Poker town
NEWS
Station Casinos Profit Up 40 Pct, Outlook Raised
2005-08-25
Station Casinos Inc. on Thursday reported a 40 percent increase in quarterly earnings and slightly raised profit forecasts for 2005 and 2006, citing a strong Las Vegas economy.
Station's casinos, scattered throughout Las Vegas, focus on local residents rather than tourists. The company also manages tribal casinos.
The Las Vegas-based company said second-quarter net income rose to $40.6 million, or 58 cents per share, from $29 million, or 43 cents per share, a year earlier.
"The Las Vegas locals market continues to be robust -- job creation, population migration and the local economy are all really strong," Bear Stearns analyst Joe Greff said.
He added that Station was in "the sweet spot" of that market, with the potential to construct seven new projects over the next 10 years.
On Thursday, Station announced plans to expand the Green Valley Ranch resort at a cost of about $110 million and a joint venture to build a luxury condominium tower adjacent to its Red Rock project, which the company said is now projected to cost $925 million, or $75 million more than had been expected.
"We have a strong profile in place for at least the next 10 to 12 years," Chief Financial Officer Glenn Christenson said.
The company also plans to build a casino catering to local residents in Reno, Nevada.
Excluding one-time items, Station had second-quarter earnings of 65 cents a share, beating the average Wall Street estimate of 64 cents.
Revenue rose 14 percent to $274 million. Earnings before interest, taxes, depreciation and amortization increased 27 percent to $118.3 million, while same-store revenue rose 16 percent.
Station also increased its quarterly dividend 19 percent to 25 cents a share.
The company's shares were up 3.3 percent at $74.17 in late trading on the New York Stock Exchange.
Looking ahead, Station said it expects to earn as much as 56 cents a share in the third quarter, up from its previous top-end forecast of 54 cents. The company also raised its forecast for fourth-quarter earnings to between 61 cents and 66 cents a share from its previous range of 61 cents to 65 cents.
For the full year, Station said it expects to earn to $2.47 to $2.58 a share, excluding one-time items. Analysts expected $2.51 a share.
Station also set an outlook for earnings before interest, taxes, depreciation and amortization (EBITDA) of $104 million to $110 million for the third quarter, $115 million to $120 million for the fourth quarter and $458 million to $469 million for the full year.
For 2006, Station forecast earnings of $2.70 to $2.89 a share, and EBITDA of $545 million to $565 million, also up from previous projections.
Analysts expect 2006 earnings of $2.86 a share.
Goldman Sachs analyst Steven Kent, in a report, called the 2006 guidance "the most important take-away" of Station's comments because it includes an additional $15 million of EBITDA, despite $8 million of additional construction disruption and unchanged same-store sales growth of just 3 percent to 5 percent.
Company officials said the 3 percent to 5 percent range reflects expected population growth and they will be able to fine tune the sales growth estimate as 2006 nears.
