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Ameristar Casinos (ASCA) 4Q Earnings Drop 83.5 Pct, Miss Estimates

 February 07, 2013 12:10 PM

(By Balaseshan) Ameristar Casinos Inc. (NASDAQ: ASCA) reported a 83.5% drop in quarterly earnings due to lower casino revenue, higher impairment expenses of fixed assets and a rise in interest expense. Results missed Street's expectations.

Earnings for the fourth quarter were $1.22 million or $0.04 per share, down from $7.38 million or $0.22 per share in the previous year quarter.

Adjusted earnings per share (EPS) rose to $0.32 from $0.21. The improvement was mostly attributable to a lower effective income tax rate and a reduction in non-cash stock-based compensation expense.

Net revenue decreased 2.5% to $288.83 million, due to lower casino revenue. The company said new competition in Kansas City and a more challenging competitive environment in the Chicago land market adversely impacted the quarterly results.

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Analysts, on average, polled by Thomson Reuters had expected a profit of $0.38 per share on revenue of $291.14 million for the fourth quarter.

Net revenues for Kansas City and East Chicago decreased 8.1% and 3.7%, respectively, representing 88.1% of the consolidated net revenue decline from last year.

The Jackpot properties had a year-over-year net revenue decline of 5.8%, mostly as a result of lower than expected slot hold. The year-over-year variances in net revenues at the other four properties were relatively modest, with declines at Council Bluffs and Vicksburg and increases at Black Hawk and St. Charles, the company noted.

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On Feb. 6, the company's board declared a cash dividend of $0.125 per share, payable on March 15 to stockholders of record on Feb. 28.

Looking ahead into the first quarter, the company now expects depreciation of $24.5 million to $25.5 million, interest expense, net of capitalized interest, of $28.5 million to $29.5 million, and the combined state and federal income tax rate to be in the range of 40% to 42%.

The company projects first-quarter capital spending of $49.0 million to $54.0 million, including about $15.0 million for maintenance capital expenditures and $36.0 million related to Lake Charles design and construction costs. Non-cash stock-based compensation expense is anticipated to be $3.6 million to $4.1 million.

On December 21, 2012, Ameristar Casinos has agreed to be acquired by Pinnacle Entertainment Inc. (NYSE: PNK) for $26.50 per share in cash or a total enterprise value of $2.8 billion, including debt of $1.9 billion and cash on hand of $116 million as of September 30, 2012. The deal is now expected to close in the second or third quarter of 2013.

ASCA is trading up 0.32% at $26.40 on Thursday. The stock has been trading between $15.04 and $27.18 for the past 52 weeks.

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