UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2019

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period                 to                 

Commission File No.  001-36629

ELDORADO RESORTS, INC.

(Exact name of registrant as specified in its charter)

Nevada	46-3657681
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

100 West Liberty Street, Suite 1150, Reno, Nevada 89501

(Address and zip code of principal executive offices)

(775) 328‑0100

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $.00001 par value	ERI	NASDAQ Stock Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non‑accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b‑2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non‑accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b‑2 of the Exchange Act).    Yes  ☐    No  ☒

The number of shares of the Registrant’s Common Stock, $0.00001 par value per share, outstanding as of November 4, 2019 was 77,769,501.

ELDORADO RESORTS, INC.

QUARTERLY REPORT FOR THE THREE MONTHS ENDED

SEPTEMBER 30, 2019

TABLE OF CONTENTS

		Page
PART I. FINANCIAL INFORMATION		2
Item 1.	FINANCIAL STATEMENTS	2
	Consolidated Balance Sheets at September 30, 2019 (unaudited) and December 31, 2018	2
	Consolidated Statements of Income for the Three and Nine Months Ended September 30, 2019 and 2018 (unaudited)	3
	Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2019 and 2018 (unaudited)	4
	Consolidated Statements of Stockholders’ Equity for the Nine Months Ended September 30, 2019 and 2018 (unaudited)	5
	Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2019 and 2018 (unaudited)	6
	Condensed Notes to Consolidated Financial Statements (unaudited)	7
Item 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	44
Item 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	67
Item 4.	CONTROLS AND PROCEDURES	68
PART II. OTHER INFORMATION		69
Item 1.	LEGAL PROCEEDINGS	69
Item 1A.	RISK FACTORS	69
Item 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	78
Item 3.	DEFAULTS UPON SENIOR SECURITIES	78
Item 4.	MINE SAFETY DISCLOSURES	78
Item 5.	OTHER INFORMATION	78
Item 6.	EXHIBITS	79
SIGNATURES		80

1

PART I-FINANCIAL INFORMATION

Item 1.  Financial Statements.

ELDORADO RESORTS, INC.

CONSOLIDATED BALANCE SHEETS

(dollars in thousands)

	September 30,				December 31,
	2019				2018
		(unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$		208,831		$	230,752
Restricted cash and investments			22,242			24,892
Marketable securities			20,433			16,957
Accounts receivable, net			48,150			60,169
Due from affiliates			2,823			327
Inventories			17,684			20,595
Income taxes receivable			—			15,731
Prepaid expenses			37,429			48,002
Assets held for sale			605,947			155,771
Total current assets			963,539			573,196
Investment in and advances to unconsolidated affiliates			129,796			1,892
Property and equipment, net			2,635,111			2,882,606
Gaming licenses and other intangibles, net			1,118,855			1,362,006
Goodwill			909,717			1,008,316
Right-of-use assets			245,344			—
Other assets, net			78,879			83,446
Total assets	$		6,081,241		$	5,911,462
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt	$		238		$	462
Accounts payable			50,024			58,524
Accrued property, gaming and other taxes			54,628			51,931
Accrued payroll and related			72,999			87,332
Accrued interest			34,637			42,780
Income taxes payable			15,425			47,475
Short-term lease obligation			21,963			—
Accrued other liabilities			108,999			102,982
Liabilities related to assets held for sale			56,058			10,691
Total current liabilities			414,971			402,177
Long-term financing obligation to GLPI			967,982			959,835
Long-term debt, less current portion			2,950,955			3,261,273
Deferred income taxes			224,877			200,010
Long-term lease obligation			229,297			—
Other long-term liabilities			166,381			59,014
Total liabilities			4,954,463			4,882,309
Commitments and contingencies (Note 14)
STOCKHOLDERS' EQUITY:
Common stock, 200,000,000 shares authorized, 77,545,678    and 77,215,066 issued and outstanding, net of treasury shares, par value    $0.00001 as of September 30, 2019 and December 31, 2018, respectively			1			1
Paid-in capital			756,225			748,076
Retained earnings			379,682			290,206
Treasury stock at cost, 223,823 shares held at September 30, 2019 and    December 31, 2018			(9,131	)		(9,131	)
Accumulated other comprehensive income			1			1
Total stockholders’ equity			1,126,778			1,029,153
Total liabilities and stockholders’ equity	$		6,081,241		$	5,911,462

The accompanying condensed notes are an integral part of these consolidated financial statements.

2

ELDORADO RESORTS, INC.

CONSOLIDATED STATEMENTS OF INCOME

(dollars in thousands, except per share data)

(unaudited)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2019			2018			2019			2018
REVENUES:
Casino and pari-mutuel commissions	$	458,000		$	368,169		$	1,385,848		$	1,060,417
Food and beverage		78,435			58,153			229,072			164,644
Hotel		94,318			44,780			237,493			114,447
Other		32,428			16,151			83,712			44,739
Net revenues		663,181			487,253			1,936,125			1,384,247
EXPENSES:
Casino and pari-mutuel commissions		202,555			180,062			616,101			519,558
Food and beverage		60,406			45,381			180,288			134,927
Hotel		27,315			13,977			76,101			40,178
Other		12,092			9,315			34,064			25,030
Marketing and promotions		33,292			23,122			97,673			66,255
General and administrative		122,767			75,599			360,086			223,546
Corporate		13,014			9,217			50,819			33,018
Impairment charges		—			3,787			958			13,602
Depreciation and amortization		52,592			35,760			166,882			99,204
Total operating expenses		524,033			396,220			1,582,972			1,155,318
(Loss) gain on sale or disposal of property and equipment		(284	)		(110	)		21,668			(393	)
Proceeds from terminated sales		—			5,000			—			5,000
Transaction expenses		(12,442	)		(4,091	)		(21,628	)		(10,043	)
Loss from unconsolidated affiliates		(1,515	)		(63	)		(2,132	)		(116	)
Operating income		124,907			91,769			351,061			223,377
OTHER EXPENSE:
Interest expense, net		(71,897	)		(34,085	)		(217,205	)		(96,579	)
Loss on early retirement of debt, net		(1,204	)		—			(1,204	)		(162	)
Unrealized gain on restricted investments		3,318			—			460			—
Total other expense		(69,783	)		(34,085	)		(217,949	)		(96,741	)
Income before income taxes		55,124			57,684			133,112			126,636
Provision for income taxes		(18,069	)		(19,980	)		(38,892	)		(31,281	)
Net income	$	37,055		$	37,704		$	94,220		$	95,355
Net income per share of common stock:
Basic	$	0.48		$	0.49		$	1.21		$	1.23
Diluted	$	0.47		$	0.48		$	1.20		$	1.22
Weighted average basic shares outstanding		77,721,353			77,522,664			77,657,553			77,445,611
Weighted average diluted shares outstanding		78,449,747			78,283,588			78,588,517			78,208,040

The accompanying condensed notes are an integral part of these consolidated financial statements.

3

ELDORADO RESORTS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(dollars in thousands)

(unaudited)

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2019		2018		2019		2018
Net income	$	37,055	$	37,704	$	94,220	$	95,355