Argosy (NYSE:AGY)
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Argosy Gaming Company Reports First Quarter 2005 Earnings
ALTON, Ill., April 28 /PRNewswire-FirstCall/ -- Argosy Gaming Company
(NYSE:AGY) today announced first quarter results for the period ended March 31,
2005. Earnings per diluted share ("EPS") were $0.71 on net income of $21.3
million, as compared to $0.13 per diluted share on net income of $4.0 million
for the first quarter of 2004. Included in the results of the first quarter of
2004 are $25.3 million of expenses, or $0.50 per share, associated with the
February 2004 refinancing of the Company's outstanding 10 3/4% notes due 2009.
Included in the first quarter results of 2005 are $2.7 million of expenses, or
$0.05 per share, associated with the proposed merger with Penn National Gaming.
Net revenues were $271.0 million for the first quarter of 2005, up $6.9 million
from $264.1 million in the first quarter of 2004. Of note, net revenues at
Argosy's Baton Rouge property were up 18.0%, from first quarter results of
$22.4 million in 2004 to $26.4 million in 2005, in part due to visitors to the
city for a bowling congress that runs from February 12th through July 4th of
this year. At Argosy Casino - Sioux City, net revenues for the first quarter
were up 16.7%, from $11.3 million in 2004 to $13.2 million in 2005, following
the addition of the renovated boat formerly used at the Company's Riverside
property.
Argosy's EBITDA (earnings before interest, taxes, depreciation and
amortization) for the quarter was $68.6 million for the first quarter 2005,
including the expenses related to the Penn merger, compared to $42.0 million
for the first quarter 2004, including the expenses for the refinancing
mentioned above. Excluding the merger and financing costs, EBITDA increased
6.0%, primarily due to improved performance at the Company's Baton Rouge and
Alton properties.
The Company's EBITDA margin (EBITDA as a percent of net revenues) for the
quarter was 26.3%, up from 25.5% the same quarter last year, excluding merger
and refinancing costs. At the property level, the EBITDA margin improved at
every Argosy location except for Empress Casino Joliet. The Company is
currently accruing for gaming taxes at its Illinois properties using the
existing graduated tax tables. Current legislation calls for a rollback to
lower rates beginning July 1, 2005. Had the Company accrued the Illinois
gaming taxes based on a rollback occurring, EPS for the quarter would have been
approximately $0.05 higher.
Argosy reported that debt decreased from $814.1 million as of December 31, 2004
to $803.2 million as of March 31, 2005. The Company spent $8.3 million in
maintenance capital during the first quarter of 2005. Project capital for the
quarter, which was primarily for work on the new $75 million hotel and garage
project in Riverside and an expansion at the Company's Lawrenceburg property,
was $8.5 million.
Based on analysis of the potential for the Cincinnati market, the Company has
initiated the approval process to complete a major capital expansion project in
Lawrenceburg. The project would include the replacement of the existing
three-level boat with a larger single-level boat that would add approximately
1,200 gaming positions to the existing 2,875. The expansion plan would also
provide a substantial increase in parking by adding a new, 1,500-space garage
as well as surface parking for an additional 350 cars. This nearly doubles the
available on-site parking. The total cost of the project is estimated to be
approximately $250 million, and would be partially offset by a 10-year, $50
million incentive credit from the City of Lawrenceburg. Pending regulatory
approval, the Company expects to begin construction later this year, with
completion of the garage near the end of 2006 and of the casino in late 2007.
The transaction with Penn National Gaming is on schedule, with an anticipated
closing in the third quarter of this year. The Company is assisting Penn in
their efforts to divest Argosy's Baton Rouge property to expedite securing
necessary approvals. Any agreement between Penn and a potential purchaser of
the property would be subject to the closing of the Argosy/Penn merger.
Pursuant to the merger agreement between Argosy and Penn, Argosy has agreed not
to provide any guidance concerning its expected earnings or other performance.
Argosy will host a conference call for interested parties on April 28, 2005, at
11:00 a.m. EDT to review its first quarter 2005 results. Call participants
should dial (706) 634-1306 ten to fifteen minutes before the call and reference
ID #5541059. The call will be broadcast live via the Internet and may be
accessed through our web site at http://www.argosy.com/ . A replay of the call
will be available at our web site through May 12, 2005.
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 Argosy Casino-Alton in 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, judicial actions and gaming legislative or
regulatory agency actions (including obtaining the requisite approval of
regulatory authorities for the proposed merger between Argosy and Penn National
Gaming);
- 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
March 31, March 31,
2005 2004
(unaudited) (unaudited)
Revenues:
Casino $274,983 $266,007
Admissions 5,529 5,360
Food, beverage and other 28,298 26,460
308,810 297,827
Less promotional allowances (37,793) (33,738)
Net revenues 271,017 264,089
Costs and expenses:
Gaming and admission taxes 95,826 91,578
Casino 31,531 32,574
Selling, general and administrative 44,166 44,176
Food, beverage and other 20,133 18,601
Other operating expenses 10,738 9,863
Depreciation and amortization 15,626 14,225
Gain on disposition of asset held for sale - -
Write down of assets - -
218,020 211,017
Income from operations 52,997 53,072
Other income (expense):
Interest income 78 21
Interest expense (14,653) (18,051)
Expense on early retirement of debt - (25,277)
(14,575) (43,307)
Income before income taxes 38,422 9,765
Income tax expense (17,098) (5,805)
Net income $21,324 $3,960
Basic income per share $0.72 $0.13
Diluted income per share $0.71 $0.13
Weighted average shares outstanding:
Basic 29,556,028 29,345,773
Diluted 29,853,912 29,561,807
- more tables -
ARGOSY GAMING COMPANY AND SUBSIDIARIES
SELECTED FINANCIAL INFORMATION
SUMMARY OPERATING DATA
(In Thousands)
Three Months Ended
March 31, March 31,
2005 2004
(unaudited) (unaudited)
Casino Revenues
Argosy Casino - Alton $28,306 $27,186
Argosy Casino - Riverside 39,787 38,238
Argosy Casino - Baton Rouge 24,521 21,695
Argosy Casino - Sioux City 13,746 11,686
Argosy Casino - Lawrenceburg 112,371 112,002
Empress Casino Joliet 56,252 55,200
Total $274,983 $266,007
Net Revenues
Argosy Casino - Alton $27,209 $26,044
Argosy Casino - Riverside 37,091 37,930
Argosy Casino - Baton Rouge 26,364 22,351
Argosy Casino - Sioux City 13,238 11,346
Argosy Casino - Lawrenceburg 112,695 112,933
Empress Casino Joliet 54,420 53,485
Total $271,017 $264,089
Income (loss) from operations
Argosy Casino - Alton $4,574 $3,158
Argosy Casino - Riverside 7,925 9,384
Argosy Casino - Baton Rouge 4,603 2,625
Argosy Casino - Sioux City 3,264 2,419
Argosy Casino - Lawrenceburg 33,212 33,116
Empress Casino Joliet 10,537 10,355
Corporate (11,118) (7,985)
Total $52,997 $53,072
- more -
ARGOSY GAMING COMPANY AND SUBSIDIARIES
SELECTED FINANCIAL INFORMATION
RECONCILIATION OF NET INCOME TO EBITDA (1)
(In Thousands, unaudited)
Three months Three months
ended ended
March 31, 2005 March 31, 2004
Net income (2) $21,324 $3,960
Income tax expense 17,098 5,805
Interest expense, net 14,575 18,030
Depreciation and amortization expense:
Argosy Casino - Alton 1,634 1,552
Argosy Casino - Riverside 3,915 2,461
Argosy Casino - Baton Rouge 2,406 2,266
Argosy Casino - Sioux City 972 1,123
Argosy Casino - Lawrenceburg 3,701 3,412
Empress Casino Joliet 2,346 2,800
Corporate (3) 652 611
Total 15,626 15,626 14,225 14,225
EBITDA (1):
Argosy Casino - Alton 6,208 4,710
Argosy Casino - Riverside 11,840 11,845
Argosy Casino - Baton Rouge 7,009 4,891
Argosy Casino - Sioux City 4,236 3,542
Argosy Casino - Lawrenceburg 36,913 36,528
Empress Casino Joliet 12,883 13,155
Corporate (2) (3) (10,466) (32,651)
Total $68,623 $68,623 $42,020 $42,020
- more -
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 $25,277 of pre-tax expense on early retirement of debt for
the three months ended March 31, 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.
ARGOSY GAMING COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Share and Per Share Data)
March 31, December 31,
2005 2004
Current assets: (unaudited)
Cash and cash equivalents $77,434 $80,069
Accounts receivable, net 4,333 3,534
Income taxes receivable - 8,705
Deferred income taxes 14,560 14,224
Other current assets 10,077 10,064
Total current assets 106,404 116,596
Net property and equipment 547,864 544,929
Other assets:
Deferred finance costs, net 18,782 19,576
Goodwill, net 727,470 727,470
Intangible assets, net 23,696 24,263
Other 6,880 5,622
Total other assets 776,828 776,931
Total assets $1,431,096 $1,438,456
Current liabilities:
Accounts payable $12,131 $10,032
Accrued payroll and related expenses 24,365 25,447
Accrued gaming and admission taxes 21,672 12,424
Other accrued liabilities 49,173 76,317
Accrued interest 7,194 17,627
Income taxes payable 2,722 -
Current maturities of long-term debt 2,559 2,512
Total current liabilities 119,816 144,359
Long-term debt 800,622 811,615
Deferred income taxes 113,673 107,794
Other long-term obligations 2,459 1,926
Stockholders' equity:
Common stock, $.01 par; 120,000,000 shares
authorized; 29,566,639 and 29,553,772 shares
issued and outstanding at March 31, 2005
and December 31, 2004, respectively 296 296
Capital in excess of par 99,020 98,580
Retained earnings 295,210 273,886
Total stockholders' equity 394,526 372,762
Total liabilities and stockholders' equity $1,431,096 $1,438,456
DATASOURCE: Argosy Gaming Company
CONTACT: Jim Wise, +1-618-474-7476, or Erin Williams, +1-618-474-7465,
both of Argosy Gaming Company
Web site: http://www.argosycasinos.com/