Red Rock Resorts Results

Red Rock Resorts Announces First Quarter 2019 Results

Red Rock Resorts

Red Rock Resorts, Inc. (NASDAQ: RRR) today reported financial results for the first quarter ended March 31, 2019.  

Net revenues were $447.0 million for the first quarter of 2019, an increase of 6.2%, or $26.0 million, from $421.0 million for the same period of 2018. The increase in net revenues was  primarily due to an increase in Las Vegas operations.

Net income was $20.3 million for the first quarter of 2019, a decrease of 75.3%, or $61.8 million, from $82.1 million for the same period of 2018. The decrease in net income was primarily due to a decrease in the fair value of derivative instruments, an increase in write-downs and other charges, and a prior year gain associated with the extinguishment of a tax receivable liability. 

Adjusted EBITDA(1) was $145.1 million for the first quarter of 2019, an increase of 3.6%, or $5.0 million, from $140.1 million in the same period of 2018. The increase in Adjusted EBITDA was primarily due to an increase in Las Vegas operations.

Las Vegas Operations

Net revenues from Las Vegas operations were $422.4 million for the first quarter of 2019, an increase of 6.9%, or $27.2 million, from $395.2 million in the same period of 2018.  Adjusted EBITDA from Las Vegas operations was $130.5 million for the first quarter of 2019, an increase of 3.7%, or $4.6 million, from $125.9 million in the same period of 2018.

Native American Management

Adjusted EBITDA from Native American operations was $21.5 million for the first quarter of 2019, a 2.8% decrease from $22.1 million in the same period of 2018.  The decrease was primarily due to the expiration of the Gun Lake management agreement in February of 2018, partially offset by increased management fees generated under the Graton Resort management agreement. 

Palms Redevelopment Update

The Palms redevelopment project remains on schedule and the budget remains unchanged. With the exception of the new wellness spa and salon (which is expected to be complete by the end of the second quarter of 2019), phase two of the project is now complete.  In addition, with the exception of Michelin-starred dim sum restaurant Tim Ho Wan (which is expected to be complete by the end of the third quarter of 2019), phase three of the project is now also complete.  As of March 31, 2019, the Company has incurred approximately $587 million in costs against the $690 million project.

Balance Sheet Highlights

The Company's cash and cash equivalents at March 31, 2019 were $109.2 million and total principal amount of debt outstanding at the end of the first quarter was $3.0 billion. The Company's debt to Adjusted EBITDA and interest coverage ratios were 5.1x and 4.3x, respectively.

Quarterly Dividend

The Company's Board of Directors has declared a cash dividend of $0.10 per Class A common share for the second quarter of 2019. The dividend will be payable on June 28, 2019 to all stockholders of record as of the close of business on June 14, 2019. 

Prior to the payment of such dividend, Station Holdco LLC ("Station Holdco") will make a cash distribution to all unit holders of record, including the Company, of $0.10 per unit for a total distribution of approximately $11.7 million, approximately $7.0 million of which is expected to be distributed to the Company and approximately $4.7 million of which is expected to be distributed to the other unit holders of record of Station Holdco.

Presentation of Financial Information

(1) Adjusted EBITDA is a non-GAAP measure that is presented solely as a supplemental disclosure. We believe that Adjusted EBITDA is a widely used measure of operating performance in our industry and is a principal basis for valuation of gaming companies. We believe that in addition to net income, Adjusted EBITDA is a useful financial performance measurement for assessing our operating performance because it provides information about the performance of our ongoing core operations. Adjusted EBITDA includes net income plus depreciation and amortization, share-based compensation, write-downs and other charges, net, including Palms redevelopment and preopening expense, tax receivable agreement liability adjustment, interest expense, net, loss on modification of debt, change in fair value of derivative instruments, provision for income tax and other.

Red Rock Resorts, Inc.

Condensed Consolidated Statements of Income

(amounts in thousands, except per share data)

(unaudited)

Three Months Ended March 31,

2019

2018

Operating revenues:

Casino

$    244,933

$    236,247

Food and beverage

104,933

90,928

Room

48,075

46,630

Other

25,922

22,556

Management fees

23,159

24,678

Net revenues

447,022

421,039

Operating costs and expenses:

Casino

82,940

78,958

Food and beverage

92,236

80,109

Room

20,196

20,100

Other

11,859

8,786

Selling, general and administrative

99,065

95,109

Depreciation and amortization

50,853

43,164

Write-downs and other charges, net

23,728

3,845

Tax receivable agreement liability adjustment

-

(16,873)

380,877

313,198

Operating income

66,145

107,841

Earnings from joint ventures

505

608

Operating income and earnings from joint ventures

66,650

108,449

Other (expense) income:

Interest expense, net

(37,438)

(31,111)

Loss on modification of debt

(302)

-

Change in fair value of derivative instruments

(6,638)

15,803

Other

(69)

(155)

(44,447)

(15,463)

Income before income tax

22,203

92,986

Provision for income tax

(1,919)

(10,856)

Net income

20,284

82,130

Less: net income attributable to noncontrolling interests

8,961

30,950

Net income attributable to Red Rock Resorts, Inc.

$      11,323

$      51,180

Earnings per common share:

Earnings per share of Class A common stock, basic

$          0.16

$          0.74

Earnings per share of Class A common stock, diluted

$          0.16

$          0.65

Weighted-average common shares outstanding:

Basic

69,397

68,798

Diluted

116,693

116,947

Red Rock Resorts, Inc.

Segment Information and Reconciliation of Net Income to Adjusted EBITDA

(amounts in thousands)

(unaudited)

Three Months Ended March 31,

2019

2018

Net revenues

Las Vegas operations

$    422,370

$    395,170

Native American management

22,996

24,505

Reportable segment net revenues

445,366

419,675

Corporate and other

1,656

1,364

Net revenues

$    447,022

$    421,039

Net income

$      20,284

$      82,130

Adjustments

Depreciation and amortization

50,853

43,164

Share-based compensation

3,853

2,454

Write-downs and other charges, net

23,728

3,845

Tax receivable agreement liability adjustment

-

(16,873)

Interest expense, net

37,438

31,111

Loss on modification of debt

302

-

Change in fair value of derivative instruments

6,638

(15,803)

Provision for income tax

1,919

10,856

Other

69

(807)

Adjusted EBITDA

$    145,084

$    140,077

Adjusted EBITDA

Las Vegas operations

$    130,478

$    125,877

Native American management

21,476

22,094

Reportable segment Adjusted EBITDA

151,954

147,971

Corporate and other

(6,870)

(7,894)

Adjusted EBITDA

$    145,084

$    140,077

SOURCE Red Rock Resorts, Inc.



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