CEO: COVID closure made Red Rock Resorts a leaner company

October 28, 2020 10:43 AM
  • Howard Stutz, CDC Gaming Reports
October 28, 2020 10:43 AM
  • Howard Stutz, CDC Gaming Reports

Las Vegas-based Red Rock Resorts continues to pare down rather than build up.

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The ongoing pandemic has changed the business operations for the casino operator the relies primarily on residents from the Las Vegas area.

Red Rock executives said Tuesday Nevada’s 78-day closure of its gaming industry in an effort to slow spreading coronavirus last spring allowed the company to evaluate its business model.

“The shutdown gave us the ability to question everything we were doing,” Red Rock CEO Frank Fertitta III said during the company’s third quarter conference call with analysts. “We believe there is a permanent reduction in the cost of operating the business.”

For example, Fertitta said the company buffet restaurants, a staple of its pre-COVID-19 operating environment, “won’t be coming back in the near future.”

Fertitta told analysts Red Rock is “a gaming company.” He said 80% of the company profits come from the casino floor.

“The results show we can make money in this environment,” he said.

Revenues for Red Rock in the quarter than ended on Sept. 30 declined 24.2% to $353.2 million, despite a 31% increase from the company’s management contract with the Graton Rancheria Tribe in Northern California for the Graton Casino Resort.

However, adjusted cash flow companywide increased 44.8% to $160.9 million while the company had a net income of $43.6 million, compared to a net loss of $15.7 million a year ago.

The company’s Las Vegas operations saw revenues fall 27.2% to $320.8 million in the quarter, but cash flow rose 45.8% to $141.7 million. Red Rock has opened just Red Rock Resort, Green Valley Ranch, Santa Fe Station, Boulder Station, Palace Station, Sunset Station, and its Wildfire properties.

Four properties, Palms, Texas Station, and the Fiesta in North Las Vegas and Henderson remain closed, potentially through the end of the year.

“There is no timetable for reopening those properties,” said Red Rock Chief Financial Officer Stephen Cootey.

During the call, Red Rock said it had extended its management agreement with the Graton tribe until Feb. 4, 2021, and company executives said they hope to add another three months to the contract.

However, the company is moving forward on a second tribal gaming agreement with a California tribe after a favorable court ruling in another Indian gaming matter potentially cleared the path for the long-stalled project near Fresno.

Red Rock and the North Fork Rancheria of Mono Indians are looking to break ground in the second half of next year on a $350 million casino project. The tribe and Red Rock have been seeking approval on the project since 2003.

Meanwhile, Red Rock Resorts is continuing to make efforts on selling eight vacant land parcels in Las Vegas and two sites in Reno, including an 88-acre location near the Mount Rose Highway.

Red Rock said it has cash on hand of $108.9 million at the end of the quarter and total debt of $3 billion.

Shares of Red Rock closed at $18.75 on the Nasdaq, down 82 cents or 4.19%.

Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at Follow @howardstutz on Twitter.