Filing scope and business context
This is Twin River Worldwide Holdings, Inc. (NYSE: TRWH) Form 10-K for the fiscal year ended December 31, 2019, filed March 13, 2020. The filing is not identified as a Bally’s Corp filing; investors should verify the issuer and ticker. The 10-K reports full-year results, with unaudited fourth-quarter figures also provided.
The company operated gaming, hotel, food and beverage, and racing businesses across Rhode Island, Mississippi, Delaware and Colorado. Dover Downs was acquired on March 28, 2019, so its results are included only from that date. The Black Hawk Casinos acquisition closed January 23, 2020, after year-end; the proposed acquisitions of properties in Kansas City and Vicksburg remained pending at filing.
Financial performance
| Metric | FY 2019 | FY 2018 | Change |
|---|---|---|---|
| Revenue | $523.6 million | $437.5 million | +19.7% |
| Income from operations | $114.6 million | $120.6 million | −5.0% |
| Operating margin | 21.9% | 27.6% | −5.7 percentage points |
| Net income | $55.1 million | $71.4 million | −22.8% |
| Net margin | 10.5% | 16.3% | −5.8 percentage points |
| Diluted EPS | $1.46 | $1.87 | Lower year over year |
| Cash from operations | $94.1 million | $109.2 million | −$15.1 million |
Revenue growth primarily reflected Dover Downs, which contributed $80.8 million after acquisition, and the contribution from Tiverton and the new Twin River hotel. Gaming revenue rose 12.3%; food and beverage revenue rose 44.5%, and hotel revenue rose 82.7%. In Rhode Island, increased competition—including Encore Boston Harbor—pressured Twin River Casino Hotel in the second half of 2019; management said Tiverton remained resilient and Biloxi gaming performance was strong.
Profitability weakened as operating costs rose 29.1% to $409.0 million, faster than revenue. Management cited acquisition-related costs, higher payroll and operating expenses, increased corporate and public-company costs, and higher depreciation. Interest expense increased to $39.8 million from $23.0 million, reflecting higher borrowings and interest rates. The 2019 effective tax rate was 26.7%, versus 27.0%.
Fourth-quarter results
| Metric | Q4 2019 | Q4 2018 |
|---|---|---|
| Revenue | $130.4 million | $111.4 million |
| Income from operations | $29.0 million | $34.7 million |
| Net income | $13.4 million | $22.1 million |
| Diluted EPS | $0.40 | $0.57 |
The quarterly comparison is affected by the addition of Dover Downs to the 2019 results; the filing does not provide a directly comparable same-property Q4 result.
Cash, liquidity and debt
- Cash and cash equivalents were $182.6 million at year-end; restricted cash was $2.9 million. Net working capital was $155.2 million, compared with $46.9 million at year-end 2018.
- Operating cash flow was $94.1 million; investing cash outflow was $38.9 million; financing cash inflow was $48.9 million. Capital expenditures were $28.2 million.
- Debt at par totaled $698.5 million: a $298.5 million variable-rate term loan and $400.0 million of 6.75% senior notes due 2027. The term loan’s reported year-end rate was 4.55%. The $250 million revolver had no borrowings outstanding.
- The term loan matures in 2026 and the revolver in 2024. The company reported compliance with debt covenants at December 31, 2019. A 1 percentage-point interest-rate change was estimated to change annual interest expense by approximately $3.0 million.
Outlook, risks and notable items
- No quantified earnings or revenue guidance is provided. Management expected 2020 operating costs to increase with a full year of Dover Downs, the Black Hawk Casinos and, if completed, the Kansas City and Vicksburg acquisitions. It expected 2020 capital expenditures to exceed 2019, including anticipated Kansas City improvements.
- The company said operating cash flows and credit-facility availability should support working capital and capital needs for the foreseeable future, and expected these sources to fund the planned $230 million Kansas City/Vicksburg acquisition. Completion remained subject to conditions, including Missouri regulatory approval.
- Management identified COVID-19 in its forward-looking risk disclosures as a potential threat to consumer spending, operations and liquidity; the filing does not quantify any resulting impact on 2019 results or provide a COVID-specific forecast.
- Other material risks include regional gaming competition, regulatory and tax changes, dependence on Rhode Island gaming arrangements, debt service and refinancing, weather and hurricane exposure at Biloxi, labor and pension obligations, cyber and technology disruptions, and acquisition integration risks.
- In 2019, the company repurchased $223.1 million of shares and paid $7.5 million in cash dividends. It recorded $12.2 million of acquisition, integration and restructuring expense, a $1.7 million debt-extinguishment/modification loss, and a $1.2 million insurance recovery gain. A $250 million capital-return program had $19.7 million remaining at year-end; the board authorized an additional $100 million in February 2020.
- A Rhode Island investigation resulted in the December 2019 indictment of a former non-officer employee, a casino vendor and an associate. The company said it cooperated and that authorities had advised its counsel the company and its employees other than the former employee were not investigation targets. A separate shareholder lawsuit alleged fiduciary breaches; the company disputed the claims and did not expect a material adverse effect.
Important facts for investors to verify
- Confirm the filing issuer: the document is for Twin River Worldwide Holdings, Inc. (TRWH), not Bally’s Corp.
- Assess same-property trends separately from acquisition-driven growth, particularly the Rhode Island competition impact and Dover Downs contribution.
- Review debt terms, variable-rate exposure, covenant restrictions and the funding plan for acquisitions, dividends and capital spending.
- Track regulatory approvals, integration costs and operating performance for Black Hawk and the proposed Kansas City/Vicksburg transaction.
- Monitor COVID-19 effects, gaming-market competition, the Rhode Island regulatory agreement and the disclosed legal matters.