Eldorado Resorts says Q4 is looking strong
Eldorado Resorts delivered a message to its investors that few of its larger gaming rivals can emulate right now.
Things are going really well.
The Reno-based gaming operator is enjoying the benefits of a strong U.S. economy while its bigger peers are getting battered by headwinds in Macau and slow growth on the Strip.
“We are just really kicking a— this quarter,” Chief Financial Officer Tom Reeg told investors on a conference call Thursday about the outlook for the fourth quarter. “Our customer feels strong.”
Reeg said the fourth quarter is having its best performance, so far, since he joined in 2014 and that cash flow growth has accelerated compared to the third quarter.
The company will use some of the money to buy back $150 million of its shares, or about 5 percent.
Reeg’s remarks and the buyback helped drive Eldorado shares in the after hours market. The stock popped $3.36, or 8.6 percent, to $42.25 after the close of trading.
Eldorado on completed the $1.85 billion purchase of Tropicana Entertainment Oct. 1,widening its footprint to 28 properties in 13 states.
It was its second large-scale acquisition of a gaming company in 17 months following the $1.7 billion purchase of Isle of Capri Casinos in May 2017.
Eldorado initially expected cost savings of $40 million in the first year following the Tropicana deal. Reeg said Thursday the company will “dramatically outperform” that target.
When asked whether there were any more potential acquisitions in the pipeline, Reeg said Eldorado is “not actively chasing” any assets.
Eldorado expects the legalization of sports betting around the country to drive more visitors to its properties.
Q3 performance
Eldorado reported net revenues of $487 million in the third quarter, up 3 percent compared with the same period last year.
The revenue growth was completely driven by the acquisition of Grand Victoria Casino. Excluding the purchase of the Illinois property, Eldorado revenue would have been down 2 percent.
However the company’s adjusted cash flow surged 16 percent to $134 million, driven by cost savings.
Net income rose 27 percent to $37.7 million for the quarter, or 48 cents per diluted share.
Contact Todd Prince at 702-383-0386 or tprince@reviewjournal.com. Follow @toddprincetv on Twitter.
