Ameristar Casinos, Inc. (NASDAQ: ASCA)
- 3Q Net Revenues and Adjusted EBITDA declined
slightly YOY
- Majority of properties improved Adjusted
EBITDA YOY
- Strong 3Q Adjusted EBITDA margin held steady
at 29.6%
- Record-breaking results generated by Ameristar
Black Hawk
- Construction of Ameristar Lake Charles
continues on schedule
Ameristar Casinos, Inc. (NASDAQ: ASCA) today announced financial
results for the third quarter of 2012.
"The 2012 third quarter was one of Ameristar's most profitable
quarters ever despite a slight decline in net revenues and Adjusted
EBITDA," said Gordon Kanofsky, Ameristar's Chief Executive Officer.
"Ameristar's operating model and geographic diversification
produced an Adjusted EBITDA margin equal to our third quarter
record margin achieved in 2011. Several properties improved their
key financial metrics on a year-over-year basis, including
Ameristar Black Hawk, which had the best quarter in its history.
Our scale and diversification helped mitigate the impact from
additional competition faced in two of our markets. Additionally,
our efficient operating model absorbed a $1.1 million
year-over-year increase in development expenses in the third
quarter, which were related to our Louisiana and Massachusetts
projects.
"We look forward to further growing our company and diversifying
our operations when we complete our luxury casino resort in Lake
Charles, La., which is expected to open in the third quarter of
2014. Additionally, our proposal in Springfield, Mass. to develop a
world-class luxury resort in a new geographic region serves as
another example of our commitment to pursue growth opportunities.
We will continue our pursuit of North American acquisitions and
development projects that surpass our ROI hurdles and are within
our risk tolerance, as well as other means to maximize long-term
shareholder value, including debt reduction, dividends and stock
repurchases."
Consolidated net revenues for the third quarter decreased year
over year by $6.5 million (2.1%), to $298.0 million. Black Hawk
improved net revenues by $2.3 million (5.7%) to an all-time
quarterly record for the property of $42.4 million. Despite
construction disruption affecting our St. Charles and Jackpot
properties, each produced stable year-over-year net revenues and
improved sequentially upon second quarter net revenues. St. Charles
overcame floor disruption from a slot system upgrade and street
construction near our property. Both projects were completed in the
third quarter of 2012. Maintenance on the I-70 bridge near our St.
Charles property will commence in earnest in early November and is
expected to negatively impact results for approximately one year,
during which four of the bridge's 10 lanes will be closed.
Jackpot's construction disruption related to a road repaving
project on Highway 93 between Twin Falls, Idaho and Jackpot that
concluded late in the third quarter and a hotel renovation
affecting 21% of the Jackpot properties' rooms that was completed
in late July 2012.
As anticipated, new competition continued to impact Ameristar
Kansas City, which had a year-over-year net revenue decline of $4.0
million (7.1%). Additionally, East Chicago's third quarter net
revenues declined by $4.6 million (8.5%) year over year mostly as a
result of low table games hold and increased competition in the
Chicagoland market. A promotional program intended to counter East
Chicago's new competitive environment contributed to an increase of
$0.6 million (0.8%) in consolidated third quarter promotional
allowances over the prior-year third quarter.
The majority of our properties produced higher Adjusted EBITDA
on a year-over-year basis. Black Hawk established its all-time
quarterly Adjusted EBITDA record of $16.1 million, a year-over-year
increase of $1.4 million (9.2%), while Council Bluffs improved $0.8
million (5.1%) year over year. Despite the generally strong
performance from several properties, consolidated Adjusted EBITDA
decreased from the prior-year third quarter by $2.1 million (2.4%)
to $88.1 million as a result of year-over-year declines of $2.0
million (21.6%) and $1.6 million (7.8%) at East Chicago and Kansas
City, respectively.
Third quarter consolidated net revenues and Adjusted EBITDA
improved on a year-over-year basis when excluding the financial
results from our East Chicago and Kansas City properties. The
combined operating results of our other six properties with stable
competitive conditions in their respective markets reflect
year-over-year increases in net revenues and Adjusted EBITDA of
$2.1 million (1.1%) and $2.2 million (3.0%), respectively.
Through the efficiency of our operating model, third quarter
consolidated Adjusted EBITDA margin held steady at a strong 29.6%
year over year despite the revenue decline and increased
non-capitalizable development expenses. We generated operating
income of $57.4 million in the third quarter of 2012, compared to
$61.1 million in the same period in 2011.
For the quarter ended Sept. 30, 2012, we reported net income of
$16.1 million, compared to net income of $18.9 million for the same
period in 2011. Diluted earnings per share were $0.48 for the third
quarter of 2012, compared to diluted earnings per share of $0.56 in
the prior-year third quarter. Adjusted EPS of $0.48 for the quarter
ended Sept. 30, 2012 represents a decrease of $0.09 from Adjusted
EPS for the 2011 third quarter.
Growth Pipeline Ameristar Casino Resort
Spa Lake Charles Construction of Ameristar Casino Resort Spa Lake
Charles began on July 20, 2012 and is progressing on schedule. The
resort is being developed on a leased 243-acre site and will
include a casino with approximately 1,600 slot machines and 60
table games, a hotel with approximately 700 guest rooms (including
70 suites), a variety of food and beverage outlets, an 18-hole golf
course, a tennis club, swimming pools, a spa and other resort
amenities, and approximately 3,000 parking spaces, 1,000 of which
will be in a garage.
The cost of the project (including the purchase price) is
expected to be between $560 million to $580 million, excluding
capitalized interest and pre-opening expenses. In establishing the
scale, scope and budget for Ameristar Lake Charles, we have sought
to maximize its return on investment potential based on our
assessment of the market, which includes approximately 6.1 million
adults within 150 miles, extending to the Houston, Tex.
metropolitan area, and which we believe is underserved by the
currently operating casinos in the market. We anticipate funding
the project through a combination of cash from operations and
borrowings under our revolving credit facility. We expect to open
the resort in the third quarter of 2014.
Ameristar Casino Resort Spa Springfield In January 2012, we
purchased a 40-acre site just minutes from downtown Springfield,
Mass. with the intent to apply for the sole casino license for
western Massachusetts. On October 23, 2012, we announced specific
plans for our proposal to develop Ameristar Casino Resort Spa
Springfield if we are awarded the license. Our plan includes a
150,000-square-foot casino featuring approximately 3,300 slot
machines and 110 table games, including a poker room. Ameristar
Springfield is expected to include a 500-room luxury hotel with 50
suites. The property will feature indoor and outdoor resort
swimming pools, a spa, a fitness center and retail amenities. There
will be a diverse offering of nationally- and locally-recognized
food and beverage venues, offering everything from upscale to
casual dining. Also planned is a conference and entertainment
center, along with garage parking for approximately 4,300 vehicles.
The resort is master-planned to accommodate significant future
expansions of the casino, hotel and parking garages.
We estimate the initial development cost of Ameristar
Springfield would be approximately $910 million, which includes
capitalized interest and pre-opening expenses and a license fee
payment to the Commonwealth of Massachusetts. Ameristar's proposed
budget also includes the $16.9 million paid earlier in 2012 to
acquire the site and $58 million for planned traffic improvements
to create easy access to the resort and alleviate current traffic
problems in the area. As with our Lake Charles project currently
under construction, we believe our proposed scale, scope and budget
for Ameristar Springfield will allow us to strongly compete for the
western Massachusetts license and maximize the return on investment
potential in a market with approximately 2.5 million adults within
a 50-mile radius.
The City of Springfield is currently conducting a process to
select one or more casino proposals to be submitted to the gaming
commission that is currently scheduled for completion during the
first half of 2013. The gaming commission anticipates making
decisions for the awarding of licenses in the first quarter of
2014.
We believe our proposal has several competitive advantages over
the other two casino development proposals for Springfield,
including:
- A 12- to 18-month head start on development (and the creation
of jobs and the flow of tax revenues) since Ameristar's site is the
only one that is owned or controlled by the developer and is
immediately ready for construction.
- A site that is three to four times larger than either of the
competing proposed sites, with a larger scale casino and
hotel.
- The lowest site acquisition, site development and
infrastructure costs, which will allow us to maximize our
investment in creating a world-class resort experience that we
believe will attract more visitors to Springfield.
- A traffic plan that we believe will create the easiest access
with the least impact on local traffic.
Based on these factors, we believe Ameristar's proposal has the
potential to maximize gaming and total revenues, gaming taxes,
direct and indirect job creation and overall economic impact
compared to any of the other announced proposals for Springfield or
other locations in western Massachusetts.
Additional Financial Information Cash and Cash
Equivalents. At Sept. 30, 2012, total cash was $116.3 million,
representing an increase of $30.6 million from total cash as of
Dec. 31, 2011. The increase is attributable to accumulated cash
flows from operations and no outstanding indebtedness subject to
voluntary repayment under our revolving credit facility (as
described below). In October 2012, we made the $39 million
semi-annual interest payment related to the $1.04 billion principal
amount of our 7.50% Senior Notes due 2021.
Debt. At Sept. 30, 2012, the face amount
of our outstanding debt was $1.9 billion. Net repayments for the
third quarter of 2012 totaled $2.5 million. At Sept. 30, 2012, our
Total Net Leverage Ratio (as defined in the senior credit facility)
was required to be no more than 6.50:1. As of that date, our Total
Net Leverage Ratio was 5.01:1.
Capital Expenditures. For the quarters
ended Sept. 30, 2012 and 2011, capital expenditures totaled $34.4
million and $19.1 million, respectively. Third quarter 2012 capital
expenditures include $15.2 million associated with the Lake Charles
construction project.
Stock Repurchase Program. On Sept. 15,
2011, our Board of Directors approved the repurchase of up to $75
million of Ameristar common stock through Sept. 30, 2014. During
the third quarter of 2012, we repurchased approximately 0.7 million
shares of common stock at a total cost of approximately $11.1
million under the stock repurchase program. To date, we have
repurchased approximately 1.0 million shares of common stock, or 3%
of our outstanding stock, under the program at an average price of
$16.67 per share, for a total cost of $16.7 million.
Dividend. During the third quarter of
2012, our Board of Directors declared a cash dividend of $0.125 per
share, which we paid on Sept. 14, 2012. On Oct. 26, 2012, the Board
declared a cash dividend of $0.125 per share, payable on Dec. 14,
2012.
Outlook
For the full year 2012, we currently expect:
- depreciation to range from $106.6 million to $107.6
million.
- interest expense, net of capitalized interest, to be between
$114.4 million and $115.4 million, including non-cash interest
expense of approximately $5.5 million.
- the combined state and federal income tax rate to be in the
range of 27% to 29%.
- capital spending of $147.0 million to $152.0 million, including
approximately $70.0 million for maintenance capital expenditures,
$31.9 million related to Lake Charles design and construction
costs, $29.8 million recorded for the fair value of a Lake Charles
intangible asset and $16.9 million for the January 2012
Springfield, Mass. land purchase.
- non-cash stock-based compensation expense of $16.0 million to
$17.0 million.
- corporate expense, excluding non-cash stock-based compensation
expense, to be between $50.5 million and $51.5 million.
Conference Call Information We will hold a
conference call to discuss our third quarter results on Wednesday,
Oct. 31, 2012 at 10 a.m. EDT. The call may be accessed live by
dialing toll-free 866-400-0018 domestically, or 913-981-5521, and
referencing pass code number 1153647. Conference call participants
are requested to dial in at least five minutes early to ensure a
prompt start. Interested parties wishing to listen to the
conference call and view corresponding informative slides on the
Internet may do so live at our website -- www.ameristar.com -- by
clicking on "About Us/Investor Relations" and selecting the
"Webcasts and Events" link. A copy of the slides will be available
in the corresponding "Earnings Releases" section one-half hour
before the conference call. In addition, the call will be recorded
and can be replayed from 1 p.m. EDT Oct. 31, 2012 until 11:59 p.m.
EST Nov. 14, 2012. To listen to the replay, call toll-free
888-203-1112 domestically, or 719-457-0820, and reference the pass
code number above.
Forward-Looking Information This release
contains certain forward-looking information that generally can be
identified by the context of the statement or the use of
forward-looking terminology, such as "believes," "estimates,"
"anticipates," "intends," "expects," "plans," "is confident that,"
"should," "could," "would," "will" or words of similar meaning,
with reference to Ameristar or our management. Similarly,
statements that describe our future plans, objectives, strategies,
financial results or position, operational expectations or goals
are forward-looking statements. It is possible that our
expectations may not be met due to various factors, many of which
are beyond our control, and we therefore cannot give any assurance
that such expectations will prove to be correct. For a discussion
of relevant factors, risks and uncertainties that could materially
affect our future results, attention is directed to "Item 1A. Risk
Factors" and "Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations" in our Annual Report
on Form 10-K for the year ended Dec. 31, 2011, and "Item 2.
Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Item 1A. Risk Factors" in our Quarterly
Report on Form 10-Q for the quarter ended June 30, 2012.
On a monthly basis, gaming regulatory authorities in certain
states in which we operate publish gross gaming revenue and/or
certain other financial information for the gaming facilities that
operate within their respective jurisdictions. Because various
factors in addition to our gross gaming revenue (including
operating costs, promotional allowances and corporate and other
expenses) influence our operating income, Adjusted EBITDA and
diluted earnings per share, such reported information, as it
relates to Ameristar, may not accurately reflect the results of our
operations for such periods or for future periods.
About Ameristar Ameristar Casinos is an
innovative casino gaming company featuring the newest and most
popular slot machines. Our 7,200 dedicated team members pride
themselves on delivering consistently friendly and appreciative
service to our guests. We continuously strive to increase the
loyalty of our guests through the quality of our slot machines,
table games, hotel, dining and other leisure offerings. Our eight
casino hotel properties primarily serve guests from Colorado,
Idaho, Illinois, Indiana, Iowa, Kansas, Louisiana, Mississippi,
Missouri, Nebraska and Nevada. We began construction on our ninth
property, a casino resort in Lake Charles, La., in July 2012, which
we expect will open in the third quarter of 2014. We have been a
public company since 1993, and our stock is traded on the Nasdaq
Global Select Market. We generate more than $1 billion in net
revenues annually.
Visit Ameristar Casinos' website at www.ameristar.com (which
shall not be deemed to be incorporated in or a part of this news
release).
Please refer to the tables at the end of this release for the
reconciliation of the non-GAAP financial measures Adjusted EBITDA
and Adjusted EPS reported throughout this release. Additionally,
more information on these non-GAAP financial measures can be found
under the caption "Use of Non-GAAP Financial Measures" at the end
of this release.
AMERISTAR CASINOS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in Thousands, Except Per Share Data)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2012 2011 2012 2011
---------- ---------- ---------- ----------
REVENUES:
Casino $ 307,397 $ 312,595 $ 930,460 $ 943,576
Food and beverage 35,588 35,805 103,528 104,125
Rooms 19,788 20,110 58,546 59,028
Other 7,337 7,538 21,304 21,951
---------- ---------- ---------- ----------
370,110 376,048 1,113,838 1,128,680
Less: promotional allowances (72,102) (71,541) (207,442) (210,336)
---------- ---------- ---------- ----------
Net revenues 298,008 304,507 906,396 918,344
OPERATING EXPENSES:
Casino 134,122 138,121 403,478 413,522
Food and beverage 12,854 13,473 40,035 39,930
Rooms 2,192 2,146 6,090 5,926
Other 2,427 2,729 7,309 7,968
Selling, general and
administrative 62,017 60,794 183,059 189,343
Depreciation and
amortization 27,036 26,111 80,556 78,657
Net (gain) loss on
disposition of assets (28) (4) 200 (123)
---------- ---------- ---------- ----------
Total operating expenses 240,620 243,370 720,727 735,223
Income from operations 57,388 61,137 185,669 183,121
OTHER INCOME (EXPENSE):
Interest income 7 1 40 3
Interest expense, net of
capitalized interest (29,652) (27,314) (85,358) (79,533)
Loss on early retirement
of debt - (15) - (85,311)
Other - (1,595) 834 (1,292)
---------- ---------- ---------- ----------
INCOME BEFORE INCOME TAX
PROVISION 27,743 32,214 101,185 16,988
Income tax provision 11,612 13,330 26,066 17,572
---------- ---------- ---------- ----------
NET INCOME (LOSS) $ 16,131 $ 18,884 $ 75,119 $ (584)
========== ========== ========== ==========
EARNINGS (LOSS) PER SHARE:
Basic $ 0.49 $ 0.58 $ 2.28 $ (0.01)
========== ========== ========== ==========
Diluted $ 0.48 $ 0.56 $ 2.22 $ (0.01)
========== ========== ========== ==========
CASH DIVIDENDS DECLARED PER
SHARE $ 0.125 $ 0.105 $ 0.375 $ 0.315
========== ========== ========== ==========
WEIGHTED-AVERAGE SHARES
OUTSTANDING:
Basic 32,910 32,815 32,929 42,790
========== ========== ========== ==========
Diluted 33,732 33,874 33,903 42,790
========== ========== ========== ==========
AMERISTAR CASINOS, INC. AND SUBSIDIARIES
SUMMARY CONSOLIDATED FINANCIAL DATA
(Dollars in Thousands)
(Unaudited)
September 30, 2012 December 31, 2011
-------------------- --------------------
Balance sheet data
Cash and cash equivalents $ 116,311 $ 85,719
Total assets $ 2,096,557 $ 2,012,039
Total debt, including net
discount of $897 and $8,258 $ 1,920,977 $ 1,926,064
Stockholders' deficit $ (25,599) $ (90,578)
Three Months Ended Nine Months Ended
September 30, September 30,
2012 2011 2012 2011
--------- --------- --------- ---------
Consolidated cash flow
information
Net cash provided by operating
activities $ 87,252 $ 66,311 $ 203,069 $ 209,279
Net cash (used in) provided by
investing activities $ (86,354) $ 11,204 $(139,465) $ (18,675)
Net cash used in financing
activities $ (20,114) $ (69,154) $ (33,012) $(169,875)
Net revenues
Ameristar St. Charles $ 68,160 $ 68,036 $ 202,504 $ 203,630
Ameristar Kansas City 51,960 55,920 160,357 170,115
Ameristar Council Bluffs 40,902 40,654 125,742 123,849
Ameristar Black Hawk 42,402 40,105 121,563 115,060
Ameristar Vicksburg 29,243 29,586 92,064 89,961
Ameristar East Chicago 49,790 54,405 159,666 169,119
Jackpot Properties 15,551 15,801 44,500 46,610
--------- --------- --------- ---------
Consolidated net revenues $ 298,008 $ 304,507 $ 906,396 $ 918,344
========= ========= ========= =========
Operating income (loss)
Ameristar St. Charles $ 16,988 $ 17,357 $ 53,004 $ 54,561
Ameristar Kansas City 14,794 16,199 47,702 50,820
Ameristar Council Bluffs 15,532 14,140 47,161 43,985
Ameristar Black Hawk 11,567 10,211 32,126 27,685
Ameristar Vicksburg 9,684 9,475 31,891 30,442
Ameristar East Chicago 2,521 4,705 16,098 18,525
Jackpot Properties 3,126 3,509 9,149 11,223
Corporate and other (16,824) (14,459) (51,462) (54,120)
--------- --------- --------- ---------
Consolidated operating
income $ 57,388 $ 61,137 $ 185,669 $ 183,121
========= ========= ========= =========
Adjusted EBITDA
Ameristar St. Charles $ 24,088 $ 24,020 $ 73,700 $ 74,552
Ameristar Kansas City 18,437 20,002 58,726 62,253
Ameristar Council Bluffs 17,483 16,639 53,219 50,511
Ameristar Black Hawk 16,084 14,723 45,609 41,491
Ameristar Vicksburg 13,363 13,141 42,985 41,588
Ameristar East Chicago 7,114 9,070 30,323 31,444
Jackpot Properties 4,634 4,898 13,385 15,388
Corporate and other (13,069) (12,219) (37,680) (36,345)
--------- --------- --------- ---------
Consolidated Adjusted EBITDA $ 88,134 $ 90,274 $ 280,267 $ 280,882
========= ========= ========= =========
AMERISTAR CASINOS, INC. AND SUBSIDIARIES
SUMMARY CONSOLIDATED FINANCIAL DATA - CONTINUED
(Dollars in Thousands)
(Unaudited)
Three Months Nine Months
Ended Ended
September 30, September 30,
2012 2011 2012 2011
------ ------ ------ ------
Operating income (loss) margins (1)
Ameristar St. Charles 24.9% 25.5% 26.2% 26.8%
Ameristar Kansas City 28.5% 29.0% 29.7% 29.9%
Ameristar Council Bluffs 38.0% 34.8% 37.5% 35.5%
Ameristar Black Hawk 27.3% 25.5% 26.4% 24.1%
Ameristar Vicksburg 33.1% 32.0% 34.6% 33.8%
Ameristar East Chicago 5.1% 8.6% 10.1% 11.0%
Jackpot Properties 20.1% 22.2% 20.6% 24.1%
Consolidated operating income margin 19.3% 20.1% 20.5% 19.9%
Adjusted EBITDA margins (2)
Ameristar St. Charles 35.3% 35.3% 36.4% 36.6%
Ameristar Kansas City 35.5% 35.8% 36.6% 36.6%
Ameristar Council Bluffs 42.7% 40.9% 42.3% 40.8%
Ameristar Black Hawk 37.9% 36.7% 37.5% 36.1%
Ameristar Vicksburg 45.7% 44.4% 46.7% 46.2%
Ameristar East Chicago 14.3% 16.7% 19.0% 18.6%
Jackpot Properties 29.8% 31.0% 30.1% 33.0%
Consolidated Adjusted EBITDA margin 29.6% 29.6% 30.9% 30.6%
(1) Operating income (loss) margin is operating income (loss) as
a percentage of net revenues.
(2) Adjusted EBITDA margin is Adjusted EBITDA as a percentage of
net revenues.
RECONCILIATION OF OPERATING INCOME (LOSS) TO ADJUSTED EBITDA
(Dollars in Thousands) (Unaudited)
The following tables set forth reconciliations of operating income (loss), a
GAAP financial measure, to Adjusted EBITDA, a non-GAAP financial measure.
Three Months Ended September 30, 2012
---------------------------------------------------------------------------
(Gain) Loss
Operating Depreciation on
Income and Disposition Stock-Based Adjusted
(Loss) Amortization of Assets Compensation EBITDA
--------- ------------ ----------- ------------ --------
Ameristar St.
Charles $ 16,988 $ 6,944 $ - $ 156 $ 24,088
Ameristar Kansas
City 14,794 3,555 (15) 103 18,437
Ameristar
Council Bluffs 15,532 1,927 (100) 124 17,483
Ameristar Black
Hawk 11,567 4,416 4 97 16,084
Ameristar
Vicksburg 9,684 3,543 - 136 13,363
Ameristar East
Chicago 2,521 4,474 2 117 7,114
Jackpot
Properties 3,126 1,305 81 122 4,634
Corporate and
other (16,824) 872 - 2,883 (13,069)
--------- ------------ ----------- ------------ --------
Consolidated $ 57,388 $ 27,036 $ (28) $ 3,738 $ 88,134
========= ============ =========== ============ ========
Three Months Ended September 30, 2011
----------------------------------------------------------------------------
(Gain) Loss
Operating Depreciation on
Income and Disposition Stock-Based
(Loss) Amortization of Assets Compensation
--------- ------------ ----------- ------------
Ameristar St. Charles $ 17,357 $ 6,462 $ - $ 192
Ameristar Kansas City 16,199 3,674 (3) 132
Ameristar Council Bluffs 14,140 1,896 8 137
Ameristar Black Hawk 10,211 4,368 - 144
Ameristar Vicksburg 9,475 3,500 - 159
Ameristar East Chicago 4,705 4,247 (9) 127
Jackpot Properties 3,509 1,253 - 136
Corporate and other (14,459) 711 - 2,838
--------- ------------ ----------- ------------
Consolidated $ 61,137 $ 26,111 $ (4) $ 3,865
========= ============ =========== ============
Deferred Non- River
Compensation Operational Flooding
Plan Expense Professional Expenses Adjusted
(1) Fees (2) EBITDA
------------ ------------ -------- --------
Ameristar St. Charles $ - $ - $ 9 $ 24,020
Ameristar Kansas City - - - 20,002
Ameristar Council Bluffs - - 458 16,639
Ameristar Black Hawk - - - 14,723
Ameristar Vicksburg - - 7 13,141
Ameristar East Chicago - - - 9,070
Jackpot Properties - - - 4,898
Corporate and other (1,321) 12 - (12,219)
------------ ------------ -------- --------
Consolidated $ (1,321)$ 12 $ 474 $ 90,274
============ ============ ======== ========
(1) Deferred compensation plan expense represents the change in
the Company's non-cash liability based on plan participant
investment results. This expense is included in selling, general
and administrative expenses in the condensed consolidated
statements of operations.
(2) River flooding expenses represent non-capitalizable costs
incurred to reduce exposure to significant property damage from
extraordinary flood levels, as well as required flood cleanup
costs.
RECONCILIATION OF OPERATING INCOME (LOSS) TO ADJUSTED EBITDA - CONTINUED
(Dollars in Thousands) (Unaudited)
Nine Months Ended September 30, 2012
----------------------------------------------------------------------------
Loss (Gain)
Operating Depreciation on
Income and Disposition Stock-Based
(Loss) Amortization of Assets Compensation
--------- ------------ ----------- ------------
Ameristar St. Charles $ 53,004 $ 20,392 $ (150) $ 454
Ameristar Kansas City 47,702 10,852 (109) 281
Ameristar Council Bluffs 47,161 5,940 (100) 351
Ameristar Black Hawk 32,126 13,248 (72) 307
Ameristar Vicksburg 31,891 10,702 (1) 393
Ameristar East Chicago 16,098 13,281 610 334
Jackpot Properties 9,149 3,866 22 348
Corporate and other (51,462) 2,275 - 10,280
--------- ------------ ----------- ------------
Consolidated $ 185,669 $ 80,556 $ 200 $ 12,748
========= ============ =========== ============
Deferred Net River
Compensation Flooding
Plan Expense Reimbursements Adjusted
(1) (2) EBITDA
------------ -------------- --------
Ameristar St. Charles $ - $ - $ 73,700
Ameristar Kansas City - - 58,726
Ameristar Council Bluffs - (133) 53,219
Ameristar Black Hawk - - 45,609
Ameristar Vicksburg - - 42,985
Ameristar East Chicago - - 30,323
Jackpot Properties - - 13,385
Corporate and other 1,227 - (37,680)
------------ -------------- --------
Consolidated $ 1,227 $ (133) $280,267
============ ============== ========
Nine Months Ended September 30, 2011
(Gain) Loss
Operating Depreciation on
Income and Disposition Stock-Based
(Loss) Amortization of Assets Compensation
--------- ------------ ----------- ------------
Ameristar St. Charles $ 54,561 $ 19,454 $ 4 $ 524
Ameristar Kansas City 50,820 11,155 (80) 358
Ameristar Council Bluffs 43,985 5,657 (105) 367
Ameristar Black Hawk 27,685 13,433 (21) 394
Ameristar Vicksburg 30,442 10,451 (1) 447
Ameristar East Chicago 18,525 12,517 67 335
Jackpot Properties 11,223 3,785 13 367
Corporate and other (54,120) 2,205 - 9,220
--------- ------------ ----------- ------------
Consolidated $ 183,121 $ 78,657 $ (123) $ 12,012
========= ============ =========== ============
Net
Deferred River
Compensation Non-Operational Flooding
Plan Expense Professional Expenses Adjusted
(1) Fees (2) EBITDA
------------ --------------- -------- --------
Ameristar St. Charles $ - $ - $ 9 $ 74,552
Ameristar Kansas City - - - 62,253
Ameristar Council Bluffs - - 607 50,511
Ameristar Black Hawk - - - 41,491
Ameristar Vicksburg - - 249 41,588
Ameristar East Chicago - - - 31,444
Jackpot Properties - - - 15,388
Corporate and other (623) 6,973 - (36,345)
------------ --------------- -------- --------
Consolidated $ (623) $ 6,973 $ 865 $280,882
============ =============== ======== ========
(1) Deferred compensation plan expense represents the change in
the Company's non-cash liability based on plan participant
investment results. This expense is included in selling, general
and administrative expenses in the condensed consolidated
statements of operations.
(2) Amounts are net of insurance reimbursements and represent
non-capitalizable costs incurred to reduce exposure to significant
property damage from extraordinary flood levels, as well as
required flood cleanup costs.
RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBITDA
(Dollars in Thousands) (Unaudited)
The following table sets forth a reconciliation of consolidated net income
(loss), a GAAP financial measure, to consolidated Adjusted EBITDA, a non-
GAAP financial measure.
Three Months Ended Nine Months Ended
September 30, September 30,
2012 2011 2012 2011
--------- -------- -------- --------
Net income (loss) $ 16,131 $ 18,884 $ 75,119 $ (584)
Income tax provision 11,612 13,330 26,066 17,572
Interest expense, net of
capitalized interest 29,652 27,314 85,358 79,533
Interest income (7) (1) (40) (3)
Other - 1,595 (834) 1,292
Net (gain) loss on disposition of
assets (28) (4) 200 (123)
Depreciation and amortization 27,036 26,111 80,556 78,657
Stock-based compensation 3,738 3,865 12,748 12,012
Deferred compensation plan expense - (1,321) 1,227 (623)
Loss on early retirement of debt - 15 - 85,311
Non-operational professional fees - 12 - 6,973
Net river flooding
(reimbursements) expenses - 474 (133) 865
--------- -------- -------- --------
Adjusted EBITDA $ 88,134 $ 90,274 $280,267 $280,882
========= ======== ======== ========
RECONCILIATION OF DILUTED EPS TO ADJUSTED DILUTED EPS
(Shares in Thousands) (Unaudited)
The following table sets forth a reconciliation of diluted earnings (loss)
per share (EPS), a GAAP financial measure, to adjusted diluted earnings per
share (Adjusted EPS), a non-GAAP financial measure.
Three Months Ended Nine Months Ended
September 30, September 30,
2012 2011 2012 2011
--------- -------- -------- --------
Diluted income (loss) per share
(EPS) $ 0.48 $ 0.56 $ 2.22 $ (0.01)
Cumulative effect from tax
elections - - (0.46) -
Loss on early retirement of debt - - - 1.25
Non-operational professional fees - - - 0.14
Non-cash tax provision impact from
change in Indiana state tax rate - - - 0.08
River flooding expenses - 0.01 - 0.01
--------- -------- -------- --------
Adjusted diluted earnings per share
(Adjusted EPS) $ 0.48 $ 0.57 $ 1.76 $ 1.47
========= ======== ======== ========
Weighted-average diluted shares
outstanding used in calculating
Adjusted EPS 33,732 33,874 33,903 43,875
========= ======== ======== ========
Use of Non-GAAP Financial Measures
Securities and Exchange Commission Regulation G, "Conditions for
Use of Non-GAAP Financial Measures," prescribes the conditions for
use of non-GAAP financial information in public disclosures. We
believe our presentation of the non-GAAP financial measures
Adjusted EBITDA and Adjusted EPS are important supplemental
measures of operating performance to investors. The following
discussion defines these terms and explains why we believe they are
useful measures of our performance.
Adjusted EBITDA is a commonly used measure of performance in the
gaming industry that we believe, when considered with measures
calculated in accordance with United States generally accepted
accounting principles, or GAAP, gives investors a more complete
understanding of operating results before the impact of investing
and financing transactions, income taxes and certain non-cash and
non-recurring items and facilitates comparisons between us and our
competitors.
Adjusted EBITDA is a significant factor in management's internal
evaluation of total Company and individual property performance and
in the evaluation of incentive compensation for employees.
Therefore, we believe Adjusted EBITDA is useful to investors
because it allows greater transparency related to a significant
measure used by management in its financial and operational
decision-making and because it permits investors similarly to
perform more meaningful analyses of past, present and future
operating results and evaluations of the results of core ongoing
operations. Furthermore, we believe investors would, in the absence
of the Company's disclosure of Adjusted EBITDA, attempt to use
equivalent or similar measures in assessment of our operating
performance and the valuation of our Company. We have reported
Adjusted EBITDA to our investors in the past and believe its
inclusion at this time will provide consistency in our financial
reporting.
Adjusted EBITDA, as used in this press release, is earnings
before interest, taxes, depreciation, amortization, other
non-operating income and expenses, stock-based compensation,
deferred compensation plan expense, non-operational professional
fees and river flooding expenses and reimbursements. In future
periods, the calculation of Adjusted EBITDA may be different than
in this release. The foregoing tables reconcile Adjusted EBITDA to
operating income (loss) and net income, based upon GAAP.
Adjusted EPS, as used in this press release, is diluted earnings
per share, excluding the after-tax per-share impact of loss on
early retirement of debt, the cumulative effect from tax elections,
non-operational professional fees, non-cash tax provision impact
from state tax rate change and river flooding expenses and
reimbursements. Management adjusts EPS, when deemed appropriate,
for the evaluation of operating performance because we believe that
the exclusion of certain items is necessary to provide the most
accurate measure of our core operating results and as a means to
compare period-to-period results. We have chosen to provide this
information to investors to enable them to perform more meaningful
analysis of past, present and future operating results and as a
means to evaluate the results of our core ongoing operations.
Adjusted EPS is a significant factor in the internal evaluation of
total Company performance. Management believes this measure is used
by investors in their assessment of our operating performance and
the valuation of our Company. In future periods, the adjustments we
make to EPS in order to calculate Adjusted EPS may be different
than or in addition to those made in this release. The foregoing
table reconciles EPS to Adjusted EPS.
Limitations on the Use of Non-GAAP Measures The use of Adjusted
EBITDA and Adjusted EPS has certain limitations. Our presentation
of Adjusted EBITDA and Adjusted EPS may be different from the
presentations used by other companies and therefore comparability
among companies may be limited. Depreciation expense for various
long-term assets, interest expense, income taxes and other items
have been and will be incurred and are not reflected in the
presentation of Adjusted EBITDA. Each of these items should also be
considered in the overall evaluation of our results. Additionally,
Adjusted EBITDA does not consider capital expenditures and other
investing activities and should not be considered as a measure of
our liquidity. We compensate for these limitations by providing the
relevant disclosure of our depreciation, interest and income tax
expense, capital expenditures and other items both in our
reconciliations to the GAAP financial measures and in our
consolidated financial statements, all of which should be
considered when evaluating our performance.
Adjusted EBITDA and Adjusted EPS should be used in addition to
and in conjunction with results presented in accordance with GAAP.
Adjusted EBITDA and Adjusted EPS should not be considered as an
alternative to net income, operating income or any other operating
performance measure prescribed by GAAP, nor should these measures
be relied upon to the exclusion of GAAP financial measures.
Adjusted EBITDA and Adjusted EPS reflect additional ways of viewing
our operations that we believe, when viewed with our GAAP results
and the reconciliations to the corresponding GAAP financial
measures, provide a more complete understanding of factors and
trends affecting our business than could be obtained absent this
disclosure. Management strongly encourages investors to review our
financial information in its entirety and not to rely on a single
financial measure.
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CONTACT: Tom Steinbauer Senior Vice President, Chief
Financial Officer Ameristar Casinos, Inc. 702-567-7000
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