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Red Rock Resorts Announces Second Quarter 2018 Results

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Red Rock Resorts Announces Second Quarter 2018 Results

PR Newswire

LAS VEGAS, July 31, 2018 /PRNewswire/ -- Red Rock Resorts, Inc. ("Red Rock Resorts," "we" or the "Company") (NASDAQ:RRR) today reported financial results for the second quarter ended June 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 $416.2 million for the second quarter of 2018, an increase of 1.5%, or $6.1 million, from $410.1 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 $99.1 million for the second quarter of 2018, an increase of $149.3 million from a net loss of $50.2 million for the same period of 2017. The increase in net income was primarily due to a $57.8 million after-tax gain associated with the extinguishment of a tax receivable liability, as well as a prior year after-tax loss of $78.1 million associated with the acquisition of the leases at Boulder Station and Texas Station.

Adjusted EBITDA(1) was $124.6 million for the second quarter of 2018, an increase of 4.0% from $119.9 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.

Las Vegas Operations

Net revenues from Las Vegas operations were $393.7 million for the second quarter of 2018, a 4.1% increase from $378.1 million in the same period of 2017. Adjusted EBITDA from Las Vegas operations was $112.6 million for the second quarter of 2018, a 7.1% increase from $105.1 million in the same period of 2017. The increase in both net revenues and Adjusted EBITDA was primarily due to solid performance in our non-disrupted Las Vegas operations, partially offset by construction disruption at Palace Station and the Palms.

Native American Management

Adjusted EBITDA from Native American operations was $19.8 million for the second quarter of 2018, a 12.8% decrease from $22.7 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. The Palace Station project is expected to be completed in phases by the end of 2018. As of June 30, 2018, the Company has incurred $147.3 million in costs against that $191 million project.

The Palms redevelopment project also remains on schedule and the budget remains unchanged. The final elements of phase one of the project opened in May 2018, with components of phase two of the project expected to open through the second quarter of 2019, and phase three of the project expected to open by the third quarter of 2019. As of June 30, 2018, the Company has incurred $225.2 million in costs against that $620 million project.

Balance Sheet Highlights

The Company's cash and cash equivalents at June 30, 2018 were $108.4 million and total principal amount of debt outstanding at the end of the second quarter was $2.67 billion. The Company's debt to Adjusted EBITDA and interest coverage ratios, were 5.1x and 4.6x, respectively.

Quarterly Dividend

The Company's Board of Directors has declared a cash dividend of $0.10 per Class A common share for the third quarter of 2018. The dividend will be payable on September 28, 2018 to all stockholders of record as of the close of business on September 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 will 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: 0629885.  A replay of the call will be available from today through August 7, 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 (loss) 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, interest expense, net, loss on extinguishment/modification of debt, net, change in fair value of derivative instruments, provision (benefit) 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.

View source version on http://redrockresorts.investorroom.com/:

CONTACT:

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

Red Rock Resorts, Inc.

Condensed Consolidated Statements of Operations

(amounts in thousands, except per share data)

(unaudited)










Three Months Ended
June 30,


Six Months Ended
June 30,


2018


2017


2018


2017

Operating revenues:








Casino

$ 232,756


$ 219,136


$ 469,003


$ 442,672

Food and beverage

94,632


91,596


185,560


190,142

Room

42,719


45,194


89,349


95,954

Other

24,917


23,541


47,473


46,210

Management fees

21,164


30,676


45,842


60,903

   Net revenues

416,188


410,143


837,227


835,881

Operating costs and expenses:








Casino

80,396


77,669


159,354


154,128

Food and beverage

85,114


82,819


165,223


167,644

Room

19,431


20,653


39,531


42,415

Other

12,109


10,214


20,895


19,245

Selling, general and administrative

98,071


95,214


193,180


189,875

Depreciation and amortization

45,992


46,807


89,156


92,060

Write-downs and other charges, net

10,786


9,638


14,631


10,692

Tax receivable agreement liability adjustment

(73,502)


(444)


(90,375)


(444)

Related party lease termination


98,393



98,393


278,397


440,963


591,595


774,008

Operating income (loss)

137,791


(30,820)


245,632


61,873

Earnings from joint ventures

499


420


1,107


835

Operating income (loss) and earnings from joint ventures

138,290


(30,400)


246,739


62,708

Other (expense) income:








Interest expense, net

(31,598)


(33,853)


(62,709)


(68,797)

Loss on extinguishment/modification of debt, net


(975)



(2,994)

Change in fair value of derivative instruments

7,321


3,330


23,124


3,369

Other

(66)


(86)


(221)


(172)


(24,343)


(31,584)


(39,806)


(68,594)

Income (loss) before income tax

113,947


(61,984)


206,933


(5,886)

(Provision) benefit for income tax

(14,845)


11,813


(25,701)


1,134

Net income (loss)

99,102


(50,171)


181,232


(4,752)

Less: net income (loss) attributable to noncontrolling interests

16,367


(24,437)


47,317


1,082

Net income (loss) attributable to Red Rock Resorts, Inc.

$   82,735


$ (25,734)


$ 133,915


$   (5,834)









Earnings (loss) per common share:








   Earnings (loss) per share of Class A common stock, basic

$       1.20


$     (0.38)


$       1.94


$     (0.09)

   Earnings (loss) per share of Class A common stock, diluted

$       0.82


$     (0.38)


$       1.46


$     (0.09)









Weighted-average common shares outstanding:








   Basic

69,124


67,311


68,962


66,506

   Diluted

117,002


67,311


116,973


66,506









Dividends declared per common share

$       0.10


$       0.10


$       0.20


$       0.20

 

Red Rock Resorts, Inc.

Segment Information and Reconciliation of Net Income (Loss) to Adjusted EBITDA

(amounts in thousands)

(unaudited)










Three Months Ended
June 30,


Six Months Ended
June 30,


2018


2017


2018


2017

Net revenues








Las Vegas operations

$ 393,682


$ 378,142


$ 788,852


$ 772,386

Native American management

21,020


30,543


45,525


60,648

   Reportable segment net revenues

414,702


408,685


834,377


833,034

Corporate and other

1,486


1,458


2,850


2,847

   Net revenues

$ 416,188


$ 410,143


$ 837,227


$ 835,881









Net income (loss)

$   99,102


$ (50,171)


$ 181,232


$   (4,752)

Adjustments








Depreciation and amortization

45,992


46,807


89,156


92,060

Share-based compensation

3,103


2,326


5,557


3,738

Write-downs and other charges, net

10,786


9,638


14,631


10,692

Tax receivable agreement liability adjustment

(73,502)


(444)


(90,375)


(444)

Related party lease termination


98,393



98,393

Interest expense, net

31,598


33,853


62,709


68,797

Loss on extinguishment/modification of debt, net


975



2,994

Change in fair value of derivative instruments

(7,321)


(3,330)


(23,124)


(3,369)

Adjusted EBITDA attributable to MPM noncontrolling interest


(6,418)


(962)


(11,056)

Provision (benefit) for income tax

14,845


(11,813)


25,701


(1,134)

Other

41


86


196


172

Adjusted EBITDA

$ 124,644


$ 119,902


$ 264,721


$ 256,091









Adjusted EBITDA








Las Vegas operations

$ 112,589


$ 105,120


$ 238,466


$ 225,977

Native American management

19,790


22,695


41,884


46,012

   Reportable segment Adjusted EBITDA

132,379


127,815


280,350


271,989

Corporate and other

(7,735)


(7,913)


(15,629)


(15,898)

   Adjusted EBITDA

$ 124,644


$ 119,902


$ 264,721


$ 256,091

 

Cision View original content:http://www.prnewswire.com/news-releases/red-rock-resorts-announces-second-quarter-2018-results-300689344.html

SOURCE Red Rock Resorts, Inc.

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