Station Casinos continues to roll as operating revenues jump 18%

May 3, 2005 5:33 AM

While the world focused on Wynn Resort and the Las Vegas Strip last week, Station Casinos Inc. (STN), considered to be the most successful operator of locals casinos, reported record results for the first fiscal quarter that ended on March 31.

The company reported that EBITDA, earnings before interest, taxes, depreciation and amortization, reached a company record of $120.9 million, an increase of 28% over the prior year’s first quarter.

Revenues from the Las Vegas operations increase 18% over 2004, marking the fifth consecutive quarter of double-digit same-store revenue growth on a year-over-year basis. Diluted earnings per share, after being adjusted for non-recurring items and development expenses, was $0.70 compared to last year’s $0.51 per share.

Addressing the report, Lorenzo Fertitta, vice chairman and president, credited the "stable regulatory, political and tax environment in Nevada, and the strong Las Vegas economy " as the drivers for the company’s business.

For the future, the company said it expects EBITDA for the second quarter to be between $113 million and $117 million with earnings per share to be between $0.61 and $0.65. This guidance is based on expected growth of between 9% and 12%.

Alliance Gaming

New management of Alliance Gaming Corporation (AGI) showed improved performance for the third fiscal quarter that ended on March 31 but still reported a loss for the period. However, a return to profitability was foreseen in the near future.

During the quarter, revenues increased 10% on a sequential basis from the previous quarter to $125.4 million. This was 8% better than last year’s $116.2 million.

Operating loss from continuing operations was $2.2 million compared to an operating loss of $7.7 million during the previous quarter. In the comparable quarter of last year, the operating income was $22.2 million.

The company said it had pre-tax charges totaling $13.7 million that included inventory obsolescence, impairment charges, restructuring charges and a tax charge of $1.4 million.

"I am pleased with our progress during the quarter on our key business initiatives, including our Alpha video product roll out. We tracked against our plans during the quarter, and our earnings per share, excluding charges, is encouraging," said Richard Haddrill, president and CEO.

Penn National

Record operating results were reported by Penn National Gaming Inc. (PENN) for the first quarter of the fiscal year although a charge for retiring debt dropped income to $15.8 million or $0.19 per share compared to last year’s $17.8 million or $0.22 a share.

However, when considering only operating income, the company said it exceeded expectations due to improved cash flow from its Charles Town Races & Slot and Casino Rouge properties. Excluding non-recurring charges, the company’s earnings rose to $0.31 per share compared to last year’s $0.26 per share. Analysts had forecast $0.28 per share.

The company is in the process of acquiring Argosy Gaming Inc. (AGY) and expects to close in the third quarter of this year.

As for the remainder of the year, the company said it expects second quarter revenues to rise to $308.7 million from last year’s $290.1 million. Full-year earnings, excluding non-recurring charges, should reached $1.30 per share, the company said.

Aztar

Crediting its new tower at the Tropicana Atlantic City with generating an enthusiastic response and with overall improvement in its other properties, Aztar Corporation (AZR) reported a dramatic increase in revenue and net income for the first quarter of the fiscal year that ended on March 31.

Diluted earnings for the first quarter equated to $0.27 per share, after adjustments, compared to $0.10 in the comparable quarter of 2004.

Primarily due to the new Quarter facility on the A.C. Boardwalk, the Tropicana Atlantic City’s revenues rose 22%. And the Nevada, Indiana and Missouri properties reported strong results in the quarter "with each of them posting all-time record levels of EBITDA and in aggregate thus producing EBITDA growth of 17%.

The quarterly results were reported by the company’s new chairman, president and CEO Robert Haddock, who succeeded long-time Chief Executive Paul Rubeli.

Haddock also said "we continue to be optimistic that in the fiscal quarter ahead we can expect to see substantial growth in cash flow from the property (in Atlantic City)."

The company had previously said it was still looking at various options for the valuable real estate in owns in Las Vegas with its property situated on a corner of the Las Vegas Strip, across from the MGM Grand.