Exhibit 99.1
Station Casinos Announces Third Quarter Results and Declares Dividend
LAS VEGAS--(BUSINESS WIRE)--Nov. 2, 2006--Station Casinos, Inc.
(NYSE: STN; "Station" or the "Company") today announced the results of
its operations for the third quarter ended September 30, 2006 and
other Company-related news.
Notable events include:
-- Third quarter EBITDA (1) of $126.7 million, an increase of 8%
over the prior year's third quarter.
-- Net revenues from its Major Las Vegas Operations, excluding
Green Valley Ranch, increased 28% from the prior year's third
quarter.
-- Adjusted for non-recurring items and development expenses,
diluted earnings per share ("EPS") of $0.38 compared to $0.63
in the prior year's third quarter, a decrease of 40%.
-- The opening of a portion of the Phase III expansion of Green
Valley Ranch on October 3, 2006 and a portion of the Phase II
expansion of Fiesta Henderson on August 17, 2006.
-- Repurchasing approximately 2.6 million shares of the Company's
common stock during the quarter at an average price of $55.79
per share.
-- Declaring a quarterly cash dividend of $0.2875 per share
payable on December 4, 2006 to shareholders of record on
November 13, 2006.
-- In the Gun Lake litigation, the Department of Justice filing a
Notice with the District Court on October 27, 2006, indicating
that the Department of Interior plans to take the 146-acre
parcel of land, that is the subject of the litigation, into
trust on January 5, 2007, if the plaintiffs do not seek
injunctive relief or fail to persuade the court to issue any
relief precluding the Department of Interior from doing so.
Results of Operations
The Company's net revenues for the third quarter ended September
30, 2006 were approximately $346.0 million, an increase of 25%
compared to the prior year's third quarter. The Company reported
EBITDA for the quarter of $126.7 million, an increase of 8% compared
to the prior year's third quarter. This marks the 19th consecutive
quarter of year-over-year growth of Adjusted EBITDA. For the third
quarter, Adjusted Earnings (2) applicable to common stock were $21.7
million, or $0.38 per diluted share, compared to last year's $0.63 per
diluted share on a comparable basis.
During the third quarter, the Company incurred a $1.5 million loss
on the disposition of certain assets primarily related to the
cancellation of the residential project at Red Rock, $2.1 million in
costs to develop new gaming opportunities, primarily related to Native
American gaming and $0.4 million of other non-recurring costs.
Including these items, the Company reported net income of $19.2
million and diluted earnings applicable to common stock of $0.34 per
share.
The Company's earnings from its Green Valley Ranch joint venture
for the third quarter were $10.8 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 $25.4 million, a 4%
increase compared to the prior year's third quarter.
Las Vegas Market Results
For the third quarter, net revenues from the Major Las Vegas
Operations, excluding Green Valley Ranch, increased to $308.6 million,
a 28% increase compared to the prior year's quarter, while EBITDA from
those operations increased 4% to $102.1 million.
Net revenues fell short of previously communicated guidance
primarily as a result of a smaller than expected increase in spend per
visit when compared to the previous quarter and due to greater than
expected construction disruption at Santa Fe Station. Same store
revenues, excluding Red Rock, for the quarter were down 1% year over
year.
The Company also reported lower EBITDA than previously
communicated guidance. EBITDA was impacted by the "flow through"
effect from the lower than expected revenues, lower margins at Red
Rock, offset by lower corporate costs, primarily from a reduction in
corporate level bonuses. Same store EBITDA, excluding Red Rock, was
down 8% year over year, with about one half the shortfall caused by
longer than expected construction disruption at Santa Fe.
"Now that we have transitioned into more normalized operations, we
are seeing positive results in our efforts to improve operating
margins at Red Rock. We are pleased with the customer acceptance of
Red Rock and net revenues for the quarter exceeded our initial
internal projections," said Lorenzo J. Fertitta, vice chairman and
president of the Company.
Red Rock has already generated more EBITDA through the end of
October than Green Valley Ranch generated in its first full year of
operations. The Company believes Red Rock will now generate between
$90 million and $95 million in EBITDA in its first year, or
approximately an 11% return on the weighted average investment.
"Assuming a similar progression in cash flows over time as we
experienced at Green Valley Ranch, we are well on our way to achieving
our stated return on investment goal of high teens to low twenties,"
said 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 $3.41 billion as of September 30, 2006. Total
capital expenditures were $203.5 million for the third quarter.
Expansion and project capital expenditures included $40.2 million for
Phases I and II of Red Rock, $37.1 million for the expansion of Santa
Fe Station, $27.2 million for the expansion of Fiesta Henderson and
$47.0 million for the purchase of land. During the third quarter, the
Company also purchased approximately 2.6 million shares of its common
stock for approximately $142.5 million. As of September 30, 2006, the
Company's debt to cash flow ratio, as defined in its bank credit
facility, was 5.9 to 1.
Gun Lake Tribe Management Contract
On October 27, 2006, the Department of Justice filed a Notice with
the District Court and sent a letter to the plaintiffs in the Gun Lake
litigation indicating that the Department of the Interior plans to
take the 146-acre parcel of land, which is the subject of the
litigation, into trust on January 5, 2007, if the plaintiffs do not
seek injunctive relief or fail to persuade the court to issue any
relief precluding the Department of Interior from doing so. "This
action by the Department of the Interior is a positive development
that we believe could expedite the court's decision in the lawsuit
that has unduly delayed this project," said Lorenzo Fertitta.
Dividend
The Company's Board of Directors has declared a quarterly cash
dividend of $0.2875 per share. The dividend is payable on December 4,
2006 to shareholders of record on November 13, 2006.
Stock Repurchases
During the third quarter, the Company repurchased approximately
2.6 million shares of the Company's common stock at an average price
of $55.79 per share. Since the beginning of the year, the Company has
repurchased a total of 12.7 million shares of its common stock through
a combination of open market purchases and an accelerated stock
buyback program. The total cost of share repurchases completed in 2006
to date is approximately $880 million.
Fiscal 2006 and 2007 Guidance
The Company expects EBITDA for the fourth quarter of $133 million
to $143 million, excluding development expense and other non-recurring
items. This would result in EPS of $0.41 to $0.51 for the fourth
quarter, assuming 57 million diluted shares outstanding. The fourth
quarter guidance assumes revenue growth in the Major Las Vegas
Operations, excluding Green Valley Ranch, of 25% to 30% over the prior
year and an effective tax rate of 38.0%.
The Company is also updating guidance for fiscal 2007. For fiscal
2007, the Company now expects EBITDA of approximately $610 million to
$650 million which would result in EPS guidance of $2.00 to $2.43.
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 38.0% and 58 million diluted shares outstanding.
Conference Call Information
The Company will host a conference call today, Thursday, November
2 at 12:00 p.m. (Eastern Time) to discuss its third 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 November 2,
2006, until 12:00 p.m. (Eastern Time) on November 14, 2006 at (800)
642-1687. The reservation number is 8563500.
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, Gold Rush Casino and Lake
Mead Lounge 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-3ASR File No. 333-134936. 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,
other non-recurring costs, 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, other
non-recurring costs, 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, loss on
early retirement of debt and other non-recurring 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,
2006 2005
------------- ------------
Assets:
Cash and cash equivalents $95,032 $85,552
Receivables, net 47,846 19,604
Other current assets 44,734 34,055
------------- ------------
Total current assets 187,612 139,211
Property and equipment, net 2,525,587 1,990,584
Other long-term assets 932,940 799,248
------------- ------------
Total assets $3,646,139 $2,929,043
============= ============
Liabilities and stockholders' (deficit)
equity:
Current portion of long-term debt $483 $108
Other current liabilities 264,813 228,657
------------- ------------
Total current liabilities 265,296 228,765
Revolving credit facility 1,087,200 330,000
Senior and senior subordinated notes 2,304,812 1,606,545
Other debt 16,742 9,136
Interest rate swaps, mark-to-market (617) (1,461)
Other long-term liabilities 163,853 125,244
------------- ------------
Total liabilities 3,837,286 2,298,229
Stockholders' (deficit) equity (191,147) 630,814
------------- ------------
Total liabilities and stockholders'
(deficit) equity $3,646,139 $2,929,043
============= ============
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,
------------------- --------------------
2006 2005 2006 2005
--------- --------- ---------- ---------
Operating revenues:
Casino $248,836 $206,412 $710,196 $613,321
Food and beverage 57,637 35,789 152,784 109,341
Room 20,867 14,009 59,507 46,071
Other 19,894 14,159 51,728 38,209
Management fees 24,299 24,028 74,183 70,930
--------- --------- ---------- ---------
Gross revenues 371,533 294,397 1,048,398 877,872
Promotional allowances (25,565) (18,060) (68,169) (54,107)
--------- --------- ---------- ---------
Net revenues 345,968 276,337 980,229 823,765
--------- --------- ---------- ---------
Operating costs and expenses:
Casino 93,776 71,737 254,905 213,163
Food and beverage 41,710 25,310 109,709 76,534
Room 8,584 5,159 21,967 15,726
Other 7,801 4,904 19,204 13,222
Selling, general and
administrative 64,872 46,076 167,652 134,449
Corporate 12,032 14,592 44,791 42,856
Development 2,104 2,047 6,785 6,749
Depreciation and
amortization 36,859 26,053 93,886 75,523
Preopening (211) 1,651 27,477 3,454
Loss on asset disposals,
net 1,458 3,384 680 3,598
Lease terminations - - 500 11,654
--------- --------- ---------- ---------
268,985 200,913 747,556 596,928
--------- --------- ---------- ---------
Operating income 76,983 75,424 232,673 226,837
Earnings from joint
ventures 9,044 8,956 30,884 28,356
--------- --------- ---------- ---------
Operating income and earnings
from joint ventures 86,027 84,380 263,557 255,193
--------- --------- ---------- ---------
Other income (expense):
Interest expense, net (52,149) (20,466) (117,310) (58,316)
Interest and other expense
from joint ventures (1,842) (1,473) (4,890) (5,299)
Loss on early retirement of
debt - (600) - (1,278)
--------- --------- ---------- ---------
(53,991) (22,539) (122,200) (64,893)
--------- --------- ---------- ---------
Income before income taxes 32,036 61,841 141,357 190,300
Income tax provision (12,807) (22,881) (54,213) (70,091)
--------- --------- ---------- ---------
Net income $19,229 $38,960 $87,144 $120,209
========= ========= ========== =========
Earnings per common share:
Basic $0.35 $0.57 $1.47 $1.77
Diluted $0.34 $0.56 $1.43 $1.73
Weighted average common
shares outstanding
Basic 55,003 68,355 59,286 67,901
Diluted 56,712 69,772 61,099 69,302
Dividends paid per common
share $0.29 $0.25 $0.79 $0.67
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,
------------------- ---------------------
2006 2005 2006 2005
--------- --------- ----------- ---------
Major Las Vegas Operations
(a):
---------------------------
Net revenues $308,617 $241,047 $868,593 $719,145
Net income $22,791 $36,636 $89,124 $116,082
Income tax provision 15,312 22,509 54,599 68,175
Interest and other
expense, net 29,554 14,246 66,760 41,414
Depreciation and
amortization 34,769 24,392 88,476 70,627
Gain on asset disposals,
net (2) (31) (407) (179)
Preopening expenses (293) - 27,135 147
--------- --------- ----------- ---------
EBITDA $102,131 $97,752 $325,687 $296,266
========= ========= =========== =========
Green Valley Ranch (50%
owned):
---------------------------
Net revenues $61,728 $58,994 $191,823 $173,653
Net income $13,492 $12,405 $45,915 $39,460
Interest and other
expense, net 5,350 5,805 17,260 17,285
Depreciation and
amortization 6,309 5,627 18,412 16,389
Preopening expenses 286 - 286 -
Loss on asset disposals,
net - - 25 1,159
Lease terminations - 600 - 1,632
--------- --------- ----------- ---------
EBITDA $25,437 $24,437 $81,898 $75,925
========= ========= =========== =========
Major Las Vegas
Operations including
Green Valley Ranch:
---------------------------
Net revenues $370,345 $300,041 $1,060,416 $892,798
Net income $36,283 $49,041 $135,039 $155,542
Income tax provision 15,312 22,509 54,599 68,175
Interest and other
expense, net 34,904 20,051 84,020 58,699
Depreciation and
amortization 41,078 30,019 106,888 87,016
Preopening expenses (7) - 27,421 147
(Gain) loss on asset
disposals, net (2) (31) (382) 980
Lease terminations - 600 - 1,632
--------- --------- ----------- ---------
EBITDA $127,568 $122,189 $407,585 $372,191
========= ========= =========== =========
Total Station Casinos, Inc.
(b):
---------------------------
Net income $19,229 $38,960 $87,144 $120,209
Income tax provision 12,807 22,881 54,213 70,091
Interest and other
expense, net 53,991 21,939 122,200 63,615
Depreciation and
amortization 36,859 26,053 93,886 75,523
Development expense 2,104 2,047 6,785 6,749
Preopening expenses (211) 1,651 27,477 3,454
Preopening expenses at
Green Valley Ranch
(50%) 143 - 143 -
Loss on asset disposals,
net 1,458 3,384 680 3,598
Other non-recurring
costs 363 - 363 -
Lease terminations - 300 500 12,470
Loss on early retirement
of debt - 600 - 1,278
--------- --------- ----------- ---------
EBITDA $126,743 $117,815 $393,391 $356,987
========= ========= =========== =========
Occupancy percentage 94% 96% 96% 97%
ADR $71 $57 $71 $61
(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 Nine Months Ended
September 30, September 30,
------------------ -------------------
2006 2005 2006 2005
--------- -------- --------- ---------
Adjusted Earnings (a):
Net income $19,229 $38,960 $87,144 $120,209
Development expense 1,368 1,331 4,411 4,387
Preopening expenses (137) 1,073 17,860 2,245
Loss on asset disposals 948 2,200 442 2,339
Lease terminations - 195 325 8,105
Loss on early retirement of
debt - 390 - 831
Preopening expenses at Green
Valley Ranch (50%) 93 - 93 -
Other non-recurring costs 236 - 236 -
--------- -------- --------- ---------
Adjusted Earnings $21,737 $44,149 $110,511 $138,116
========= ======== ========= =========
Adjusted basic earnings per
common share (a):
Net income $0.35 $0.57 $1.47 $1.77
Development expense 0.03 0.02 0.07 0.07
Preopening expenses - 0.02 0.30 0.03
Loss on asset disposals 0.02 0.03 0.01 0.03
Lease terminations - - 0.01 0.12
Loss on early retirement of
debt - 0.01 - 0.01
Preopening expenses at Green
Valley Ranch (50%) - - - -
Other non-recurring costs - - - -
--------- -------- --------- ---------
Adjusted basic earnings per
common share $0.40 $0.65 $1.86 $2.03
========= ======== ========= =========
Weighted average common shares
outstanding - basic 55,003 68,355 59,286 67,901
Adjusted diluted earnings per
common share (a):
Net income $0.34 $0.56 $1.43 $1.73
Development expense 0.02 0.02 0.07 0.07
Preopening expenses - 0.02 0.29 0.03
Loss on asset disposals 0.02 0.03 0.01 0.03
Lease terminations - - 0.01 0.12
Loss on early retirement of
debt - - - 0.01
Preopening expenses at Green
Valley Ranch (50%) - - - -
Other non-recurring costs - - - -
--------- -------- --------- ---------
Adjusted diluted earnings per
common share $0.38 $0.63 $1.81 $1.99
========= ======== ========= =========
Weighted average common shares
outstanding - diluted 56,712 69,772 61,099 69,302
(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