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Red Rock Resorts Announces Third Quarter 2018 Results

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Red Rock Resorts Announces Third Quarter 2018 ResultsReading Time: 5 minutes

 

Red Rock Resorts, Inc. (“Red Rock Resorts,” “we” or the “Company”) (NASDAQ: RRR) reported financial results for the third quarter ended September 30, 2018.  The Company has adopted FASB’s new revenue recognition standard (“ASC 606”), effective January 1, 2018.  Certain prior period amounts have been adjusted to reflect the full retrospective adoption of ASC 606, with no material impact on operating income, net income or Adjusted EBITDA(1).

Net revenues were $412.3 million for the third quarter of 2018, an increase of 1.6%, or $6.4 million, from $405.9 million for the same period of 2017. The increase in net revenues was  primarily due to an increase in Las Vegas operations, partially offset by a decrease in Native American management fees.

Net income was $25.1 million for the third quarter of 2018, an increase of 12.3%, or $2.8 million, from $22.3 million for the same period of 2017. The increase in net income was primarily due to an increase in non-disrupted Las Vegas operations and an increase in the fair value of derivative instruments, partially offset by lower operating income and higher interest expense.

Adjusted EBITDA was $109.1 million for the third quarter of 2018, a decrease of 7.9%, or $9.3 million, from $118.4 million in the same period of 2017. The decrease in Adjusted EBITDA was primarily due to a decrease in Native American management fees and ongoing construction disruption at Palace Station Hotel & Casino (“Palace Station”) and the Palms Casino Resort (the “Palms”), partially offset by an increase in non-disrupted Las Vegas operations.

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Las Vegas Operations

Net revenues from Las Vegas operations were $389.7 million for the third quarter of 2018, an increase of 3.9%, or $14.6 million, from $375.1 million in the same period of 2017.  Adjusted EBITDA from Las Vegas operations was $97.9 million for the third quarter of 2018, a decrease of 3.9%, or $3.9 million, from $101.9 million in the same period of 2017. The decrease in Adjusted EBITDA was primarily due to ongoing construction disruption at Palace Station and the Palms, partially offset by an increase in non-disrupted Las Vegas operations.

Native American Management

Adjusted EBITDA from Native American operations was $19.8 million for the third quarter of 2018, a 21.9% decrease from $25.3 million in the same period of 2017.  The decrease was primarily due to the expiration of the Gun Lake Casino management agreement in February of 2018, partially offset by continued strong performance at Graton Resort & Casino.

Palace Station and Palms Redevelopment Update

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The Palace Station redevelopment project remains on schedule and on budget with all aspects of the project expected to be complete by the end of 2018.  As of September 30, 2018, the Company has incurred $179 million in costs against the $191 million project.

The Palms redevelopment project remains on schedule with the remaining components of phase two expected to be complete in the second quarter of 2019 and phase three expected to be complete by the third quarter of 2019.  The overall budget for the redevelopment project has been increased to approximately $690 million primarily due to increased construction costs driven by high demand in the Las Vegas market, as well as higher material costs. As of September 30, 2018, the Company has incurred $318 million in costs against the $690 million project.

Balance Sheet Highlights

The Company’s cash and cash equivalents at September 30, 2018 were $110.6 million and total principal amount of debt outstanding at the end of the third quarter was $2.77 billion. The Company’s debt to Adjusted EBITDA and interest coverage ratios were 5.1x and 4.4x, respectively.

Quarterly Dividend

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The Company’s Board of Directors has declared a cash dividend of $0.10 per Class A common share for the fourth quarter of 2018. The dividend will be payable on December 31, 2018 to all stockholders of record as of the close of business on December 14, 2018.

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.

Conference Call Information

The Company will host a conference call today at 4:30 p.m. Eastern Time to discuss its financial results. The conference call will consist of prepared remarks from the Company and include a question and answer session.  Those interested in participating in the call should dial (888) 317-6003, or (412) 317-6061 for international callers, approximately 15 minutes before the call start time.  Please use the passcode: 7584099. A replay of the call will be available from today through November 14, 2018 at www.redrockresorts.com.

Presentation of Financial Information

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(1) Adjusted EBITDA includes net income plus depreciation and amortization, share-based compensation, write-downs and other charges, net, including Palms redevelopment and preopening expenses, tax receivable agreement liability adjustment, related party lease termination, asset impairment, interest expense, net, loss on extinguishment/modification of debt, net, change in fair value of derivative instruments, provision for income tax and other, and excludes Adjusted EBITDA attributable to the noncontrolling interests of MPM.

Company Information and Forward Looking Statements

Red Rock Resorts owns a majority indirect equity interest in and manages Station Casinos LLC (“Station Casinos”). Station Casinos is the leading provider of gaming and entertainment to the residents of Las Vegas, Nevada.  Station Casinos’ properties, which are located throughout the Las Vegas valley, are regional entertainment destinations and include various amenities, including numerous restaurants, entertainment venues, movie theaters, bowling and convention/banquet space, as well as traditional casino gaming offerings such as video poker, slot machines, table games, bingo and race and sports wagering.  Station Casinos owns and operates Red Rock Casino Resort Spa, Green Valley Ranch Resort Spa Casino, Palms Casino Resort, Palace Station Hotel & Casino, Boulder Station Hotel & Casino, Sunset Station Hotel & Casino, Santa Fe Station Hotel & Casino, Texas Station Gambling Hall & Hotel, Fiesta Rancho Casino Hotel, Fiesta Henderson Casino Hotel, Wildfire Rancho, Wildfire Boulder, Wild Wild West Gambling Hall & Hotel, Wildfire Sunset, Wildfire Valley View, Wildfire Anthem and Wildfire Lake Mead.  Station Casinos also owns a 50% interest in Barley’s Casino & Brewing Company, Wildfire Casino & Lanes and The Greens.  In addition, Station Casinos is the manager of Graton Resort & Casino in northern California.

This press release contains certain forward-looking statements with respect to the Company and its subsidiaries which involve risks and uncertainties that cannot be predicted or quantified, and consequently, actual results may differ materially from those expressed or implied herein.  Such risks and uncertainties include, but are not limited to the effects of the economy and business conditions on consumer spending and our business; competition, including the risk that new gaming licenses or gaming activities are approved; our substantial outstanding indebtedness and the effect of our significant debt service requirements; our ability to refinance our outstanding indebtedness and obtain necessary capital; the impact of extensive regulation; risks associated with changes to applicable gaming and tax laws; risks associated with development, construction and management of new projects or the redevelopment or expansion of existing facilities; and other risks described in the filings of the Company with the Securities and Exchange Commission.  In providing forward-looking statements, the Company is not undertaking any duty or obligation to update these statements publicly as a result of new information, future events or otherwise, except as required by law.  If the Company updates one or more forward-looking statements, no inference should be drawn that it will make additional updates with respect to those other forward-looking statements.

 

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Red Rock Resorts, Inc.

Condensed Consolidated Statements of Income

(amounts in thousands, except per share data)

(unaudited)

Three Months Ended
September 30,

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Nine Months Ended

September 30,

2018

2017

2018

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2017

Operating revenues:

Casino

$      230,723

$      221,771

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$      699,726

$      664,443

Food and beverage

94,666

87,311

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280,226

277,453

Room

39,306

43,447

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128,655

139,401

Other

26,385

23,817

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73,858

70,027

Management fees

21,252

29,602

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67,094

90,505

 Net revenues

412,332

405,948

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1,249,559

1,241,829

Operating costs and expenses:

Casino

82,772

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77,570

242,126

231,698

Food and beverage

87,097

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80,019

252,320

247,663

Room

19,595

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20,056

59,126

62,471

Other

13,216

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11,013

34,111

30,258

Selling, general and administrative

104,360

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98,840

297,540

288,715

Depreciation and amortization

44,235

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42,661

133,391

134,721

Write-downs and other charges, net

6,439

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15,239

21,070

25,931

Tax receivable agreement liability adjustment

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214

(90,375)

(230)

Related party lease termination

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1,950

100,343

Asset impairment

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1,829

1,829

357,714

349,391

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949,309

1,123,399

Operating income

54,618

56,557

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300,250

118,430

Earnings from joint ventures

499

407

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1,606

1,242

Operating income and earnings from joint ventures

55,117

56,964

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301,856

119,672

Other (expense) income:

Interest expense, net

(33,590)

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(31,330)

(96,299)

(100,127)

Loss on extinguishment/modification of debt, net

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(558)

(3,552)

Change in fair value of derivative instruments

4,229

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(310)

27,353

3,059

Other

(66)

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(86)

(287)

(258)

(29,427)

(32,284)

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(69,233)

(100,878)

Income before income tax

25,690

24,680

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232,623

18,794

Provision for income tax

(623)

(2,364)

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(26,324)

(1,230)

Net income

25,067

22,316

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206,299

17,564

Less: net income attributable to noncontrolling interests

10,387

10,531

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57,704

11,613

Net income attributable to Red Rock Resorts, Inc.

$        14,680

$        11,785

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$      148,595

$          5,951

Earnings per common share:

 Earnings per share of Class A common stock, basic

$            0.21

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$            0.17

$            2.15

$            0.09

 Earnings per share of Class A common stock, diluted

$            0.20

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$            0.16

$            1.66

$            0.08

Weighted-average common shares outstanding:

 Basic

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69,250

68,060

69,059

67,030

 Diluted

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117,074

115,941

117,006

115,877

Dividends declared per common share

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$            0.10

$            0.10

$            0.30

$            0.30

 

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Red Rock Resorts, Inc.

Segment Information and Reconciliation of Net Income to Adjusted EBITDA

(amounts in thousands)

(unaudited)

Three Months Ended
September 30,

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Nine Months Ended

September 30,

2018

2017

2018

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2017

Net revenues

Las Vegas operations

$      389,668

$      375,071

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$   1,178,520

$   1,147,457

Native American management

21,119

29,478

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66,644

90,126

 Reportable segment net revenues

410,787

404,549

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1,245,164

1,237,583

Corporate and other

1,545

1,399

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4,395

4,246

 Net revenues

$      412,332

$      405,948

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$   1,249,559

$   1,241,829

Net income

$        25,067

$        22,316

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$      206,299

$        17,564

Adjustments

Depreciation and amortization

44,235

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42,661

133,391

134,721

Share-based compensation

3,315

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1,989

8,872

5,727

Write-downs and other charges, net

6,439

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15,239

21,070

25,931

Tax receivable agreement liability adjustment

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214

(90,375)

(230)

Related party lease termination

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1,950

100,343

Asset impairment

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1,829

1,829

Interest expense, net

33,590

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31,330

96,299

100,127

Loss on extinguishment/modification of debt, net

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558

3,552

Change in fair value of derivative instruments

(4,229)

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310

(27,353)

(3,059)

Adjusted EBITDA attributable to MPM noncontrolling interest

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(2,426)

(962)

(13,482)

Provision for income tax

623

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2,364

26,324

1,230

Other

66

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86

262

258

Adjusted EBITDA

$      109,106

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$      118,420

$      373,827

$      374,511

Adjusted EBITDA

Las Vegas operations

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$        97,942

$      101,873

$      336,408

$      327,850

Native American management

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19,787

25,337

61,671

71,349

 Reportable segment Adjusted EBITDA

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117,729

127,210

398,079

399,199

Corporate and other

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(8,623)

(8,790)

(24,252)

(24,688)

 Adjusted EBITDA

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$      109,106

$      118,420

$      373,827

$      374,511

 

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Source: Red Rock Resorts, Inc.


Source: European Gaming Media

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What makes Turbo Games’ provably fair games so special?

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A partnership between game developer Turbo Games and iGaming solution provider and aggregator Slotegrator began in November 2022 via the APIgrator game integration solution. Since then, the collaboration has been developing successfully — and now it’s time to analyze what made it successful.

Turbo Games has noticed how the new technologies spreading throughout the industry can work for the good of brand transparency and player loyalty: “We can already see how blockchain technology has made it possible to make betting checks more accessible to players. All you need is a blockchain-hash and a decoder service. We think we will continue to move in this direction. Many traditional online casinos do not offer the possibility to check the bet. Sooner or later we all have to come to this. Perhaps the development of artificial intelligence will help here, because we are already seeing its involvement in all spheres of human life.”

Turbo Games specializes in provably fair games. Provable fairness is a concept where players can verify their wins or losses using blockchain technology — the outcome of the game is dictated by a smart contract and is absolutely random, barring the possibility of any human involvement. Using cryptographic hashing algorithms, the gambling site and the player’s device both generate seeds (random strings of numbers). Players receive a key that allows them to check the results; if the results are the same as the game round they witnessed, it proves that there was no foul play.

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According to statistics from Turbo Games, the audience for provably fair games is mostly between 18 and 25 years old. However, there are also players aged 35-40 who prefer traditional games but would like to try something new, and have turned their attention to provably fair games.

There are good odds that the technology of provably fair games will become more popular, if not even commonplace, because it gives players a feeling of transparency and proves that the business is trustworthy without the need to search through dozens of reviews. Whereas many innovations in iGaming simply add entertainment, provable fairness addresses security concerns and reassures players that they’re not being exploited, which is invaluable.

Provably fair games are beneficial for both players and online casinos. Vadim Potapenko, Head of Sales at Turbo Games, comments: “It often happens that the users are not satisfied with the result, because gambling is not only about big wins, but also possible losses. By allowing them to check the fairness of a bet, we make life easier for platforms and players. Of course, this allows us to communicate with partners and users that we work honestly and that’s why they should trust our games.”

Ayvar Gabidullin, Business Development Manager at Slotegrator, adds that “this type of game is now becoming more and more popular and has great potential for both players and game providers in the future. On the part of the player, the advantage is that the player can always be sure that his game is fair and he can independently check any of his bets. And for the game provider, this also simplifies the process of implementing casino games, since now it will not be necessary to obtain the appropriate certificates from independent laboratories before launching new games, they can immediately enter the market with these games and where anyone can check the result and make sure that that there is no cheating with players. Many game providers are starting to look towards this type of game. And as far as I see, many operators are starting to think about adding these games.”

What do players in 2023 need? The iGaming industry is all about reputation and trust. Players have a huge number of platforms to choose from, making them pickier and pickier. There’s an abundance of forums where players leave reviews, so if players view a brand as untrustworthy, there are plenty of places they can share their opinion. Provable fairness not only stops that from happening, it provides evidence to the contrary, giving players something else to talk about.

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Slotegrator also recommends investing time and effort into localization and creating an effective and detailed marketing strategy — before trying provably fair technology players need to get to the platform, and there is no acquisition without marketing.

 

 ABOUT SLOTEGRATOR

Since 2012, Slotegrator has been one of the iGaming industry’s leading software and business solution providers for online casino and sportsbook operators.

The company’s main focus is software development and support for online casino platforms, as well as the integration of game content and payment systems.

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The company works with licensed game developers and offers a vast portfolio of casino content: slots, live casino games, poker, virtual sports, table games, lotteries, casual games, and data feeds for betting.

Slotegrator also provides consulting services in gambling license acquisition and business incorporation.

More information: https://slotegrator.pro/

 

ABOUT TURBO GAMES

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Turbo Games — a provably fair games provider that belongs to Turbo Stars company — has an ambitious goal to establish widespread recognition throughout the iGaming world. Even though it is young, the company consists of professionals who have been working on the brand for over five years and are even planning to introduce a new brand for a wider audience soon.

Turbo Games also works in Europe, India, and South Africa, where the company sees the most potential and expects the same “hype” as in Brazil.

The portfolio of Turbo Games consists of 21 titles, including well-known games like Mines, Crash X, DoubleRoll, Hi-Lo, and Plinko. The studio releases a game every month. However, not all games are developed from scratch. Wicket Blast and Spin Strike, the last two releases, are based on cricket and the Indian Premier League. Crash X remains the most popular fast game in the Turbo Games portfolio, and the studio reports that crash games enjoy stable levels of popularity. Overall, the main focus of the brand is provably fair games.

More information: https://turbogames.io/

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Games Factory Talents has teamed up with Nordic Game to bring you Nordic Game Talents.

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Looking to take your career to the next level in the games industry? Then, Nordic Game Talents is the place to be! Games Factory Talents has teamed up with Nordic Game to bring you Nordic Game Talents.

From Oct 27-29, the online and interactive event is dedicated to recruitment and career building in the creative & games industry within the Nordic region. The event empowers participants to be part of a bigger community and motivates them to explore new paths in achieving their career goals.

Hiring creative & games studios – Supercell, Funcom, Panzerdog, Tactile Games, Gamecan, Fingersoft, Dazzle Rocks, Redhill Games to name a few from the Nordic region will be participating in the event. These studios will share information on their latest projects, work culture and what it takes to be part of their team. The individual games associations from Finland, Denmark, Sweden, Norway and Estonia will share insights through live sessions on the booming games industry in their respective countries. Career development topics pertinent to job seekers like – How to have a successful first interview, Creative Portfolio reviews will also be discussed.

Experienced game industry professionals and individuals beginning their careers from around the world are welcome to join the event. One-to-one interviews with the hiring studios can be scheduled through the event platform. A great opportunity to get to know the studios and network with game professionals from around the world.

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Participating in the event

As a job seeker attending Nordic Game Talents, take a few minutes to fill out a simple registration form. After filling the registration form you will receive a link to the online event platform – PINE, to join the event on 27th October. Participants joining Nordic Game Talents will also receive a free-of-charge pass to the Nordic Game Conference.

To view the complete agenda, please click here and to learn more about the event please visit Games Job Fair

About Games Factory Talents

A Helsinki-based talent attraction agency dedicated to the games & creative industry. Our services include direct recruitment, organizing game job fairs and managing a community of game industry professionals through our GameDev Talent Board.

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To learn more about Games Factory Talents visit – Games Factory Talents

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810 THE SPREAD

Cumulus Media Launches 810 THE SPREAD, the Bay Area’s First Sports Station Focused on Sports Betting

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Cumulus Media (NASDAQ: CMLS) announces that it has launched the Bay Area’s first Sports radio station focused on sports betting, 810 THE SPREAD. The new station brings sports and sports betting news, information, and insights to the burgeoning and underserved sports betting audience in San Francisco. 810 THE SPREAD will deliver behind-the-book perspectives from experts in a highly entertaining and engaging format. 810 THE SPREAD goes live today on the legendary 810am frequency that has been the 80-year home of historic Talk Radio KGO-AM. Cumulus San Francisco also launched the station’s new website at www.810thespread.com. Kevin Graham, Program Director of Cumulus’ sister sports stations KNBR 680AM/104.5FM and 1050 KTCT, adds Program Director duties for 810 THE SPREAD.

Larry Blumhagen, Vice President/Market Manager, Cumulus San Francisco, said: “810 THE SPREAD joins our sports brands KNBR 680AM/104.5FM and 1050 KTCT for a trifecta of dynamic sports content across four signals and streaming everywhere. We are excited about this new chapter and look forward to serving the Bay Area’s passionate sports fans in an incomparable way.”

Blumhagen added: “This is a bittersweet day for us, as it’s hard to say goodbye to the legendary KGO, which has been a part of listeners’ lives for so many years. We want to thank all the people who have been a part of KGO’s historic run these many years – and the listeners who loyally tuned in to the station. Times change, and we must change with them.”

Kevin Graham, Program Director, 810 THE SPREAD, said: “810 THE SPREAD will be the Bay Area’s best bet for sports fans and sports betting enthusiasts, and we are pleased to introduce sports-betting radio to our community. The station will feature a lineup of expert personalities that deliver unique sports talk and sports betting insights that entertain, inform, and engage, along with Cal Football and Basketball as well as select professional and college sports play-by-play events. While 810 THE SPREAD will feature specific gambling information, we believe our entertaining presentation will make it a favorite for all Bay area sports fans and a perfect complement to the legendary KNBR and KTCT. With its addition, it truly shows Cumulus’ commitment to the Bay area as ‘The Sports Leader’!”

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The weekday programming lineup for 810 THE SPREAD includes:

6am-9am – Bet QL Daily – The must-consume show for sports fans and betting fans alike. Hosted by Joe Ostrowski, Joe Giglio, and Erin Hawksworth.

9am-12pm – Jim Rome - Aggressive, informed sports opinions, rapid-fire dialogue, and plenty of sports smack. As one of the most prolific sports talk hosts in America, Rome draws massive tune-in with legions of fans known as clones, who live for Rome’s take on the day’s largest issues in sports.

12pm-4pm – You Better You Bet – Nick Kostos and Ken Barkley have you covered for the best bets on the biggest matchups, the latest line movement and updates in the futures market. We’ll have up-to-the-minute coverage of backdoor covers and bad beats, and the cheers and tears that come with them. It’s sports betting conversation like you’ve never heard before.

4pm-8pm – Bet MGM Tonight – Live sports betting updates for all the night’s games as they happen – plus live “look-ins” for Major League Baseball games in progress. Get the latest scores, sides, totals, props, parlays, futures, and much more with hosts Quinton Mayo, Trysta Krick, and Ryan Horvat.

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8pm-12 Midnight – CBS Sports Radio

BetQL Network programming is provided by Cumulus Media’s Westwood One through a partnership with Audacy.

For more information or to stream 810 THE SPREAD, visit: http://www.810thespread.com.

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