Eldorado Resorts continues to move toward its blockbuster $17.3 billion merger with Caesars Entertainment, but third-quarter results constituted a hiccup — earnings per share and revenue both missed forecasts.
In a statement Wednesday, Reno-based Eldorado said its net income was $37.1 million, or 47 cents per diluted share for the three months ended Sept. 30, down from net income of $37.7 million, or 48 cents per diluted share, a year earlier.
Analysts surveyed by Zacks Investment Research had, on average, forecast Eldorado to earn 62 cents per share in the quarter.
Earnings before interest, taxes, depreciation and amortization, a cash flow measure that excludes one-time costs, rose 47.5 percent to $197.8 million from $134.1 million.
Revenue rose 36.1 percent to $663.2 million from $487.3 million, but missed the $674.7 million consensus expectation of Zacks-polled analysts.
The Press of Atlantic City reported in mid-October that New Jersey gaming regulators will meet Nov. 15 to vote on the proposed Caesars-Eldorado deal, which, if approved, would create the country’s largest gaming operator. The two companies also, the Press reported, described an 11-member executive board that would include six representatives from Eldorado and five from Caesars.
New Jersey gaming regulators could consider the merger petition, filed in September, as early as January, sources told the Press.
“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,” Eldorado CEO Tom Reeg said in a statement accompanying the earnings news. “We are increasingly excited about the opportunity to combine best practices from each company.
“We remain confident that the national, multibrand 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,” he added.
Eldorado officials ticked off positives in the statement. Sports betting launched at six properties in Iowa, Indiana and Mississippi, bringing the count of Eldorado casinos offering sports betting to 13. Eldorado also repaid $70 million in debt during the third quarter and has reduced debt by more than $300 million year-to-date.
Nevertheless, net revenue fell for properties in all of Eldorado’s regions — West Region (down 5 percent), Midwest Region (down 3.9 percent), South Region (down 10.6 percent), East Region (down 1.1 percent) and Central Region (down 2.4 percent.)
Also, a May Securities and Exchange Commission filing has sparked lawsuits from several law firms representing shareholders.
In the filing, Eldorado revealed that Reeg, Chief Operating Officer and President Anthony Carano, Executive Chairman Gary Carano and board member James Hawkins were subpoenaed relating to an investigation of the executives trading in an undisclosed company tied to Hawkins. The New York Post has reported that the undisclosed company was IRadimed Corp, a Winter Springs, Florida, maker of IV infusion pumps and MRI patient monitors.
In a statement Monday, the Los Angeles-based Schall Law Firm noted that Eldorado shares fell 8 percent the day the filing was revealed and encouraged investors who’d lost $100,000 or more as a result to join the lawsuit.
Roth Capital Partners analyst David Bain told the Las Vegas Review-Journal in September that the subpoenas probably won’t stall the merger. In an investors note the newspaper highlighted, Bain said New Jersey OK’d Eldorado’s acquisition of the Tropicana Atlantic City and licensed Reeg a month after they’d learned of the SEC inquiry.
Eldorado shares rose 75 cents, or 1.62 percent, to close at $46.91 in regular trading on the Nasdaq, but fell after hours, dipping 11 cents, or 0.23 percent, to reach $46.80 at 5 p.m. PST. The share price has risen 23.6 percent in 2019.
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