Red Rock Resorts, Inc. ("Red Rock Resorts," "we" or the "Company")
(NASDAQ:RRR) today reported financial results for the third quarter
ended September 30, 2017.
Net revenues were $400.4 million for the third quarter of 2017,
an increase of 15.3%, or $53.2 million, from $347.1 million for the
same period of 2016. The increase was primarily the result of
the addition of $37.9 million of net revenue from the Palms, a
$13.3 million increase from same-store Las Vegas operations and a
$1.9 million increase from Native American operations.
Net income was $22.3 million for the third quarter of 2017, a
decrease of $11.1 million from net income of $33.4 million for the
same period in 2016. The decrease in net income was primarily
attributable to an increase in write-downs and other charges.
Adjusted EBITDA(1) was $118.3 million for the third quarter of
2017, an increase of 8.5% from $109.0 million in the same period of
2016. The increase was primarily due to solid results from
same-store Las Vegas operations, continued strength in Native
American operations and the addition of the Palms.
The Company also announced on November 3, 2017 that it had
approved a cash dividend of $0.10 per share, payable on November
30, 2017 to shareholders of record as of November 15,
2017.
Las Vegas Operations
Net revenues from Las Vegas operations were $369.5 million for
the third quarter of 2017, a 16.1% increase from $318.3 million in
the same period of 2016, which was primarily driven by the addition
of the Palms and an increase in same-store gaming revenue.
Adjusted EBITDA(1) from Las Vegas operations was $101.8 million for
the third quarter of 2017, a 7.9% increase from $94.3 million in
the same period of 2016. That EBITDA increase was primarily
driven by growth in same-store operations, which was partially
offset by ongoing construction disruption at Palace Station and
$3.5 million of costs relating to the enhancement of our food and
beverage offerings and investments made in our team members.
Native American Management
Adjusted EBITDA(1) from Native American operations was $25.3
million for the third quarter of 2017, a 17.2% increase from $21.6
million in the same period of 2016 due to strong operating results
at both Graton and Gun Lake.
Palms Redevelopment
The Company is excited to announce today the second phase of its
redevelopment plan for the Palms Casino Resort (the “Palms”).
This renovation of the Palms will touch virtually every aspect of
the property and is expected to transform the Palms into a “must
see” gaming and entertainment destination by creating a mix of
classic Vegas hospitality and extraordinary new experiences
delivered through world-class partnerships, which will include
industry-leading nightlife and entertainment companies such as TAO
Group, Clique Hospitality and Live Nation, as well as James Beard
award-winning celebrity chefs Bobby Flay, Michael Symon and Marc
Vetri. As previously announced, phase one of the
redevelopment plan is expected to be completed in the second
quarter of 2018. Phase two of the redevelopment plan is
expected to be completed in late fourth quarter of 2018 or early
first quarter of 2019. The total budget for both phases of
the project, including construction costs, capitalized interest and
pre-opening expenses, is expected to be approximately $485
million.
Balance Sheet Highlights
The Company’s cash and cash equivalents at September 30, 2017
were $222.4 million and total principal amount of debt outstanding
at the end of the third quarter was $2.69 billion, excluding $250.0
million in aggregate principal amount of 7.50% Senior Notes that
were redeemed in October 2017 with restricted cash
constituting a portion of the proceeds from the issuance of $550.0
million in principal amount of 5.00% Senior Notes in
September 2017. At September 30, 2017, debt to EBITDA
and interest coverage ratios, net of excess cash and $250.0 million
in principal amount of 7.50% Senior Notes, were 5.0x and 4.6x,
respectively.
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 November 21, 2017 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 is not a generally accepted accounting
principle (“GAAP”) measurement and is presented solely as a
supplemental disclosure because the Company believes that it is a
widely used measure of operating performance in the gaming 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 excluding non-cash expenses,
financing costs, and other non-operational items. Adjusted EBITDA
includes net income plus preopening, depreciation and amortization,
share-based compensation, write-downs and other charges, net,
related party lease termination, asset impairment, interest
expense, net, loss on extinguishment/modification of debt, net,
change in fair value of derivative instruments and income taxes,
and excludes Adjusted EBITDA attributable to the noncontrolling
interests of MPM.
Company Information and Forward Looking
Statements
Red Rock Resorts manages and owns a majority indirect equity
interest in 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 is the manager of Gun
Lake Casino in southwestern Michigan.
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.
View source version on globenewswire.com:
http://globenewswire.com/Search?runSearchId=39933809
CONTACT:
Red Rock Resorts Daniel FoleyVice President, Finance &
Investor Relations(702) 495-3683orLori NelsonVice President of
Corporate Communications(702) 495-4248
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, |
|
|
|
2017 |
|
|
|
2016 |
|
|
|
2017 |
|
|
|
2016 |
|
|
Operating
revenues: |
|
|
|
|
|
|
|
|
Casino |
$ |
263,153 |
|
|
$ |
232,584 |
|
|
$ |
784,521 |
|
|
$ |
706,151 |
|
|
Food and
beverage |
|
71,658 |
|
|
|
63,551 |
|
|
|
227,076 |
|
|
|
196,579 |
|
|
Room |
|
43,118 |
|
|
|
32,192 |
|
|
|
137,523 |
|
|
|
99,555 |
|
|
Other |
|
24,018 |
|
|
|
17,463 |
|
|
|
70,537 |
|
|
|
52,350 |
|
|
Management fees |
|
29,602 |
|
|
|
27,702 |
|
|
|
90,505 |
|
|
|
81,806 |
|
|
Gross
revenues |
|
431,549 |
|
|
|
373,492 |
|
|
|
1,310,162 |
|
|
|
1,136,441 |
|
|
Promotional allowances |
|
(31,179 |
) |
|
|
(26,352 |
) |
|
|
(88,567 |
) |
|
|
(78,568 |
) |
|
Net
revenues |
|
400,370 |
|
|
|
347,140 |
|
|
|
1,221,595 |
|
|
|
1,057,873 |
|
|
Operating costs
and expenses: |
|
|
|
|
|
|
|
|
Casino |
|
104,945 |
|
|
|
90,088 |
|
|
|
309,769 |
|
|
|
266,495 |
|
|
Food and
beverage |
|
51,555 |
|
|
|
44,888 |
|
|
|
161,660 |
|
|
|
131,913 |
|
|
Room |
|
17,473 |
|
|
|
12,036 |
|
|
|
55,779 |
|
|
|
36,314 |
|
|
Other |
|
9,526 |
|
|
|
6,411 |
|
|
|
26,438 |
|
|
|
18,438 |
|
|
Selling,
general and administrative |
|
98,515 |
|
|
|
82,739 |
|
|
|
287,719 |
|
|
|
237,981 |
|
|
Preopening |
|
307 |
|
|
|
10 |
|
|
|
705 |
|
|
|
731 |
|
|
Depreciation and amortization |
|
42,661 |
|
|
|
36,240 |
|
|
|
134,721 |
|
|
|
114,103 |
|
|
Write-downs and other charges, net |
|
15,146 |
|
|
|
1,379 |
|
|
|
24,996 |
|
|
|
14,713 |
|
|
Related
party lease termination |
|
1,950 |
|
|
|
- |
|
|
|
100,343 |
|
|
|
- |
|
|
Asset
impairment |
|
1,829 |
|
|
|
- |
|
|
|
1,829 |
|
|
|
- |
|
|
|
|
343,907 |
|
|
|
273,791 |
|
|
|
1,103,959 |
|
|
|
820,688 |
|
|
Operating
income |
|
56,463 |
|
|
|
73,349 |
|
|
|
117,636 |
|
|
|
237,185 |
|
|
Earnings
from joint ventures |
|
407 |
|
|
|
346 |
|
|
|
1,242 |
|
|
|
1,386 |
|
|
Operating
income and earnings from joint ventures |
|
56,870 |
|
|
|
73,695 |
|
|
|
118,878 |
|
|
|
238,571 |
|
|
|
|
|
|
|
|
|
|
|
Other (expense)
income: |
|
|
|
|
|
|
|
|
Interest
expense, net |
|
(31,330 |
) |
|
|
(35,275 |
) |
|
|
(100,127 |
) |
|
|
(104,421 |
) |
|
Loss on
extinguishment/modification of debt, net |
|
(558 |
) |
|
|
(186 |
) |
|
|
(3,552 |
) |
|
|
(7,270 |
) |
|
Change in
fair value of derivative instruments |
|
(310 |
) |
|
|
- |
|
|
|
3,059 |
|
|
|
87 |
|
|
|
|
(32,198 |
) |
|
|
(35,461 |
) |
|
|
(100,620 |
) |
|
|
(111,604 |
) |
|
Income before
income tax |
|
24,672 |
|
|
|
38,234 |
|
|
|
18,258 |
|
|
|
126,967 |
|
|
Provision
for income tax |
|
(2,364 |
) |
|
|
(4,790 |
) |
|
|
(1,230 |
) |
|
|
(12,292 |
) |
|
Net
income |
|
22,308 |
|
|
|
33,444 |
|
|
|
17,028 |
|
|
|
114,675 |
|
|
Less: net
income attributable to noncontrolling interests |
|
10,528 |
|
|
|
25,172 |
|
|
|
11,385 |
|
|
|
43,111 |
|
|
Net income
attributable to Red Rock Resorts, Inc. |
$ |
11,780 |
|
|
$ |
8,272 |
|
|
$ |
5,643 |
|
|
$ |
71,564 |
|
|
|
|
|
|
|
|
|
|
|
Earnings
per common share: |
|
|
|
|
|
|
|
|
Earnings
per share of Class A common stock, basic |
$ |
0.17 |
|
|
$ |
0.20 |
|
|
$ |
0.08 |
|
|
$ |
0.55 |
|
|
Earnings
per share of Class A common stock, diluted |
$ |
0.16 |
|
|
$ |
0.20 |
|
|
$ |
0.07 |
|
|
$ |
0.55 |
|
|
|
|
|
|
|
|
|
|
|
Weighted
average common shares outstanding: |
|
|
|
|
|
|
|
|
Basic |
|
68,060 |
|
|
|
41,137 |
|
|
|
67,030 |
|
|
|
27,070 |
|
|
Diluted |
|
115,941 |
|
|
|
41,288 |
|
|
|
115,877 |
|
|
|
27,174 |
|
|
|
|
|
|
|
|
|
|
|
Dividends
declared per common share |
$ |
0.10 |
|
|
$ |
0.10 |
|
|
$ |
0.30 |
|
|
$ |
0.10 |
|
|
|
|
|
|
|
|
|
|
|
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, |
|
|
|
2017 |
|
|
|
2016 |
|
|
|
2017 |
|
|
|
2016 |
|
|
Net
revenues |
|
|
|
|
|
|
|
|
Las Vegas
operations |
$ |
369,493 |
|
|
$ |
318,253 |
|
|
$ |
1,127,223 |
|
|
$ |
972,587 |
|
|
Native
American management |
|
29,478 |
|
|
|
27,597 |
|
|
|
90,126 |
|
|
|
81,404 |
|
|
Reportable segment net revenues |
|
398,971 |
|
|
|
345,850 |
|
|
|
1,217,349 |
|
|
|
1,053,991 |
|
|
Corporate
and other |
|
1,399 |
|
|
|
1,290 |
|
|
|
4,246 |
|
|
|
3,882 |
|
|
Net revenues |
$ |
400,370 |
|
|
$ |
347,140 |
|
|
$ |
1,221,595 |
|
|
$ |
1,057,873 |
|
|
|
|
|
|
|
|
|
|
|
Net
income |
$ |
22,308 |
|
|
$ |
33,444 |
|
|
$ |
17,028 |
|
|
$ |
114,675 |
|
|
Adjustments |
|
|
|
|
|
|
|
|
Preopening |
|
307 |
|
|
|
10 |
|
|
|
705 |
|
|
|
731 |
|
|
Depreciation and amortization |
|
42,661 |
|
|
|
36,240 |
|
|
|
134,721 |
|
|
|
114,103 |
|
|
Share-based compensation |
|
1,989 |
|
|
|
1,413 |
|
|
|
5,727 |
|
|
|
5,714 |
|
|
Write-downs and other charges, net |
|
15,146 |
|
|
|
1,379 |
|
|
|
24,996 |
|
|
|
14,713 |
|
|
Related
party lease termination |
|
1,950 |
|
|
|
— |
|
|
|
100,343 |
|
|
|
— |
|
|
Asset
impairment |
|
1,829 |
|
|
|
— |
|
|
|
1,829 |
|
|
|
— |
|
|
Interest
expense, net |
|
31,330 |
|
|
|
35,275 |
|
|
|
100,127 |
|
|
|
104,421 |
|
|
Loss on
extinguishment/modification of debt, net |
|
558 |
|
|
|
186 |
|
|
|
3,552 |
|
|
|
7,270 |
|
|
Change in
fair value of derivative instruments |
|
310 |
|
|
|
— |
|
|
|
(3,059 |
) |
|
|
(87 |
) |
|
Adjusted
EBITDA attributable to MPM noncontrolling interest |
|
(2,426 |
) |
|
|
(3,715 |
) |
|
|
(13,482 |
) |
|
|
(13,047 |
) |
|
Provision
for income tax |
|
2,364 |
|
|
|
4,790 |
|
|
|
1,230 |
|
|
|
12,292 |
|
|
Other |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1,133 |
) |
|
Adjusted
EBITDA |
$ |
118,326 |
|
|
$ |
109,022 |
|
|
$ |
373,717 |
|
|
$ |
359,652 |
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA |
|
|
|
|
|
|
|
|
Las Vegas
operations |
$ |
101,779 |
|
|
$ |
94,322 |
|
|
$ |
327,056 |
|
|
$ |
317,959 |
|
|
Native
American management |
|
25,337 |
|
|
|
21,624 |
|
|
|
71,349 |
|
|
|
62,152 |
|
|
Reportable segment Adjusted EBITDA |
|
127,116 |
|
|
|
115,946 |
|
|
|
398,405 |
|
|
|
380,111 |
|
|
Corporate
and other |
|
(8,790 |
) |
|
|
(6,924 |
) |
|
|
(24,688 |
) |
|
|
(20,459 |
) |
|
Adjusted EBITDA |
$ |
118,326 |
|
|
$ |
109,022 |
|
|
$ |
373,717 |
|
|
$ |
359,652 |
|
|
|
|
|
|
|
|
|
|
|
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