Press Releases

RENO, Nev.--(BUSINESS WIRE)-- Eldorado Resorts, Inc. (NASDAQ: ERI) (“Eldorado,” “ERI,” or “the Company”) today reported operating results for the fourth quarter and full year ended December 31, 2017.

“Eldorado’s record fourth quarter results marked the conclusion of another active and productive year of growth for the Company in which we extended our success in expanding margins and growing financial results. Notably, the fourth quarter growth was broad based and reflects a continuation of the strong operating momentum we have generated since last May’s accretive acquisition of Isle of Capri,” said Gary Carano, Chairman and Chief Executive Officer of Eldorado. “Fourth quarter Adjusted EBITDA increased 16.3% to $91.1 million on essentially flat revenue reflecting a 300 basis point year-over-year improvement in our consolidated Adjusted EBITDA margin to 21.3%. Overall 14 of our 20 properties grew Adjusted EBITDA in the 2017 fourth quarter compared to the prior-year period, and for the full year 16 of our properties saw Adjusted EBITDA rise, which helped drive an 8.7% year-over-year increase in consolidated Adjusted EBITDA to $407.2 million despite a modest net revenue decline.

“We see a pathway toward meaningful additional margin expansion as we focus our operating strategies on practices that emphasize generating profitable revenue across the portfolio. Although we already surpassed our targeted $35 million of annual synergies from the Isle of Capri transaction, we are still in the early stages of rationalizing marketing and promotional spend across the enterprise and optimizing the acquired food and beverage operations. Isle of Capri Lake Charles is an example of one property that offers significant opportunity for improvement following the termination of the sale agreement for the property in the fourth quarter. We have identified significant cost reductions at the property based on our analysis of the operations of properties within our portfolio that have a similar revenue and competitive market profile. By deploying best practices across the portfolio, we also expect to generate further improvements in our legacy property operations.

“We continue to move forward with return-focused investments that improve our guests’ experiences and elevate our properties overall competitiveness in their markets. The comprehensive facility improvement program under way at our Reno Tri-Properties continues to drive higher visitation. To date, we have completed upgrades to nearly 1,000 hotel rooms and suites, updated food and beverage operations across the facilities with eight new or redesigned restaurants, cafes or bars now open, created new public spaces in all three properties and opened a new poker room and sports book. We believe that our spending in winter 2016 helped drive extremely strong results at the Reno Tri-Properties throughout the second half of the year. As a result of these strong returns, we have decided to accelerate additional investment in the RenoTri-Properties in 2018, as we expect to spend $37.5 million of project capex in 2018 for further facility upgrades. We are similarly embarking on upgrades to the room product at our two Black Hawk properties beginning in late 2018 as we seek to capitalize on the strong economy of the Denver market.

“We entered 2018 with significant momentum and a comprehensive set of operating initiatives that will help us continue to grow our financial results. We believe that there are still many opportunities for Eldorado to build on our leading regional gaming platform which will help us further enhance shareholder value.”

Balance Sheet and Liquidity

At December 31, 2017, Eldorado had $134.6 million in cash and cash equivalents and $3.3 million in restricted cash. Outstanding indebtedness at December 31, 2017 totaled $2.2 billion, with no amounts outstanding on the Company’s revolving credit facility. Gross capital expenditures in the fourth quarter of 2017 and for the full year totaled $30.3 million and $83.5 million, respectively.

“We continue to improve our marketing and customer acquisition efficiencies and to lower costs across our entire property portfolio,” said Tom Reeg, President and Chief Financial Officer. “The 2017 fourth quarter results include a non-recurring, non-cash income tax benefit of $112.4 million resulting from the re-measurement of our deferred tax assets and liabilities as a result of the recently enacted Tax Cuts and Jobs Act. In addition, our annual free cash flow is expected to benefit from more than $40 million in lower cash taxes over the next two years. The Tax Cuts and Jobs Act treatment of capital investment incentivizes us to bring high return growth projects online sooner and as a result, we expect full year capital expenditures of approximately $150 million, with approximately 50% allocated to project capex and 50% for maintenance capex.”

Summary of 2017 Fourth Quarter Region Results

West Region(Reno Tri-Properties, Isle Casino Hotel Black Hawk and Lady Luck Casino Black Hawk)

Net revenue for the West Region properties for the quarter ended December 31, 2017 increased approximately 6.6% to $111.7 million compared to $104.8 million in the prior-year period, while operating income rose to $15.8 million from $12.2 million in the year-ago quarter. Adjusted EBITDA increased 22.7% to $24.1 million reflecting an Adjusted EBITDA margin of 21.5% compared to Adjusted EBITDA of $19.6 million on an Adjusted EBITDA margin of 18.7% in the prior-year period. Adjusted EBITDA increased year over year at the Reno Tri-Properties and at both Isle Black Hawk and Lady Luck Black Hawk with the combined Adjusted EBITDA margin for the Black Hawk properties exceeding 30% for the second consecutive quarter.

Midwest Region(Isle Casino Waterloo, Isle Casino Bettendorf, Isle of Capri Casino Boonville, Isle Casino Cape Girardeau, Lady Luck Casino Caruthersville and Isle of Capri Casino Kansas City)

Net revenue for the Midwest Region properties for the quarter ended December 31, 2017 decreased approximately 1.4% to $97.4 million compared to $98.8 million in the prior-year period, while operating income rose to $22.4 million from $18.9 million in the year-ago quarter. Adjusted EBITDA rose approximately 6.8% to $30.5 million as the Adjusted EBITDA margin for the segment rose 240 basis points to 31.4%. Adjusted EBITDA increased year over year at five of the six Midwest Region properties. Adjusted EBITDA for the Midwest Region in the prior-year period was $28.6 million reflecting an Adjusted EBITDA margin of 28.9%.

South Region(Isle Casino Racing Pompano Park, Eldorado Shreveport, Isle of Capri Casino Lula, Lady Luck Casino Vicksburg and Isle of Capri Lake Charles)

Net revenue for the South Region properties for the quarter ended December 31, 2017 declined approximately 7.4% to $109.0 million compared to $117.7 million in the prior-year period. Operating loss was $(28.5) million compared to operating income of $14.9 million in the year-ago quarter. The operating loss for the South Region in the fourth quarter of 2017 includes total impairment charges of $38.0 million, including impairment charges of $13.2 million for Isle of Capri Lake Charles; $24.5 million for Lady Luck Casino Vicksburg; and $0.3 million for Isle of Capri Casino Lula. Adjusted EBITDA increased 9.8% to $23.3 million as the Adjusted EBITDA margin for the segment rose 340 basis points to 21.4%. Adjusted EBITDA for the South Region in the prior-year period was $21.2 million reflecting an Adjusted EBITDA margin of 18.0%. The South Region’s results include contributions from Isle of Capri Lake Charles for both periods and reflect a nearly 75% year-over-year increase in Adjusted EBITDA for the property. Isle of Capri Lake Charles had previously been classified as discontinued operations and as assets held for sale. In November 2017, Eldorado terminated the sale agreement for the property as the proposed buyer did not obtain required gaming approvals prior to the termination date. Pursuant to the terms of the agreement, Eldorado retained the proposed buyer’s $20.0 million deposit, which is included in Corporate and Other operating income (loss).

East Region(Presque Isle Downs and Casino, Lady Luck Casino Nemacolin, Eldorado Scioto Downs Racino and Mountaineer Casino, Racetrack and Resort)

Net revenue for the East Region properties for the quarter ended December 31, 2017 increased approximately 1.9% to $110.1 million compared to $108.0 million in the prior-year period, while operating income grew to $13.6 million from $8.6 million in the year-ago quarter. Adjusted EBITDA for the East Region rose 11.7% to $20.3 million compared to Adjusted EBITDA of $18.2 million in the prior-year period as the East Region’s Adjusted EBITDA margin improved 160 basis points to 18.5%. Eldorado Scioto Downs generated Adjusted EBITDA growth for the twelfth consecutive quarter and Mountaineer Casino, Racetrack & Resort grew Adjusted EBITDA for the third consecutive quarter following the implementation of initiatives to improve amenities and right-size operating expenses to match current visitation and revenue volumes.

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, transaction expenses, S-1 expenses, severance expense, income related to the termination of the Lake Charles sale, costs associated with the terminated Lake Charles sale, impairment charges, equity in income of unconsolidated affiliates, (gain) loss on the sale or disposal of property and equipment, and other regulatory gaming assessments, including the impact of the change in regulatory reporting requirements, 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 accounting principles generally accepted in the United States (“US 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.

Fourth Quarter Conference Call

Eldorado will host a conference call at 4:30 p.m. ET today. Senior management will discuss the financial results and host a question and answer session. The dial in number for the audio conference call is 719/325-4879, conference ID 8151361 (domestic and international callers). Participants can also access a live webcast of the call through the “Events & Presentations” section of Eldorado’s website at http://www.eldoradoresorts.com/ and a replay of the webcast will be archived on the site for 90 days following the live event.

About Eldorado Resorts, Inc.

Eldorado Resorts is a leading casino entertainment company that owns and operates twenty properties in ten states, including Colorado, Florida, Iowa, Louisiana, Mississippi, Missouri, Nevada, Ohio, Pennsylvania and West Virginia. In aggregate, Eldorado’s properties feature approximately 21,000 slot machines and VLTs and 600 table games, and over 7,000 hotel rooms. For more information, please visit www.eldoradoresorts.com.

Forward-Looking Statements

This press release includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.Forward-looking statements include statements regarding our strategies, objectives and plans for future development or acquisitions of properties or operations, as well as expectations, future operating results and other information that is not historical information.When used in this press release, the terms or phrases such as “anticipates,” “believes,” “projects,” “plans,” “intends,” “expects,” “might,” “may,” “estimates,” “could,” “should,” “would,” “will likely continue,” and variations of such words or similar expressions are intended to identify forward-looking statements.Although our expectations, beliefs and projections are expressed in good faith and with what we believe is a reasonable basis, there can be no assurance that these expectations, beliefs and projections will be realized.There are a number of risks and uncertainties that could cause our actual results to differ materially from those expressed in the forward-looking statements which are included elsewhere in this press release.Such risks, uncertainties and other important factors include, but are not limited to:Eldorado’s ability to promptly and effectively integrate the business of Eldorado and Isle and realize synergies resulting from the combined operations; our substantial indebtedness and the impact of such obligations on our operations and liquidity; competition; sensitivity of our operations to reductions in discretionary consumer spending and changes in general economic and market conditions; governmental regulations and increases in gaming taxes and fees in jurisdictions in which we operate; and other risks and uncertainties described in our reports on Form 10-K, Form 10-Q and Form 8-K.

In light of these and other risks, uncertainties and assumptions, the forward-looking events discussed in this press release might not occur.These forward-looking statements speak only as of the date of this press release, even if subsequently made available on our website or otherwise, and we do not intend to update publicly any forward-looking statement to reflect events or circumstances that occur after the date on which the statement is made, except as may be required by law.

View source version on businesswire.com: http://www.businesswire.com/news/home/20180222006345/en/

Eldorado Resorts, Inc.
Thomas Reeg, 775-328-0112
President and Chief Financial Officer
investorrelations@eldoradoresorts.com
or
JCIR
Joseph N. Jaffoni, Richard Land, 212-835-8500
eri@jcir.com

Source: Eldorado Resorts, Inc.