LAS VEGAS, Nov. 2 /PRNewswire-FirstCall/ -- Riviera Holdings Corporation (AMEX:RIV) today reported financial results for the three- and nine-month periods ended September 30, 2007. The Company reported record Adjusted EBITDA (1), as defined below, and operating income for the three months and nine months ended September 30, 2007.
Third Quarter 2007 Net revenues for the third quarter were $52.4 million, an increase of $2.0 million or 4 percent from the third quarter of 2006. Income from operations was $6.7 million, up $700,000 or 11 percent from the third quarter of 2006. Included in income from operations in the third quarter of 2007 was $206,000 in equity-based compensation costs related to stock option expense compared to $183,000 in 2006, and $160,000 of mergers, acquisitions and development costs in 2007 compared to $281,000 in 2006. Adjusted EBITDA (1) was $10.3 million in the third quarter of 2007 compared with $9.5 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 loss in the tables of this release (See Notes 1 and 2 to the Financial Summary table). Net loss for the quarter was $18.3 million, or $1.48 per share on a fully diluted basis. The net loss included the unfavorable effect of a $7.5 million non-cash charge to record the loss on the Company's derivatives resulting from the interest rate swap on the new term loan, a non-cash charge of $5.0 million to write off the unamortized costs and discounts and $7.9 million for the prepayment premium related to the retirement of the Company's $215 million 11% bonds which were extinguished on July 9, 2007.
Third Quarter 2007 Highlights
* Riviera Black Hawk net revenue increased $980,000 or 7 percent
* Riviera Black Hawk EBITDA increased $570,000 or 12 percent
* Riviera Las Vegas net revenue increased $1.1 million or 3 percent
* Riviera Las Vegas EBITDA increased $419,000 or 7 percent
* The Company redeemed its 11% notes, on July 9, 2007 which was replaced
with a term loan with an effective interest rate of 7.5%
* The Company has $33.0 million in unrestricted cash plus a $20 million
revolver available Nine Months Ended September 30, 2007
Net revenues for the nine months ended September 30, 2007 were $158.1 million, an increase of $3.6 million or 2 percent from the same period in 2006. Income from operations was $25.1 million, an increase of $4.4 million or 21 percent from the 2006 period. Adjusted EBITDA (1) was $36.1 million, an increase of $4.2 million or 13 percent from the 2006 period.
Included in operating income for the first nine months of 2007 was $759,000 in equity-based compensation costs related to stock option expense compared to $589,000 in 2006, and $448,000 of mergers, acquisitions and development costs in 2007 compared to $1.2 million in 2006. Net loss for the nine months ended September 30, 2007 was $12.1 million, or $0.98 per share on a fully diluted basis, compared to net income of $1.3 million, or $0.10 per diluted share for the nine months ended September 30, 2006.
Included in the net loss for the nine months ended September 30, 2007 was a non-cash charge of $5.0 million related to the Company's remaining bond costs and $7.9 million related to the premium related to the retirement of the Company's $215 million 11% bonds on July 9, 2007. Additionally, the Company recorded $6.6 million as a non-cash charge related to the negative impact of the decrease in interest rates on the Company's interest rate swap. The interest swap agreement generated approximately a 7.5% fixed rate for the Company's current debt.
Nine-Month 2007 Highlights
* Riviera Black Hawk net revenue was up $2.0 million or 5 percent
* Riviera Black Hawk EBITDA increased $2.4 million to $15.1 million or 18
percent
* Riviera Las Vegas net revenue increased $1.6 million to $116.6 million
or 1 percent
* Riviera Las Vegas EBITDA increased $1.6 million to $24.1 million or 7
percent Riviera Las Vegas
"For the nine months ended September 30, 2007, Riviera Las Vegas outpaced 2006 EBITDA by $1.6 million. Most of the increase occurred in the second and third quarters 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 the progress of our capital expenditure plan as refurbished rooms will begin to come on line in December of this year. We anticipate the upgrade to our rooms will continue to produce room rate increases.
"EBITDA in Las Vegas increased $400,000, or 7 percent for the third quarter of 2007. Revenue increases in our room and entertainment divisions, combined with controlled operating costs, produced an EBITDA margin of 16 percent compared with 15.5 percent in the same quarter of 2006. The room revenue increase was attributable to an increase in the ADR (Average Daily Rate), which was $79.13 in the third quarter of 2007, up $4.85 or 6.5 percent compared to 2006. RevPar (Revenue per Available Room) increased $3.76 or 5 percent." Riviera Black Hawk Mark Lefever, President of Riviera Black Hawk, said, "We continue to be delighted with the momentum and increases in all operating measures generated by our Black Hawk team. Our success in this market is a result of our database marketing efforts and our team's ability to continue to provide outstanding guest experiences.
"Our results have generated an EBITDA increase for the nine months ended September 30, 2007 of 18 percent to $15.1 million, due in large part to our continued success in offering a value-based entertainment experience to our guests.
"We have begun making the necessary changes to our property in preparation of the statewide smoking ban, which is effective January 1, 2008. We believe our entire plan will provide smokers and nonsmokers an experience that will be second to none in the greater Denver market." 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 adjusted EBITDA. With our previously announced capital expenditure plan focused on updating our room product in Las Vegas, and our casino floors in both Las Vegas and Black Hawk, we believe we are positioned in the marketplace to continue to generate increases in revenues and operating income for the foreseeable future. We believe these improvements will enhance our guests' overall experience at both properties, while generating stronger long-term financial results for our Company.
"Third quarter 2007 net income was adversely impacted by a one-time charge of $12.9 million to record the call premium and the write off of the remaining deferred refinancing costs on the 11% notes we redeemed in July, and by a $7.5 million non-cash charge for the effects of the interest rate environment on our swap agreement for our new $225 million debt. With this refinancing, our effective rate is now fixed at approximately 7.5%, which is a significant reduction to our previous borrowing arrangements. We are pleased with our rate, and are not concerned with the non-cash charge or benefits that resulted from our swap agreement. The current expense reflects the cost that would be required only if we were to break our swap agreement." Mr. Westerman stated that the Company, through its investment advisor Jefferies and Company, is continuing the strategic process to maximize shareholder value.
Conference Call Information In conjunction with the release of third quarter 2007 financial results, Riviera will broadcast a conference call at 2 p.m. Eastern Daylight Time today, Friday, November 2, 2007. Investors can listen to the call via the Internet at http://www.rivierahotel.com/ or by dialing (888) 792-8352. The conference call rebroadcast will be available at (877) 519-4471, code 9328343.
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, 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. Our 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 September 30
2007 2006 Var %Var
Net Revenues:
Riviera Las Vegas $37,940 $36,887 $1,053 2.9%
Riviera Black Hawk 14,440 13,462 978 7.3% Total Net Revenues 52,380 50,349 2,031 4.0% Operating Income:
Riviera Las Vegas 4,572 4,026 546 13.6%
Riviera Black Hawk 3,695 3,521 174 4.9%
Mergers, Acquisitions
and Development
Costs, net (160) (281) 121 (43.1)%
Equity-Based
Compensation (206) (183) (23) (12.6)%
Asset Impairment 0 0 0 NM%
Corporate Expenses (1,237) (1,095) (142) (13.0)% Total Operating Income 6,664 5,988 676 11.3% Adjusted EBITDA (1):
Riviera Las Vegas 6,131 5,712 419 7.3%
Riviera Black Hawk 5,440 4,870 570 11.7%
Corporate Expenses (1,237) (1,095) (142) (13.0)% Total Adjusted
EBITDA 10,334 9,487 847 8.9% Adjusted EBITDA
Margins(2):
Riviera Las Vegas 16.2% 15.5% 0.7%
Riviera Black Hawk 37.7% 36.2% 1.5%
Consolidated 19.7% 18.8% 0.9% Net income (loss) $(18,254) $(432) EARNINGS PER SHARE DATA: Weighted average basic
shares outstanding 12,326 12,170
Basic earnings (loss)
per share $(1.48) $(0.04) Weighted average diluted
shares outstanding 12,326 12,170
Diluted earnings
(loss) per share $(1.48) $(0.04)
Nine Months Ended September 30
2007 2006 Var %Var
Net Revenues:
Riviera Las Vegas $116,597 $ 114,975 $1,622 1.4%
Riviera Black Hawk 41,475 39,500 1,975 5.0% Total Net Revenues 158,072 154,475 3,597 2.3% Operating Income:
Riviera Las Vegas 19,277 17,235 2,042 11.8%
Riviera Black Hawk 10,204 8,614 1,590 18.5%
Mergers, Acquisitions
and Development
Costs, net (448) (1,159) 711 61.3%
Equity-Based
Compensation (759) (589) (170) (28.9)%
Asset Impairment 0 (16) 16 NM%
Corporate Expenses (3,210) (3,413) 234 6.8% Total Operating
Income 25,064 20,672 4,423 21.2% Adjusted EBITDA (1):
Riviera Las Vegas 24,143 22,529 1,614 7.2%
Riviera Black Hawk 15,132 12,774 2,358 18.5%
Corporate Expenses (3,210) (3,444) 234 6.8% Total Adjusted
EBITDA 36,065 31,890 4,175 13.1% Adjusted EBITDA
Margins (2):
Riviera Las Vegas 20.7% 19.6% 1.1%
Riviera Black Hawk 36.5% 32.3% 4.2%
Consolidated 22.8% 20.6% 2.2% Net income (loss) $(12,118) $1,266 EARNINGS PER SHARE DATA: Weighted average basic
shares outstanding 12,303 12,122
Basic earnings (loss)
per share $(0.98) $0.10 Weighted average diluted
shares outstanding 12,303 12,374
Diluted earnings
(loss) per share $(0.98) $0.10
(1) Adjusted EBITDA consists of earnings before interest, income taxes,
depreciation, amortization, equity-based compensation, asset
impairment loss on extinguishments of debt, the effects of the
accounting for our interest rate swap agreement, 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 Other Operating
Income Income Income Depre- Asset
(Loss) (Expense) (Loss) ciation Impairment Third Quarter
2007:
Riviera
Las Vegas $4,628 $ 56 $4,572 $2,331 -
Riviera
Black Hawk 1,996 (1,699) 3,695 973 -
Corporate (24,878) (23,275) (1,603) - -
$(18,254) $24,918 $6,664 $3,304 $- Third Quarter
2006:
Riviera Las
Vegas $4,051 $25 $4,026 $2,231 -
Riviera
Black Hawk 1,606 (1,915) 3,521 804 -
Corporate (6,089) (4,530) (1,559) - - $(432) $(6,420) $5,988 $3,035 $-
Nine Months
Ended
September
30, 2007:
Riviera Las
Vegas $19,422 $145 $19,277 $6,872 -
Riviera Black
Hawk 4,693 (5,511) 10,204 2,922 -
Corporate (36,223) (31,816) (4,417) - -
$(12,118) $(37,182) $25,064 $9,794 $-
Nine Months
Ended
September
30, 2006:
Riviera Las
Vegas $17,315 $80 $17,235 $6,772 -
Riviera Black
Hawk 2,867 (5,747) 8,614 2,682 -
Corporate (18,916) (13,739) (5,177) - 16
$1,266 $(19,406) $20,672 $9,454 $16
Mergers
Equity Acquisitions,
Based Development Management Adjusted
Comp & Costs Fee EBITDA
Third Quarter 2007:
Riviera Las Vegas - - $(772) $6,131
Riviera Black Hawk - - 772 5,440
Corporate 206 160 - (1,237)
$206 $ 160 $ - $10,334 Third Quarter 2006:
Riviera Las Vegas - - $(545) $5,712
Riviera Black Hawk - - 545 4,870
Corporate 183 281 - (1,095)
$183 $281 $ - $9,487 Nine Months Ended
September 30, 2007:
Riviera Las Vegas - - $(2,006) $24,143
Riviera Black Hawk - - 2,006 15,132
Corporate 759 448 - (3,210)
$759 $ 448 $- $36,065 Nine Months Ended
September 30, 2006:
Riviera Las Vegas - - $(1,478) $22,529
Riviera Black Hawk - - 1,478 12,774
Corporate 589 1,159 - (3,444)
$589 $1,159 $- $31,890
Balance Sheet Summary
Sept 30, Dec 31,
2007 2006
Cash and short term investments $32,975 $25,285
Total current assets 45,642 34,142
Property and equipment, net 168,056 171,320
Total assets 219,136 213,682
Long-term debt, net of current portion 225,405 214,124
Total liabilities 261,030 244,216
Total shareholders' deficiency (41,894) (30,534) RIVIERA HOLDINGS CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except
per share amounts) Three Months Ended Nine Months Ended
September 30 September 30
2007 2006 2007 2006
Revenues:
Casino $28,935 $28,262 $87,941 $85,206
Rooms 14,812 13,996 46,276 43,085
Food and beverage 7,976 8,110 24,937 25,754
Entertainment 4,102 3,625 9,959 11,166
Other 1,684 1,534 5,041 4,970
Total 57,509 55,527 174,154 170,181
Less promotional
allowances (5,129) (5,178) (16,082) (15,706)
Net revenues 52,380 50,349 158,072 154,475 COSTS AND EXPENSES:
Direct costs and
expenses of operating
departments:
Casino 13,849 14,246 42,460 42,968
Rooms 7,520 6,981 21,619 20,602
Food and beverage 6,129 6,194 18,608 18,646
Entertainment 2,684 2,372 6,353 7,714
Other 368 338 1,043 1,137
Other operating
expenses:
General and
administrative 11,496 10,731 31,924 31,518
Mergers, Acquisitions
and Development
Costs, net 160 281 448 1,159
Equity-Based
Compensation 206 183 759 589
Asset Impairment - - - 16
Depreciation and
amortization 3,304 3,035 9,794 9,454
Total costs and
expenses 45,716 44,361 133,008 133,803 INCOME FROM OPERATIONS 6,664 5,988 25,064 20,672
OTHER EXPENSE:
Interest expense,
Net (4,569) (6,420) (17,660) (19,406)
Loss on Retirement
of Debt (12,878) - (12,878) -
Loss on Derivatives (7,471) - (6,644) - Total other
expense (24,918) (6,420) (37,182) (19,406) NET INCOME: $(18,254) $(432) $(12,118) $1,266 EARNINGS PER SHARE
DATA:
Shares used in
calculating net
income (loss) per
common share:
Basic 12,326 12,170 12,303 12,122
Diluted 12,326 12,170 12,303 12,374
Net Income (Loss)
per common share:
Basic $(1.48) $(0.04) $(0.98) $0.10
Diluted $(1.48) $(0.04) $(0.98) $0.10
DATASOURCE: Riviera Holdings Corporation CONTACT: Mark Lefever, Treasurer and CFO of Riviera Holdings Corporation, +1-702-794-9527, +1-702-794-9442, fax, ; or Investors, Betsy Truax, of Skorpus Consulting, +1-208-241-3704, +1-208-232-5317, Fax, , for Riviera Holdings Corporation Web site: http://www.rivierahotel.com/
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