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Ameristar Casinos, Inc. (ASCA)

Q2 2009 Earnings Call

August 05, 2009 11:00 PM ET

Executives

Gordon R. Kanofsky - Chief Executive Officer and Vice Chairman

Thomas M. Steinbauer - Senior Vice President of Finance, Chief Financial Officer, Secretary, Treasurer

Analysts

Larry Clapton - Chasterlane

Ryan Worst - Brean Murray, Carret & Co.

David Katz - Oppenheimer & Company

Dennis Forst - KeyBanc Capital Markets

Joseph Greff - J.P. Morgan

Stephen Altebrando - Sidoti & Company

Justin Sebastiano - Morgan Joseph & Co Inc

Jane Pedreira - Clear Sights Research LLC.

Presentation

Operator

Welcome to Ameristar's 2009 Second Quarter Conference Call. I would like to remind you today that today's call is being recorded. All participants have been placed in a listen-only mode and that the floor will be open for questions following the presentation.

Before we get started, I would like to remind you that a slide presentation is available on Ameristar's website www.ameristar.com. It can be located by clicking on the About Ameristar link on the home page, then clicking on the Investor Relations link in the left hand column, and then clicking on the Presentation slideshow link under the quarterly results conference call section.

This presentation corresponds with comments that will be made in the call and provides additional useful information with regard to financial result. During the course of this conference call, the company will state beliefs and make projections or other forward-looking statements regarding the future events and the future financial performance of the company.

We wish to caution you that such statements are just projections and expectations, and the actual results or events may differ materially. I refer you to the forward-looking statements section, in both slide presentation and in the news release issued earlier today about the company's second quarter financial results, the latter of which is available on the company's website.

In addition, the company will discus EBITDA, adjusted EBITDA and adjusted EPS, which are non-GAAP financial measures. A definition and reconciliation of these measures to the most comparable GAAP financial measures are included in both the news release and the slide presentation. It is now my pleasure to turn the call over to Gordon Kanofsky, Ameristar's CEO and Vice Chairman. Please go ahead, sir.

Gordon R. Kanofsky

Thank you. And I'd like to welcome all of you to our second quarter 2009 earnings call. I'm going to start up with slide number three for those of you that are following the presentation. Kind of predictably the slide three covers what we're going to discuss today, and I don't think there's any real surprises of the topics that are on that slide.

So I'll start out with a few highlights, get into some of the details of second quarter financial results. I will talk about the early results from the regulatory reform in Colorado and give an update on our hotel that is opening there very soon.

Then I'll turn the call over to Tom Steinbauer, our CFO, who is here with me today to cover balance sheet and other financial data and details of our recent debt restructuring as well as some of the more granular estimates that we give typically each quarter for the following quarter. And then, we'll turn it over to you and hear what's on your mind and go to Q&A.

So turning over to slide four, I'll start with the highlights. Very pleased to report that we had a record second quarter adjusted EBITDA. We had a solid quarter with a definite improvement in year-over-year adjusted EBITDA margins. Five properties improved their adjusted EBITDA margins in the quarter. Four of them achieved particularly strong margin growth, those being Jackpot, Kansas City, East Chicago and Black Hawk. The remaining two properties maintained margin levels, just hit the volume all the way down.

So we got a second line here just in case we got interrupted. But it's giving us some feedback, so just trying to get that off.

Also, the early results since the July 2 implementation of regulatory enhancements in Colorado, we had a 27% year-over-year increase in gross gaming revenue during the month of July at Black Hawk. We think that gives us a lot of strengthening to build on when our hotel opens on September 29.

Also, as Tom will discuss, we have successfully restructured half of the outstanding revolving credit facility debt maturing in November 2010. We think we're well-positioned to address the rest of the balance for refinancing by the time of that maturity.

The financial markets, as all of you know, continue to show some strength and rebounding for financing capital, gives us a lot of confidence going forward there will be successful in our balance sheet plan.

So to get into some more of the details of the quarter. Turning over to slide five. As we've talked about in some of the recent calls, there is really four key metrics that we use in looking at our business and measuring our own success. The net revenues, adjusted EBITDA, adjusted EBITDA margin and adjusted earning per share. We continue to anticipate some decreases in market share in some quarters, based on the gross gaming revenues, not the net revenues.

As we've discussed in the second and third quarters of last year, we had pumped a lot of promotional spending to try to really keep people coming in the doors in the face of the weakening economy and the hopes that they would continue to spend their money in addition to the promotional dollars that we can sent them. As we reported to you before, those weren't terrible successful and they decreased profitability. We have since then ceased those. We've changed our whole marketing campaign in that regard, and it's led to increased profitability. So we're very happy with the result that we are getting.

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