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Ameristar Casinos Inc. Reports Operating Results (10-Q)

August 10, 2009 | About:

Ameristar Casinos Inc. (ASCA) filed Quarterly Report for the period ended 2009-06-30.

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 markets in which it operates. Founded in 1954 in Jackpot Nevada Ameristar has been a public company since November 1993. The company has a portfolio of seven casinos in six markets: Ameristar St. Charles; Ameristar Kansas City; Ameristar Council Bluffs; Ameristar Vicksburg; Ameristar Black Hawk; and Cactus Petes and the Horseshu in Jackpot Nevada. Ameristar Casinos Inc. has a market cap of $1.08 billion; its shares were traded at around $18.77 with a P/E ratio of 14.4 and P/S ratio of 0.8. The dividend yield of Ameristar Casinos Inc. stocks is 2.2%. Ameristar Casinos Inc. had an annual average earning growth of 20% over the past 10 years. GuruFocus rated Ameristar Casinos Inc. the business predictability rank of 3-star.

Highlight of Business Operations:

On May 27, 2009, we issued $650.0 million aggregate principal amount of 91/4% Senior Notes due 2014 (the Notes). We used the net proceeds from the sale of the Notes (approximately $620.0 million, after deducting discounts and expenses) to repay a portion of the revolving loan indebtedness outstanding under our senior credit facility.

In the second quarter of 2009, consolidated operating income increased $7.4 million, or 15.4%, from the second quarter of 2008, primarily as a result of the previously mentioned implementation of operational and marketing efficiencies at all our properties. Operating income margins increased year-over-year at our Jackpot, Kansas City, East Chicago and St. Charles properties. Operating income margin at our Council Bluffs property was flat compared to the prior-year second quarter. Our Black Hawk propertys second quarter operating income was adversely impacted by a $1.3 million one-time non-cash adjustment to property tax expense.

For the three months ended June 30, 2009, corporate expense declined $2.4 million, due mostly to the realized cost efficiencies and the absence of $1.7 million of severance pay that adversely impacted the second quarter of 2008. The year-over-year decrease in corporate expense was partially offset by a $1.1 million increase in deferred compensation expense in the second quarter of 2009 due to fluctuations in the investment markets.

For the six months ended June 30, 2009, our operating income was $124.7 million, compared to an operating loss of $29.1 million for the same prior-year period. The increase is primarily attributable to the $129.0 million non-cash impairment charge recorded in the first quarter of 2008 relating to East Chicagos intangible assets. Excluding the impairment charge, consolidated operating income improved $24.8 million, or 24.8%, when compared to the first half of 2008 primarily due to the operational efficiencies implemented in the second half of 2008.

For the quarter ended June 30, 2009, consolidated interest expense, net of amounts capitalized, increased $9.8 million (62.4%) from the 2008 second quarter. The increase is due primarily to a full quarter of higher interest rate add-ons resulting from the credit facility amendment and approximately one month of increased interest expense from the issuance of the Notes. Year to date, consolidated interest expense, net of amounts capitalized, increased $4.7 million (12.4%) from the first half of 2008 due to the increased interest from the credit facility amendment and Notes issuance. Additionally, when we open the Black Hawk hotel we will no longer capitalize the interest on the associated debt, which will cause our net interest expense to rise relative to prior periods.

For the three months ended June 30, 2009, consolidated net income decreased $2.7 million, or 16.1%, from the second quarter of 2008. The decrease is primarily due to higher interest expense and a loss on early retirement of debt in the second quarter of 2009, partially offset by the improvement in operating income described above. Diluted earnings per share were $0.25 in the quarter ended June 30, 2009, compared to $0.29 in the corresponding prior-year quarter. For the six months ended June 30, 2009 and 2008, we reported net income of $44.2 million and a net loss of $43.9 million, respectively. Diluted earnings per share were $0.76 for the first half of 2009, compared to a diluted loss per share of $0.77 in the corresponding prior-year period. The impairment charge at Ameristar East Chicago adversely affected diluted earnings per share in the first six months of 2008 by $1.34.

Read the The complete ReportASCA is in the portfolios of Bruce Sherman of Private Capital Management.

Rating: 4.3/5 (4 votes)


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