LAS VEGAS, Aug. 3 /PRNewswire-FirstCall/ -- Riviera Holdings Corporation (AMEX:RIV) today reported financial results for the three and six-month periods ended June 30, 2007. The Company reported record net income, Adjusted EBITDA (1), as defined below, and operating income for the second quarter and six months ended June 30, 2007.
Second Quarter 2007 Net revenues for the quarter were $53.7 million, an increase of $1.2 million or 2.3 percent from the second quarter of 2006. Income from operations was $9.4 million, up $2.5 million or 36.9 percent from the second quarter of 2006. Included in income from operations in the second quarter of 2007 was $354,000 in equity-based compensation costs related to stock option expense compared with $190,000 in 2006, and $238,000 of mergers, acquisitions and development costs in 2007 compared with $761,000 in 2006. Adjusted EBITDA (1) was $13.3 million in the second quarter of 2007 compared with $11.0 million in 2006. Adjusted EBITDA consists of earnings before interest, income taxes, depreciation, amortization, equity-based compensation, asset impairments, and mergers, acquisitions and development costs, as shown in the reconciliation with net income in the tables of this release (See Notes 1 and 2 to the Financial Summary table). Net income for the quarter was a record $3.6 million, or $0.28 per share on a diluted basis, an increase of $3.2 million from the second quarter of 2006. Net income included the effects of the increase in interest expense, offset by the favorable effect of $827,000 recorded as a gain on the derivative resulting from the interest rate swap on the Company's new term loan.
Second Quarter 2007 Highlights -- Riviera Black Hawk net revenue increased $705,000 or 5.5 percent
-- Riviera Black Hawk EBITDA increased $1.2 million or 31.2 percent
-- Riviera Las Vegas net revenue increased $523,000 or 1.3 percent
-- Riviera Las Vegas EBITDA increased $1.1 million or 12.6 percent
-- The Company completed its refinancing and redeemed its 11 percent
notes, and the new effective borrowing rate for the Company is now
approximately 7.5 percent
-- The Company has $31.5 million in unrestricted cash plus a $20 million
revolver
Six Months Ended June 30, 2007
Net revenues for the six months ended June 30, 2007 were $105.7 million, up $1.6 million or 1.5 percent from the same period in 2006. Income from operations was $18.4 million, up $3.7 million or 25.3 percent from the 2006 period. Adjusted EBITDA (1) was $25.7 million, up $3.3 million or 14.9 percent from the 2006 period.
Included in operating income for the first six months of 2007 was $533,000 in equity based compensation costs related to stock option expense compared with $406,000 in 2006, and $288,000 of mergers, acquisitions and development costs in 2007 compared with $878,000 in 2006. Net income for the six months ended June 30, 2007 was a record $6.1 million, or $0.49 per share on a fully diluted basis, compared with net income of $1.7 million, or $0.14 per diluted share, for the six months ended June 30, 2006.
Six-Month 2007 Highlights -- Riviera Black Hawk net revenue was up $997,000 or 3.8 percent
-- Riviera Black Hawk EBITDA increased $1.8 million to $9.7 million or
22.6 percent
-- Riviera Las Vegas net revenue increased $569,000 to $78.7 million
-- Riviera Las Vegas EBITDA increased $1.2 million to $18.0 million or 7.1
percent
Riviera Las Vegas
"For the first six months of 2007, Riviera Las Vegas outpaced 2006 EBITDA by $1.2 million. Most of the increase occurred in the second quarter as we continued to capitalize on the reduced competition in our market segment," commented Robert Vannucci, Chief Operating Officer of Riviera Las Vegas. "We are also very excited about a new capital expenditure plan to upgrade our rooms, which we anticipate will continue to produce room rate increases.
"EBITDA in Las Vegas increased $1.1 million, or 12.6 percent for the second quarter. Revenue increases in our slots and room divisions combined with revisions in our entertainment operations and other controlled operating costs produced an EBITDA margin of 23.4 percent compared with 21.1 percent in the same quarter of 2006. The room revenue increase was attributable to an increase in the ADR (Average Daily Rate), which was $80.99 in the second quarter of 2007, increasing $7.20 or 9.8 percent compared with 2006. RevPar (Revenue per Available Room) increased $3.97, or 5.4 percent.
"During the quarter, the Company worked with the management of the Frontier to assist in placing their guests and some employees at the Riviera. We were able to obtain the list of Frontier gaming patrons and plan to aggressively market these customers similar to what we did with the Westward Ho customer list. We believe the effects of this arrangement will transition loyal Frontier guests into loyal Riviera guests as it did with former Westward Ho customers. Also during the recent quarter, our culinary union contract expired. We have started negotiations with the union, and it is our hope to reach an agreement that is fair and equitable to our people and property," said Mr. Vannucci.
Riviera Black Hawk Mark Lefever, President of Riviera Black Hawk, said, "We are pleased with the second quarter results in Black Hawk and the Colorado market in general. Our EBITDA margin of 36.2 percent for the quarter, which we believe to be the highest in our market, is a result of our dedicated team, who continue to provide outstanding guest service.
"We have begun to make necessary changes in preparation of the statewide smoking ban, which becomes effective January 1, 2008. Our goal is to satisfy our guests, while complying with the state law and minimizing the potential impact the ban may have on operations." Consolidated Operations William L. Westerman, Chief Executive Officer, said, "Our team continues to focus on the daily operations at both properties, as shown in our record financial results. With our new financing in place, I am excited to announce a capital expenditure plan of $25 million over the next 30 months. Our plan is to refurbish all 2,075 rooms in Las Vegas, remodel the casino floor in Las Vegas and renovate our Black Hawk facility in order to meet the requirements of the smoking ban in Colorado and to increase the comfort level for our guests in Black Hawk. We believe these improvements will enhance our guests' overall experience at both properties, while generating stronger long-term financial results for our Company.
"Our third quarter 2007 net income will be adversely impacted by a one- time charge of approximately $12.9 million to record the call premium on the 11 percent notes we redeemed in July and the write-off of the remaining deferred financing costs and the discounts on the those notes.
"Over the last 18 months, net income has been adversely affected by over $1.5 million in merger and acquisition costs primarily related to the efforts to acquire our Company. Some of those efforts deserved and received our consideration and some of them deserved and received our opposition. When you consider the costs and distractions resulting from this process, we believe our results are impressive, and I want to thank all our team members for remaining focused on our operations.
"We are continuing to work with our financial advisor, Jefferies and Company on our strategic process to maximize shareholder value that we announced in May 2007." Conference Call Information In conjunction with the release of second quarter 2007 financial results, Riviera will broadcast a conference call at 2 p.m. Eastern Daylight Time today, Friday, August 3, 2007. Investors can listen to the call via the Internet at http://www.rivierahotel.com/ or by dialing (888) 889-5345. The conference call rebroadcast will be available at (877) 519-4471, code 9021164.
Forward-Looking Statements The forward-looking statements in this news release, which reflect our best judgment based on factors currently known to us, involve significant risks and uncertainties including the implementation and future results of the capital expenditure plan that we just announced, the future results of our ongoing strategic process for maximizing shareholder value, pending litigation involving takeover efforts that we have opposed, hotel and casino market conditions, the effect on Riviera Black Hawk of the Colorado smoking ban that becomes effective on January 1, 2008, increases in energy costs, general economic and political conditions, regulatory requirements and other risks and uncertainties detailed from time to time in our filings with the Securities and Exchange Commission. Actual results may differ materially from what is expressed or implied in our forward-looking statements. We do not plan to update our forward-looking statements even though our situation or plans may change in the future, unless applicable law requires us to do so.
About Riviera Holdings Corporation Riviera Holdings Corporation owns and operates the Riviera Hotel and Casino on the Las Vegas Strip and the Riviera Black Hawk Casino in Black Hawk, Colorado. Riviera's stock is listed on the American Stock Exchange under the symbol RIV.
Riviera Holdings Corporation
Financial Summary
(Amounts in thousands except per share amounts) Three Months Ended June 30 Six Months Ended June 30
2007 2006 Var %Var 2007 2006 Var %Var
Net Revenues:
Riviera
Las Vegas $40,185 $39,662 $523 1.3% $78,657 $78,088 $569 0.7%
Riviera
Black Hawk 13,480 12,775 705 5.5% 27,035 26,038 997 3.8%
Total Net
Revenues 53,665 52,437 1,228 2.3% 105,692 104,126 1,566 1.5% Operating Income:
Riviera
Las Vegas 7,795 6,567 1,228 18.7% 14,705 13,209 1,496 11.3%
Riviera
Black Hawk 3,253 2,340 913 39.0% 6,509 5,093 1,416 27.8%
Mergers,
Acquisitions
and Development
Costs, net (238) (761) 523 -68.7% (288) (878) 590 -67.2%
Equity-Based
Compensation (354) (190) (164) 86.3% (553) (406)(147) 36.2%
Asset Impairment 0 (3) 3 -100.0% 0 (16) 16 -100.0%
Corporate Expenses (1,017) (1,058) 41 3.9% (1,973) (2,318) 345 14.9%
Total Operating
Income 9,439 6,895 2,544 36.9% 18,400 14,684 3,716 25.3% Adjusted EBITDA (1):
Riviera
Las Vegas 9,405 8,350 1,055 12.6% 18,012 16,817 1,195 7.1%
Riviera
Black Hawk 4,877 3,716 1,161 31.2% 9,692 7,904 1,788 22.6%
Corporate
Expenses (1,017) (1,058) 41 3.9% (1,973) (2,318) 345 14.9%
Total Adjusted
EBITDA 13,265 11,008 2,257 20.5% 25,731 22,403 3,328 14.9% Adjusted EBITDA
Margins (2):
Riviera Las Vegas 23.4% 21.1% 2.4% 22.9% 21.5% 1.4%
Riviera Black Hawk 6.2% 29.1% 7.1% 35.8% 30.4% 5.5%
Consolidated 24.7% 21.0% 3.7% 24.3% 21.5% 2.8%
Net income $3,574 $418 $3,156 $6,136 $1,698 $4,438 EARNINGS PER SHARE DATA: Weighted average
basic shares
outstanding 12,322 12,040 282 12,291 12,001 290
Basic earnings
per share $0.29 $0.03 $0.26 $0.50 $0.14 $0.36 Weighted average
diluted shares
outstanding 12,605 12,326 279 12,557 12,271 286
Diluted earnings
per share $0.28 $0.03 $0.25 $0.49 $0.14 $0.35
(1) Adjusted EBITDA consists of earnings before interest, income taxes,
depreciation, amortization, equity-based compensation, asset
impairment, and mergers, acquisitions and development costs, net, as
shown in the reconciliation with net income in the tables below in
this release. Adjusted EBITDA is presented solely as a supplemental
disclosure because we believe that it is 1) a widely used measure of
operating performance in the gaming industry, and 2) a principal basis
for valuation of gaming companies by certain investors. We use
property-level EBITDA (earnings before interest, income taxes,
depreciation, amortization and corporate expense) as the primary
measure of our business segment properties' performance, including the
evaluation of our operating personnel. Adjusted EBITDA should not be
construed as an alternative to operating income, as an indicator of
our operating performance, as an alternative to cash flows from
operating activities, as a measure of liquidity, or as any other
measure determined in accordance with generally accepted accounting
principles. We have significant uses of cash flows, including capital
expenditures, interest payments and debt principal repayments, which
are not reflected in Adjusted EBITDA. Also, other gaming companies
that report EBITDA or Adjusted EBITDA may calculate it in a different
manner than we do. A reconciliation of net income to Adjusted EBITDA
is included in the tables below in this release.
(2) Adjusted EBITDA margins represent Adjusted EBITDA divided by Net
Revenues.
Riviera Holdings Corporation and Subsidiaries
Reconciliation of Net Income to Adjusted EBITDA
(Amounts in thousands)
Net Interest Operating
Income Income Income Asset
(Loss) (Expense) (Loss) Depreciation Impairment
Second Quarter 2007:
Riviera Las Vegas $7,850 $55 $7,795 $2,273 --
Riviera Black Hawk 1,339 (1,914) 3,253 961 --
Corporate (5,615) (4,006) (1,609) -- --
$3,574 $5,865 $9,439 $3,234 $ -- Second Quarter 2006:
Riviera Las Vegas $6,608 $41 $6,567 $2,209 --
Riviera Black Hawk 420 (1,920) 2,340 950 --
Corporate (6,610) (4,598) (2,012) -- 3
$418 $(6,477) $6,895 $3,159 $ 3
Six Months Ended
June 30, 2007:
Riviera Las Vegas $14,794 $89 $14,705 $4,541 --
Riviera Black Hawk 2,697 (3,812) 6,509 1,949 --
Corporate (11,355) (8,541) (2,814) -- --
$6,136 $(12,264) $18,400 $6,490 $ -- Six Months Ended
June 30, 2006:
Riviera Las Vegas $13,264 $55 $13,209 $4,541 --
Riviera Black Hawk 1,261 (3,832) 5,093 1,878 --
Corporate (12,827) (9,209) (3,618) -- 16
$1,698 $(12,986) $14,684 $6,419 $ 16 Riviera Holdings Corporation and Subsidiaries
Reconciliation of Net Income to Adjusted EBITDA
(Amounts in thousands) (continued) Mergers
Equity Acquisitions
Based Development Management Adjusted
Comp & Cost, net Fee EBITDA
Second Quarter 2007:
Riviera Las Vegas -- -- $(663) $9,405
Riviera Black Hawk -- -- 663 4,877
Corporate 354 238 -- (1,017)
$354 $238 $ -- $13,265
Second Quarter 2006:
Riviera Las Vegas -- -- $(426) $8,350
Riviera Black Hawk -- -- 426 3,716
Corporate 190 761 -- (1,058
$190 $761 $ -- $11,008 Six Months Ended
June 30, 2007:
Riviera Las Vegas -- -- $(1,234) $18,012
Riviera Black Hawk -- -- (1,234) 9,692
Corporate 553 288 -- (1,973)
$553 $228 $ -- $25,731 Six Months Ended
June 30, 2006:
Riviera Las Vegas -- -- $(933) $16,817
Riviera Black Hawk -- -- 933 7,904
Corporate 406 878 -- (2,318)
$406 $878 $ -- $22,403 Balance Sheet Summary
June 30, Dec 31,
2007 2006 Cash and short term investments $31,561 $25,285
Restricted Cash 224,447 --
Total current assets 265,350 34,142
Property and equipment, net 167,953 171,320
Total assets 443,491 213,682
Total current liabilities 237,691 25,235
Long-term debt, net of current portion 225,305 214,124
Total shareholders' deficiency (23,845) (30,551) RIVIERA HOLDINGS CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share amounts) Three Months Ended Six Months Ended
June 30 June 30
2007 2006 2007 2006
Revenues:
Casino $30,887 $29,862 $59,006 $56,944
Rooms 15,150 14,246 31,464 29,089
Food and beverage 8,773 8,746 16,961 17,644
Entertainment 3,451 3,860 5,857 7,541
Other 1,645 1,733 3,357 3,436
Total 59,906 58,447 116,645 114,654
Less promotional allowance 6,241 6,010 10,953 10,528
Net revenues 53,665 52,437 105,692 104,126
COSTS AND EXPENSES:
Direct costs and expenses of
operating departments:
Casino 14,359 14,902 28,611 28,722
Rooms 7,048 6,832 14,099 13,621
Food and beverage 6,338 6,120 12,479 12,452
Entertainment 2,043 2,700 3,669 5,342
Other 338 333 675 799
Other operating expenses:
General and administrative 10,274 10,542 20,428 20,787
Mergers, Acquisitions and
Development Costs, net 238 76 2 878
Equity-Based Compensation 354 190 553 406
Asset Impairment -- 3 -- 16
Depreciation and amortization 3,234 3,159 6,490 6,419
Total costs and expenses 44,226 45,542 87,292 89,442 INCOME FROM OPERATIONS 9,439 6,895 18,400 14,684 OTHER EXPENSE:
Interest expense (7,606) (6,601) (14,174) (13,191)
Interest income 914 124 1,083 205
Gain on Derivatives 827 -- 827 --
Total other expense (5,865) (6,477) (12,264) (12,986) NET INCOME: $3,574 $418 $6,136 $1,698 EARNINGS PER SHARE DATA: Shares used in calculating
net income per common share:
Basic 12,322 12,040 12,291 12,001
Diluted 12,605 12,326 12,557 12,271
Net Income per common share
Basic $0.29 $0.03 $0.50 $0.14
Diluted $0.28 $0.03 $0.49 $0.14
DATASOURCE: Riviera Holdings Corporation CONTACT: Mark Lefever, Treasurer and CFO of Riviera Holdings Corporation, +1-702-794-9527, fax, +1-702-794-9442, ; or Investors, Betsy Truax of Skorpus Consulting, +1-208-241-3704, fax, +1-208-232-5317, , for Riviera Holdings Corporation Web site: http://www.theriviera.com/
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