Ameristar Casinos' Second Quarter Financial Results Show Continued
Growth LAS VEGAS, July 28 /PRNewswire-FirstCall/ -- Ameristar
Casinos, Inc. (NASDAQ:ASCA) today announced financial results for
the second quarter of 2004, reflecting the continued growth of the
company. Second Quarter 2004 Financial Highlights * Record second
quarter consolidated net revenues of $210.0 million, representing
an increase of $15.2 million, or 7.8%, over the second quarter of
2003. * Record second quarter consolidated EBITDA (a non-GAAP
financial measure which is defined and reconciled with operating
income below) of $56.9 million, representing an increase of $1.8
million, or 3.2%, over the second quarter of 2003. * Consolidated
operating income of $39.1 million for the second quarter of 2004, a
decrease of $0.2 million from the prior-year second quarter. *
Record second quarter net income of $15.0 million, up $0.6 million,
or 3.8%, from the second quarter of 2003. * Diluted earnings per
share of $0.54 for the second quarter of 2004, compared to $0.54
for the second quarter of 2003. Our previously issued earnings
guidance for the second quarter of 2004 indicated a range of $0.55
to $0.57 per share. Analysts' latest consensus estimate for the
second quarter of 2004, as reported by Thomson First Call, was
$0.59. * On June 1, 2004, our Board of Directors declared a
quarterly cash dividend of $0.125 per share, which was paid on June
30, 2004 to shareholders of record on June 15, 2004. * During the
second quarter of 2004, we prepaid $15.0 million of long-term debt
under our senior credit facilities, further improving our total
debt leverage ratio (as defined in our senior credit agreement)
from 3.49:1 at December 31, 2003 to 3.17:1 at June 30, 2004. Second
Quarter 2004 Operational Highlights * We extended and improved our
leadership position in market share (based on gross gaming
receipts) in each of our markets with Ameristar-branded properties
during the second quarter of 2004 compared to the same period in
2003. * As of June 30, 2004, nearly 100% of the slot machines at
our Ameristar-branded properties have been equipped with coinless
technology. Other Second Quarter 2004 Highlights * On May 28, 2004,
we signed an agreement with Windsor Woodmont Black Hawk Resort
Corp. to acquire Mountain High Casino in Black Hawk, Colorado for
approximately $115.0 million, plus the assumption of approximately
$2.4 million of outstanding debt and certain other contingent
consideration. Closing of this acquisition is expected to occur in
December 2004. Mountain High Casino is an upscale, integrated
gaming and entertainment facility and is currently the largest
casino in Colorado. Following the closing of the transaction, we
intend to invest approximately $75 million in capital expenditures
to improve the competitiveness of the property, as well as make
other operational enhancements. The planned capital improvements
include construction of a hotel and additional covered parking,
reconfiguration and expansion of the gaming area, the introduction
of cashless slot technology and other gaming equipment upgrades,
the addition and replacement of food and beverage outlets and
enhancement of the entertainment showroom. * On July 15, 2004, we
received approval from the Iowa Racing and Gaming Commission for a
$26 million expansion and enhancement of Ameristar Council Bluffs.
Our expansion plans call for adding another 9,800 square feet of
gaming space to accommodate 398 additional gaming positions,
including slot machines, table games and a poker room, as well as
an overlook bar and deli. In addition to satisfying demand during
peak times, the changes will result in a more spacious casino floor
with improved circulation and traffic flow. Enhancements to the
landside facilities include an extensive renovation to the buffet,
which will be re-branded as the Heritage Buffet. The changes will
bring an upscale Craftsman-era ambiance to the room and an upgrade
to the entire buffet line, including the creation of several
display cooking stations. The buffet will also be expanded by 53
seats to bring it to a total of 340 seats. In the hotel --
currently the only AAA Four Diamond-rated hotel in the Omaha area
-- all of the 162 guest rooms will undergo a complete renovation.
The new rooms will feature a classically modern interior accented
by hardwood furniture, and upscale bathroom finishings. The rooms
will provide luxury conveniences, including a 32" LCD TV,
pillow-top bed and fully functioning work desks with high-speed
internet access. "Our continued market share leadership in all of
the jurisdictions in which we operate further evidences the
strength of the Ameristar brand," said Craig H. Neilsen, Chairman
and CEO. "We are most pleased that since the introduction of our
all-new Ameristar Kansas City property in the third quarter of
2003, we have seen steady improvement in our market share
leadership despite a significant increase in the number of gaming
positions in the Kansas City market. Our solid financial
performance has allowed us to continue to return a portion of our
earnings to our shareholders with the declaration of our second
quarterly cash dividend, while at the same time we have further
reduced our financial leverage. Indeed, we believe we are
well-positioned to further grow the Company." Financial Results Net
Revenues Net revenues for the second quarter of 2004 increased to
$210.0 million, an increase of 7.8% compared to the second quarter
of 2003. All of our Ameristar-branded properties improved in net
revenues, with increases of 11.2% at Ameristar Vicksburg, 9.3% at
Ameristar Council Bluffs, 8.6% at Ameristar Kansas City and 7.5% at
Ameristar St. Charles. For the quarter, each of our
Ameristar-branded properties improved its market share. Ameristar
Vicksburg and Ameristar Council Bluffs further improved their
long-time market leadership positions to 45.7% and 40.9%,
respectively, with increases of 6.5 and 2.1 percentage points,
respectively, over the prior-year second quarter. Ameristar St.
Charles and Ameristar Kansas City increased reported market shares
to 32.7% and 34.8%, respectively, up 1.7 and 0.9 percentage points,
respectively, over the prior-year second quarter. Driven by a $23.2
million (14.3%) increase in slot revenues, casino revenues for the
second quarter of 2004 increased $23.8 million, or 12.6%, from the
second quarter of 2003. We believe casino revenues increased in
part as a result of our continued successful implementation of our
targeted marketing programs, which is evidenced by a 21.7% increase
in rated play at our Ameristar-branded properties when compared to
the second quarter of 2003. We also believe that the growth in slot
revenues has been driven by our aggressive implementation of
coinless slot technology at our Ameristar-branded properties, which
are now nearly 100% coinless. In addition, we believe our continued
leadership in the introduction of new-generation nickel and penny
slot machines at our Ameristar-branded properties is a contributor
to the improvement in slot revenues, due to the popularity of this
segment of the slot market. We believe the quality of our food and
beverage operations also contributed to our market share
leadership. Food and beverage revenues increased by $3.5 million,
or 14.0%, in the second quarter of 2004 compared to the prior-year
second quarter. The increase was principally attributable to our
new food and beverage venues that opened at Ameristar Kansas City
in the third quarter of 2003 and Ameristar Vicksburg's newly
renovated Heritage Buffet, which was completed in the fourth
quarter of 2003. The renovation and expansion of the buffet at
Ameristar Council Bluffs is expected to achieve results similar to
those of our other recent food and beverage projects. Net revenues
at the Jackpot Properties decreased to $15.5 million, representing
a $0.3 million decrease compared to the second quarter of 2003.
Lower net revenues were the result of increased competition from a
Native American gaming property in Southeastern Idaho and higher
fuel prices. Operating Income and EBITDA In the second quarter of
2004, consolidated operating income decreased 0.6% to $39.1 million
and consolidated operating income margin dropped 1.6 percentage
points from the prior-year second quarter, to 18.6%. Operating
income margin decreased at Ameristar St. Charles, Ameristar Kansas
City and the Jackpot Properties by 1.5, 1.9 and 7.3 percentage
points, respectively, when compared to the same period in 2003.
Consolidated EBITDA increased 3.2% to $56.9 million compared to the
second quarter of 2003. However, consolidated EBITDA margin in the
second quarter of 2004 decreased from 28.3% to 27.1%, primarily due
to Ameristar St. Charles, Ameristar Kansas City and the Jackpot
Properties, where EBITDA margin dropped 2.3, 0.5 and 7.1 percentage
points, respectively, from the prior-year second quarter. The
declines in operating income and EBITDA margins at these properties
were primarily attributable to increased costs for marketing and
advertising to maintain competitiveness, as well as increased
employee benefits costs. At the Jackpot Properties, the decreases
in EBITDA and operating income and related margins were also the
result of the aforementioned decline in net revenues and higher
labor and entertainment costs. Ameristar Kansas City's operating
income margin was also negatively impacted by an increase in
depreciation expense of $1.1 million from the prior-year quarter,
as a result of the completion of the enhancement and renovation
projects at the property in the third quarter of 2003. However,
EBITDA at Ameristar Kansas City increased $0.9 million, or 6.6%,
over the prior-year second quarter, due primarily to the
aforementioned increases in gaming and food and beverage revenues.
Ameristar Vicksburg improved its EBITDA margin to 34.0% from 32.5%
and its operating income margin to 23.1% from 22.5% in the second
quarter of 2003. Ameristar Council Bluffs' EBITDA margin increased
to 37.0% in the second quarter of 2004 from 35.9% in the second
quarter of 2003, and its operating income margin improved 0.8
percentage points to 30.3% when compared to the same quarter in
2003. The growth in EBITDA and operating income margins at these
properties was principally driven by the increase in revenues noted
above. Corporate expense increased $1.1 million in the second
quarter of 2004 compared to the same quarter of 2003. The increase
in corporate expense was primarily the result of our expanded
development activities. We expect this trend to continue through
the remainder of 2004 as we seek growth through development
opportunities in the United Kingdom and Pennsylvania, and through
acquisition opportunities. Depreciation and amortization expense
increased to $17.8 million in the second quarter of 2004 from $15.8
million in the second quarter of 2003, primarily due to the
increase in our depreciable assets resulting from the enhancement
and renovation projects at Ameristar Kansas City and Ameristar
Vicksburg and the continued implementation of coinless slot
technology. Net Income and Diluted Earnings Per Share For the
second quarter of 2004, net income increased 3.8% to $15.0 million
from $14.5 million for the second quarter of 2003. Diluted earnings
per share were $0.54 in each of the quarters ended June 30, 2004
and 2003. Interest expense for the 2004 second quarter was $13.8
million, down $2.8 million from the second quarter of 2003. The
decline in interest expense was due to a decrease in our long-term
debt levels, the termination of our interest rate swap agreement on
March 31, 2004, and lower interest rates on our senior credit
facilities year-over-year. In the 2004 second quarter, we incurred
a non-operating loss on early retirement of debt of $0.2 million.
Our effective income tax rate for the quarter ended June 30, 2004
was 40.0%, compared to 37.0% for the quarter ended June 30, 2003,
due primarily to an increase in the effective state income tax
rate. Liquidity and Capital Resources Our financial position
remains strong, with approximately $89.7 million of cash and cash
equivalents and $68.9 million of available borrowing capacity under
our senior credit facilities as of June 30, 2004. During the second
quarter of 2004, we reduced our long-term debt by approximately
$15.8 million, including the prepayment of $15.0 million of
principal under our senior credit facilities. At June 30, 2004, our
total debt was $685.4 million, representing a decrease of $31.6
million (4.4%) from December 31, 2003. We expect to increase the
borrowing capacity under our senior credit facilities in order to
fund the acquisition of Mountain High Casino. Capital expenditures
for the second quarter of 2004 totaled $28.8 million and included
capital maintenance projects at all of our properties, the
continued acquisition of coinless slot machines and the
implementation of information technology solutions to enhance our
operating capabilities. Outlook Based on our preliminary results of
operations to date in July 2004 and our outlook for the remainder
of the quarter, we currently estimate operating income of $37
million to $39 million, EBITDA of $55 million to $57 million (given
anticipated depreciation expense of $18 million), interest expense
of $14 million and diluted earnings per share of $0.50 to $0.53 for
the third quarter of 2004. Conference Call We will hold a
conference call to discuss our second quarter results and guidance
for the third quarter at 3:00 p.m. Eastern Time on July 28, 2004.
The call can be accessed live by calling (800) 500-0311. It can be
replayed until August 4, 2004 at 12:00 a.m. Eastern Time by calling
(888) 203-1112 and using the access code number 368895. This press
release may be accessed on our website at
http://www.ameristar.com/corp/c_aa_proom.asp. Forward-Looking
Information This press release contains certain forward-looking
information that generally can be identified by the context of the
statement or the use of forward-looking terminology, such as
"believes," "estimates," "anticipates," "intends," "expects,"
"plans," "is confident that" or words of similar meaning, with
reference to Ameristar or our management. Similarly, statements
that describe our future plans, objectives, strategies, financial
results or position, operational expectations or goals are
forward-looking statements. It is possible that our expectations
may not be met due to various factors, many of which are beyond our
control, and we therefore cannot give any assurance that such
expectations will prove to be correct. For a discussion of relevant
factors, risks and uncertainties that could materially affect our
future results, attention is directed to "Item 1. Business - Risk
Factors" and "Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations" in our Annual Report
on Form 10-K for the year ended December 31, 2003 and "Item 2.
Management's Discussion and Analysis of Financial Condition and
Results of Operations" in our Quarterly Report on Form 10-Q for the
quarter ended March 31, 2004. About Ameristar Ameristar Casinos,
Inc. is a leading Las Vegas-based gaming and entertainment company
known for its premier properties characterized by innovative
architecture, state-of-the-art casino floors and superior dining,
lodging and entertainment offerings. Ameristar's focus on the total
entertainment experience and the highest quality guest service has
earned it the leading market share position in each of the five
markets in which it operates. Founded in 1954 in Jackpot, Nevada,
Ameristar recently marked its 10th anniversary as a public company.
The company has a portfolio of six casinos: Ameristar Kansas City;
Ameristar St. Charles (greater St. Louis); Ameristar Council Bluffs
(Omaha, Nebraska and southwestern Iowa); Ameristar Vicksburg
(Jackson, Mississippi and Monroe, Louisiana); and Cactus Petes and
the Horseshu in Jackpot, Nevada (Idaho and the Pacific Northwest).
Visit Ameristar Casinos' Web site at http://www.ameristar.com/
(which shall not be deemed to be incorporated in or a part of this
news release). AMERISTAR CASINOS, INC. AND SUBSIDIARIES CONDENSED
CONSOLIDATED STATEMENTS OF INCOME (Amounts in Thousands, Except Per
Share Data) (Unaudited) Three Months Six Months Ended June 30,
Ended June 30, 2004 2003 2004 2003 REVENUES: Casino $211,904
$188,128 $427,214 $371,888 Food and beverage 28,198 24,734 57,246
49,500 Rooms 6,746 6,565 13,060 12,071 Other 5,756 5,787 11,415
10,437 252,604 225,214 508,935 443,896 Less: Promotional allowances
42,599 30,388 84,567 60,550 Net revenues 210,005 194,826 424,368
383,346 OPERATING EXPENSES: Casino 94,830 86,142 190,948 170,661
Food and beverage 15,692 13,917 31,028 28,030 Rooms 1,581 1,460
3,206 3,061 Other 3,318 2,501 6,492 5,909 Selling, general and
administrative 37,703 35,604 76,235 69,989 Depreciation and
amortization 17,796 15,767 35,128 30,778 Impairment loss (17) 88 95
540 Total operating expenses 170,903 155,479 343,132 308,968 Income
from operations 39,102 39,347 81,236 74,378 OTHER INCOME (EXPENSE):
Interest income 78 104 88 211 Interest expense (13,788) (16,635)
(29,223) (33,229) Loss on early retirement of debt (224) -- (470)
-- Other (140) 147 (97) 34 INCOME BEFORE INCOME TAX PROVISION
25,028 22,963 51,534 41,394 Income tax provision 10,009 8,496
20,614 15,207 NET INCOME $15,019 $14,467 $30,920 $26,187 EARNINGS
PER SHARE: Net income: Basic $0.56 $0.55 $1.15 $1.00 Diluted $0.54
$0.54 $1.12 $0.97 WEIGHTED AVERAGE SHARES OUTSTANDING: Basic 27,044
26,377 26,924 26,318 Diluted 27,860 27,012 27,727 26,866 AMERISTAR
CASINOS, INC. AND SUBSIDIARIES SUMMARY CONSOLIDATED FINANCIAL DATA
(Dollars in Thousands) (Unaudited) Three Months Six Months Ended
June 30, Ended June 30, 2004 2003 2004 2003 Consolidated cash flow
information Cash flows provided by operations $58,827 $51,753
$93,906 $86,016 Cash flows used in investing $(26,830) $(15,214)
$(47,862) $(43,021) Cash flows used in financing $(21,269)
$(21,224) $(34,586) $(31,327) Net revenues Ameristar St. Charles
$69,009 $64,170 $140,449 $125,837 Ameristar Kansas City 57,038
52,540 114,640 104,350 Ameristar Council Bluffs 42,473 38,850
84,827 76,465 Ameristar Vicksburg 26,010 23,392 54,925 47,281
Jackpot Properties 15,475 15,744 29,527 29,375 Corporate and other
-- 130 -- 38 Consolidated net revenues $210,005 $194,826 $424,368
$383,346 Operating income (loss) Ameristar St. Charles $16,346
$16,177 $35,767 $30,657 Ameristar Kansas City 10,794 10,924 21,376
21,865 Ameristar Council Bluffs 12,854 11,457 25,071 21,379
Ameristar Vicksburg 6,021 5,254 14,731 11,192 Jackpot Properties
2,209 3,399 3,554 5,055 Corporate and other (9,122) (7,864)
(19,263) (15,770) Consolidated operating income $39,102 $39,347
$81,236 $74,378 EBITDA (1) Ameristar St. Charles $22,240 $22,154
$47,283 $42,273 Ameristar Kansas City 15,322 14,380 30,553 28,181
Ameristar Council Bluffs 15,700 13,940 30,571 26,368 Ameristar
Vicksburg 8,847 7,594 20,303 15,965 Jackpot Properties 3,161 4,335
5,412 7,023 Corporate and other (8,372) (7,289) (17,758) (14,654)
Consolidated EBITDA $56,898 $55,114 $116,364 $105,156 Operating
income margins (2) Ameristar St. Charles 23.7% 25.2% 25.5% 24.4%
Ameristar Kansas City 18.9% 20.8% 18.6% 21.0% Ameristar Council
Bluffs 30.3% 29.5% 29.6% 28.0% Ameristar Vicksburg 23.1% 22.5%
26.8% 23.7% Jackpot Properties 14.3% 21.6% 12.0% 17.2% Consolidated
operating income margin 18.6% 20.2% 19.1% 19.4% AMERISTAR CASINOS,
INC. AND SUBSIDIARIES SUMMARY CONSOLIDATED FINANCIAL DATA-CONTINUED
(Unaudited) Three Months Six Months Ended June 30, Ended June 30,
2004 2003 2004 2003 EBITDA margins (1) Ameristar St. Charles 32.2%
34.5% 33.7% 33.6% Ameristar Kansas City 26.9% 27.4% 26.7% 27.0%
Ameristar Council Bluffs 37.0% 35.9% 36.0% 34.5% Ameristar
Vicksburg 34.0% 32.5% 37.0% 33.8% Jackpot Properties 20.4% 27.5%
18.3% 23.9% Consolidated EBITDA margin 27.1% 28.3% 27.4% 27.4% (1)
EBITDA is earnings before interest, taxes, depreciation and
amortization. EBITDA is presented solely as a supplemental
disclosure because management believes that it is a widely used
measure of operating performance in the gaming industry and a
principal basis for the valuation of gaming companies. Our credit
agreement also requires the use of EBITDA as a measure of
compliance with our principal debt covenants. In addition,
management uses property-level EBITDA (EBITDA before corporate
expense) as the primary measure of our operating properties'
performance, including the evaluation of operating personnel.
EBITDA margin is EBITDA as a percentage of net revenues. EBITDA
should not be construed as an alternative to income from operations
(as determined in accordance with GAAP) as an indicator of our
operating performance, or as an alternative to cash flows from
operating activities (as determined in accordance with GAAP) as a
measure of liquidity, or as an alternative to any other measure
determined in accordance with GAAP. We have significant uses of
cash flows, including capital expenditures, interest payments,
taxes and debt principal repayments, which are not reflected in
EBITDA. It should also be noted that not all gaming companies that
report EBITDA calculate EBITDA in the same manner as we do. (2)
Operating income margin is operating income as a percentage of net
revenues. RECONCILIATION OF OPERATING INCOME (LOSS) TO EBITDA
(Dollars in Thousands) (Unaudited) The following table sets forth a
reconciliation of operating income (loss), a GAAP financial
measure, to EBITDA, a non-GAAP financial measure. Three Months Six
Months Ended June 30, Ended June 30, 2004 2003 2004 2003 Ameristar
St. Charles: Operating income $16,346 $16,177 $35,767 $30,657
Depreciation and amortization 5,894 5,977 11,516 11,616 EBITDA
$22,240 $22,154 $47,283 $42,273 Ameristar Kansas City: Operating
income $10,794 $10,924 $21,376 $21,865 Depreciation and
amortization 4,528 3,456 9,177 6,316 EBITDA $15,322 $14,380 $30,553
$28,181 Ameristar Council Bluffs: Operating income $12,854 $11,457
$25,071 $21,379 Depreciation and amortization 2,846 2,483 5,500
4,989 EBITDA $15,700 $13,940 $30,571 $26,368 Ameristar Vicksburg:
Operating income $6,021 $5,254 $14,731 $11,192 Depreciation and
amortization 2,826 2,340 5,572 4,773 EBITDA $8,847 $7,594 $20,303
$15,965 Jackpot Properties: Operating income $2,209 $3,399 $3,554
$5,055 Depreciation and amortization 952 936 1,858 1,968 EBITDA
$3,161 $4,335 $5,412 $7,023 Corporate and other: Operating loss
$(9,122) $(7,864) $(19,263) $(15,770) Depreciation and amortization
750 575 1,505 1,116 EBITDA $(8,372) $(7,289) $(17,758) $(14,654)
Consolidated: Operating income $39,102 $39,347 $81,236 $74,378
Depreciation and amortization 17,796 15,767 35,128 30,778 EBITDA
$56,898 $55,114 $116,364 $105,156
http://www.newscom.com/cgi-bin/prnh/20010501/AMERISTARLOGO
http://photoarchive.ap.org/ DATASOURCE: Ameristar Casinos, Inc.
CONTACT: Tom Steinbauer, Senior Vice President of Finance, Chief
Financial Officer of Ameristar Casinos, Inc., +1-702-567-7000 Web
site: http://www.ameristar.com/corp/c_aa_proom.asp Web site:
http://www.ameristarcasinos.com/
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