Isle Of Capri Casinos, Inc. Announces Fiscal 2013 Second Quarter Results

ST. LOUIS, Nov. 29, 2012 /PRNewswire/ -- Isle of Capri Casinos, Inc. (NASDAQ: ISLE) (the "Company") today reported financial results for the second quarter of fiscal year 2013 ended October 28, 2012 and other Company-related news. 

Consolidated Results

The following table outlines the Company's financial results (dollars in millions, except per shares data, unaudited):


Three Months Ended


Six Months Ended


October 28,


October 23,


October 28,


October 23,


2012


2011


2012


2011

Net revenues

$         223.2


$         231.4


$         459.0


$         459.0

Consolidated adjusted EBITDA (1)

38.7


41.9


83.7


80.7









Income (loss) from continuing operations

(4.3)


(1.0)


0.4


(3.6)

Loss from discontinued operations

(2.3)


(0.5)


(0.4)


(0.2)

Net income (loss)

(6.6)


(1.5)


-


(3.8)

Diluted income (loss) per share from continuing operations

(0.11)


(0.03)


0.01


(0.09)

Diluted loss per share from discontinued operations

(0.06)


(0.01)


(0.01)


(0.01)

Diluted income (loss) per share

(0.17)


(0.04)


-


(0.10)

Virginia McDowell, president and chief executive officer remarked, "The second quarter was a period of achievements and challenges. Similar to other regional gaming operators, we experienced softening net revenues during September and October. Cost containment efforts led to increased adjusted EBITDA and margins at several of our properties; however we could not overcome the softness in our Mississippi business."

"We continue to be hampered by several factors in Mississippi which accounted for more than 150% of our year-over-year property adjusted EBITDA decline. Some of these factors, such as construction disruption in Vicksburg, will end in the coming weeks, however others related to market conditions and operations have the full attention and focus of our team.  The balance of our properties experienced an overall increase in adjusted EBITDA of 2.5%, while net revenue decreased 1.9%. 

"Our new casino property in Cape Girardeau debuted on October 30, our rebranding project in Vicksburg is nearly complete and the renovation of the primary Lake Charles hotel tower will be complete by the end of December.  Additionally, we have begun construction on our Lady Luck Casino at Nemacolin Woodlands Resort in Pennsylvania. We are achieving our goals of renewing our asset base and restyling our customer experiences."

Operating Results

Net revenues decreased $8.2 million during the period, to $223.2 million. Consolidated adjusted EBITDA decreased $3.2 million, or 7.6%, to 38.7 million. This decrease of $3.2 million is attributable to a decrease in adjusted EBITDA of $3.2 million at our Mississippi properties and a $1.0 million increase in corporate legal costs, which offset gains in adjusted EBITDA at several of our other properties. 

Diluted loss per share from continuing operations for the quarter was $(0.11) compared to $(0.03) for the second quarter last year. The results for the current year were impacted by approximately $2.7 million in preopening costs associated with Cape Girardeau and $2.5 million of costs associated with the refinancing of our subordinated debt in July.  Before consideration of these items, diluted earnings per share from continuing operations for the quarter would have been break-even ($0.00).

As a result of efficiencies in marketing and cost containment efforts, we had favorable results at the following properties:

  • Black Hawk – Adjusted EBITDA increased 2.2% to $7.7 million despite a decrease in net revenues of 3.9% to $30.7 million, resulting in margin improvement of nearly 150 basis points to 25%.
  • Pompano – Despite the continued year over year impact of a major expansion at a competing facility, adjusted EBITDA increased $0.4 million while net revenues increased $0.8 million to $33.7 million. In addition, construction was completed to convert the buffet to a Farmer's Pick® in mid-September.
  • Quad Cities and Waterloo – Adjusted EBITDA increased a combined 5.2% to $13.9 million on increased revenues of 1.5% to $51.0 million, resulting in margin improvement of over 90 basis points to 27.2%.  The results were also favorably impacted by the successful implementation of Fan Club® in Waterloo and the introduction of our new Lone Wolf® Bar.
  • Lake Charles – Adjusted EBITDA increased $0.3 million despite decreased net revenues of $2.9 million for the quarter. Results were negatively impacted by construction disruption associated with ongoing renovation of the entire hotel tower, which caused an average of approximately 20% of our total hotel rooms to be out of service during the quarter.
  • Kansas City – Adjusted EBITDA remained flat at $4.1 million despite the impact of a new competitor in the market, which resulted in decreased revenues of $1.4 million.

Our Mississippi properties faced significant challenges during the quarter, which contributed to over 150% of our property adjusted EBITDA loss year over year.

In Vicksburg, our results were impacted by construction disruption associated with the on-going rebranding of the property to a Lady Luck® Casino, as we experienced an average of 200 to 400 slot machines out of service per day.  The results were also impacted by an overall market decline of 6% during the quarter. 

In Natchez, our results were impacted by significant weather disruption and damage, where our boat was closed for four days due to a storm that caused meaningful decreased patron count for approximately one month.  In addition, the adverse weather conditions damaged each of the three entrances to the facility as well as some infrastructure components.  The facility continues to face extraordinarily low river levels, causing our boat to nearly sit on the bottom of the river, which has severely impacted the entrance and overall customer experience. We are committed to mitigating the damage done to our facility, but we expect business to suffer until water levels return to a reasonable level in this section of the Mississippi River. Additionally, pending regulatory approval, a new competitor facility is expected to open in the market before the end of the year.

In Lula, the market changes that occurred following the flooding in last fiscal year have not improved.  The market continues to decline, as customers continue to patronize the facilities in the Memphis and Little Rock areas that benefitted from the prior year's flooding.  We are pursuing financial improvements through cost savings and operational consolidations.

Corporate Expenses and Other Items

Corporate and development expenses were $10.8 million for the quarter, an increase of $1.5 million compared to prior year.  Included in the results for the fiscal 2013 quarter are $1.5 million in refinancing related costs and $1.0 million in increased legal costs offset by lower insurance costs and stock compensation expenses.

Non-cash stock compensation expense was $1.5 million for the quarter compared to $2.3 million in the second quarter of fiscal 2012.

Preopening costs associated with Cape Girardeau were $2.7 million.

Discontinued Operations

Included in discontinued operations are the operating results of our Biloxi property approximately $2.1 million of charges related to Hurricane Isaac for costs incurred and a credit against the purchase price to satisfy our obligation to repair the property, as required by the purchase agreement.

Development

We have begun preliminary demolition in advance of construction of Lady Luck Casino at Nemacolin Woodlands Resort. We currently expect to open Lady Luck Nemacolin during summer 2013. The facility is planned to include 600 slot machines, 28 table games, an Otis & Henry's Bar & Grill, and a Lone Wolf Bar.  The Company currently expects the total project to cost approximately $57 million to $60 million, including the $12.5 million license fee.  Several aspects of the project are currently out for bid and we expect to get firm pricing on those over the next few weeks. 

In Vicksburg, our Lady Luck rebranding project is complete, and we will hold our grand re-opening ceremony tomorrow.  The property is a fully-branded Lady Luck casino, as we have greatly enhanced the exterior and interior, completed the renovation of the casino floor and have introduced an Otis & Henry's Bar & Grill and a Lone Wolf Bar.  The property also has implemented our Fan Club® program.

Capital Structure

As of October 28, 2012, the Company had $75.5 million in cash and cash equivalents, $1.18 billion in total debt and $199 million in net line of credit availability.

Second quarter capital expenditures were $46 million, of which $32 million related to Cape Girardeau, and $14 million at our existing properties. The Company expects capital expenditures to be approximately $80 million to $90 million for the balance of the fiscal year, including maintenance capital, final costs in Cape Girardeau and construction costs in Nemacolin of approximately $20 million to $30 million.

Conference Call Information

Isle of Capri Casinos, Inc. will host a conference call on Thursday, November 29, 2012 at 10:00 am central time during which management will discuss the financial and other matters addressed in this press release.  The conference call can be accessed by interested parties via webcast through the investor relations page of the Company's website, www.islecorp.com, or, for domestic callers, by dialing 877-917-8929.  International callers can access the conference call by dialing 517-308-9020.  The conference call reference number is 311019. The conference call will be recorded and available for review starting at noon central on Thursday, November 27, 2012, until 11:59 pm central on Tuesday, December 6, 2012, by dialing 866-463-2179; International: 203-369-1376 and access number 7007.

About Isle of Capri Casinos, Inc.

Isle of Capri Casinos, Inc. is a leading regional gaming and entertainment company dedicated to providing guests with exceptional experience at each of the 15 casino properties that it owns and operates, primarily under the Isle and Lady Luck brands.  The Company currently owns and operates gaming and entertainment facilities in Mississippi, Louisiana, Iowa, Missouri, Colorado and Florida. We are developing a new facility at the Nemacolin Woodlands Resort in Western Pennsylvania.  More information is available at the Company's website, www.islecorp.com.

Forward-Looking Statements

This press release may be deemed to contain forward-looking statements, which are subject to change. These forward-looking statements may be significantly impacted, either positively or negatively by various factors, including without limitation, licensing, and other regulatory approvals, financing sources, development and construction activities, costs and delays, weather, permits, competition and business conditions in the gaming industry. The forward-looking statements are subject to numerous risks and uncertainties that could cause actual results to differ materially from those expressed in or implied by the statements herein.

Additional information concerning potential factors that could affect the Company's financial condition, results of operations and expansion projects, is included in the filings of the Company with the Securities and Exchange Commission, including, but not limited to, its Form 10-K for the most recently ended fiscal year.

CONTACTS:
Isle of Capri Casinos, Inc.,
Dale Black, Chief Financial Officer-314.813.9327
Jill Alexander, Senior Director of Corporate Communication-314.813.9368

 

ISLE OF CAPRI CASINOS, INC. 

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share amounts)

(Unaudited)









Three Months Ended


Six Months Ended




October 28,


October 23,


October 28,


October 23,




2012


2011


2012


2011


Revenues:










Casino


$      234,648


$      239,707


$      484,917


$      474,934


Rooms


8,328


8,419


16,958


16,891


Food, beverage, pari-mutuel and other


30,437


30,723


63,243


60,350


Insurance recoveries


-


111


-


111


Gross revenues


273,413


278,960


565,118


552,286


Less promotional allowances


(50,206)


(47,534)


(106,088)


(93,256)


Net revenues


223,207


231,426


459,030


459,030


Operating expenses:










Casino


36,802


38,172


75,298


74,143


Gaming taxes


58,619


59,435


120,247


118,952


Rooms


1,781


1,929


3,554


3,848


Food, beverage, pari-mutuel and other


9,217


9,590


19,321


19,543


Marine and facilities


13,888


14,933


27,588


29,059


Marketing and administrative


56,464


58,594


114,420


115,541


Corporate and development


10,777


9,327


19,250


21,593


Preopening


2,654


27


3,341


63


Depreciation and amortization


16,850


19,646


33,672


38,822


Total operating expenses


207,052


211,653


416,691


421,564


Operating income


16,155


19,773


42,339


37,466


Interest expense


(21,985)


(21,877)


(42,416)


(43,702)


Interest income


131


192


306


435


Derivative income (expense)


176


260


310


29












Income (loss) from continuing operations before 










income taxes


(5,523)


(1,652)


539


(5,772)


Income tax (provision) benefit


1,182


622


(136)


2,183


Income (loss) from continuing operations 


(4,341)


(1,030)


403


(3,589)


Income (loss) from discontinued operations










net of income taxes 


(2,312)


(427)


(395)


(191)


Net income (loss)


$        (6,653)


$        (1,457)


$                 8


$        (3,780)












Income (loss) per common share-basic:










Income (loss) from continuing operations


$          (0.11)


$          (0.03)


$            0.01


$          (0.09)


Income from discontinued operations, 










net of income taxes 


(0.06)


(0.01)


(0.01)


(0.01)


Net income (loss)


$          (0.17)


$          (0.04)


$                -


$          (0.10)












Income (loss) per common share-dilutive:










Income (loss) from continuing operations


$          (0.11)


$          (0.03)


$            0.01


$          (0.09)


Income from discontinued operations, 










net of income taxes 


(0.06)


(0.01)


(0.01)


(0.01)


Net income (loss)


$          (0.17)


$          (0.04)


$                -


$          (0.10)












Weighted average basic shares


39,336,134


38,753,049


39,177,208


38,515,099


Weighted average diluted shares


39,336,134


38,753,049


39,192,075


38,515,099




ISLE OF CAPRI CASINOS, INC. 

CONSOLIDATED BALANCE SHEETS 

(In thousands, except share and per share amounts) 






October 28,


April 29,


2012


2012

ASSETS

(unaudited)



Current assets:




Cash and cash equivalents

$        75,479


$        94,461

Marketable securities

24,277


24,943

Accounts receivable, net

8,007


6,941

Insurance receivable

-


7,497

Income taxes receivable

4,723


2,161

Deferred income taxes

615


627

Prepaid expenses and other assets

28,550


18,950

Assets held for sale

45,557


46,703

Total current assets

187,208


202,283

Property and equipment, net

1,009,406


950,014

Other assets:




Goodwill

330,903


330,903

Other intangible assets, net

61,167


56,586

Deferred financing costs, net

18,246


13,205

Restricted cash

12,916


12,551

Prepaid deposits and other

7,469


9,428

Total assets

$   1,627,315


$   1,574,970





LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities:




Current maturities of long-term debt

$          5,406


$          5,393

Accounts payable 

33,282


23,536

Accrued liabilities:




Payroll and related

37,043


38,566

Property and other taxes

25,168


19,522

Interest

14,099


9,296

Progressive jackpots and slot club awards

15,136


14,892

Liabilities related to assets held for sale

8,041


4,362

Other

40,777


40,549

Total current liabilities

178,952


156,116

Long-term debt, less current maturities

1,177,065


1,149,038

Deferred income taxes

35,804


36,057

Other accrued liabilities

32,162


33,583

Other long-term liabilities

16,489


16,556

Stockholders' equity:




Preferred stock, $.01 par value; 2,000,000 shares authorized; none issued

-


-

Common stock, $.01 par value; 60,000,000 shares authorized; shares issued:




42,066,148 at October 28, 2012 and 42,066,148 at April 29, 2012

421


421

Class B common stock, $.01 par value; 3,000,000 shares authorized; none issued

-


-

Additional paid-in capital

244,656


247,855

Retained earnings (deficit)

(26,650)


(26,658)

Accumulated other comprehensive (loss) income

(544)


(855)


217,883


220,763

Treasury stock, 2,577,155 shares at October 28, 2012 and 3,083,867 shares 




at April 29, 2012

(31,040)


(37,143)

Total stockholders' equity

186,843


183,620

Total liabilities and stockholders' equity

$   1,627,315


$   1,574,970