Exhibit 99.1
Station Casinos Announces Record Third
Quarter Results and Declares Dividend
LAS VEGAS--(BUSINESS WIRE)--Oct. 18, 2005--Station Casinos, Inc.
(NYSE:STN) ("Station" or the "Company") today announced the results of
its operations for the third quarter ended September 30, 2005.
Highlights include:
-- Same-store revenues from its Las Vegas operations increased
16% over the prior year's third quarter, marking the seventh
consecutive quarter of double-digit same-store revenue growth
on a year-over-year basis. Excluding Green Valley Ranch,
revenues from its Major Las Vegas Operations increased 13%
over the prior year's third quarter.
-- Record third quarter EBITDA(1) of $117.8 million, an increase
of 30% over the prior year's third quarter.
-- Same-store EBITDA from its Las Vegas operations increased 30%
over the prior year's third quarter.
-- Adjusted for non-recurring items and development expense,
diluted earnings per share ("EPS") of $0.63 compared to $0.46
in the prior year's third quarter, an increase of 37%.
-- Same-store EBITDA margins for its Las Vegas operations
increased to 40.7% from 36.3% in the prior year's third
quarter.
-- Declaring a quarterly cash dividend of $0.25 per share payable
on December 2, 2005, to shareholders of record on November 11,
2005.
Results of Operations
The Company's net revenues for the third quarter ended September
30, 2005, were approximately $276.3 million, an increase of 14%
compared to the prior year's third quarter. The Company reported
EBITDA for the quarter of $117.8 million, an increase of 30% compared
to the prior year's third quarter. For the third quarter, Adjusted
Earnings(2) applicable to common stock were $44.2 million, or $0.63
per share, an increase of 37% over the prior year's $0.46 per share on
a comparable basis. This marks the fifteenth consecutive quarter of
year-over-year growth of Adjusted EBITDA, EBITDA margin and EPS.
During the third quarter, the Company incurred preopening costs
related to projects under development of $1.7 million, a $3.4 million
loss on the disposition of land, a $0.6 million loss on the early
retirement of debt, $0.3 million in costs to terminate certain leases
at Green Valley Ranch and $2.0 million in costs to develop new gaming
opportunities, primarily related to Native American gaming. Including
these items, the Company reported net income of $39.0 million and
diluted earnings applicable to common stock of $0.56 per share.
The Company's earnings from its Green Valley Ranch joint venture
for the third quarter were $10.7 million, excluding the lease
termination costs, which represents a combination of the Company's
management fee plus 50% of Green Valley Ranch's operating income. For
the quarter, Green Valley Ranch generated EBITDA before management
fees of $24.4 million, a 29% increase compared to the prior year's
third quarter. These numbers include results from the $125 million
expansion of that property, which opened in December 2004 and included
approximately 300 new hotel rooms and 25,000 square feet of additional
meeting and convention space.
Las Vegas Market Results
Same-store (Major Las Vegas Operations and Green Valley Ranch) net
revenues for the quarter increased to $300.0 million, a 16% increase
compared to the prior year's quarter, while EBITDA from those
operations increased 30% to $122.2 million. "Our seventh consecutive
quarter of double-digit same-store revenue growth was driven by the
continued strength of the Las Vegas economy. We have not seen changes
in consumer behavior in the Las Vegas local's market. All of the key
metrics that influence our business were very robust during the third
quarter including population growth, new job creation and extensive
commercial and residential construction," said Lorenzo J. Fertitta,
vice chairman and president.
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.
Balance Sheet Items and Capital Expenditures
Long-term debt was $1.74 billion as of September 30, 2005. Total
capital expenditures were $260.5 million for the third quarter.
Expansion and project capital expenditures included $173.9 million for
Red Rock Resort and $43.5 million for the purchase of land. As of
September 30, 2005, the Company's debt to cash flow ratio as defined
in its bank credit facility was 3.9 to 1.
Dividend
The Company's Board of Directors declared a quarterly cash
dividend of $0.25 per share. The dividend is payable on December 2,
2005, to shareholders of record on November 11, 2005.
Fiscal 2005 and 2006 Guidance
For the fourth quarter of 2005, the Company expects EBITDA of
approximately $115 million to $120 million and EPS of $0.59 to $0.64,
excluding development expense and other non-recurring items. The
guidance for the fourth quarter assumes approximately $7 million of
construction disruption relating to the Santa Fe Station, Fiesta
Henderson and Green Valley Ranch master-planned expansions. The
projected revenue growth for the fourth quarter is 9% to 11% excluding
the impact of the construction disruption. Including the impact of the
construction disruption, the projected revenue growth for the fourth
quarter is 6% to 8%. As a result, the Company now expects EBITDA for
2005 of approximately $472 million to $477 million, excluding
development expense and non-recurring items and Adjusted Earnings
applicable to common stock of approximately $2.57 to $2.62, assuming
69.5 million fully diluted shares. The full year guidance assumes
revenue growth in the Major Las Vegas Operations (excluding Green
Valley Ranch) for 2005 of 11% to 12% over the prior year, with an
effective tax rate of 36.9%.
The Company previously issued guidance for fiscal 2006 of
approximately $545 million to $565 million of EBITDA and $2.70 to
$2.89 of EPS, assuming approximately $16 million of construction
disruption relating to the Santa Fe Station, Fiesta Henderson and
Green Valley Ranch master-planned expansions. The Company intends to
update this guidance on its fourth quarter conference call. This
guidance also assumes the opening of Phase I of Red Rock Resort at the
end of the first quarter of 2006, the completion of the Fiesta
Henderson expansion in the third quarter of 2006, the completion of
the Santa Fe Station expansion in phases beginning in the third
quarter of 2006 through the fourth quarter of 2006 and the completion
of the Green Valley Ranch expansion from the fourth quarter of 2006
through early 2007. This guidance further assumes an effective tax
rate of 36.5% and 70 million diluted shares outstanding.
Conference Call Information
The Company will host a conference call today, Tuesday, October
18, at 12:00 p.m. (Eastern Time) to discuss its third quarter 2005
financial results and provide guidance for the remainder of 2005 and
2006. Interested participants may access the call by dialing the
conference operator at 866-633-6299. For those dialing in
internationally, your dial in number is 706-679-5908. A live audio
webcast of the call, as well as supplemental tables and charts, will
also be available at the Company's website, www.stationcasinos.com(3).
A replay of the call will be available from 3:00 p.m. (Eastern Time)
on October 18, 2005, until 11:00 p.m. (Eastern Time) on October 25,
2005, at 800-642-1687. The reservation number is 9022749.
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 Station Casino 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. 333-128963. 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.
Additional financial information, including presentations from recent
investor conferences, is available in the "Investors" section of the
Company's website at www.stationcasinos.com(3).
Construction projects such as Red Rock Resort and the
master-planned expansions of Santa Fe Station, Fiesta Henderson and
Green Valley Ranch 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.
Development of the proposed gaming and entertainment project with
the Gun Lake Tribe and the operation of Class III gaming at that
project are subject to certain governmental and regulatory approvals,
including, but not limited to, the governor of the State of Michigan
signing the Gun Lake Tribe's state gaming compact, the Department of
the Interior completing the process of taking land into trust for the
benefit of the Gun Lake Tribe and approval of the management agreement
by the National Indian Gaming Commission. No assurances can be given
as to when, or if, these governmental and regulatory approvals will be
received.
(1) EBITDA consists of net income plus income tax provision,
interest and other expense, loss on early retirement of debt,
preopening expenses, lease terminations, depreciation, amortization,
development expense, certain litigation, Regulation 6A fine and
related investigative costs. 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, loss on early retirement of
debt, preopening expenses, lease terminations, depreciation,
amortization, development expense, certain litigation, Regulation 6A
fine and related investigative costs, 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. A reconciliation of EBITDA to net
income is included in the financial schedules accompanying this
release.
(2) Adjusted Earnings excludes development expense, preopening
expenses, lease terminations, loss on early retirement of debt, loss
on sale of land, certain litigation, Regulation 6A fine and related
investigative costs. 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. A
reconciliation of Adjusted Earnings and EPS to GAAP net income and EPS
is included in the financial schedules accompanying this release.
(3) The hyperlink to the Company's URL is included herein solely
for the convenience of investors in accessing the audio webcast of the
third quarter conference call. All other references herein to the
Company's URL are inactive textual references. None of the information
contained on the Company's website shall be deemed incorporated by
reference or otherwise included herein.
Station Casinos, Inc.
Condensed Consolidated Balance Sheets
(amounts in thousands)
(unaudited)
September 30, December 31,
2005 2004
------------- -------------
Assets:
Cash and cash equivalents $ 65,587 $ 68,417
Receivables, net 18,287 21,452
Other current assets 35,460 29,652
------------- -------------
Total current assets 119,334 119,521
Property and equipment, net 1,813,024 1,367,957
Other long-term assets 737,126 558,106
------------- -------------
Total assets $ 2,669,484 $ 2,045,584
============= =============
Liabilities and stockholders' equity:
Current portion of long-term debt $ 97 $ 16,917
Other current liabilities 214,716 159,099
------------- -------------
Total current liabilities 214,813 176,016
Revolving credit facility 125,500 51,500
Senior and senior subordinated notes 1,606,635 1,265,686
Other debt 9,384 6,037
Interest rate swaps, mark-to-market (1,844) (1,927)
Other long-term liabilities 105,942 59,351
------------- -------------
Total liabilities 2,060,430 1,556,663
Stockholders' equity 609,054 488,921
------------- -------------
Total liabilities and
stockholders' equity $ 2,669,484 $ 2,045,584
============= =============
Station Casinos, Inc.
Condensed Consolidated Statements of Operations
(amounts in thousands, except per share data)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------- ----------------------
2005 2004 2005 2004
---------- ---------- ---------- ----------
Operating revenues:
Casino $ 206,412 $ 181,048 $ 613,321 $ 533,016
Food and beverage 35,789 34,418 109,341 103,451
Room 14,009 13,426 46,071 42,545
Other 14,159 10,644 38,209 30,973
Management fees 24,028 19,995 70,930 62,174
---------- ---------- ---------- ----------
Gross revenues 294,397 259,531 877,872 772,159
Promotional
allowances (18,060) (16,669) (54,107) (50,155)
---------- ---------- ---------- ----------
Net revenues 276,337 242,862 823,765 722,004
---------- ---------- ---------- ----------
Operating costs and
expenses:
Casino 71,737 69,391 213,163 203,239
Food and beverage 25,310 25,355 76,534 74,212
Room 5,159 5,418 15,726 15,601
Other 4,904 4,369 13,222 12,582
Selling, general and
administrative 46,076 44,129 134,449 126,906
Corporate expense 14,592 11,311 42,856 33,874
Development expense 2,047 2,113 6,749 8,309
Depreciation and
amortization 26,053 21,935 75,523 62,117
Preopening expenses 1,651 233 3,454 577
Lease terminations - - 11,654 -
---------- ---------- ---------- ----------
197,529 184,254 593,330 537,417
---------- ---------- ---------- ----------
Operating income 78,808 58,608 230,435 184,587
Earnings from joint
ventures 8,956 7,038 28,356 18,249
---------- ---------- ---------- ----------
Operating income and
earnings from joint
ventures 87,764 65,646 258,791 202,836
---------- ---------- ---------- ----------
Other income
(expense):
Interest expense,
net (20,466) (18,595) (58,316) (58,500)
Interest and other
expense from joint
ventures (1,473) (894) (5,299) (3,271)
Loss on early
retirement of debt (600) - (1,278) (93,265)
Other (3,384) (487) (3,598) (3,299)
---------- ---------- ---------- ----------
(25,923) (19,976) (68,491) (158,335)
---------- ---------- ---------- ----------
Income before income
taxes 61,841 45,670 190,300 44,501
Income tax provision (22,881) (16,584) (70,091) (16,163)
---------- ---------- ---------- ----------
Net income $ 38,960 $ 29,086 $ 120,209 $ 28,338
========== ========== ========== ==========
Basic and diluted
earnings per common
share:
Net income
Basic $ 0.57 $ 0.45 $ 1.77 $ 0.45
Diluted $ 0.56 $ 0.43 $ 1.73 $ 0.43
Weighted average
common shares
outstanding
Basic 68,355 65,052 67,901 63,647
Diluted 69,772 67,769 69,302 66,300
Dividends paid per
common share $ 0.250 $ 0.175 $ 0.670 $ 0.475
Station Casinos, Inc.
Summary Information and
Reconciliation of Net Income to EBITDA
(amounts in thousands, except occupancy percentage and ADR)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- --------------------
2005 2004 2005 2004
--------- --------- --------- ---------
Major Las Vegas
Operations (a):
- -------------------------
Net revenues $241,047 $213,981 $719,145 $636,113
Net income $ 36,636 $ 22,628 $116,082 $ 78,615
Income tax provision 22,509 14,678 68,175 46,171
Interest and other
expense, net 14,215 13,581 41,235 40,767
Depreciation and
amortization 24,392 20,566 70,627 58,537
Preopening expenses - - 147 -
Litigation, Regulation
6A fine and related
investigative costs - 3,303 - 3,303
--------- --------- --------- ---------
EBITDA $ 97,752 $ 74,756 $296,266 $227,393
========= ========= ========= =========
Green Valley Ranch
Station (50% owned):
- -------------------------
Net revenues $ 58,994 $ 43,743 $173,653 $127,626
Net income $ 12,405 $ 10,640 $ 39,460 $ 24,491
Interest and other
expense, net 5,805 3,873 18,444 12,026
Depreciation and
amortization 5,627 4,309 16,389 12,647
Lease terminations 600 - 1,632 7,284
Litigation - 75 - 75
--------- --------- --------- ---------
EBITDA $ 24,437 $ 18,897 $ 75,925 $ 56,523
========= ========= ========= =========
Same-Store
Operations (b):
- -------------------------
Net revenues $300,041 $257,724 $892,798 $763,739
Net income $ 49,041 $ 33,268 $155,542 $103,106
Income tax provision 22,509 14,678 68,175 46,171
Interest and other
expense, net 20,020 17,454 59,679 52,793
Depreciation and
amortization 30,019 24,875 87,016 71,184
Lease terminations 600 - 1,632 7,284
Preopening expenses - - 147 -
Litigation, Regulation
6A fine and related
investigative costs - 3,378 - 3,378
--------- --------- --------- ---------
EBITDA $122,189 $ 93,653 $372,191 $283,916
========= ========= ========= =========
Total Station Casinos,
Inc. (c):
- -------------------------
Net income $ 38,960 $ 29,086 $120,209 $ 28,338
Income tax provision 22,881 16,584 70,091 16,163
Interest and other
expense, net 25,323 19,976 67,213 65,070
Depreciation and
amortization 26,053 21,935 75,523 62,117
Development expense 2,047 2,113 6,749 8,309
Preopening expenses 1,651 233 3,454 577
Lease terminations 300 - 12,470 3,642
Loss on early
retirement of debt 600 - 1,278 93,265
Litigation, Regulation
6A fine and related
investigative costs - 813 - 813
--------- --------- --------- ---------
EBITDA $117,815 $ 90,740 $356,987 $278,294
========= ========= ========= =========
Occupancy percentage 96% 96% 97% 96%
ADR $ 57 $ 52 $ 61 $ 56
(a) 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.
(b) Same-Store Operations include the Major Las Vegas Operations plus
the total operations of Green Valley Ranch.
(c) Total Station Casinos, Inc. includes the Major Las Vegas
Operations, Wild Wild West, Wildfire, Magic Star (since August 2,
2004), Gold Rush (since August 2, 2004), the Company's earnings
from joint ventures, management fees and Corporate expense.
Station Casinos, Inc.
Reconciliation of GAAP Net Income and EPS
to Adjusted Earnings and EPS
(amounts in thousands, except per share data)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------- ----------------------
2005 2004 2005 2004
---------- ---------- ---------- ----------
Adjusted Earnings
Net income $ 38,960 $ 29,086 $ 120,209 $ 28,338
Development
expense, net 1,331 1,374 4,387 5,401
Preopening
expenses, net 1,073 151 2,245 375
Loss on sale of
land, net 2,220 - 2,220 1,782
Loss on early
retirement of
debt, net 390 - 831 60,622
Lease
terminations, net 195 - 8,105 2,367
Litigation,
Regulation 6A
fine and related
investigative
costs, net - 528 - 528
---------- ---------- ---------- ----------
Adjusted Earnings $ 44,169 $ 31,139 $ 137,997 $ 99,413
========== ========== ========== ==========
Adjusted basic
earnings per common
share:
Net income $ 0.57 $ 0.45 $ 1.77 $ 0.45
Development
expense, net 0.02 0.02 0.07 0.08
Preopening
expenses, net 0.02 - 0.03 0.01
Loss on sale of
land, net 0.03 - 0.03 0.03
Loss on early
retirement of
debt, net 0.01 - 0.01 0.95
Lease
terminations, net - - 0.12 0.03
Litigation,
Regulation 6A
fine and related
investigative
costs, net - 0.01 - 0.01
---------- ---------- ---------- ----------
Adjusted basic
earnings per common
share $ 0.65 $ 0.48 $ 2.03 $ 1.56
========== ========== ========== ==========
Weighted average
common shares
outstanding - basic 68,355 65,052 67,901 63,647
Adjusted diluted
earnings per common
share:
Net income $ 0.56 $ 0.43 $ 1.73 $ 0.43
Development
expense, net 0.02 0.02 0.06 0.08
Preopening
expenses, net 0.02 - 0.03 0.01
Loss on sale of
land, net 0.03 - 0.03 0.03
Loss on early
retirement of
debt, net - - 0.01 0.91
Lease
terminations, net - - 0.13 0.03
Litigation,
Regulation 6A
fine and related
investigative
costs, net - 0.01 - 0.01
---------- ---------- ---------- ----------
Adjusted diluted
earnings per common
share $ 0.63 $ 0.46 $ 1.99 $ 1.50
========== ========== ========== ==========
Weighted average
common shares
outstanding -
diluted 69,772 67,769 69,302 66,300
CONTACT: Station Casinos, Inc.
Glenn C. Christenson, Executive Vice President/Chief
Financial Officer/Chief Administrative Officer,
800-544-2411 or 702-367-2484
or
Thomas M. Friel, Vice President of Finance/Controller,
800-544-2411 or 702-221-6793
or
Lori B. Nelson, Director of Corporate Communications,
800-544-2411 or 702-367-2427