Boyd, Aztar results differ in third quarter

By Liz Benston

Friday, Oct. 25, 2002 | 11:23 a.m.

Boyd Gaming Corp. became the fourth Las Vegas casino giant to report an increase in earnings, cash flow and revenues for the third quarter. Unlike its Strip-dominant competitors, Boyd on Thursday attributed its growth mainly to the acquisition of a new property and the initiation of permanent dockside gambling at an Indiana riverboat casino.

And Aztar Corp., owner of the Tropicana hotel-casino on the Las Vegas Strip, said its Las Vegas property generated cash flow of $5.7 million in the quarter, up 2 percent from the 2001 quarter, despite weaker room rates and flat occupancy trends.

Besides Boyd, other major companies have cited last year's terrorist attacks as a large factor in unusually high returns compared to a year ago, when Las Vegas casinos were particularly hard hit by a drop in tourism following Sept. 11.

"Our geographic and market diversity is serving us extremely well," Boyd Gaming President Don Snyder said.

Before one-time charges including pre-opening expenses and the early retirement of debt, Boyd's third quarter earnings came in at 23 cents per share -- just short of Wall Street analysts' average estimate of 25 cents per share. That compares to operating earnings of 9 cents per share before taking into account pre-opening expenses a year earlier.

After one-time events, the company reported third quarter earnings per share of 17 cents, compared to 7 cents for the third quarter of last year. Net income for the quarter totaled $11.3 million compared to $4.1 million a year ago.

Revenues for the quarter increased 13 percent, to $308 million. Total cash flow -- a key performance indicator in the casino industry -- rose 25 percent from the third quarter of 2001, to $73.2 million. Boyd defines cash flow as earnings before interest, taxes, depreciation, amortization, preopening expenses and one-time corporate expenses.

Cash flow increased at all of the company's operating units except for its downtown Las Vegas properties, which experienced a 2 percent drop during the period, to $8.7 million. Executives attributed results to a short-term decline in business from the company's air charter services from Hawaii rather than property-specific issues.

"That appears to be more (of) a summer issue," Chief Financial Officer Ellis Landau said. "Charter results look better for fourth quarter."

Cash flow at the company's Stardust casino on the Strip ballooned from $722,000 for the third quarter of 2001 to $3.1 million this year. At Blue Chip Hotel & Casino in Indiana, cash flow increased 16 percent, to $24.4 million, boosted by the ability to permanently dock the riverboat casino in August. Delta Downs, a Louisiana racetrack Boyd acquired last year, reported $5.8 million in cash flow due to a ramp-up in slot machine operations that began in February. That compares to a loss of $219,000, before adding pre-opening expenses, for the year ago quarter.

Boyd is considering some enhancements to Louisiana Downs, including the possibility of adding a hotel to the 200-acre site, Snyder said. At Blue Chip, land is also available for future development. The hotel is "virtually full" much of the time, presenting an opportunity for more rooms and even some restaurants.

Cash flow at Sam's Town Las Vegas jumped 40 percent, to $7 million. At Eldorado and Jokers Wild casinos in Henderson, cash flow increased 9 percent, to $1.3 million. Cash flow at Sam's Town Tunica in Mississippi rose 12 percent, to $4.3 million. Despite a dramatic gambling tax increase in Illinois this year, the company's Par-A-Dice Hotel & Casino experienced a 2 percent increase in cash flow, to $13.6 million.

For now, however, executives say their focus lies in Atlantic City with the $1 billion Borgata, expected to open next summer as the region's first major resort in more than a decade. The company has declined to reveal a more specific opening date for the property.

Separately, Phoenix-based Aztar Corp. reported a decline in earnings for the third quarter, driven by low returns on table games at the Tropicana in Atlantic City.

Aztar, which also operates the Tropicana Resort and Casino in Las Vegas, reported earnings of 43 cents per share compared with 46 cents for the third quarter of 2001.

Had table game hold -- the amount won from gamblers -- been normal in the third quarter, earnings per share would have been about 46 cents. And had the table hold been equal to last year's unusually high percentage, earnings would have been about 49 cents, the company said. Analysts had expected an average of 47 cents per share.

Cash flow declined by 3 percent from the year-ago quarter, to $52.7 million. At the Tropicana in Las Vegas, cash flow increased 2 percent, to $5.7 million. The hotel's occupancy rate was flat with last year, at 94 percent, but room rates fell by more than 4 percent.

At the Ramada Express Laughlin, cash flow was up 5 percent, to $4 million. Occupancy was lower in the quarter but room rates jumped by more than 13 percent.

An expansion at Tropicana Atlantic City is on schedule for an expected opening in March 2004. The expansion would create the largest hotel and third-largest casino in the city, Aztar officials say.

"The Atlantic City market is strong and vibrant, and 2003 will witness the beginning of a new era with the focus on new projects and new non-casino attractions throughout the city," Aztar Chairman and Chief Executive Officer Paul E. Rubeli said in a statement.