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Best of Howard Stutz

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Howard Stutz
 

Ameristar laying off 3 percent of workers

5 August 2008

LAS VEGAS, Nevada -- The souring national economy has affected the regional casino markets.

Las Vegas based-Ameristar Casinos, which operates eight casinos primarily in the Midwest, said Monday it laid off roughly 3 percent of its casino work force during the second quarter ended June 30.

The casino operator eliminated 244 employees and took steps to either eliminate or reduce hours for 150 other positions. The annual savings to the company from the reductions will be approximately $20 million.

Ameristar made the announcement when it released second-quarter earnings.

"Regrettably, we have reduced our work force as the economic downturn is more prolonged than many economists expected," Ameristar CEO Gordon Kanofsky said.

Kanofsky, an Ameristar corporate executive since 1999, became CEO in June upon the resignation of former CEO John Boushy. Monday was Ameristar's first earnings release and conference call since he became CEO.

Ameristar is a regional casino operator based on Las Vegas but does not have a Strip resort. The company has two small casinos in Northern Nevada near the Idaho border.

"We met with a number of analysts in institutional shareholders soon after we took over," Kanofsky said during the conference call. "Our feet are much more firmly on the ground. We've got a good management team in place."

Following Boushy's resignation, speculation rose that the casino operator might be for sale. Share of Ameristar have fallen more than 50 percent this year. In late 2006, company founder and Chairman Craig Neilsen died, leaving his 55 percent controlling stake in Ameristar to his private foundation, which is focused on spinal cord injury research.

During the conference call, no one asked a question about a potential sale.

In the quarter ended June 30, Ameristar said its net income was $17 million, or 29 cents a share, compared with $17.2 million, or 30 cents a share for the same quarter a year ago. Analysts polled by Thomson Financial predicted the company would earn 32 cents a share.

Ameristar had net revenues of $328.1 million, an increase of 29.6 percent compared to $253.2 million in the 2007 second quarter. The 2008 results included $74.5 million in net revenues from the East Chicago property, which the company acquired last September.

Shares of Ameristar rose 33 cents, or 2.57 percent, on the Nasdaq National Market to close at $13.15 Monday. The company announced earnings after the close of trading.

"Economic conditions continued to result in difficult year-over-year comparisons," Kanofsky said. In addition to the economy, he said, increased promotional spending to drive customer traffic and the implementation of a smoking ban in Colorado casinos drove down margins.

Kanofsky said additional hotel rooms at Ameristar St. Charles outside St. Louis, a casino expansion to the company's riverboat in Vicksburg, Miss., and the rebranding of the Ameristar East Chicago, lifted those properties.