More good earnings news from Boyd, Caesars, Argosy

Feb 15, 2005 5:43 AM

Continuing a trend that developed at the beginning of the earning seasons, gaming companies reported substantial profits for the final quarter of fiscal 2004.

Boyd Gaming Corporation (BYD), benefiting strongly from its July acquisition of privately held Coast Casinos Inc. and its 50% ownership of the Borgata Hotel/Casino Resort in Atlantic City, beat both last year’s performance and the consensus of gaming analysts with an increase of 163% in its earnings per share.

With consolidated revenues of $540 million, a jump of 75% over last year’s $308 million, the company had net income of $40 million or adjusted earnings of $0.50 per share. In the final quarter of 2003, the company reported $0.19 per share.

As for EBITDA, earnings before interest, taxes, depreciation and amortization, the company said its Las Vegas Strip property, the Stardust, increased 90% while the Coast properties were up 41%and its Downtown Las Vegas properties had an increase of 5.3%.

EBITDA for the Central Region of properties, including riverboats and racinos, moved higher by 17.2% while the Borgata’s operating income before amortization expenses increased 146%.

For the full year, Borgata reported hotel occupancy at 92% with the average daily rate of $127 per room and a gaming win of $638 million, second largest behind the bigger Bally’s Hotel/Casino by $9 million.

William Boyd, chairman and CEO, called the results "outstanding." He added that the "principal drivers of the growth were in two areas where market dynamics, our business models, and our current expansion projects provide excellent prospects for continuing our strong earnings."

During the conference call, Ellis Landau, chief financial officer, said he expects the current quarter to have similar earnings of $0.50 per share.

Caesars Entertainment

Although hampered a bit by a soft business climate in Atlantic City, Caesars Entertainment Inc. (CZR) was able to set aside the red ink of a year earlier and show a profit of $20 million during the fourth quarter of 2004.

Last year’s final quarter saw the company show a net loss of $84 million of $0.28 per share whereas in the final quarter that ended on Dec. 31, 2004, the company had earnings per share of $0.06.

Affecting the company’s report was an $8 million charge related to the termination of a lease at Caesars Atlantic City and an $11 million gain related to the sale of real estate in Atlantic City.

Also, adjusted net income excluded expenses of $16 million related to the company’s pending acquisition by Harrah’s Entertainment Inc. (HET).

Officials pointed out that the company’s previous best fourth quarter net income was $17 million, accomplished in 1999.

For the full year, including discontinued operations, charges, gains and income tax adjustments, net income was $297 million or $0.94 per diluted share, an all-time record for the company. Net revenue for 2004 was $1.008 billion.

Wally Barr, president and CEO, credited Las Vegas for the strong performance.

"Las Vegas is one of the hottest tourist destination resorts in the nation right now — and the entire industry in benefiting," he remarked.

Last July, Caesars directors voted to accept an offer from Harrah’s to acquire the company for $1.9 billion in cash and 67.7 million shares of Harrah’s common stock. The acquisition, now under scrutiny by the Federal Trade Commission, is expected to close by the end of the second quarter.

Argosy Gaming

Another company in the process of being acquired, Argosy Gaming Inc. (AGY), also posted strong fourth quarter results.

The company, that operates casinos docked along the Ohio, Missouri and Mississippi rivers and scheduled to be acquired by Penn National Gaming Co. (PENN) for $2.2 billion, reported net income of $17.9 million or $0.60 per share. A year earlier, the company reported net income of $13.6 million or $0.46 per share.

The recent fourth quarter’s results topped analysts’ estimates of $0.56 earnings per share.

For fiscal 2004, the company posted net income of $61.5 million or $2.07 per share, up from last year’s $51.7 million or $1.76 per share.

Isle of Capri

Isle of Capri Inc. (ISLE) reported better financial results than management had projected but the results for the third fiscal quarter that ended on Dec. 31, 2004, still were below last year’s results.

Net income for the period reached $3.5 million or $0.11 per share compared to last year’s net income of $7.8 million or $0.25 per share.

Although income fell during the period total revenues were up slightly. In this year’s quarter, revenues reached $266.8 million, barely topping last year’s $265.2 million.

Bernard Goldstein, chairman and CEO, described the period as challenging for the company.

"This quarter has presented some challenges; however, the results of our operations for the third quarter were above the range we projected. As we near the end of a period of construction disruption at many of our core properties, we continue to position the company to grow and develop."

Aztar

Feeling the wrath of Wall Street following its quarterly report was Aztar Corporation (AZR) whose share price fell 12.5% following the report.

The company said its revenues were $192.7 million, a 4% increase over the previous year’s $185.3 million while its net income of $2.3 million was down 81% from last year’s $11.7 million.

Earnings per share dropped to $0.05 from the $0.32 it reached in the corresponding quarter.

Also, the company said it was delaying any plans for the development of its aging Tropicana Hotel/Casino property on the Las Vegas Strip until the fall of the year.

Gaming analysts reacted quickly in slashing their rating on the shares thus resulting in the price of the stock plummeting.