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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.

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

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

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

(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.

 

Red Rock Resorts, Inc.

Condensed Consolidated Statements of Income

(amounts in thousands, except per share data)

(unaudited)

Three Months Ended
September 30,

Nine Months Ended

September 30,

2018

2017

2018

2017

Operating revenues:

Casino

$      230,723

$      221,771

$      699,726

$      664,443

Food and beverage

94,666

87,311

280,226

277,453

Room

39,306

43,447

128,655

139,401

Other

26,385

23,817

73,858

70,027

Management fees

21,252

29,602

67,094

90,505

 Net revenues

412,332

405,948

1,249,559

1,241,829

Operating costs and expenses:

Casino

82,772

77,570

242,126

231,698

Food and beverage

87,097

80,019

252,320

247,663

Room

19,595

20,056

59,126

62,471

Other

13,216

11,013

34,111

30,258

Selling, general and administrative

104,360

98,840

297,540

288,715

Depreciation and amortization

44,235

42,661

133,391

134,721

Write-downs and other charges, net

6,439

15,239

21,070

25,931

Tax receivable agreement liability adjustment

214

(90,375)

(230)

Related party lease termination

1,950

100,343

Asset impairment

1,829

1,829

357,714

349,391

949,309

1,123,399

Operating income

54,618

56,557

300,250

118,430

Earnings from joint ventures

499

407

1,606

1,242

Operating income and earnings from joint ventures

55,117

56,964

301,856

119,672

Other (expense) income:

Interest expense, net

(33,590)

(31,330)

(96,299)

(100,127)

Loss on extinguishment/modification of debt, net

(558)

(3,552)

Change in fair value of derivative instruments

4,229

(310)

27,353

3,059

Other

(66)

(86)

(287)

(258)

(29,427)

(32,284)

(69,233)

(100,878)

Income before income tax

25,690

24,680

232,623

18,794

Provision for income tax

(623)

(2,364)

(26,324)

(1,230)

Net income

25,067

22,316

206,299

17,564

Less: net income attributable to noncontrolling interests

10,387

10,531

57,704

11,613

Net income attributable to Red Rock Resorts, Inc.

$        14,680

$        11,785

$      148,595

$          5,951

Earnings per common share:

 Earnings per share of Class A common stock, basic

$            0.21

$            0.17

$            2.15

$            0.09

 Earnings per share of Class A common stock, diluted

$            0.20

$            0.16

$            1.66

$            0.08

Weighted-average common shares outstanding:

 Basic

69,250

68,060

69,059

67,030

 Diluted

117,074

115,941

117,006

115,877

Dividends declared per common share

$            0.10

$            0.10

$            0.30

$            0.30

 

Red Rock Resorts, Inc.

Segment Information and Reconciliation of Net Income to Adjusted EBITDA

(amounts in thousands)

(unaudited)

Three Months Ended
September 30,

Nine Months Ended

September 30,

2018

2017

2018

2017

Net revenues

Las Vegas operations

$      389,668

$      375,071

$   1,178,520

$   1,147,457

Native American management

21,119

29,478

66,644

90,126

 Reportable segment net revenues

410,787

404,549

1,245,164

1,237,583

Corporate and other

1,545

1,399

4,395

4,246

 Net revenues

$      412,332

$      405,948

$   1,249,559

$   1,241,829

Net income

$        25,067

$        22,316

$      206,299

$        17,564

Adjustments

Depreciation and amortization

44,235

42,661

133,391

134,721

Share-based compensation

3,315

1,989

8,872

5,727

Write-downs and other charges, net

6,439

15,239

21,070

25,931

Tax receivable agreement liability adjustment

214

(90,375)

(230)

Related party lease termination

1,950

100,343

Asset impairment

1,829

1,829

Interest expense, net

33,590

31,330

96,299

100,127

Loss on extinguishment/modification of debt, net

558

3,552

Change in fair value of derivative instruments

(4,229)

310

(27,353)

(3,059)

Adjusted EBITDA attributable to MPM noncontrolling interest

(2,426)

(962)

(13,482)

Provision for income tax

623

2,364

26,324

1,230

Other

66

86

262

258

Adjusted EBITDA

$      109,106

$      118,420

$      373,827

$      374,511

Adjusted EBITDA

Las Vegas operations

$        97,942

$      101,873

$      336,408

$      327,850

Native American management

19,787

25,337

61,671

71,349

 Reportable segment Adjusted EBITDA

117,729

127,210

398,079

399,199

Corporate and other

(8,623)

(8,790)

(24,252)

(24,688)

 Adjusted EBITDA

$      109,106

$      118,420

$      373,827

$      374,511

 

Source: Red Rock Resorts, Inc.


Source: European Gaming Media

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Betway becomes official global betting partner of the Mzansi Super League T20

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Betway has agreed a three-year-deal to become the official betting partner of the Mzansi Super League T20 – further adding to its cricket sponsorship portfolio.

The tournament, which takes place in Johannesburg, Tshwane, Durban, Nelson Mandela Bay, Cape Town and Paarl, is broadcast live in the UK and the first fixtures have already provided some great action.

Former South African international AB de Villiers impressed the locals as he hit fifty in vain as Tshwane Spartans were beaten by Cape Town Blitz, while Nelson Mandela Bay Giants beat the Jozi Stars.

Betway’s latest seven-figure-deal comes just months after it was confirmed as the official betting partner of both the men’s and women’s Cricket West Indies (CWI) sides.

Betway’s Anthony Werkman, said: “We are really pleased to be on board at the start of this new look T20 tournament.

“Being involved as a global partner shows the ambition Betway has to become a recognised worldwide supporter of elite professional sport, and the names appearing in this tournament certainly fit that bill.

“I am sure that the crowds will enjoy the games and we look forward to delivering an exciting experience for our customers too over the next three years.”

Cricket South Africa CEO, Thabang Moroe, added: “We are thrilled to have sports betting brand, Betway, on board to join our roster of sponsors, all whom have committed to helping us take Mzansi T20 to the world through the game of cricket.”


Source: European Gaming Media

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Praesepe put faith in Project pokers

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Project has received what it is describing as a ‘substantial order’ from Praesepe, part of the Gauselmann group of companies, for its specialist poker themed games comprising Red Hot Poker, Jacks or Better and the Cat C lite, Hi Lo Poker.

Confirming the order, Praesepe’s Head of Gaming Machines, Nigel Davis, said:We have a long and successful history of working with Project, one of the industry’s leading independent machine innovators. Project was the first to fully understand poker and over the last decade has mastered the art of translating the dynamics of the game into an array of stylish B4, Cat C and Cat C lite machines. We’ve found that poker attracts a different segment of the player base into our venues. They don’t perceive themselves as being slots players but poker players, which means that as an operator we are not simply cannibalising spend from one machine to another. Attracting new income is the lifeblood of any business and poker themed games bring new customers into our venues. I am confident the Project pokers that we have ordered will further enhance the fantastic Cashino customer experience.

Project Managing Director, Tony Boulton stated:We are delighted at the faith shown by Praesepe in our products. We have spent a lot of time understanding the psyche of the poker player and working hard to deliver new and enhanced experiences for poker aficionados. Poker doesn’t go out of fashion, it works across machine categories and it can be deployed either as a stand alone machine or, as we’ve demonstrated in 5 Star Games, as part of a mixed game style compendium. Key to its success and its longevity is the fact that it generates differentiated income courtesy of its’ distinct player base.


Source: European Gaming Media

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Continent 8 Named “International Business of the Year” at the Isle of Man Newspapers Awards for Excellence

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Continent 8 Named “International Business of the Year” at the Isle of Man Newspapers Awards for ExcellenceReading Time: 2 minutes

 

Continent 8 Technologies, the award-winning, multi-jurisdictional global data solutions provider, has been named the 2018 “International Business of the Year” at the prestigious Isle of Man Newspapers Awards for Excellence held last night at the Villa Marina, Isle of Man.

This year, Continent 8 was shortlisted in the “International Business of the Year category” – one of the most sought after awards of the night. Now in its 13th year, the Awards for Excellence has recognised more than 300 local companies since the awards started, creating a unique opportunity to recognise success for companies, individuals, the public sector, and the charitable sector.

This is the second time Continent 8 has been recognised for success and innovation. In 2014, Continent 8 was honoured as the “Company of the Year”. At that time, the judges remarked that Continent 8 demonstrated a clear strategy, as well as innovative ways of sourcing and delivering service on and off island. They recognised that Continent 8 had a firmly established local and international profile and has served as a strong ambassador on behalf of the Island.

Continent 8’s CEO Michael Tobin stated about this year’s award, “We are truly honoured to be recognised as this year’s International Business of the Year. Our success and growth are directly attributed to our global team of experts, our ability to develop long-term partnerships, and by offering the most sophisticated, innovative, and reliable services to our customers.” Mr. Tobin, described the award as a “Humbling recognition of our relentless pursuit of service and innovation on a global scale and our commitment to the growth of the Isle of Man.”

In accepting the award on behalf of Continent 8 David Black thanked the organisers, judges, shareholders, the global team and led a touching tribute following the recent tragic loss of colleague, Paul Steer.

Continent 8 is an award-winning, multi-jurisdictional global network solutions provider that connects, manages, and secures the world’s most valuable information. Its advanced data centers and high-quality networks support critical online operations in both private and public-sector organisations in over 30 locations across Europethe United States and Asia. For more information visit www.continent8.com.


Source: European Gaming Media

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