Red Rock Resorts(RRR) - 2018 Q4 - Annual Report

Financial Performance - Net revenues for the year ended December 31, 2018, were $1,681,030, an increase from $1,642,139 in 2017, representing a growth of approximately 2.4%[286] - Operating income rose to $372,208 in 2018 from $331,281 in 2017, reflecting an increase of about 12.3%[286] - Net income attributable to Red Rock Resorts, Inc. was $157,541 for 2018, significantly up from $35,423 in 2017, marking a growth of approximately 344%[286] - Adjusted EBITDA for 2018 was $508.9 million, up from $497.2 million in 2017, indicating a growth of about 2.5%[341] - The Las Vegas operations segment generated revenues of $1,588.0 million in 2018, compared to $1,518.4 million in 2017, representing an increase of approximately 4.6%[341] Assets and Liabilities - Total assets increased to $4,009,526 in 2018 from $3,620,121 in 2017, indicating a growth of about 10.8%[286] - Total debt rose to $2,855,359 in 2018, up from $2,617,822 in 2017, representing an increase of approximately 9.1%[286] - The carrying amount of property and equipment was approximately $3.0 billion, representing about 75.1% of total assets as of December 31, 2018[381] - Goodwill totaled $195.7 million at December 31, 2018, with approximately 86.8% associated with one property[386] - The liability under the Tax Receivable Agreement (TRA) as of December 31, 2018, was $24.9 million, with future payments expected to be substantial[408] Revenue Breakdown - Casino revenues increased by $54.3 million to $940.5 million in 2018, driven by increased gaming volume, with slot handle up 2.9% and table games drop up 11.0%[307] - Food and beverage revenues for 2018 reached $381.2 million, a 4.3% increase from $365.4 million in 2017, attributed to new restaurant openings[309] - Room revenues decreased by 4.6% to $170.8 million in 2018, impacted by construction disruptions and a reduction in available rooms at Palace Station[311] - Other revenues increased by 8.5% to $100.9 million in 2018, primarily due to additional entertainment offerings[314] Expenses - SG&A expenses rose by 2.5% to $390.5 million in 2018, mainly due to higher employee-related expenses[319] - Depreciation and amortization expense increased to $180.3 million in 2018, reflecting higher depreciation for Palms and Palace Station[321] - Write-downs and other charges, net totaled $34.7 million in 2018, including $19.0 million related to Palms redevelopment expenses[322] Cash Flow and Capital Expenditures - Net cash provided by operating activities for 2018 was $346.0 million, an increase from $290.0 million in 2017, impacted by a $41.8 million decrease in management fees[357] - Total capital expenditures for 2018 amounted to $579.3 million, primarily for renovation projects and slot machine purchases[360] - During 2018, the company incurred net borrowings of $245.0 million under the revolving credit facility, mainly to fund capital expenditures[361] Tax and Interest - The company recognized a total income tax expense of $23.9 million in 2018, a significant decrease from $134.8 million in 2017, largely due to the impacts of the Tax Cuts and Jobs Act[334] - Interest expense, net for 2018 was $143.1 million, an increase from $131.4 million in 2017, primarily due to higher outstanding indebtedness and interest rates[328] Development Projects - The ongoing $690 million redevelopment project at Palms is on schedule, with phase one completed in May 2018 and phase two expected to finish in Q2 2019[297] - The company has development and management agreements with the Mono tribe to assist in developing a gaming and entertainment facility, with a land purchase option valued at $57.3 million[373] Financial Ratios and Covenants - The interest coverage ratio was 4.40 to 1.00 and the consolidated total leverage ratio was 5.00 to 1.00 as of December 31, 2018, indicating compliance with financial covenants[367] Shareholder Returns - The company declared cash dividends of $0.40 per common share in 2018, consistent with the previous year[286] - An equity repurchase program was approved in February 2019, allowing for the repurchase of up to $150 million of Class A common stock[353] Risk Management - The company is self-insured for certain liabilities, with reserves based on historical loss experience and expected costs per claim[395] - Interest rate swaps are used to hedge exposure to variability in future cash flows related to interest payments on debt, recognized at fair value on the balance sheet[396] - The company is involved in various lawsuits and assesses potential liabilities, accruing losses when probable and estimable[399] Tax Positions - No liability for unrecognized tax benefits was required as of December 31, 2018, indicating no significant tax positions expected to incur liabilities in the next twelve months[405] - Interest and penalties related to income taxes have not been incurred in any presented periods[406]