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Howard Stutz

Station Casinos sees double-digit growth in profits

8 August 2013

Station Casinos, Inc. grew profits 11 percent in the second quarter but didn’t disclose what percentage of the company’s overall figures came from online poker.

The casino operator, which has 16 large and small gaming properties in the Las Vegas Valley, said Wednesday that the quarter marked the company’s ninth consecutive three-month period of increased cash flow.

Station Casinos-owned Fertitta Interactive, which includes online poker operator Ultimate Gaming, had $1.6 million in operating costs associated with the start-up of Ultimate Poker on April 30.

The company’s adjusted cash flow for the quarter that ended June 30, including the loss from Fertitta Interactive, was $96.1 million, a 4.7 percent increase over the same quarter a year ago.

Station Casinos’ net income was $7.3 million, compared with $6.5 million in the second quarter of 2012.

Total revenues were $316.6 million, an increase of 1.4 percent.

Station Casinos is not publicly traded but has publicly owned debt.

Ultimate Gaming’s Ultimate Poker is the only regulated pay-to-play online gambling provider in Nevada.

During the quarter, Ultimate Gaming announced a deal with the Trump Taj Mahal in Atlantic City to provide online gaming services.

“Ultimate Gaming’s entrance into the New Jersey market is our next step in expanding our presence in the online gaming industry,” said Chief Financial Officer Marc Falcone.

During the quarter, Ultimate Poker completed its field trial with Nevada gaming regulators on July 25. Ultimate Poker dealt its 10 millionth hand last month.

On a conference call with analysts, Falcone said Ultimate Gaming was a service provider to Trump Taj Mahal, and the company had submitted all of the required applications to New Jersey gaming regulators. He did not speculate on the size of the market.

“The economics will be revealed in the public filings,” Falcone said.

Falcone did not provide revenue figures from Ultimate Poker’s operations in Nevada for the quarter.

He said the company’s positive overall results came about despite “a challenging revenue environment” in Las Vegas.

“We anticipate an eventual market recovery, coupled with our continued focus on efficiently managing our operations, should drive substantial operating leverage for the company,” Falcone said. “Our ability to efficiently manage operating expenses without compromising our highest level of guest service led to another quarter of impressive results.”

Station Casinos said its $800 million Graton Resort and Casino in Northern California, which it will manage for the Federated Indians of Graton Rancheria, is expected to open in November.

Falcone said the company’s primary goal is to “de-leverage” debt.

Station Casinos has long-term debt of $2.16 billion.
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