Though taxes and competition in the U.S. Midwest continue to weigh on results, strong marketing, a Las Vegas boom, and a solid showing in Atlantic City helped Harrah's Entertainment (NYSE:HET) deliver a record quarterly profit.
For the first quarter, revenues for the casino operator climbed 4.7% to $1.11 billion. Property EBITDA (earnings before interest, taxes, depreciation, and amortization) grew 1.4% to a record $287.5 million, while adjusted earnings rose slightly to a record $0.76 per share, well ahead of analyst estimates.
Harrah's Illinois and Indiana properties showed the ill effects of last summer's tax hikes, with combined operating income falling 31.3%. Meanwhile, weakness in Kansas City -- where the company's property lies between recently renovated and expanded competitors Argosy Gaming (NYSE:AGY) and Ameristar Casinos (NASDAQ:ASCA) -- tugged down overall Missouri revenues by 1% and operating income by 14.3%, offsetting gains in St. Louis.
But for Harrah's, marketing has been key. Overall, same-store revenues in the quarter increased 5.8%, while cross-market play jumped another 23.1%. Revenues from patrons using the company's Total Rewards cards alone rose 12%.
With a boost from cross-market play, revenues in Southern Nevada jumped an impressive 13.3%, driving operating income a whopping 45.7% higher. This echoes exceptional results from locals operator Station Casinos (NYSE:STN) yesterday, MGM Mirage (NYSE:MGG) this morning, and Mandalay Resort Group's (NYSE:MBG) pre-announcement last month.
Despite competition from the new Borgata, owned jointly by MGM Mirage and Boyd Gaming (NYSE:BYD), Harrah's managed to grow both revenues and income in Atlantic City, thanks largely to expansions at its Showboat property. And while there were declines at Harrah's Atlantic City, revenues and operating income for Showboat Atlantic City climbed 6.8% and 35%, respectively.
No, Harrah's isn't firing on all cylinders, but it still managed to turn in respectable results. With the addition of Horseshoe Gaming's three leading riverboat properties, a clearer environment in Illinois, Harrah's own property expansions in St. Louis and Kansas City, and the prospects for development in the U.K, that picture only looks to improve.
Give us your take on the Harrah's Entertainment discussion board.
Fool contributor Jeff Hwang owns shares of Ameristar Casinos.
