Red Rock Resorts(US:RRR)2019-05-08 21:20Financial Performance - Net revenues for the three months ended March 31, 2019, increased by 6.2% to $447.0 million compared to $421.0 million in the prior year period [106]. - Operating income decreased by 38.7% to $66.1 million from $107.8 million, primarily due to redevelopment costs at Palms and higher depreciation expenses [108]. - Net revenues for the three months ended March 31, 2019, were $447.0 million, an increase of 6.2% from $421.0 million in the same period of 2018 [125]. - Adjusted EBITDA for the three months ended March 31, 2019, was $145.1 million, up 3.6% from $140.1 million in the prior year [125]. - Net income for the three months ended March 31, 2019, was $20.3 million, a decrease of 75.3% compared to $82.1 million in the same period of 2018 [125]. Revenue Breakdown - Casino revenues increased by 3.7% to $244.9 million, with slot handle up 2.4%, table games drop up 11.3%, and race and sports write up 12.0% [109]. - Food and beverage revenue rose by 15.4% to $104.9 million, driven by new restaurant openings and a 13.0% increase in average guest check [110]. - Room revenues increased by 3.1% to $48.1 million, with an average daily rate (ADR) of $131.38, up 4.6% from the prior year [111]. - Management fee revenue decreased by 6.2% to $23.2 million due to the expiration of a management agreement, partially offset by stronger results from Graton Resort [113]. Expenses and Charges - Depreciation and amortization expenses increased to $50.9 million, up from $43.2 million, due to completed projects at Palace Station and Palms [115]. - Write-downs and other charges increased significantly to $23.7 million from $3.8 million, primarily related to the Palms redevelopment [116]. - Interest expense, net increased to $37.4 million for the three months ended March 31, 2019, from $31.1 million in the same period of 2018, primarily due to higher outstanding indebtedness and variable interest rates [125]. - The company recorded a loss on modification of debt of $0.3 million for the three months ended March 31, 2019, due to an amendment to the credit facility [119]. Cash Flow and Capital Expenditures - Cash flows provided by operating activities were $54.6 million for the three months ended March 31, 2019, down from $106.0 million in the prior year [143]. - Capital expenditures for the three months ended March 31, 2019, were $160.0 million, primarily related to the redevelopment at Palms [144]. - The anticipated uses of cash for the remainder of 2019 include $175.0 million to $225.0 million for maintenance and investment capital expenditures [136]. Financial Position - The company had $109.2 million in cash and cash equivalents at March 31, 2019, with combined borrowing availability under the revolving credit facility of $497.6 million [135]. - As of March 31, 2019, Station LLC's interest coverage ratio was 4.30 to 1.00 and its consolidated total leverage ratio was 5.10 to 1.00, indicating compliance with financial covenants [148]. - Outstanding letters of credit and similar obligations totaled $37.1 million as of March 31, 2019 [149]. - There were no material changes to contractual obligations during the three months ended March 31, 2019 [150]. Development and Legislative Updates - The ongoing $690 million redevelopment project at Palms Casino Resort is on schedule, with phase one completed in May 2018 and further phases expected to finish in 2019 [102]. - Development agreements with the North Fork Rancheria of Mono Indians involve assisting in the development of a gaming and entertainment facility in California [151]. - The Nevada legislature began its current session on February 4, 2019, with no specific proposals to increase taxes on gaming revenue at this time [153]. - No material changes to the terms of indebtedness were reported during the three months ended March 31, 2019 [154]. - The company updated its lease accounting policies as of January 1, 2019, in line with the new lease accounting standard [156]. Market Risks - Market risks related to interest rates, foreign currency exchange rates, and commodity prices have not materially changed since the last report [158].