Mandalay to beat profit expectations

Friday, May 4, 2001 | 10:14 a.m.

Mandalay Resort Group announced Thursday it would easily beat analyst profit expectations for the first quarter of fiscal 2001.

The Las Vegas-based casino giant said it expected to post earnings of 60 cents per share for the quarter ending April 30, compared to 58 cents per share in the year-ago period. Mandalay said this figure was helped by the fact that the company had less shares outstanding than it did in 2000.

Based on the number of shares Mandalay said it had outstanding last month, net income should be between $45 million and $46 million, compared to $48.9 million in the year-ago quarter.

Analysts had expected 51 cents per share. Mandalay will release a full earnings report May 18. This morning, Mandalay's stock fell 41 cents to $24.90.

Las Vegas-based Mandalay is one of the nation's largest casino operators, with 16 casinos in Nevada, Mississippi, Illinois and Michigan. It has 13 Nevada properties in Las Vegas, Reno, Laughlin, Jean and Henderson, and its Strip properties include Circus Circus, Excalibur, Luxor, Mandalay Bay and 50 percent of Monte Carlo. Its holdings give the company more hotel rooms on the Strip than any other operator.

Analysts remained cautious on Mandalay following the pre-announcement, saying hurdles still remain later in the year despite a strong first quarter along the Strip.

"I've got to see the numbers in detail before I can say it's great," said William Schmitt, gaming analyst with CIBC World Markets. "I have to believe that even though this quarter looks good, there's more bad news than good news out there. But it's better than pre-announcing a short fall."

Schmitt expressed concern about the spread of tribal gaming and soaring energy costs in California, as well as the slowing economy.

Mandalay said earnings were boosted by "strong visitor traffic to the Las Vegas Strip in the quarter, as room rates climbed at its major resorts," as well as a strong increase in cash flow from Detroit's MotorCity Casino. However, this strength was partially offset by slowdowns at Mandalay properties in Laughlin, Jean, and Tunica, Miss.

Mandalay did not disclose revenue or cash flow numbers, saying only that operating cash flow would exceed the year-ago quarter's record number.

Schmitt said the slowdown in Laughlin and Jean "could eat its way into their other properties on the Strip, because (these factors impact) that low-end player ... you could see it work its way up to Circus Circus, Excalibur, those kind of properties."