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Gaming Guru

Chris Sieroty

Station posts quarterly loss despite increase in revenues

30 March 2012

Station Casinos said Thursday that its revenues were higher and operations at its casinos in Southern Nevada continue to improve, but not enough for the locals gaming company to turn a profit for the fourth quarter or for 2011.

The company reported a $4.2 million loss for the fourth quarter, compared with earnings of $74.1 million for the same period year earlier. The results in the fourth quarter of 2010 were reported by Station Casinos Inc., the company that operated the casinos before its restructuring through U.S. Bankruptcy Court.

Station Casinos emerged from bankruptcy on June 17. The company now operates 17 casinos, including Green Valley Ranch Resort, Red Rock Resort and Palace Station, with about 13,000 employees. Station Casinos manages Aliante Station in North Las Vegas.

"2011 and the previous couple of years were major transition years for Station Casinos," Executive Vice President and Chief Financial Officer Mark Falcone said on a conference call Thursday. "We completed our financial restructuring June 17 at an enterprise value of $2.8 billion. The successful restructuring of Station Casinos allowed us to keep 17 of 18 properties intact and a much stronger and healthy company, financially, going forward."

The company reported revenue of $303.4 million, down from $278.3 million in the same quarter a year earlier. The company attributed the increase in revenue to launching its "We Love Locals" advertising campaign, enhancing its Boarding Pass loyalty program and the opening of the Gun Lake Casino in Michigan in February 2011.

Station Casinos has a seven-year development and management deal with the Match-E-Be-Nash-She-Wish Band of Pottawatomi Indians. Falcone said operating results outperformed expectations, allowing the tribe to repay $34 million advanced during the development phase.

For the year, Station Casinos reported a loss of $40.8 million, compared with a loss of $195.6 million last year. Revenue for 2011 was $1.17 billion, up from $1.11 billion last year.

"The company's operating results for 2011 reflect an improving operating environment as a result of the ongoing recovery on the Las Vegas Strip and a stabilization of the Las Vegas locals' market," Station Casinos said in its earnings report.

The company said occupancy rates in the fourth quarter jumped to 86 percent from 81 percent in the same quarter a year earlier, and its average daily room rate rose to $69 from $65. For 2011, Station Casinos reported occupancy at 85 percent, compared with 80 percent in 2010 and the average room rate went to $71 from $69.

For 2011, the company reported modest increases in food and beverage ($224.6 million) and room ($101 million) revenues. Station Casinos generated $851.7 million in casino revenue last year, compared with $819.9 million.

The company reported $2.48 billion in long-term debt as of Dec. 31. Most of the debt -- $1.68 billion -- is being carried by the Guarantor Group, which includes among other subsidiaries those that own Red Rock Resort and Palace Station.

Green Valley Ranch Resort is carrying $302.3 million in debt, the earnings report said.

"From June 17, the date we acquired our assets from Station Casinos Inc. on a consolidated basis, we have paid down over $70 million of debt," the company said.

The company also reported paying $6.5 million in employee bonuses and reinstated matching contributions to its 401(k) retirement plan.
Station posts quarterly loss despite increase in revenues is republished from