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Section 1: 8-K (8-K)

8-K
false 0001590895 0001590895 2019-11-06 2019-11-06

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): November 6, 2019

 

Eldorado Resorts, Inc.

(Exact name of registrant as specified in its charter)

 

Nevada

 

001-36629

 

46-3657681

(State or other jurisdiction

of incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

100 West Liberty Street, Suite 1150

Reno, NV

 

89501

(Address of principal executive offices)

 

(Zip Code)

Registrant’s telephone number, including area code (775) 328-0100

Not Applicable

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

 

Trading
Symbol(s)

 

Name of each exchange
on which registered

Common Stock, $0.00001 par value

 

ERI

 

NASDAQ Stock Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company   

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  

 

 


Item 2.02 Results of Operations and Financial Condition.

On November 6, 2019 Eldorado Resorts, Inc. issued a press release announcing its unaudited financial results for the three and nine months ended September 30, 2019 and other information. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

The information in this Current Report on Form 8-K and the Exhibit attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits:

Exhibit
    No.    

   

Description

         
 

99.1

   

Earnings Press Release dated November 6, 2019

         
 

104

   

Cover Page Interactive Data File (embedded within the Inline XBRL document)


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

ELDORADO RESORTS, INC.,

 

 

 

a Nevada corporation

             

Date: November 6, 2019

 

 

By:

 

/s/ Thomas R. Reeg

 

 

Name:

 

Thomas R. Reeg

 

 

Title:

 

Chief Executive Officer

(Back To Top)

Section 2: EX-99.1 (EX-99.1)

EX-99.1

Exhibit 99.1

 

LOGO

ELDORADO RESORTS REPORTS THIRD QUARTER NET REVENUE OF $663.2 MILLION,

OPERATING INCOME OF $124.9 MILLION, AND ADJUSTED EBITDA OF $197.8 MILLION

Reno, Nevada (November 6, 2019) – Eldorado Resorts, Inc. (NASDAQ: ERI) (“Eldorado,” “ERI,” or “the Company”) today reported operating results for the third quarter ended September 30, 2019.

Third Quarter and Recent Highlights:

 

   

Net revenue of $663.2 million, an increase of 36.1% on a GAAP basis and decrease of 4.1% on a same-store basis

 

   

Operating income of $124.9 million, an increase of 36.1% on a GAAP basis and 36.5% on a same-store basis, with net income of $37.1 million

 

   

Adjusted EBITDA rose 7.9% year over year on a same-store basis

 

   

Adjusted EBITDA margin expanded 330 basis points on a same-store basis versus the comparable prior-year period

 

   

Sports betting launched at six properties in Iowa, Indiana and Mississippi during the quarter bringing the total number of Eldorado casinos now currently offering sports betting to thirteen properties

 

   

Company repaid $70 million of debt in third quarter and year-to-date has reduced debt by more than $300 million

“Eldorado generated record third quarter Adjusted EBITDA of $197.8 million on a 36.5% increase in operating income and a 4.1% decline in net revenues on a same-store basis. Adjusted EBITDA grew 7.9% year over year on a same-store basis reflecting further success with our margin enhancement and operating efficiency initiatives coupled with revenue recognition from our new sports betting partnerships. We achieved a 330-basis point year-over-year increase in our consolidated Adjusted EBITDA margin to 29.8%, a quarterly record,” said Tom Reeg, Chief Executive Officer of Eldorado Resorts.

“As we continue to move through the regulatory review process in advance of the expected closing in the first half of 2020 for the Caesars Entertainment acquisition, our senior management and integration team has now had the opportunity to visit every domestic Caesars asset. We are increasingly excited about the opportunity to combine best practices from each company. We remain confident that the national, multi-brand footprint across all major and regional markets created by the combination of Eldorado and Caesars is a strategically, financially and operationally compelling opportunity that is expected to deliver value to shareholders and stakeholders of both companies.”


($ in thousands,

except per share data)

  Total Net Revenue  
    Three Months Ended  
    September 30,  
    2019     2019
Divestitures
    2019
Pre-Acquisition
    2019 Total     2018     2018
Divestitures(1)
    2018
Pre-Acquisition(2)
    2018
Total(3)
    Change  

West

  $ 151,418     $ —       $ —       $ 151,418     $ 129,092     $ —       $ 30,354     $ 159,446       -5.0

Midwest

    95,865       —         —         95,865       99,834       —         —         99,834       -4.0

South

    108,018       —         —         108,018       106,569       —         14,275       120,844       -10.6

East

    186,562       —         —         186,562       127,722       46,551       107,504       188,675       -1.1

Central

    119,410       —         —         119,410       23,897       —         98,446       122,343       -2.4

Corporate and Other

    1,908       —         —         1,908       139       —         30       169       1029.0
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Net Revenue

  $ 663,181     $ —       $ —       $ 663,181     $ 487,253     $ 46,551     $ 250,609     $ 691,311       -4.1
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

($ in thousands,

except per share data)

  Operating Income  
    Three Months Ended  
    September 30,  
    2019     2019
Divestitures
    2019
Pre-Acquisition
    2019 Total     2018     2018
Divestitures(1)
    2018
Pre-Acquisition(2)
    2018
Total(3)
    Change  

West

  $ 35,358     $ —       $ —       $ 35,358     $ 31,894     $ —       $ 4,290     $ 36,184       -2.3

Midwest

    30,221       —         —         30,221       26,637       —         —         26,637       13.5

South

    15,185       —         —         15,185       16,176       —         (1,435     14,741       3.0

East

    45,341       —         —         45,341       23,637       4,234       22,378       41,781       8.5

Central

    25,793       —         —         25,793       2,868       —         17,506       20,374       26.6

Corporate and Other

    (26,991     —         —         (26,991     (9,443     —         (38,788     (48,231     -44.0
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Operating Income

  $ 124,907     $ —       $ —       $ 124,907     $ 91,769     $ 4,234     $ 3,951     $ 91,486       36.5
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

($ in thousands,

except per share data)

  Adjusted EBITDA  
    Three Months Ended  
    September 30,  
    2019     2019
Divestitures
    2019
Pre-Acquisition
    2019 Total     2018     2018
Divestitures(1)
    2018
Pre-Acquisition(2)
    2018
Total(3)
    Change  

West

  $ 49,483     $ —       $ —       $ 49,483     $ 41,434     $ —       $ 7,388     $ 48,822       1.4

Midwest

    35,693       —         —         35,693       35,278       —         —         35,278       1.2

South

    24,699       —         —         24,699       26,015       —         591       26,606       -7.2

East

    57,191       —         —         57,191       32,114       8,295       30,481       54,300       5.3

Central

    37,441       —         —         37,441       5,850       —         24,770       30,620       22.3

Corporate and Other

    (6,719     —         —         (6,719     (6,601     —         (5,710     (12,311     -45.4
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Adjusted EBITDA(6)

  $ 197,788     $ —       $ —       $ 197,788     $ 134,090     $ 8,295     $ 57,520     $ 183,315       7.9
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net Income

  $ 37,055         $ 37,704            
 

 

 

       

 

 

           

Basic EPS

  $ 0.48         $ 0.49            
 

 

 

       

 

 

           

Diluted EPS

  $ 0.47         $ 0.48            
 

 

 

       

 

 

           


($ in thousands, except

per share data)

  Total Net Revenue  
    Nine Months Ended  
    September 30,  
    2019     2019
Divestitures(4)
    2019
Pre-Acquisition
    2019
Total(5)
    2018     2018
Divestitures(1)
    2018
Pre-Acquisition(2)
    2018
Total(3)
    Change  

West

  $ 397,241     $ —       $ —       $ 397,241     $ 346,550     $ —       $ 87,316     $ 433,866       -8.4

Midwest

    289,893       —         —         289,893       301,235       —         —         301,235       -3.8

South

    357,667       —         —         357,667       341,612       —         51,711       393,323       -9.1

East

    523,250       8,071       —         515,179       370,576       133,537       287,936       524,975       -1.9

Central

    362,673       —         —         362,673       23,897       —         349,241       373,138       -2.8

Corporate and Other

    5,401       —         —         5,401       377       —         94       471       1046.7
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Net Revenue

  $ 1,936,125     $ 8,071     $ —       $ 1,928,054     $ 1,384,247     $ 133,537     $ 776,298     $ 2,027,008       -4.9
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

($ in thousands, except

per share data)

  Operating Income  
    Nine Months Ended  
    September 30,  
    2019     2019
Divestitures(4)
    2019
Pre-Acquisition
    2019
Total(5)
    2018     2018
Divestitures(1)
    2018
Pre-Acquisition(2)
    2018
Total(3)
    Change  

West

  $ 66,772     $ —       $ —       $ 66,772     $ 63,898     $ —       $ 13,635     $ 77,533       -13.9

Midwest

    87,066       —         —         87,066       80,725       —         —         80,725       7.9

South

    61,723       —         —         61,723       50,099       —         355       50,454       22.3

East

    107,715       (91     —         107,806       67,164       13,262       46,261       100,163       7.6

Central

    80,896       —         —         80,896       2,868       —         70,105       72,973       10.9

Corporate and Other

    (53,111     —         —         (53,111     (41,377     —         (52,127     (93,504     -43.2
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Operating Income

  $ 351,061     $ (91   $ —       $ 351,152     $ 223,377     $ 13,262     $ 78,229     $ 288,344       21.8
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

($ in thousands, except

per share data)

  Adjusted EBITDA  
    Nine Months Ended  
    September 30,  
    2019     2019
Divestitures(4)
    2019
Pre-Acquisition
    2019
Total(5)
    2018     2018
Divestitures(1)
    2018
Pre-Acquisition(2)
    2018
Total(3)
    Change  

West

  $ 107,831     $ —       $ —       $ 107,831     $ 91,616     $ —       $ 22,914     $ 114,530       -5.8

Midwest

    108,770       —         —         108,770       105,717       —         —         105,717       2.9

South

    92,479       —         —         92,479       86,634       —         6,451       93,085       -0.7

East

    144,113       (38     —         144,151       87,657       19,469       70,864       139,052       3.7

Central

    115,366       —         —         115,366       5,850       —         93,691       99,541       15.9

Corporate and Other

    (25,458     —         —         (25,458     (21,824     —         (15,230     (37,054     -31.3
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Adjusted
EBITDA(6)

  $ 543,101     $ (38   $ —       $ 543,139     $ 355,650     $ 19,469     $ 178,690     $ 514,871       5.5
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net Income

  $ 94,220         $ 95,355            
 

 

 

       

 

 

           

Basic EPS

  $ 1.21         $ 1.23            
 

 

 

       

 

 

           

Diluted EPS

  $ 1.20         $ 1.22            
 

 

 

       

 

 

           

 

(1)

Figures are for Presque Isle Downs and Nemacolin for the three and nine months ended September 30, 2018.

(2)

Figures are for Grand Victoria Casino (“GV”) and Tropicana Entertainment, Inc. (“TEI”) for the three and nine months ended September 30, 2018. Such figures are based on unaudited internal financial statements and have not been reviewed by the Company’s auditors and do not conform to GAAP.

(3)

Total figures for 2018 include combined results of operations for ERI, TEI and GV and exclude results of operations for Presque Isle Downs and Nemacolin. Such presentation does not conform to GAAP or the Securities and Exchange Commission rules for pro forma presentation; however, we believe that the additional financial information will be helpful to investors in comparing current results with results of prior periods. This is non-GAAP data and should not be considered a substitute for data prepared in accordance with GAAP, but should be viewed in addition to the results of the operations reported by the Company.

(4)

Figures are for Presque Isle Downs for the period beginning January 1, 2019 and ending January 11, 2019 and Nemacolin for the period beginning January 1, 2019 and ending March 8, 2019.

(5)

Total figures for 2019 exclude results of operations for Presque Isle Downs and Nemacolin.

(6)

Adjusted EBITDA is not a GAAP measurement and is presented solely as a supplemental disclosure because the Company believes it is a widely used measure of operating performance in the gaming industry. See “Reconciliation of GAAP Measures to Non-GAAP Measures” below for a definition of Adjusted EBITDA and a quantitative reconciliation of Adjusted EBITDA to operating income (loss), which the Company believes is the most comparable financial measure calculated in accordance with GAAP.


Balance Sheet and Liquidity

As of September 30, 2019, Eldorado had $2.95 billion of debt outstanding. Total cash and cash equivalents were $208.8 million, excluding restricted cash. No amounts were outstanding under the Company’s $500 million Revolving Credit Facility.

“During the third quarter of 2019, we continued to utilize our free cash flow from operations to reduce debt. During the quarter we paid down $70 million on our term loan bringing year-to-date debt reduction to over $300 million,” said Bret Yunker, Chief Financial Officer.

Summary of 2019 Third Quarter Region Results

The property results for properties owned by Tropicana Entertainment have been included in results of operations for the third quarter of 2018, which preceded the date of acquisition of such properties. The full quarter property results for Grand Victoria Casino are included in the results of operations for the third quarter of 2018 following the completion of the acquisition of the property by Eldorado on August 7, 2018. Results for Presque Isle Downs and Lady Luck Nemacolin have been excluded as both assets were divested. Such presentation does not conform to GAAP or the Securities and Exchange Commission rules for pro forma presentation; however, we believe that the additional financial information will be helpful to investors in comparing current results with results of prior periods.

West Region (THE ROW, Isle Casino Hotel Black Hawk, Lady Luck Casino Black Hawk, Tropicana Laughlin Hotel and Casino and MontBleu Casino Resort & Spa)

Net revenue for the West Region properties for the quarter ended September 30, 2019 declined approximately 5.0% to $151.4 million compared to $159.4 million in the prior-year period and operating income decreased to $35.4 million from $36.2 million in the year-ago quarter. West Region third quarter Adjusted EBITDA improved 1.4% to $49.5 million, reflecting a positive sequential performance versus the 2019 second quarter period following the completion of renovations including room remodels and casino floor enhancements at the Company’s two Black Hawk properties. The West region’s 2019 third quarter Adjusted EBITDA margin improved by 200 basis points to 32.7%.

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 September 30, 2019 decreased approximately 4.0% to $95.9 million compared to $99.8 million in the prior-year period while operating income increased to $30.2 million from $26.6 million in the year-ago quarter. Adjusted EBITDA rose approximately 1.2% to $35.7 million compared to the prior year as the Adjusted EBITDA margin for the segment rose 190 basis points to 37.2%. Adjusted EBITDA for the Midwest Region in the prior-year period was $35.3 million reflecting an Adjusted EBITDA margin of 35.3%.

South Region (Isle Casino Racing Pompano Park, Eldorado Shreveport, Isle of Capri Casino Lula, Lady Luck Casino Vicksburg, Isle of Capri Lake Charles, Trop Casino Greenville and Belle of Baton Rouge Casino & Hotel)

Net revenue for the South Region properties for the quarter ended September 30, 2019 declined approximately 10.6% to $108.0 million compared to $120.8 million in the prior-year period while operating income increased to $15.2 million from $14.7 million in the prior-year period. South Region 2019 third quarter Adjusted EBITDA declined approximately 7.2% to $24.7 million, primarily reflecting the impact in the quarter from poor weather in Louisiana and Florida. Despite this impact, the region’s Adjusted EBITDA margin improved 85 basis points to 22.9%.


East Region (Eldorado Scioto Downs Racino, Mountaineer Casino Racetrack and Resort and Tropicana Casino and Resort, Atlantic City)

Net revenue for the East Region properties for the quarter ended September 30, 2019 declined approximately 1.1% to $186.6 million compared to $188.7 million in the prior-year period and operating income increased to $45.3 million from $41.8 million in the year-ago period. East Region 2019 third quarter Adjusted EBITDA rose 5.3% to $57.2 million compared to Adjusted EBITDA of $54.3 million in the prior-year period as the EBITDA margin improved 190 basis points to 30.7%. All three East Region properties generated year over year Adjusted EBITDA growth.

Central Region (Grand Victoria Casino, Tropicana Evansville and Lumière Place)

Net revenue for the Central Region for the quarter ended September 30, 2019 decreased approximately 2.4% to $119.4 million compared to $122.3 million in the prior-year period while operating income increased to $25.8 million from $20.4 million in the prior-year period. Central Region Adjusted EBITDA for the third quarter rose 22.3% to $37.4 million compared to Adjusted EBITDA of $30.6 million in the prior-year period as the Central Region’s Adjusted EBITDA margin improved 630 basis points to 31.4%. All three Central Region properties generated year over year Adjusted EBITDA growth.

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. Management has historically used Adjusted EBITDA when evaluating operating performance because we believe that the inclusion or exclusion of certain recurring and non-recurring items is necessary to provide a full understanding of our core operating results and as a means to evaluate period-to-period results. Adjusted EBITDA represents operating income (loss) before depreciation and amortization, stock-based compensation, transaction expenses, severance expense, selling costs associated with the disposition of properties, preopening expenses, costs associated with resolving the historical Tropicana bankruptcy, impairment charges, equity in income (loss) of unconsolidated affiliates, (gain) loss on the sale or disposal of property and equipment, (gain) loss associated with the sales of Presque Isle Downs and Nemacolin and other non-cash regulatory gaming assessments. Adjusted EBITDA also excludes the expense associated with our Master Lease with GLPI as the transaction was accounted for as a financing obligation and the associated expense is included in interest expense. 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, payments under our Master Lease 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.

Third Quarter Conference Call

Eldorado will host a conference call at 4:30PM EST 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 (334) 323-0501, conference ID 2091971 (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-six properties in twelve states, including Colorado, Florida, Illinois, Indiana, Iowa, Louisiana, Mississippi, Missouri, Nevada, New Jersey, Ohio and West Virginia. In aggregate, Eldorado’s properties feature approximately 26,600 slot machines, VLTs and e-tables and approximately 750 table games, and over 11,800 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, among others, statements regarding the expected synergies and benefits of a potential combination of Eldorado and Caesars, including the expected accretive effect of the proposed transaction on Eldorado’s results of operations; the anticipated benefits of geographic diversity that would result from the proposed transaction and the expected results of Caesars’ gaming properties; expectations about future business plans, prospective performance and opportunities; required regulatory approvals; the expected timing of the completion of the proposed transaction; and the anticipated financing of the proposed transaction , 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 is no assurance that the proposed transaction will be consummated and 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 made herein. Such risks, uncertainties and other important factors include, but are not limited to: (a) risks related to the combination of Caesars and Eldorado and the integration of their respective businesses and assets; (b) the possibility that the proposed transaction with Caesars and related transactions do not close when expected or at all because required regulatory, stockholder or other approvals are not received or other conditions to the consumption thereof are not satisfied on a timely basis or at all; (c) the risk that the financing required to fund the proposed transaction with Caesars and related transactions is not obtained on the terms anticipated or at all; (d) potential adverse reactions or changes to business or employee relationships, including those resulting from the announcement or completion of the proposed transaction; (e) potential litigation challenging the proposed transaction; (f) the possibility that the anticipated benefits of the proposed transaction, including cost savings and expected synergies, are not realized when expected or at all, including as a result of the impact of, or issues arising from, the implementation of our operating strategies and integration of our business and Caesars’ business; (g) conditions imposed on the companies in order to obtain required regulatory approvals; (h) uncertainties in the global economy and credit markets and its potential impact on our ability to finance the proposed transaction; (i) the possibility that the proposed transaction may be more expensive to complete than expected, including as a result of unexpected factors or events; (j) diversion of management’s attention from ongoing business operations and opportunities; (k) the ability to retain certain of our key employees and Caesars’ key employees; (l) risks associated with increased leverage from the proposed transaction; (m) changes in the value of Eldorado’s common stock between the date of the merger agreement and the closing of the proposed transaction; (n) competitive responses to the proposed transaction; (o) legislative, regulatory and economic developments; (p) uncertainties as to the timing of the consummation of the proposed transaction and the ability of each party to consummate the proposed transaction; (q) the impact of provisions of the Merger Agreement limiting the operation of our business prior to the closing of proposed transaction with Caesars and (r) 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.


Additional Information

This communication does not constitute an offer to buy or solicitation of an offer to sell any securities. In connection with Eldorado’s previously announced transaction with Caesars Entertainment Corporation (“Caesars”), Eldorado has filed with the Securities and Exchange Commission (the “SEC”) a registration statement on Form S-4 (the “registration statement”) that includes a joint proxy statement of Eldorado and Caesars that also constitutes a prospectus of Eldorado and Caesars (the “joint proxy statement/prospectus”). Each of Eldorado and Caesars has provided the joint proxy statement/prospectus to their respective stockholders. Eldorado and Caesars also plan to file other relevant documents with the SEC regarding the proposed transaction. This document is not a substitute for the joint proxy statement/prospectus or registration statement or any other document which Eldorado or Caesars may file with the SEC in connection with the proposed transaction. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS AND OTHER RELEVANT DOCUMENTS FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. You may obtain a copy of the joint proxy statement/prospectus, the registration statement and other relevant documents filed by Eldorado and Caesars without charge at the SEC’s website, www.sec.gov, or by directing a request to (1) Eldorado Resorts, Inc. by mail at 100 West Liberty Street, Suite 1150, Reno, Nevada 89501, Attention: Investor Relations, by telephone at (775) 328-0112 or by going to the Investor page on Eldorado’s corporate website at www.eldoradoresorts.com; or (2) Caesars Entertainment Corporation by mail at Caesars Palace, One Caesars Palace Drive, Las Vegas, Nevada 89109, Attention: Investor Relations, by telephone at (800) 319-0047, or by going to the Investors page on Caesars’ corporate website at investor.caesars.com.

Certain Information Regarding Participants

Eldorado, Caesars and certain of their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from Eldorado and Caesars stockholders in respect of the proposed transaction under the rules of the SEC. You may obtain information regarding the names, affiliations and interests of Eldorado’s directors and executive officers in Eldorado’s Annual Report on Form 10-K for the year ended December 31, 2018, which was filed with the SEC on March 1, 2019, and its definitive proxy statement for its 2019 Annual Meeting, which was filed with the SEC on April 26, 2019.

Investors may obtain information regarding the names, affiliations and interests of Caesars’ directors and executive officers in Caesars’ Annual Report on Form 10-K for the year ended December 31, 2018, which was filed with the SEC on February 22, 2019, and its proxy statement for its 2019 Annual Meeting, which was filed with the SEC on May 15, 2019. Other information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, is contained in the joint proxy statement/prospectus and other relevant materials to be filed with the SEC regarding the proposed transaction. Investors should read the joint proxy statement/prospectus carefully and in its entirety before making any voting or investment decisions.

Contact:

 

Brian Agnew   Joseph N. Jaffoni, Richard Land
Eldorado Resorts   JCIR
775/328-0112   212/835-8500
[email protected]   [email protected]

- Tables follow -


ELDORADO RESORTS, INC.

CONSOLIDATED STATEMENTS OF INCOME

($ in thousands, except per share data)

(Unaudited)

 

     Three Months Ended     Nine Months Ended  
     September 30,     September 30,  
     2019     2018     2019     2018  

REVENUES:

        

Casino and pari-mutuel commissions

   $ 458,000     $ 368,169     $ 1,385,848     $ 1,060,417  

Food and beverage

     78,435       58,153       229,072       164,644  

Hotel

     94,318       44,780       237,493       114,447  

Other

     32,428       16,151       83,712       44,739  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net revenues

     663,181       487,253       1,936,125       1,384,247  
  

 

 

   

 

 

   

 

 

   

 

 

 

EXPENSES:

        

Casino and pari-mutuel commissions

     202,555       180,062       616,101       519,558  

Food and beverage

     60,406       45,381       180,288       134,927  

Hotel

     27,315       13,977       76,101       40,178  

Other

     12,092       9,315       34,064       25,030  

Marketing and promotions

     33,292       23,122       97,673       66,255  

General and administrative

     122,767       75,599       360,086       223,546  

Corporate

     13,014       9,217       50,819       33,018  

Impairment charges

     —         3,787       958       13,602  

Depreciation and amortization

     52,592       35,760       166,882       99,204  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     524,033       396,220       1,582,972       1,155,318  

(Loss) gain on sale or disposal of property and equipment

     (284     (110     21,668       (393

Proceeds from terminated sales

     —         5,000       —         5,000  

Transaction expenses

     (12,442     (4,091     (21,628     (10,043

Loss from unconsolidated affiliates

     (1,515     (63     (2,132     (116
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     124,907       91,769       351,061       223,377  
  

 

 

   

 

 

   

 

 

   

 

 

 

OTHER EXPENSE:

        

Interest expense, net

     (71,897     (34,085     (217,205     (96,579

Loss on early retirement of debt, net

     (1,204     —         (1,204     (162

Unrealized gain on restricted investments

     3,318       —         460       —    
  

 

 

   

 

 

   

 

 

   

 

 

 

Total other expense

     (69,783     (34,085     (217,949     (96,741
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

     55,124       57,684       133,112       126,636  

Provision for income taxes

     (18,069     (19,980     (38,892     (31,281
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

   $ 37,055     $ 37,704     $ 94,220     $ 95,355  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income per share of common stock:

        

Basic

   $ 0.48     $ 0.49     $ 1.21     $ 1.23  
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

   $ 0.47     $ 0.48     $ 1.20     $ 1.22  
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average basic shares outstanding

     77,721,353       77,522,664       77,657,553       77,445,611  
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average diluted shares outstanding

     78,449,747       78,283,588       78,588,517       78,208,040  
  

 

 

   

 

 

   

 

 

   

 

 

 


ELDORADO RESORTS, INC.

SUMMARY INFORMATION AND RECONCILIATION OF

OPERATING INCOME (LOSS) TO ADJUSTED EBITDA

($ in thousands)

 

     Three Months Ended September 30, 2019  
     Operating
Income
    Depreciation
and
Amortization
     Stock-based
Compensation
     Transaction
Expenses (6)
     Other (7)     Adjusted
EBITDA
 
               

West

   $ 35,358     $ 13,934      $ —        $ —        $ 191     $ 49,483  

Midwest

     30,221       4,515        4        —          953       35,693  

South

     15,185       9,000        2        —          512       24,699  

East

     45,341       11,630        —          —          220       57,191  

Central

     25,793       11,627        —          —          21       37,441  

Corporate

     (26,991     1,886        4,260        12,442        1,684       (6,719
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total

   $ 124,907     $ 52,592      $ 4,266      $ 12,442      $ 3,581     $ 197,788  
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 
     Three Months Ended September 30, 2018  
     Operating
Income
    Depreciation
and
Amortization
     Stock-based
Compensation
     Transaction
Expenses (6)
     Other (8)     Adjusted
EBITDA
 

Excluding Pre-Acquisition/Including Divestitures:

               

West

   $ 31,894     $ 9,475      $ —        $ —        $ 65     $ 41,434  

Midwest

     26,637       8,605        15        —          21       35,278  

South

     16,176       9,704        9        —          126       26,015  

East

     23,637       4,486        2        —          3,989       32,114  

Central

     2,868       2,215        —          —          767       5,850  

Corporate

     (9,443     1,275        2,468        4,091        (4,992     (6,601
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total Excluding Pre-Acquisition/Including Divestitures

   $ 91,769     $ 35,760      $ 2,494      $ 4,091      $ (24   $ 134,090  
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Divestitures:

               

East

   $ 4,234     $ 55      $ 2      $ —        $ 4,004     $ 8,295  
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total Divestitures (1)

   $ 4,234     $ 55      $ 2      $ —        $ 4,004     $ 8,295  
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Pre-Acquisition:

               

West

   $ 4,290     $ 3,098      $ —        $ —        $ —       $ 7,388  

Midwest

     —         —          —          —          —         —    

South

     (1,435     2,022        —          —          4       591  

East

     22,378       8,072        —          —          31       30,481  

Central

     17,506       6,884        —          —          380       24,770  

Corporate

     (38,788     448        —          1,529        31,101       (5,710
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total Pre-Acquisition (2)

   $ 3,951     $ 20,524      $ —        $ 1,529      $ 31,516     $ 57,520  
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Including Pre-Acquisition/Excluding Divestitures:

               

West

   $ 36,184     $ 12,573      $ —        $ —        $ 65     $ 48,822  

Midwest

     26,637       8,605        15        —          21       35,278  

South

     14,741       11,726        9        —          130       26,606  

East

     41,781       12,503        —          —          16       54,300  

Central

     20,374       9,099        —          —          1,147       30,620  

Corporate

     (48,231     1,723        2,468        5,620        26,109       (12,311
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total Including Pre-Acquisition/Excluding Divestitures (3)

   $ 91,486     $ 56,229      $ 2,492      $ 5,620      $ 27,488     $ 183,315  
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 


     Nine Months Ended September 30, 2019  
     Operating
Income
    Depreciation
and
Amortization
     Stock-based
Compensation
    Transaction
Expenses (6)
     Other (7)     Adjusted
EBITDA
 

Including Divestitures:

              

West

   $ 66,772     $ 40,585      $ —       $ —        $ 474     $ 107,831  

Midwest

     87,066       20,650        29       —          1,025       108,770  

South

     61,723       29,865        11       —          880       92,479  

East

     107,715       36,019        7       —          372       144,113  

Central

     80,896       34,317        —         —          153       115,366  

Corporate

     (53,111     5,446        15,676       21,628        (15,097     (25,458
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total Including Divestitures

   $ 351,061     $ 166,882      $ 15,723     $ 21,628      $ (12,193   $ 543,101  
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Divestitures:

              

East

   $ (91   $ —        $ 7     $ —        $ 46     $ (38
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total Divestitures (4)

   $ (91   $ —        $ 7     $ —        $ 46     $ (38
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Excluding Divestitures:

              

West

   $ 66,772     $ 40,585      $ —       $ —        $ 474     $ 107,831  

Midwest

     87,066       20,650        29       —          1,025       108,770  

South

     61,723       29,865        11       —          880       92,479  

East

     107,806       36,019        —         —          326       144,151  

Central

     80,896       34,317        —         —          153       115,366  

Corporate

     (53,111     5,446        15,676       21,628        (15,097     (25,458
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total Excluding Divestitures (5)

   $ 351,152     $ 166,882      $ 15,716     $ 21,628      $ (12,239   $ 543,139  
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 
     Nine Months Ended September 30, 2018  
     Operating
Income
    Depreciation
and
Amortization
     Stock-based
Compensation
    Transaction
Expenses (6)
     Other (8)     Adjusted
EBITDA
 

Excluding Pre-Acquisition/Including Divestitures:

              

West

   $ 63,898     $ 27,046      $ (32   $ —        $ 704     $ 91,616  

Midwest

     80,725       24,654        90       —          248       105,717  

South

     50,099       26,343        50       —          10,142       86,634  

East

     67,164       15,252        11       —          5,230       87,657  

Central

     2,868       2,215        —         —          767       5,850  

Corporate

     (41,377     3,694        9,526       10,043        (3,710     (21,824
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total Excluding Pre-Acquisition/Including Divestitures

   $ 223,377     $ 99,204      $ 9,645     $ 10,043      $ 13,381     $ 355,650  
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Divestitures:

              

East

   $ 13,262     $ 1,632      $ 11     $ —        $ 4,564     $ 19,469  
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total Divestitures (1)

   $ 13,262     $ 1,632      $ 11     $ —        $ 4,564     $ 19,469  
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Pre-Acquisition:

              

West

   $ 13,635     $ 9,271      $ —       $ —        $ 8     $ 22,914  

Midwest

     —         —          —         —          —         —    

South

     355       6,076        —         —          20       6,451  

East

     46,261       24,444        —         —          159       70,864  

Central

     70,105       22,939        —         —          647       93,691  

Corporate

     (52,127     1,537        —         4,259        31,101       (15,230
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total Pre-Acquisition (2)

   $ 78,229     $ 64,267      $ —       $ 4,259      $ 31,935     $ 178,690  
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Including Pre-Acquisition/Excluding Divestitures:

              

West

   $ 77,533     $ 36,317      $ (32   $ —        $ 712     $ 114,530  

Midwest

     80,725       24,654        90       —          248       105,717  

South

     50,454       32,419        50       —          10,162       93,085  

East

     100,163       38,064        —         —          825       139,052  

Central

     72,973       25,154        —         —          1,414       99,541  

Corporate

     (93,504     5,231        9,526       14,302        27,391       (37,054
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total Including Pre-Acquisition/Excluding Divestitures (3)

   $ 288,344     $ 161,839      $ 9,634     $ 14,302      $ 40,752     $ 514,871  
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 


(1)

Figures are for Presque Isle Downs and Nemacolin for the three and nine months ended September 30, 2018.

(2)

Figures are for Grand Victoria Casino and Tropicana for the three and nine months ended September 30, 2018. Such figures are based on unaudited internal financial statements and have not been reviewed by the Company’s auditors and do not conform to GAAP.

(3)

Total figures for the three and nine months ended September 30, 2018 include combined results of operations for Grand Victoria Casino, Tropicana and the Company and exclude results of operations for Presque Isle Downs and Nemacolin. Such presentation does not conform to GAAP or the Securities and Exchange Commission rules for pro forma presentation; however, we believe that the additional financial information will be helpful to investors in comparing current results with results of prior periods. This is non-GAAP data and should not be considered a substitute for data prepared in accordance with GAAP, but should be viewed in addition to the results of operations reported by the Company.

(4)

Figures are for Presque Isle Downs for the period beginning January 1, 2019 and ending January 11, 2019 and Nemacolin for the period beginning January 1, 2019 and ending March 8, 2019.

(5)

Total figures for 2019 exclude results of operations for Presque Isle Downs and Nemacolin.

(6)

Transaction expenses represent primarily costs related to the pending acquisition of Caesars for the three and nine months ended September 30, 2019 and costs related to the acquisitions of Grand Victoria Casino, Tropicana and Isle for the three and nine months ended September 30, 2018.

(7)

Other, for the three and nine months ended September 30, 2019, is comprised of severance expense, (gain) loss on the sale or disposal of property and equipment, equity in income (loss) of unconsolidated affiliate, impairment charges, pre-opening charges for Tropicana, the (gain) loss associated with the sales of Presque Isle Downs and Nemacolin and selling costs associated with the pending divestitures of Mountaineer, Cape Girardeau, Caruthersville, Kansas City and Vicksburg.

(8)

Other, for the three and nine months ended September 30, 2018 is comprised of severance expense, (gain) loss on the sale or disposal of property and equipment, equity in income (loss) of an unconsolidated affiliate, an impairment charge at Vicksburg, selling costs associated with the divestitures of Presque Isle Downs and Nemacolin, the terminated sale of Vicksburg and the purchase of Grand Victoria Casino.

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