Exhibit 99.1
Station Casinos Raises Guidance for First Quarter and
Announces Acceleration of the Phase II Expansion of Red Rock
LAS VEGAS--(BUSINESS WIRE)--March 15, 2005--Station Casinos, Inc.
(NYSE:STN)("Station" or the "Company") today raised its guidance for
the first quarter ending March 31, 2005 and announced an acceleration
of the Phase II expansion of Red Rock Resort Spa and Casino ("Red
Rock").
First Quarter Guidance
Based on the strength of the Las Vegas economy and strong same
store revenues, the Company now believes that, prior to development
and preopening expenses and certain non-recurring items, EBITDA (1)
and adjusted earnings per share ("EPS") (2) for the first quarter of
2005 will exceed its previously issued guidance of $107 million to
$113 million and $0.56 to $0.62, respectively. The Company now
believes that EBITDA for the quarter will be between $117 million and
$119 million and EPS will be between $0.66 and $0.68. The increase is
due to higher than anticipated same store revenues driving higher than
anticipated EBITDA margins at our Major Las Vegas Operations (3).
While the Company's original guidance provided for 9% to 13% same
store revenue growth at the Major Las Vegas Operations (excluding
Green Valley Ranch) in the 2005 first quarter, the Company now
believes that same store revenue growth will be near the top end of
this range. "Our strategic decision several years ago to focus on the
locals market in Las Vegas continues to drive shareholder value
through our exceptional operating results and return on invested
capital," said Glenn Christenson, executive vice president and chief
financial officer.
In addition, the Company anticipates that Green Valley Ranch will
generate $26 million to $27 million of EBITDA in the first quarter of
2005 compared to $17.7 million in the first quarter of 2004. The
Company also anticipates that Green Valley Ranch's revenues for the
first quarter will increase by 39% to 43% over the prior year first
quarter. In December 2004, as part of a $125 million expansion, the
Company opened approximately 300 new hotel rooms and 25,500 square
feet of new meeting and convention space at Green Valley Ranch. Based
on the projected results for the first quarter of 2005, the annualized
return on investment for the entire facility is approaching 25%. The
expanded hotel and convention space has allowed Green Valley Ranch to
host larger convention groups, which enables it to fill rooms during
mid-week periods at premium rates. As a result, the average daily room
rate at Green Valley Ranch for the first quarter to date was $183 with
an occupancy rate of 88% versus an average daily rate of $161 and an
occupancy rate of 94% for the first quarter of 2004. "We are pleased
with the initial results from the expansion of Green Valley Ranch.
However, based on the quality of the room product, the quality of the
convention facility and the strength of the market, we believe there
is still ample opportunity to grow both the occupancy and the room
rate," said Lorenzo Fertitta, vice chairman and president.
Accelerated Expansion of Red Rock Resort Spa and Casino
Based on the continued success of Green Valley Ranch and the
favorable supply-demand dynamics in the Las Vegas local's market, the
Company now plans to accelerate its construction of the Phase II
expansion of Red Rock. Construction on the expansion is expected to
begin in late 2005 and to be completed by the end of 2006. The
project, as expanded, will now include over 2,800 slot machines,
approximately 850 hotel rooms, 94,000 square feet of meeting and
convention space, a 35,000 square-foot spa, nine full service
restaurants, 16-screen movie theater complex, a night club and private
pool club to be operated by Midnight Oil Company (the operator of the
"Whiskey" bars and clubs at Green Valley Ranch and in New York and Los
Angeles), both indoor and outdoor entertainment venues and parking for
almost 5,500 vehicles.
"The continued exceptional operating results of our properties in
Las Vegas and our analysis of the future prospects in this market
strongly influenced our decision to accelerate the timing of the Phase
II expansion at Red Rock," said Fertitta. "As an example, Green Valley
Ranch is on a run rate to exceed $100 million of EBITDA for 2005.
These outstanding results combined with the favorable supply-demand
dynamics in the Las Vegas local's market and the quality of the
product we are building at Red Rock gives us confidence to begin the
Phase II expansion of Red Rock," stated Fertitta. Based on increased
amenities, an upgrade in the quality of the finishes throughout the
project, general increases in construction costs and the addition of
the Phase II expansion, the total cost of Red Rock is now expected to
be approximately $800 million. The company believes that the operating
results at Red Rock will ramp up over time and that, by the third or
fourth year of operation, the property will produce in excess of $120
million of EBITDA.
Phase I of Red Rock is expected to open at the end of the first
quarter of 2006. The Company's EBITDA guidance for the first full year
of operations is now $65 million to $75 million, which does not
include any contribution from the Phase II expansion.
A comparison of the amenities at Red Rock and Green Valley Ranch
is set forth below:
- -0-
*T
Red Rock Green Valley
Hotel rooms 850 496
Slot machines 2,800 2,192
Table games 60 50
Convention space 94,200 66,337
Restaurant seats 2,309 1,788
Theater seats 4,305 2,412
Race and sports book seats 274 158
Bingo seats 600 -
Poker tables 15 -
Parking spaces 5,487 3,431
*T
EBITDA and Adjusted Earnings are not generally accepted accounting
principles ("GAAP") measurements and are presented solely as a
supplemental disclosure because the Company believes that they are
widely used measures of operating performance in the gaming industry
and as a principal basis for valuation of gaming companies. EBITDA and
Adjusted Earnings are further defined in footnotes 1 and 2,
respectively.
Company Information and Forward Looking Statements
Station Casinos, Inc. is the leading provider of gaming and
entertainment to the residents of Las Vegas, Nevada. Station's
properties are regional entertainment destinations and include various
amenities, including numerous restaurants, entertainment venues, movie
theaters, bowling and convention/banquet space, as well as traditional
casino gaming offerings such as video poker, slot machines, table
games, bingo and race and sports wagering. Station owns and operates
Palace Station Hotel & Casino, Boulder Station Hotel & Casino, Santa
Fe Station Hotel & Casino, Wildfire Casino and Wild Wild West Gambling
Hall & Hotel in Las Vegas, Nevada, Texas Station Gambling Hall & Hotel
and Fiesta Rancho Casino Hotel in North Las Vegas, Nevada, and Sunset
Station Hotel & Casino, Fiesta Henderson Casino Hotel, Magic Star
Casino and Gold Rush Casino in Henderson, Nevada. Station also owns a
50% interest in both Barley's Casino & Brewing Company and Green
Valley Ranch in Henderson, Nevada and a 6.7% interest in the Palms
Casino Resort in Las Vegas, Nevada. In addition, Station manages the
Thunder Valley Casino near Sacramento, California on behalf of the
United Auburn Indian Community.
This press release contains certain forward-looking statements
with respect to the business, financial condition, results of
operations, dispositions, acquisitions and expansion projects of the
Company and its subsidiaries which involve risks and uncertainties
that cannot be predicted or quantified, and consequently, actual
results may differ materially from those expressed or implied herein.
Such risks and uncertainties include, but are not limited to,
financial market risks, the ability to maintain existing management,
integration of acquisitions, competition within the gaming industry,
the cyclical nature of the hotel business and gaming business,
economic conditions, regulatory matters and litigation and other risks
described in the filings of the Company with the Securities and
Exchange Commission, including, but not limited to, the Company's
Annual Report on Form 10-K for the year ended December 31, 2004, and
its Registration Statement on Form S-4 File No. 333-113986. All
forward-looking statements are based on the Company's current
expectations and projections about future events. All forward-looking
statements speak only as of the date hereof and the Company undertakes
no obligation to publicly update any forward-looking statements,
whether as a result of new information, future events or otherwise.
Construction projects such as Red Rock and the expansions of Green
Valley Ranch, Santa Fe Station and Sunset Station entail significant
risks, including shortages of materials or skilled labor, unforeseen
regulatory problems, work stoppages, weather interference, floods and
unanticipated cost increases. The anticipated costs and construction
periods are based on budgets, conceptual design documents and
construction schedule estimates. There can be no assurance that the
budgeted costs or construction period will be met.
(1) EBITDA consists of net income plus income tax provision,
interest and other expense, preopening expenses, depreciation,
amortization, development expense and non-recurring items. EBITDA is
presented solely as a supplemental disclosure because the Company
believes that it is a widely used measure of operating performance in
the gaming industry and as a principal basis for valuation of gaming
companies. The Company believes that in addition to cash flows and net
income, EBITDA is a useful financial performance measurement for
assessing the operating performance of the Company. Together with net
income and cash flows, EBITDA provides investors with an additional
basis to evaluate the ability of the Company to incur and service debt
and incur capital expenditures. To evaluate EBITDA and the trends it
depicts, the components should be considered. The impact of income tax
provision, interest and other expense, preopening expenses,
depreciation, amortization, development expense and non-recurring
items, each of which can significantly affect the Company's results of
operations and liquidity and should be considered in evaluating the
Company's operating performance, cannot be determined from EBITDA.
Further, EBITDA does not represent net income or cash flows from
operating, financing and investing activities as defined by generally
accepted accounting principles ("GAAP") and does not necessarily
indicate cash flows will be sufficient to fund cash needs. It should
not be considered as an alternative to net income, as an indicator of
the Company's operating performance or to cash flows as a measure of
liquidity. In addition, it should be noted that not all gaming
companies that report EBITDA or adjustments to such measures may
calculate EBITDA or such adjustments in the same manner as the
Company, and therefore, the Company's measure of EBITDA may not be
comparable to similarly titled measures used by other gaming
companies.
(2) Adjusted Earnings excludes development expense, preopening
expenses and non-recurring items. Adjusted Earnings is presented
solely as a supplemental disclosure because the Company believes that
it is a widely used measure of operating performance in the gaming
industry and as a principal basis for valuation of gaming companies,
as this measure is considered by the Company to be a better measure on
which to base expectations of future results than GAAP net income.
(3) The Major Las Vegas Operations include the wholly owned
properties of Palace Station, Boulder Station, Texas Station, Sunset
Station, Santa Fe Station, Fiesta Rancho and Fiesta Henderson.
CONTACT: Station Casinos, Inc.
Executive Vice President/Chief Financial Officer/Chief
Administrative Officer
Glenn C. Christenson, 800-544-2411 or 702-367-2484
or
Vice President of Finance/Controller
Thomas M. Friel, 800-544-2411 or 702-221-6793
or
Vice President of Corporate and Government Relations
Lesley A. Pittman, 800-544-2411 or 702-367-2437