Eldorado Resorts Results

Eldorado Resorts Reports Second Quarter Net Revenue of $456.8 Million, Operating Income of $77.4 Million and Record Adjusted EBITDA of $118.0 Million

Eldorado Resorts

Eldorado Resorts, Inc. (NASDAQ: ERI)  yesterday reported operating results for the second quarter ended June 30, 2018. Separately, Eldorado also announced that at a meeting earlier yesterday, the Illinois Gaming Board approved the Company’s pending acquisition of the Grand Victoria Casino in Elgin, IL.

 

       

($ in thousands, except per share data)

Total Net Revenue
Three Months Ended
June 30,
2018   2017  

2017 Pre-

Acquisition(1)

 

2017

Total(2)

  Change
West $ 117,880 $ 99,752 $ 11,001   $ 110,753 6.4%
Midwest 100,607 67,641 36,279 103,920 (3.2)%
South 112,242 88,459 32,219 120,678 (7.0)%
East 125,961 119,638 2,990 122,628 2.7%
Corporate and Other   112     136     45     181   (38.1)%
Total Net Revenue (3) $ 456,802   $ 375,626   $ 82,534   $ 458,160   (0.3)%

 

       

($ in thousands, except per share data)

Operating Income (Loss)
Three Months Ended
June 30,
2018   2017  

2017 Pre-

Acquisition(1)

 

2017

Total(2)

  Change
West $ 21,865 $ 16,512 $ 2,709   $ 19,221 13.8%
Midwest 27,411 15,412 10,637 26,049 5.2%
South 20,564 12,610 5,739 18,349 12.1%
East 24,397 18,228 (197) 18,031 35.3%
Corporate and Other   (16,823)     (93,229)     (2,550)     (95,779)   (82.4)%
Total Operating Income (Loss) (3) $ 77,414   $ (30,467)   $ 16,338   $ (14,129)   647.9%
 

 

       

($ in thousands, except per share data)

Adjusted EBITDA
Three Months Ended
June 30,

2018

 

2017

 

2017 Pre-

Acquisition(1)

 

2017

Total (2)

  Change
West $ 31,758 $ 23,199 $ 3,640   $ 26,839 18.3%
Midwest 35,923 20,458 12,686 33,144 8.4%
South 28,402 18,466 7,299 25,765 10.2%
East 29,363 26,558 42 26,600 10.4%
Corporate and Other   (7,431)     (5,884)     (1,729)     (7,613)   (2.4)%
Total Adjusted EBITDA (4) $ 118,015   $ 82,797   $ 21,938   $ 104,735   12.7%

 

                   
Net income (loss) $ 36,796 $ (46,190)
Basic EPS $ 0.48 $ (0.68)
Diluted EPS $ 0.47 $ (0.68)
 

 

       
Total Net Revenue

($ in thousands, except per share data)

Six Months Ended
June 30,

2018

 

2017

 

2017 Pre-

Acquisition(1)

 

2017

Total (2)

  Change
West $ 217,459 $ 163,240 $ 43,414   $ 206,654 5.2%
Midwest 201,402 67,641 142,237 209,878 (4.0)%
South 235,042 121,019 131,100 252,119 (6.8)%
East 242,852 225,926 11,717 237,643 2.2%
Corporate and Other   239     193     226     419   (43.0)%
Total Net Revenue (3) $ 896,994   $ 578,019   $ 328,694   $ 906,713   (1.1)%
 

 

       
Operating Income (Loss)

($ in thousands, except per share data)

Six Months Ended
June 30,

2018

 

2017

 

2017 Pre-

Acquisition(1)

 

2017

Total (2)

  Change
West $ 32,004 $ 17,933 $ 9,525   $ 27,458 16.6%
Midwest 54,087 15,412 34,819 50,231 7.7%
South 33,923 18,528 25,086 43,614 (22.2)%
East 43,528 33,196 (1,072) 32,124 35.5%
Corporate and Other   (31,934)     (101,508)     (8,811)     (110,319)   (71.1)%
Total Operating Income (Loss) (3) $ 131,608   $ (16,439)   $ 59,547   $ 43,108   205.3%

 

       
Adjusted EBITDA
($ in thousands, except per share data) Six Months Ended
June 30,

2018

 

2017

 

2017 Pre-

Acquisition(1)

 

2017

Total (2)

  Change
West $ 50,182 $ 29,423 $ 13,231   $ 42,654 17.6%
Midwest 70,438 20,458 46,856 67,314 4.6%
South 60,619 26,316 30,998 57,314 5.8%
East 55,543 50,562 (120) 50,442 10.1%
Corporate and Other   (15,223)     (10,678)     (5,996)     (16,674)   (8.7)%
Total Adjusted EBITDA (4) $ 221,559   $ 116,081   $ 84,969   $ 201,050   10.2%

 

                   
Net income (loss) $ 57,651 $ (45,245)
Basic EPS $ 0.74 $ (0.79)
Diluted EPS $ 0.74 $ (0.79)
 

 

1.     Figures are for Isle of Capri Casinos, Inc. (“Isle”) for the one and four months ended April 30, 2017. Such figures were prepared by the Company to reflect Isle’s unaudited consolidated historical net revenues, operating income and Adjusted EBITDA for periods corresponding to ERI's fiscal quarterly calendar. Such figures are based on the unaudited internal financial statements and have not been reviewed by the Company's auditors and do not conform to GAAP.
2. Total figures for 2017 include combined results of operations for Isle and ERI for periods preceding the date that ERI acquired Isle. Such presentation does not conform with GAAP or the Securities and Exchange Commission rules for pro forma presentation; however, we believe that the additional financial information will be helpful to investors in comparing current results with results of prior periods. This is non-GAAP data and should not be considered a substitute for data prepared in accordance with GAAP, but should be viewed in addition to the results of operations reported by the Company.
3. The prior period presentation has been adjusted for the adoption of Accounting Standards Codification (ASC) No. 606 “Revenue from Contracts with Customers” effective January 1, 2018 utilizing the full retrospective transition method. See reconciliation table on the last page of this release for further details.
4. Adjusted EBITDA is not a GAAP measurement and is presented solely as a supplemental disclosure because the Company believes it is a widely used measure of operating performance in the gaming industry. See “Reconciliation of GAAP Measures to Non-GAAP Measures” below for a definition of Adjusted EBITDA and a quantitative reconciliation of Adjusted EBITDA to operating income (loss), which the Company believes is the most comparable financial measure calculated in accordance with GAAP.
 

 

“In the second quarter, Adjusted EBITDA rose at 16 of our 20 properties as all four of our property reporting segments generated year-over-year gains including double digit Adjusted EBITDA growth in our East, West and South segments,” said Gary Carano, Chairman and Chief Executive Officer of Eldorado. “On a consolidated basis, second quarter Adjusted EBITDA rose 12.7% to $118.0 million, as our property level Adjusted EBITDA margin rose 290 basis points to 27.5% and our consolidated Adjusted EBITDA margin increased 300 basis points to 25.8%.

 

“Our strong margin growth, including property level and consolidated Adjusted EBITDA margin growth in every quarter since our May 2017 acquisition of Isle of Capri, reflects the benefit of our focus on disciplined marketing and promotion, advertising, food and beverage and labor expense management. Our record results also reflect success in driving better customer experiences across our property portfolio through an emphasis on market-leading guest services and targeted return-focused property enhancement projects. With the bulk of our planned major capital investments and enhancements complete in Reno, our recent rebranding of the three-property operations across six contiguous city blocks as ‘THE ROW’ has been met with an enthusiastic response from our guests. THE ROW leverages our integrated design and property enhancements and amplifies the convenience, amenities, entertainment and quality of Eldorado Resort Casino, Silver Legacy Resort Casino Reno and Circus Circus Reno. Our recent investments in the Reno market have resulted in revenue improvements with growth in high margin, non-gaming revenue channels. This fall THE ROW will open the The Spa at Silver Legacy, a 21,000 square foot spa that will offer our guests the largest relaxation, beauty, fitness and retail treatment facility in northern Nevada.

 

“Additional projects scheduled to be completed over the balance of this year include the renovation of approximately 400 rooms at Silver Legacy and the opening of Brew Brothers restaurants at Isle Casino Waterloo and Isle of Capri Casino Boonville. Following the opening of the two new Brew Brothers locations, the successful microbrew concept will be featured at five of our properties. In addition, renovations to all 402 rooms at our Black Hawk properties will begin at the end of the year and are expected to be completed in the first quarter of 2019.

 

“We are pleased with our 2018 results to date and expect that the Grand Victoria Casino and pending Tropicana Entertainment acquisitions, combined with the strong operations of our existing properties, will position us for additional growth in the future as we continue to pursue opportunities to create additional value for shareholders.”

 

Balance Sheet and Liquidity

 

At June 30, 2018, Eldorado had $202.0 million in cash and cash equivalents excluding restricted cash. Outstanding indebtedness at June 30, 2018 totaled $2.2 billion, with no amounts outstanding on the Company’s revolving credit facility. Capital expenditures in the second quarter and first six months of 2018 totaled $33.9 million and $55.2 million, respectively.

 

Summary of 2018 Second Quarter Region Results

 

The property results for Presque Isle Downs and Casino and Lady Luck Nemacolin are included in operations until the announced transactions for the divestitures of these properties are completed which is expected to be in the 2018 fourth quarter.

 

West Region (THE ROW, Isle Casino Hotel Black Hawk and Lady Luck Casino Black Hawk)

 

Net revenue for the West Region properties for the quarter ended June 30, 2018 increased approximately 6.4% to $117.9 million compared to $110.8 million in the prior-year period, while operating income rose to $21.9 million from $19.2 million in the year-ago quarter. Adjusted EBITDA increased 18.3% to $31.8 million reflecting an Adjusted EBITDA margin improvement of 270 basis points to 26.9%, compared to Adjusted EBITDA of $26.8 million on an Adjusted EBITDA margin of 24.2% in the prior-year period. Adjusted EBITDA increased year over year at THE ROW and for the combined operations in Black Hawk, with the combined Adjusted EBITDA margin for the Black Hawk properties exceeding 30% for the fourth consecutive quarter.

 

Midwest Region (Isle Casino Waterloo, Isle Casino Bettendorf, Isle of Capri Casino Boonville, Isle Casino Cape Girardeau, Lady Luck Casino Caruthersville and Isle of Capri Casino Kansas City)

 

Net revenue for the Midwest Region properties for the quarter ended June 30, 2018 decreased approximately 3.2% to $100.6 million compared to $103.9 million in the prior-year period, while operating income rose to $27.4 million from $26.0 million in the year-ago quarter. Adjusted EBITDA rose approximately 8.4% to $35.9 million as the Adjusted EBITDA margin for the segment rose 380 basis points to 35.7%. Adjusted EBITDA for the Midwest Region in the prior-year period was $33.1 million reflecting an Adjusted EBITDA margin of 31.9%.

 

South Region (Isle Casino Racing Pompano Park, Eldorado Shreveport, Isle of Capri Casino Lula, Lady Luck Casino Vicksburg and Isle of Capri Lake Charles)

 

Net revenue for the South Region properties for the quarter ended June 30, 2018 declined approximately 7.0% to $112.2 million compared to $120.7 million in the prior-year period, while operating income increased to $20.6 million from $18.3 million in the year-ago quarter. Adjusted EBITDA increased 10.2% to $28.4 million as the Adjusted EBITDA margin for the segment rose 400 basis points to 25.3%. Adjusted EBITDA for the South Region in the prior-year period was $25.8 million reflecting an Adjusted EBITDA margin of 21.4%. Adjusted EBITDA increased year over year at four of the five South Region properties including Isle of Capri Lake Charles which saw an Adjusted EBITDA increase of more than 23% as the Company continues to execute on opportunities for significant improvement following the termination of the sale agreement for the property in the 2017 fourth quarter. Isle Casino Racing Pompano Park and Isle of Capri Casino Lula also both generated double digit Adjusted EBITDA growth in the current quarter.

 

East Region (Presque Isle Downs and Casino, Lady Luck Casino Nemacolin, Eldorado Scioto Downs Racino and Mountaineer Casino, Racetrack and Resort)

 

Net revenue for the East Region properties for the quarter ended June 30, 2018 increased approximately 2.7% to $126.0 million compared to $122.6 million in the prior-year period, while operating income grew to $24.4 million from $18.0 million in the year-ago quarter. Adjusted EBITDA for the East Region rose 10.4% to $29.4 million compared to Adjusted EBITDA of $26.6 million in the prior-year period as the East Region’s Adjusted EBITDA margin improved 160 basis points to 23.3%. Eldorado Scioto Downs generated Adjusted EBITDA growth for the fourteenth consecutive quarter.

 

 

About Eldorado Resorts, Inc.

 

Eldorado Resorts is a leading casino entertainment company that owns and operates twenty properties in ten states, including Colorado, Florida, Iowa, Louisiana, Mississippi, Missouri, Nevada, Ohio, Pennsylvania and West Virginia. In aggregate, Eldorado’s properties feature approximately 21,000 slot machines and VLTs and 600 table games, and over 7,000 hotel rooms. On April 16, 2018, the Company announced that it entered into acquisition agreements for Tropicana Entertainment Inc. and the Grand Victoria Casino in Elgin, IL. The Grand Victoria Casino transaction is expected to close in the 2018 third quarter and the Tropicana Entertainment Inc. transaction is expected to close in the fourth quarter.

 

   

ELDORADO RESORTS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

($ in thousands, except per share data)

(unaudited)

 
Three Months Ended Six Months Ended
June 30,     June 30,
2018   2017 (1) 2018   2017 (1)
REVENUES:
Casino $ 343,675 $ 275,593 $ 683,133 $ 417,147
Pari-mutuel commissions 5,045 4,112 9,115 4,748
Food and beverage 54,293 49,709 106,491 82,130
Hotel 38,926 34,278 69,667 53,583
Other   14,863   11,934   28,588   20,411
Net revenues   456,802   375,626   896,994   578,019
EXPENSES:
Casino 165,353 139,707 331,203 219,688
Pari-mutuel commissions 4,592 4,030 8,293 5,237
Food and beverage 44,770 42,803 89,546 68,821
Hotel 13,695 12,270 26,201 21,349
Other 8,310 6,901 15,715 13,070
Marketing and promotions 21,832 21,531 43,133 31,660
General and administrative 73,745 60,887 147,947 92,687
Corporate 12,232 7,442 23,801 14,016
Impairment charges 9,815
Depreciation and amortization   31,910   24,909   63,444   40,513
Total operating expenses 376,439 320,480 759,098 507,041
Gain (loss) on sale or disposal of property and equipment 423 (89) (283) (57)
Transaction expenses (3,404) (85,464) (5,952) (87,078)
Equity in gain (loss) of unconsolidated affiliates   32   (60)   (53)   (282)
Operating income (loss)   77,414   (30,467)   131,608   (16,439)
OTHER INCOME (EXPENSE):
Interest expense, net (31,405) (27,527) (62,494) (40,197)
Loss on early retirement of debt, net     (27,317)   (162)   (27,317)
Total other expense   (31,405)   (54,844)   (62,656)   (67,514)
Net income (loss) before income taxes 46,009 (85,311) 68,952 (83,953)
(Provision) benefit for income taxes   (9,213)   39,121   (11,301)   38,708
Net income (loss) $ 36,796 $ (46,190) $ 57,651 $ (45,245)
Net income (loss) per share of common stock:
Basic $ 0.48 $ (0.68) $ 0.74 $ (0.79)
Diluted $ 0.47 $ (0.68) $ 0.74 $ (0.79)
Weighted average basic shares outstanding   77,458,584   67,453,095   77,406,447   57,405,834
Weighted average diluted shares outstanding   78,258,629   67,453,095   78,169,629   57,405,834
 

 

1.     The prior period presentation has been adjusted for the adoption of Accounting Standards Codification (ASC) No. 606 “Revenue from Contracts with Customers” effective January 1, 2018 utilizing the full retrospective transition method. See reconciliation table on the last page of this release for further details.
 

 

 
ELDORADO RESORTS, INC.
SUMMARY INFORMATION AND RECONCILIATION OF
OPERATING INCOME (LOSS) TO ADJUSTED EBITDA
($ in thousands)
(unaudited)
 
Three Months Ended June 30, 2018
Operating

Income

(Loss)

    Depreciation

and

Amortization

    Stock-Based

Compensation

    Transaction

Expenses (3)

      Other (4)     Adjusted

EBITDA

West $   21,865 $   9,382 $   (95) $   $   606 $   31,758
Midwest 27,411 8,404 31 77 35,923
South 20,564 8,108 17 (287) 28,402
East 24,397 4,717 3 246 29,363
Corporate and Other     (16,823)     1,299     3,516     3,404     1,173     (7,431)
Total $   77,414 $   31,910 $   3,472 $   3,404 $   1,815 $   118,015
 
 
Three Months Ended June 30, 2017 (6)
Operating

Income

(Loss)

Depreciation

and

Amortization

Stock-Based

Compensation

Transaction

Expenses (3)

Other (4) Adjusted

EBITDA

Excluding Pre-Acquisition:
West $ 16,512 $ 6,571 $ 52 $ $ 64 $ 23,199
Midwest 15,412 4,966 86 (6) 20,458
South 12,610 4,662 64 1,130 18,466
East 18,228 8,273 4 53 26,558
Corporate and Other     (93,229)     437     1,123     85,464     321     (5,884)
Total Excluding Pre-Acquisition $   (30,467) $   24,909 $   1,329 $   85,464 $   1,562 $   82,797
 
Pre-Acquisition (1):
West $ 2,709 $ 925 $ 2 $ $ 4 $ 3,640
Midwest 10,637 2,001 14 34 12,686
South 5,739 1,441 9 110 7,299
East (197) 239 42
Corporate and Other     (2,550)     96     461     286     (22)     (1,729)
Total Pre-Acquisition $   16,338 $   4,702 $   486 $   286 $   126 $   21,938
 
Including Pre-Acquisition:
West $ 19,221 $ 7,496 $ 54 $ $ 68 $ 26,839
Midwest 26,049 6,967 100 28 33,144
South 18,349 6,103 73 1,240 25,765
East 18,031 8,512 4 53 26,600
Corporate and Other     (95,779)     533     1,584     85,750     299     (7,613)
Total Including Pre-Acquisition (2) $   (14,129) $   29,611 $   1,815 $   85,750 $   1,688 $   104,735
 

 

 
Six Months Ended June 30, 2018
Operating

Income

(Loss)

Depreciation

and

Amortization

Stock-Based

Compensation

Transaction

Expenses (3)

Other (4)   Adjusted

EBITDA

West $ 32,004 $ 17,571 $ (32) $ $ 639 $ 50,182
Midwest 54,087 16,049 75 227 70,438
South 33,923 16,639 42 10,015 60,619
East 43,528 10,766 8 1,241 55,543
Corporate and Other   (31,934)     2,419     7,058     5,952     1,282   (15,223)
Total $ 131,608 $   63,444 $   7,151 $   5,952 $   13,404 $ 221,559
 
 
Six Months Ended June 30, 2017 (6)
Operating

Income

(Loss)

Depreciation

and

Amortization

Stock-Based

Compensation

Transaction

Expenses (3)

Other (4) Adjusted

EBITDA

Excluding Pre-Acquisition:
West $ 17,933 $ 11,214 $ 52 $ $ 224 $ 29,423
Midwest 15,412 4,966 86 (6) 20,458
South 18,528 6,594 64 1,130 26,316
East 33,196 17,153 4 209 50,562
Corporate and Other   (101,508)   586   2,856   87,078   310   (10,678)
Total Excluding Pre-Acquisition $ (16,439) $ 40,513 $ 3,062 $ 87,078 $ 1,867 $ 116,081
 
Pre-Acquisition (5):
West $ 9,525 $ 3,694 $ 8 $ $ 4 $ 13,231
Midwest 34,819 11,952 51 34 46,856
South 25,086 5,693 35 184 30,998
East (1,072) 952 (120)
Corporate and Other   (8,811)   371   1,631   286   527   (5,996)
Total Pre-Acquisition $ 59,547 $ 22,662 $ 1,725 $ 286 $ 749 $ 84,969
 
Including Pre-Acquisition:
West $ 27,458 $ 14,908 $ 60 $ $ 228 $ 42,654
Midwest 50,231 16,918 137 28 67,314
South 43,614 12,287 99 1,314 57,314
East 32,124 18,105 4 209 50,442
Corporate and Other   (110,319)   957   4,487   87,364   837   (16,674)
Total Including Pre-Acquisition (2) $ 43,108 $ 63,175 $ 4,787 $ 87,364 $ 2,616 $ 201,050
 

 

1.     Figures are for Isle for April 2017. Such figures were prepared by the Company to reflect Isle’s unaudited consolidated historical operating revenues, operating income and Adjusted EBITDA for periods corresponding to the Company’s fiscal quarterly calendar. Such figures are based on the unaudited internal financial statements and have not been reviewed by the Company’s auditors and do not conform to GAAP.
2. Total figures for 2017 include combined results of operations for Isle and the Company for periods preceding the date that the Company acquired Isle. Such presentation does not conform with GAAP or the Securities and Exchange Commission rules for proforma presentation; however, we believe that the additional financial information will be helpful to investors in comparing current results with results of prior periods. This is non-GAAP data and should not be considered a substitute for data prepared in accordance with GAAP, but should be viewed in addition to the results of operations reported by the Company.
3. Transaction expenses represent costs related to the acquisition of Isle for the three and six months ended June 30, 2017 and costs primarily related to the acquisitions of Grand Victoria Casino and Tropicana Entertainment Inc. for the three and six months ended June 30, 2018.
4. Other is comprised of severance expense, (gain) loss on the sale or disposal of property and equipment, equity in income (loss) of unconsolidated affiliate and other non-cash regulatory gaming assessments for the three and six months ended June 30, 2018 and 2017. Also included are costs associated with the sales of Vicksburg and Presque Isle Downs for the three and six months ended June 30, 2018 and the failed sale of Lake Charles for the three and six months ended June 30, 2017. In conjunction with the announced sale of Vicksburg, an impairment charge totaling $9.8 million was recorded for the six months ended June 30, 2018.
5. Figures are for Isle for the four months ended April 30, 2017. Such figures were prepared by the Company to reflect Isle’s unaudited consolidated historical operating revenues, operating income and Adjusted EBITDA for periods corresponding to the Company’s fiscal quarterly calendar. Such figures are based on the unaudited internal financial statements and have not been reviewed by the Company’s auditors and do not conform to GAAP.
6. The prior period presentation has been adjusted for the adoption of Accounting Standards Codification (ASC) No. 606 “Revenue from Contracts with Customers” effective January 1, 2018 utilizing the full retrospective transition method. See Note 2 to our Condensed Notes to Unaudited Consolidated Financial Statements for additional information.
 

 

   
Reconciliation Table

Three Months Ended June 30, 2017

 
As Reported  

ASC 606

Adjustments

 

Other

Reclassifications (1)

  As Adjusted
Gross revenues $ 389,237 $ (31,215)   $ 17,604   $ 375,626
Promotional allowances (34,057)   33,226   831   -
Net revenues $ 355,180   $ 2,011   $ 18,435   $ 375,626
Operating (loss) income (32,116) 110 1,539 (30,467)
Net (loss) income (46,328) 138 - (46,190)

 

   

 

Reconciliation Table

 

Six Months Ended June 30, 2017

   
As Reported  

ASC 606

Adjustments

 

Other

Reclassifications (1)

  As Adjusted
Gross revenues $ 608,783 $ (48,235) $ 17,471   $ 578,019
Promotional allowances (52,678)   51,713   965   -
Net revenues $ 556,105   $ 3,478   $ 18,436   $ 578,019
Operating (loss) income (17,967) (11) 1,539 (16,439)
Net (loss) income (45,307) 62 - (45,245)
 

 

1.     Other reclassifications are comprised of the reversal of our Lake Charles property from discontinued operations and other reclassifications to conform to current period presentations.
 



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