Gambling in the USA
Red Rock Resorts Announces Fourth Quarter and Year End 2018 Results
Red Rock Resorts, Inc. reported financial results for the fourth quarter and year ended December 31, 2018. The Company 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 $431.5 million for the fourth quarter of 2018, an increase of 7.8%, or $31.2 million, from $400.3 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 due to the expiration of the Gun Lake management agreement in February of 2018.
Net income was $13.2 million for the fourth quarter of 2018, a decrease of 71.3%, or $32.8 million, from $46.0 million for the same period of 2017. The decrease in net income was primarily due to an after-tax decrease in the fair value of derivative instruments of $23.9 million. These results also reflect an out-of-period, one-time, non-cash adjustment related to a lease obligation regarding our corporate office building that increased interest expense by $9.3 million and decreased net income by $8.6 million.
Adjusted EBITDA was $135.1 million for the fourth quarter of 2018, an increase of 10.1%, or $12.4 million, from $122.7 million in the same period of 2017. The increase in Adjusted EBITDA was primarily due to an increase in Las Vegas operations, partially offset by a decrease in Native American management fees due to the Gun Lake expiration.
For the full year, net revenues were $1.68 billion in 2018, an increase of 2.4%, or $38.9 million, from $1.64 billion for the same period of 2017. The increase in net revenues was primarily due to a $69.6 million increase in Las Vegas operations, partially offset by a $31.0 million decrease in Native American operations due to the Gun Lake expiration.
For the full year, net income was $219.5 million in 2018, compared to $63.5 million for the same period of 2017. The increase in net income was primarily due to a gain associated with the extinguishment of tax receivable liabilities, as well as a prior year loss associated with the acquisition of the leases at Boulder Station and Texas Station.
For the full year, Adjusted EBITDA was $509.0 million in 2018, an increase of 2.4%, or $11.7 million, from $497.2 million in 2017, primarily due to a $23.7 million increase in Las Vegas operations, partially offset by a $15.1 million decrease in Native American operations due to the Gun Lake expiration.
Las Vegas Operations
Net revenues from Las Vegas operations were $409.5 million for the fourth quarter of 2018, an increase of 10.4%, or $38.5 million, from $371.0 million in the same period of 2017. Adjusted EBITDA from Las Vegas operations was $121.0 million for the fourth quarter of 2018, an increase of 14.4%, or $15.2 million, from $105.8 million in the same period of 2017.
Native American Management
Adjusted EBITDA from Native American operations was $19.1 million for the fourth quarter of 2018, a 22.1% decrease from $24.5 million in the same period of 2017. The decrease was primarily due to the Gun Lake expiration, partially offset by increased management fees generated under the Graton Resort management agreement.
Palace Station and Palms Redevelopment Update
The Palace Station redevelopment project was completed on schedule and on budget with all aspects of the project open as of the end of 2018. As of December 31, 2018, the Company has incurred $188 million in costs against the budget of $191 million.
The Palms redevelopment project remains on schedule and the budget remains unchanged with the remaining components of phase two expected to be complete in the second quarter of 2019 and phase three expected to be complete in the third quarter of 2019. As of December 31, 2018, the Company has incurred approximately $430 million in costs against the $690 million project.
Balance Sheet Highlights
The Company’s cash and cash equivalents at December 31, 2018 were $114.6 million and total principal amount of debt outstanding at the end of the fourth quarter was $2.91 billion. The Company’s debt to Adjusted EBITDA and interest coverage ratios were 5.0x 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 first quarter of 2019. The dividend will be payable on March 29, 2019 to all stockholders of record as of the close of business on March 14, 2019.
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: 4563756. A replay of the call will be available from today through February 20, 2019 at www.redrockresorts.com.
Presentation of Financial Information
(1) Adjusted EBITDA is a non-GAAP measure that is presented solely as a supplemental disclosure. We believe that Adjusted EBITDA is a widely used measure of operating performance in our 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 or non-recurring items. Adjusted EBITDA includes net income plus depreciation and amortization, share-based compensation, write-downs and other charges, net, 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. |
|||||||
Consolidated Statements of Income |
|||||||
(amounts in thousands, except per share data) |
|||||||
(unaudited) |
|||||||
Three Months Ended |
Year Ended |
||||||
2018 |
2017 |
2018 |
2017 |
||||
Operating revenues: |
|||||||
Casino |
$ 240,757 |
$ 221,763 |
$ 940,483 |
$ 886,206 |
|||
Food and beverage |
100,971 |
87,995 |
381,197 |
365,448 |
|||
Room |
42,169 |
39,640 |
170,824 |
179,041 |
|||
Other |
27,054 |
22,940 |
100,912 |
92,967 |
|||
Management fees |
20,520 |
27,972 |
87,614 |
118,477 |
|||
Net revenues |
431,471 |
400,310 |
1,681,030 |
1,642,139 |
|||
Operating costs and expenses: |
|||||||
Casino |
84,854 |
79,388 |
326,980 |
311,086 |
|||
Food and beverage |
87,892 |
78,406 |
340,212 |
326,069 |
|||
Room |
19,314 |
19,297 |
78,440 |
81,768 |
|||
Other |
14,320 |
10,074 |
48,431 |
40,332 |
|||
Selling, general and administrative |
92,952 |
92,215 |
390,492 |
380,930 |
|||
Depreciation and amortization |
46,864 |
43,496 |
180,255 |
178,217 |
|||
Write-downs and other charges, net |
13,580 |
3,653 |
34,650 |
29,584 |
|||
Tax receivable agreement liability adjustment |
(263) |
(139,070) |
(90,638) |
(139,300) |
|||
Related party lease termination |
— |
— |
— |
100,343 |
|||
Asset impairment |
— |
— |
— |
1,829 |
|||
359,513 |
187,459 |
1,308,822 |
1,310,858 |
||||
Operating income |
71,958 |
212,851 |
372,208 |
331,281 |
|||
Earnings from joint ventures |
579 |
390 |
2,185 |
1,632 |
|||
Operating income and earnings from joint ventures |
72,537 |
213,241 |
374,393 |
332,913 |
|||
Other (expense) income: |
|||||||
Interest expense, net |
(46,800) |
(31,315) |
(143,099) |
(131,442) |
|||
Loss on extinguishment/modification of debt, net |
— |
(13,355) |
— |
(16,907) |
|||
Change in fair value of derivative instruments |
(14,938) |
11,053 |
12,415 |
14,112 |
|||
Other |
(67) |
(99) |
(354) |
(357) |
|||
(61,805) |
(33,716) |
(131,038) |
(134,594) |
||||
Income before income tax |
10,732 |
179,525 |
243,355 |
198,319 |
|||
Benefit (provision) for income tax |
2,449 |
(133,556) |
(23,875) |
(134,786) |
|||
Net income |
13,181 |
45,969 |
219,480 |
63,533 |
|||
Less: net income attributable to noncontrolling interests |
4,235 |
16,497 |
61,939 |
28,110 |
|||
Net income attributable to Red Rock Resorts, Inc. |
$ 8,946 |
$ 29,472 |
$ 157,541 |
$ 35,423 |
|||
Earnings per common share: |
|||||||
Earnings per share of Class A common stock, basic |
$ 0.13 |
$ 0.43 |
$ 2.28 |
$ 0.53 |
|||
Earnings per share of Class A common stock, diluted |
$ 0.11 |
$ 0.35 |
$ 1.77 |
$ 0.42 |
|||
Weighted-average common shares outstanding: |
|||||||
Basic |
69,283 |
68,486 |
69,115 |
67,397 |
|||
Diluted |
116,414 |
116,274 |
116,859 |
115,930 |
|||
Dividends declared per common share |
$ 0.10 |
$ 0.10 |
$ 0.40 |
$ 0.40 |
Red Rock Resorts, Inc. |
|||||||
Segment Information and Reconciliation of Net Income to Adjusted EBITDA |
|||||||
(amounts in thousands) |
|||||||
(unaudited) |
|||||||
Three Months Ended |
Year Ended |
||||||
2018 |
2017 |
2018 |
2017 |
||||
Net revenues |
|||||||
Las Vegas operations |
$ 409,483 |
$ 370,985 |
$ 1,588,003 |
$ 1,518,442 |
|||
Native American management |
20,365 |
27,842 |
87,009 |
117,968 |
|||
Reportable segment net revenues |
429,848 |
398,827 |
1,675,012 |
1,636,410 |
|||
Corporate and other |
1,623 |
1,483 |
6,018 |
5,729 |
|||
Net revenues |
$ 431,471 |
$ 400,310 |
$ 1,681,030 |
$ 1,642,139 |
|||
Net income |
$ 13,181 |
$ 45,969 |
$ 219,480 |
$ 63,533 |
|||
Adjustments |
|||||||
Depreciation and amortization |
46,864 |
43,496 |
180,255 |
178,217 |
|||
Share-based compensation |
2,417 |
2,195 |
11,289 |
7,922 |
|||
Write-downs and other charges, net |
13,580 |
3,653 |
34,650 |
29,584 |
|||
Tax receivable agreement liability adjustment |
(263) |
(139,070) |
(90,638) |
(139,300) |
|||
Related party lease termination |
— |
— |
— |
100,343 |
|||
Asset impairment |
— |
— |
— |
1,829 |
|||
Interest expense, net |
46,800 |
31,315 |
143,099 |
131,442 |
|||
Loss on extinguishment/modification of debt, net |
— |
13,355 |
— |
16,907 |
|||
Change in fair value of derivative instruments |
14,938 |
(11,053) |
(12,415) |
(14,112) |
|||
Adjusted EBITDA attributable to MPM noncontrolling interest |
— |
(1,780) |
(962) |
(15,262) |
|||
(Benefit) provision for income tax |
(2,449) |
133,556 |
23,875 |
134,786 |
|||
Other |
67 |
1,099 |
329 |
1,357 |
|||
Adjusted EBITDA |
$ 135,135 |
$ 122,735 |
$ 508,962 |
$ 497,246 |
|||
Adjusted EBITDA |
|||||||
Las Vegas operations |
$ 120,971 |
$ 105,790 |
$ 457,379 |
$ 433,640 |
|||
Native American management |
19,124 |
24,548 |
80,795 |
95,897 |
|||
Reportable segment Adjusted EBITDA |
140,095 |
130,338 |
538,174 |
529,537 |
|||
Corporate and other |
(4,960) |
(7,603) |
(29,212) |
(32,291) |
|||
Adjusted EBITDA |
$ 135,135 |
$ 122,735 |
$ 508,962 |
$ 497,246 |
Source: Red Rock Resorts, Inc.
Gambling in the USA
Gaming Americas Weekly Roundup – March 11-17
Welcome to our weekly roundup of American gambling news again! Here, we are going through the weekly highlights of the American gambling industry which include the latest news and new partnerships. Read on and get updated.
Latest News
Scientific Games announced the consolidation of its legal and public policy teams into a new unified department, Global Legal and Public Policy. This team will be led by James D. Schultz who will assume the new title of Executive Vice President, Global Legal and Public Policy. Deputy General Counsel Phil Bauer, an indispensable 25-year veteran of the company, will be promoted to General Counsel and Corporate Secretary, and report to Schultz.
Sportradar Group AG announced that the North Carolina State Lottery Commission has granted Sportradar’s U.S. betting subsidiary, Sportradar Solutions LLC, a Supplier license in the state North Carolina. This license is valid for five years from its date of issuance on February 28.
The Office of Lottery and Gaming (OLG) announced that FanDuel is the new sports wagering subcontractor for Intralot Inc., OLG’s lottery and sports wagering system vendor. Under this agreement, residents of Washington, D.C. will gain access to FanDuel’s sports wagering app, which is the market leader nationally, as well as its website and retail platforms.
Elys BMG Group Inc. announced that Grand Central Sportsbook in Washington D.C. (Grand Central) has been granted provisional approval to open its H Street sportsbook by the DC Office of Lottery and Gaming, Regulation and Oversight Division.
BetMGM has officially launched its mobile sports betting service in North Carolina, giving customers in the Tar Heel state access to a wide variety of betting options as well as the opportunity to earn experiences at MGM Resorts’ properties nationwide.
Supremeland Gaming announced the approval of an interim Supplier License in West Virginia, further solidifying its position as a key player in the rapidly expanding iGaming industry. This milestone marks the company’s third approval following the successful acquisition of the first approvals in Pennsylvania and New Jersey.
Partnerships
Caesars Entertainment and National Hockey League (NHL) announced a renewal of their US partnership. The new, multiyear partnership extension retains Caesars’ status as a Sports Betting and Gaming Partner of the NHL and, for the first time, provides Caesars Digital with access to League-owned intellectual property to build and promote NHL-branded iCasino games for its online casino platforms in North America, including the recently launched Caesars Palace Online Casino.
SCCG Management announced the extension and significant expansion of its strategic partnership with SnapOdds, the revolutionary sports betting technology product from Snapscreen Inc. This expansion marks a pivotal shift towards a consumer-facing (B2C) strategy, leveraging SnapOdds’ unique TV and streaming content recognition software.
Hip-Hop icon Nas has partnered with Resorts World New York City on a $5 billion expansion plan for a casino in Queens. The vision of Aqueduct Park is to transform the casino in Nas’ hometown, into a full-fledged establishment that mirrors the company’s properties in Las Vegas.
SCCG Management, the leading advisory and management consultancy in the global gaming industry, headquartered in Las Vegas, announced the extension of its partnership with IDnow, a premier European provider of identity verification solutions. This strategic alliance is placing a focused effort on expanding its reach to encompass the broader Latin America (LATAM) region.
Gambling in the USA
Gaming Americas Weekly Roundup – March 4-10
Welcome to our weekly roundup of American gambling news again! Here, we are going through the weekly highlights of the American gambling industry which include the latest news and new partnerships. Read on and get updated.
Latest News
NJ Attorney General Matthew J. Platkin announced the retirement of David L. Rebuck after serving 13 years as the Director of the Division of Gaming Enforcement (DGE), making him the longest-serving director in DGE’s history. In total, Director Rebuck is retiring with 36 years of service to the State.
Altenar’s status as a leading sportsbook provider in South America has been further boosted with the opening of a new office in Uruguay. The new hub, located in Costa Rica Street 1667, in Carrasco, Montevideo, will be the base for around 15 members of staff and strengthen the company’s support for iGaming operators in the LatAm region.
MGM Resorts International and BetMGM announced new groundbreaking initiatives in collaboration with Kindbridge designed to support problem gambling research and mental health services. Kindbridge Research Institute and Kindbridge Behavioural Health are organisations that aim to better understand the problems that exist within at-risk communities, delivering evidence-based treatment for gambling disorder.
Elray Resources has launched Kings of Sport, a state-of-the art online crypto casino that brings together the world of cryptocurrencies with the excitement of traditional casino games. Kings of Sport is expanding player options in the online gambling industry by providing users with a diverse selection of classic and modern casino games that can be played using popular cryptocurrencies like Bitcoin, Ethereum and others.
Supremeland Gaming, the new American iGaming challenger, announced its U.S. expansion, attaining a second gaming approval in the US, three weeks after its inaugural licensing announcement in neighbouring Pennsylvania. The New Jersey approval will allow Supremeland Gaming to build and release games in the Garden State through its partnership with EveryMatrix.
Churchill Downs Incorporated announced that Exacta Systems has completed the installation of 175 Exacta-technology driven terminals at The Brook in Seabrook, New Hampshire. Exacta, acquired by CDI in August 2023, is a leading provider of central determinate system technology for historical racing machines (HRMs). The Brook is a casino entertainment destination located in the easternmost part of the state next to the Massachusetts border.
Underdog announced an investment in idPair by GuardDog, Underdog’s responsible gaming innovation fund. idPair’s proprietary technology creates a centralised view of an individual’s play and gambling activity across all applications and operators in a jurisdiction for regulators, providing for universal responsible gaming limits.
Partnerships
Betfred USA and U.S. Integrity announced a partnership that will provide Betfred with monitoring software and tools that will play a pivotal role in preventing student-athletes, coaches and staff from engaging in prohibited sports wagering.
SCCG Management announced its sponsorship of the 10th Arnold South America Sports Festival in São Paulo, Brazil. This year’s festival, scheduled for April 5-7, 2024, will feature the Pillow Fight Championship (PFC) as its centrepiece, showcasing the thrilling world of professional pillow fighting in South America.
5WPR announced that it has been selected as the public relations Agency of Record for casino and sportsbook platform provider, Soft2Bet, which, after successfully growing its business throughout Europe, is launching in the US, targeting NJ as the first state where it will debut its offering.
Gambling in the USA
Gaming Americas Weekly Roundup – February 26-March 3
Welcome to our weekly roundup of American gambling news again! Here, we are going through the weekly highlights of the American gambling industry which include the latest news and new partnerships. Read on and get updated.
Latest News
Fanatics Betting and Gaming launched the Fanatics Sportsbook & Casino in Michigan. Sports fans living in and visiting Michigan will be able to download the Fanatics Sportsbook on iOS and Android and begin their Fanatics Sportsbook and Casino experience. Michigan marks the thirteenth state for the Fanatics Sportsbook and third state for Fanatics Casino.
Apple has introduced Apple Sports, a free app for iPhone that gives sports fans access to real-time scores, stats and more. Designed for speed and simplicity, the app’s personalised experience puts users’ favourite leagues and teams front and centre, featuring an easy-to-use interface designed by Apple. Apple Sports is available to download now in the App Store in US, UK and Canada.
MGM Resorts International has been recognised for leadership in corporate transparency and performance on climate change by global environmental non-profit CDP, securing a place on the organisation’s annual A List. MGM Resorts is one of just 347 companies that received the prestigious ‘A,’ out of more than 23,000 scored, placing it in the top 0.015% of reporting companies.
The Massachusetts Gaming Commission has issued a $40,000 fine to Encore Boston Harbor as a result of Encore’s sportsbook accepting wagers on two events involving a collegiate team based in Massachusetts not competing in a tournament. These wagers are prohibited under Massachusetts General Law Chapter 23N Section 3, MGC regulation 205 CMR 247.01(2)(a)(2) and the Massachusetts Sports Wagering Catalogue. The Commission issued the fine following an Investigation and Enforcement Bureau investigation and an adjudicatory hearing in which the operator participated.
FanDuel Group has appointed E. Sequoyah Simermeyer to the newly established position of VP of Strategic Partnerships. Simermeyer boasts a distinguished career in public service, where he most recently served as the Chairman of the National Indian Gaming Commission. In his new role at FanDuel, Simermeyer aims to play a crucial part in leading the company’s initiatives to cultivate sustainable commercial relationships across the US, with a specific focus on promoting economic development that supports tribal sovereignty.
Partnerships
SCCG has announced a strategic partnership with Major League Rugby that aims to identify sports betting partners and leverage opportunities in the regulated gaming industry. As MLR continues to cement its status as the premier rugby competition in North America, SCCG will collaborate closely with the league to explore relationships with sports betting operators and capitalise on the burgeoning market for regulated sports betting.
Quick Custom Intelligence and Leech Lake Gaming announced a 3-year strategic partnership that promises to revolutionise the gaming and hospitality industry in the northern Minnesota market. This strategic alliance sets the stage for an exciting fusion of technology and hospitality, with Leech Lake Gaming at the forefront. The software deployment phase has been successfully completed, and Leech Lake Gaming’s dedicated host team is currently undergoing intensive training.
PrizePicks announced a new partnership deal with the Dallas Stars. Marking its first official relationship with an NHL franchise, PrizePicks will be featured on local telecasts of Stars’ games via commercials and will be able to offer special VIP experiences to fans.
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