Park Place Entertainment shares rise after 2Q report

Jul 30, 2002 6:50 AM

Park Place Entertainment Corp. (PPE) easily outdistanced analysts expectations during the second quarter of its fiscal year reporting earnings of $96 million, or $0.31 cents a share. A year earlier, the company had earnings of $61 million or $0.20 a share.

However, the earnings included a one-time investment gain of $39 million, net of tax, from the sale of its interest in Jupiters Limited, an Australian casino company. Excluding the investment gain and pre-opening charges, earnings were $0.19 a share.

Still investors reacted with a roar, sending the company’s share price up $1.27 to $9.07 with a huge 4,223,700 shares traded.

Tom Gallagher, president and CEO, focused on the highlights of the quarter including the "Gateway Project" that linked the newly-acquired Claridge Hotel/Casino with Bally’s Atlantic City; a recovery on the Las Vegas Strip, with all PPE Strip properties showing continuing improvement; an 8% increase in Eastern Region cash flow, led by a 13% increase at Caesars Indiana; continued debt reduction with $255 million applied in the second quarter; and the continued roll-out of Connection Card, with strong cross-property play increases.

Also, he said that the Colosseum, the future home of singer Celine Dion, was moving along on time and on budget with opening set for March 2003.

Many analysts participating in a Monday conference call were impressed with the results but others, including Robin Farley of UBS Warburg, had reservations. In a research note, Farley said for the time being she was maintaining her rating of "hold" on the company’s shares.

Aztar Corp.

Aztar Corp. reported strong earnings of $0.46 per share compared to last year’s $0.40 a share, but noted the results were being described "before the effect of a recent change in New Jersey tax law."

On July 2, the company reported, New Jersey enacted the Business Tax Reform Act and made it retroactive to Jan. 1, 2002. As a result of the increased taxes, Aztar said it had made a provision for a tax charge of $1.8 million, equivalent to four cents a share. It said the increased tax would cost the company about two cents per quarter.

The company’s biggest operation, the Tropicana Casino and Resort in Atlantic City, reported second quarter revenues of $114.5 million, down 2% from last year caused essentially by a lower hold percentage on slots revenue.

Nearly equaling last year’s performance was the Tropicana Resort and casino in Las Vegas with second quarter revenue of $39.2 million versus last year’s $39.7 million.

Solid growth, however, was recorded at Casino Aztar in Evansville, Ind., where the revenue reached $27.4 million versus last year’s $25 million.

Alliance Gaming

With business booming in its Bally’s Gaming and Systems division, Alliance Gaming Corp. (ALLY) posted a 76% increase in its quarterly earnings for the period ended on June 30. Earnings were listed at $14.8 million or $0.30 a share compared to $8.4 million or $0.19 a share last year.

For the fiscal year, the company earned $27.7 million or $0.56 a share. During the previous year, Alliance Gaming showed a loss of $1.2 million or three cents a share.

Consolidated EBITDA, before non-recurring items, rose 22% to $29.3 million, pushing the yearly total to $112.4 million, an increase of 27% from the $86 million the prior fiscal year.

As for the coming year, the company said earnings of $0.84 a share were visible for fiscal 2003 on revenues of about $675 million.

Station Casinos Inc.

Station Casinos Inc. (STN) failed to meet analysts’ consensus estimate during the second quarter when it reported earnings of $8 million or $0.13 a share. The consensus estimate was $0.16 a share.

The company said revenues for the period declined by four percent to $192 million while its EBITDA increased four percent to $65.7 million.

Commenting on the numbers, Glenn Christenson, executive vice president and CFO, remarked, "Green Valley Station generated $28.3 million of revenue during the quarter. The revenues generated by Green Valley Station more than offset the decline in the revenues at our major Las Vegas operations, which is consistent with our belief that adding a quality gaming product in fast growing segments of the Las Vegas Valley can result in an expansion of the market."

For the quarter, the company reported earnings from Green Valley Station joint venture to be $3.1 million, representing a combination of Station’s management fee plus 50% of Green Valley Station’s operating income.

Providing guidance for the next quarter, the company said it expects earnings per share to be $0.09 to $0.10.

Ameristar Casinos Inc.

Strong operating results at four of its properties raised quarterly net revenues of Ameristar Casinos Inc. (ASCA) to $166.3 million, a 13% increase over the second quarter of last year. Operating income rose to $34.7 million, up 17.6% over last year’s $29.5 million.

The company said they experienced strong operating results at its properties in Council Bluffs, Iowa, Vicksburg, Miss., St. Charles, Mo., and Jackpot, Nev.

It also was noted that the company had increased the number of shares outstanding with the issuance of 4.9 million made available in a public equity offering.

Other financial reports

Argosy Gaming Company (AGY) reported net income of $23.2 million or $0.79 per diluted share compared to $13.7 million or $0.47 in the second quarter of 2001.

Scientific Games Corporation (SGMS) said its second quarter produced revenues of $114.3 million compared to $112.6 a year ago. As for earnings per share, the company said it was essentially break even compared to last year’s $0.06 per share.

Churchill Downs Inc. (CHDN) had net earnings of $23.1 million, a 5.5% jump over the second quarter of last year. Per share earnings were $1.73 compared with last year’s $1.66.

Penn National Gaming Inc. (PENN) reported second quarter earnings of $0.28 a share as against the $0.20 reported a year ago.