Macau hikes LVS earnings

Feb 6, 2007 4:48 AM

Helped by a lucky run at The Venetian tables and dramatic boost in its Macau business, Las Vegas Sands Corp. (LVS) reported record operating results for the fourth quarter of 2006.

Consolidated operating income for the period was $166.3 million of which $99.4 million was from The Sands Macao, the company said. This resulted in net income of $113.6 million or $0.32 per share compared to $110 million or $0.31 per share on a GAAP or generally accepted accounting principles basis.

Adjusted net income (excluding loss on disposal of assets, pre-opening expense and development expense) increased 12.6% during the fourth quarter, improving to $132.9 million or adjusted earnings per diluted share of $0.37.

The company noted that The Venetian’s table games drop increased to $384.9 million, versus $320.4 million during the fourth quarter of 2005. Casino revenues increased 46.5% to $154 million from the previous year’s $105.1 million, primarily due to a table games win percentage of 46.9% compared to 26.4% a year ago. The normal range was given as between 20% to 22%.

William P. Weidner, president and COO, called 2006 "another outstanding year of execution for our company." He lauded the operating results of both our Las Vegas and Macao properties."

As for Asia, he said, "we delivered another strong quarter at The Sands Macao with our Mass Market, VIP and slots businesses all reflecting increases in gaming win compared to the quarter one year ago."

He said the company would now concentrate on its Cotai Strip development as well as the Palazzo in Las Vegas. Also moving on to the drawing board, he said, were the recently-approved project in Bethlehem, Pa., and in Singapore.

WMS Industries

Shipments to new jurisdictions such as Pennsylvania and Florida boosted the quarterly revenue picture for WMS Industries (WMS) for the period that ended on Dec. 31, 2006.

Net income for the fiscal second quarter rose 53% to $12.2 million or $0.33 per diluted share. This compared to $8 million or $0.23 per diluted share in 2005.

The company noted that included in the per share earnings was a "catch-up benefit" of $0.03 related to the retroactive reinstatement of U.S. research and development tax credit legislation.

"Success from our North American and international expansion initiatives, including growth in new jurisdictions and the contribution from Orion Gaming, drove record quarterly revenue and unit shipments," said Brian Gamache, president and CEO.

He specifically identified shipments to the new casinos in Pennsylvania and Florida as benefiting the company during the reporting period.

Product sales increased 21% to $93.8 million compared with the $77.5 million recorded in the previous year. Gaming operations were up14% to $40.8 million, topping the $35.9 million in 2005.

Ameristar Casinos

While some investors looked at Ameristar Casinos Inc. (ASCA) as a potential acquisition candidate, the company’s late founder and chairman, Craig Neilsen, showed his aggressive style by making a bid to acquire Aztar Corp.

The bid failed and so did Neilsen’s heart, leaving the company in the hands of family and his chosen successor, John Boushy, who left his post as an executive with Harrah’s Entertainment Inc. (HET) to join Ameristar just before the chairman’s death.

The Boushy management influence showed up almost immediately as the company reported a record fourth quarter performance, earned primarily through a strategy that focused on increasing margins through a cost reduction.

But, based on Boushy’s statements during the conference call last week, Ameristar plans to double its EBITDA (earnings before interest, taxes, depreciation and amortization) in the next three to five years. Half of that would come from existing properties, he said, while the other half would be generated through acquisitions.

With a Harrah’s background, Boushy is expected to look closely at some of the properties that could become available through the announced buyout of Harrah’s by a pair of private equity groups.

And an acquisition, such as the Rio Hotel/Casino, would give Ameristar its first Las Vegas exposure.

Also benefiting Ameristar would be the passage of a bill in Missouri that would remove the existing $500 loss limit in exchange for a 1% increase in the gaming tax rate. Ameristar has strong presence in both St. Louis and Kansas City and would benefit greatly from the removal of the loss limit.

Concern of some analysts, however, deals with developing competition from Pinnacle Entertainment Inc. (PNK) which is building a pair of casinos in the St. Louis area. Added competition is also developing against Ameristar properties in Black Hawk, Colo., where heavy winter snow has delayed the construction of a new hotel tower.

During the fourth quarter, the company said its earnings per share grew 24% to $0.31 while its 2006 adjusted diluted earnings per share grew 15.5% to $1.34. The quarterly results easily topped the average analysts’ forecast of $0.25 per share.

As for fiscal 2007, the company said that based on preliminary results of operations "we currently estimate operating income of $44 million to $46 million." Earnings estimate is for $176 million to $184 million and earnings of between $1.41 and $1.49 per share.