Red Rock Resorts Announces First Quarter 2018 Results
Source: Nasdaq GlobeNewswire / 01 May 2018 21:01:25 Europe/London
LAS VEGAS, May 01, 2018 (GLOBE NEWSWIRE) -- Red Rock Resorts, Inc. ("Red Rock Resorts," "we" or the "Company") (NASDAQ:RRR) today reported financial results for the first quarter ended March 31, 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 $421.0 million for the first quarter of 2018, a decrease of 1.1%, or $4.7 million, from $425.7 million for the same period of 2017. The decrease in net revenues was primarily due to ongoing construction disruption at Palace Station Hotel & Casino (“Palace Station”) and the Palms Casino Resort (the “Palms”) and a decrease in Native American management fees.
Net income was $82.1 million for the first quarter of 2018, an increase of $36.7 million from net income of $45.4 million for the same period of 2017. The increase in net income was primarily due to a $13.3 million after-tax gain associated with the extinguishment of a tax receivable liability, as well as a $14.3 million after-tax positive change in the fair value of interest rate swaps.
Adjusted EBITDA was $140.1 million for the first quarter of 2018, an increase of 2.9% from $136.2 million in the same period of 2017. The increase was primarily due to an increase in Las Vegas operations, partially offset by a decrease in Native American management fees.
Las Vegas Operations
Net revenues from Las Vegas operations were $395.2 million for the first quarter of 2018, a 0.2% increase from $394.2 million in the same period of 2017. Adjusted EBITDA from Las Vegas operations was $125.9 million for the first quarter of 2018, a 4.2% increase from $120.9 million in the same period of 2017. The increase was primarily due to an increase in non-disrupted Las Vegas operations, partially offset by substantial construction disruption at Palace Station and the Palms.
Native American Management
Adjusted EBITDA from Native American operations was $22.1 million for the first quarter of 2018, a 5.2% decrease from $23.3 million in the same period of 2017, due to the expiration of the Gun Lake management agreement in February of 2018.
Palace Station and Palms Redevelopment Update
The Palace Station redevelopment project remains on schedule and the budget remains unchanged. As of March 31, 2018, the Company has incurred $116 million in costs against that $191 million project. The Palace Station project is expected to be completed in phases by the end of 2018.
The Palms redevelopment project remains on schedule and the budget remains unchanged. The final elements of phase one of the project will be open later this month, with components of phase two expected to open through the second quarter of 2019, and phase three of the project expected to open by the fourth quarter of 2019. As of March 31, 2018, the Company has incurred $152 million in costs against that $620 million project.
Balance Sheet Highlights
The Company’s cash and cash equivalents at March 31, 2018 were $179.2 million and total principal amount of debt outstanding at the end of the first quarter was $2.68 billion. The Company’s debt to Adjusted EBITDA and interest coverage ratios, were 5.0x and 4.6x, respectively.
The Company’s Board of Directors has declared a cash dividend of $0.10 per Class A common share for the second quarter of 2018. The dividend will be payable on June 29, 2018 to all stockholders of record as of the close of business on June 15, 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 $11.6 million, approximately $6.9 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 will include a question and answer session. Those interested in participating in the call should dial (877) 793-4361, or (615) 247-0185 for international callers, approximately 15 minutes before the call start time. A replay of the call will be available from today through May 8, 2018 at www.redrockresorts.com. A live audio webcast of the call will also be available 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, tax receivable agreement liability adjustment, 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 and owns a 50% interest in MPM Enterprises, L.L.C., which managed Gun Lake Casino in southwestern Michigan through February 2018.
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
Vice President, Finance & Investor Relations
Vice President of Corporate Communications
Red Rock Resorts, Inc. Condensed Consolidated Statements of Income (amounts in thousands, except per share data) (unaudited) Three Months Ended March 31, 2018 2017 Operating revenues: Casino $ 236,247 $ 223,536 Food and beverage 90,928 98,546 Room 46,630 50,760 Other 22,556 22,669 Management fees 24,678 30,227 Net revenues 421,039 425,738 Operating costs and expenses: Casino 78,958 76,459 Food and beverage 80,109 84,825 Room 20,100 21,762 Other 8,786 9,031 Selling, general and administrative 95,109 94,661 Depreciation and amortization 43,164 45,253 Write-downs and other charges, net 3,845 1,054 Tax receivable agreement liability adjustment (16,873 ) — 313,198 333,045 Operating income 107,841 92,693 Earnings from joint ventures 608 415 Operating income and earnings from joint ventures 108,449 93,108 Other (expense) income: Interest expense, net (31,111 ) (34,944 ) Loss on extinguishment/modification of debt, net — (2,019 ) Change in fair value of derivative instruments 15,803 39 Other (155 ) (86 ) (15,463 ) (37,010 ) Income before income tax 92,986 56,098 Provision for income tax (10,856 ) (10,679 ) Net income 82,130 45,419 Less: net income attributable to noncontrolling interests 30,950 25,519 Net income attributable to Red Rock Resorts, Inc. $ 51,180 $ 19,900 Earnings per common share: Earnings per share of Class A common stock, basic $ 0.74 $ 0.30 Earnings per share of Class A common stock, diluted $ 0.65 $ 0.30 Weighted-average common shares outstanding: Basic 68,798 65,692 Diluted 116,947 65,837 Dividends declared per common share $ 0.10 $ 0.10 Red Rock Resorts, Inc. Segment Information and Reconciliation of Net Income to Adjusted EBITDA (amounts in thousands) (unaudited) Three Months Ended March 31, 2018 2017 Net revenues Las Vegas operations $ 395,170 $ 394,244 Native American management 24,505 30,105 Reportable segment net revenues 419,675 424,349 Corporate and other 1,364 1,389 Net revenues $ 421,039 $ 425,738 Net income $ 82,130 $ 45,419 Adjustments Depreciation and amortization 43,164 45,253 Share-based compensation 2,454 1,412 Write-downs and other charges, net 3,845 1,054 Tax receivable agreement liability adjustment (16,873 ) — Interest expense, net 31,111 34,944 Loss on extinguishment/modification of debt, net — 2,019 Change in fair value of derivative instruments (15,803 ) (39 ) Adjusted EBITDA attributable to MPM noncontrolling interest (962 ) (4,638 ) Provision for income tax 10,856 10,679 Other 155 86 Adjusted EBITDA $ 140,077 $ 136,189 Adjusted EBITDA Las Vegas operations $ 125,877 $ 120,857 Native American management 22,094 23,317 Reportable segment Adjusted EBITDA 147,971 144,174 Corporate and other (7,894 ) (7,985 ) Adjusted EBITDA $ 140,077 $ 136,189