Article Excerpt:
TWST: What today is Station Casinos?Mr. Christenson: We have 14 casinos in Las Vegas today, and those properties generally cater to locals and tourists who visit Las Vegas as much as six to eight times a year. We also have a separate business where we manage casinos for Native Americans around the country. We currently have five contracts, one of which is currently in operation and four that are in various stages of securing the necessary state and federal approvals. The company was founded back in 1976. We went public in 1993, and at that time the only property that we were operating in Las Vegas was the Palace Station. So it's been a company that's enjoyed tremendous growth over the last 12 years and we expect significant growth going forward.
TWST: What's key today about your strategies and your goals? Is it scale
at this point as you look at the large players and what they are able to
do? Does that make a difference today in how you formulate your own
strategies?
Mr. Christenson: I think you have to go to our core strategy, which is
to take advantage of the unique supply-demand characteristics in the Las
Vegas locals market. What we see in the Las Vegas locals market is
tremendous demand for our products being driven primarily by the
population and job growth in Las Vegas. We see that growth continuing at
a very strong pace for the foreseeable future. At the same time you see
this strong demand, there are significant barriers to entry into the
local market because of legislation passed in 1997 called Senate Bill
208. This bill limits where hotel/casinos can be built off the strip or
downtown. Our company has been very active in securing the majority of
sites that are available for development in the future. This creates a
tremendous dynamic for us going forward. Our strategy is to execute one
of the most simple business models out there. 87% of our cash flows come
from slots, so we have a very stable, very predictable, highly margined
cash flow stream. We develop entertainment malls for locals. They come
to our properties for various forms of entertainment and then generally
like to play the slot machines. At the end of the day we count the
quarters in the machines and we take them to the bank. It really doesn't
get much simpler than that. Because of our business model and operating
strategies, we have the strongest operating margins in the gaming
industry, as well as the highest returns on investment. We arefocused on
how to capitalize on our strategy over the next five to 10 years. We
have recently put in place a financial strategy and balance sheet
platform that will allow us to take advantage of our growth
opportunities for at least the next five to 10 years by developing
properties that have strong returns on investment using relatively low-
cost capital and significant free cash flows.
Tickers included in this excerpt: STN
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