The opening of Durango Casino & Resort in December helped boost Red Rock Resorts’s fourth-quarter revenue.
During an earnings call Wednesday, the company said revenues were $462.7 million for the quarter, an increase of 8.8%, or $37.2 million, from $425.5 million in the same period of 2022.
Adjusted EBITDA was $201.3 million for the fourth quarter, an increase of 3.6%, or $6.9 million, from $194.4 million in the same period of 2022.
“Red Rock Resorts delivered a meaningful beat, relative to consensus, and outpaced our consensus forecast,” said Carlo Santarelli, an analyst for Deutsche Bank in a note to investors. “A healthy locals-market backdrop, coupled with a fast start at Durango, drove the upside, with the primary surprise being the limited impact Durango had on segment margins during the abbreviated period in which it was open.”
Stephen Cootey, executive vice president and chief financial officer of Red Rock Resorts, said the Las Vegas operations broke a fourth-quarter EBITDA record. In terms of net revenue and margins, it ranked as the second best fourth quarter in the company’s history.
“2023 was a year in which we validated our long-term growth strategy by welcoming our Durango and Wildfire properties to the Red Rock family,” Cootey said. “The successful openings of these properties not only validate our long-term growth strategy, but also demonstrate the power of our development pipeline and real-estate bank, which now consists of more than 441 acres of developable land positioned in highly favorable areas across the Las Vegas valley.”
Cootey said with strong group bookings and the performance of Durango, they’re confident in the business, but the company will face tougher comparisons to 2023. Palace Station faces disruptions due to ongoing traffic work in the first half of 2024.
“While still in early days, we’re extremely pleased with the resort’s opening,” Cootey said of Durango. “It has grown the surrounding market, attracted new customers to the brand, and has been profitable since day one.”
There’s been some cannibalization across the portfolio with the opening, but nothing out of line with expectations, Cootey said. It will ultimately be backfilled with the valley’s growth.
Red Rock didn’t provide any casino-by-casino reports.
“The property is performing above our expectations,” said President Scott Kreeger. “Things are going great and when we talk about cannibalization, we’re not experiencing any different level of cannibalization than we forecast in previous calls.”
As for the Super Bowl this week, board Vice Chairman Lorenzo Fertitta said it’s shaping up to be one of the biggest events in Las Vegas history.
“We’re definitely feeling the impact from a regional standpoint on the hotel and casino sides from guests coming in for the game,” Fertitta said. “Super Bowl is always a big weekend in Las Vegas, but this seems to be shaping up to be bigger than a normal Super Bowl weekend for the city and for us.”
For the year, net revenues were $1.72 billion in 2023, an increase of 3.6%, or $60.3 million, from $1.66 billion in 2022. Adjusted EBITDA was $746 million in 2023, an increase of 0.3%, or $2.1 million, from $743.9 million in 2022. Las Vegas operations saw near-record net revenue and adjusted EBITDA margins, while achieving the best adjusted EBITDA in history.
The company’s Board of Directors has declared a special dividend of $1 per Class A common share that will be payable on March 4 to all stockholders of record as of the close of business on February 22.
“The dividend reflects our board and management team’s continued confidence in the resilience of our business model and the strength of the Las Vegas locals market,” Cootey said.
Red Rock announced the completion of the land sales where the Texas Station and Fiesta Rancho properties stood. It received $58 million in the fourth quarter for the 73 acres, or about $800,000 per acre, according to Santarelli.
