Harrah’s reports record revenues for second quarter
LAS VEGAS — Harrah’s Entertainment Inc. exceeded Wall Street’s expectations on Wednesday by reporting strong earnings and record second-quarter revenues, driven in part by gains at its Atlantic City resorts and the Rio hotel-casino.
The Las Vegas-based hotel-casino operator is the first major gambling corporation to report its second-quarter earnings, which came as casino companies rebound from a dramatic decline in tourism following Sept. 11, industry experts say.
Harrah’s reported net income before one-time charges of $86.2 million, or a record 75 cents per share for the quarter ending June 30. That’s up 79 percent from the year-ago quarter when Harrah’s earned 40 cents per share, or $48 million.
“We exceeded analysts expectations by 10 percent,” Phil Satre, Harrah’s chief executive, said during a call with investors and analysts.
The gambling giant reported revenues of $1 billion, up 17.9 percent from revenues of $873.4 million in the same quarter last year. Cash flow for the company’s properties was $297 million, a 25 percent increase over the year-ago period’s $236 million.
Company executives attributed the earnings boost to cash flow gains at Atlantic City’s Showboat — up 18 percent — and Harrah’s Marina — up 13 percent. The Rio in Las Vegas posted more than a 150 percent gain in cash flow over the same period a year ago, generating $25.5 million.
In addition, Harrah’s saw operating gains from capital investments, including last year’s acquisition of Harveys Casino Resorts, in Louisiana, Illinois, Missouri and New Jersey despite higher gambling taxes in Illinois and Indiana, Satre said.
Harrah’s saw sales growth of nearly 8 percent — the 14th consecutive quarter of same-store revenue gains, Satre said.
Jason Ader, an industry analyst for Bear Stearns Co. in New York, said that Harrah’s strong earnings should “kick off a solid earnings season in general” for gambling companies.
Harrah’s plans to release a nationwide survey later this week showing that consumer demand for casino entertainment is growing.
“Looking ahead, we believe the gaming industry will continue to flourish,” Satre said.
The company is scheduled to open Harrah’s Rincon hotel-casino Aug. 8 near San Diego. The 201-room development for the Rincon San Luiseno Band of Mission Indians will feature Las Vegas-style gambling with 1,500 slots, 36 table games and six restaurants, Satre said.
For the first six months of 2002, revenues rose 15.7 percent to a record $2.014 billion from $1.741 billion in the same period a year earlier. Income from operations increased 40.4 percent to a record $401.9 million from $286.3 million.
Harrah’s stock price closed at $43.50 per share, down 11 cents from the day before.
Harrah’s operates 25 properties in Nevada, New Jersey, Louisiana and the riverboat markets of the Midwest. The company is Nevada’s second largest employer with 42,000 workers.