis. Is that correct?

Yes. That is correct. The number I gave on the guidance is adjusted earnings per share so it adjusts out that -- the incremental depreciation that we have indicated we’re taking out because it’s Stardust related.

So it’s about 2.2 million a quarter then. So the remainder of the year will be kind of adjusted out. Is that what you’re telling me?

Yes, about 2.5 million a quarter is being adjusted out for the incremental depreciation related to that project.

Your next question comes from the line of Joe Greff of Bear Stearns. You may proceed sir.

Ellis, could you talk about Atlantic City a little bit. I know it had a great -- Borgata had a great Q1 result how April has been relative to your expectations. And then for the 2Q, when does -- do you have a specific date in terms of the Phase 1 expansion. And then also when you got those slot machines that are out of service, I presume they come back in with the expansion views. If you can give us some sort of date -- very end of the quarter, middle of the quarter please? Thank you.

Thanks, Joe. We are having -- We’re experiencing a good April. I’m going to have Larry just talk about -- a little bit about the timing of how things are going to come back on and expansion’s going to open. I don’t think there is anything unusual about April we want to report. We don’t normally get into that, but April is going along just fine. If you have anything to add to that, Larry, you can. If you could talk a little bit about the expansion coming on and from the adjustments that are taking place.

Yes, I agree. No, we’re on forecast to have the property back in shape when the expansion happens at the end of June and our first quarter has been consistent in April with business volumes.

We’re looking for the -- for late in June for the expansion to be fully opened.

And then just a question about [non-op] for the rest of 2006, the net interest expense and tax rate and no change since the last call?

The tax rate we reported in the first quarter was 35-1/2%. I think that going forward we should probably be looking at a 36% rate for the remaining quarters of the year. Was there something else, Joe? I didn’t catch the first part of that. Was that only tax or something else?

Net interest expense?

Interest expense. Really no change from the guidance that we gave last quarter.

Your next question comes from the line of Kent Green of Boston American Asset Management. You may proceed sir.

The question pertains to Blue Chip. With the extension out and the problems with the engines and the new extension and going into summer, could we think that there is a bigger ramp up coming in Blue Chip?

Kent, first of all, there were only two months of Blue Chip in the quarter we just reported. It opened at the end of January, so we will expect some -- the future with all three quarters to be a ramp up from Q2. In addition, the summer tends to be a better season for us, so we have the seasonal improvements that you’ll get into the summer. So those things are positives that we’re looking forward to. And you mentioned about the tribe in Michigan and that seems to be -- you saw it held up for a bit, so, so far things look good as -- I’m sorry, Blue Chip is doing quite well with its new casino.

Switching back to New Orleans market, the -- I think Pinnacle has got a nice piece of land they’re going to put a hotel in over there in Boomtown, although that’s closer to Downtown than you are. You’re out at Lake Pontchartrain, is there any more land out there that you can get a hold of? I know you’re kind of limited in the amount of land that you have out there.

We are limited. We lease the land that we operate on and the water bottom that the boat floats over, so there is really no other available land for us to acquire, to expand that property. So we have the facility that we have.

And then switching to Delta Downs, is there any reason -- I know you just got done with a smaller expansion there and even with the Pinnacle acquiring the licenses, they seem to be preoccupied pretty well in St. Louis for a while anyway. Any thought about continuing to expand that property over there? You got a big piece of land in there and then how’s the racetrack doing itself? Is that improving the racetrack now that you’ve got the slots in?

Delta Downs has been performing extremely well since its opening of the expanded facility last year and, as you’ll remember, the expanded facility last year was a complete remodel and expansion of the casino as well as the addition of a hotel, so it was a fairly significant investment related to the initial project. We do have plans to continue to expand that as the business warrants it. The casino is limited in size based on the regulations that we have for racetracks in Louisiana, so that cannot get any bigger, although we can continue to add additional amenities whether they be hotels or restaurants or other things to continue to attract patrons and, once again, as business warrants and business demands, we will continue to look at those investments and determine if they make sense.

You know, as Ellis stated, racing restarted in April and it’s going very well. We’re racing quarter horses right now. We missed our thoroughbred meet, but racing is probably about the same this year as it was last year.

Your next question comes from the line of [Snedeze Ruse] of [Pallion] Securities. You may proceed.

You mentioned that volume is not down that much at Sun Coast since the opening of Red Rock, but I was wondering if you could just talk a little bit about what you’re doing on the promotional side to get that volume, if anything? Or what kind of programs are in place and how long you think they might be above just sort of normal promotional levels if at all?

We have not instituted any unusual marketing programs in the face of the opening of Red Rock, so marketing is pretty much as usual. We’re operating according to our plan that we put together at the beginning of the year, so you’re not seeing anything unusual in the market at this point. Snedeze, does that answer your question?

Yes, that’s it. Thanks.

Your next question comes from the line of David Barteld of NCPI. You may proceed.

Just actually, just the last question we had left that was unanswered was, can you give us an idea of what pre-opening expenses are going to be looking like next quarter and through the remainder of the year?

You know we have gotten Blue Chip in their last quarter was a fairly sizeable one and South Coast still has some, but it’s pretty much going to be Echelon related now. I really don’t have a forecast for you because that’ll be carrying over quite some time now as we build that effort up. I don’t really have a number, but it will be growing as Echelon development grows. So I guess it’ll be a sizeable number from that, but that will be the main project we’re talking about.

Okay. Also, could you talk to us a little bit now that you’re lumping all the local properties together, the focus has been on South Coast and some of the other areas. Can you give us an idea how the downtown properties are doing in the quarter with some of these other casinos and the local markets opening up and what you’re expectations are for the end of the year or through the rest of the year?

Are you talking about our downtown Las Vegas properties? Yes, they are broken down separately. The downtown Las Vegas properties if that’s what you are referring to. You see that is the properties that caters principally to the Hawaiian market. You saw the very nice gain in revenue and EBITDA that they achieved in the past quarter. It was our first -- the best first quarter ever. That group continues to do well. It is run very efficiently. We remain quite optimistic about the way that group performs. The Hawaiian economy is good and that is very good for us. The property -- the group runs like a Local’s group with very strong relationships and repeat visitation and strong emphasis on value for the customer. It has a lot of those same characteristics but the locals happen to be Hawaiian who come over on by the planes that we charter or on a schedule there that we arrange. This is a very strong relationship-driven business so we good things continuing for it.

Your final question comes from the line of Jay Colgan. You may proceed, sir.

Couple of quickies including well wishes to you as well, Ellis. I feel kind of like a jerk for not saying that before. So, just getting back to Las Vegas Local’s market, just from the big picture standpoint, we haven’t seen the March monthly numbers just given the timing of when the state reports those numbers, so was there anything that happened or have you seen anything happening? Just on a bigger picture basis, as the housing market is starting to flatten out, etc. Have you seen anything that leads you to believe that the Las Vegas Locals customer is just packing it in a little bit more, or do you think what happened in the quarter is really more kind of company specific?

We haven’t seen anything in the market, we talk about flattening of house prices but we really haven’t seen anything in the market to affect the local customer. Business has been operating pretty much as it has been over the last several quarters. The local economy remains strong, tremendous influx of new residents that continue to come in and the economy in Las Vegas continues to be extremely strong, so we don’t see any of that having changed over the last quarter.

And then in regards -- Just going back to Echelon Place for a second. You didn’t make any formal announcements. Are there any thoughts at this juncture? It’s still early in the process as you’re looking at the plans, the drawings, etc., to change any aspects of the scope of any parts of the project including the joint ventures. Any expectations of changing CapEx one way or the other, and are you still set to go for, I think you said, second quarter ‘07 break ground. Did you say that you’re still looking for an early 2010 opening? Just wanted to cover those bases.

Yes. I think, as I said, we’re still early in the design process and right now we’re focused on finishing the design and finishing the team. -- building the team there and none of it’s changed from what we described earlier. We are looking forward to ground breaking about a year from now. It would be a 3-year build out, so there may be a second quarter ‘10 instead of a first quarter ‘10 when we look forward to opening, but it’s still in the same general ballpark.

This [indiscernible] changes, I mean there are changes all the time. As long as it is on paper, it is easy to do and we hope we’re making the project better and better all the time so when we go into the ground, it’s really going to be a first class project. I am looking forward to coming back in 2010 for the grand opening if Bob will have me.

Probably’ll enjoy the party even more.

Ladies and gentleman, this concludes our question and answer session. I would now like to turn the conference back over to Mr. Ellis Landau for closing remarks.

Okay. Well thank you all for being on the call. Thank you for the well wishes and take care and goodbye.

Ladies and gentleman, thank you for your participation in today’s presentation. This concludes the conference. You may all disconnect. Have a great day.