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Red Rock Resorts, Inc. (RRR) SEC Filing 10-K Annual report for the fiscal year ending Saturday, December 31, 2016

Red Rock Resorts, Inc.

CIK: 1653653 Ticker: RRR

EXHIBIT 99.1

Red Rock Resorts Announces Full Year and Fourth Quarter 2016 Results

LAS VEGAS, March 07, 2017 (GLOBE NEWSWIRE) -- Red Rock Resorts, Inc. ("Red Rock Resorts" "we" or the "Company") (NASDAQ:RRR) today announced financial results for the full year and quarter ended December 31, 2016. 


 2016 Significant Highlights:

  • Successfully completed an initial public offering of 29.5 million Class A shares generating net proceeds of $541 million.
  • Completed a $2.4 billion refinancing of Station Casinos’ credit facility, which provided increased borrowing capacity, additional financial flexibility and reduced borrowing costs.
  • Acquired the Palms Casino Resort for $316 million, a property that provides key strategic benefits in the Las Vegas locals market and close proximity to the Las Vegas Strip.
  • Commenced construction on a $115 million expansion and upgrade at Palace Station.
  • Completed Phase I of the IGT slot system upgrade across our 20,000 citywide slot machines, with the entire upgrade expected to be completed by the fourth quarter of 2017.
  • Launched the “My Rewards” enhancement to our award-winning Boarding Pass guest loyalty program, which allows guests to earn points for spend on both non-gaming and gaming amenities.

Full Year 2016 Financial Highlights:

  • Consolidated net revenues increased 7.4% to $1.45 billion as compared to $1.35 billion in the prior year, the sixth consecutive year of net revenue growth.
  • Consolidated net income increased 8.7% to $155.8 million as compared to $143.3 million in the prior year. 
  • Consolidated Adjusted EBITDA increased 7.3% to $484.4 million as compared to $451.4 million in the prior year. This represents the sixth consecutive year of Adjusted EBITDA growth.

“2016 was a transformational year for Red Rock Resorts, as we successfully re-entered the public markets, completed a refinancing of our credit facility, acquired the Palms Casino Resort and embarked upon a number of operational and capital initiatives to position our business for future growth,” said Marc J. Falcone, Executive Vice President, Chief Financial Officer and Treasurer. “We are also pleased that we were able to generate our highest annual Adjusted EBITDA since 2007,” said Falcone.

Las Vegas Operations Segment

Net revenues from Las Vegas operations, including the Palms, for the fourth quarter increased $42.0 million or 13.0% to $363.6 million from $321.6 million in the prior year period.   Adjusted EBITDA, including the Palms, decreased $4.3 million or 3.9% to $105.7 million from $110.0 million in the prior year period.  Adjusted EBITDA margin, including the Palms, decreased 510 basis points to 29.1% in the fourth quarter of 2016. 

Several factors adversely impacted the fourth quarter results, including unusually low sports hold, construction disruption at Palace Station, transition costs associated with the takeover of the Palms Casino Resort, expenses relating to enhanced food and beverage offerings and service levels and an unfavorable holiday calendar.  

For the full year 2016, net revenues from Las Vegas operations, including the Palms, increased $78.0 million or 6.2% to $1.34 billion from $1.26 billion in the prior year.   Adjusted EBITDA increased $13.4 million or 3.3% to $423.7 million from $410.3 million and Adjusted EBITDA margin decreased 90 basis points to 31.7%, respectively from the prior year.

“Despite the negative impact of certain factors in the fourth quarter, the overall core fundamentals of the operating business remain very solid. Same-store gaming revenues, excluding sports, were up 2.2% and non-gaming revenues were up 3.1%, driven by hotel and food and beverage performance.  Moreover, the continued strength of the Las Vegas economy, combined with our ongoing strategic initiatives, position us well going forward to drive additional topline growth and generate free cash flow,” added Falcone.  

Native American Segment

The Company’s Native American segment produced Adjusted EBITDA of $25.1 million for the fourth quarter, which was up $3.8 million or 17.9% from $21.3 million in the prior year period, driven by strong performance at Graton Resort & Casino. 

For the full year 2016, the Company’s Native American segment produced Adjusted EBITDA of $87.3 million, which was up $20.6 million or 31.0% from $66.6 million in the prior year, as Native American operations continued to produce very solid financial results. 

Graton Resort & Casino opened its $185 million expansion as planned on November 15, 2016 and Gun Lake Casino’s $85 million casino expansion is expected to open in the summer of 2017. 

Corporate and Other

Fourth quarter corporate and other increased by $0.5 million or 10.0% to $6.1 million as compared to the prior year period.

For the full year 2016, corporate and other increased by $1.0 million or 3.9% to $26.5 million as compared to $25.5 million for the prior year.

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. Adjusted EBITDA is further defined under the heading “Presentation of Financial Information” and a reconciliation of net income to Adjusted EBITDA is included in the financial information attached hereto.

Balance Sheet Highlights

As of December 31, 2016, the Company’s cash balance was $133.8 million, and the principal balance of outstanding debt was $2.48 billion. At December 31, 2016, the Company’s $685 million revolving credit facility had an outstanding balance of $120.0 million, which included borrowings associated with the purchase of the Palms.  As of December 31, 2016, debt (net of excess cash) to Adjusted EBITDA ratio was 4.8 times and interest coverage was at 4.6 times, proforma for the acquisition of the Palms. 

Subsequent Events

On January 30, 2017, the Company entered into an amendment to its Credit Agreement which, (a) increased the Term Loan B by $125.0 million and (b) reduced the applicable borrowing margin by 50 basis points which will decrease annual interest expense by approximately $7.5 million.  The proceeds were used to repay the outstanding borrowings under its revolving credit facility. 

On March 1, 2017, the Company announced that its Board of Directors declared a cash dividend of $0.10 per Class A common share for the first quarter.  The dividend will be payable on March 31, 2017 to all stockholders of record as of the close of business on March 15, 2017.  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 $11.6 million, approximately $6.6 million of which is expected to be distributed to the Company and approximately $5.0 million of which is expected to be distributed to the other unit holders of record of Station Holdco.

On March 3, 2017, the Company entered into a modification agreement regarding its $115.9 million non-recourse land loan.  Under the terms of the modification agreement, the Company paid $61.8 million to retire $72.6 million of the outstanding principal under the loan.  In addition, warrants to purchase 60% of the interests in the entities supporting the debt were cancelled by the lenders.

Conference Call Information

The Company will host a conference call today at 1:30 p.m. Pacific 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 March 14, 2017 at www.redrockresorts.com. A live audio webcast of the call will also be available at www.redrockresorts.com.

Presentation of Financial Information

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 items. Adjusted EBITDA includes net income plus preopening, depreciation and amortization, share-based compensation, a donation to UNLV, asset impairment, write-downs and other charges, net, interest expense, net, loss on extinguishment/modification of debt, change in fair value of derivative instruments and benefit (provision) for income tax, and excludes Adjusted EBITDA attributable to the noncontrolling interests of MPM and discontinued operations.

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 with our existing properties or realize expected synergies; the strength and sustainability of the recovery from the recent economic downturn, and the effects of the economy generally, and in particular in Nevada, on consumer spending and our business; the effects of intense competition that exists in the gaming industry; the risk that new gaming licenses or gaming activities, such as expansion of internet gaming, are approved and result in additional competition; our substantial outstanding indebtedness and the effect of our significant debt service requirements on our operations and ability to compete; the risk that we will not be able refinance our outstanding indebtedness or obtain necessary capital to finance any development or investment projects that we may decide to undertake in the future; the impact of extensive regulation from gaming and other government authorities on our ability to operate our business and the risk that regulatory authorities may revoke, suspend, condition or limit our gaming or other licenses, impose substantial fines or take other actions that adversely affect us; risks associated with changes to applicable gaming and tax laws that could have a material adverse effect on our financial condition; the impact of general business conditions including competitive practices, changes in customer demand and the cyclical nature of the gaming and hospitality business in general, on our business and results of operations; the impact of volatility in the capital markets; adverse outcomes of legal proceedings and the development of, and changes in, claims or litigation reserves; risks, such as cost overruns and construction delays, 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. 

 
Red Rock Resorts, Inc.
Consolidated Statements of Income
(amounts in thousands, except per share data)
(unaudited)
              
       Three Months Ended Year Ended
       December 31, December 31,
       2016 2015 2016 2015
Operating revenues:       
 Casino$  254,841  $  238,556  $  960,992  $  922,154 
 Food and beverage   74,040     63,670     270,619     251,235 
 Room   43,303     30,577     142,858     122,888 
 Other   21,858     16,803     74,208     69,728 
 Management fees   29,714     25,156     111,520     88,859 
  Gross revenues       423,756     374,762     1,560,197     1,454,864 
 Promotional allowances   (29,202)    (26,811)    (107,770)    (102,729)
  Net revenues       394,554     347,951     1,452,427     1,352,135 
              
Operating costs and expenses:       
 Casino   102,066     90,240     368,561     347,509 
 Food and beverage   53,264     41,525     185,177     162,722 
 Room   18,649     11,797     54,963     46,559 
 Other   8,150     5,917     26,588     25,454 
 Selling, general and administrative   87,713     73,916     325,694     327,857 
 Preopening   -     44     731     1,165 
 Depreciation and amortization   42,565     33,969     156,668     137,865 
 Asset impairment   -     4,200     -     6,301 
 Write-downs and other charges, net   9,886     2,068     24,599     9,514 
          322,293     263,676     1,142,981     1,064,946 
              
Operating income   72,261     84,275     309,446     287,189 
 Earnings (losses) from joint ventures   527     (261)    1,913     809 
Operating income and earnings (losses) from joint ventures   72,788     84,014     311,359     287,998 
              
Other (expense) income:       
 Interest expense, net   (35,768)    (35,459)    (140,189)    (144,489)
 Loss on extinguishment/modification of debt   -     -     (7,270)    (90)
 Change in fair value of derivative instruments   -     3     87     (1)
          (35,768)    (35,456)    (147,372)    (144,580)
Income before income tax   37,020     48,558     163,987     143,418 
 Benefit (provision) for income tax   4,080     -     (8,212)    - 
Income from continuing operations   41,100     48,558     155,775     143,418 
Discontinued operations   -     5     -     (166)
Net income   41,100     48,563     155,775     143,252 
 Less net income (loss) attributable to noncontrolling interests   20,697     (136)    63,808     5,594 
Net income attributable to Red Rock Resorts, Inc.$  20,403  $  48,699  $  91,967  $  137,658 
              
 Earnings per common share:       
  Net earnings per share of Class A common stock, basic and diluted    $  0.37  $  0.54  $  1.03  $  1.53 
              
 Weighted average common shares outstanding:       
  Basic       55,198     9,888     34,141     9,888 
  Diluted       55,340     9,888     34,285     9,888 
              
 Dividends declared per common share$  0.10  $  -   $  0.20  $  -  

 

Red Rock Resorts, Inc.
Segment Information and
Reconciliation of Net Income to Adjusted EBITDA
(amounts in thousands)
(unaudited)
          
          
   Three Months Ended Year Ended
   December 31, December 31,
   2016 2015 2016 2015
Net Revenues         
Las Vegas operations  $  363,590  $  321,622  $  1,336,177  $  1,258,207 
Native American management     29,558     24,989     110,962     88,277 
Reportable segment net revenues    393,148     346,611     1,447,139     1,346,484 
Corporate and other     1,406     1,340     5,288     5,651 
Net revenues  $  394,554  $  347,951  $  1,452,427  $  1,352,135 
          
Net income  $  41,100  $  48,563  $  155,775  $  143,252 
Adjustments:         
Preopening     -     44     731     1,165 
Depreciation and amortization     42,565     33,969     156,668     137,865 
Share-based compensation     1,179     2,629     6,893     19,726 
Donation to UNLV     -     -     -     2,500 
Asset impairment     -     4,200     -     6,301 
Write-downs and other charges, net    9,886     2,068     24,599     9,514 
Other     -     537     (1,133)    537 
Interest expense, net     35,768     35,459     140,189     144,489 
Loss on extinguishment/modification of debt   -     -     7,270     90 
Change in fair value of derivative instruments   -     (3)    (87)    1 
Adjusted EBITDA attributable to MPM noncontrolling interest    (1,628)    (1,633)    (14,675)    (14,192)
(Benefit) provision for income tax     (4,080)    -     8,212     - 
Discontinued operations     -     (5)    -     166 
Adjusted EBITDA  $  124,790  $  125,828  $  484,442  $  451,414 
          
Adjusted EBITDA         
Las Vegas operations  $  105,733  $  110,040  $  423,692  $  410,301 
Native American management     25,107     21,290     87,259     66,622 
Reportable segment Adjusted EBITDA    130,840     131,330     510,951     476,923 
Corporate and other     (6,050)    (5,502)    (26,509)    (25,509)
Adjusted EBITDA  $  124,790  $  125,828  $  484,442  $  451,414 
          

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


The following information was filed by Red Rock Resorts, Inc. (RRR) on Tuesday, March 7, 2017 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-K Annual Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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Document And Entity Information
Consolidated Balance Sheets
Consolidated Balance Sheets (parenthetical)
Consolidated Statements Of Cash Flows
Consolidated Statements Of Comprehensive Income
Consolidated Statements Of Income
Consolidated Statements Of Stockholders'/members' Equity
Acquisition Of Palms Casino Resort (details)
Acquisition Of Palms Casino Resort (notes)
Acquisition Of Palms Casino Resort (tables)
Basis Of Presentation And Summary Of Significant Accounting Policies
Basis Of Presentation And Summary Of Significant Accounting Policies (advertising Expense) (details)
Basis Of Presentation And Summary Of Significant Accounting Policies (details)
Basis Of Presentation And Summary Of Significant Accounting Policies (tables)
Basis Of Presentation And Summary Of Significant Accounting Policies Allowance (details)
Basis Of Presentation And Summary Of Significant Accounting Policies Basis Of Presentation And Summary Of Significant Accounting Policies (gaming Tax Expense) (details)
Basis Of Presentation And Summary Of Significant Accounting Policies Basis Of Presentation And Summary Of Significant Accounting Policies (policies)
Basis Of Presentation And Summary Of Significant Accounting Policies Complimentary (details)
Basis Of Presentation And Summary Of Significant Accounting Policies Ppe Useful Lives (details)
Basis Of Presentation And Summary Of Significant Accounting Policies Principles Of Consolidation (details)
Commitments And Contingencies
Commitments And Contingencies (details)
Commitments And Contingencies (future Operating Lease Payments) (details)
Commitments And Contingencies (tables)
Derivative Instruments
Derivative Instruments (details)
Derivative Instruments (tables)
Discontinued Operations
Discontinued Operations (details)
Discontinued Operations (tables)
Earnings Per Share (details)
Earnings Per Share (notes)
Earnings Per Share (tables)
Fair Value Measurements
Fair Value Measurements (details)
Fair Value Measurements (tables)
Goodwill And Other Intangibles
Goodwill And Other Intangibles (tables)
Goodwill And Other Intangibles - Amortization Expense (details)
Goodwill And Other Intangibles - Indefinite-lived And Finite-lived Intangible Assets (details)
Income Taxes (details)
Income Taxes (notes)
Income Taxes (tables)
Investments In Joint Ventures And Variable Interest Entities
Investments In Joint Ventures And Variable Interest Entities (details)
Land Held For Development
Land Held For Development (details)
Long-term Debt
Long-term Debt (tables)
Long-term Debt - Corporate Office Lease (details)
Long-term Debt - Restructured Land Loan (details)
Long-term Debt - Schedule Of Long-term Instruments (details)
Long-term Debt 7.50% Senior Notes (details)
Long-term Debt New Credit Facility (details)
Long-term Debt Other Debt (details)
Long-term Debt Principal Maturities (details)
Management Agreements
Management Agreements (details)
Native American Development
Native American Development (details)
Native American Development (tables)
Noncontrolling Interest In Station Holdco (details)
Noncontrolling Interest In Station Holdco (notes)
Noncontrolling Interest In Station Holdco (tables)
Organization And Background
Organization And Background (details)
Other Accrued Liabilities
Other Accrued Liabilities (details)
Other Accrued Liabilities (tables)
Property And Equipment
Property And Equipment (details)
Property And Equipment (tables)
Quarterly Financial Information
Quarterly Financial Information (details)
Quarterly Financial Information (tables)
Related Party Transactions
Related Party Transactions Related Party Transactions (details)
Retirement Plans
Retirement Plans (details)
Retirement Plans (tables)
Schedule Ii- Valuation And Qualifying Accounts (details)
Schedule Ii- Valuation And Qualifying Accounts (notes)
Schedule Ii- Valuation And Qualifying Accounts (tables)
Segments
Segments (details)
Segments (tables)
Share-based Compensation
Share-based Compensation (tables)
Share-based Compensation Allocation Of Recognized Costs (details)
Share-based Compensation Share Unit Awards Activity (details)
Share-based Compensation Text (details)
Share-based Compensation Weighted Average Assumptions (details)
Stockholders'/members' Equity
Stockholders'/members' Equity (details)
Stockholders'/members' Equity (tables)
Stockholders'/members' Equity Net Income Attributable To Red Rock Resorts, Inc. And Transfers (to) From Noncontrolling Interests (details)
Stockholders'/members' Equity Stockholders'/members' Equity (aoci) (details)
Stockholders'/members' Equity Stockholders'/members' Equitynet Income (loss) (details)
Write-downs And Other Charges, Net
Write-downs And Other Charges, Net (details)
Write-downs And Other Charges, Net (tables)
Ticker: RRR
CIK: 1653653
Form Type: 10-K Annual Report
Accession Number: 0001653653-17-000004
Submitted to the SEC: Fri Mar 10 2017 9:27:07 PM EST
Accepted by the SEC: Mon Mar 13 2017
Period: Saturday, December 31, 2016
Industry: Hotels And Motels

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