The Timeshare Beat Home | Today's Headlines | Back to Previous Page
|
The Timeshare Beat Home | Today's Headlines | Back to Previous Page |
|
|
|
Press Release: Station Casinos, Inc.
July 29, 2005
LAS VEGAS, NV -- Station Casinos, Inc. (NYSE: STN; "Station" or the "Company") yesterday announced
the results of its operations for the second quarter ended June 30, 2005.
Highlights include:
Results of Operations
The Company's net revenues for the second quarter ended June 30, 2005 were approximately $274.0 million, an increase
of 14% compared to the prior year's second quarter. The Company reported EBITDA for the quarter of $118.3 million,
an increase of 27% compared to the prior year's second quarter. For the second quarter, Adjusted Earnings (2) applicable
to common stock were $45.4 million, or $0.65 per share, an increase of 25% over the prior year's $0.52 per share
on a comparable basis. This marks the fourteenth consecutive quarter of year-over-year growth of Adjusted EBITDA,
EBITDA margin and EPS.
During the second quarter, the Company incurred preopening costs related to projects under development of $1.2
million, $4.1 million in costs to terminate certain leases at Green Valley Ranch and on property owned by the Company
adjacent to the Wild Wild West site and $2.1 million in costs to develop new gaming opportunities, primarily related
to Native American gaming. Including these items, the Company reported net income of $40.6 million and diluted
earnings applicable to common stock of $0.58 per share.
The Company's earnings from its Green Valley Ranch joint venture for the second quarter were $10.7 million, excluding
the lease termination costs, which represents a combination of the Company's management fee plus 50% of Green Valley
Ranch's operating income. For the quarter, Green Valley Ranch generated EBITDA before management fees of $24.5
million, a 23% increase compared to the prior year's second quarter. These numbers include a full quarter of results
from the $125 million expansion of that property, which opened in December 2004 and included approximately 300
new hotel rooms and 25,000 square feet of additional meeting and convention space. "We are pleased that the
revenues in the seasonally-weaker second quarter were essentially the same as the first quarter. While certain
one-time expenses such as advertising and preopening costs impacted operating cash flow and margins in the quarter,
we see significant upside opportunity going forward," said Lorenzo J. Fertitta, vice chairman and president.
Las Vegas Market Results
Same-store (Major Las Vegas Operations and Green Valley Ranch) net revenues for the quarter increased to $296.0
million, a 16% increase compared to the prior year's quarter, while EBITDA from those operations increased 29%
to $122.7 million. "The Las Vegas local's market continues to thrive. Our local economy remains vibrant with
strong population growth, new job creation and extensive commercial and residential construction, all of which
contributed to another quarter of double-digit same-store revenue growth," said Fertitta.
EBITDA and Adjusted Earnings are not generally accepted accounting principles ("GAAP") measurements and
are presented solely as a supplemental disclosure because the Company believes that they are widely used measures
of operating performance in the gaming industry and as a principal basis for valuation of gaming companies. EBITDA
and Adjusted Earnings are further defined in footnotes 1 and 2, respectively.
Phase III Master-Planned Expansion of Green Valley Ranch
In addition to the previously announced expansions of Red Rock Resort, Santa Fe Station and Fiesta Henderson, the
Company yesterday announced the Phase III expansion of Green Valley Ranch. "With the success of Green Valley
Ranch and the growing population in Henderson, we have decided to commence the Phase III master-planned expansion
of that property. We believe that these four master-planned expansions, all of which are scheduled to open during
2006, along with our local and Native American development opportunities, will provide us with a strong growth
pipeline for years to come," said Fertitta.
The Phase III master-planned expansion of Green Valley Ranch will include a 1,500-space parking garage, additional
slot machines, a new race and sports book, a new poker room, a 500-seat entertainment lounge, 14,000 square feet
of additional convention space and two new restaurants. Construction of this project is expected to begin in fall
2005 and will open in phases from the fourth quarter of 2006 through early 2007. The estimated cost of this project
is $110 million.
Joint Venture to Develop Residential Project at Red Rock Resort
The Company also announced yesterday that it has entered into a joint venture with Cloobeck Molasky Partners I,
LLC ("Cloobeck Molasky") to develop a high-end residential project on approximately 8 acres located adjacent
to the hotel and resort-pool area at Red Rock Resort. It is anticipated that the residential project will contain
up to 600 luxury units. The principals of Cloobeck Molasky have developed, among other projects, the Polo Towers
time share resort in Las Vegas as well as high-rise condominium projects in San Diego, Long Beach and Oakland,
California. The Molasky family has been involved in the development of Las Vegas for over 30 years.
Pursuant to the terms of the operating agreement, the Company will own 80% of the joint venture and Cloobeck Molasky
will own 20%. Subject to obtaining local approvals, sales of the residential towers are expected to begin in spring
2006. "This partnership, with two of the most experienced and successful developers in Las Vegas, represents
another example of how we can maximize the value of our land holdings and lower our overall investment in a project,"
stated Fertitta.
Balance Sheet Items and Capital Expenditures
Long-term debt was $1.48 billion as of June 30, 2005. Total capital expenditures totaled $151.0 million for the
second quarter. Expansion and project capital expenditures included $102.0 million for Red Rock Resort, $7.9 million
for the Phase II master-planned expansion of Santa Fe Station and $5.7 million for the purchase of land adjacent
to the Wild Wild West site. In addition, as a result of the Company further refining the design of Red Rock Resort
and due to additional increases in construction costs on this design-build project, the projected aggregate cost
for Phases I and II of Red Rock Resort has been increased to $925 million. As of June 30, 2005, the Company's debt
to cash flow ratio as defined in its bank credit facility was 3.5 to 1.
Dividend
The Company's Board of Directors declared a quarterly cash dividend of $0.25 per share, which represents a 19%
increase over the prior quarterly cash dividend. The dividend is payable on September 2, 2005 to shareholders of
record on August 12, 2005. "Our strong operational performance and significant free cash flows has allowed
us to provide significant cash returns to our shareholders while continuing to grow the business through new unit
development and master-planned expansions. This marks the third time since we instituted a dividend in 2003 that
we have increased the amount returned to shareholders as a result of the strength of our operations," said
Glenn C. Christenson, executive vice president and chief financial officer.
Fiscal 2005 and 2006 Guidance
For the third quarter of 2005, the Company expects EBITDA of approximately $104 million to $110 million and EPS
of $0.51 to $0.56, excluding development expense and other non-recurring items. This guidance assumes approximately
$2 million of construction disruption related to the Santa Fe Station and Fiesta Henderson master-planned expansions.
This guidance assumes revenue growth in the Major Las Vegas Operations (excluding Green Valley Ranch) for the third
quarter of 8% to 11% over the prior year's quarter, an effective tax rate of 37.0% and 70 million fully diluted
shares outstanding.
For the fourth quarter of 2005, the Company expects EBITDA of approximately $115 million to $120 million and EPS
of $0.61 to $0.66, excluding development expense and other non-recurring items. The guidance for the fourth quarter
assumes approximately $7 million of construction disruption relating to the Santa Fe Station, Fiesta Henderson
and Green Valley Ranch master-planned expansions. As a result, the Company now expects EBITDA for 2005 of approximately
$458 million to $469 million, excluding development expense and non-recurring items and Adjusted Earnings applicable
to common stock of approximately $2.47 to $2.58, assuming 69.5 million fully diluted shares. This guidance assumes
revenue growth in the Major Las Vegas Operations (excluding Green Valley Ranch) for 2005 of 10% to 12% over the
prior year, with an effective tax rate of 36.9%.
In addition, the Company is updating its fiscal 2006 guidance. For fiscal 2006, the Company now expects EBITDA
of approximately $545 million to $565 million and EPS of $2.70 to $2.89, assuming approximately $14 million of
construction disruption relating to the Santa Fe Station, Fiesta Henderson and Green Valley Ranch master-planned
expansions. This guidance assumes a "standard" 3% to 5% revenue growth at the existing properties, which
reflects the expected population growth in Las Vegas. The Company intends to update same-store revenue guidance
as it gets closer to 2006. This guidance also assumes the opening of Phase I of Red Rock Resort at the end of the
first quarter of 2006, the completion of the Fiesta Henderson expansion in the third quarter of 2006, the completion
of the Santa Fe Station expansion in phases beginning in the third quarter of 2006 through the fourth quarter of
2006 and the completion of the Green Valley Ranch expansion from the fourth quarter of 2006 through early 2007.
This guidance further assumes an effective tax rate of 36.5% and 70 million diluted shares outstanding.
Conference Call Information
The Company will host a conference call today, Thursday, July 28, at 1:00 p.m. (Eastern Time) to discuss its second
quarter 2005 financial results and provide guidance for the remainder of 2005 and 2006. Interested participants
may access the call by dialing the conference operator at (866) 633-6299. A live audio webcast of the call, as
well as supplemental tables and charts, will also be available at the Company's website, www.stationcasinos.com
(3). A replay of the call will be available from 4:00 p.m. (Eastern Time) on July 28, 2005, until 11:00 p.m. (Eastern
Time) on August 4, 2005 at (800) 642-1687. The reservation number is 7234477.
Company Information and Forward Looking Statements
Station Casinos, Inc. is the leading provider of gaming and entertainment to the residents of Las Vegas, Nevada.
Station's properties are regional entertainment destinations and include various amenities, including numerous
restaurants, entertainment venues, movie theaters, bowling and convention/banquet space, as well as traditional
casino gaming offerings such as video poker, slot machines, table games, bingo and race and sports wagering. Station
owns and operates Palace Station Hotel & Casino, Boulder Station Hotel & Casino, Santa Fe Station Hotel
& Casino, Wildfire Casino and Wild Wild West Gambling Hall & Hotel in Las Vegas, Nevada, Texas Station
Gambling Hall & Hotel and Fiesta Rancho Casino Hotel in North Las Vegas, Nevada, and Sunset Station Hotel &
Casino, Fiesta Henderson Casino Hotel, Magic Star Casino and Gold Rush Casino in Henderson, Nevada. Station also
owns a 50% interest in both Barley's Casino & Brewing Company and Green Valley Ranch Station Casino in Henderson,
Nevada and a 6.7% interest in the Palms Casino Resort in Las Vegas, Nevada. In addition, Station manages the Thunder
Valley Casino near Sacramento, California on behalf of the United Auburn Indian Community.
This press release contains certain forward-looking statements with respect to the business, financial condition,
results of operations, dispositions, acquisitions and expansion projects of the Company and its subsidiaries which
involve risks and uncertainties that cannot be predicted or quantified, and consequently, actual results may differ
materially from those expressed or implied herein. Such risks and uncertainties include, but are not limited to,
financial market risks, the ability to maintain existing management, integration of acquisitions, competition within
the gaming industry, the cyclical nature of the hotel business and gaming business, economic conditions, regulatory
matters and litigation and other risks described in the filings of the Company with the Securities and Exchange
Commission, including, but not limited to, the Company's Annual Report on Form 10-K for the year ended December
31, 2004, and its Registration Statement on Form S-4 File No. 333-113986. All forward-looking statements are based
on the Company's current expectations and projections about future events. All forward-looking statements speak
only as of the date hereof and the Company undertakes no obligation to publicly update any forward-looking statements,
whether as a result of new information, future events or otherwise. Additional financial information, including
presentations from recent investor conferences, is available in the "Investors" section of the Company's
website at www.stationcasinos.com (3).
Construction projects such as Red Rock Resort and the master-planned expansions of Santa Fe Station, Fiesta Henderson
and Green Valley Ranch entail significant risks, including shortages of materials or skilled labor, unforeseen
regulatory problems, work stoppages, weather interference, floods and unanticipated cost increases. The anticipated
costs and construction periods are based on budgets, conceptual design documents and construction schedule estimates.
There can be no assurance that the budgeted costs or construction period will be met.
Development of the proposed gaming and entertainment project with the Gun Lake Tribe and the operation of Class
III gaming at that project are subject to certain governmental and regulatory approvals, including, but not limited
to, the governor of the State of Michigan signing the Gun Lake Tribe's state gaming compact, the Department of
the Interior completing the process of taking land into trust for the benefit of the Gun Lake Tribe and approval
of the management agreement by the National Indian Gaming Commission. No assurances can be given as to when, or
if, these governmental and regulatory approvals will be received.
(1) EBITDA consists of net income (loss) plus income tax provision (benefit), interest and other expense, loss
on early retirement of debt, preopening expenses, lease terminations, depreciation, amortization and development
expense. EBITDA is presented solely as a supplemental disclosure because the Company believes that it is a widely
used measure of operating performance in the gaming industry and as a principal basis for valuation of gaming companies.
The Company believes that in addition to cash flows and net income, EBITDA is a useful financial performance measurement
for assessing the operating performance of the Company. Together with net income and cash flows, EBITDA provides
investors with an additional basis to evaluate the ability of the Company to incur and service debt and incur capital
expenditures. To evaluate EBITDA and the trends it depicts, the components should be considered. The impact of
income tax provision (benefit), interest and other expense, loss on early retirement of debt, preopening expenses,
lease terminations, depreciation, amortization and development expense, each of which can significantly affect
the Company's results of operations and liquidity and should be considered in evaluating the Company's operating
performance, cannot be determined from EBITDA. Further, EBITDA does not represent net income or cash flows from
operating, financing and investing activities as defined by generally accepted accounting principles ("GAAP")
and does not necessarily indicate cash flows will be sufficient to fund cash needs. It should not be considered
as an alternative to net income, as an indicator of the Company's operating performance or to cash flows as a measure
of liquidity. In addition, it should be noted that not all gaming companies that report EBITDA or adjustments to
such measures may calculate EBITDA or such adjustments in the same manner as the Company, and therefore, the Company's
measure of EBITDA may not be comparable to similarly titled measures used by other gaming companies. A reconciliation
of EBITDA to net income (loss) is included in the financial schedules accompanying this release.
(2) Adjusted Earnings excludes development expense, preopening expenses, lease terminations, loss on early retirement
of debt and loss on sale of land. Adjusted Earnings is presented solely as a supplemental disclosure because the
Company believes that it is a widely used measure of operating performance in the gaming industry and as a principal
basis for valuation of gaming companies, as this measure is considered by the Company to be a better measure on
which to base expectations of future results than GAAP net income. A reconciliation of Adjusted Earnings and EPS
to GAAP net income (loss) and EPS is included in the financial schedules accompanying this release.
(3) The hyperlink to the Company's URL is included herein solely for the convenience of investors in accessing
the audio webcast of the second quarter conference call. All other references herein to the Company's URL are inactive
textual references. None of the information contained on the Company's website shall be deemed incorporated by
reference or otherwise included herein.
Station Casinos, Inc.
Condensed Consolidated Balance Sheets
(amounts in thousands)
(unaudited)
June 30, December 31,
2005 2004
----------- -------------
Assets:
Cash and cash equivalents $61,140 $68,417
Receivables, net 17,423 21,452
Other current assets 34,034 29,652
----------- -------------
Total current assets 112,597 119,521
Property and equipment, net 1,595,778 1,367,957
Other long-term assets 601,081 558,106
----------- -------------
Total assets $2,309,456 $2,045,584
=========== =============
Liabilities and
stockholders' equity:
Current portion of long-term debt $17,359 $16,917
Other current liabilities 170,301 159,099
----------- -------------
Total current liabilities 187,660 176,016
Revolving credit facility - 51,500
Senior and senior subordinated notes 1,452,934 1,265,686
Other debt 6,024 6,037
Interest rate swaps, mark-to-market (472) (1,927)
Other long-term liabilities 88,077 59,351
----------- -------------
Total liabilities 1,734,223 1,556,663
Stockholders' equity 575,233 488,921
----------- -------------
Total liabilities and stockholders'
equity $2,309,456 $2,045,584
=========== =============
Station Casinos, Inc.
Condensed Consolidated Statements of Operations
(amounts in thousands, except per share data)
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------- -------------------
2005 2004 2005 2004
--------- --------- --------- ---------
Operating revenues:
Casino $202,896 $176,474 $406,909 $351,968
Food and beverage 36,715 34,664 73,552 69,033
Room 15,681 14,206 32,062 29,119
Other 12,867 10,270 24,050 20,329
Management fees 23,626 21,209 46,902 42,179
--------- --------- --------- ---------
Gross revenues 291,785 256,823 583,475 512,628
Promotional allowances (17,817) (16,646) (36,047) (33,486)
--------- --------- --------- ---------
Net revenues 273,968 240,177 547,428 479,142
--------- --------- --------- ---------
Operating costs and expenses:
Casino 70,698 67,308 141,426 133,848
Food and beverage 25,982 25,077 51,224 48,857
Room 5,365 5,192 10,567 10,183
Other 4,388 4,324 8,318 8,213
Selling, general and
administrative 44,434 41,588 88,373 82,777
Corporate expense 14,072 11,090 28,264 22,563
Development expense 2,091 2,194 4,702 6,196
Depreciation and
amortization 25,117 20,732 49,470 40,182
Lease terminations 3,560 - 11,654 -
Preopening expenses 1,186 344 1,803 344
--------- --------- --------- ---------
196,893 177,849 395,801 353,163
--------- --------- --------- ---------
Operating income 77,075 62,328 151,627 125,979
Earnings from joint
ventures 8,710 4,180 19,400 11,211
--------- --------- --------- ---------
Operating income and earnings
from joint ventures 85,785 66,508 171,027 137,190
--------- --------- --------- ---------
Other income (expense):
Interest expense, net (18,884) (17,456) (37,850) (39,905)
Interest and other expense
from joint ventures (2,142) (991) (3,826) (2,377)
Loss on early retirement of
debt - - (678) (93,265)
Other (301) (2,733) (214) (2,812)
--------- --------- --------- ---------
(21,327) (21,180) (42,568) (138,359)
--------- --------- --------- ---------
Income (loss) before income
taxes 64,458 45,328 128,459 (1,169)
Income tax (provision)
benefit (23,849) (16,318) (47,210) 421
--------- --------- --------- ---------
Net income (loss) $40,609 $29,010 $81,249 $(748)
========= ========= ========= =========
Basic and diluted earnings
(loss) per common share:
Net income (loss)
Basic $0.60 $0.46 $1.20 $(0.01)
Diluted $0.58 $0.43 $1.17 $(0.01)
Weighted average common shares
outstanding
Basic 67,902 63,604 67,670 62,936
Diluted 69,469 66,742 69,223 62,936
Dividends paid per common
share $0.210 $0.175 $0.420 $0.300
Station Casinos, Inc.
Summary Information and
Reconciliation of Net Income (Loss) to EBITDA
(amounts in thousands, except occupancy percentage and ADR)
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------- -------------------
2005 2004 2005 2004
--------- --------- --------- ---------
Major Las Vegas Operations (a):
-------------------------------
Net revenues $238,736 $211,535 $478,098 $422,132
Net income $38,940 $27,758 $79,446 $55,987
Income tax provision 21,877 15,267 45,666 31,493
Interest and other
expense, net 13,935 12,789 27,020 27,186
Depreciation and
amortization 23,422 19,512 46,235 37,971
Preopening expenses 53 - 147 -
--------- --------- --------- ---------
EBITDA $98,227 $75,326 $198,514 $152,637
========= ========= ========= =========
Green Valley Ranch Station
(50% owned):
--------------------------
Net revenues $57,251 $43,992 $114,659 $83,883
Net income $11,315 $4,407 $27,055 $13,851
Interest and other
expense, net 6,590 4,014 12,639 8,153
Depreciation and
amortization 5,547 4,207 10,762 8,338
Lease terminations 1,032 7,284 1,032 7,284
--------- --------- --------- ---------
EBITDA $24,484 $19,912 $51,488 $37,626
========= ========= ========= =========
Same-Store Operations (b):
--------------------------
Net revenues $295,987 $255,527 $592,757 $506,015
Net income $50,255 $32,165 $106,501 $69,838
Income tax provision 21,877 15,267 45,666 31,493
Interest and other expense,
net 20,525 16,803 39,659 35,339
Depreciation and
amortization 28,969 23,719 56,997 46,309
Lease terminations 1,032 7,284 1,032 7,284
Preopening expenses 53 - 147 -
--------- --------- --------- ---------
EBITDA $122,711 $95,238 $250,002 $190,263
========= ========= ========= =========
Total Station Casinos, Inc. (c):
--------------------------------
Net income (loss) $40,609 $29,010 $81,249 $(748)
Income tax provision
(benefit) 23,849 16,318 47,210 (421)
Interest and other expense,
net 21,327 21,180 41,890 45,094
Depreciation and amortization 25,117 20,732 49,470 40,182
Development expense 2,091 2,194 4,702 6,196
Preopening expenses 1,186 344 1,803 344
Lease terminations 4,076 3,642 12,170 3,642
Loss on early retirement
of debt - - 678 93,265
--------- --------- --------- ---------
EBITDA $118,255 $93,420 $239,172 $187,554
========= ========= ========= =========
Occupancy percentage 97% 96% 97% 96%
ADR $61 $58 $63 $58
(a) The Major Las Vegas Operations include the wholly owned properties
of Palace Station, Boulder Station, Texas Station, Sunset Station,
Santa Fe Station, Fiesta Rancho and Fiesta Henderson.
(b) Same-Store Operations include the Major Las Vegas Operations plus
the total operations of Green Valley Ranch Station.
(c) Total Station Casinos, Inc. includes the Major Las Vegas
Operations, Wild Wild West, Wildfire, Magic Star (since August 2,
2004), Gold Rush (since August 2, 2004), the Company's earnings
from joint ventures, management fees and Corporate expense.
Station Casinos, Inc.
Reconciliation of GAAP Net Income (Loss) and EPS
to Adjusted Earnings and EPS
(amounts in thousands, except per share data)
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------- ---------------------
2005 2004 2005 2004
--------- --------- --------- -----------
Adjusted Earnings
Net income (loss) $40,609 $29,010 $81,249 $(748)
Development expense, net 1,359 1,426 3,056 4,027
Preopening expenses, net 771 224 1,172 224
Lease terminations, net 2,649 2,367 7,910 2,367
Loss on early retirement
of debt, net - - 441 60,622
Loss on sale of land, net - 1,782 - 1,782
--------- --------- --------- ----------
Adjusted Earnings $45,388 $34,809 $93,828 $68,274
========= ========= ========= ==========
Adjusted basic earnings
(loss) per common share:
Net income (loss) $0.60 $0.46 $1.20 $(0.01)
Development expense, net 0.02 0.02 0.04 0.06
Preopening expenses, net 0.01 - 0.02 -
Lease terminations, net 0.04 0.04 0.12 0.04
Loss on early retirement
of debt, net - - 0.01 0.96
Loss on sale of land, net - 0.03 - 0.03
--------- --------- --------- ----------
Adjusted basic earnings per
common share $0.67 $0.55 $1.39 $1.08
========= ========= ========= ==========
Weighted average common
shares outstanding - basic 67,902 63,604 67,670 62,936
Adjusted diluted earnings
(loss) per common share:
Net income (loss) $0.58 $0.43 $1.17 $(0.01)
Development expense, net 0.02 0.02 0.04 0.06
Preopening expenses, net 0.01 - 0.02 -
Lease terminations, net 0.04 0.04 0.12 0.04
Loss on early retirement
of debt, net - - 0.01 0.92
Loss on sale of land, net - 0.03 - 0.03
--------- --------- --------- ----------
Adjusted diluted earnings
per common share $0.65 $0.52 $1.36 $1.04
========= ========= ========= ==========
Weighted average common
shares outstanding - diluted 69,469 66,742 69,223 65,940
----------------------
Contacts Station Casinos, Inc., Las Vegas Glenn C. Christenson, 800-544-2411 or 702-367-2484 Executive Vice President/Chief Financial Officer/ Chief Administrative Officer Thomas M. Friel, 800-544-2411 or 702-221-6793 Vice President of Finance/Controller Lori B. Nelson, 800-544-2411 or 702-367-2427 Director of Corporate Communications