Twin River Second-Quarter Results Likely Uplifted by Dover Downs

Posted on: August 12, 2019, 06:00h. 

Last updated on: August 12, 2019, 12:52h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Twin River Worldwide Holdings, Inc. (NYSE:TRWH) is still putting the finishing touches on its second-quarter earnings report, expected to be released later this week, and it looks like the recently completed acquisition of Dover Downs Gaming and Entertainment is already paying dividends.

The slots area at Dover Downs, a property lifting earnings for Twin River. (Image: Delaware Online)

TRWH completed its purchase of the Delaware gaming company in late March, meaning the April through June period was the first full quarter Dover Downs affected the firm’s results.

Financial performance at Dover during our first full quarter of ownership exceeded our already high expectation due to our initial integration and optimization efforts, and yet we still anticipate substantial physical and operating changes to be implemented,” said Twin River CEO and President George Papanier in a recent filing with the Securities and Exchange Commission (SEC).

The filing doesn’t break out Dover Downs by itself. Performance from that business is lumped together with Hard Rock Hotel & Casino Biloxi, TRWH’s Mississippi property.

“The Biloxi and Dover operations are estimated between $31.9 million and $32.3 million, and $30.0 million and $30.5 million of net revenue, respectively, and $8.8 million and $9.8 million, and $4.7 million and $5.7 million of Adjusted EBITDA, respectively, for the same period,” according to the filing.

More Improvements Expected

While Dover Downs isn’t the revenue driver for TRWH that the company’s two Rhode Island properties – the Twin River and Tiverton casinos – are, the Delaware venue is showing significant improvement from where it was before TRWH acquired it.

Dover Downs was saddled with a sizable debt load, waning profits, and increasing regional competition from operators in Maryland and Virginia. Last year, the state had to provide financial support to its three racinos in the form of lower taxes.

While regional rivalries remain a factor, Dover Downs’ financial health is improving, and that could be a boon for Twin River, as the company looks to fend off competition in its home region of New England.

“Again, this property is ramping its operations and financial performance faster than expected, and with our numerous implemented and planned changes and upgrades to both the marketing plan and customer experience, we expect to further improve upon this upward trajectory,” said Papanier of Dover Downs.

Expanding Down South

Twin River purchased Hard Rock Biloxi in 2014, and the company’s success with that property could be why it is expanding in Mississippi.

“In 2014, we acquired the Hard Rock Biloxi at an approximate 10x multiple,” said Papanier. “We are pleased to report that, even with additional competition in that market since the acquisition, our cash flow growth has resulted in a current ownership multiple below 7x.”

Last month, TRWH said it will acquire two casinos from Eldorado Resorts, including the Lady Luck in Vicksburg, Miss., for $230 million as part of Eldorado’s plan to shed assets and raise cash for its $17.3 billion takeover of Caesars Entertainment.

In 2018, casinos operating in Mississippi had combined gross gaming revenue (GGR) of $2.12 billion, according to the Mississippi Gaming Commission.