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Arnold M. Knightly
 

Station Casino sees drop

9 August 2007

LAS VEGAS, Nevada -- Station Casinos' second-quarter earnings fell 44 percent, weighted by expenses for construction and acquisition costs, the gaming company reported Wednesday.

The company posted net income of $15.1 million, or 27 cents per share, for the quarter ended June 30.

Analysts polled by Thomson Financial expected a profit of 58 cents per share.

A year ago, the company reported income of $26.8 million, or 44 cents per share.

The trend follows the first quarter, when earnings declined 44 percent.

The company spent $74.7 million in the quarter on capital projects, including $18.1 million for a new corporate office building, $6.8 million for an expansion of the Fiesta Henderson and $6.1 million for expansion at Red Rock Resort.

The company spent $6.1 million in expenses associated with the $5.4 billion management-led buyout that is expected to close in late 2007.

Station Casinos earnings were also affected by a surge in interest expenses, which increased 38.5 percent to $57 million. The increase was tied to construction, capital expenditures and stock repurchases, the company reported.

Net income for 2007 was down 44 percent, to $38.1 million from $67.9 million. Cash flow, defined as earnings before interest, taxes, depreciation and amortization, increased 7.5 percent to $144 million for the quarter, well below one analyst's projections.

Bear Stearns gaming analyst Joe Greff had projected cash flow of $162.1 million.

For the year, cash flow increased 11.1 percent to $296.3 million.

Revenues increased 6.2 percent to $362.9 million for the quarter and 15.9 percent to $735.3 million for the year.

The year-to-year revenue numbers are skewed upward by the opening of $925 million Red Rock Resort on April 18, 2006.

Second-quarter casino revenue increased 4.6 percent to $256.5 million and room revenue increased 32.1 percent to $28 million.

However, casino operational costs increased 11.5 percent.

The hotels had 92 percent room occupancy, while the average daily room rate increased 25.3 percent to $94.

The gaming company released the earnings before the stock market opened Wednesday. The company didn't hold a conference call to discuss the results or give guidance to investors.

Station Casinos' board entered a purchase agreement in February for a $90 per share buyout by Fertitta Colony Partners, a joint venture between members of the company's founding family and the Los Angeles-based private-equity firm Colony Capital.

A shareholders will vote Monday on the proposal.

The stock price will continue to be tied to the buyout offer of $90 per share, not earnings reports and other market factors.

Station shares closed at $85.30, down 42 cents, or 0.49 percent, Wednesday in trading on the New York Stock Exchange.

Station Casino sees drop is republished from Online.CasinoCity.com.