Twin River Reports Fourth Quarter And Full Year 2019 Results

PROVIDENCE, R.I., March 3, 2020 /PRNewswire/ -- Twin River Worldwide Holdings, Inc. (NYSE: TRWH) (the "Company", "Twin River" or "TRWH") today reported its full financial results of operations for the fourth quarter and year ended December 31, 2019.

Fourth Quarter 2019 Compared to the Fourth Quarter 2018

• Revenue increased 17.0% to $130.4 million
• Gross gaming revenue increased 12.9% to $207.2 million⁽¹⁾
• Net income decreased 39.7% to $13.4 million
• Adjusted EBITDA increased 8.7% to $40.2 million⁽¹⁾

Fourth Quarter 2019 Results

Revenue for the fourth quarter of 2019 increased 17.0% to $130.4 million from $111.4 million in the fourth quarter of 2018. This increase was principally driven by the effects of the acquisition of Dover Downs Hotel & Casino ("Dover Downs"), which continued to exceed expectations contributing $27.6 million of revenue to the Company's results. New competition in the New England market, and the associated increases in marketing and promotional activity, continued to negatively impact revenue in the fourth quarter at the Company's Twin River Casino Hotel ("Lincoln"), however, the Company noted that the impacts have moderated and revenue has showed signs of stabilization. Tiverton Casino Hotel ("Tiverton"), which opened in September 2018, continued to demonstrate marked resilience in the face of the new regional competition mentioned above. Also, overall performance at Hard Rock Hotel & Casino Biloxi ("Hard Rock Biloxi") remained strong.

Overall gaming revenue increased $4.7 million, or 5.6%, to $88.5 million, food and beverage revenue increased $7.1 million, or 56.7%, to $19.5 million, and hotel revenue increased $4.5 million, or 78.9%, to $10.2 million, in each case, in the fourth quarter of 2019 compared to the same period in 2018.

Income from operations in the fourth quarter of 2019 decreased $5.7 million, or 16.4%, to $29.0 million compared to $34.7 million for the same period last year. These results were unfavorably impacted by an increase in share-based compensation expense of $9.8 million as $1.0 million of expense was recorded in the fourth quarter of 2019 compared to a benefit of $8.8 million in the prior year, driven by a reduction in the fair value of outstanding liability classified awards as well the timing of grants and the mix of liability classified awards creating expense volatility in 2018, and a decrease in income from operations of $2.2 million in the Rhode Island segment primarily due to the reduction in revenue as a result of new competition in the market noted above, partially offset by cost efficiency measures, particularly in Lincoln.

Partially offsetting these increases in operating expenses was income from operations from Dover Downs, which was acquired in the first quarter of 2019, of $3.4 million, a reduction in acquisition, integration and restructuring expense of $1.4 million year-over-year and a gain related to insurance recovery proceeds received for a damaged roof at the Company's Arapahoe Park for $1.2 million recorded in the fourth quarter of 2019.

Interest expense for the fourth quarter of 2019 increased $4.6 million to $11.4 million compared to the same period last year, as, on May 10, 2019, the Company extended its balance sheet by entering into a new credit facility and issuing $400 million aggregate principal amount of senior notes.

Reflecting the items described above, net income decreased $8.8 million, or 39.7%, to $13.4 million for the fourth quarter of 2019 compared to the same period last year. Adjusted EBITDA for the fourth quarter of 2019 was $40.2 million, an increase of $3.2 million, or 8.7%, from $37.0 million in the same period in 2018.

Diluted EPS for the fourth quarter was $0.40 per share compared to $0.63 in the same period last year. The decrease in diluted EPS was a result of the above-described factors. The Company's repurchase of shares of its common stock as described below also meaningfully impacted the reported earnings per share. Adjusted EPS was $0.42 for the fourth quarter of 2019 compared to $0.78 for the fourth quarter of 2018.

Balance Sheet and Liquidity

The Company had $182.6 million in cash and cash equivalents, excluding restricted cash, at December 31, 2019. As previously announced, during the second quarter of 2019 the Company completed a debt financing with a $300 million term loan, $250 million revolving credit facility and $400 million of senior unsecured notes. Outstanding indebtedness at the end of the fourth quarter of 2019, before the impact of $12.9 million of unamortized deferred financing fees and $2.0 million of unamortized original issue discount, totaled $698.5 million.

During the fourth quarter of 2019, the Company continued to use proceeds from its debt refinancing for shareholder return efforts, which included the payment of a cash dividend of $0.10 per share of common stock ("Dividend") on October 25, 2019, for total cash dividends of $7.6 million returned to shareholders during 2019. During the fourth quarter, the Company repurchased 2,486,668 shares of its common stock for approximately $60.0 million, for a total of 9,063,350 shares repurchased, for approximately $222.7 million for 2019, inclusive of 2,504,971 shares repurchased under a modified Dutch auction tender offer ("Offer") on July 26, 2019. The Dividend, Offer and share repurchases were components of the Company's previously announced capital return program and were funded with cash on hand. As of December 31, 2019, the Company had approximately $19.7 million available for use under its capital return program.

On February 10, 2020 the Company announced that its Board of Directors approved an increase in its previously announced capital return program of $100 million, allowing for the continuation of opportunistic stock repurchases and other potential returns of capital. Prior to this increase, the Company had approximately $6.2 million remaining available under the $250 million program as of January 31, 2020.

As previously noted, under the return of capital plan, stock repurchases may be effected in various ways, which could include open-market or private repurchase transactions, accelerated stock repurchase programs, tender offers or other transactions. The amount, timing and terms of any return of capital transaction will be determined based on prevailing market conditions and other factors. Twin River expects to fund any additional share repurchases and dividends from its existing capital resources. There is no fixed time period to complete stock repurchases.

Quarterly Dividend

On February 24, 2020, the Company's Board of Directors declared a cash dividend of $0.10 per common share payable on March 20, 2020 to all shareholders of record as of the close of business on March 6, 2020.

2020 Earnings Guidance

The Company is reaffirming the guidance for 2020 it previously provided on February 10, 2010. The Company estimates Adjusted EBITDA for 2020 to be approximately $180 million, an increase of 8% over the same period in 2019. The Company anticipates that its annualized run-rate for Adjusted EBITDA coming out of 2020 will be approximately $190 million. The Company's guidance is based on current plans and expectations, contains a number of assumptions and includes the impact of its pending acquisition of properties in Kansas City, Missouri and Vicksburg, Mississippi from Eldorado Resorts, Inc., which the Company expects will be consummated in the second quarter of 2020 pending regulatory approval in Missouri. The guidance is subject to a number of known and unknown uncertainties and risks, including those set forth below under "Forward-Looking Statements".

Fourth Quarter Conference Call 

The Company previously held a conference call and audio webcast to review its preliminary results for 2019 and guidance for 2020 on February 11, 2020. An online archive of the webcast is available on the Company's website. Supplemental materials, which have been updated to reflect the actual results of the quarter reported herein, have been posted to the Investors section of the website, under Events & Presentations.

Reconciliation of GAAP Measures to Non-GAAP Measures

To supplement the financial information presented on a generally accepted accounting principles ("GAAP") basis, the Company has included in this earnings release non-GAAP financial measures for Adjusted EBITDA, Adjusted EBITDA margin, gross gaming revenue and adjusted earnings per diluted share, which exclude certain items described below. This release also includes estimated levels of Adjusted EBITDA. The Company believes these measures represent important measures of financial performance that provide useful information that is helpful in understanding the Company's ongoing operating results. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for any measure prepared in accordance with GAAP. The reconciliations of these non-GAAP financial measures to their comparable GAAP financial measures are presented in the tables appearing below.

"Adjusted EBITDA" is earnings for the Company, or where noted the Company's reporting segments, before, in each case, interest expense, net of interest income, provision for income taxes, depreciation and amortization, non-operating income, acquisition, integration and restructuring expense, expansion and pre-opening expenses, Newport Grand disposal loss, share-based compensation, professional and advisory fees associated with capital return program, credit agreement amendment expenses, gains on insurance recoveries, pension withdrawal expense and certain other gains or losses as well as, when presented for the Company's reporting segments, an adjustment related to the allocation of corporate cost among segments. Adjusted EBITDA margin is measured as Adjusted EBITDA as a percentage of revenue.

"Gross gaming revenue" represents total gaming revenue adjusted for the State of Rhode Island's and the State of Delaware's shares of net terminal income, table games revenue and other gaming revenue, and is being presented by the Company to reflect the unique structure of the Company's operations in those states where the state's share of the Company's revenues is retained at the gross revenue level rather than through taxes. Management believes that the presentation of gaming revenue on a gross basis allows for comparisons to gross gaming win data provided throughout the gaming industry.

"Adjusted EPS" represents net income applicable to common stockholders per diluted share before deemed dividends related to changes in fair value of common stock subject to possible redemption, acquisition, integration and restructuring expense, Newport Grand disposal loss, credit agreement amendment expense, gains on insurance recoveries, pension withdrawal, expansion and pre-opening expenses, professional and advisory fees associated with capital return program and certain other gains or losses.

Management has historically used Adjusted EBITDA, Adjusted EBITDA margin and Adjusted EPS when evaluating operating performance because the Company believes that the inclusion or exclusion of certain recurring and non-recurring items is necessary to provide a full understanding of the Company's core operating results and as a means to evaluate period-to-period performance. Management also believes that Adjusted EBITDA is a measure that is widely used for evaluating operating performance of companies in our industry and a principal basis for valuing resort and gaming companies like the Company. Management of the Company believes that while certain items excluded from Adjusted EBITDA and Adjusted EPS may be recurring in nature and should not be disregarded in evaluating the Company's earnings performance, it is useful to exclude such items when comparing current performance to prior periods because these items can vary significantly depending on specific underlying transactions or events that may not be comparable between the periods presented or they may not relate specifically to current operating trends or be indicative of future results. Neither Adjusted EBITDA nor Adjusted EPS should be construed as an alternative to GAAP net income or GAAP diluted EPS, respectively, as an indicator of the Company's performance. In addition, Adjusted EBITDA or Adjusted EPS as used by the Company may not be defined in the same manner as other companies in the Company's industry, and, as a result, may not be comparable to similarly titled non-GAAP financial measures of other companies.

The Company does not provide reconciliations of Adjusted EBITDA to net income on a forward-looking basis to its most comparable GAAP financial measure because the Company is unable to forecast the amount or significance of certain items required to develop meaningful comparable GAAP financial measures without unreasonable efforts. These items include accelerated depreciation, impairment charges, gains or losses on retirement of debt, acquisition, integration and restructuring expenses, share-based compensation expense, variations in effective tax rate and expansion and pre-opening expenses, which are difficult to predict and estimate and are primarily dependent on future events, but which are excluded from the Company's calculations of Adjusted EBITDA. The Company believes that the probable significance of providing these forward-looking non-GAAP financial measures without a reconciliation to the most directly comparable GAAP financial measure, is that investors and analysts will have certain information that the Company believes is useful and meaningful regarding its completed and proposed acquisitions and the estimated impact on those businesses' results from the anticipated changes the Company is likely to make, or has made, to their operations, but will not have that information on a GAAP basis. Investors are cautioned that the Company cannot predict the occurrence, timing or amount of all non-GAAP items that may be excluded from Adjusted EBITDA in the future. Accordingly, the actual effect of these items, when determined could potentially be significant to the calculation of Adjusted EBITDA.

About Twin River Worldwide Holdings, Inc.

Twin River Worldwide Holdings, Inc. owns and manages seven casinos, two in Rhode Island, one in Mississippi, one in Delaware, and three casinos as well as a horse racetrack that has 13 authorized OTB licenses in Colorado. Properties include Twin River Casino Hotel (Lincoln, RI), Tiverton Casino Hotel (Tiverton, RI), Hard Rock Hotel & Casino (Biloxi, MS), Dover Downs Hotel & Casino (Dover, DE), Golden Gates Casino (Black Hawk, CO), Golden Gulch Casino (Black Hawk, CO), Mardi Gras Casino (Black Hawk, CO), and Arapahoe Park racetrack (Aurora, CO). Its casinos range in size from 695 slots and 17 table games combined for its Colorado facilities to properties with over 4,100 slots, approximately 125 table games, and 48 stadium gaming positions, along with hotel and resort amenities. Its shares are traded on the New York Stock Exchange under the ticker symbol "TRWH."

Forward-Looking Statements

This communication contains "forward-looking" statements as that term is defined in Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended and the Private Securities Litigation Reform Act of 1995. All statements, other than historical facts, including future financial and operating results and the Company's plans, objectives, expectations and intentions, legal, economic and regulatory conditions are forward-looking statements.

Forward-looking statements are sometimes identified by words like "may," "will," "should," "potential," "intend," "expect," "endeavor," "seek," "anticipate," "estimate," "overestimate," "underestimate," "believe," "could," "project," "predict," "continue," "target" or other similar words or expressions. Forward-looking statements are based upon current plans, estimates and expectations that are subject to risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements. The inclusion of such statements should not be regarded as a representation that such plans, estimates or expectations will be achieved. Important factors that could cause actual results to differ materially from such plans, estimates or expectations include, among others, (1) unexpected costs, charges or expenses resulting from the recently completed acquisition of three properties in Black Hawk, Colorado and the proposed acquisition of properties in Kansas City, Missouri and Vicksburg, Mississippi; (2) uncertainty of the expected financial performance of the Company, including the failure to realize the anticipated benefits of its acquisitions; (3) the Company's ability to implement its business strategy; (4) the risk that stockholder litigation may result in significant costs of defense, indemnification and/or liability; (5) evolving legal, regulatory and tax regimes; (6) changes in general economic and/or industry specific conditions, including a decrease in customer visits or employee shortages as a result of the ongoing effects of the coronavirus; (7) the effects of competition that exists in the gaming industry; (8) actions by third parties, including government agencies; (9) the risk that the proposed acquisitions of properties in Kansas City, Missouri and Vicksburg, Mississippi, and the proposed enhancements to those properties and their operations, may not be completed on the terms or in the time frame expected, or at all; (10) the risks related to the Company's announcement of the proposed partnering with IGT Global Services ("IGT") to create a new company jointly owned by the Company and IGT that will focus on creating and maintaining a competitive gaming machine offering, (11) the possibility that the anticipated operating results and other  benefits of the proposed joint venture with IGT and proposed agreement with the State of Rhode Island related thereto are not realized when expected or at all or that the proposed joint venture is not consummated, and (12) other risk factors as detailed under Part I. Item 1A. "Risk Factors" of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2018 as filed with the Securities and Exchange Commission on April 1, 2019. The foregoing list of important factors is not exclusive. Any projections of future results of operations are based on a number of assumptions, many of which are outside the Company's control and should not be construed in any manner as a guarantee that such results will in fact occur. These projections are subject to change and could differ materially from final reported results. Any forward-looking statements speak only as of the date of this communication. The Company does not undertake any obligation to update any forward-looking statements, whether as a result of new information or development, future events or otherwise, except as required by law. Readers are cautioned not to place undue reliance on any of these forward-looking statements.

SOURCE Twin River Worldwide Holdings, Inc.