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Red Rock Resorts, Inc. (RRR) SEC Filing 10-K Annual report for the fiscal year ending Sunday, December 31, 2017

Red Rock Resorts, Inc.

CIK: 1653653 Ticker: RRR

EXHIBIT 99.1

Red Rock Resorts Announces Fourth Quarter and Year End 2017 Results

LAS VEGAS, Feb. 27, 2018 (GLOBE NEWSWIRE) -- Red Rock Resorts, Inc. ("Red Rock Resorts," "we" or the "Company") (NASDAQ:RRR) today reported financial results for the fourth quarter and year ended December 31, 2017.

Net revenues were $394.0 million for the fourth quarter of 2017, a decrease of 0.1%, or $0.6 million, from $394.6 million for the same period of 2016.  The decrease in net revenues was  primarily due to substantial ongoing construction disruption at Palace Station and the Palms Casino Resort (the “Palms”).

Net income was $46.0 million for the fourth quarter of 2017, an increase of $4.9 million from net income of $41.1 million for the same period in 2016.  During the fourth quarter of 2017, the U.S. Tax Cuts and Jobs Act (the "U.S. tax reform") was enacted. The fourth quarter 2017 reflects a non-recurring non-cash increase in net income of approximately $2.1 million, due to the revaluation of its tax receivable agreement liability, as well as revaluing the Company's deferred tax assets, based on the U.S. tax reform. This estimated net benefit is based on the Company's initial analysis of the U.S. tax reform and may be adjusted in future periods as the Company collects additional information and evaluates any regulatory guidance.

Adjusted EBITDA(1) was $122.6 million for the fourth quarter of 2017, a decrease of 1.7% from $124.8 million in the same period of 2016.  The decrease in EBITDA was primarily due to substantial ongoing construction disruption at Palace Station and the Palms, a $0.6 million decrease in Native American operations and a $1.6 million increase in corporate and other.

For the full year, net revenues were $1.62 billion in 2017, an increase of 11.2%, or $163.2 million, from $1.45 billion for the same period of 2016.  The increase in net revenues was primarily due to the acquisition of the Palms, a $41.8 million increase in same-store Las Vegas operations and a $7.0 million increase in Native American operations.

For the full year, net income was $63.0 million in 2017, compared to $155.8 million for the same period of 2016. The decrease in net income was primarily attributable to the Company’s acquisition of the leases at Boulder Station and Texas Station. 

For the full year, Adjusted EBITDA(1) was $496.4 million, an increase of 2.5% from $484.4 million in 2016, primarily due to the acquisition of the Palms and an $8.6 million increase in Native American operations, partially offset by a $5.8 million increase in corporate and other. 

The Company also announced on February 23, 2018 that its Board of Directors approved a cash dividend of $0.10 per share, payable on March 30, 2018 to shareholders of record as of March 15, 2018. 

Las Vegas Operations

Net revenues from Las Vegas operations were $364.7 million for the fourth quarter of 2017, a 0.3% increase from $363.6 million in the same period of 2016.  Adjusted EBITDA(1) from Las Vegas operations was $105.7 million for the fourth quarter of 2017, unchanged from the same period of 2016.  Net revenues and Adjusted EBITDA were both negatively impacted by substantial ongoing construction disruption at Palace Station and the Palms during the fourth quarter.   

Native American Management

Adjusted EBITDA(1) from Native American operations was $24.5 million for the fourth quarter of 2017, a 2.2% decrease from $25.1 million in the same period of 2016, primarily due to lower development fees for the quarter, as the Company had received a development fee of $0.8 million in the prior year quarter in connection with the development and construction of the hotel expansion at Graton Resort & Casino, which opened in November 2016. 

Palace Station and Palms Redevelopment Update

The Palace Station project remains on schedule and the budget remains unchanged. As of December 31, 2017, the Company has incurred $80 million in costs against that $191 million project. The Palace Station project is expected to be completed in phases by the end of 2018.

The Company is excited to announce today that it is accelerating the third phase of its redevelopment plan for the Palms, as part of its transformation of the property into a “must see” gaming and entertainment destination.  The key components of this phase will include: a casino floor expansion featuring 300 new slot machines and 16 table games; an authentic Hong Kong-style Dim Sum restaurant; a casino connector seamlessly integrating the adjacent 599 room Palms Place and the existing self-park garage into the property; collaborations with world-class contemporary artists throughout the property; and state-of-the-art digital signage on the hotel exterior. The total budget for the Palms redevelopment, including construction costs, capitalized interest, and pre-opening expenses, is now expected to be approximately $620 million.  As of December 31, 2017, the Company has incurred $77 million in costs against the project. The project is expected to open its first phase in the second quarter of 2018, with components of the second phase to open throughout the first and second quarters of 2019 and phase three to open in the fourth quarter of 2019.

Balance Sheet Highlights

At December 31, 2017, the Company’s cash and cash equivalents were $231.5 million and total principal amount of debt outstanding was $2.68 billion. The Company’s debt to Adjusted EBITDA and interest coverage ratios, were 5.0x and 4.5x, respectively.

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 (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 6, 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 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 depreciation and amortization, share-based compensation, write-downs and other charges, net, tax receivable agreement liability adjustment, related party lease termination, asset impairments, 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 Enterprises, L.L.C. (“MPM”).

Company Information and Forward Looking Statements

Red Rock Resorts manages and owns a majority indirect equity interest in 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 and holds a 50% interest in MPM, which managed the Gun Lake Casino in southwestern Michigan through February 2018.

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; adverse outcomes of legal proceedings and the development of, and changes in, claims or litigation reserves; 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.

CONTACT:

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

 
Red Rock Resorts, Inc.
Consolidated Statements of Income
(amounts in thousands, except per share data)
(unaudited)
 
 Three Months Ended
December 31,
 Year Ended
December 31,
 2017 2016 2017 2016
Operating revenues:       
Casino$263,834  $254,841  $1,048,355  $960,992 
Food and beverage 71,631   74,040   298,707   270,619 
Room 39,062   43,303   176,585   142,858 
Other 23,158   21,858   93,695   74,208 
Management fees 27,972   29,714   118,477   111,520 
Gross revenues 425,657   423,756   1,735,819   1,560,197 
Promotional allowances (31,636)  (29,202)  (120,203)  (107,770)
Net revenues 394,021   394,554   1,615,616   1,452,427 
Operating costs and expenses:       
Casino 107,094   102,066   416,863   368,561 
Food and beverage 49,434   53,264   211,094   185,177 
Room 16,521   18,649   72,300   54,963 
Other 8,603   8,150   35,041   26,588 
Selling, general and administrative 91,527   87,713   379,246   325,694 
Depreciation and amortization 43,496   42,565   178,217   156,668 
Write-downs and other charges, net 3,653   9,147   29,584   24,591 
Tax receivable agreement liability adjustment (139,070)  739   (139,300)  739 
Related party lease termination       100,343    
Asset impairment       1,829    
  181,258   322,293   1,285,217   1,142,981 
Operating income 212,763   72,261   330,399   309,446 
Earnings from joint ventures 390   527   1,632   1,913 
Operating income and earnings from joint ventures 213,153   72,788   332,031   311,359 
                
Other (expense) income:               
Interest expense, net (31,315)  (35,768)  (131,442)  (140,189)
Loss on extinguishment/modification of debt, net (13,355)     (16,907)  (7,270)
Change in fair value of derivative instruments 11,053      14,112   87 
  (33,617)  (35,768)  (134,237)  (147,372)
Income before income tax 179,536   37,020   197,794   163,987 
(Provision) benefit for income tax (133,525)  4,080   (134,755)  (8,212)
Net income 46,011   41,100   63,039   155,775 
Less: net income attributable to noncontrolling interests 16,502   20,697   27,887   63,808 
Net income attributable to Red Rock Resorts, Inc.$29,509  $20,403  $35,152  $91,967 
                
Earnings per common share:               
Earnings per share of Class A common stock, basic$0.43  $0.37  $0.52  $1.03 
Earnings per share of Class A common stock, diluted$0.35  $0.37  $0.42  $1.03 
                
Weighted average common shares outstanding:               
Basic 68,486   55,198   67,397   34,141 
Diluted 116,274   55,340   115,930   34,285 
                
Dividends declared per common share$0.10  $0.10  $0.40  $0.20 
                

 

Red Rock Resorts, Inc.
Segment Information and Reconciliation of Net Income to Adjusted EBITDA
(amounts in thousands)
(unaudited)
 
 Three Months Ended
December 31,
 Year Ended
December 31,
 2017 2016 2017 2016
Net revenues       
Las Vegas operations$364,696  $363,590  $1,491,919  $1,336,177 
Native American management 27,842   29,558   117,968   110,962 
Reportable segment net revenues 392,538   393,148   1,609,887   1,447,139 
Corporate and other 1,483   1,406   5,729   5,288 
Net revenues$394,021  $394,554  $1,615,616  $1,452,427 
                
Net income$46,011  $41,100  $63,039  $155,775 
Adjustments       
Depreciation and amortization 43,496   42,565   178,217   156,668 
Share-based compensation 2,195   1,179   7,922   6,893 
Write-downs and other charges, net 3,653   9,147   29,584   24,591 
Tax receivable agreement liability adjustment (139,070)  739   (139,300)  739 
Related party lease termination       100,343    
Asset impairment       1,829    
Interest expense, net 31,315   35,768   131,442   140,189 
Loss on extinguishment/modification of debt, net 13,355      16,907   7,270 
Change in fair value of derivative instruments (11,053)     (14,112)  (87)
Adjusted EBITDA attributable to MPM noncontrolling interest (1,780)  (1,628)  (15,262)  (14,675)
Provision (benefit) for income tax 133,525   (4,080)  134,755   8,212 
Other 1,000      1,000   (1,133)
Adjusted EBITDA$122,647  $124,790  $496,364  $484,442 
                
Adjusted EBITDA               
Las Vegas operations$105,702  $105,733  $432,758  $423,692 
Native American management 24,548   25,107   95,897   87,259 
Reportable segment Adjusted EBITDA 130,250   130,840   528,655   510,951 
Corporate and other (7,603)  (6,050)  (32,291)  (26,509)
Adjusted EBITDA$122,647  $124,790  $496,364  $484,442 
                


The following information was filed by Red Rock Resorts, Inc. (RRR) on Tuesday, February 27, 2018 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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Inside this 10-K Annual Report

Document And Entity Information
Consolidated Balance Sheets
Consolidated Balance Sheets (parenthetical)
Consolidated Statements Of Cash Flows
Consolidated Statements Of Cash Flows (parenthetical)
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)
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 5.00% Senior Notes (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)
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: 0001653653-18-000004
Submitted to the SEC: Thu Mar 01 2018 2:59:02 PM EST
Accepted by the SEC: Thu Mar 01 2018
Period: Sunday, December 31, 2017
Industry: Hotels And Motels

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