Friday, May 30, 2003 | 10:50 a.m.
SUN STAFF AND WIRE REPORTS
Mandalay Resort Group of Las Vegas on Thursday said first-quarter profit fell 9.8 percent as the Iraq war helped to curtail travel -- but the company's stock rose today, apparently on optimism that business is improving in the second quarter.
Mandalay stock traded at $29.87 this morning, up 45 cents.
Net income for the quarter ending April 30 fell to $44 million from $48.9 million in the year-earlier period, the company said. On a per-share basis, income rose to 69 cents from 68 cents, reflecting a decline in shares outstanding.
Revenue rose slightly from $610.6 million to $616.5 million in the quarter ended April 30, President and Chief Financial Officer Glenn Schaeffer said on a conference call.
"Despite the significant distraction of the war in Iraq, as well as a hesitant economy, we essentially matched our record prior-year results," he said.
Mandalay said profit fell at its Luxor, Excalibur and Circus Circus casino resorts on the Las Vegas Strip because the Iraq war slowed travel in March and April.
But the company charged higher room rates at its flagship Mandalay Bay, as the casino's new $235 million convention center helped boost bookings. Mandalay gets about two-thirds of its profit from its Las Vegas casinos.
"The convention center is getting rave reviews," he said. "The proof is in the pudding. We have a star in the making."
Mandalay Bay should continue to help drive profits for the company with the addition of a $225 million, 1,125-suite hotel tower slated to open in November. Schaeffer said the tower's construction should not hamper business or cause delays at Mandalay Bay.
Mandalay Bay's average room rate rose above $200 a night in the first quarter, the highest ever, the company said.
Schaeffer said the company had no plans to build a new casino in Las Vegas and the Mandalay Bay and Luxor hotel-casinos continue to be the biggest components in its earnings growth plan.
Wall Street was expecting the company to earn 79 cents a share, based on the median estimate of analysts polled by Thomson First Call. The number of shares outstanding fell 10 percent to 64.2 million.
Revenue per available room, a measure of average occupancy and room rate, will be higher in May and June based on bookings, Schaeffer said on the call.
Profit at the company's Detroit casino, of which it owns 53.5 percent, fell 11 percent to $32.8 million.
Profit at the 50 percent-owned Grand Victoria casino in Elgin, Ill., of which the company owns half, fell 26 percent to $23.8 million, hurt by higher taxes in Illinois.
Properties in Nevada outside of Las Vegas suffered decreased cash flow because of expanded Indian gambling operations in California and a soft economy, the company reported. Cash flow was up slightly in Mississippi.
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