Loews Earnings Call Insights: Hotels Segment and New Drilling Program
Robert Glasspiegel – Langen McAlenney: I’d like to go after hotels with my first question. I think I know how to go about trying to value most of your other subsidiaries, but this segment which is smaller is bit more challenging for me and once every couple of years, maybe at an Investor Day or on a call you gave us a little bit help with thinking about valuing the operations, but as this business is getting more emphasis, with growth dynamics maybe you can give us a little help with either what the EBITDA is or how we should think about what the value is with this operation?
Peter W. Keegan – SVP and CFO: I can’t answer that question directly, since we’re not going to give you a value. However, Bob when you see our 10-K this year, we are trying to change some of the metrics that we’re going to be showing you going forward starting in 2013 and beginning with the K which will be filed by the end of February. So hopefully, we can start to answer your question with a little more clarity. Obviously, some hotel companies are valued at multiples of EBITDA, we’ll start presenting more of that data publically, starting about the end of this month and we’ll be providing some more overall chain metrics, so that you can compare the broader performance of the hotel group including the non-owned hotels in terms of their revenue and their RevPAR. So I can’t answer your question directly today. Hopefully we’d be giving you a little better metrics going forward.
Robert Glasspiegel – Langen McAlenney: If you don’t have EBITDA numbers today, but you can give us your rough guestimates of how it’s running, if…?
Peter W. Keegan – SVP and CFO: We haven’t made it public yet. We will be making more public going forward.
Robert Glasspiegel – Langen McAlenney: Do I read it right that this could be an area for a decent amount of cap spending prospectively or…
Peter W. Keegan – SVP and CFO: Yes. We are helping the hotel’s growth strategy and really providing some level of bridge financing on individual hotel purchases. As Jim mentioned, the goal here is to bring in some investment partners and some of those purchases as we already have done on the Hollywood hotel.
Robert Glasspiegel – Langen McAlenney: Just a clarification question. I was getting a little bit nailed on my model. You had a decent amount of partnership income at CNA, but the trading portfolio generated outsize loss in the quarters, is that bond marks or is there anything that you’d characterize that hit the quarter and first quarter is off to a better start as far as partnership income I suspect.
James S. Tisch – Office of the President, President and CEO: I think it was generally stocks that were held – equities that we held at the Loews portfolio were down for the quarter.
Robert Glasspiegel – Langen McAlenney: So as I think about Q1 it’s more how the equities might be doing in bond marks? They would drive trading…
James S. Tisch – Office of the President, President and CEO: We do not have too much in the bond market. We are generally bearish on bonds and we think that equities could do reasonably well. We also had a number of gold stocks that did not perform well in the quarter.
Robert Glasspiegel – Langen McAlenney: So I should look at gold and some of your other big equity holdings that are public as a guestimate if I don’t want to use the market for…?
James S. Tisch – Office of the President, President and CEO: Yes.
Robert Glasspiegel – Langen McAlenney: And that’s reported real-time, no lag?
James S. Tisch – Office of the President, President and CEO: The equities, yes.
Robert Glasspiegel – Langen McAlenney: The partnerships I know do have a little bit of lag at CNA and…
James S. Tisch – Office of the President, President and CEO: Not all of them, some of them do but they are each consistent.
New Drilling Program
David Adelman – Morgan Stanley: Jim, can you – you mentioned the statistics about the new drilling program, but you didn’t really characterized the performance of those new wells how are they doing how are they performing versus what other companies are drilling in that region.
James S. Tisch – Office of the President, President and CEO: So we found about the wells in the Mississippian Lime. We’ve drilled 30 wells there and we’ve had when you average out all the wells that we drilled our performance is similar to the performance of wells drilled by people in our area. What we are doing is we want to drill another set of wells so that we can begin to really delineate the area and understand what we have. Right now our belief is that this area is commercial and we just have to wait and see how the other wells come out to prove us whether that thought is accurate.
David Adelman – Morgan Stanley: Then can you give us a rough indication of how much the annual depreciation in that division is going to come down because of the sizeable ceiling test impairment you took this year?
Peter W. Keegan – SVP and CFO: I don’t have that readily available. Let’s get back to you on that.
David Adelman – Morgan Stanley: Then lastly also a question on the hotel business. If you look forward two or three years could you characterize or define what success will be in that business unit from a strategic and financial perspective given the efforts underway. You’ll have wowed Loews hotels into what?
Peter W. Keegan – SVP and CFO: We are looking to grow Loews hotels we are looking to do it in what I would call an asset light manner and that we would like to own 25% to 50% of the properties that we acquire with investors owning the other 50% to 75%. We’d like to build the hotel chain into one where hotel owners would want us to manage their hotel without actually owing it. In terms of earnings and EBITDA we’d be looking for that to grow and we’re looking to take the hotel company from an enterprise that’s been rather stable over the past decade or so to one that’s got growth in its future.
A Closer Look: Loews Earnings Cheat Sheet>>