Eldorado grows EBITDA 4 percent in fourth quarter

March 10, 2017 3:05 PM
  • Aaron Stanley
March 10, 2017 3:05 PM
  • Aaron Stanley

Eldorado Resorts posted 4 percent EBITDA growth during the fourth quarter while net revenues checked in below expectations and down roughly the same amount, the company reported Thursday afternoon.

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Adjusted EBITDA for the quarter checked in at $34 million, a $2 million jump from the period year period. Net revenues fell from $214 million to $206 million. Operating income was flat at $13 million, and earnings per share checked in at $0.02 – $0.05 below the consensus estimate.

“Eldorado’s fourth quarter 3.9% year-over-year increase in Adjusted EBITDA and 110 basis point improvement in our property operating margin to 18.0% reflects our focus on profitable revenue and operational execution,” said Gary Carano, Eldorado’s chairman and chief executive officer.

“We achieved improved operating results despite a tepid operating environment, including the impact of weather disruption at our Eastern properties, which led to a 3.7% decline in total revenues,” he continued.

For the full year 2016, net revenues ticked down by 1 percent from 2015 to $893 million while adjusted EBITDA grew 5 percent to $168 million.

“Our focus on driving margins and Adjusted EBITDA growth is similarly reflected in our full year 2016 performance as Adjusted EBITDA increased 4.8% and the full year property operating margin rose 110 basis points to 20.5% on essentially flat revenues,” Carano said. “Our three largest operations continue to be key drivers of our business and are offsetting temporary property-specific challenges at our Eastern properties.”

Carano noted that EBITDA grew 30 percent in the fourth quarter at Eldorado’s three properties in Reno, 2.3 percent at Scioto Downs in Ohio and 4.7 percent at Shreveport. Taken together, these facilities generated a 13 percent year-on-year increase on top of just a 2 percent increase in revenue.

Eldorado also gave an update on the $1.7 billion acquisition of Isle of Capri Casinos, which remains scheduled to close in the second quarter of 2017. The combined enterprise will offer roughly 20,000 slot machines and video lottery terminals, 550 table games and 6,500 hotel rooms across ten states.

“The Isle of Capri acquisition is a transformational growth opportunity for Eldorado which will substantially increase the scale of our gaming operations while further diversifying Eldorado’s geographic reach and Adjusted EBITDA mix,” said Carano.

Shareholders of both Eldorado and Isle and Capri approved the deal in late January.

Concurrent with the acquisition, Eldorado emphasized that it is taking steps to reducing its debt load and strengthening its balance sheet.

“We continue to focus on the strength of our balance sheet and capital structure and access to capital at attractive rates,” said Tom Reeg, President and Chief Financial Officer of Eldorado.

“Reflecting this focus, we reduced debt by $68.8 million in 2016 and ended the year with trailing twelve month consolidated gross leverage ratio of 4.9x compared to 5.6x at the end of 2016,” he added. “In addition, we expect that the combined Eldorado/Isle of Capri will generate free cash flow that will provide the flexibility to reduce leverage, fund the facility enhancement plan across our portfolio and evaluate additional accretive strategic growth investments.”