Exhibit 99.1
Station Casinos Announces Record First Quarter Results and Declares Dividend
LAS VEGAS--(BUSINESS WIRE)--May 4, 2006--Station Casinos, Inc.
(NYSE: STN - News; "Station" or the "Company") today announced the
results of its operations for the first quarter ended March 31, 2006.
Highlights include:
-- Record first quarter EBITDA (1) of $132.6 million, an increase
of 10% over the prior year's first quarter.
-- Adjusted for non-recurring items and development expense,
diluted earnings per share ("EPS") of $0.78 compared to $0.70
in the prior year's first quarter, an increase of 11%.
-- Revenues from its Major Las Vegas Operations, including Green
Valley Ranch, increased 8% from the prior year's first
quarter.
-- EBITDA margins for its Major Las Vegas Operations, including
Green Valley Ranch, increased to 43.2% from 42.9% in the prior
year's first quarter.
-- The successful opening of Red Rock Casino Resort Spa ("Red
Rock") on April 18, 2006.
-- Repurchasing 7.1 million shares of the Company's common stock
since the beginning of the year through a combination of open
market purchases and an accelerated stock buyback program.
-- Declaring a quarterly cash dividend of $0.25 per share payable
on June 2, 2006 to shareholders of record on May 12, 2006.
Results of Operations
The Company's net revenues for the first quarter ended March 31,
2006 were approximately $292.5 million, an increase of 7% compared to
the prior year's first quarter. The Company reported EBITDA for the
quarter of $132.6 million, an increase of 10% compared to the prior
year's first quarter. For the first quarter, Adjusted Earnings (2)
applicable to common stock were $51.5 million, or $0.78 per diluted
share, an increase of 11% over the prior year's $0.70 per diluted
share on a comparable basis. This marks the seventeenth consecutive
quarter of year-over-year growth of Adjusted EBITDA, EBITDA margin and
EPS.
During the first quarter, the Company incurred preopening costs
related to projects under development of $14.1 million, $0.5 million
in costs to terminate certain leases, a $0.8 million gain on the
disposition of certain assets and $2.1 million in costs to develop new
gaming opportunities, primarily related to Native American gaming.
Including these items, the Company reported net income of $41.1
million and diluted earnings applicable to common stock of $0.62 per
share.
The Company's earnings from its Green Valley Ranch joint venture
for the first quarter were $13.5 million, 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 $30.1 million, an 11%
increase compared to the prior year's first quarter. "The results at
Green Valley Ranch are very impressive considering we continue to
experience significant construction disruption related to the Phase
III expansion of that property, as well as new supply in the market,"
said Lorenzo J. Fertitta, vice chairman and president.
Las Vegas Market Results
For the quarter, net revenues from the Major Las Vegas Operations,
including Green Valley Ranch, increased to $321.8 million, an 8%
increase compared to the prior year's quarter, while EBITDA from those
operations increased 9% to $139.1 million. "Revenue growth exceeded
our guidance for the quarter as the key metrics in our business
remained strong. We look forward to the end of the third quarter when
construction disruption at our properties dissipates and the new
development starts to ramp up," said Lorenzo Fertitta.
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 $2.39 billion as of March 31, 2006. Total
capital expenditures were $271.1 million for the first quarter.
Expansion and project capital expenditures included $172.1 million for
Red Rock, $17.0 million for the expansion of Santa Fe Station, $10.5
million for the expansion of Fiesta Henderson and $26.9 million for
the purchase of land. In addition, during the first quarter the
Company purchased approximately 3.9 million shares of its common stock
for approximately $264.8 million. As of March 31, 2006, the Company's
debt to cash flow ratio as defined in its bank credit facility was 4.9
to 1.
Dividend
The Company's Board of Directors has declared a quarterly cash
dividend of $0.25 per share. The dividend is payable on June 2, 2006
to shareholders of record on May 12, 2006.
Stock Repurchases
Since the beginning of the year, the Company has repurchased 7.1
million shares of its common stock through a combination of open
market purchases and an accelerated stock buyback ("ASB") program.
Pursuant to the terms of the ASB program, the Company could also
receive up to an additional 367,539 shares from a third party based on
the volume weighted average price of the stock during the term of such
program and the collar provisions setting minimum and maximum prices
for the repurchase of such shares. The total cost of the share
repurchases completed in 2006 to date is approximately $537 million.
Fiscal 2006 and 2007 Guidance
For the second quarter of 2006, the Company expects EBITDA of
approximately $131 million to $136 million and EPS of $0.60 to $0.65,
excluding development expense and other non-recurring items. The
guidance for the second quarter assumes 73 days of operations for Red
Rock and approximately $7 million of construction disruption relating
to the Santa Fe Station, Fiesta Henderson and Green Valley Ranch
master-planned expansions. Including the impact of the construction
disruption, the projected revenue growth for the second quarter is 30%
to 32%. For the remainder of 2006, the Company expects EBITDA of
approximately $135 million to $140 million for the third quarter and
$151 million to $156 million for the fourth quarter. The guidance
assumes $2 million of construction disruption in the third quarter and
none in the fourth quarter. This would result in EPS of $0.53 to $0.59
for the third quarter and $0.66 to $0.71 for the fourth quarter
assuming 62 million fully diluted shares outstanding. For the full
year 2006, the Company expects EBITDA of approximately $550 million to
$565 million, excluding development expense and non-recurring items
and Adjusted Earnings applicable to common stock of approximately
$2.57 to $2.71, assuming 63 million fully diluted shares. This
guidance assumes approximately $16 million of construction disruption
relating to the Santa Fe Station, Fiesta Henderson and Green Valley
Ranch master-planned expansions. It also assumes the completion of
most of the components 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. The full year 2006
guidance assumes revenue growth in the Major Las Vegas Operations
(excluding Green Valley Ranch) of 24% to 27% over the prior year and
an effective tax rate of 37.2%.
The Company is reiterating EBITDA guidance for fiscal 2007 of
approximately $630 million to $670 million and updating EPS guidance
to $2.65 to $3.05. This guidance assumes that Phase II of Red Rock
opens in early 2007, and further assumes an effective tax rate of
37.2% and 63 million diluted shares outstanding.
Conference Call Information
The Company will host a conference call today, Thursday, May 4, at
12:00 p.m. (Eastern Time) to discuss its first quarter 2006 financial
results and provide guidance for the remainder of 2006 and 2007. Those
interested in participating in the call should dial (866) 633-6299 or
(706) 679-5908 for international callers, approximately 10 minutes
before the call start time. 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 May 4, 2006, until
3:00 p.m. (Eastern Time) on May 12, 2006 at (800) 642-1687. The
reservation number is 7579378.
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
Red Rock Casino Resort Spa, 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 Green Valley
Ranch Station Casino, Barley's Casino & Brewing Company and The Greens
in Henderson, Nevada and a 6.7% interest in the Palms Casino Resort in
Las Vegas, Nevada. In addition, Station manages 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, 2005, and
its Registration Statement on Form S-4 File No. 333-133414. 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 "Investor Relations" section
of the Company's website at www.stationcasinos.com (3).
Construction projects such as Red Rock 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 projects with
the Gun Lake Tribe, the Federated Indians of Graton Rancheria, the
Mechoopda Indian Tribe of Chico Rancheria and the North Fork Rancheria
of Mono Indians and the operation of Class III gaming at each of the
projects is subject to certain governmental and regulatory approvals,
including, but not limited to, approval of state gaming compacts with
the State of Michigan or the State of California, the Department of
the Interior completing the process of taking land into trust for the
benefit of the tribes and approval of the management agreements 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, gain on
asset disposals, preopening expenses, lease terminations,
depreciation, amortization and development expense. 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, gain on asset disposals, preopening expenses, lease
terminations, depreciation, amortization and development expense, 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, gain on asset disposals and loss on
early retirement of debt. 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
first 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)
March 31, December 31,
2006 2005
----------- ------------
Assets:
Cash and cash equivalents $76,512 $85,552
Receivables, net 21,680 19,604
Other current assets 34,720 34,055
----------- ------------
Total current assets 132,912 139,211
Property and equipment, net 2,208,709 1,990,584
Other long-term assets 850,671 799,248
----------- ------------
Total assets $3,192,292 $2,929,043
=========== ============
Liabilities and stockholders' equity:
Current portion of long-term debt $239 $108
Other current liabilities 257,058 228,657
----------- ------------
Total current liabilities 257,297 228,765
Revolving credit facility 466,600 330,000
Senior and senior subordinated notes 1,904,958 1,606,545
Other debt 17,074 9,136
Interest rate swaps, mark-to-market (5,186) (1,461)
Other long-term liabilities 151,227 125,244
----------- ------------
Total liabilities 2,791,970 2,298,229
Stockholders' equity 400,322 630,814
----------- ------------
Total liabilities and stockholders'
equity $3,192,292 $2,929,043
=========== ============
Station Casinos, Inc.
Condensed Consolidated Statements of Operations
(amounts in thousands, except per share data)
(unaudited)
Three Months Ended
March 31,
-------------------
2006 2005
--------- ---------
Operating revenues:
Casino $216,223 $204,013
Food and beverage 38,871 36,837
Room 17,021 16,381
Other 13,972 11,183
Management fees 25,900 23,276
--------- ---------
Gross revenues 311,987 291,690
Promotional allowances (19,517) (18,230)
--------- ---------
Net revenues 292,470 273,460
--------- ---------
Operating costs and expenses:
Casino 74,180 70,728
Food and beverage 26,576 25,242
Room 5,544 5,202
Other 4,583 3,930
Selling, general and administrative 44,623 43,939
Corporate 16,287 14,192
Development 2,132 2,611
Depreciation and amortization 25,664 24,353
Preopening 14,122 617
Lease terminations 500 8,094
Gain on asset disposals, net (843) (87)
--------- ---------
213,368 198,821
--------- ---------
Operating income 79,102 74,639
Earnings from joint ventures 11,923 10,690
--------- ---------
Operating income and earnings from joint ventures 91,025 85,329
--------- ---------
Other income (expense):
Interest expense, net (23,816) (18,966)
Interest and other expense from joint ventures (1,568) (1,684)
Loss on early retirement of debt - (678)
--------- ---------
(25,384) (21,328)
--------- ---------
Income before income taxes 65,641 64,001
Income tax provision (24,519) (23,361)
--------- ---------
Net income $41,122 $40,640
========= =========
Earnings per common share:
Basic $0.64 $0.60
Diluted $0.62 $0.59
Weighted average common shares outstanding
Basic 64,104 67,435
Diluted 66,054 69,140
Dividends paid per common share $0.25 $0.21
Station Casinos, Inc.
Summary Information and
Reconciliation of Net Income to EBITDA
(amounts in thousands, except occupancy percentage and ADR)
(unaudited)
Three Months Ended
March 31,
-------------------
2006 2005
--------- ---------
Major Las Vegas Operations (a):
-------------------------------
Net revenues $254,720 $239,362
Net income $44,468 $40,506
Income tax provision 26,341 23,789
Interest and other expense, net 14,632 13,245
Depreciation and amortization 23,901 22,813
Gain on asset disposals, net (254) (160)
Preopening expenses - 94
--------- ---------
EBITDA $109,088 $100,287
========= =========
Green Valley Ranch (50% owned):
-------------------------------
Net revenues $67,094 $57,408
Net income $17,835 $15,740
Interest and other expense, net 6,194 5,527
Depreciation and amortization 5,998 5,215
Loss on asset disposals, net 23 522
--------- ---------
EBITDA $30,050 $27,004
========= =========
Major Las Vegas Operations including Green Valley Ranch:
--------------------------------------------------------
Net revenues $321,814 $296,770
Net income $62,303 $56,246
Income tax provision 26,341 23,789
Interest and other expense, net 20,826 18,772
Depreciation and amortization 29,899 28,028
(Gain) loss on asset disposals, net (231) 362
Preopening expenses - 94
--------- ---------
EBITDA $139,138 $127,291
========= =========
Total Station Casinos, Inc. (b):
--------------------------------
Net income $41,122 $40,640
Income tax provision 24,519 23,361
Interest and other expense, net 25,384 20,650
Depreciation and amortization 25,664 24,353
Lease terminations 500 8,094
Development expense 2,132 2,611
Preopening expenses 14,122 617
Gain on asset disposals, net (843) (87)
Loss on early retirement of debt - 678
--------- ---------
EBITDA $132,600 $120,917
========= =========
Occupancy percentage 98% 97%
ADR $66 $65
(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) Total Station Casinos, Inc. includes the Major Las Vegas
Operations, Wild Wild West, Wildfire, Magic Star, Gold Rush, 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
March 31,
---------------------
2006 2005
-------- --------
Adjusted Earnings (a):
Net income $41,122 $40,640
Development expense 1,386 1,697
Preopening expenses 9,179 401
Lease terminations 325 5,261
Gain on asset disposals (548) (57)
Loss on early retirement of debt - 441
-------- --------
Adjusted Earnings $51,464 $48,383
======== ========
Adjusted basic earnings per common share (a):
Net income $0.64 $0.60
Development expense 0.02 0.02
Preopening expenses 0.14 0.01
Lease terminations 0.01 0.08
Gain on asset disposals (0.01) -
Loss on early retirement of debt - 0.01
-------- --------
Adjusted basic earnings per common share $0.80 $0.72
======== ========
Weighted average common shares outstanding -
basic 64,104 67,435
Adjusted diluted earnings per common share (a):
Net income $0.62 $0.59
Development expense 0.02 0.02
Preopening expenses 0.14 0.01
Lease terminations 0.01 0.07
Gain on asset disposals (0.01) -
Loss on early retirement of debt - 0.01
-------- --------
Adjusted diluted earnings per common share $0.78 $0.70
======== ========
Weighted average common shares outstanding -
diluted 66,054 69,140
(a) All dollar and per share amounts are shown net of tax.
CONTACT: Station Casinos, Inc.
Glenn C. Christenson, 800-544-2411 or 702-367-2484
Executive Vice President/Chief Financial Officer/
Chief Administrative Officer
or
Thomas M. Friel, 800-544-2411 or 702-495-4210
Vice President of Finance/Controller
or
Lori B. Nelson, 800-544-2411 or 702-495-4248
Director of Corporate Communications