Harrah’s Entertainment, Boyd Gaming top earnings estimates

Jul 23, 2002 8:02 AM

Two major casino companies — Harrah’s Entertainment Inc. (HET) and Boyd Gaming Corp. (BYD) — reported results of the fiscal year’s second quarter and both exceeded their company’s best operating periods.

Harrah’s said second quarter revenues totaled $1.03 billion, up from last year’s $873.4 million. Income from operations rose 34.8% and per share earnings were $0.75, easily topping last year’s $0.49 a share. The company said revenues for the first six months of the fiscal year rose 15.7%.

"We were able to achieve record quarterly results despite additional expenses from increased gaming tax rates in Illinois and Indiana," said Phil Satre, chairman and CEO. He noted that the company accrues its tax liability over the course of the year based on an estimate of the annual gaming tax rate for the property. He cited the benefits resulting from the acquisition of Harveys Casino and the capital investments made in their properties in Louisiana, Illinois, Missouri and New Jersey as contributing to the quarter’s record results.

Also helping, he said, were the improved performance at the Rio in Las Vegas.

Particularly noteworthy in the Boyd Gaming results, the company said, was the record EBITDA of $78.2 million versus the $62.2 million in last year’s second quarter. EBITDA represents the company’s earnings before interest, taxes, depreciation and amortization.

Earnings before pre-opening expenses amounted to $0.29 a share, more than double the earnings of $0.14 per share reported in the second quarter of last year. On a consolidated basis, net revenues in the second quarter 2002 were a record $312 million versus last year’s $281 million. Contributing to the increase were slot machine revenues generated by the newly acquired Delta Downs racetrack in Vinton, La.

From the first day of the slots operation at Delta Downs on Feb. 13, 2002, Boyd Gaming reported revenues of $54.4 million for its 1,500 slot machines. Other strong properties were the Par-A-Dice which reported record second quarter revenue of $37 million, a 5.7% jump over last year, and the Blue Chip riverboat in Indiana which showed record revenue of $51.4, a 10.1% boost over last year’s $46.7 million.

Bill Boyd, chairman and CEO of Boyd Gaming commented, "Much of our growth in earnings can be attributed to margin improvement, a real tribute to our managers’ ability to control costs and market efficiently." He did sound a word of caution about the future, however, "Looking forward, we are facing increases in certain expenses, such as gaming taxes in Illinois and Indiana, labor costs in Nevada related to the recent union settlement, and insurance costs."