Herbst posts strong gain in cash flow

Monday, March 17, 2003 | 11:35 a.m.

Herbst Gaming Inc. reported increases in profit, cash flow and revenue in 2002 driven by strong performance at its locals casinos.

The company said it earned $5.2 million in 2002 compared to a net loss of $12 million in 2001.

The prior year loss included a non-recurring charge of $13 million in conjunction with the restructuring of the company's debt.

Cash flow was $39.8 million for the year, a 13 percent increase over the prior year.

The company defines cash flow -- a key indicator of casino performance -- as earnings before non-recurring items, interest, taxes, depreciation and amortization.

Herbst Gaming reported net revenue of $250 million last year, a 7 percent increase from the prior year.

All of its locals' casinos performed better than expected, officials said during a conference call with investors. Also, the opening of the nearby Tuscany casino on Flamingo Road and down the street from Herbst's Terrible's hotel and casino hasn't hurt the company's flagship, officials said. In fact, the "win per position" -- a measure of profit per game -- has actually increased, they said.

The company also managed to control promotional costs last year, officials said.

The growth figures have positive implications for neighborhood casino operator Station Casinos Inc., which also relies on locals to drive business, UBS Warburg analyst Robin Farley said in a note to investors this week.