Herbst Gaming reports solid second quarter

August 06, 2002 8:34 AM
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Herbst Gaming, Inc. last week reported net revenues of $63 million for the second quarter ended June 30, 2002, an increase of 7.7 percent, or $4.5 million, compared with $58.5 million in the prior year’s quarter.

"We’re pretty delighted about the quarter," said Ed Herbst in a conference call. Net income was $1.7 million for the second quarter of 2002, an increase of 668 percent or $1.5 million, compared with net income of $0.2 million in the prior year’s quarter.

Earnings before interest, taxes, depreciation and amortization (EBITDA) were $10.4 million for the second quarter ended June 30, 2002, an increase of 15 percent or $1.4 million, compared with EBITDA of $9.0 million for the second quarter 2001.

Herbst pointed out that, while the company’s casinos and convenience stores were experiencing robust sales, it was the company’s slot route operations that was "the core business" for Herbst Gaming.

"Route operations accounted for about 71 percent of total revenue," Herbst said.

In the wake of IGT’s announcement that it was planning to sell its own slot routes, there was heightened speculation that Herbst Gaming would seek to acquire some if not all of IGT’s route assets.

Herbst acknowledged that the company was examining the possibility of acquiring IGT’s routes, but would not comment on a possible purchase, or on the potential value of the routes to Herbst.

In other areas of the company, Herbst’s new casino in Searchlight, which opened with 75 gaming machines, has been doing good business with the diversion of truck traffic from Hoover Dam.

Hotel occupancy at Terrible’s Casino in Las Vegas had not reached pre 9-11 levels, although there was a "spike up" on weekends, with rates hovering around $39-40 per night.

The company also reported net revenues of $124.6 million for the six months ended June 30, 2002, an increase of 7.3 percent, or $8.5 million, compared with $116.1 million in the prior year. Net income was $3.3 million for the six months ended June 30, 2002, an increase of 346 percent, or $2.5 million, compared with net income of $0.7 million in the prior year. Earnings before interest, taxes, depreciation and amortization (EBITDA) were $20.4 million for the six months ended June 30, 2002.