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Station Casinos posts $11.2 million profit, buys 50.1 percent of Fertitta Interactive14 November 2012
By Chris Sieroty
The privately held company also announced it will acquire a 50.1 percent ownership stake in Fertitta Interactive LLC, which operates Ultimate Gaming. Fertitta Interactive launched Ultimate Gaming's free-play site on Facebook earlier this year, with a real-money site expected to launch in Nevada by June 30.
Marc Falcone, executive vice president and chief financial officer with Station Casinos, declined to disclose the purchase price. He expected the all-cash deal for Fertitta Interactive to close by the end of the month.
The price is "not going to have a significant impact on the Station Casinos balance sheet," Falcone told gaming industry analysts during a conference call Tuesday.
Once the Fertitta Interactive deal closes, Station Casinos will own a majority stake, while company co-founders Tim Poster and Tom Breitling will each own 12.5 percent and entities owned by Frank Fertitta III and his brother Lorenzo will own 25 percent.
"We are one of the only U.S. gaming companies to develop and own its technology," Falcone said. "We are excited about the possibilities that Ultimate Gaming presents and believe this creates a long-term value driver for Station Casinos."
Falcone said it was important to the company to own the technology, which "allows us to control the perpetual innovation cycle."
The gaming company posted third-quarter earnings of $11.2 million, compared with a loss of $19.2 million in the same period last year. Last year's third quarter marked Station Casinos' first full quarter of operations following the company's exit from bankruptcy on June 17, 2011.
"Despite a challenging economic environment, we experienced continued improvements in our operating results during the third quarter, and for the third consecutive quarter we experienced gains in both revenues and operating income in all of our major departments," Falcone said.
Net revenue rose 4.7 percent to $295.7 million, compared with $282.4 million in the third quarter of 2011.
Station Casinos operates 17 properties in Southern Nevada, including Red Rock Resort, Palace Station and Green Valley Ranch Resort.
In an earnings statement, Station Casinos reported third-quarter casino revenues of $212.4 million, up from $203.1 million last year. Food and beverage revenues were $56.6 million, up from $53.3 million, and hotel-room revenue was $25.8 million, up slightly from $25.1 million last year.
Station Casinos earned $6.8 million in management fees in the third quarter.
The company posted an occupancy rate of 90 percent, up from 86 percent in the third quarter of 2011. The average daily room rate declined from $69 to $67.
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