LAS VEGAS, Oct. 28 /PRNewswire-FirstCall/ -- Ameristar Casinos, Inc.
(Nasdaq: ASCA) today announced record financial results for the third quarter
of 2004, reflecting the continued growth of the company.
Third Quarter Highlights
* Record consolidated net revenues of $215.7 million, representing an
increase of $14.1 million, or 7.0%, over the third quarter of 2003.
* Record third quarter consolidated EBITDA (a non-GAAP financial measure
which is defined and reconciled with operating income below) of
$59.2 million, representing an increase of $9.1 million, or 18.2%,
over the third quarter of 2003.
* Record third quarter consolidated operating income of $40.3 million,
an increase of $6.1 million, or 17.9%, from the prior-year third
quarter.
* Record third quarter net income of $16.6 million, up $4.7 million, or
39.7%, from the third quarter of 2003.
* Diluted earnings per share of $0.60 for the third quarter of 2004,
compared to $0.44 for the third quarter of 2003. Our previously
issued earnings guidance for the third quarter of 2004 indicated a
range of $0.50 to $0.53 per share. Analysts' latest consensus
estimate for the third quarter of 2004, as reported by Thomson First
Call, was $0.52.
* On August 17, 2004, our Board of Directors declared a quarterly cash
dividend of $0.125 per share, which was paid on September 15, 2004 to
our shareholders of record as of August 31, 2004.
* During the third 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 2.99:1 at September 30,
2004.
* We extended and improved our leadership position in market share
(based on gross gaming receipts) in our Kansas City, Council Bluffs
and Vicksburg markets during the third quarter of 2004 compared to the
same period in 2003.
* We are continuing to progress toward the completion of our pending
acquisition of Mountain High Casino in Black Hawk, Colorado. Subject
to the receipt of regulatory approval, we anticipate the closing to
occur in December 2004.
Craig H. Neilsen, Chairman and CEO, stated: "We are very pleased with our
performance in the third quarter of 2004. We believe our financial results
further validate our business model and evidence the continued successful
implementation of our operating strategies. In particular, we had significant
flow-through during the third quarter of 2004 compared to the same period in
2003, as net revenues increased by 7.0% and EBITDA increased by 18.2%, which
demonstrates the effectiveness of our cost-containment strategies. In
addition, the major investment in slot technology we have made over the past
year, including our accelerated implementation of coinless slot technology and
the further introduction of lower denomination slot machines, has
significantly contributed to the continued financial success we have achieved
in the third quarter of 2004. We are committed to maintaining the most
advanced casino floor in each of our markets, which we expect will result in
continued financial success for our company."
Financial Results
Net Revenues
Net revenues for the third quarter of 2004 increased to $215.7 million, an
increase of 7.0% compared to the third quarter of 2003. All of our properties
improved in net revenues, with increases of 11.5% at Ameristar Vicksburg,
9.8% at Ameristar Council Bluffs, 7.3% at Ameristar Kansas City, 4.4% at
Ameristar St. Charles and 3.4% at the Jackpot Properties. For the quarter,
Ameristar Vicksburg and Ameristar Council Bluffs further improved their
long-time market leadership positions to 44.9% and 41.3%, respectively, with
increases of 4.9 and 1.9 percentage points, respectively, over the prior-year
third quarter. Ameristar Kansas City also maintained its market share
leadership, as it increased reported market share to 35.4%, up 0.6 percentage
point over the prior-year third quarter. The reported market share for
Ameristar St. Charles was 31.1%, which represented a decline of 0.8 percentage
point compared to the third quarter of 2003.
Led by a $20.1 million (11.9%) increase in slot revenues, consolidated
casino revenues for the third quarter of 2004 increased $20.1 million, or
10.3%, from the third quarter of 2003. We believe that the growth in slot
revenues has been driven by our continued accelerated 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, lower denomination slot machines at our
Ameristar-branded properties has contributed to the improvement in slot
revenues, due to the popularity of this segment of the slot market. We also
believe casino revenues increased, in part as a result of our continued
successful implementation of our targeted marketing programs, which is
evidenced by a 20.5% increase in rated play at our Ameristar-branded
properties when compared to the third quarter of 2003. Promotional allowances
(which are deducted in arriving at net revenues) increased $9.7 million, or
30.5%, in the third quarter of 2004 compared to the 2003 third quarter, in
part due to the increase in rated play.
We believe the quality of our food and beverage operations also
contributed to our record third quarter financial performance. Food and
beverage revenues increased by $2.8 million, or 10.7%, in the third quarter of
2004 compared to the prior-year third quarter. The increase was principally
attributable to our new food and beverage venues that opened at Ameristar
Kansas City late in the third quarter of 2003 and Ameristar Vicksburg's newly
renovated Heritage Buffet, which was completed in the fourth quarter of 2003.
In the first quarter of 2005, we expect to complete a major renovation of our
buffet at Ameristar Council Bluffs, which we believe will favorably impact
future gaming and food and beverage revenues at the property.
Operating Income and EBITDA
In the third quarter of 2004, consolidated operating income increased
$6.1 million, or 17.9%, to $40.3 million and consolidated operating income
margin improved 1.7 percentage points from the prior-year third quarter, to
18.7%. Operating income margin increased at Ameristar Kansas City, Ameristar
Vicksburg and the Jackpot Properties by 3.4, 2.1 and 5.7 percentage points,
respectively, when compared to the same period in 2003. Consolidated EBITDA
increased 18.2% to $59.2 million compared to the third quarter of 2003.
Additionally, consolidated EBITDA margin in the third quarter of 2004
increased from 24.9% to 27.5%, primarily due to Ameristar Kansas City,
Ameristar Vicksburg and the Jackpot Properties, where EBITDA margin improved
5.5, 3.0 and 5.7 percentage points, respectively, from the prior-year third
quarter. The growth in EBITDA, operating income and the related margins at
these properties was principally driven by both the increase in revenues noted
above and the continued implementation of cost-containment initiatives.
Additionally, Ameristar Kansas City had $1.3 million of non-recurring expenses
in the third quarter of 2003 related to the introduction of the "All New
Ameristar Kansas City."
At Ameristar St. Charles, operating income for the third quarter decreased
$0.3 million and the related margin dropped 1.4 percentage points to
22.3% compared to the 2003 third quarter. Although EBITDA was flat, the
property saw a decline in EBITDA margin of 1.2 percentage points during the
third quarter. The declines in the margins and operating income were
primarily the result of higher marketing costs in a more competitive market
environment, due to the expanded facilities and increased marketing and
promotional activities of our principal competitor in the St. Louis market.
In addition, the margins and operating income were negatively impacted by
increased employee benefit costs.
Ameristar Council Bluffs increased third quarter operating income by
$1.0 million and third quarter EBITDA by $1.4 million when compared to the
prior-year period. The improvements in operating income and EBITDA occurred
despite a 2% increase in the Iowa tax rate on gaming revenues of riverboat
casinos, which became effective July 1, 2004. Operating income margin
decreased 0.5 percentage point to 30.1% and EBITDA margin declined
0.1 percentage point to 36.9% due to higher health insurance costs and the
aforementioned tax increase.
Corporate expense decreased $0.5 million in the third quarter of 2004
compared to the same quarter of 2003. The decrease in corporate expense was
primarily the result of $0.9 million in costs incurred in 2003 relating to the
unsuccessful pursuit of a corporate acquisition. Year to date, corporate
expense increased $3.0 million, or 11.4%, compared to the first nine months of
2003. This increase resulted primarily from the continued growth of the
company and increased development activities. We expect this trend to
continue through the remainder of 2004 and 2005 as we seek growth through
development opportunities, including in the United Kingdom and Pennsylvania,
and through acquisition opportunities.
Depreciation and amortization expense increased to $18.9 million in the
third quarter of 2004 from $15.9 million in the third quarter of 2003,
primarily due to the increase in our depreciable assets resulting from the
completion of enhancement and renovation projects at Ameristar Kansas City in
September 2003 and Ameristar Vicksburg in December 2003, the continued
implementation of coinless slot technology and the introduction of lower
denomination slot machines at our Ameristar-branded properties.
Net Income and Diluted Earnings Per Share
For the third quarter of 2004, net income increased 39.7% to
$16.6 million, from $11.9 million for the third quarter of 2003. Diluted
earnings per share were $0.60 in the quarter ended September 30, 2004,
compared to $0.44 in the corresponding prior-year quarter. Interest expense
for the 2004 third quarter was $13.8 million, down $1.3 million from the third
quarter of 2003. The decline in interest expense was due to a decrease in our
long-term debt levels as we continued to prepay senior debt, the termination
of our interest rate swap agreement on March 31, 2004, and lower interest
rates on our senior credit facilities year-over-year. We incurred
non-operating losses on early retirement of debt in the third quarters of 2004
and 2003 in the amounts of $0.2 million and $0.4 million, respectively. Our
effective income tax rate for the quarter ended September 30, 2004 increased
to 37.2% from 37.0% for the quarter ended September 30, 2003, due primarily to
a slight increase in our effective state income tax rate.
Liquidity and Capital Resources
Our financial position remains strong, with approximately $76.2 million of
cash and cash equivalents and $68.9 million of available borrowing capacity
under our senior credit facilities as of September 30, 2004. During the third
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 September 30, 2004, our total debt was $669.7 million,
representing a decrease of $47.2 million (6.6%) from December 31, 2003. In
the fourth quarter of 2004, we expect to borrow up to an additional
$115.0 million under our senior credit facilities in order to fund our pending
acquisition of Mountain High Casino.
Capital expenditures for the third quarter of 2004 totaled $20.6 million
and included the continued acquisition of coinless slot machines, the
implementation of information technology solutions to enhance our operating
capabilities and capital projects at all of our properties. For the year, we
expect that capital expenditures will be approximately $85 million.
Planned Capital Improvement Projects
Following the closing of the Mountain High Casino acquisition, we intend
to invest approximately $90 million in capital expenditures to improve the
competitiveness of the property, as well as make other operational
enhancements. The planned capital improvements include reconfiguration and
expansion of the gaming area, the introduction of cashless slot technology and
other gaming equipment upgrades, construction of a 300-room AAA Four
Diamond-quality hotel and additional covered parking, an upgrade of the food
and beverage outlets and the addition of a casual dining restaurant. All of
these improvements are expected to be completed during 2005, with the
exception of the hotel, which we expect will be completed by mid-2007.
We are currently planning to expand the number of gaming positions,
including the addition of poker rooms, at our Council Bluffs and Vicksburg
properties. We anticipate completion of these gaming expansions to occur by
the end of 2005.
In addition, we are currently planning a complete renovation of the hotel
rooms at Ameristar Kansas City and Ameristar Council Bluffs, which are
expected to be completed in the fall of 2005.
At Ameristar St. Charles, we are currently designing planned capital
improvements, which include a 300-room all-suite hotel, 20,000 square feet of
meeting facilities, a new entertainment pavilion and an additional parking
garage. We expect to begin construction on these improvements in the first
half of 2005, and we believe they will further strengthen the competitive
position of the property.
We expect the return on our investment from these development projects to
be similar to that of other projects we have completed in the recent past.
Outlook
Based on our preliminary results of operations to date in October 2004 and
our outlook for the remainder of the quarter, we currently estimate operating
income of $33 million to $35 million, EBITDA of $52 million to $54 million
(given anticipated depreciation expense of $19 million), interest expense of
$14 million and diluted earnings per share of $0.41 to $0.45 for the fourth
quarter of 2004.
Gaming regulatory authorities in Iowa, Mississippi and Missouri currently
publish, on a monthly basis, gross gaming revenue, market share and other
financial information with respect to the gaming facilities, including
Ameristar's, that operate within their respective jurisdictions. Because
various factors in addition to our gross gaming revenue (including changes in
operating costs, promotional allowances and other expenses) influence our
operating income, EBITDA and diluted earnings per share, such reported
information, as it relates to Ameristar, may not be indicative of the results
of our operations for such periods or for future periods.
Conference Call
We will hold a conference call to discuss our third quarter results and
guidance for the fourth quarter at 3:00 p.m. Eastern Time on October 28, 2004.
The call can be accessed live by calling (800) 967-7185. It can be replayed
until November 4, 2004 at 1:00 a.m. Eastern Time by calling (888) 203-1112 and
using the access code number 961941.
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 June 30, 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 a
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 Nine Months
Ended September 30, Ended September 30,
2004 2003 2004 2003
REVENUES:
Casino $215,001 $194,865 $642,216 $566,752
Food and beverage 28,828 26,034 86,073 74,109
Rooms 6,959 6,602 20,019 18,123
Other 6,370 5,833 17,785 16,271
257,158 233,334 766,093 675,255
Less: Promotional
allowances 41,507 31,806 126,074 90,381
Net revenues 215,651 201,528 640,019 584,874
OPERATING EXPENSES:
Casino 94,768 89,382 285,716 260,043
Food and beverage 16,314 15,730 47,342 43,760
Rooms 1,706 1,651 4,912 4,712
Other 4,244 3,307 10,736 9,216
Selling, general and
administrative 39,321 41,227 115,555 111,216
Depreciation and
amortization 18,888 15,888 54,016 46,666
Impairment loss 100 147 196 687
Total operating expenses 175,341 167,332 518,473 476,300
Income from operations 40,310 34,196 121,546 108,574
OTHER INCOME (EXPENSE):
Interest income 69 71 157 282
Interest expense (13,806) (15,115) (43,029) (48,344)
Loss on early retirement
of debt (202) (415) (673) (415)
Other 50 126 (46) 160
INCOME BEFORE INCOME TAX
PROVISION 26,421 18,863 77,955 60,257
Income tax provision 9,820 6,979 30,434 22,186
NET INCOME $16,601 $11,884 $47,521 $38,071
EARNINGS PER SHARE:
Basic $0.61 $0.45 $1.76 $1.44
Diluted $0.60 $0.44 $1.71 $1.41
WEIGHTED AVERAGE SHARES
OUTSTANDING:
Basic 27,107 26,489 26,986 26,376
Diluted 27,779 27,297 27,744 27,025
AMERISTAR CASINOS, INC. AND SUBSIDIARIES
SUMMARY CONSOLIDATED FINANCIAL DATA
(Dollars in Thousands)
(Unaudited)
Three Months Nine Months
Ended September 30, Ended September 30,
2004 2003 2004 2003
Consolidated cash flow
information
Cash flows provided
by operations $28,071 $26,110 $124,276 $112,126
Cash flows used
in investing $(22,447) $(17,711) $(72,608) $(60,732)
Cash flows used
in financing $(19,100) $(29,180) $(53,686) $(60,507)
Net revenues
Ameristar St. Charles $68,883 $66,005 $209,332 $191,842
Ameristar Kansas City 59,520 55,480 174,160 159,832
Ameristar Council Bluffs 44,229 40,285 129,056 116,753
Ameristar Vicksburg 26,364 23,643 81,289 70,924
Jackpot Properties 16,655 16,115 46,182 45,523
Consolidated net
revenues $215,651 $201,528 $640,019 $584,874
Operating income (loss)
Ameristar St. Charles $15,380 $15,644 $51,147 $46,301
Ameristar Kansas City 12,111 9,365 33,487 31,230
Ameristar Council Bluffs 13,317 12,339 38,388 33,718
Ameristar Vicksburg 6,241 5,109 20,972 16,301
Jackpot Properties 3,501 2,462 7,054 7,516
Corporate and other (10,240) (10,723) (29,502) (26,492)
Consolidated operating
income $40,310 $34,196 $121,546 $108,574
EBITDA (1)
Ameristar St. Charles $21,542 $21,423 $68,825 $63,696
Ameristar Kansas City 17,228 12,977 47,780 41,158
Ameristar Council Bluffs 16,312 14,903 46,883 41,271
Ameristar Vicksburg 9,124 7,471 29,427 23,436
Jackpot Properties 4,476 3,414 9,888 10,436
Corporate and other (9,484) (10,104) (27,241) (24,757)
Consolidated EBITDA $59,198 $50,084 $175,562 $155,240
Operating income
margins (2)
Ameristar St. Charles 22.3% 23.7% 24.4% 24.1%
Ameristar Kansas City 20.3% 16.9% 19.2% 19.5%
Ameristar Council Bluffs 30.1% 30.6% 29.7% 28.9%
Ameristar Vicksburg 23.7% 21.6% 25.8% 23.0%
Jackpot Properties 21.0% 15.3% 15.3% 16.5%
Consolidated operating
income margin 18.7% 17.0% 19.0% 18.6%
AMERISTAR CASINOS, INC. AND SUBSIDIARIES
SUMMARY CONSOLIDATED FINANCIAL DATA - CONTINUED
(Unaudited)
Three Months Nine Months
Ended September 30, Ended September 30,
2004 2003 2004 2003
EBITDA margins (1)
Ameristar St. Charles 31.3% 32.5% 32.9% 33.2%
Ameristar Kansas City 28.9% 23.4% 27.4% 25.8%
Ameristar Council Bluffs 36.9% 37.0% 36.3% 35.3%
Ameristar Vicksburg 34.6% 31.6% 36.2% 33.0%
Jackpot Properties 26.9% 21.2% 21.4% 22.9%
Consolidated EBITDA margin 27.5% 24.9% 27.4% 26.5%
(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 Nine Months
Ended September 30, Ended September 30,
2004 2003 2004 2003
Ameristar St. Charles:
Operating income $15,380 $15,644 $51,147 $46,301
Depreciation and
amortization 6,162 5,779 17,678 17,395
EBITDA $21,542 $21,423 $68,825 $63,696
Ameristar Kansas City:
Operating income $12,111 $9,365 $33,487 $31,230
Depreciation and
amortization 5,117 3,612 14,293 9,928
EBITDA $17,228 $12,977 $47,780 $41,158
Ameristar Council Bluffs:
Operating income $13,317 $12,339 $38,388 $33,718
Depreciation and
amortization 2,995 2,564 8,495 7,553
EBITDA $16,312 $14,903 $46,883 $41,271
Ameristar Vicksburg:
Operating income $6,241 $5,109 $20,972 $16,301
Depreciation and
amortization 2,883 2,362 8,455 7,135
EBITDA $9,124 $7,471 $29,427 $23,436
Jackpot Properties:
Operating income $3,501 $2,462 $7,054 $7,516
Depreciation and
amortization 975 952 2,834 2,920
EBITDA $4,476 $3,414 $9,888 $10,436
Corporate and other:
Operating loss $(10,240) $(10,723) $(29,502) $(26,492)
Depreciation and
amortization 756 619 2,261 1,735
EBITDA $(9,484) $(10,104) $(27,241) $(24,757)
Consolidated:
Operating income $40,310 $34,196 $121,546 $108,574
Depreciation and
amortization 18,888 15,888 54,016 46,666
EBITDA $59,198 $50,084 $175,562 $155,240
SOURCE Ameristar Casinos, Inc.
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PRN Photo Desk, photodesk@prnewswire.com
Related links:
http://www.ameristar.com
CONTACT:
Tom Steinbauer, Senior Vice President of
Finance, Chief Financial Officer of Ameristar Casinos, Inc.,
+1-702-567-7000
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