Station Casinos sees rise in revenues but records net loss
Station Casinos LLC, the largest locals casino company in Southern Nevada, reported a net loss of $4.7 million for the third quarter, compared with a $7.8 million profit for the same period last year, according to a quarterly earnings report released Tuesday.
Despite the company’s quarterly loss, Station Casinos sees major opportunities from operating the Graton Resort &Casino in Northern California and the New Jersey launch this month of its Ultimate Gaming website.
The Las Vegas-based company, whose properties include Red Rock Resort, Green Valley Ranch and Palace Station, as well as Fiesta and Wildfire-branded casinos, posted revenues of $304.7 million, compared with $295.7 million in the third quarter of 2012.
“Despite the soft revenue environment, Station Casinos reported revenue increases across all major departments and generated double-digit growth in adjusted EBITDAM (earnings before interest, taxes, depreciation, amortization, and management fees),” said Marc Falcone, executive vice president, CFO and treasurer of Station Casinos.
For the first nine months of the year, the company’s revenues were $933.1 million, up slightly from $926.3 million for the same period last year.
“This is our 10th consecutive quarter of gains in adjusted EBITDAM,” Falcone said. “Our continued focus on efficiently managing our business has clearly improved our operating results.”
Station Casinos measures its performance by earnings before interest, taxes, depreciation, amortization and management fees.
After a decade of planning, development and construction, the Graton Resort &Casino in Rohnert Park, Calif., opened Nov. 5.
Falcone told analysts in the company’s conference call that about 275,000 customers were already involved in the Graton’s Rewards Play program. He said the company has a seven-year management agreement that will generate management fees of 24 percent of pre-tax income in years one through four, and 24 percent in years five through seven.
“Although it is very early, the initial performance of the property is exceeding our expectations by all measures,” Falcone said.
He declined to discuss the property’s financial performance. Falcone said Station Casinos would release more information about the Graton’s early performance with its fourth-quarter earnings.
Station Casinos generated $11.4 million in management fees, up from $6.8 million for the third quarter of 2012. The company manages the Gun Lake Casino in Bradley, Mich., for the Match-E-Be-Nash-She-Wish Band of Pottawatomi Indians, and is developing a casino in Madera, Calif., with the North Folk Rancheria.
The company showed modest improvement in property revenues for the quarter.
Casino revenues were $216.05 million in the third quarter, up from $212.4 million last year. Food and beverage was $56.7 million, up from $56.6 million, while room revenue was $26.5 million for the quarter that ended Sept. 30, up from $25.8 million for the same period last year.
In New Jersey, the firm’s subsidiary Fertitta Interactive and its Ultimate Gaming brand are set to launch a full-scale online gaming site Nov. 21. Ultimate recently received a transactional waiver from the New Jersey Division of Gaming Enforcement that will allow the company and its partner, Trump Taj Mahal Associates LLC, to begin accepting real-money wagers.
Unlike Nevada, where only poker is permitted online, New Jersey operators can offer a full slate of casino-style games. Ultimate will offer its online gaming site Ultimate Casino on ucasino.com.
“The interactive team has been hard at work developing its platform in New Jersey, and we look forward to offering a fun, convenient and secure online gaming experience to the people of New Jersey,” Falcone said.
As of Sept. 30, Station Casinos’ long-term debt was $2.16 billion, excluding a nonrecourse land loan of $110.3 million, and cash equivalents were $123.5 million.
Contact report Chris Sieroty at csieroty@reviewjournal.com or 702-477-3893. Follow @sierotyfeatures on Twitter.
