Coast Resorts profit improves despite stiffening competition

Wednesday, May 17, 2000 | 10:40 a.m.

Coast Resorts Inc. continued a string of strong results for Las Vegas casino operators, reporting a $31.3 million improvement in earnings for the quarter ending March 31.

The company reported net income of $10.6 million for the quarter, up from a loss of $20.7 million in the 1999 quarter. The 1999 loss was caused by a $27 million charge taken by Coast for the early retirement of debt.

Even excluding this charge, Coast's net income improved 68 percent over the 1999 quarter. Revenues rose 10.6 percent to $99.6 million, while cash flow improved 25 percent to $27.3 million.

Coast attributed its gains to strong performance at all of its Las Vegas properties, despite a decrease in overall occupancy rates.

The company reported casino revenues of $74 million, up 12 percent from the year-ago quarter. These revenues are boosted by a 20 percent jump in slot revenues at the Orleans, located 1 mile west of the Strip on Tropicana Avenue. Revenues at the Gold Coast rose 7.7 percent, while Barbary Coast revenues rose 8.5 percent.

Despite declines in room occupancy at the three hotels -- a trend Coast blames on increased competition in the Las Vegas market -- Coast boosted hotel room revenues by 5.5 percent. This increase was the result of a big jump in average daily room rates, which rose 13 percent to $60.

During the quarter, Coast refinanced $175 million in outstanding bonds from 13 percent interest to 9.5 percent. The company also entered into a new $75 million credit facility, using it to buy back $16.8 million in 10.88 percent bonds.

Coast currently has $243.6 million in long-term debt, up slightly from $234.8 million at March 31, 1999.

Coast is building the Suncoast Hotel and Casino near Summerlin, its fourth Las Vegas resort. The $185 million resort is expected to open in September, the company said in its quarterly earnings report.