Business Context and Reporting Period
This Form 8-K, filed on May 30, 2017, by Eldorado Resorts, Inc. (ERI), discloses historical financial data for its newly acquired subsidiary, Isle of Capri Casinos, Inc. ("Isle"). The acquisition was consummated on May 1, 2017. The filing provides unaudited historical net revenues and Adjusted EBITDA for Isle, restated to align with ERI's calendar fiscal quarters to facilitate comparison. The data covers fiscal quarters ending in 2016 and 2017, as well as calendar quarters from March 31, 2016, through March 31, 2017.
Key Financial Metrics
The filing presents unaudited financial data for Isle of Capri Casinos, Inc. in thousands of dollars. Key metrics for the most recent calendar quarter ended March 31, 2017, include:
- Total Net Revenues: $218,022
- Total Adjusted EBITDA: $58,825
- Operating Income: $39,084
Regional performance for the quarter ended March 31, 2017, highlights the following:
- West Region (Black Hawk): Revenues of $32,413; Adjusted EBITDA of $9,591.
- Midwest Region: Combined revenues of approximately $86.9 million; Adjusted EBITDA of approximately $29.4 million.
- South Region: Combined revenues of approximately $70.6 million; Adjusted EBITDA of approximately $19.5 million.
- East Region (Nemacolin): Revenues of $8,727; Adjusted EBITDA of $(162).
The filing does not provide data regarding total debt, liquidity, cash flow, or GAAP net income for the combined entity or the acquired subsidiary.
Material Changes and Trends
Comparing the calendar quarter ended March 31, 2017, to the same period in 2016:
- Revenue Growth: Total net revenues increased from $219,689 in Q1 2016 to $218,022 in Q1 2017, representing a slight decrease of approximately 0.8%.
- Profitability: Total Adjusted EBITDA increased from $56,057 in Q1 2016 to $58,825 in Q1 2017, an increase of approximately 5.0%.
- Operating Income: Operating income improved significantly from $37,090 in Q1 2016 to $39,084 in Q1 2017.
Seasonality is evident in the data, with the South Region (Pompano Park) showing higher revenues and Adjusted EBITDA in the first quarter compared to subsequent quarters in 2016.
Guidance, Outlook, and Risks
The filing contains no forward-looking guidance, outlook, or management commentary regarding future performance. It is strictly a disclosure of historical data pursuant to Regulation FD.
Risks and Contingencies:
- Non-GAAP Measures: Adjusted EBITDA is a non-GAAP financial measure and does not conform to GAAP or SEC rules for pro forma presentation. It excludes capital expenditures, interest payments, income taxes, and debt principal repayments.
- Unaudited Data: The figures are based on unaudited internal financial statements and have not been reviewed by the Company's auditors.
- Regulatory FD: The information is furnished, not filed, and will not be incorporated by reference into registration statements unless specifically identified.
Investor Verification Checklist
- Verify the pro forma financial impact of the Isle of Capri acquisition on Eldorado Resorts' consolidated balance sheet and income statement in subsequent filings.
- Confirm the definition of "Adjusted EBITDA" used by Eldorado Resorts to ensure consistency with industry peers.
- Review the audited financial statements of Isle of Capri for the fiscal year ended April 2017 to validate the unaudited quarterly trends presented here.
- Assess the integration costs and synergies expected from the merger, which are not detailed in this historical data summary.
- Monitor the performance of the Nemacolin property, which consistently reported negative Adjusted EBITDA in the provided periods.