Exhibit 99.1
Station Casinos Announces Record Second Quarter EBITDA and Increases Dividend
LAS VEGAS--(BUSINESS WIRE)--July 25, 2006--Station Casinos, Inc.
(NYSE: STN) ("Station" or the "Company") today announced the results
of its operations for the second quarter ended June 30, 2006 and other
Company-related news.
Highlights include:
-- Record second quarter EBITDA (1) of $134.0 million, an
increase of 13% over the prior year's second quarter.
-- Revenues from its Major Las Vegas Operations, excluding Green
Valley Ranch, increased 28% from the prior year's second
quarter.
-- Adjusted for non-recurring items and development expenses,
diluted earnings per share ("EPS") of $0.61 compared to $0.66
in the prior year's second quarter, a decrease of 8%.
-- The successful opening of Red Rock Casino Resort Spa ("Red
Rock") on April 18, 2006.
-- The announcement of the Phase III master-planned expansion at
Red Rock, which will include a 72-lane bowling center and
expansions of both parking garages.
-- Repurchasing approximately 6.3 million shares of the Company's
common stock during the quarter, through a combination of open
market purchases and an accelerated stock buyback program,
thus completing the Company's previously authorized stock
repurchases.
-- A new authorization by the Board of Directors for the Company
to repurchase up to 10 million shares of the Company's common
stock.
-- Declaring a quarterly cash dividend of $0.2875 per share
payable on September 1, 2006 to shareholders of record on
August 11, 2006, which constitutes a 15% increase over the
prior quarterly dividend.
Results of Operations
The Company's net revenues for the second quarter ended June 30,
2006 were approximately $341.8 million, an increase of 25% compared to
the prior year's second quarter. The Company reported EBITDA for the
quarter of $134.0 million, an increase of 13% compared to the prior
year's second quarter. This marks the eighteenth consecutive quarter
of year-over-year growth of Adjusted EBITDA. For the second quarter,
Adjusted Earnings (2) applicable to common stock were $37.3 million,
or $0.61 per diluted share, compared to last year's $0.66 per diluted
share on a comparable basis.
During the second quarter, the Company incurred preopening costs
related to projects under development of $13.6 million, a $0.1 million
loss on the disposition of certain assets and $2.5 million in costs to
develop new gaming opportunities, primarily related to Native American
gaming. Including these items, the Company reported net income of
$26.8 million and diluted earnings applicable to common stock of $0.44
per share.
The Company's earnings from its Green Valley Ranch joint venture
for the second quarter were $11.5 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 $26.4 million, an 8%
increase compared to the prior year's second quarter. "Green Valley
Ranch has continued its strong performance this year despite the
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 second quarter, net revenues from the Major Las Vegas
Operations, excluding Green Valley Ranch, increased to $305.3 million,
a 28% increase compared to the prior year's quarter, while EBITDA from
those operations increased 17% to $114.5 million. The results for the
second quarter include 73 days of operations at Red Rock. "The revenue
growth reflects the very successful opening of Red Rock and the
remarkable customer acceptance of the new property," 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 $3.04 billion as of June 30, 2006. Total
capital expenditures were $215.3 million for the second quarter.
Expansion and project capital expenditures included $140.3 million for
Phase I and Phase II of Red Rock, $30.4 million for the expansion of
Santa Fe Station, $13.3 million for the expansion of Fiesta Henderson
and $6.5 million for the purchase of land. During the second quarter,
the Company also purchased approximately 6.3 million shares of its
common stock for approximately $472.7 million. As of June 30, 2006,
the Company's debt to cash flow ratio as defined in its bank credit
facility was 5.2 to 1.
Phase III Master-planned Expansion of Red Rock
Today the Company announced the commencement of the Phase III
master-planned expansion of Red Rock, which will include a 72-lane
bowling center and expansions of both parking garages. Construction of
the bowling center is currently underway and is expected to be
completed in the second quarter of 2007. The expansions of the parking
garages are expected to begin in September 2006 and be completed in
phases beginning in the third quarter of 2007 through the first
quarter of 2008. The Company anticipates minimal construction
disruption with respect to this expansion. The estimated cost of this
expansion is approximately $60 million to $65 million.
Dividend
The Company's Board of Directors has declared a quarterly cash
dividend of $0.2875 per share, which represents a 15% increase over
the prior quarterly cash dividend. The dividend is payable on
September 1, 2006 to shareholders of record on August 11, 2006.
Stock Repurchases
Since the beginning of the year, the Company has repurchased 10.1
million shares of its common stock through a combination of open
market purchases and an accelerated stock buyback program, thus
completing the Company's previously authorized stock repurchases. The
total cost of the share repurchases completed in 2006 to date is
approximately $737 million. In addition, on July 24, 2006 the
Company's Board of Directors authorized the repurchase of up to an
additional 10 million shares of the Company's common stock, which
essentially replenishes the previous authorization.
Fiscal 2006 and 2007 Guidance
The Company is reiterating its EBITDA guidance for both the third
quarter and fourth quarter of 2006. The Company expects EBITDA for the
third quarter of approximately $135 million to $140 million and EBITDA
for the fourth quarter of $151 million to $156 million, excluding
development expense and other non-recurring items. The guidance
assumes construction disruption relating to the Santa Fe Station,
Fiesta Henderson and Green Valley Ranch master-planned expansions of
$2 million in the third quarter and none in the fourth quarter. This
would result in EPS of $0.49 to $0.54 for the third quarter and $0.59
to $0.64 for the fourth quarter, assuming 59.5 million diluted shares
outstanding for the third quarter and 60 million for the fourth
quarter. This guidance 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 fourth quarter of 2006 through the first quarter of
2007 and the completion of the Green Valley Ranch expansion from the
fourth quarter of 2006 through early 2007. The third quarter guidance
assumes revenue growth in the Major Las Vegas Operations, excluding
Green Valley Ranch, of 30% to 35% over the prior year and an effective
tax rate of 38.0%.
The Company is also reiterating EBITDA guidance for fiscal 2007 of
approximately $630 million to $670 million and updating EPS guidance
to $2.53 to $2.95. This guidance assumes that the Phase II
master-planned expansion of Red Rock opens in early 2007, and further
assumes an effective tax rate of 37.2% and 61 million diluted shares
outstanding.
Conference Call Information
The Company will host a conference call today, Tuesday, July 25,
at 12:00 p.m. (Eastern Time) to discuss its second 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 4:00 p.m. (Eastern Time) on
July 25, 2006, until 12:00 p.m. (Eastern Time) on August 7, 2006 at
(800) 642-1687. The reservation number is 2033599.
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 "Investors" section of the
Company's website at www.stationcasinos.com (3).
Construction projects such as the master-planned expansions of Red
Rock, 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, loss or
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, loss or gain on asset disposals, preopening expenses, lease
terminations, depreciation, amortization and, 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 or 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
second 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)
June 30, December 31,
2006 2005
----------- -----------
Assets:
Cash and cash equivalents $90,474 $85,552
Receivables, net 47,192 19,604
Other current assets 46,563 34,055
----------- -----------
Total current assets 184,229 139,211
Property and equipment, net 2,385,991 1,990,584
Other long-term assets 881,356 799,248
----------- -----------
Total assets $3,451,576 $2,929,043
=========== ===========
Liabilities and stockholders' (deficit)
equity:
Current portion of long-term debt $242 $108
Other current liabilities 304,729 228,657
----------- -----------
Total current liabilities 304,971 228,765
Revolving credit facility 1,122,200 330,000
Senior and senior subordinated notes 1,904,886 1,606,545
Other debt 17,031 9,136
Interest rate swaps, mark-to-market (7,856) (1,461)
Other long-term liabilities 161,713 125,244
----------- -----------
Total liabilities 3,502,945 2,298,229
Stockholders' (deficit) equity (51,369) 630,814
----------- -----------
Total liabilities and stockholders'
(deficit) equity $3,451,576 $2,929,043
=========== ===========
Station Casinos, Inc.
Condensed Consolidated Statements of Operations
(amounts in thousands, except per share data)
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------- -------------------
2006 2005 2006 2005
--------- --------- --------- ---------
Operating revenues:
Casino $245,137 $202,896 $461,360 $406,909
Food and beverage 56,276 36,715 95,147 73,552
Room 21,619 15,681 38,640 32,062
Other 17,862 12,867 31,834 24,050
Management fees 23,984 23,626 49,884 46,902
--------- --------- --------- ---------
Gross revenues 364,878 291,785 676,865 583,475
Promotional allowances (23,087) (17,817) (42,604) (36,047)
--------- --------- --------- ---------
Net revenues 341,791 273,968 634,261 547,428
--------- --------- --------- ---------
Operating costs and expenses:
Casino 86,949 70,698 161,129 141,426
Food and beverage 41,423 25,982 67,999 51,224
Room 7,839 5,365 13,383 10,567
Other 6,820 4,388 11,403 8,318
Selling, general and
administrative 58,157 44,434 102,780 88,373
Corporate expense 16,472 14,072 32,759 28,264
Development expense 2,549 2,091 4,681 4,702
Depreciation and
amortization 31,363 25,117 57,027 49,470
Preopening expenses 13,566 1,186 27,688 1,803
Loss (gain) on asset
disposals, net 65 301 (778) 214
Lease terminations - 3,560 500 11,654
--------- --------- --------- ---------
265,203 197,194 478,571 396,015
--------- --------- --------- ---------
Operating income 76,588 76,774 155,690 151,413
Earnings from joint ventures 9,917 8,710 21,840 19,400
--------- --------- --------- ---------
Operating income and earnings
from joint ventures 86,505 85,484 177,530 170,813
--------- --------- --------- ---------
Other income (expense):
Interest expense, net (41,345) (18,884) (65,161) (37,850)
Interest and other expense
from joint ventures (1,480) (2,142) (3,048) (3,826)
Loss on early retirement of
debt - - - (678)
--------- --------- --------- ---------
(42,825) (21,026) (68,209) (42,354)
--------- --------- --------- ---------
Income before income taxes 43,680 64,458 109,321 128,459
Income tax provision (16,887) (23,849) (41,406) (47,210)
--------- --------- --------- ---------
Net income $26,793 $40,609 $67,915 $81,249
========= ========= ========= =========
Earnings per common share:
Basic $0.46 $0.60 $1.10 $1.20
Diluted $0.44 $0.58 $1.07 $1.17
Weighted average common shares
outstanding
Basic 58,851 67,902 61,463 67,670
Diluted 60,921 69,469 63,458 69,223
Dividends paid per common
share $0.25 $0.21 $0.50 $0.42
Station Casinos, Inc.
Summary Information and
Reconciliation of Net Income to EBITDA
(amounts in thousands, except occupancy percentage and ADR)
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------- -------------------
2006 2005 2006 2005
--------- --------- --------- ---------
Major Las Vegas Operations
(a):
- --------------------------
Net revenues $305,256 $238,736 $559,976 $478,098
Net income $39,091 $38,940 $83,559 $79,446
Income tax provision 23,148 21,877 49,489 45,666
Interest and other
expense, net 22,574 13,923 37,206 27,168
Depreciation and
amortization 29,806 23,422 53,707 46,235
(Gain) loss on asset
disposals, net (151) 12 (405) (148)
Preopening expenses - 53 - 147
--------- --------- --------- ---------
EBITDA $114,468 $98,227 $223,556 $198,514
========= ========= ========= =========
Green Valley Ranch (50% owned):
- -------------------------------
Net revenues $63,001 $57,251 $130,095 $114,659
Net income $14,588 $11,315 $32,423 $27,055
Interest and other expense,
net 5,716 5,953 11,910 11,480
Depreciation and
amortization 6,105 5,547 12,103 10,762
Loss on asset disposals, net 2 637 25 1,159
Lease terminations - 1,032 - 1,032
--------- --------- --------- ---------
EBITDA $26,411 $24,484 $56,461 $51,488
========= ========= ========= =========
Major Las Vegas Operations
including Green Valley Ranch:
- ------------------------------
Net revenues $368,257 $295,987 $690,071 $592,757
Net income $53,679 $50,255 $115,982 $106,501
Income tax provision 23,148 21,877 49,489 45,666
Interest and other expense,
net 28,290 19,876 49,116 38,648
Depreciation and
amortization 35,911 28,969 65,810 56,997
(Gain) loss on asset
disposals, net (149) 649 (380) 1,011
Lease terminations - 1,032 - 1,032
Preopening expenses - 53 - 147
--------- --------- --------- ---------
EBITDA $140,879 $122,711 $280,017 $250,002
========= ========= ========= =========
Total Station Casinos, Inc.
(b):
- ---------------------------
Net income $26,793 $40,609 $67,915 $81,249
Income tax provision 16,887 23,849 41,406 47,210
Interest and other
expense, net 42,825 21,026 68,209 41,676
Depreciation and
amortization 31,363 25,117 57,027 49,470
Development expense 2,549 2,091 4,681 4,702
Preopening expenses 13,566 1,186 27,688 1,803
Loss (gain) on asset
disposals, net 65 301 (778) 214
Lease terminations - 4,076 500 12,170
Loss on early retirement of
debt - - - 678
--------- --------- --------- ---------
EBITDA $134,048 $118,255 $266,648 $239,172
========= ========= ========= =========
Occupancy percentage 96% 97% 97% 97%
ADR $75 $61 $71 $63
(a) Includes the wholly owned properties of Red Rock (since April 18,
2006), Palace Station, Boulder Station, Texas Station, Sunset
Station, Santa Fe Station, Fiesta Rancho and Fiesta Henderson.
(b) 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 Six Months Ended
June 30, June 30,
-------------------- -------------------
2006 2005 2006 2005
---------- --------- --------- ---------
Adjusted Earnings (a):
Net income $26,793 $40,609 $67,915 $81,249
Development expense 1,657 1,359 3,043 3,056
Preopening expenses 8,818 771 17,997 1,172
Loss (gain) on asset
disposals 42 196 (506) 139
Lease terminations - 2,649 325 7,910
Loss on early retirement
of debt - - - 441
---------- --------- --------- ---------
Adjusted Earnings $37,310 $45,584 $88,774 $93,967
========== ========= ========= =========
Adjusted basic earnings per
common share (a):
Net income $0.46 $0.60 $1.10 $1.20
Development expense 0.03 0.02 0.05 0.04
Preopening expenses 0.14 0.01 0.29 0.02
Loss (gain) on asset
disposals - - (0.01) -
Lease terminations - 0.04 0.01 0.12
Loss on early retirement
of debt - - - 0.01
---------- --------- --------- ---------
Adjusted basic earnings per
common share $0.63 $0.67 $1.44 $1.39
========== ========= ========= =========
Weighted average common
shares outstanding - basic 58,851 67,902 61,463 67,670
Adjusted diluted earnings
per common share (a):
Net income $0.44 $0.58 $1.07 $1.17
Development expense 0.03 0.02 0.05 0.04
Preopening expenses 0.14 0.01 0.28 0.02
Loss (gain) on asset
disposals - 0.01 (0.01) -
Lease terminations - 0.04 0.01 0.12
Loss on early retirement
of debt - - - 0.01
---------- --------- --------- ---------
Adjusted diluted earnings
per common share $0.61 $0.66 $1.40 $1.36
========== ========= ========= =========
Weighted average common
shares outstanding - diluted 60,921 69,469 63,458 69,223
(a) All dollar and per share amounts are shown net of tax.
CONTACT: Station Casinos, Inc., Las Vegas
Glenn C. Christenson, 800-544-2411 or 702-495-4242
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