New hope for Station; Raider Nation exiled

Station Casinos reported second-quarter results yesterday and JP Morgan analyst Joseph Greff came away “encouraged” and “impressed.” He wrote of “less bad results in April and May and much better positive [cash flow] generation in June.” How so? In its first month of resumed operations, Station generated $100 million in net revenue. Closed properties were only a “modest” drag on the numbers. “July is reported to be similar to June (though seasonally July is not as strong as June) with revenues benefitting from being ‘one of the only games in town,’ with limited national sports to watch and closed bars, theaters and nightclubs in LV.” Marketing is down, as are salaries (7K fewer employees). Greff predicts a “leveling off” in the second half of 2020, explaining, “Some of the positive spend and visitation activity in June and July is likely not sustainable (think of recent unemployment benefits, which is probably one of the reasons why younger versus older casino patrons were stronger).” On the other hand, lower levels of casino employment cut into Station’s player base.

The Wildfire properties are on hold, according to Greff, given Gov. Steve Sisolak‘s policy on bars. But most other Station casinos are back on line. Visitation is trending down but individual spending is up, as is coin-in. Las Vegas operations suffered 78% compared to 2Q19 and Native American management income was down to $6 million, a 75% slippage. Oh, and CEO Frank Fertitta III floated the possibility that the Palms, Texas Station, Fiesta Henderson and Fiesta Rancho might never reopen, just en passant. Greff didn’t see fit to mention it but, if economists like John Restrepo are right, the Las Vegas economy is headed for a major realignment.