Twin River Pushes Pause on Buyback, Dividend, Remains Open to Acquisitions

Posted on: August 11, 2020, 11:56h. 

Last updated on: August 11, 2020, 01:15h.

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

Twin River Worldwide Holdings (NYSE:TRWH) is trading higher by more than five percent Tuesday. That’s after the company reported better-than-expected second-quarter results, while noting it’s pausing dividends and share repurchases.

Twin River Holdings Stock Surge
With its Bally’s Atlantic City buy still pending, Twin River could hunt for more deals. (Image: Press of Atlantic City)

The operator of Rhode Island’s two casinos lost 79 cents a share on revenue of $28.92 million in the June quarter. Analysts expected a loss of $1.08 on turnover 40 percent below what the company reported. Each of TRWH’s nine gaming venues shuttered in March because of the coronavirus. Two Mississippi casinos reopened on May 21, with Dover Downs and Casino KC following on June 1. The pair of Ocean State venues restarted by-invitation-only on June 8, while the operator’s trio of Colorado properties joined the fray on June 17.

CFO Steve Capp said that while TRWH repurchased 160,000 shares of its own stock prior to the COVID-19 shutdown, it’s pausing shareholder rewards plans, joining an array of gaming companies that did so earlier this year.

Since those repurchases, and as a condition of the amendment we signed to our credit facility, we have halted spending under the capital return program, including both share repurchases and the payment of a quarterly dividend,” said Capp on a conference call with analysts and investors.

Last year, Twin River impressed the investment community when it revealed it would spend $250 million on buybacks and dividends. It was an announcement that came just months after the company became a publicly traded entity. The dividend was 10 cents a share per quarter.

Solid Effort, Strong Balance Sheet

Capp noted that since TRWH commenced the repurchase program last year, it bought back 11 million shares. Its current shares outstanding tally of 30.5 million is down about 25 percent from when the company went public. Reducing shares out boosts a company’s per-share earnings.

Allotting for cash on hand and unfunded $250 million credit revolver, TRWH had $580 million in liquidity as of June 30. That figure drops to $350 million when factoring in the recently completed purchases of the properties now known as Casino KC and Casino Vicksburg.

Accounting for the operator’s pending purchases of Bally’s Atlantic City, MontBleu in Lake Tahoe, Nev., and a gaming property in Shreveport, La., TWRH has liquidity of $185 million, or 25.45 percent of its current market capitalization.

The company said that the cash position provides it “with operating cushion well through 2021.”

Eyes Open for Deals

TRWH is rapidly expanding its geographic footprint and decreasing its dependence on Rhode Island via acquisitions, a trend that could continue if prices are favorable. Capp said the focus is on growth and doing so in accretive fashion.

“It’s a very dynamic time out there,” said the CFO on the call. “And I think — obviously, the two keys to the M&A environment are what are the multiples that buyers and sellers are going to agree on in this very unpredictable environment and how well-positioned is the company’s balance sheet to actually execute on an acquisition.”

CEO George Papanier said TRWH is looking to be “opportunistic” while noting the plan is to be aggressive in entering new markets, such as online casinos and sports wagering.

Specific regions for potential acquisitions weren’t mentioned on the call. But there are rumors swirling that TRWH could be interested in a Las Vegas asset because the company has no exposure in the largest US casino market.