Isle of Capri Casinos, Inc. Announces Fiscal 2017 First Quarter Results

ST. LOUIS, Aug. 30, 2016 /PRNewswire/ -- Isle of Capri Casinos, Inc. (NASDAQ: ISLE) (the "Company") today reported financial results for the first quarter ended July 24, 2016 and other Company-related news.

Fiscal 2017 First Quarter Highlights 

• Diluted net income per share from continuing operations increased to $0.25 per share from $0.21 in the prior year quarter.
• Adjusted EBITDA decreased $1.3 million, or 2.5%, year over year.
• Excluding our Lake Charles property, which the Company has agreed to sell, Adjusted EBITDA increased slightly year over year. 
• Seven of 13 properties generated higher year-over-year Adjusted EBITDA in the first quarter, five of which generated record first quarter Adjusted EBITDA.

Consolidated Financial Results

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

Eric Hausler, the Company's chief executive officer, commented,

"We experienced softer year-over-year trends in May and June; however we saw a solid rebound in July.  Despite the early quarter softness, we generated record first quarter Adjusted EBITDA at Pompano, Waterloo, Cape Girardeau, Caruthersville and Vicksburg, which was offset by lower results in Black Hawk and Lake Charles.  

"We remain focused on driving increased profitability from our existing operations and effectively managing our corporate costs.  Excluding Lake Charles, Adjusted EBITDA increased $0.2 million and Adjusted EBITDA margin increased 40 bps. 

"We continue to reinvigorate our properties through prudent capital investments to enhance the guest experience. During the quarter, we began renovating the Kansas City buffet and expect to start renovating the Black Hawk buffet in the second quarter, among other projects.

"On June 24, our land-based facility in Bettendorf opened to the public and has been well received.  The property opened on time at a cost slightly under our previously announced $60 million budget.  Bettendorf's Adjusted EBITDA increased 10.5% during the first quarter year over year, despite the property being closed for almost a week in June for the transition. 

"We continued to execute on a variety of other strategic initiatives which we believe enhance shareholder value.  Most notably, on August 22 we announced that we have signed a definitive agreement to sell our Lake Charles property for $134.5 million. On a pro forma basis, we expect the transaction will be accretive to Adjusted EBITDA margins and deleveraging.  Beginning with the fiscal 2017 second fiscal quarter, we will reflect Lake Charles in discontinued operations in the consolidated income statements and as assets held for sale in the consolidated balance sheets.    

"In late August, we launched LadyLuck^®.com—the essence of luck, fun and gaming—our social casino and merchandise site. Both offer our customers new and exciting channels to engage with our brand. We expect to further modify and enhance these experiences in the coming quarters."

Financial Highlights

Net revenues for the current quarter were $240.9 million compared to $246.9 million in the prior year quarter, down 2.5%. 

Consolidated Adjusted EBITDA was $49.8 million for the quarter compared to $51.1 million in the prior year quarter, down 2.5%.  Consolidated Adjusted EBITDA margins remained flat at 20.7%.  Excluding Lake Charles, Adjusted EBITDA increased $0.2 million, or 0.4%, year over year, to $46.7 million during the quarter.  Operating income decreased to $27.9 million from $29.6 million in the prior year quarter.

Interest expense was $16.6 million compared to $17.4 million in the prior year quarter, as a result of our lower overall debt balance as well as the benefits of refinancing our 7.75% Senior Notes due 2019 in the first quarter of fiscal 2016.

On a GAAP basis, diluted income per share from continuing operations was $0.25 compared to diluted income per share from continuing operations of $0.21 in the prior year's quarter.

In the first fiscal quarter of fiscal 2016, we recorded a loss on early extinguishment of debt of $3.0 million related to the tender and refinancing of our 7.75% Senior Notes due 2019.

Operating Results

(All comparisons are to the prior year quarter)

Black Hawk – Net revenues decreased $2.0 million, or 5.9%, to $32.4 million and Adjusted EBITDA decreased $2.1 million, or 19.5%, to $8.6 million, at our two casinos in Black Hawk. We have adjusted our marketing programming and cost structure going forward in order to enhance profitability.

Pompano – Net revenues decreased $1.3 million, or 3.1%, to $40.6 million, and Adjusted EBITDA increased 1.9%, to $7.9 million at Pompano Park.  The property reported its highest Adjusted EBITDA for the first quarter since opening, despite lower net revenues as a result of rationalizing reinvestment rates and cost containment initiatives.   

Iowa – Net revenues for our Iowa properties increased $0.6 million, or 1.2%, compared to prior year, and Adjusted EBITDA increased $0.7 million, to $13.5 million.

Despite construction disruption from our new land-based facility, net revenues increased $1.2 million and Adjusted EBITDA increased $0.5 million, or 10.5%, for the quarter year over year at our Bettendorf property. 

Waterloo posted its highest first quarter Adjusted EBITDA since opening in June 2007.  Adjusted EBITDA margins at the property improved 218 basis points and Adjusted EBITDA increased $0.4 million, or 6.0%, to $7.1 million.

Our property in Marquette was impacted by an increased competitive environment resulting in decreased net revenues of $0.4 million, to $6.5 million.  Adjusted EBITDA declined $0.2 million, to $1.4 million.

Lake Charles – Our property in Lake Charles was negatively impacted by persistent rain and flooding in Texas as well as increased competition.  For the quarter, net revenues decreased $3.1 million, to $28.7 million, or 9.7%, while Adjusted EBITDA decreased $1.5 million, to $3.1 million, or 31.9%.  The quarter's results include fees and expenses of $0.3 million related to the announced sale transaction of the property. 

Mississippi – Net revenues for Lula and Vicksburg decreased 1.2%, to $20.3 million while Adjusted EBITDA increased $0.1 million, to $5.0 million, or 2.0%. 

Vicksburg's net revenues increased $0.7 million, or 8.9%, and Adjusted EBITDA increased $0.4 million, or 20.4%, to $2.3 million, as a result of changes in our marketing reinvestment strategy.

The Lula market continues to be negatively impacted by increased competition in the market.  Net revenues at our Lula property decreased $0.9 million, to $12.0 million and Adjusted EBITDA decreased $0.3 million, or 9.4%.   

Missouri – Net revenues for our Missouri properties increased $0.1 million, to $61.7 million and Adjusted EBITDA increased $1.0 million, to $17.8 million.  Our Missouri properties continue to post strong results with Cape Girardeau and Caruthersville producing their highest first quarter Adjusted EBITDA since opening/acquisition while Boonville and Kansas City produced their second highest first quarter Adjusted EBITDA.

Cape Girardeau's net revenues increased $1.0 million, or 7.0%, and Adjusted EBITDA increased $0.9 million, or 33.2%.  The property's Adjusted EBITDA margin improved 452 bps and the property generated nearly 90% flow-through on incremental revenues as it continues to ramp-up.

In Caruthersville, net revenues increased $0.4 million, Adjusted EBITDA improved by 8.6%, to $2.4 million, and Adjusted EBITDA margins improved nearly 100 bps primarily due to continued strategic marketing spending and capital investments we have made to the property. 

Boonville continues to post the Company's highest Adjusted EBITDA margin, at 37.9% for the quarter.  During the first quarter of fiscal 2017, net revenues decreased 3.2%, to $19.7 million and Adjusted EBITDA decreased 2.7%, to $7.5 million.

Kansas City reported its second highest first quarter Adjusted EBITDA, despite net revenues decreasing 3.3%, to $17.7 million. Adjusted EBITDA increased 3.7%, to $4.4 million. We began remodeling and rebranding the Kansas City buffet to a Farmer's Pick in late June which caused some construction disruption at the property. We expect to reopen the buffet at the end of the second quarter.

Pennsylvania – At Nemacolin, net revenues decreased 0.9%, to $9.7 million while Adjusted EBITDA decreased $0.1 million to a loss of $(0.1) million. 

Corporate Expenses

Corporate and development expenses were $7.2 million for the quarter compared to $7.6 million in the first quarter of fiscal 2016.

Non-cash stock compensation expense was flat at $1.2 million for the first quarter of both fiscal 2017 and fiscal 2016. 

Capital Structure and Capital Expenditures

As of July 24, 2016, the Company had:

• $63.9 million in cash and cash equivalents, excluding $9.9 million in restricted cash and investments;
• $931.8 million in total debt; and
• $215.0 million in net line of credit availability.

First quarter capital expenditures were $9.7 million, excluding spending related to the land-based project in Bettendorf.  We spent $20.7 million in the first quarter of fiscal 2017 on the land-based project at Bettendorf.  For the project through the end of the first quarter, we have expended $42.3 million.  We expect to incur the remainder of the project cost in the second quarter of fiscal 2017. 

Conference Call Information

Isle of Capri Casinos, Inc. will host a conference call on Tuesday, August 30, 2016 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 888-346-3970.  International callers can access the conference call by dialing 412-902-4263.  The conference call will be recorded and available for review starting at 11:59 pm central on Tuesday, August 30, 2016, until 11:59 pm central on Tuesday, September 6, 2016, by dialing 877-344-7529; International: 412-317-0088 and access number 10091663.

About Isle of Capri Casinos, Inc.

Isle of Capri Casinos, Inc. is a leading regional gaming and entertainment company dedicated to providing guests with an exceptional experience at each of the 14 casino properties that it owns or operates, primarily under the Isle and Lady Luck brands.  The Company currently operates gaming and entertainment facilities in Colorado, Florida, Iowa, Louisiana, Mississippi, Missouri, and 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.

CONTACT:
Isle of Capri Casinos, Inc.,

Jill Alexander, Senior Director of Corporate Communication-314.813.9368