\nBy Howard Stutz, LVRJ<\/p>\n
\tStation Casinos received a vote of confidence last week from Wall Street.<\/p>\n
\tIt\u2019s not like the company needed the endorsement.<\/p>\n
\tTimes are good for Station Casinos, which reported its 17th straight quarter of cash flow growth in August.<\/p>\n
\tThe company, which operates 19 large and small casinos throughout the Las Vegas Valley, has benefited from an improving Southern Nevada economy. Las Vegas employment numbers are on the upswing, Clark County taxable sales saw their 57th straight monthly increase in June, and housing prices have grown 82 percent in the last 42 months.<\/p>\n
\tThe numbers are good news for a casino company whose business relies on consumer spending by the locals market.<\/p>\n
\t\u201cThe continued improvement in these areas should bode well for further upside in our business,\u201d Station Casinos Chief Financial Officer Marc Falcone said on Aug. 11.<\/p>\n
\tStandard & Poor\u2019s Ratings Service was listening.<\/p>\n
\tThe high-yield bond advisory firm told investors that it now has a \u201cpositive outlook\u201d in its ratings for Station Casinos continued ability to service its $2 billion of long-term debt. Before, Standard & Poor\u2019s offered a \u201cstable\u201d outlook toward the company.<\/p>\n
\t\u201cThe revision \u2026 reflects our expectation that Station Casinos credit measures will continue to improve through 2016, as a result of continued good operating performance coupled with debt repayment.\u201d Standard & Poor\u2019s analyst Stephen Pagano wrote in a report to company bond holders.<\/p>\n
\tPagano is bullish on the Las Vegas locals gaming market continuing to grow over the next several quarters. Last year, Station Casinos undertook a $55 million capital improvement effort at its flagship Red Rock Resort and Green Valley Ranch Resort to upgrade various nongaming aspects of the properties, such as restaurants. Nongaming spending by customers is a much larger slice of the revenue pie.<\/p>\n
\tFalcone said the company\u2019s capital expenditures this year will total between $105 million and $120 million. The budget covers normal maintenance, slot machines and technology upgrades, and improving restaurants and other amenities at several area properties.<\/p>\n
\tPagano said the one concern the firm has is another downturn hitting the Las Vegas economy. However, he wrote that Station Casinos\u2019 \u201cleadership in the market\u201d and quarterly cash flows \u201chigher than those of its commercial gaming peers\u201d give him comfort the company could weather rough waters.<\/p>\n
\tStation Casinos has another revenue producing division that impressed Standard & Poor\u2019s: its management contracts with American Indian casinos in California and Michigan.<\/p>\n
\tFalcone said management fees from the two properties in the quarter that ended June 30 increased 33 percent from a year ago. The Gun Lake Casino, located between Grand Rapids and Kalamazoo, Mich., had strong operating results in the quarter. Station Casinos has operated the casino for the Gun Lake Tribe of Pottawatomi Indians since 2011.<\/p>\n
\tAt the Graton Resort & Casino in Northern California\u2019s Sonoma County, Station Casinos expects its fees for operating the facility to increase by $5 million annually. The company and the Federated Indians of Graton Rancheria refinanced the loans cover the facility that cost $800 million to build. The casino opened nearly two years ago.<\/p>\n
\tMeanwhile, Station Casinos and the tribe will break ground Wednesday on a 200-room, $175 million hotel tower expansion to give the stand-alone casino much needed lodging capabilities.<\/p>\n
\t\u201cWe view Station Casinos\u2019 current and future management contracts with Native American casinos as a positive factor, as this helps to diversify its revenue stream, with little incremental cost,\u201d Pagano said.<\/p>\n
\tStation Casinos is 58 percent owned by company founders Frank Fertitta III and Lorenzo Fertitta with publicly owned debt.<\/p>\n
\tAs he has done on previous quarterly earnings conference calls, Falcone addressed questions about the company\u2019s corporate growth opportunities. He said the company\u2019s management \u201ccontinues to consider\u201d different opportunities, such as real estate investment trust spinoff and even a possible initial public offering.<\/p>\n
\tStation Casinos has traveled a long road in more than four years since emerging from a 24-month bankruptcy reorganization. The investment community has zero concerns about the company\u2019s prospects.<\/p>\n
\tFalcone credited steady improvements in the Las Vegas economy and the casino company\u2019s \u201cdisciplined and focused approach on operations.\u201d<\/p>\n
\tPagano hinted Standard & Poor\u2019s would consider raising the rating \u201cone-notch higher\u201d if the Station Casinos sustains the current debt-to-cash flow ratios.<\/p>\n
No replies were posted for this topic.<\/p>\n","protected":false},"excerpt":{"rendered":"
By Howard Stutz, LVRJ Station Casinos received a vote of confidence last week from Wall Street. It\u2019s not like the company needed the endorsement. Times are good for Station Casinos, which reported its 17th straight quarter of cash flow growth…<\/p>\n","protected":false},"author":36,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[10],"tags":[],"class_list":["post-9082","post","type-post","status-publish","format-standard","hentry","category-latest-casino-news"],"_links":{"self":[{"href":"https:\/\/forumarchives.tmsites.net\/index.php\/wp-json\/wp\/v2\/posts\/9082","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumarchives.tmsites.net\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumarchives.tmsites.net\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumarchives.tmsites.net\/index.php\/wp-json\/wp\/v2\/users\/36"}],"replies":[{"embeddable":true,"href":"https:\/\/forumarchives.tmsites.net\/index.php\/wp-json\/wp\/v2\/comments?post=9082"}],"version-history":[{"count":0,"href":"https:\/\/forumarchives.tmsites.net\/index.php\/wp-json\/wp\/v2\/posts\/9082\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumarchives.tmsites.net\/index.php\/wp-json\/wp\/v2\/media?parent=9082"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumarchives.tmsites.net\/index.php\/wp-json\/wp\/v2\/categories?post=9082"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumarchives.tmsites.net\/index.php\/wp-json\/wp\/v2\/tags?post=9082"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}