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Category: Stock Market and Eldorado Resorts (ERI)
Date: 17 June 2020 Stock Price: $40.79 We take a look at the 1st quarter earnings report of their 2020 fiscal year of Eldorado Resorts. The casino group has been hit hard by the covid-19 pandemic with lockdowns, stay at home orders and social distancing all having a significant impact on their operations.
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About Eldorado Resorts
Eldorado Resorts is a leading casino entertainment company that owns and operates twenty-three properties in eleven states, including Colorado, Florida, Illinois, Indiana, Iowa, Louisiana, Mississippi, Missouri, Nevada, New Jersey, and Ohio. In aggregate, Eldorado’s properties feature approximately 23,900 slot machines, VLTs and e-tables and approximately 660 table games, and over 11,300 hotel rooms.
Overview of Eldorado's 1st quarter 2020 earnings report
Data below is reported for the latest quarter unless stated otherwise
Net revenue per region for Eldorado Resorts for 1Q 2020: in $ millions
- Revenue: $473.069 million (up from $635.823 billion for the same quarter of the previous year)
- Revenue decreased by -25.6% over the last 12 months
- Total operating expenses: $588.161 million (up from $533.248 million for the same quarter of the previous year)
- Operating expenses increased by 10.4% over the last 12 months
- Net loss: -$175.638 million (down from $38.229 million for the same quarter of the previous year)
- Diluted loss per share: -$2.25 (down from $0.49 for the same quarter of the previous year)
- Diluted weighted-average shares outstanding: 77.954 million (down from 78.589 million for the same quarter of the previous year)
- Cash and cash equivalents: $671.7 million
- Cash and cash equivalents per share: $8.62
- Cash and cash equivalents makes up 21.1% of Eldorado Resorts' market capital
Net revenue per region for Eldorado Resorts for 1Q 2020: in $ millions
- West: 105.490
- Midwest: 60.793
- South: 97.052
- East: 108.056
- Central: 99.705
- Corporate and other: 1.973
- Total: 473.069
Eldorado Resorts management commentary on their 1st quarter 2020 earnings report
RENO, Nev.--(BUSINESS WIRE)-- Eldorado Resorts, Inc. (NASDAQ: ERI) (“Eldorado,” “ERI,” or “the Company”) today reported operating results for the first quarter ended March 31, 2020.
Tom Reeg, Chief Executive Officer of Eldorado Resorts, commented, “Our first quarter operating performance through the end of February 2020 represented a very strong start to the year. For the first two months of 2020, revenues were up 6.6% and adjusted EBITDA was up 24.7%, driving strong margin growth of 390 basis points year over year. We were encouraged by the strength of the consumer and the pace of revenue growth for this two-month period. However, the strength in January and February was offset by COVID-19 related weakness due to the mandated closure of all our properties by March 18, 2020. As a result, Eldorado generated first quarter same-store net revenues of $473.1 million and EBITDA of $102.5 million, down 17.5% and 33.0% year over year, respectively.
Tom Reeg, Chief Executive Officer of Eldorado Resorts, commented, “Our first quarter operating performance through the end of February 2020 represented a very strong start to the year. For the first two months of 2020, revenues were up 6.6% and adjusted EBITDA was up 24.7%, driving strong margin growth of 390 basis points year over year. We were encouraged by the strength of the consumer and the pace of revenue growth for this two-month period. However, the strength in January and February was offset by COVID-19 related weakness due to the mandated closure of all our properties by March 18, 2020. As a result, Eldorado generated first quarter same-store net revenues of $473.1 million and EBITDA of $102.5 million, down 17.5% and 33.0% year over year, respectively.
“Our primary focus since the mandated closure of our properties has been the safety and well-being of our team members and guests. We responded quickly to reduce costs and preserve liquidity following the closures and ended the first quarter of 2020 with over $670 million of cash on the balance sheet after drawing $465 million on our revolver in March. Our full-time team members received four weeks of pay after operations were suspended and we will continue to pay team member health care benefits through June 30, 2020. Compensation for the executive team has been reduced as well.
“We remain actively engaged in satisfying the remaining steps to complete the Caesars transaction. Our teams also remain focused on the integration process and we remain excited about the long-term opportunity to create value for stakeholders of both companies.”
“We have a very strong liquidity position which will allow us to weather the short-term weakness due to COVID-19 mandated closure of our properties. In addition, we continue to expect the announced $230 million sale of our Kansas City and Vicksburg properties to Twin River to close in the current quarter following receipt of customary regulatory approvals,” said Bret Yunker, Chief Financial Officer.
“We remain actively engaged in satisfying the remaining steps to complete the Caesars transaction. Our teams also remain focused on the integration process and we remain excited about the long-term opportunity to create value for stakeholders of both companies.”
“We have a very strong liquidity position which will allow us to weather the short-term weakness due to COVID-19 mandated closure of our properties. In addition, we continue to expect the announced $230 million sale of our Kansas City and Vicksburg properties to Twin River to close in the current quarter following receipt of customary regulatory approvals,” said Bret Yunker, Chief Financial Officer.
Speaking of the Caesars transaction Eldorado proposes issuing secured notes to fund part of it
RENO, Nev.--(BUSINESS WIRE)-- Eldorado Resorts, Inc. (Nasdaq: ERI) (“Eldorado” or the “Company”) today announced that Colt Merger Sub, Inc. (the “Escrow Issuer”), a wholly owned subsidiary of Eldorado, intends to offer, subject to market and other conditions, $3,080.0 million aggregate principal amount of senior secured notes due 2025 (the “ERI Senior Secured Notes”), $1,875.0 million aggregate principal amount of senior notes due 2027 (the “ERI Senior Notes” and, together with the ERI Senior Secured Notes, the “ERI Notes”) and $1,050.0 million aggregate principal amount of senior secured notes due 2025 (the “CRC Senior Secured Notes” and, together with the ERI Notes, the “Notes”) in private placements to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), and to persons outside the United States under Regulation S of the Securities Act.
The offerings of the Notes are part of the financing for the proposed acquisition by Eldorado of all of the issued and outstanding equity interests of Caesars Entertainment Corporation (“Caesars”), a Delaware corporation, pursuant to which the Escrow Issuer will merge with and into Caesars, with Caesars continuing as the surviving corporation and a wholly-owned subsidiary of Eldorado (the “Merger”).
The proceeds of each of the proposed offerings will be placed in escrow pending satisfaction of certain conditions, including, without limitation, the consummation of the Merger. Upon satisfaction of such escrow conditions, (i) with respect to the ERI Notes, Eldorado will assume the Escrow Issuer’s obligations under the ERI Notes and the indentures that will govern the ERI Notes, and certain of Eldorado’s subsidiaries, after giving effect to the Merger (including Caesars and certain of its subsidiaries), will guarantee Eldorado’s obligations under the ERI Notes, and (ii) with respect to the CRC Senior Secured Notes, Caesars Resort Collection, LLC (“CRC”) and CRC Finco, Inc. (“CRC Finco”) will, jointly and severally, assume the Escrow Issuer’s obligations under the CRC Senior Secured Notes, and certain of CRC’s subsidiaries, after giving effect to the Merger will guarantee CRC and CRC Finco’s obligations under the CRC Senior Secured Notes.
Upon satisfaction of the escrow conditions, Eldorado intends to apply the net proceeds of the sale of the ERI Notes and CRC and CRC Finco intend to apply the net proceeds of the sale of the CRC Senior Secured Notes, in each case, together with proceeds of the new CRC incremental term loan, the various real estate related transactions under Eldorado’s master transaction agreement with VICI Properties L.P. and cash on hand, to (i) fund a portion of the consideration for the Merger, (ii) (a) pay in full all amounts outstanding (including all accrued and unpaid interest) and terminate all commitments under Eldorado’s existing credit agreement, (b) repay a portion of the outstanding borrowings under the CRC credit facility, (c) repay (or redeem, repurchase, defease or satisfy and discharge) in full all of Eldorado’s existing senior notes, (d) repurchase certain (but potentially not all) of Caesars’ convertible notes and (e) pay in full all amounts outstanding (including all accrued and unpaid interest) and terminate all commitments under the existing credit agreement of CEOC, LLC and (iii) pay fees and costs related to the foregoing.
The offerings of the Notes are part of the financing for the proposed acquisition by Eldorado of all of the issued and outstanding equity interests of Caesars Entertainment Corporation (“Caesars”), a Delaware corporation, pursuant to which the Escrow Issuer will merge with and into Caesars, with Caesars continuing as the surviving corporation and a wholly-owned subsidiary of Eldorado (the “Merger”).
The proceeds of each of the proposed offerings will be placed in escrow pending satisfaction of certain conditions, including, without limitation, the consummation of the Merger. Upon satisfaction of such escrow conditions, (i) with respect to the ERI Notes, Eldorado will assume the Escrow Issuer’s obligations under the ERI Notes and the indentures that will govern the ERI Notes, and certain of Eldorado’s subsidiaries, after giving effect to the Merger (including Caesars and certain of its subsidiaries), will guarantee Eldorado’s obligations under the ERI Notes, and (ii) with respect to the CRC Senior Secured Notes, Caesars Resort Collection, LLC (“CRC”) and CRC Finco, Inc. (“CRC Finco”) will, jointly and severally, assume the Escrow Issuer’s obligations under the CRC Senior Secured Notes, and certain of CRC’s subsidiaries, after giving effect to the Merger will guarantee CRC and CRC Finco’s obligations under the CRC Senior Secured Notes.
Upon satisfaction of the escrow conditions, Eldorado intends to apply the net proceeds of the sale of the ERI Notes and CRC and CRC Finco intend to apply the net proceeds of the sale of the CRC Senior Secured Notes, in each case, together with proceeds of the new CRC incremental term loan, the various real estate related transactions under Eldorado’s master transaction agreement with VICI Properties L.P. and cash on hand, to (i) fund a portion of the consideration for the Merger, (ii) (a) pay in full all amounts outstanding (including all accrued and unpaid interest) and terminate all commitments under Eldorado’s existing credit agreement, (b) repay a portion of the outstanding borrowings under the CRC credit facility, (c) repay (or redeem, repurchase, defease or satisfy and discharge) in full all of Eldorado’s existing senior notes, (d) repurchase certain (but potentially not all) of Caesars’ convertible notes and (e) pay in full all amounts outstanding (including all accrued and unpaid interest) and terminate all commitments under the existing credit agreement of CEOC, LLC and (iii) pay fees and costs related to the foregoing.
Eldorado Resorts (NASDAQ: ERI) stock price history
The image below, obtained from Google, shows the stock price history of Eldorado Resorts (NASDAQ: ERI) over the last 5 years. And it's been a good time for Eldorado Resort' stockholders. 5 years ago it was trading at around $7.80 and its currently trading at around $40.79 a stock. That's a return of 422% provided to Eldorado stockholders over the last 5 years.
The stock of Eldorado Resorts is trading at a little closer to its 52 week high of $40.79 than it is to its 52 week low of $6.03, which to us is a clear indication that the short term sentiment and momentum of the stock of Eldorado Resorts is neutral to slightly positive at this point in time.
The stock of Eldorado Resorts is trading at a little closer to its 52 week high of $40.79 than it is to its 52 week low of $6.03, which to us is a clear indication that the short term sentiment and momentum of the stock of Eldorado Resorts is neutral to slightly positive at this point in time.
Eldorado Resorts (ERI) vs Century Casinos (CNTY)
The image below shows the stock price performance of Eldorado Resorts (CNTY) and Century Casinos (CNTY) over the last 3 years. The stock of Eldorado Resorts has easily outperformed that of Century Casino's over the three year period. Over the last 3 years the stock of Eldorado (ERI) has increased by 106% while the stock of Century (CNTY) decreased by -26.46% over the same time period.
Recent coverage of Eldorado Resorts (ERI)
The extract below discusses the latest results from United Airlines as obtained from Fool.com
As it moves forward with its plans to acquire and merge with Caesars Entertainment (NASDAQ:CZR), casino giant Eldorado Resorts (NASDAQ:ERI) announced several major moves today to raise additional cash. The company's deal to merge with Caesars, likely to close this month, amounts to a likely $17.5 billion, and will create America's largest gaming enterprise to date. Today, Eldorado announced it's publicly offering 18 million shares of common stock for sale, with an additional 2.7 million shares optionally available to the offering's underwriters for the next 30 days. Eldorado says the money is earmarked for "general corporate purposes."
The company is additionally raising money through a $400 million, five-year mortgage agreement with VICI Properties (NYSE:VICI). Eldorado is taking out the mortgage against the Caesars Forum Convention Center. The mortgage deal will close when Eldorado finishes its merger with Caesars Entertainment, putting it in possession of the Convention Center and thus able to use the property to secure the mortgage.
Once Eldorado and Caesars combine, VICI has also agreed to purchase 23 acres of empty land next to the Las Vegas strip from the company. The price agreed upon is $4.5 million per acre, providing over $100 million and bringing Eldorado's total haul from its dealings with VICI to around half a billion dollars.
Read the full article here
As it moves forward with its plans to acquire and merge with Caesars Entertainment (NASDAQ:CZR), casino giant Eldorado Resorts (NASDAQ:ERI) announced several major moves today to raise additional cash. The company's deal to merge with Caesars, likely to close this month, amounts to a likely $17.5 billion, and will create America's largest gaming enterprise to date. Today, Eldorado announced it's publicly offering 18 million shares of common stock for sale, with an additional 2.7 million shares optionally available to the offering's underwriters for the next 30 days. Eldorado says the money is earmarked for "general corporate purposes."
The company is additionally raising money through a $400 million, five-year mortgage agreement with VICI Properties (NYSE:VICI). Eldorado is taking out the mortgage against the Caesars Forum Convention Center. The mortgage deal will close when Eldorado finishes its merger with Caesars Entertainment, putting it in possession of the Convention Center and thus able to use the property to secure the mortgage.
Once Eldorado and Caesars combine, VICI has also agreed to purchase 23 acres of empty land next to the Las Vegas strip from the company. The price agreed upon is $4.5 million per acre, providing over $100 million and bringing Eldorado's total haul from its dealings with VICI to around half a billion dollars.
Read the full article here
Eldorado Resorts (NASDAQ: ERI) latest stock valuation
So what is United Airlines' stock worth based on the release of their latest earnings report and the fiscal guidance provided by United Airlines? Based on the latest earnings results, and their fiscal guidance our valuation models provide a target (full value) price for United Airlines at $71.10 a United Airlines stock. We therefore believe that the stock is undervalued at its current price of $40.88
We usually suggest long term fundamental or value investors look to enter into a stock at least 10% below our target (full value) price which in this case is $80.10 Therefore we see a good entry point into United Airlines stock at $72.10 or below. Since United Airlines is trading at well below our suggested entry point into the stock we rate United Airlines as a buy. (but this is only for the brave as the airline industry is still in for a very tough time in the next 18 months).
We usually suggest long term fundamental or value investors look to enter into a stock at least 10% below our target (full value) price which in this case is $80.10 Therefore we see a good entry point into United Airlines stock at $72.10 or below. Since United Airlines is trading at well below our suggested entry point into the stock we rate United Airlines as a buy. (but this is only for the brave as the airline industry is still in for a very tough time in the next 18 months).
Next earnings release of Eldorado Resorts
It is expected that Eldorado Resorts will release their 2nd quarter 2020 earnings release towards end August 2020