Argosy (NYSE:AGY)
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Argosy Gaming Company Reports Third Quarter 2004 Earnings
ALTON, Ill., Oct. 27 /PRNewswire-FirstCall/ -- Argosy Gaming Company
(NYSE:AGY) today announced third quarter results for the period ended September
30, 2004. Diluted earnings per share ("Diluted EPS") were $0.71 on net income
of $21.1 million, as compared to Diluted EPS of $0.56 on net income of $16.5
million for the third quarter of 2003. Included in the quarterly results for
the third quarter of 2004 is a gain of $3.2 million pre-tax, or approximately
$0.06 per diluted share, from the sale of one of the boats that operated at the
Company's Joliet property prior to the addition of the current barge-based
facility. In previously issued guidance, the Company anticipated incurring a
$0.11 charge in the third quarter related to the recent refinancing of its
senior credit facility. However, the charge was not incurred, as the ultimate
structure of the refinancing requires that the associated fees be amortized
over the life of the amended facility instead of being expensed currently.
Net income for the nine months ended September 30, 2004, was $43.7 million
($1.47 EPS) on net revenues of $785.1 million, compared to net income of $38.1
million ($1.30 EPS) on net revenues of $727.6 million for the same period in
2003. For the nine-month period ended September 30, 2003, a $5.9 million
charge due to new legislation regarding the calculation of the 2002 increase in
Indiana gaming tax rates and a $6.5 million write-down of barge platforms
originally intended for use at the Company's Joliet property reduced EPS by
$0.26 per share. For the nine-month period ended September 30, 2004, results
were positively impacted by the $0.06 per share gain on the sale of the Joliet
boat, but were negatively impacted by $0.52 per share in expenses related to
the refinancing of the Company's 10 3/4% notes in February.
Third Quarter Results
Net revenues for the third quarter of 2004 were $266.5 million, up 9.7% from
third quarter 2003 net revenues of $242.9 million. Each of the Company's
properties reported higher net revenues in the third quarter of 2004 than in
the same quarter of 2003. Argosy Casino-Riverside achieved a 53.3% increase in
net revenues versus the same quarter in 2003, improving from $22.7 million to
$34.8 million, and in line with its capacity increase due to the opening of its
new casino in December 2003. In Sioux City, net revenues increased 22.6%, from
$10.2 million in 2003 to $12.5 million in 2004. In September, the first full
month of operations from the larger riverboat previously used in Riverside,
casino revenues in Sioux City increased 48% on a 28% increase in capacity. At
the Company's Lawrenceburg property net revenues increased $7.7 million, or
7.1%, to $115.5 million from $107.8 million in the third quarter of 2003.
The Company reported EBITDA (earnings before interest, taxes, depreciation and
amortization) of $71.6 million for the third quarter 2004, as compared to $63.1
million for the third quarter 2003. The $8.5 million increase is primarily
related to the successful expansion of the Company's Riverside casino and
improved operational performance at most of the Company's properties. EBITDA
margin (EBITDA as a percent of net revenues) improved from the same quarter
last year at every property except for the Company's two Illinois casinos,
excluding Joliet's boat sale. Company-wide, EBITDA margin for the quarter was
26.9%, up from 26.0% for the same quarter last year. The Company's effective
gaming and admission tax rate (gaming and admission taxes as a percent of net
revenues) increased 2.0 percentage points, from 33.8% in the third quarter of
2003 to 35.8% this quarter. The gain from the sale of the boat in Joliet had a
positive impact on the consolidated EBITDA margin of 1.2 percentage points.
"Higher revenues and improved margins are a strong testament to the great job
done by our management teams," said Richard J. Glasier, President and CEO of
Argosy Gaming Company. "I'm very pleased with our results this quarter,
particularly in light of the tough tax environment in Illinois and the highly
competitive nature of some of the markets we operate in."
The Company reported a reduction in debt from $847.1 million as of June 30,
2004 to $805.3 million as of September 30, 2004. As a result of the reduction
in debt and a lower effective interest rate, net interest expense dropped from
$19.0 million in the third quarter of 2003 to $15.6 million in the current
quarter.
On September 30, 2004 Argosy completed a refinancing of its Revolving Credit
and Term Loan B facilities. The existing Credit Agreement, which consisted of
a $400 million revolver and $275 million term loan B, was amended and restated
to permit a $500 million revolver and $175 million term loan B. The new
facility reduces the interest rate on the term loan B from LIBOR plus 225 basis
points to LIBOR plus 175 basis points. The interest rate for LIBOR-based loans
under the new facility for the revolver dropped by approximately 88 basis
points.
Argosy spent $14.0 million in capital during the quarter ended September 30,
2004 of which approximately half was for maintenance capital and half for
project capital at the Sioux City and Riverside properties. The Argosy IV
riverboat, which was previously used in Riverside, went into service in Sioux
City on September 1, 2004, with 125 more slot machines and six additional
gaming tables. The Sioux City expansion project, which also included enhanced
parking and a new live entertainment venue, was completed on budget at a cost
of approximately $8 million. At Riverside, work has begun on the construction
of a 1,400-space garage to replace the existing 800-space facility. Completion
is expected at the end of August of 2005. The $75 million project also
includes the construction of a hotel with approximately 250 rooms that is
expected to be completed near the end of 2006. Argosy continues to evaluate
alternative expansion projects at Lawrenceburg and expects to finalize its
decision by year-end 2004. The Company expects capital expenditures for the
fourth quarter of 2004 to be in the range of $15 million to $20 million, of
which $10 million to $12 million will be for project capital, and the remainder
for maintenance capital.
"Argosy's new casino at Riverside is still growing the Kansas City market, and
the transfer of the Riverside boat to Sioux City has created a lot of
excitement in the market," said Glasier. "Our investments at these properties
have given us very solid returns. We're looking forward to continued growth
with our expansion projects in Riverside and Lawrenceburg."
In October 2004, the Company entered into a contract to purchase Raceway Park
in Toledo, Ohio for approximately $20 million, subject to various conditions
including regulatory approval. The purchase also includes an off-track
wagering facility in Sandusky, Ohio.
Guidance
Argosy expects reported full-year 2004 EPS in the range of $1.95 - $2.00.
Included in the estimate are $0.52 in costs associated with refinancing the
Company's senior subordinated notes in February and the $0.06 gain from the
sale of the Joliet boat.
Argosy will host a conference call for interested parties on October 27, 2004,
at 11:00 a.m. EDT to review its third quarter financial results. For those
interested in participating in the call, please dial (706) 634-1306 and
reference conference ID #1541464 ten to fifteen minutes prior to the call start
time. The call will also be broadcast live via the Internet and may be
accessed through our web site at http://www.argosycasinos.com/ . A simulcast
of the web cast will be made available through November 3, 2004 and can be
accessed through our web site: http://www.argosycasinos.com/ .
Argosy Gaming Company is a leading owner and operator of casinos and related
entertainment and hotel facilities in the midwestern and southern United
States. Argosy owns and operates the Alton Belle Casino in Alton, Illinois,
serving the St. Louis metropolitan market; the Argosy Casino-Riverside in
Missouri, serving the greater Kansas City metropolitan market; the Argosy
Casino-Baton Rouge in Louisiana; the Argosy Casino-Sioux City in Iowa; the
Argosy Casino-Lawrenceburg in Indiana, serving the Cincinnati and Dayton
metropolitan markets; and the Empress Casino Joliet in Illinois serving the
greater Chicagoland market.
This press release contains statements relating to future results, which are
forward-looking statements as that term is defined in the Private Securities
Litigation Reform Act of 1995. These forward-looking statements generally can
be identified by phrases such as the Company or its management "believes,"
"anticipates," "expects," "forecasts," "estimates," "foresees," or other words
or phrases of similar import. Similarly, such statements herein that describe
the Company's business outlook, objectives, strategy, intentions or goals are
also forward-looking statements. All such forward-looking statements are
subject to certain risks and uncertainties that could cause actual results to
differ materially from those projected, including but not limited to:
-- competitive and general economic conditions in the markets in which
the Company operates, including locations of competitors and
legalization of gaming in new jurisdictions;
-- construction factors relating to the Company's expansion projects,
including delays, zoning issues, environmental restrictions, weather
and other hazards, site access matters and building permit issues;
-- the ability to effectively implement operational changes at the
Company's properties;
-- litigation outcomes and judicial actions, including gaming legislative
action, referenda and taxation;
-- the effect of economic, credit and capital market conditions on the
economy in general, and on gaming companies in particular;
-- changes in laws (including increased tax rates), regulations or
accounting standards;
-- the effect of future legislation or regulatory changes on the
Company's operations (including legalization of gaming in new
jurisdictions);
-- other risks and uncertainties detailed from time to time in the
Company's filings with the Securities and Exchange Commission.
-Tables Follow-
ARGOSY GAMING COMPANY
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands, Except Per Share Data)
Three Months Ended Nine Months Ended
September September September September
30, 30, 30, 30,
2004 2003 2004 2003
(unaudited) (unaudited) (unaudited) (unaudited)
Revenues:
Casino $271,204 $245,928 $795,424 $738,938
Admissions 5,829 4,594 16,540 10,761
Food, beverage and
other 26,828 24,270 79,246 74,023
303,861 274,792 891,210 823,722
Less promotional
allowances (37,373) (31,854) (106,069) (96,107)
Net revenues 266,488 242,938 785,141 727,615
Costs and expenses:
Gaming and admission
taxes 95,442 82,125 277,033 257,448
Casino 30,660 32,499 94,413 99,873
Selling, general and
administrative 42,153 37,412 124,254 112,682
Food, beverage and
other 19,304 17,394 56,626 52,953
Other operating
expenses 10,449 10,420 30,047 31,305
Depreciation and
amortization 16,504 13,235 45,577 38,757
Gain on sale of
assets (3,155) - (3,155) -
Write down of assets - - - 6,500
211,357 193,085 624,795 599,518
Income from operations 55,131 49,853 160,346 128,097
Other income (expense):
Interest income 65 20 104 106
Interest expense (15,680) (19,054) (50,325) (56,990)
Expense on early
retirement of debt - - (26,040) -
(15,615) (19,034) (76,261) (56,884)
Income before income taxes 39,516 30,819 84,085 71,213
Income tax expense (18,376) (14,330) (40,402) (33,114)
Net income $21,140 $16,489 $43,683 $38,099
Basic income per share $0.72 $0.56 $1.48 $1.31
Diluted income per share $0.71 $0.56 $1.47 $1.30
Weighted average shares
outstanding:
Basic 29,475,631 29,230,951 29,421,578 29,095,635
Diluted 29,658,326 29,428,042 29,634,103 29,339,888
ARGOSY GAMING COMPANY AND SUBSIDIARIES
SELECTED FINANCIAL INFORMATION
SUMMARY OPERATING DATA
(In Thousands)
Three Months Ended Nine Months Ended
September September September September
30, 30, 30, 30,
2004 2003 2004 2003
(unaudited)(unaudited)(unaudited)(unaudited)
Casino Revenues
Alton Belle Casino $27,774 $26,778 $80,861 $85,364
Argosy Casino - Riverside 35,980 23,453 111,181 71,569
Argosy Casino - Baton Rouge 20,109 20,109 62,743 60,598
Argosy Casino - Sioux City 12,914 10,515 35,997 31,684
Argosy Casino - Lawrenceburg 115,358 106,817 335,031 307,014
Empress Casino Joliet 59,069 58,256 169,611 182,709
Total $271,204 $245,928 $795,424 $738,938
Net Revenues
Alton Belle Casino $26,433 $25,583 $77,067 $81,718
Argosy Casino - Riverside 34,847 22,724 108,603 68,738
Argosy Casino - Baton Rouge 20,533 20,358 64,389 62,160
Argosy Casino - Sioux City 12,497 10,190 34,878 30,765
Argosy Casino - Lawrenceburg 115,504 107,805 336,486 310,228
Empress Casino Joliet 56,674 56,278 163,718 174,006
Total $266,488 $242,938 $785,141 $727,615
Income (loss) from operations
Alton Belle Casino $3,009 $3,694 $8,593 $13,027
Argosy Casino - Riverside 6,208 3,814 23,713 11,216
Argosy Casino - Baton Rouge 1,809 1,226 7,239 4,215
Argosy Casino - Sioux City 3,055 1,748 8,267 5,338
Argosy Casino - Lawrenceburg 34,530 32,302 101,368 82,733
Empress Casino Joliet (4) 14,259 12,802 33,672 29,020
Corporate (7,739) (5,733) (22,506) (17,452)
Total $55,131 $49,853 $160,346 $128,097
ARGOSY GAMING COMPANY AND SUBSIDIARIES
SELECTED FINANCIAL INFORMATION
RECONCILIATION OF NET INCOME TO EBITDA (1)
(In Thousands, unaudited)
Three months ended Three months ended
September 30, 2004 September 30, 2003
Net income $21,140 $16,489
Income tax expense 18,376 14,330
Interest expense, net 15,615 19,034
Depreciation and amortization expense:
Alton Belle Casino 1,746 1,598
Argosy Casino - Riverside 4,355 1,479
Argosy Casino - Baton Rouge 2,178 2,282
Argosy Casino - Sioux City 786 1,119
Argosy Casino - Lawrenceburg 3,585 3,216
Empress Casino Joliet 3,212 2,986
Corporate (3) 642 555
Total 16,504 16,504 13,235 13,235
EBITDA (1):
Alton Belle Casino 4,755 5,292
Argosy Casino - Riverside 10,563 5,293
Argosy Casino - Baton Rouge 3,987 3,508
Argosy Casino - Sioux City 3,841 2,867
Argosy Casino - Lawrenceburg 38,115 35,518
Empress Casino Joliet (4) 17,471 15,788
Corporate (3) (7,097) (5,178)
Total $71,635 $71,635 $63,088 $63,088
ARGOSY GAMING COMPANY AND SUBSIDIARIES
SELECTED FINANCIAL INFORMATION
RECONCILIATION OF NET INCOME TO EBITDA (1)
(In Thousands, unaudited)
Nine months ended Nine months ended
September 30, 2004 September 30, 2003
Net income (2) $43,683 $38,099
Income tax expense 40,402 33,114
Interest expense, net 50,221 56,884
Depreciation and amortization
expense:
Alton Belle Casino 4,906 5,009
Argosy Casino - Riverside 9,404 4,297
Argosy Casino - Baton Rouge 6,683 6,514
Argosy Casino - Sioux City 2,506 3,306
Argosy Casino - Lawrenceburg 10,580 9,710
Empress Casino Joliet 9,599 8,319
Corporate (3) 1,899 1,602
Total 45,577 45,577 38,757 38,757
EBITDA (1):
Alton Belle Casino 13,499 18,036
Argosy Casino - Riverside 33,117 15,513
Argosy Casino - Baton Rouge 13,922 10,729
Argosy Casino - Sioux City 10,773 8,644
Argosy Casino - Lawrenceburg 111,948 92,443
Empress Casino Joliet (4) 43,271 37,339
Corporate (2)(3) (46,647) (15,850)
Total $179,883 $179,883 $166,854 $166,854
ARGOSY GAMING COMPANY
NOTES TO SELECTED FINANCIAL INFORMATION
(in thousands)
(1) "EBITDA" represents earnings before interest, taxes, depreciation and
amortization. EBITDA is presented solely as a supplemental
disclosure because management believes it is 1) a widely used measure
of operating performance in the gaming industry, 2) a principal basis
for valuation of gaming companies and 3) is used as a basis for
determining compliance with our credit facility. Management uses
property-level EBITDA (EBITDA before corporate expense) and EBITDA
margin (EBITDA as a percent of net revenues) as the primary measures
of our properties' performance, including the evaluation and
compensation of operating personnel. EBITDA should not be construed
as an alternative to GAAP-based financial measures such as operating
income, an indicator of our operating performance, or cash flows from
operating activities, a measure of our liquidity. We have
significant uses of cash flows, including capital expenditures,
interest payments, taxes and debt principal repayments, which are not
reflected in EBITDA. We believe the performance of our operating
units is more appropriately measured before these expenses, since the
allocation of our capital is decided by corporate management and is
subject to the approval of the board of directors. In addition, we
manage cash and finance our operations at the consolidated level and
we file a consolidated income tax return. We do not consider EBITDA
in isolation. Our calculation of EBITDA may not be comparable to
similarly titled measures reported by other companies.
(2) Includes $26,040 of pre-tax expense on early retirement of debt for
the nine months ended September 30, 2004.
(3) Because we do not include corporate expense in our computation,
property-level EBITDA does not reflect all the costs of operating the
properties as if each were a stand-alone business unit. Corporate
expense includes significant expenses necessary to manage a multiple
casino operation, certain of which, such as corporate executive
compensation, development, public company reporting, treasury,
accounting, legal and tax expenses, would also be required of a
typical stand-alone casino property.
(4) Included for the three and nine months ended September 30, 2004 is a
gain of $3,155 on the sale of an asset held for sale. Included for
the nine months ended September 30, 2003 is a $6,500 write-down of
assets related to assets previously held for future development.
ARGOSY GAMING COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Share and Per Share Data)
September 30, December 31,
2004 2003
Current assets: (unaudited)
Cash and cash equivalents $63,829 $67,205
Accounts receivable, net 3,693 4,292
Income taxes receivable - 1,015
Deferred income taxes 12,001 13,295
Other current assets 10,665 7,196
Total current assets 90,188 93,003
Net property and equipment 548,684 548,120
Other assets:
Deferred finance costs, net 20,230 16,748
Goodwill, net 727,470 727,470
Intangible assets, net 24,338 26,092
Other 4,652 439
Total other assets 776,690 770,749
Total assets $1,415,562 $1,411,872
Current liabilities:
Accounts payable $14,579 $26,955
Accrued payroll and related
expenses 24,323 24,125
Accrued gaming and admission
taxes 20,117 14,486
Other accrued liabilities 69,439 70,070
Accrued interest 6,594 9,296
Income taxes payable 9,762 -
Current maturities of long-term
debt 2,526 4,648
Total current liabilities 147,340 149,580
Long-term debt 802,751 865,510
Deferred income taxes 112,145 93,119
Other long-term obligations 1,211 419
Stockholders' equity:
Common stock, $.01 par;
120,000,000 shares authorized;
29,479,267 and 29,314,542
shares issued and outstanding
at September 30, 2004 and
December 31, 2003,
respectively 295 293
Capital in excess of par 95,796 92,551
Accumulated other comprehensive
loss - (1,941)
Retained earnings 256,024 212,341
Total stockholders' equity 352,115 303,244
Total liabilities and stockholders'
equity $1,415,562 $1,411,872
DATASOURCE: Argosy Gaming Company
CONTACT: Jim Wise, media inquiries, +1-618-474-7476, or Erin Williams,
investor relations, +1-618-474-7465, both of Argosy Gaming Company
Web site: http://www.argosycasinos.com/