With a tip of their collective hats to the vibrancy of the Las Vegas market, some of the country’s largest gaming companies reported substantial growth, and in some cases, record results, for the first fiscal quarter that ended on March 31.
The reports began with blowout numbers and higher guidance from Station Casinos Inc. (STN) and continued through MGM MIRAGE Inc. (MGG) and Caesars Entertainment Inc. (CZR).
Also reporting solid quarters were International Game Technology Inc. (IGT) and Alliance Gaming Inc. (AGI), the two largest gaming machine manufacturers. However, Wall Street investors were not happy with the failure of Alliance Gaming to meet street estimates and hammered both AGI and IGT in trading during the final two days of last week’s trading.
Station Casinos reported a profit of $33.5 million, excluding non-recurring charges. The profit amounted to $0.51 per share, beating both last year’s $0.23 per share and the Wall Street analysts’ estimate of $0.46 per share.
The company said revenue reached $255.8 million, an 18% increase over the previous year. One-time expenses included a $93.3 million loss on the early retirement of debt; $2 million to develop a new casino for an Indian tribe, and a $2 million payment related to an Indian casino in Michigan.
Particularly noteworthy, said Frank Fertitta, III, company chairman and CEO, was the same-store EBITDA (earnings before interest, taxes, depreciation and amortization) from the Las Vegas operations increased 17% over the prior year’s quarter while same store revenues increased 11%.
The company declared a quarterly cash dividend of $0.175 to be paid on June 4. This represents a 40% dividend increase.
Adjusted earnings from continuing operations per diluted share increased to an all-time record $0.70 in the first quarter, easily topping last year’s $0.38 per share in the comparable quarter, according to the MGM MIRAGE Inc. (MGG) report.
The increase resulted from strong visitor levels and customer spending in all areas of the company’s Las Vegas properties, the report said. Especially strong was the REVPAR (revenue per available room) at these Strip properties.
"Our first quarter was satisfying in many regards and we achieved several milestones including record EPS and EBITDA, said Terry Lanni, the company’s chairman and CEO. "Bellagio and MGM Grand each had their most profitable quarter ever," he added.
Net revenues rose to $1.07 billion, an increase of 12% while property-level EBITDA reached $370.5 million, a jump of 29% over the prior year, and an all-time high for any quarter.
Helping to increase revenues, the company said, was a strong convention calendar, increased Las Vegas visitations and considerable increases in gaming volumes. Casino revenue increased by 13% while non-casino revenue rose more than 11%.
As with other companies, Caesars Entertainment Inc. (CZR) experienced sizable increases in visitations and table action to boost the company’s earnings to $0.23 per share, or $0.04 higher than the amount given in a pre-announcement.
Net income for the quarter was a record $71 million, an increase of 73% over the first quarter of 2003. The report excluded Las Vegas Hilton, the property that was treated as a discontinued operation pending the sale of the property to Colony Capital.
Net revenue for the reporting period was a record $1.196 billion, compared to last year’s $1.086 billion. EBITDA was a record $312 million, up 17% from the $267 million of a year ago.
Wally Barr, company president and CEO, remarked "We posted record results in the West, and reported our second best performance ever in the Mid-South. And in the East, our results were significantly better than expected, given increased health care costs and the presence of new competition (the Borgata).
Boosting the company’s West division results was a 41% revenue increase at Caesars Palace. Both net revenue of $172 million and EBITDA of $47 million were records.
Guidance for the second quarter placed per share earnings between $0.15 and $0.17 and the full year between $0.64 and $0.68.
International Game Technology
Another record performance by International Game Technology (IGT) during the quarter with the company’s leaders attributing the increases to the "acceptance and acceleration of IGT’s EZ Pay ticket-in, ticket-out technology."
EZ Pay systems drove domestic replacement sales to a record 23,400 units versus 13,900 units in the previous year’s quarter, the company reported.
Worldwide, the company said machine sales reached 45,400 units, an increase of 31% over the quarter in 2003. As such, revenues reached $636.1 million, a jump of 20% while operating income was $206 million, a 29% improvement over the corresponding year.
Also continuing its aim to maintain its core business, the company said it had completed the sale of its OnLine Entertainment Systems, Inc. that resulted in a final gain of $56.8 million before taxes. In previous reports, the company noted the sale of its casinos, slot route and pari-mutuel operations.
The company reiterated that it was comfortable with Wall Street estimates of $1.31 earnings per share for the fiscal year ending in September.
Failing to meet analysts’ estimates by $0.03 per share caused the share price of Alliance Gaming Inc. (AGI) to drop nearly 12% late last week even though the company reported major increases in both revenues and earnings.
For the quarter, the company said revenues from continuing operations reached $116.2 million, an increase of 21% from the $96.2 million reported a year ago. And net income totaled $0.24 per diluted share, a 33% increase over last year.
Causing investor concern, however, was the company’s report that it had sold 4,150 gaming devices, down from the year earlier number of 4,500 machines. The company explained that the delayed shipment of 1,250 machines caused the difference in the numbers.
Despite that shortfall, the company reaffirmed its fiscal year earnings guidance for continuing operations of $1.04 per diluted share. Last year, the fiscal year earnings per share amounted to $0.74.