Bright outlook at Mandalay cheers Wall Street

Mar 11, 2003 5:00 AM

Following a glowing report from president and CFO Glenn Schaeffer, shares of Mandalay Resort Group (MBG) found favor on Wall Street Friday jumping $2.39 to $26.10 in spirited trading.

A day earlier, the company reported earnings of $0.15 a share, excluding special items, substantially higher than the most recent guidance of $0.12 a share. Including all items, MBG posted a profit for the fiscal fourth quarter that ended on Jan. 31 of $4.19 million or $0.06 a share compared with a loss of $48.16 million or $0.66 a share in the year-earlier quarter.

The company said it had written off good will of $5.4 million, referring primarily to the Edgewater Hotel & Casino in Laughlin, Nev., and $1.3 million convention center pre-opening costs.

Primary reason for the improved results, said Schaeffer, was the opening of the property’s new convention and conference center.

"The convention center is working and the brand identity is working," he said, adding, "Higher room rates are translating into higher earnings." As for future bookings, Schaeffer said they "are holding up well in spite of the war drums."

Mandalay’s operating cash flow for the fourth quarter and fiscal year ending on Jan. 31 was $120 million and $625.8 million, compared with $101.2 million and $617.7 million in the same periods last year.

Strongest performer in the corporate group was Mandalay Bay Resort which generated cash flow of $29.7 million, a substantial jump from last year’s $16.8 million. Following Mandalay was Luxor which posted $22.6 million in operating cash flow against last year’s $15.3 million while Excalibur, the company’s third property in its southern Strip anchor, earned $15.5 million against $13.5 million.

The other Las Vegas results were: Circus Circus $9.6 million versus $9 million, and Monte Carlo (owned 50% with partner MGM MIRAGE Inc.) $19.3 million against $13.2 million.

As for the company’s outside-Nevada operations, all reported declines. Circus Circus-Reno dropped to $1.1 million from last year’s $1.5 million cash flow and Silver Legacy (a 50% owned property) dropped to $6.1 million from last year’s $7.4 million.

In Elgin, Ill., the riverboat Grand Victoria (50% owned) generated $23.8 million in operating cash flow versus last year’s $34.7 million. MotorCity Casino in Detroit, Mich. (53% owned) reported $27.9 million in operating cash flow against $30.8 million in the prior year.

And the exception in Tunica, Miss., the company’s Gold Strike Casino, produced $4.8 million, a major increase from last year’s $3.8 million.

Herbst Gaming

A major turnaround in earnings was reported by Herbst Gaming Inc. which announced its results for the fiscal year ended Dec. 31, 2002, last week.

Net revenues for the period amounted to $250 million, an increase of 7% over the previous year with net income jumping to $5.2 million from a year net loss of $12 million.

EBITDA (earnings before interest, taxes, depreciation and amortization) for the 12-month period before extraordinary items, increased 13% to $39.8 million compared to $35.2 million for the prior year.

Management indicated that the Terrible’s Casino at Flamingo and Paradise performed "well above expectations" despite the additional competition posed by the opening of the Tuscany Hotel/Casino.