Station turns profit, plans expansions

Wednesday, April 27, 2005 | 10:55 a.m.

Citing strong business growth in the Las Vegas Valley, Station Casinos Inc. said today the company expects to break ground on an expansion of its Santa Fe casino in North Las Vegas and its Fiesta Henderson casino.

The company also reported profit of $40.6 million in the first quarter of the year compared with a loss of $29.8 million for the same period a year ago. Last year's loss includes a charge to retire early debt of $93.3 million.

Executives said earnings per share -- which set a record for the 13th consecutive quarter -- were better than they anticipated because of the continued population and job growth in Las Vegas.

"The population continues to grow and there are very few (nearby) places for people to go," Chief Financial Officer Glenn Christenson said.

"We're really very pleased with the way that things have come together," added Chief Executive Frank Fertitta III. "The next five to ten years for Station should be the best in our history."

The recent quarter includes the first results from a $125 million expansion at the company's Green Valley Ranch Station Casino in Henderson, which opened in December with 300 new hotel rooms and additional ballroom and convention space. It also includes $8.1 million in charges to buy out leases for properties adjacent to its Wild Wild West casino, which is slated for redevelopment. Also included is $2.6 million in costs to cultivate casino management contracts with American Indian tribes.

Excluding last year's loss and other nonrecurring items unrelated to operating performance, Station Casinos reported profit of $48.4 million or 70 cents per share compared with $33.5 million or 51 cents a year ago.

Analysts expected the company to earn 67 cents per share in the recent quarter.

Revenue at properties open at least a year grew 18 percent to $296.8 million.

Earnings before interest, taxes, depreciation and amortization -- a key indicator of casino performance -- grew 34 percent to $127.3 million at those properties. That was the fifth consecutive quarter of double-digit growth in that category, the company said.

Hotel occupancy across the company rose one percentage point from a year ago to 97 percent. Average daily rates rose 10 percent to $65.

The $120 million expansion at the Santa Fe will include a 2,900-space parking garage, a 500-seat buffet, 400 additional slot machines, a remodel and expansion of the race and sports book, a 15,000 square-foot meeting and banquet area and a new center bar. Construction is expected to begin in August and be complete by September 2006. The $70 million expansion at the Fiesta casino in Henderson will include a 1,500-space parking garage, 350 additional slots, a remodeled and expanded race and sports book and a 12-screen movie theater. Construction is expected to begin in July and be complete by June 2006.

Both expansions are part of previously-envisioned master plans, the company said.

Station is on track to open its newest locals casino, Red Rock Station, in Summerlin by early next year. The company also will begin construction on a Phase II expansion of Red Rock later this year.

Executives had previously contemplated accelerating the development of new and existing properties based on growing demand.

They said the company is expected to earn from $2.43 to $2.55 per share this year and from $2.67 to $2.86 per share next year. That would compare with analysts' estimates of $2.45 per share this year and $2.84 per share next year. The estimates don't include future casinos the company could build in Las Vegas.

Station Casinos shares fell more than 1 percent to $67.23 per share in midmorning trading today.