Thursday, July 24, 2003
Copyright © Las Vegas Review-Journal

Aztar Corp. nets record cash flow

Despite disappointing results from the Tropicana in Las Vegas, Aztar Corp. on Wednesday reported record cash flow and increased revenue and income for its second quarter ended July 3.

Powered by strong performances at Tropicana Atlantic City and at Casino Aztar in Evansville, Ind., Phoenix-based Aztar announced earnings of $18.8 million, or 51 cents per share, up 14 percent from $16.5 million, or 44 cents.

"It was an absolutely great quarter for us in Atlantic City," Aztar Chairman and Chief Executive Officer Paul Rubeli said during a Wednesday conference call for analysts and investors.

Tropicana Atlantic City cut payroll and gamblers' comp costs while maintaining hotel occupancy of 96 percent, Rubeli noted, boosting property cash flow, defined as earnings before interest, taxes, depreciation and amortization, to $34.2 million from $32.8 million.

The Evansville casino's cash flow jumped by 29 percent, to $8.9 million from $6.9 million.

Companywide revenue rose 1.6 percent to $214.5 million from $211.1 million.

Aztar cash flow was up 1.3 percent, to $53 million from $52.3 million.

Rubeli said the tourism slowdown that preceded the war in Iraq hurt the Tropicana in Las Vegas.

"It was a tough quarter at the Tropicana Las Vegas," Rubeli said, noting that weak hotel demand in April caused the company to increase marketing spending to fill the property's rooms.

The property was able to keep hotel occupancy at 98.9 percent, up from 97.7 percent, but the hotel's average daily rate dropped to $68.51 from $69.84.

"Room revenue was down by $400,000, but 'all off the bottom line,' " Rubeli said.

The company still plans to complete design and planning for a possible Tropicana redevelopment in Las Vegas by March 2004, making a decision shortly thereafter.

Aztar's Laughlin property, the Ramada Express, also suffered in April but was able to cut expenses enough to keep the property's cash flow margin from dropping, he said.

The Ramada Express reported second-quarter hotel occupancy of 69.4 percent, compared with 70.1 percent. The hotel's average daily rate fell to $33.26 from $36.50.

Rubeli said he wouldn't discuss Tropicana Atlantic City's performance since Borgata opened July 2, but said he expects the new megaresort to be good for its owners, Atlantic City and other casinos in the market.

"I believe it's the rising tide that lifts all boats," he said. "We remain optimistic."