| Ameristar Casinos Reports Third Quarter 2009 Results |
|
|
|
|
Ameristar Casinos, Inc. ( "In the third quarter, Ameristar once again demonstrated its ability to produce solid financial results during challenging economic conditions," said Gordon Kanofsky, Ameristar's Chief Executive Officer. "This has been particularly evident at our Black Hawk property, where favorable regulatory reform spurred third quarter year-over-year net revenue growth of 24.2% that, combined with our cost controls put in place over the past year, drove a 58.3% improvement in Adjusted EBITDA and a 7.9 percentage-point increase in the related margin. Additionally, we are pleased by the overwhelmingly positive guest reaction to our new Black Hawk hotel and spa, which offers resort destination amenities and services that are unprecedented in the greater Denver gaming market. The synergy created between the September 29 opening of the hotel and the casino's recently introduced 24-hour operations, increased bet limits and expanded table games has resulted in a substantial improvement in Ameristar Black Hawk's net revenues and an even more substantial improvement in Adjusted EBITDA."
Third Quarter 2009 Results "Favorable regulatory changes affecting three of our properties and the effective implementation of our cost initiatives enabled five of our locations -- Black Hawk, Kansas City, St. Charles, Jackpot and Council Bluffs -- to report Adjusted EBITDA margin growth when compared to the prior-year third quarter," Kanofsky said. "East Chicago maintained its Adjusted EBITDA margin, in spite of the more challenging competitive conditions in that market. Vicksburg was the only Ameristar property that reported a decline in Adjusted EBITDA margin. We believe this property has been negatively impacted by the entry of a new competitor into that market in October 2008 and higher fixed costs for the expanded facility." For the three months ended September 30, 2009 and 2008, our effective tax rate was 33.2% and 44.7%, respectively. The decrease in the tax rate was mostly due to the permanent reversal of certain contingent tax liabilities and the absence in 2009 of non-deductible costs we incurred in 2008 associated with Missouri and Colorado ballot initiatives. For the third quarter of 2009, the Company's net income of $14.5 million, or $0.25 per diluted share, was relatively unchanged year over year. Savings realized from our leaner cost structure were offset by higher borrowing costs resulting from the Company's debt restructuring to address upcoming maturities under our senior credit facility, which is described below. Additionally, net income and diluted EPS for the third quarter of 2009 were favorably impacted by the decrease in the tax rate from the previously mentioned reversal of contingent tax liabilities. Adjusted EPS was $0.27 for the quarter ended September 30, 2009, compared to $0.34 for the 2008 third quarter.
Additional Financial Information At September 30, 2009, the face amount of our outstanding debt was $1.68 billion. Net repayments in the third quarter of 2009 totaled $1.2 million. At September 30, 2009, our total leverage and senior leverage ratios (each as defined in the senior credit facility) were required to be no more than 6.00:1 and 5.75:1, respectively. As of that date, our total leverage ratio and senior leverage ratio were each 4.91:1. Interest Expense. For the third quarter of 2009, net interest expense was $30.1 million, compared to $19.0 million in the prior-year third quarter. The increase was due mostly to higher interest rate add-ons resulting from a March 2009 amendment to the senior credit facility and the May 2009 issuance of our 9-1/4% senior unsecured notes due in 2014. Capitalized interest increased from $1.6 million for the third quarter of 2008 to $4.2 million in the 2009 third quarter, due mostly to increased construction in progress associated with the Black Hawk hotel and a higher weighted-average borrowing rate. Stock-Based Compensation. For the quarter ended September 30, 2009, stock-based compensation expense was $4.1 million, compared to $2.2 million in the prior-year third quarter. Capital Expenditures. For the third quarter of 2009, capital expenditures were $33.3 million, including $15.3 million for the Black Hawk hotel construction. Dividends. During the third quarter of 2009, our Board of Directors declared two dividends, each in the amount of $0.105 per share, which we paid on July 27 and October 6. Outlook "Over the last 12 months, we have substantially reduced operating costs and believe we can sustain these savings," Kanofsky said. "The enhanced flexibility built into our operating structure over the last year has enabled us to maximize margins without adversely affecting the guest experience. At Ameristar Black Hawk, this operating structure has helped maximize Adjusted EBITDA from net revenues that have risen significantly following the regulatory enhancements and the hotel opening. We are confident that we are well-positioned for efficient profitability growth in our other markets when our revenue trends improve with the regional economies. "As a result of the opening of the Black Hawk hotel, we anticipate decreases in capital spending and capitalized interest and increases in promotional spending, depreciation and free cash flow," Kanofsky added. "We believe the utilization of the free cash flow to repay debt will also result in increased profitability and a further strengthening of our balance sheet." For the full year 2009, the Company currently expects: -- depreciation to range from $106 million to $107 million. -- interest expense, net of capitalized interest, to be between $106 million and $107 million, including non-cash interest expense of approximately $8.2 million. -- the combined state and federal income tax rate to be in the range of 41% to 42%. -- capital spending of $157 million to $159 million. -- capitalized interest of $9.0 million to $9.3 million. -- non-cash stock-based compensation expense of $12.8 million to $13.3 million.
Conference Call Information
Forward-Looking Information On a monthly basis, gaming regulatory authorities in certain states in which we operate publish gross gaming revenue and/or certain other financial information for the gaming facilities that operate within their respective jurisdictions. Because various factors in addition to our gross gaming revenue (including operating costs, promotional allowances and corporate and other expenses) influence our operating income, EBITDA and diluted earnings per share, such reported information, as it relates to Ameristar, may not accurately reflect the results of our operations for such periods or for future periods.
About Ameristar Visit Ameristar Casinos' web site at www.ameristar.com (which shall not be deemed to be incorporated in or a part of this news release). Please refer to the tables near the end of this release for the reconciliation of the non-GAAP financial measures EBITDA, Adjusted EBITDA and Adjusted EPS reported throughout this release. Additionally, more information on these non-GAAP financial measures can be found under the caption "Use of Non-GAAP Financial Measures" at the end of this release.
AMERISTAR CASINOS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in Thousands, Except Per Share Data)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
----------- ----------- ----------- -----------
REVENUES:
Casino $ 311,143 $ 329,841 $ 949,547 $ 1,000,514
Food and beverage 31,198 39,636 103,970 120,521
Rooms 16,598 15,868 47,084 42,197
Other 8,197 10,120 25,012 29,806
----------- ----------- ----------- -----------
367,136 395,465 1,125,613 1,193,038
Less: promotional
allowances (67,706) (74,064) (201,444) (218,772)
----------- ----------- ----------- -----------
Net revenues 299,430 321,401 924,169 974,266
OPERATING EXPENSES:
Casino 135,418 151,666 421,898 465,163
Food and beverage 16,186 18,941 49,270 56,643
Rooms 2,162 2,856 6,496 8,584
Other 3,593 5,318 11,340 16,568
Selling, general and
administrative 64,995 69,494 180,579 201,766
Depreciation and
amortization 26,106 26,773 78,807 78,901
Impairment loss on
assets 12 110 107 129,449
----------- ----------- ----------- -----------
Total operating
expenses 248,472 275,158 748,497 957,074
Income from
operations 50,958 46,243 175,672 17,192
OTHER INCOME (EXPENSE):
Interest income 122 190 390 593
Interest expense, net
of capitalized
interest (30,100) (19,034) (72,617) (56,849)
Loss on early
retirement of debt (155) - (5,365) -
Net loss on disposition
of assets (264) (369) (99) (927)
Other 1,091 (1,132) 1,675 (1,459)
----------- ----------- ----------- -----------
INCOME (LOSS) BEFORE
INCOME TAX PROVISION
(BENEFIT) 21,652 25,898 99,656 (41,450)
Income tax provision
(benefit) 7,190 11,566 41,013 (11,875)
----------- ----------- ----------- -----------
NET INCOME (LOSS) $ 14,462 $ 14,332 $ 58,643 $ (29,575)
=========== =========== =========== ===========
EARNINGS (LOSS) PER SHARE:
Basic $ 0.25 $ 0.25 $ 1.02 $ (0.52)
=========== =========== =========== ===========
Diluted $ 0.25 $ 0.25 $ 1.01 $ (0.52)
=========== =========== =========== ===========
CASH DIVIDENDS DECLARED
PER SHARE $ 0.21 $ 0.11 $ 0.32 $ 0.32
=========== =========== =========== ===========
WEIGHTED-AVERAGE SHARES
OUTSTANDING:
Basic 57,648 57,198 57,491 57,177
=========== =========== =========== ===========
Diluted 58,647 57,597 58,233 57,177
=========== =========== =========== ===========
AMERISTAR CASINOS, INC. AND SUBSIDIARIES
SUMMARY CONSOLIDATED FINANCIAL DATA
(Dollars in Thousands)
(Unaudited)
September 30, 2009 December 31, 2008
---------------------- ----------------------
Balance sheet data
Cash and cash equivalents $ 132,124 $ 73,726
Total assets $ 2,316,655 $ 2,225,238
Total debt, net of
$13,508 discount at
September 30, 2009 $ 1,665,427 $ 1,648,500
Stockholders' equity $ 394,668 $ 338,780
Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
---------- ---------- ---------- ----------
Consolidated cash flow
information
Net cash provided by
operating activities $ 86,040 $ 64,041 $ 212,244 $ 206,447
Net cash used in
investing activities $ (40,165) $ (62,329) $ (136,569) $ (195,501)
Net cash used in
financing activities $ (7,781) $ (12,665) $ (17,277) $ (41,196)
Net revenues
Ameristar St. Charles $ 72,065 $ 73,070 $ 222,548 $ 220,085
Ameristar East Chicago 59,967 69,961 196,088 219,783
Ameristar Kansas City 57,528 59,795 176,354 183,657
Ameristar Council Bluffs 38,451 44,113 120,689 134,346
Ameristar Vicksburg 27,918 34,879 92,063 101,985
Ameristar Black Hawk 26,246 21,125 67,292 61,804
Jackpot Properties 17,255 18,458 49,135 52,606
---------- ---------- ---------- ----------
Consolidated net
revenues $ 299,430 $ 321,401 $ 924,169 $ 974,266
========== ========== ========== ==========
Operating income (loss)
Ameristar St. Charles $ 17,952 $ 14,816 $ 56,432 $ 45,694
Ameristar East Chicago 6,330 6,029 29,897 (104,752)
Ameristar Kansas City 15,087 12,224 47,635 37,731
Ameristar Council Bluffs 12,375 13,701 36,436 38,481
Ameristar Vicksburg 6,139 8,796 25,429 29,559
Ameristar Black Hawk 4,567 3,401 10,437 8,999
Jackpot Properties 4,171 3,908 11,471 9,624
Corporate and other (15,663) (16,632) (42,065) (48,144)
---------- ---------- ---------- ----------
Consolidated operating
income $ 50,958 $ 46,243 $ 175,672 $ 17,192
========== ========== ========== ==========
EBITDA
Ameristar St. Charles $ 24,439 $ 21,407 $ 76,534 $ 63,955
Ameristar East Chicago 10,220 9,678 40,973 (94,548)
Ameristar Kansas City 18,996 16,864 59,407 52,484
Ameristar Council Bluffs 15,078 16,182 44,838 47,225
Ameristar Vicksburg 10,092 13,200 37,642 41,174
Ameristar Black Hawk 7,456 6,116 18,871 17,434
Jackpot Properties 5,646 5,432 15,920 13,802
Corporate and other (14,863) (15,863) (39,706) (45,433)
---------- ---------- ---------- ----------
Consolidated EBITDA $ 77,064 $ 73,016 $ 254,479 $ 96,093
========== ========== ========== ==========
AMERISTAR CASINOS, INC. AND SUBSIDIARIES
SUMMARY CONSOLIDATED FINANCIAL DATA - CONTINUED
(Dollars in Thousands)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
-------- -------- -------- --------
Operating income (loss) margins (1)
Ameristar St. Charles 24.9% 20.3% 25.4% 20.8%
Ameristar East Chicago 10.6% 8.6% 15.2% -47.7%
Ameristar Kansas City 26.2% 20.4% 27.0% 20.5%
Ameristar Council Bluffs 32.2% 31.1% 30.2% 28.6%
Ameristar Vicksburg 22.0% 25.2% 27.6% 29.0%
Ameristar Black Hawk 17.4% 16.1% 15.5% 14.6%
Jackpot Properties 24.2% 21.2% 23.3% 18.3%
Consolidated operating income
margin 17.0% 14.4% 19.0% 1.8%
EBITDA margins (2)
Ameristar St. Charles 33.9% 29.3% 34.4% 29.1%
Ameristar East Chicago 17.0% 13.8% 20.9% -43.0%
Ameristar Kansas City 33.0% 28.2% 33.7% 28.6%
Ameristar Council Bluffs 39.2% 36.7% 37.2% 35.2%
Ameristar Vicksburg 36.1% 37.8% 40.9% 40.4%
Ameristar Black Hawk 28.4% 29.0% 28.0% 28.2%
Jackpot Properties 32.7% 29.4% 32.4% 26.2%
Consolidated EBITDA margin 25.7% 22.7% 27.5% 9.9%
(1) Operating income (loss) margin is operating income (loss) as a
percentage of net revenues.
(2) EBITDA margin is EBITDA 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 Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
---------- ---------- ---------- ----------
Ameristar St. Charles:
Operating income $ 17,952 $ 14,816 $ 56,432 $ 45,694
Depreciation and
amortization 6,487 6,591 20,102 18,261
---------- ---------- ---------- ----------
EBITDA $ 24,439 $ 21,407 $ 76,534 $ 63,955
========== ========== ========== ==========
Ameristar East Chicago:
Operating income (loss) $ 6,330 $ 6,029 $ 29,897 $ (104,752)
Depreciation and
amortization 3,890 3,649 11,076 10,204
---------- ---------- ---------- ----------
EBITDA $ 10,220 $ 9,678 $ 40,973 $ (94,548)
========== ========== ========== ==========
Ameristar Kansas City:
Operating income $ 15,087 $ 12,224 $ 47,635 $ 37,731
Depreciation and
amortization 3,909 4,640 11,772 14,753
---------- ---------- ---------- ----------
EBITDA $ 18,996 $ 16,864 $ 59,407 $ 52,484
========== ========== ========== ==========
Ameristar Council Bluffs:
Operating income $ 12,375 $ 13,701 $ 36,436 $ 38,481
Depreciation and
amortization 2,703 2,481 8,402 8,744
---------- ---------- ---------- ----------
EBITDA $ 15,078 $ 16,182 $ 44,838 $ 47,225
========== ========== ========== ==========
Ameristar Vicksburg:
Operating income $ 6,139 $ 8,796 $ 25,429 $ 29,559
Depreciation and
amortization 3,953 4,404 12,213 11,615
---------- ---------- ---------- ----------
EBITDA $ 10,092 $ 13,200 $ 37,642 $ 41,174
========== ========== ========== ==========
Ameristar Black Hawk:
Operating income $ 4,567 $ 3,401 $ 10,437 $ 8,999
Depreciation and
amortization 2,889 2,715 8,434 8,435
---------- ---------- ---------- ----------
EBITDA $ 7,456 $ 6,116 $ 18,871 $ 17,434
========== ========== ========== ==========
Jackpot Properties:
Operating income $ 4,171 $ 3,908 $ 11,471 $ 9,624
Depreciation and
amortization 1,475 1,524 4,449 4,178
---------- ---------- ---------- ----------
EBITDA $ 5,646 $ 5,432 $ 15,920 $ 13,802
========== ========== ========== ==========
Corporate and other:
Operating loss $ (15,663) $ (16,632) $ (42,065) $ (48,144)
Depreciation and
amortization 800 769 2,359 2,711
---------- ---------- ---------- ----------
EBITDA $ (14,863) $ (15,863) $ (39,706) $ (45,433)
========== ========== ========== ==========
Consolidated:
Operating income $ 50,958 $ 46,243 $ 175,672 $ 17,192
Depreciation and
amortization 26,106 26,773 78,807 78,901
---------- ---------- ---------- ----------
EBITDA $ 77,064 $ 73,016 $ 254,479 $ 96,093
========== ========== ========== ==========
RECONCILIATION OF EBITDA TO ADJUSTED EBITDA
(Dollars in Thousands)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
--------- --------- --------- ---------
EBITDA $ 77,064 $ 73,016 $ 254,479 $ 96,093
Black Hawk hotel pre-opening
expenses 2,225 - 2,422 -
One-time non-cash adjustment to
Black Hawk property taxes - - 1,276 -
Impairment loss on East Chicago
intangible assets - - - 129,000
East Chicago transition and
rebranding costs - 2,231 - 4,988
St. Charles and Vicksburg
pre-opening expenses - 563 - 2,725
Missouri and Colorado ballot
initiative costs - 5,185 - 6,323
--------- --------- --------- ---------
Adjusted EBITDA $ 79,289 $ 80,995 $ 258,177 $ 239,129
========= ========= ========= =========
RECONCILIATION OF EPS TO ADJUSTED EPS
(Unaudited)
The following table sets forth a reconciliation of diluted earnings (loss)
per share (EPS), a GAAP financial measure, to adjusted diluted earnings per
share (Adjusted EPS), a non-GAAP financial measure.
Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
--------- --------- --------- --------
Diluted earnings (loss) per share
(EPS) $ 0.25 $ 0.25 $ 1.01 $ (0.52)
Black Hawk hotel pre-opening
expenses 0.02 - 0.03 -
Loss on early retirement of debt - - 0.06 -
One-time non-cash adjustment to
Black Hawk property taxes - - 0.01 -
Impairment loss on East Chicago
intangible assets - - - 1.34
East Chicago transition and
rebranding costs - 0.02 - 0.06
St. Charles and Vicksburg
pre-opening expenses - 0.01 - 0.03
Missouri and Colorado ballot
initiative costs - 0.06 - 0.07
--------- --------- --------- --------
Adjusted diluted earnings per
share (Adjusted EPS) $ 0.27 $ 0.34 $ 1.11 $ 0.98
========= ========= ========= ========
Use of Non-GAAP Financial Measures
EBITDA and Adjusted EBITDA The measure adjusting for such items, which we refer to as Adjusted EBITDA, is a significant factor in management's internal evaluation of total Company and individual property performance and in the evaluation of incentive compensation for employees. Therefore, we believe Adjusted EBITDA is useful to investors because it allows greater transparency related to a significant measure used by management in its financial and operational decision-making and because it permits investors similarly to perform more meaningful analyses of past, present and future operating results and evaluations of the results of core ongoing operations. Furthermore, we believe investors would, in the absence of the Company's disclosure of Adjusted EBITDA, attempt to use equivalent or similar measures in assessment of our operating performance and the valuation of our Company. We have reported Adjusted EBITDA to our investors in the past and believe its inclusion at this time will provide consistency in our financial reporting. Adjusted EBITDA, as used in this press release, is EBITDA adjusted for impairment charges related to intangible assets, transition and rebranding costs, pre-opening expenses, ballot initiative costs and a one-time Black Hawk property tax adjustment. In future periods, the adjustments we make to EBITDA in order to calculate Adjusted EBITDA may be different than or in addition to those made in this release. The foregoing tables reconcile Adjusted EBITDA to EBITDA and operating income (loss), based upon GAAP.
Adjusted EPS
Limitations on the Use of Non-GAAP Measures EBITDA, Adjusted EBITDA and Adjusted EPS should be used in addition to and in conjunction with results presented in accordance with GAAP. EBITDA, Adjusted EBITDA and Adjusted EPS should not be considered as an alternative to net income, operating income, EPS or any other operating performance measure prescribed by GAAP, nor should these measures be relied upon to the exclusion of GAAP financial measures. EBITDA, Adjusted EBITDA and Adjusted EPS reflect additional ways of viewing our operations that we believe, when viewed with our GAAP results and the reconciliations to the corresponding GAAP financial measures, provide a more complete understanding of factors and trends affecting our business than could be obtained absent this disclosure. Management strongly encourages investors to review our financial information in its entirety and not to rely on a single financial measure. |
