Earnings Call Excerpt
February 16, 2006
Corporate Participants
Chuck Champion; Youbet.com, Inc.; Chairman and CEO
Gary Sproule; Youbet.com, Inc.; CFO
Scott Solomon; Youbet.com, Inc.; General Counsel
Conference Call Participants
Ryan Worst; Brean Murray; Analyst
Todd Eilers; Roth Capital Partners; Analyst
Traci Mangini; ThinkEquity Partners; Analyst
Mark Argento; Craig-Hallum Capital; Analyst
Kevin Foll; NGER; Analyst
Craig Behnke; Founders Asset Management; Analyst
Sean McMahon; Kennedy Capital Management; Analyst
Presentation
Operator: Ladies and gentlemen, thank you for standing by. Welcome to the Youbet.com 2005 fourth quarter results conference call. (Operator instructions) I would now like to turn the conference over to Mr. Chuck Champion, Chairman and CEO. Please proceed.
Chuck Champion:
Thank you, operator. Welcome to Youbet.com's fiscal 2005 and fourth quarter conference call. On the call with me today are Gary Sproule, our Chief Financial Officer; and Scott Solomon, our General Counsel. Today we will review our fourth quarter financial results and provide an update on a number of other items that are of interest to investors, including our recent acquisition of United Tote and strategies for continued growth. At the end of the call we will take questions from analysts and investors.
Before we begin, I would like to refer everyone to the Safe Harbor language in today's press release. We will be taking advantage of the provisions of that statute and you should all be familiar with it. Before Gary reviews the financial results, I will spend a few minutes addressing our fourth quarter results.
Today we reported earnings for the fourth quarter of $1.5 million, or $0.04 per share. Earnings included a $1.9 million income tax benefit, and a $276,000 loss associated with acquisition-related costs. Gary will provide additional details on the fourth quarter earnings in a minute.
On an EPS basis, the quarter was disappointing, but our ADW remains healthy and capable of delivering the returns our shareholders expect from Youbet. As previously disclosed, there were significant race cancellations in the fourth quarter due to weather conditions, other unexpected developments such as some race tracks shortening their meet and Hollywood Park's cancellation of all of its turf races due to track conditions.
In aggregate, there were approximately 300 fewer races this quarter compared to the prior year period due to inclement weather and one-time events. Nevertheless, to put it into perspective, what we did in the fourth quarter this year is what we did in handle for all of 2001.
IRG's handle for the period was disproportionately impacted by the loss of content compared to Youbet's handle, as IRG has fewer tracks available to it and is more dependent on racing from tracks with larger purses such as Hollywood Park. As such, IRG handle was $22.5 million for the quarter. We will delve a little deeper into the fourth quarter issues on this call, and I would note that in 2006 to date we are seeing strong year-over-year handle improvements, indicating that what occurred in the fourth quarter may have been the proverbial perfect storm.
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