CasinoCityTimes.com

Gurus
News
Newsletter
Search News Subscribe
Stay informed with the
NEW Casino City Times newsletter!
Newsletter Signup
Stay informed with the
NEW Casino City Times newsletter!

Gaming News

 

Argosy Gaming Company Reports Record Q1 Earnings

24 April 2001

ALTON, Illinois –(Press Release) -- April 24, 2001 -- Argosy Gaming Company (NYSE: AGY) today announced record earnings and revenues for its first quarter ended March 31, 2001.

Record Earnings and Revenues:

The Company reported record net income of $14.6 million or $0.50 per diluted share for the first quarter ended March 31, 2001, as compared to $13.4 million or $0.46 per diluted share for the first quarter ended March 31, 2000. The Company reported a $6.3 million increase in casino revenues to $171.8 million for the first quarter 2001 from $165.5 million for the first quarter ended 2000.

The western properties increased by $4.7 million to $84.4 million for the first quarter 2001 from $79.7 million the prior year. Casino revenues in Lawrenceburg increased $1.6 million to $87.4 million for the first quarter 2001 from $85.8 million the prior year.

At the western properties, the Alton, Baton Rouge and Riverside casinos all achieved record levels in casino revenue. The Alton Belle benefited from additional slot product that the Company added in late December 2000 and early January 2001. In Baton Rouge, Argosy attributed the increase in casino revenues primarily to the continued positive results of its customer service initiatives.

Argosy's Riverside casino benefited from the fact that two of its competitors in the Kansas City were in the midst of property renovations during the first quarter. Casino revenues were down marginally at the Belle of Sioux City, and, in Lawrenceburg, casino revenue showed continued growth despite new competition recently entering the Cincinnati marketplace.

James B. Perry, President and Chief Executive Officer, commenting on the first quarter results, said, ``Our first quarter results exceeded our expectations considering we had a normal winter season in 2001 and one less business day than last year, which was a leap year. However, we still anticipate increased competitive pressure as the Cincinnati market continues to mature and when the two competitors in the Kansas City market complete their property renovations.''

EBITDA:

The Company reported first quarter consolidated EBITDA (earnings before interest, taxes, depreciation and amortization) of $50.3 million, as compared to $50.8 million for the first quarter ended March 31, 2000. EBITDA at the western properties rose to $23.5 million for the first quarter 2001, an increase of 5.1%, or $1.1 million, over first quarter 2000 amounts. EBITDA in Lawrenceburg was $33.2 million for the first quarter 2001, as compared to $34.2 million the prior year.

Significant Events:

-- Lawrenceburg acquisition - Argosy Gaming Company completed the acquisition of its minority partners' interests in the Lawrenceburg Hotel and Casino during the first quarter ended 2001. The Company now owns 100% of all five of its properties.

The Company issued $150 million of Senior Subordinated Notes due 2009 and amended and restated its $400 million senior credit facility to finance this $365 million acquisition.

-- Baton Rouge Hotel Opens - Argosy opened its new 300-room convention hotel on February 5, 2001. The hotel is owned by Argosy and managed and operated by Sheraton. The Company said that while the opening of the hotel may moderately boost incremental casino revenues, it does not expect the hotel to have a material impact on EBITDA in 2001.

-- Dockside gaming in Baton Rouge - Argosy commenced dockside operations at the Argosy Casino-Baton Rouge on April 1, 2001. The Company expects dockside operations to have a positive impact on casino revenues in Baton Rouge, although the increase will be tempered by a 3% increase in taxes.

-- Empress Casino and Hotel Joliet - On April 16, 2001, Argosy announced an agreement to acquire the Empress Casino Joliet for $465 million. Moody's credit-rating agency affirmed Argosy's B2 Senior Subordinated Notes rating on April 16, 2001 while Standard and Poor's credit-rating agency placed Argosy's BB- senior rating on credit watch-positive following the Company's agreement to buy the Empress Casino Joliet. Argosy anticipates closing the transaction in the third quarter, subject to receiving all regulatory approvals.

``The events that have occurred in the first quarter redefine our Company'', said Mr. Perry. ``We have made tremendous strides toward achieving the goals we recently laid out for shareholders in our annual report. The acquisition of the minority interests in Lawrenceburg positioned the Company to generate $200 million in EBITDA this year, while the pending Empress Casino Joliet transaction could position the Company as one of the five largest casino operators in the country.''

Perry further stated, ``We anticipate that the Empress Joliet transaction will be accretive to both earnings and free cash flow. Upon completion of the acquisition, our balance sheet will remain solid as we continue to operate within our self-imposed financial ratios, including having a leverage ratio of no more than 4x EBITDA and providing minimum interest coverage of at least 2.5x.

"We will look to utilize our substantial free cash flow to delever the balance sheet or for other opportunities at our existing properties that provide appropriate returns for our shareholders.''

Discussion and Analysis -- The full impact of the Lawrenceburg minority partners' interests acquisition will not be realized until the second quarter of 2001 as first quarter results reflect approximately five weeks of 100% ownership by the Company. The discussion and analysis that follows highlights the impact to the first quarter of the transaction.

Depreciation and amortization:

Depreciation and amortization expense increased $1.3 million to $10.1 million from $8.8 million due primarily to the goodwill associated with the Lawrenceburg acquisition and to the opening of the Baton Rouge hotel.

Net interest expense:

Net interest expense increased $1.8 million to $11.4 million from $9.6 million due primarily to additional borrowings related to the acquisition of the Lawrenceburg casino. Minority interests:

Minority interest expense decreased to $4.1 million from $10.4 million due to the acquisition of the minority partners' interests during the first quarter. The Company will no longer incur any minority interest expense, as it now owns 100% of all of its properties.

Outlook:

The Company said that while it anticipates both earnings and free cash flow accretion from the anticipated Empress Casino Joliet acquisition, the actual impact would depend on the closing date of the transaction and other matters. As a result, it is premature at this time to provide guidance for its 2001 earnings impact. Argosy said that it expects to update its outlook on its results following the closing.

Argosy said that exclusive of any impact of the proposed Joliet acquisition, it remains comfortable in estimating earnings on a diluted basis of $1.90 to $2.00 per share for the year ending December 31, 2001 and $0.43 to $0.45 per share for the quarter ending June 30, 2001.

Argosy will host a conference call for interested parties on April 24, 2001, at 10:30 a.m. CST to review its first quarter financial results. For those interested in participating in the call, please dial 785-832-1077 ten to fifteen minutes prior to the call start time. A telephonic replay of the conference call will be made available through May 4, 2001 by dialing 402-220-0676.

Argosy is a leading multi-jurisdictional owner and operator of riverboat casinos and related entertainment and hotel facilities in the midwestern and southern United States. Argosy, through its subsidiaries, owns and operates the Alton Belle Casino in Alton, Illinois, serving the St. Louis metropolitan market; the Argosy Casino in Riverside, Missouri, serving the greater Kansas City metropolitan market; the Argosy Casino-Baton Rouge in Louisiana; the Belle of Sioux City in Iowa; and the Argosy Casino & Hotel in Lawrenceburg, Indiana, serving the Cincinnati and Dayton metropolitan markets. Argosy was named ``Company of the Year'' at the Gaming Industry Annual Awards ceremony in October 2000.

< Gaming News