Twin River Announces Third Quarter 2019 Results

PROVIDENCE, R.I., Nov. 14, 2019 /PRNewswire/ -- Twin River Worldwide Holdings, Inc. (NYSE: TRWH) (the "Company", "Twin River" or "TRWH") today reported financial results for the third quarter ended September 30, 2019.

Third Quarter 2019 Compared to Third Quarter 2018

• Revenue increased 17.0% to $129.3 million
• Dover Downs exceeded expectations with $25.9 million of revenue
• Gross gaming revenue increased 13.6% to $206.1 million⁽¹⁾
• Net income of $7.0 million and adjusted EBITDA of $35.6 million⁽¹⁾ both represented decreases year-over-year

Summary of Financial Results

"I am very pleased that our proven corporate strategy of accretive growth, continued diversification of our portfolio and a meaningful return of capital to shareholders, continues to generate value for our stakeholders," said George Papanier, President and Chief Executive Officer. "While we experienced the anticipated short-term impacts of new competition at our Twin River Casino Hotel in the quarter, we continued to reap the benefits of our disciplined M&A strategy, with Dover Downs and Tiverton both performing extremely well this quarter. Our overall plan is on-track and the long-term value proposition we have laid out for our investors remains intact."

Third Quarter 2019 Results

Revenue for the third quarter of 2019 increased 17.0% to $129.3 million from $110.5 million in the third quarter of 2018. The increase in revenue year-over-year was principally driven by the effects of the acquisition of Dover Downs Hotel & Casino ("Dover Downs"), which continued to exceed expectations contributing $25.9 million of revenue to the Company's results for the third quarter. New competition in the New England market, and the associated increases in marketing and promotional activity, significantly impacted revenue in the third quarter at Twin River Casino Hotel ("Lincoln"). The Company expects this unusually high level of competitive market activity to moderate over time and is responding with new initiatives of its own, the combination of which the Company believes will result in recaptured market share over time. 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 $6.2 million, or 7.6%, to $88.3 million, food and beverage revenue increased $5.9 million, or 48.8%, to $18.1 million, and hotel revenue increased $5.4 million, or 94.7%, to $11.1 million, in each case, in the third quarter of 2019 compared to the same period in 2018.

Income from operations in the third quarter 2019 decreased $8.2 million, or 27.7%, year-over-year to $21.5 million primarily due to the reduction in revenue at Lincoln as noted above. Additionally, operating income was unfavorably impacted by the following:

• increased share-based compensation expense of $4.7 million as a benefit of $3.7 million was recorded in the prior year comparable period, which was driven by a reduction in the fair value of outstanding liability classified awards, compared to expense of $1.0 million in the current year quarter;
• increased depreciation and amortization expense of $3.1 million driven by Tiverton, which opened in the third quarter last year, the hotel at Lincoln and the addition of Dover Downs;
• professional and advisory fees of $1.8 million incurred during the current quarter associated with the Company's capital return program; and
• increased corporate wage expense of $0.6 million, reflecting the Company's corporate investment in preparation of future growth and additional costs incurred by the Company to meet reporting requirements associated with being a publicly traded company.

Partially offsetting these operating expense increases was a reduction in acquisition, integration and restructuring expense and expansion and pre-opening costs of  $3.9 million year-over-year.

Interest expense for the third quarter increased $6.1 million to $11.5 million 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 and an increase in the effective tax rate year over year, net income for the third quarter 2019 decreased $9.4 million, or 57.3%, to $7.0 million. Adjusted EBITDA for the third quarter 2019 was $35.6 million, a decrease of $5.9 million, or 14.1%, from $41.5 million in the third quarter 2018.

Diluted EPS for the third quarter of 2019 was $0.18 per share compared to $0.45 in the comparable period in 2018 and was impacted by the above-described factors and the Company's repurchase of shares of its common stock as described below. Adjusted EPS was $0.27 for the third quarter of 2019 compared to $0.60 for the same period in  2018.

Balance Sheet and Liquidity

The Company had $232.6 million in cash and cash equivalents, excluding restricted cash, at September 30, 2019. As previously announced, during the second quarter the Company completed its 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 third quarter 2019, before the impact of $12.9 million of unamortized deferred financing fees and $2.1 million of unamortized original issue discount, totaled $699.3 million.

During the third quarter of 2019, the Company used 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 July 23, 2019 for an aggregate $4.1 million and the completion of a modified Dutch auction tender offer ("Offer") on July 26, 2019 which resulted in the repurchase of 2,504,971 shares of the Company's common stock for cash at a price of $29.50 per share for an aggregate purchase price of $73.9 million. During the third quarter, the Company also repurchased 4,071,711 shares of its common stock for approximately $88.8 million. 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 September 30, 2019, the Company had approximately $83.2 million available for use under its capital return program.

Previously Announced Acquisitions

Black Hawk, Colorado

On January 29, 2019, the Company entered into an agreement to acquire a subsidiary of Affinity Gaming that owns three casino properties located in Black Hawk, Colorado: Golden Gates, Golden Gulch and Mardi Gras. Pending regulatory approval, and the satisfaction of other customary closing conditions, the transaction is expected to close in early 2020. On November 5, 2019, Proposition DD was passed by the voters of Colorado, legalizing sports gambling in the state. As a  result of this new legislation, when the expected acquisition of the three facilities in Colorado closes, which the Company expects will occur in early 2020, the Company will acquire the right to three sports gaming licenses in Colorado.

Isle of Capri Kansas City and Lady Luck Vicksburg

On July 10, 2019, the Company entered into a definitive agreement to acquire the operations and real estate of Isle of Capri Kansas City and Lady Luck Vicksburg from Eldorado Resorts, Inc. in a cash transaction for $230 million, subject to certain customary post-closing adjustments. The transaction is subject to the satisfaction of certain customary closing conditions, including approval by the gaming regulators in Mississippi (which was received in October 2019) and Missouri, and is expected to close in early to mid 2020.

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. 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 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, 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, 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.  

Third Quarter Conference Call

The Company's third quarter 2019 earnings conference call and audio webcast will be held today, Thursday, November 14, 2019, at 5:00 PM EST. To access the conference call, please dial (877) 791-0146 (U.S. toll-free) and reference conference ID number 2347243. The webcast of the call will be available to the public, on a listen-only basis, via the Internet at the Investors section of the Company's website at www.twinriverwwholdings.com. An online archive of the webcast will be available on the Company's website for 120 days. Supplemental materials have also been posted to the Investors section of the website, under Events & Presentations.

About Twin River Worldwide Holdings, Inc.

Twin River Worldwide Holdings, Inc. owns and manages four casinos, two in Rhode Island, one in Mississippi, and one in Delaware, as well as a Colorado horse race track that has 13 authorized OTB licenses. 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) and Arapahoe Park racetrack (Aurora, CO). Its casinos range in size from 1,000 slots and 32 table games 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."

Investor Contact
Steve Capp
Executive Vice President and Chief Financial Officer
401-475-8564
InvestorRelations@twinriver.com

Media Contact
Liz Cohen
Kekst CNC
212-521-4845
Liz.Cohen@kekstcnc.com

Forward-Looking Statements

This communication contains "forward-looking" statements within the meaning of 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 and any assumptions underlying any of the foregoing, 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) the effects of competition that exists in the gaming industry; (2) unexpected costs, charges or expenses resulting from the acquisition of Dover Downs and other proposed transactions; (3) uncertainty of the expected financial performance of the Company, including the failure to realize the anticipated benefits of its acquisitions; (4) the Company's ability to implement its business strategy; (5) the risk that litigation may result in significant costs of defense, indemnification and/or liability; (6) evolving legal, regulatory and tax regimes; (7) changes in general economic and/or industry specific conditions; (8) actions by third parties, including government agencies; (9) the risk that the Company's proposed acquisitions may not be completed on the terms or in the time frame expected, or at all; (10) risks related to the Company's announcement that it and a consortium of partners are seeking to potentially bid on the State of Rhode Island's lottery contract should the state open the contract up for public bid; and (11) 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 forward-looking statements speak only as of the date of this communication. TRWH 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.