Red Rock Resorts Announces Second Quarter 2017 Results

LAS VEGAS, Aug. 08, 2017 (GLOBE NEWSWIRE) -- Red Rock Resorts, Inc. ("Red Rock Resorts" "we" or the "Company") (NASDAQ:RRR) today reported financial results for the second quarter ended June 30, 2017.

Net revenues were $403.5 million for the second quarter of 2017, an increase of 14.8%, or $52.0 million, from $351.5 million for the same period of 2016.  The increase was primarily the result of the addition of $39.8 million of net revenues from the Palms Casino Resort (the "Palms"), an $8.8 million increase from same-store Las Vegas Operations and a $3.2 million increase from Native American Operations.

Net loss attributable to Red Rock Resorts was $25.9 million, or $0.39 per diluted share, for the second quarter of 2017, a decrease of $31.6 million, from net income of $5.7 million, or $0.01 per diluted share, for the same period of 2016.  The decrease in net income was primarily attributable to the acquisition of the leases at Boulder Station and Texas Station, partially offset by lower income tax.

Adjusted EBITDA⁽¹⁾ was $119.5 million for the second quarter of 2017, a 1.8% increase from $117.4 million in the same period of 2016.  The increase was the result of the addition of the Palms in operating results and continued strength in Native American Operations.

Red Rock Resorts also announced on August 4, 2017 that the Company had approved a cash dividend of $0.10 per share, payable on August 31, 2017 to shareholders of record as of August 15, 2017. 

Las Vegas Operations

Net revenues from Las Vegas Operations were $371.5 million for the second quarter of 2017, a 15.1% increase from $322.9 million in the same period of 2016, primarily due to the addition of the Palms.  Adjusted EBITDA⁽¹⁾ from Las Vegas Operations was $104.7 million for the second quarter of 2017, a 0.1% increase from $104.6 million in the same period of 2016, primarily due to the addition of the Palms and partially offset by continued construction disruption at Palace Station.

Native American Operations

Adjusted EBITDA⁽¹⁾ from Native American Operations was $22.7 million for the second quarter of 2017, a 12.9% increase from $20.1 million in the same period of 2016 due to continued strength at both Graton and Gun Lake. 

Balance Sheet Highlights

The Company’s cash and cash equivalents at June 30, 2017 were $125.3 million and total principal amount of debt outstanding at the end of the quarter was $2.57 billion. As of June 30, 2017, debt (net of cash) to Adjusted EBITDA⁽¹⁾ ratio was 4.96 times and interest coverage was at 4.58 times, proforma for the acquisition of the Palms. 

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 August 15, 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 (loss) 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 (loss) income plus preopening, depreciation and amortization, share-based compensation, write-downs and other charges, net, related party lease termination, 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. 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 Company’s ability to successfully integrate the Palms or realize expected synergies; 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 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 Operations
(amounts in thousands, except per share data)
(unaudited)
			Three Months Ended								Six Months Ended
			June 30,								June 30,
				2017				2016				2017				2016
Operating revenues:
	Casino		$	258,396			$	233,796			$	521,368			$	473,567
	Food and beverage			75,303				66,408				155,418				133,028
	Room			44,641				32,979				94,405				67,363
	Other			23,699				17,705				46,519				34,887
	Management fees			30,676				27,455				60,903				54,104
		Gross revenues		432,715				378,343				878,613				762,949
	Promotional allowances			(29,222	)			(26,857	)			(57,388	)			(52,216	)
		Net revenues		403,493				351,486				821,225				710,733
Operating costs and expenses:
	Casino			103,170				88,986				204,824				176,407
	Food and beverage			55,059				44,501				110,105				87,025
	Room			18,239				11,893				38,306				24,278
	Other			9,079				6,305				16,912				12,027
	Selling, general and administrative			94,781				80,152				189,204				155,242
	Preopening			368				373				398				721
	Depreciation and amortization			46,807				38,436				92,060				77,863
	Write-downs and other charges, net			8,826				10,966				9,850				13,334
	Related party lease termination			98,393				-				98,393				-
				434,722				281,612				760,052				546,897
Operating (loss) income				(31,229	)			69,874				61,173				163,836
	Earnings from joint ventures			420				428				835				1,040
Operating (loss) income and earnings from joint ventures				(30,809	)			70,302				62,008				164,876
Other (expense) income:
	Interest expense, net			(33,853	)			(34,078	)			(68,797	)			(69,146	)
	Loss on extinguishment/modification of debt, net			(975	)			(7,084	)			(2,994	)			(7,084	)
	Change in fair value of derivative instruments			3,330				90				3,369				87
				(31,498	)			(41,072	)			(68,422	)			(76,143	)
(Loss) income before income tax				(62,307	)			29,230				(6,414	)			88,733
	Benefit (provision) for income tax			11,813				(7,502	)			1,134				(7,502	)
Net (loss) income				(50,494	)			21,728				(5,280	)			81,231
	Less: net (loss) income attributable to noncontrolling interests			(24,574	)			16,075				857				17,939
Net (loss) income attributable to Red Rock Resorts, Inc.			$	(25,920	)		$	5,653			$	(6,137	)		$	63,292
	(Loss) earnings per common share:
		(Loss) earnings per share of Class A common stock, basic and diluted	$	(0.39	)		$	0.01			$	(0.09	)		$	0.33
	Weighted average common shares outstanding:
		Basic		67,311				30,031				66,506				19,960
		Diluted		67,311				30,193				66,506				20,041
	Dividends declared per common share		$	0.10			$	-			$	0.20			$	-

 

Red Rock Resorts, Inc.
Segment Information and
Reconciliation of Net (Loss) Income to Adjusted EBITDA
(amounts in thousands)
(unaudited)
				Three Months Ended								Six Months Ended
				June 30,								June 30,
					2017				2016				2017				2016
Net revenues
Las Vegas operations				$	371,492			$	322,876			$	757,730			$	654,334
Native American management					30,543				27,320				60,648				53,807
Reportable segment net revenues					402,035				350,196				818,378				708,141
Corporate and other					1,458				1,290				2,847				2,592
Net revenues				$	403,493			$	351,486			$	821,225			$	710,733
Net (loss) income				$	(50,494	)		$	21,728			$	(5,280	)		$	81,231
Adjustments
Preopening					368				373				398				721
Depreciation and amortization					46,807				38,436				92,060				77,863
Share-based compensation					2,326				3,681				3,738				4,301
Write-downs and other charges, net					8,826				10,966				9,850				13,334
Related party lease termination					98,393				-				98,393				-
Interest expense, net					33,853				34,078				68,797				69,146
Loss on extinguishment/modification of debt, net					975				7,084				2,994				7,084
Change in fair value of derivative instruments					(3,330	)			(90	)			(3,369	)			(87	)
Adjusted EBITDA attributable to MPM noncontrolling interest					(6,418	)			(5,211	)			(11,056	)			(9,332	)
(Benefit) provision for income tax					(11,813	)			7,502				(1,134	)			7,502
Other					-				(1,133	)			-				(1,133	)
Adjusted EBITDA				$	119,493			$	117,414			$	255,391			$	250,630
Adjusted EBITDA
Las Vegas operations				$	104,711			$	104,627			$	225,277			$	223,637
Native American management					22,695				20,096				46,012				40,528
Reportable segment Adjusted EBITDA					127,406				124,723				271,289				264,165
Corporate and other					(7,913	)			(7,309	)			(15,898	)			(13,535	)
Adjusted EBITDA				$	119,493			$	117,414			$	255,391			$	250,630

 

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CONTACT:
                    
                    Red Rock Resorts 
                    Daniel Foley
                    Vice President, Finance & Investor Relations
                    (702) 495-3683
                    or
                    Lori Nelson
                    Vice President of Corporate Communications
                    (702) 495-4248