Gaming giants report solid 1st quarter results

Apr 23, 2002 2:28 AM

Another blowout

As solid as the earnings were for MGM MIRAGE Inc. (MGG), the performance of Harrah’s Entertainment Inc. (HET) was equally as impressive. Revenues reached a remarkable $983.7 million, an increase of 13.4% to set a company quarterly record.

And, same store sales jumped an impressive 5.1%.

But two reasons underscored the blowout quarter: regionality and a marketing correction at the Rio in Las Vegas. With properties located from North Carolina to Nevada, the company quickly overcame the problems many properties encountered following the 9/11 attacks. As for the Rio, whose marketing decision makers de-emphasized high-roller action, benefits flowed as the property had a 14.l% increase in EBITDA, earnings before interest, taxes, depreciation and amortization.

Excluding the new SEC mandated accounting methods that deal with acquisitions, goodwill and other intangibles, the company reported first quarter earnings per share of $0.74 compared with last year’s $0.47.The number exceeded the estimates of analysts who forecast earnings between $0.51 and $0.57 per share.

Boyd blast

It was essentially the same story for Boyd Gaming Inc. (BYD) which reported first quarter earnings of $0.31 a share compared to last year’s $0.10. Results reflected outstanding business in nearly all jurisdictions in which the company operates.

For the quarter, net revenues reached $302.8 million, an 8% increase over the comparable quarter of a year ago. The company said it benefited from improved weather at its central region properties and from cost-cutting at its Las Vegas facilities.

Still posing a drag on the company was its Las Vegas Strip property, the Stardust Hotel and Casino which suffered from both a less-than-ideal location in the northern end of the Strip and from the decline in business brought on by the terrorists attacks.

The bright spots for the company were the "racino" the company opened in mid-February at Delta Downs racetrack in Vinton, La. The property has 1,498 slot machines that initially have been doing an average of $300 per day, and The Borgata, the $1 billion destination resort the company is constructing in Atlantic City in partnership with MGM MIRAGE Inc. It will open in mid-2003.

Stations rolling

Station Casinos Inc. (STN) increased its earnings per share as well as EBITDA margins during a quarter in which the company watched its newest property, the Green Valley Ranch Station casinos, turn in first quarter results that exceeded all its previous openings.

Earnings per share reached $0.21 compared to last year’s $0.19 while EBITDA topped $63.9 million, an increase of 10% over last year.

The company said it felt that the first quarter experience of its new Henderson property showed that it could add quality product to the Las Vegas locals market without seriously impacting its existing properties.

And then there was”¦

Lakes Gaming Inc. (LACO), without a gaming operation from which to derive revenue, except from an Indian contract that expired in January, reported first quarter revenues of $1.5 million, down from last year’s $9.2 million.

As for earnings, the company said its earnings of $0.6 million or $0.05 a share were substantially lower than in the first quarter of 2001 when the company reported earnings of $4.7 million or $0.44 a share.

Even without operating revenues, said Lyle Berman, chairman and CEO, "our balance sheet remains strong with a book value of over $16.50 a share consisting primarily of cash, cash equivalents and notes receivable." He said the company was actively pursuing new business opportunities while it awaits development of existing contracts with Indian nations in both the east coast and California.