Station Casinos’ first-quarter earnings came in below analysts’ expectations because of lower-than-expected revenue and higher operation and interest costs.
Earnings declined 44 percent to $23.1 million, or 41 cents per share, for the quarter ended March 31, from $41.1 million, or 62 cents per share, a year earlier.
Analysts polled by Thomson Financial had forecast first-quarter earnings of 58 cents per share.
Station Casinos, which is going private, released the earnings before the stock market opened Wednesday. The company didn’t hold a conference call to discuss the results and didn’t comment beyond the statistics.
Station’s earnings were significantly affected by a surge in interest expenses, which increased to $56.5 million from $23.8 million. Stock repurchases, capital expenses, and construction costs related to the $925 million Red Rock Resort, which opened in April 2006, drove interest expenses higher.
Cash flow, defined as earnings before interest, taxes, depreciation and amortization, increased 14.9 percent to $152.3 million.
Quarterly revenue rose 27.3 percent to $372.4 million from $292.5 million, slightly less than Wall Street’s estimate of $376 million.
A 22.4 percent increase in casino revenues to $264.7 million, an 80.6 percent increase in room revenues and a 58.3 percent increase in food and beverage revenue helped drive the revenue overall increase.
The cost associated with doing business also increased; operational costs and expenses rose 31.1 percent to $279.7 million from $213.4 million.
Station Casinos spent $138 million on capital improvement projects including $35.2 million to expand Red Rock Resort and $11.5 million to expand Santa Fe Station.
Station Casinos’ board entered a purchase agreement in February for a $90 per share buyout by Fertitta Colony Partners, a joint venture between members of the company’s founding family and Los Angeles-based, private-equity firm Colony Capital.
A date has not yet been set for a shareholders vote on the deal. The buyout also requires approval of state gaming officials and federal regulators.
Station Casinos must continue to publicly report its earnings to the Securities and Exchange Commission until the deal closes and the company is taken private.
Station Casinos shares rose 11 cents, or 0.13 percent, Wednesday to close at $87.59.