Moody's upgrades opinion of Affinity Gaming
In a statement, Moody's gaming analyst Peter Trombetta said Affinity's increased cash flow of 32% was came about despite the company's "modest" revenue growth of 2%.
Affinity, which operates 11 casinos in four states, including the three Primm resorts and the off-Strip Silver Sevens Hotel & Casino, is not publicly traded but has $382.7 million in publicly owned debt.
Trombetta said the outlook revision from negative to stable "reflects Affinity's strong earnings improvement" in the quarter.
"Earnings improvement has been driven by the company's efforts to cut costs and manage promotional spending and marketing programs," Trombetta said.
During the quarter that ended Sept. 30, Affinity reversed a net loss from a year ago to a profit of almost $2 million.
In Nevada, where Affinity operates five properties, net revenue grew 6.1% to $61.5 million and cash flow jumped 83.7%.
Affinity said its casinos in Missouri and Iowa saw a combined revenue decline 1.6% during the quarter while the company's three Colorado casinos saw a 3% revenue decline.
In the first nine months of the year, Affinity's revenue is up 2.3% and cash flow increased 34%.
"The stable rating outlook is based on our expectation that stable regional gaming trends will allow Affinity to continue to benefit from a more efficient cost structure," Trombetta said.
Illinois-based investment group Z Capital, Affinity's largest shareholder, has offered to acquire the company's remaining shares. Z Capital owns 40.5% of Affinity.
"Our ratings and outlook do not take into consideration the possible acquisition of Affinity by Z Capital," Trombetta said.
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