Station Casinos profit jumps 41 percent

Wednesday, July 14, 2004 | 10:43 a.m.

SUN STAFF AND WIRE REPORTS

Station Casinos Inc.'s second-quarter net income rose about 41 percent from a year ago, helped by revenue growth in its Las Vegas operations.

The Las Vegas-based casino company also revised its adjusted earnings per share guidance for the year to a range of $1.84 to $1.93. Its view stood at $1.81 to $1.96 in April.

Wall Street expects the company's 2004 earnings to improve to $1.94 a share from $1.22 a year earlier.

In a statement today, Station said its second-quarter net income rose to $29 million, or 43 cents a share, from $20.6 million, or 33 cents a share, a year ago.

The company named William Warner chief operating officer to replace Chief Operating Officer and Executive Vice President Stephen Cavallaro, who plans to retire at the end of the year and serve as a consultant for two years.

Warner has spent nearly 11 years with the company and was its chief development officer. He will remain an executive vice president.

Station Casinos' second-quarter earnings before items climbed to 52 cents a share from 25 cents a share a year ago.

Analysts surveyed by Thomson First Call expected the gambling concern to earn 49 cents a share for the latest quarter.

For the latest period, the company incurred a lease buyout cost of $3.6 million for the spa and a restaurant at its Green Valley Ranch Station Casino in Henderson. The Greenspun family, owner of the Las Vegas Sun, is Station's partner in the Green Valley Ranch property.

Station Casinos' second-quarter net revenue climbed to $240.2 million from $210 million a year earlier. Its earnings before interest, taxes, depreciation and amortization increased 37 percent, to $93.4 million.

The company's second-quarter same-store revenue from its Las Vegas operations increased 12 percent from a year ago.

Station Casinos expects third-quarter earnings per share of 37 cents to 42 cents. Wall Street expects the company's earnings to increase to 45 cents from 32 cents a year ago.

The company also booked a loss of $2.7 million for real estate sales, pre-opening costs of $300,000 related to its Red Rock Station project in Summerlin and $2.2 million in development expenses.

The $2.7 million loss was for a 27-acre parcel of land on Boulder Highway and a 68-acre parcel of land at Boulder Highway and Tropicana Avenue. The gaming entitlements from each parcel were removed with the sales, eliminating the potential of future competition to Station's Boulder Station and its Henderson properties.

"We decided not to develop the two sites on the east side of Las Vegas primarily because they were located in slower growing portions of Las Vegas that are already served by our existing properties. We concluded that we can maximize shareholder value and handle further growth in those sub-markets through master planned expansions of our existing facilities rather than by developing new properties on those sites," Chief Financial Officer Glenn Christenson said in a statement.

During the quarter the company also purchased 51 acres of land on the south end of the Las Vegas Strip at Cactus Avenue, near the site of a Boyd Gaming-Coast Casinos hotel-casino now under construction.