Station Casinos earnings jump

By Liz Benston (contact)

Monday, Jan. 24, 2005 | 10:41 a.m.

Stronger than expected demand from local gamblers helped Station Casinos Inc. blow past Wall Street estimates for the fourth quarter. The company reported profit of $38 million compared with a loss of $8.6 million in the prior year's quarter.

On a per-share basis, earnings were 55 cents compared with a loss of 14 cents in the fourth quarter of 2003.

Excluding one-time expenses, earnings were 58 cents compared with 42 cents in the prior year's fourth quarter. Wall Street analysts expected the company to earn 51 cents per share.

The company reported a 27 percent increase in cash flow to $107.1 million. Revenue grew 15 percent to $264.7 million.

"By every measure 2004 was a blowout," Station Casinos Chief Financial Officer Glenn Christenson said.

Robust job and population growth as well as the state's lowest unemployment rate since at least 1978 helped the company achieve record profit last year, Christenson said. This year the company expects higher earnings in part based on University of Nevada, Las Vegas estimates of a 4 percent increase in population, 40,000 new jobs at a growth rate of about 4 percent to 5 percent and personal income growth of about 7 percent, he said.

A future pipeline of massive Strip projects over the next few years including the April opening of the Wynn Las Vegas megaresort and the upcoming hotel tower at Caesars Palace also helps drive the local economy, Christenson said.

"We think the locals market can continue to thrive over the near and longer-term given a steady pace of Las Vegas Strip projects," Bear, Stearns & Co. analyst Joe Greff said.

Deutsche Bank analyst Marc Falcone said he "would not be surprised" if Station Casinos announced additional growth projects, either master planned expansions or new developments, to capitalize on the growth of the Las Vegas market.

Station Casinos also increased previous profit estimates for the first quarter and full year.

The company now expects to report earnings of 56 cents to 62 cents per share in the first quarter and report cash flow of about $107 million to $113 million.

For the full year, the company expects to earn from $2.22 per share to $2.35 per share and report cash flow of about $425 million to $440 million.

Shares of Station Casinos rose 91 cents to $57.50 per share in midday trading today.