Eldorado Resorts Results

Eldorado Resorts’ Fourth Quarter Combined Net Revenue Rises 2.3% to $214.3 Million

Combined Adjusted EBITDA Increases 21.1% to $32.2 Million

Eldorado Resorts, Inc. (NASDAQ:ERI) today reported operating results for the three and twelve months ended December 31, 2015. Net revenues and Adjusted EBITDA for all periods summarized below include the operations of Silver Legacy and Circus Circus Reno, which were acquired by ERI on November 24, 2015 (“the Acquisition Date”), as if the acquisition occurred on January 1, 2014 and the operations of MTR Gaming Group, Inc. (“MTR”), which merged with the Company on September 19, 2014 (“the Merger Date”), as if the merger occurred on January 1, 2014.

 
($ in thousands)     Total Net Revenue     Total Net Revenue
Three Months Ended Twelve Months Ended
December 31, December 31,
  2015       2014     Change       2015       2014     Change
Reno Tri-Properties (1) $ 76,010     $ 69,901     8.7 % $ 309,474     $ 298,410     3.7 %
Eldorado Shreveport 32,422 31,838 1.8 % 136,342 133,960 1.8 %
Scioto Downs 39,087 35,329 10.6 % 157,525 148,480 6.1 %
Mountaineer 32,989 40,057 (17.6 )% 155,608 184,848 (15.8 )%
Presque Isle Downs   33,820       32,471     4.2 %       142,507       142,717     (0.1 )%
Total Net Revenue (4) $ 214,328     $ 209,596     2.3 %     $ 901,456     $ 908,415     (0.8 )%
 
($ in thousands)   Adjusted EBITDA   Adjusted EBITDA
Three Months Ended Twelve Months Ended
December 31, December 31,
  2015       2014     Change     2015       2014     Change
Reno Tri-Properties (1) (2) $ 9,030   $ 5,812   55.4 % $ 49,939   $ 35,335   41.3 %
Eldorado Shreveport 6,324 4,158 52.1 % 29,026 24,142 20.2 %
Scioto Downs 12,720 11,551 10.1 % 53,980 49,345 9.4 %
Mountaineer 2,714 5,240 (48.2 )% 21,268 30,412 (30.1 )%
Presque Isle Downs 5,248 3,670 43.0 % 20,311 19,415 4.6 %
Corporate   (3,806 )     (3,818 )   (0.3 )%     (14,364 )     (12,022 )   19.5 %
Total Adjusted EBITDA (3) (4) $ 32,230     $ 26,613     21.1 %   $ 160,160     $ 146,627     9.2 %
 

“Eldorado’s strong fourth quarter and full year financial results mark the conclusion of another successful and active year for the Company. With fourth quarter revenue and EBITDA gains at all but one of our properties, Eldorado’s consolidated Adjusted EBITDA rose 21.1%. Furthermore, with Adjusted EBITDA growth of more than 10% at six of our seven properties, the strength across our portfolio in the fourth quarter was broad based. Our fourth quarter and full year adjusted EBITDA margin growth reflects the impact of property enhancement initiatives that target product and service offering upgrades across our entire portfolio while exercising cost discipline and extracting operating efficiencies. For example, the opening of The Brew Brothers, our restaurant and microbrewery at Scioto Downs, drove a meaningful increase in traffic and slot revenues. We believe our continued focus on margin expansion combined with the strength of our properties in their respective markets provides a basis for continued near- and long-term financial growth and the enhancement of shareholder value,” said Gary Carano, Chairman and Chief Executive Officer of Eldorado.

“During the quarter we closed on the acquisition of the 50% of Silver Legacy and all of the assets of Circus Circus Reno which was immediately accretive to our free cash flow. The acquisition of these properties complements our already strong position in downtown Reno and is consistent with our strategy to expand our scale through strategic, accretive transactions. Eldorado’s Tri-Property Reno complex completed an extraordinary year, with fourth quarter Adjusted EBITDA growth of 55.4%.

“2015 was a transformative year for Eldorado as we fully integrated MTR Gaming’s operations into the Eldorado portfolio and completed significant enhancements through prudent, return-focused capital allocation at each of our properties. At Scioto Downs, we built and opened The Brew Brothers. At Presque Isle Downs and Casino, we completed the $5.0 million five-phase design and facility enhancement program that added a new casino center bar, an improved high limit gaming area and exciting new slot product. At Eldorado Reno, over 200 rooms were remodeled and we completely refurbished the exterior of Eldorado Shreveport. At Mountaineer Casino, Racetrack & Resort, a new smoking patio was added with 261 slot machines and six table games. We are excited as we look forward to 2016, especially in the Reno market as job growth for Northern Nevada is projected to more than double the historical average. We are pleased to report that our operating momentum has continued in the first quarter.”

Balance Sheet and Liquidity

At December 31, 2015, Eldorado had $78.3 million in cash and cash equivalents and $5.3 million in restricted cash. Outstanding indebtedness at December 31, 2015 totaled $891.4 million, including $93.5 million outstanding on the Company’s revolving credit facility. We spent $11.0 million in capital expenditures in the fourth quarter, and $35.5 million for all of 2015. We anticipate capital spending of $50 million in 2016, with approximately $15 million allocated to project cap-ex and the remaining $35 million for maintenance cap-ex.

“After careful review of our financing options for the Silver Legacy and Circus Circus Reno acquisition, we chose to fund the final piece of the transaction with existing revolver capacity, in lieu of an equity offering,” said Tom Reeg, President of Eldorado. “We remain committed to reducing our debt in 2016 with free cash flow, as we realize revenue and cost synergies across the Reno Tri-Properties. Our announced cost savings program has been a success as we both exceeded our projected $10 million target of annual cost savings, and did so a full quarter ahead of plan. Our cost savings helped drive an Adjusted EBITDA margin increase of approximately 230 basis points in the fourth quarter.”

Summary of 2015 Fourth Quarter Property Results and Facility Enhancements

Nevada

Net revenues of $76.0 million at the Reno Tri-Properties for the quarter ended December 31, 2015 increased 8.7% over the prior-year period while Adjusted EBITDA of $9.0 million increased 55.4% from the same period in 2014. The increased revenue and Adjusted EBITDA were driven by increased casino volumes as well as increased occupancy and a higher ADR. Eldorado Reno’s performance also reflects the Company’s expense management programs and we expect to generate further revenue and expense synergies across the three properties in 2016. The Northern Nevada economy continues to prosper as taxable sales rose by 8.2% in 2015 compared to the prior year, while single-family homes sold and the median price increased 14.6% and 15.3%, respectively, over the same time period. Net revenue and Adjusted EBITDA for the fourth quarter 2015 were $47.8 million and $6.9 million, respectively, with the 38 days of operations from Silver Legacy and Circus Circus Reno and full quarter from Eldorado Reno.

Louisiana

Net revenues at Eldorado Shreveport rose 1.8% to $32.4 million in the fourth quarter of 2015. Adjusted EBITDA from the property increased 52.1% to $6.3 million from $4.2 million in the comparable quarter of 2014 with adjusted EBITDA margins increasing by approximately 645 basis points to 19.5%. Reflecting the margin enhancement, Eldorado Shreveport delivered substantial EBITDA growth on a modest revenue gain, despite sustained weakness in energy prices during the fourth quarter and throughout 2015.

Eastern Properties

Net revenues at Scioto Downs Racino increased 10.6% to $39.1 million in the fourth quarter of 2015 from $35.3 million in the fourth quarter of 2014. Scioto Downs’ fourth quarter 2015 Adjusted EBITDA increased 10.1% to $12.7 million from $11.6 million in the comparable prior year period. The addition of The Brew Brothers microbrewery and restaurant was a key factor in driving additional visitation and slot revenue in the quarter. During the quarter, the property was rebranded as “Eldorado Gaming Scioto Downs” with new signage throughout the facility, including a large pylon sign with an electronic message board in front. Finally, the Company and its joint venture partner broke ground on a 118-room Hampton Inn hotel in October, which is expected to open in the fourth quarter of 2016. We have begun construction of a second smoking patio with 120 new VLTs with a targeted opening date of June 1.

Fourth quarter 2015 net revenues of $33.8 million at Presque Isle Downs & Casino increased 4.2% from $32.5 million in the fourth quarter of 2014. Adjusted EBITDA increased 43.0% to $5.2 million in the fourth quarter of 2015 from $3.7 million in the same comparable quarter with adjusted EBITDA margin rising approximately 420 basis points to 15.5%. Net revenue and adjusted EBITDA benefited from the implementation of marketing strategies that target the local Erie market. Adjusted EBITDA also benefited during the quarter from the cost savings program implemented during the second quarter of 2015.

Net revenues at Mountaineer Casino, Racetrack & Resort declined 17.6% to $33.0 million in the fourth quarter of 2015 from $40.1 million in the fourth quarter of 2014. Adjusted EBITDA from the property declined 48.2% to $2.7 million from $5.2 million in the comparable quarter of 2014. Net revenue and Adjusted EBITDA continues to be impacted by the Hancock County Clean Air Regulation that went into effect July 1, 2015 and prohibits smoking in enclosed public places. The smoking patio at Mountaineer continues to be very well received by patrons and is helping mitigate the impact of the new smoking ban. During the quarter, the Company added 61 slot machines to the smoking patio, bringing the total number of slot machines to 261.

Reconciliation of GAAP Measures to Non-GAAP Measures

Adjusted EBITDA (defined below), a non GAAP financial measure, has been presented as a supplemental disclosure because it is a widely used measure of performance and basis for valuation of companies in our industry and we believe that this non GAAP supplemental information will be helpful in understanding the Company’s ongoing operating results. Adjusted EBITDA represents operating income (loss) before depreciation and amortization, stock based compensation, (gain) loss on the sale or disposal of property, equity in income of unconsolidated affiliates, acquisition charges, S-1 expenses and other regulatory gaming assessment, to the extent that such items existed in the periods presented. Adjusted EBITDA is not a measure of performance or liquidity calculated in accordance with U.S. GAAP, is unaudited and should not be considered an alternative to, or more meaningful than, net income (loss) as an indicator of our operating performance. Uses of cash flows that are not reflected in Adjusted EBITDA include capital expenditures, interest payments, income taxes, debt principal repayments and certain regulatory gaming assessments, which can be significant. As a result, Adjusted EBITDA should not be considered as a measure of our liquidity. Other companies that provide EBITDA information may calculate EBITDA differently than we do. The definition of Adjusted EBITDA may not be the same as the definitions used in any of our debt agreements.

About Eldorado Resorts, Inc.

Eldorado Resorts is a casino entertainment company that owns and operates seven properties in five states, including the Eldorado Resort Casino, the Silver Legacy Resort Casino and Circus Circus Resort Casino in Reno, NV; the Eldorado Resort Casino in Shreveport, LA; Scioto Downs Racino in Columbus, OH; Mountaineer Casino Racetrack & Resort in Chester, WV; and Presque Isle Downs & Casino in Erie, PA.

 

ELDORADO RESORTS, INC.

CONSOLIDATED BALANCE SHEETS

($ in thousands)

 
  December 31, 2015   December 31, 2014

ASSETS

CURRENT ASSETS:
Cash and cash equivalents $ 78,278 $ 87,604
Restricted cash 5,271 5,734
Accounts receivable, net 9,981 7,112
Due from affiliates - 362
Inventories 11,742 7,234
Prepaid income taxes 112 -
Prepaid expenses and other   10,795   9,447
Total current assets 116,179 117,493
RESTRICTED CASH - 2,500
INVESTMENT IN AND ADVANCES TO UNCONSOLIDATED AFFILIATES 1,286 14,009
PROPERTY AND EQUIPMENT, NET 625,416 456,139
GAMING LICENSES AND OTHER INTANGIBLE ASSETS, NET 492,033 491,913
NON-OPERATING REAL PROPERTY 16,314 16,419
GOODWILL 66,826 66,826
OTHER ASSETS, NET   6,954   6,260
Total assets $ 1,325,008 $ 1,171,559

 

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
Current portion of long-term debt $ 4,524 $ 32
Accounts payable 17,005 12,021
Due to affiliates 129 187
Accrued property, gaming and other taxes 19,424 15,782
Accrued payroll and related 17,852 9,443
Accrued interest 14,978 27,469
Income taxes payable - 137
Deferred income taxes - 2,608
Accrued other liabilities   31,798   24,165
Total current liabilities 105,710 91,844
LONG-TERM DEBT, LESS CURRENT PORTION, NET OF DISCOUNT 861,713 775,059
DEFERRED INCOME TAXES 78,797 144,439
OTHER LONG-TERM LIABILITIES   8,121   8,595
Total liabilities   1,054,341   1,019,937
 
STOCKHOLDERS’ EQUITY:
Total stockholders' equity   270,667   151,622
Total liabilities and stockholders' equity $ 1,325,008 $ 1,171,559
 
 

ELDORADO RESORTS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

($ in thousands, except per share data)

 
  Three Months Ended   Twelve Months Ended
December 31 December 31
  2015       2014     2015       2014  
Revenues:    
Casino $ 153,420 $ 142,568 $ 614,227 $ 298,848
Pari-mutuel commissions 989 1,540 9,031 1,986
Food and beverage 28,023 22,885 97,740 68,233
Hotel 12,795 7,260 37,466 28,007
Other   8,613     5,683     26,077     13,198  
203,840 179,936 784,541 410,272
Less: promotional allowances   (17,680 )   (15,841 )   (64,757 )   (48,449 )
Net operating revenues   186,160     164,095     719,784     361,823  
 
Expenses:
Casino 89,290 83,915 357,572 167,792
Pari-mutuel commissions 1,559 1,891 9,973 2,411
Food and beverage 16,222 14,522 52,606 37,411
Hotel 4,464 2,567 11,307 8,536
Other 4,812 3,601 15,325 9,348
Marketing and promotions 8,906 7,834 31,227 21,982
General and administrative 26,988 23,521 96,870 58,738
Corporate 4,756 3,818 16,469 4,617
Depreciation and amortization   14,467     15,086     56,921     28,643  
Total operating expenses 171,464 156,755 648,270 339,478
 
LOSS ON SALE OR DISPOSAL OF PROPERTY (4 ) (81 ) (6 ) (84 )
ACQUISITION CHARGES (1,735 ) (495 ) (2,452 ) (7,411 )
EQUITY IN INCOME OF UNCONSOLIDATED AFFILIATES   324     (314 )   3,460     2,705  
OPERATING INCOME   13,281     6,450     72,516     17,555  
 
OTHER INCOME (EXPENSE):
Interest expense, net (12,612 ) (17,336 ) (61,558 ) (30,734 )
Gain on valuation of unconsolidated affiliate 35,582 - 35,582 -
Gain on termination of SERP - 715 - 715
Loss on early retirement of debt, net   (147 )   (90 )   (1,937 )   (90 )
Total other expense   22,823     (16,711 )   (27,913 )   (30,109 )
 
NET INCOME (LOSS) BEFORE INCOME TAXES 36,104 (10,261 ) 44,603 (12,554 )
BENEFIT (PROVISION) FOR INCOME TAXES   74,049     (573 )   69,580     (1,768 )
NET INCOME (LOSS) 110,153 (10,834 ) 114,183 (14,322 )
NON-CONTROLLING INTEREST   -     (103 )   -     (103 )
NET INCOME (LOSS) ATTRIBUTABLE TO ERI, INC $ 110,153   $ (10,937 ) $ 114,183   $ (14,425 )
 
Net income (loss) per share of common stock:
Basic $ 2.36   $ (0.24 ) $ 2.45   $ (0.48 )
Diluted $ 2.33   $ (0.24 ) $ 2.43   $ (0.48 )
Weighted average number of shares outstanding:
Basic   46,670,735     46,441,249     46,550,042     29,901,405  
Diluted   47,227,127     46,441,249     47,008,980     29,901,405  
 
 
ELDORADO RESORTS, INC.
SUMMARY INFORMATION AND RECONCILIATION OF
OPERATING INCOME (LOSS) TO ADJUSTED EBITDA

($ in thousands)

 

Three Months Ended December 31, 2015

 
 

Operating

Income

(Loss)

 

Depreciation

and

Amortization

 

Stock-Based

Compensation

 

Transaction

Expenses

(3)

 

Equity in

(Income) Loss of

Unconsolidated

Affiliate

 

Other

 

Adjusted

EBITDA

Reno Tri-Properties $ 4,841   $ 4,548   $ -   $ -   $ (324 )   $ (35 )   $ 9,030
Eldorado Shreveport 4,367 1,912 - - - 45 6,324
Scioto Downs 8,624 4,096 - - - - 12,720
Mountaineer (56 ) 2,801 - - - (31 ) 2,714
Presque Isle Downs 3,455 1,833 - - - (40 ) 5,248
Corporate   (6,602 )     111     333     2,352     -       -       (3,806 )
Adjusted EBITDA (1) $ 14,629     $ 15,301   $ 333   $ 2,352   $ (324 )   $ (61 )   $ 32,230  
 

Three Months Ended December 31, 2014

 
 

Operating

Income

(Loss)

 

Depreciation

and

Amortization

 

Stock-Based

Compensation

 

Transaction

Expenses

 

Equity in

(Income) Loss of

Unconsolidated

Affiliate

  Other  

Adjusted

EBITDA

Reno Tri-Properties

$ 665   $ 4,833   $ -   $ -   $ 314   $ -   $ 5,812
Eldorado Shreveport 2,009 2,068 - - - 81 4,158
Scioto Downs 8,117 3,434 - - - - 11,551
Mountaineer 420 4,822 - - - (2 ) 5,240
Presque Isle Downs 1,169 2,501 - - - - 3,670
Corporate   (4,417 )     14     -     495     -     90       (3,818 )
Adjusted EBITDA (1) $ 7,963     $ 17,672   $ -   $ 495   $ 314   $ 169     $ 26,613  
 

Twelve Months Ended December 31, 2015

 
 

Operating

Income

(Loss)

 

Depreciation

and

Amortization

 

Stock-Based

Compensation

 

Transaction

Expenses

(3)

 

Equity in

(Income) Loss of

Unconsolidated

Affiliate

  Other  

Adjusted

EBITDA

Reno Tri-Properties $ 34,372   $ 19,022   $ -   $ -   $ (3,460 )   $ 5   $ 49,939
Eldorado Shreveport 21,423 7,621 - - - (18 ) 29,026
Scioto Downs 38,612 15,368 - - - - 53,980
Mountaineer 6,776 14,523 - - - (31 ) 21,268
Presque Isle Downs 11,103 9,450 - - - (242 ) 20,311
Corporate   (19,387 )     412     1,488     3,069     -       54       (14,364 )
Adjusted EBITDA (1) $ 92,899     $ 66,396   $ 1,488   $ 3,069   $ (3,460 )   $ (232 )   $ 160,160  
 
 
ELDORADO RESORTS, INC.
SUMMARY INFORMATION AND RECONCILIATION OF
OPERATING INCOME (LOSS) TO ADJUSTED EBITDA
($ in thousands)
 
Twelve Months Ended December 31, 2014
 
 

Operating

Income

(Loss)

 

Depreciation

and

Amortization

 

Stock-Based

Compensation

 

Transaction

Expenses

 

Equity in

(Income) Loss of

Unconsolidated

Affiliate

  Other  

Adjusted

EBITDA

Reno Tri-Properties $ 12,324   $ 19,418   $ -   $ 6,298   $ (2,705 )   $ -   $ 35,335
Eldorado Shreveport 15,655 8,403 - - - 84 24,142
Scioto Downs 35,644 13,692 - - - 9 49,345
Mountaineer 18,515 11,934 - - - (37 ) 30,412
Presque Isle Downs 10,178 8,852 - - - 385 19,415
Corporate   (22,199 )     42     1,310     8,733     -       92       (12,022 )
Adjusted EBITDA (1) $ 70,117     $ 62,341   $ 1,310   $ 15,031   $ (2,705 )   $ 533     $ 146,627  
 

Three Months Ended December 31, 2015

 
   

Operating

Income

(Loss)

 

Depreciation

and

Amortization

 

Stock-Based

Compensation

 

Transaction

Expenses

 

Equity in

(Income) Loss of

Unconsolidated

Affiliate

  Other  

Adjusted

EBITDA

Reno Tri-Properties

Adjusted EBITDA (2)

$ 3,493   $ 3,714   $ -   $ -   $ (324 )   $ (8 )   $ 6,875
(1)   Adjusted EBITDA include the operations of Silver Legacy and Circus Circus Reno, which were acquired by ERI on November 24, 2015 (the Acquisition Date”), as if the acquisition occurred on January 1, 2014 and the operations of MTR Gaming Group, Inc. (“MTR”), which merged with the Company on September 19, 2014 (“the Merger Date”), as if the merger occurred on January 1, 2014.
(2) Reno Tri-Properties Adjusted EBITDA for the three months ended December 31, 2015 includes the 38 days of operations from Silver Legacy and Circus Circus from the Acquisition Date.
(3) Transaction expenses for the three and twelve months ended December 31, 2015 include acquisition charges of $1.7 million and $2.4 million, respectively, and S-1 expenses of $0.6 million.



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