Vegas Tropicana turns profit despite slowdown

Tuesday, Feb. 5, 2002 | 11:10 a.m.

Aztar Corp. of Phoenix, owner of the Tropicana hotel-casino on the Las Vegas Strip, today reported substantially higher earnings for its fourth quarter ended Jan. 3 as its Las Vegas property managed to turn a profit despite the slowdown on the Strip during the quarter.

Aztar beat profit expectations, even after factoring in an extra week in the 2001 quarter compared to the 2000 quarter.

The casino resort operator reported a profit of $12.8 million or 33 cents per share, up from $5.2 million or 12 cents in the year-ago quarter. There were 38.4 million shares outstanding in the 2001 quarter, down from 41 million, which accounts for some of the per-share gain. Aztar also benefited from one additional week in this year's fourth quarter, as compared to last year's fourth quarter.

Aztar beat analyst earnings expectations for the quarter by 15 cents per share. Still, the stock fell 48 cents to $18.60 this morning.

"The key to Aztar is that their business is domiciled in Atlantic City, and Atlantic City performed extremely well during the quarter," said Andrew Zarnett, gaming analyst with Deutsche Banc Alex. Brown. "Although (the city) was effected early after the events of 9/11, it rebounded very strongly. Whatever was lost after Sept. 11 created pent-up demand that came after September."

Atlantic City's casinos have benefitted from big cuts in comps being given out by the city's operators, said Jeffries & Co. analyst Larry Klatzkin.

"In Atlantic City, gamblers are used to getting these giveaways, and (operators) have been trying to get out of the habit," Klatzkin said. "Everyone in Atlantic City is getting more intelligent. If you can keep the same customer amounts, but give less away, that goes straight to the bottom line."

Gambling winnings and other revenue of $212 million was up from $193 million.

Cash flow of $47.9 million was up more than 30 percent.

The company estimated that including the extra week resulted in approximately $23 million of additional revenues, $7 million of additional cash flow and incremental earnings per share of 11 cents. Omitting estimated results from the extra week, the company believes that it would have generated cash flow of approximately $41 million, 12 percent higher than last year's fourth quarter.

"We had a superb fourth quarter," said Paul Rubeli, Aztar chairman of the board, president and chief executive officer. "Our earnings of 33 cents nearly doubled analyst consensus estimates, which included the benefit from the extra week. Each of our properties, except for the Las Vegas Tropicana, reported higher EBITDAR (cash flow) than in the 2000 quarter, and their EBITDAR was higher than last year's even without the extra week."

Tropicana Casino and Resort in Atlantic City reported fourth-quarter revenues of $119 million, up 11 percent. Cash flow of $31.8 million was up from $23 million in the 2000 quarter.

Tropicana Resort and Casino in Las Vegas reported fourth-quarter revenues of $35.9 million, down 1 percent. Occupancy at the 1,875-room property was 85.5 percent, down from 92.4 percent and room rates fell 7 percent as tourism to Las Vegas slowed after the September terrorism.

Las Vegas cash flow was $5 million, compared with $6.3 million a year earlier.

Aztar last week announced plans to buy out its partner in the Las Vegas property and disclosed it's considering a redevelopment project that could include two new mid-sized resorts to replace the current Tropicana.

Revenues at Aztar's Ramada Express Hotel and Casino in Laughlin were $24 million, up 11 percent. Cash flow of $5.7 million was up from $3.7 million.

Casino Aztar, the company's riverboat casino in Evansville, Ind., had revenues of $27.3 million, up 16 percent. Cash flow of $7.6 million compared with $6.1 million in the year-earlier quarter.

The company's riverboat casino in Caruthersville, Mo., also called Casino Aztar, produced revenues that were 13 percent higher than in the year-earlier quarter. Fourth-quarter cash flow doubled to $1.2 million.