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Howard Stutz

Weather issues tied to Affinity Gaming's revenue slide

15 May 2014

Weather issues that have played havoc with regional gaming markets were blamed for Affinity Gaming’s revenue decline during the first quarter.

The Las Vegas-based company said Wednesday its revenue for the three months ended March 31 fell 4.4 percent to $96.6 million. Cash flow declined 22.9 percent.

Affinity operates 11 casinos in Nevada, Colorado, Missouri and Iowa.

The company said revenue declined 4.7 percent to $57.1 million in Nevada, where the company owns five properties, including the off-Strip Silver Sevens and the three Primm resorts.

In a statement, the company attributed the Nevada revenue declines to a 25.6 percent increase promotional allowances. Affinity conducted “aggressive campaigns” to increase visitation and customer spending in the Las Vegas market.

“Our first-quarter 2014 performance was impacted by extreme weather conditions across several of our regions, increased competition and soft consumer trends,” Affinity CEO David Ross said in a statement. “Despite the tough operating environment, we remain focused on further improving our existing properties, implementing strategic cost containment measures where necessary without sacrificing customer service.”

At the Primm casinos, Affinity completed a travel center near Whiskey Pete’s that is operated by a third party. The company will now lease income from the facility based fuel and maintenance sales.

During the quarter, a 7.7 percent increase in food and beverage revenue from Primm, and a 14.4 percent increase in other revenue helped offset a dip in gaming revenue.

Revenue at Affinity’s Missouri and Iowa casinos declined 5.9 percent while revenue from the company’s Colorado casinos fell 45.7 percent. The company blamed severe weather challenges in both markets.

Affinity said it cut corporate expenses by 11.3 percent in the quarter.

In April, Affinity’s top two shareholders said in filings with the Securities and Exchange Commission they were negotiating to settle board infighting over control of the company.

Private equity firm Z Capital of Illinois is Affinity’s largest shareholder with 30.5 percent stake in the company. Connecticut-based hedge fund Silver Point Capital owns 24.9 percent.

Affinity has publicly owned debt of $390.7 million.

Ross said in February that he planned leave the company by July. A replacement has yet to be named.