Eldorado Resorts added eight casinos to its growing regional gaming portfolio in last few months.
Naturally, company President Thomas Reeg was asked Thursday by analysts on its third quarter conference call if Eldorado was done shopping. The Reno-based company acquired the Grand Victoria riverboat casino in Illinois in August for $327.5 million and the operations of seven casinos previously owned by Tropicana Entertainment in a $1.85 billion joint venture with real estate investment trust Gaming and Leisure Properties in October.
The short answer? Not yet.
“There is nothing that precludes from working with anybody,” Reeg said when asked if any joint venture deals have to include GLPI. “We’ll look at attractive opportunities as they arise, but we’re not close to anything.”
For now, Reeg said the company wants to integrate into its system Grand Victoria, which draws from the Chicago market, and the Tropicana properties, including Tropicana Atlantic City.
“Absent something that is placed just in front of us, we realistically won’t be interested until the back half of next year,” said Reeg, who becomes Eldorado’s CEO on Jan. 1. “But we’re ready to act if we see something that provides a strong shareholder return story.”
Reeg told analysts Tropicana Atlantic City has “outperformed expectations.” Prior to taking over the resort, Eldorado thought the casino would see a 20 percent drop in cash flow due to competition from the openings of Hard Rock Atlantic City and Ocean Resort Casino in June. The decline has been just 7 percent.
Thursday’s conference call was the last for current CEO Gary Carano, who is stepping into a new role as executive chairman. He said the growth of the company, which now has 28 casinos in 13 states, has opened Eldorado to new opportunities.
Eldorado signed sports betting deal with William Hill US in September and is moving forward on a non-gaming entertainment development for its Isle Casino Racing Pompano Park in Pompano, Florida – 35 miles north of Miami – in partnership with the Cordish Companies.
Eldorado opened a temporary sportsbook at the Tropicana Atlantic City in October and will to open a sportsbook at its Mountaineer Casino Racetrack in West Virginia this month.
“These acquisitions have significantly expanded the scale of our gaming operations and diversified our geographic reach into seven new markets that have minimal overlap with our existing operations,” Carano said.
Reeg said the William Hill US agreement, in which Isle will receive a 20 percent ownership stake, could be lucrative.
“William Hill is targeting $300 million in (cash flow) from U.S. sports betting by 2023, and 20 percent of that will be ours,” Reeg said.
Eldorado said its third quarter revenues grew 3 percent to $487.25 million, which included a $16.6 million contribution from the Grand. Net income grew 27 percent to $37.7 million, which translated into earnings of 48 cents per share
In addition to earnings, Eldorado Resorts said the company’s board authorized a $150 million common stock repurchase program. The company anticipates funding share repurchases from its cash flow from operations. Eldorado has approximately 77.5 million shares of common stock outstanding.
“Given the strength of our recent operating results … and free cash flow that we expect to achieve from the recent accretive acquisitions of Tropicana Entertainment and Grand Victoria Casino, our board of directors believes share repurchases represent a prudent use of capital,” Carano said.
Shares of Eldorado closed at $38.89 on the Nasdaq Thursday, up $1.09 or 2.88 percent. The shares were up almost 9 percent in after-hours trading.
Howard Stutz is the executive editor of CDC Gaming. He can be reached at hstutz@cdcgamingreports.com. Follow @howardstutz on Twitter.
