Casino operator Twin River Worldwide Holdings has reported a 9.5% year-on-year decline in revenue for the first quarter of the year, after a strong performance in January and February was offset by casino closures in March.
For the two months to February 28, revenue was up 23.4% at $90.3m, with the business benefiting from the addition of Dover Downs and the acquisition of the Golden Gates, Golden Gulch and Mardi Gras casinos in Colorado.
This was offset partially by the underperformance of the Twin River Casino Hotel in Lincoln, Rhode Island, though that property had shown signs of recovery during that two month period.
However this growth was wiped out by March, when all of the operator’s venues were shuttered as a result of novel coronavirus (Covid-19). For that month, revenue dropped 60.2% to $18.9m, resting in revenue for the three months to 31 March falling 9.5% to $109.1m.
Looking at revenue sources, gaming accounted for $75.8m of the Q1 total, down 16.5%, though this was mitigated in part by growth in racing, hotel, and food and beverage revenue. Racing contributed $3.0m, with $7.6m and $15.3m coming from hotels and food and beverages respectively. Twin River recorded a further $7.4m in revenue from other sources, up 5.5%.
However, the decline in revenue was not offset by lower costs in the quarter, with total operating costs and expenses rising 24.3% to $112.3m. Operating costs were up across the board, with marketing and advertising expenses of $49.6m the biggest outgoing.
As a result of the current and expected future economic and market conditions resulting from Covid-19, it also recorded an impairment charge of $8.7m related to its Colorado-based casinos.
This resulted in the company posting an operating loss of $3.2m for the period, down from a $30.3m profit in the prior year. After interest income of $143,000 and interest expense of $11.4m, relating to a new credit facility entered into in May 2019, and resulting in $400m in senior notes being issued, Twin River’s pre-tax loss amounted to $14.5m.
This was partially offset by a $5.7m income tax benefit, for a net loss of $8.9m for the quarter.
Chief executive George Papanier said while the business had been impacted by the closures, Twin River had taken broad-based actions to reduce expenses and enhance liquidity.
“Our leadership team has also remained hard at work executing on key strategic growth initiatives, including our recently announced deal to acquire three casinos from Eldorado and Caesars to further expand our geographic diversity and enhance our financial profile,” Papanier continued. “Despite near-term uncertainties, we are confident that our strong balance sheet, liquidity and long-term strategic planning will enable us to emerge from this crisis in an even better position.”
In the wake of the pandemic, the operator has furloughed the majority of employees, but continued to provide health coverage to affected staff. It has also established a fund to provide financial assistance to employees experiencing significant hardship.
The operator has also enhanced liquidity, with $361.6m in cash and cash equivalents. It then increased its term loan by $275m under its existing credit agreement, using that to repay $250m outstanding under its revolving credit facility. Once its acquisitions from Caesars and Eldorado are factored in, this leaves it with liquidity of more than $210m, and no substantial debt maturities before 2014.
It is also setting out a plan for reopening, that will incorporate screening of all team members and guests, as well as deploying thermal imaging cameras at its properties.
Twin River venues will reopen with strict social distancing guidelines in place, with greater spacing between slot machines, as well as limited or no table games at first. All areas will also be frequently cleaned and sanitized, with masks to be worn by patrons and staff.