Red Rock Resorts brushed aside a $174.5 million net loss in 2020 and focused on the Las Vegas company’s prospects in 2021.
CEO Frank Fertitta III told analysts Tuesday there has been an increase in a younger demographic to the company’s casinos in the Las Vegas Valley, but renewed capacity restrictions toward the end of last year made customers “skittish.”
He dismissed any chances Red Rock’s four Las Vegas-area casinos that have been closed for nearly 11 months due to the COVID-19 pandemic – including the off-Strip and much-maligned Palms – will reopen anytime soon.
“The Palms is unlikely to reopen until the tourist market returns,” Fertitta said during the company’s fourth quarter conference call.
Red Rock, which operates its properties under Station Casinos, spent $360 million to acquire the Palms four years ago and the property underwent $690 million in improvements. The project was a source of concern by the investment community going back to 2019. Prior to the pandemic, Red Rock closed a high-priced day club and night club area took millions of dollars in losses on the venture.
Three other closed casinos – Texas Station, Fiesta Henderson, and Fiesta Rancho – cater to an older demographic and that business may stay away until a vaccine rollout takes hold.
“Any properties we open must be accretive,” he said.
Fertitta noted restrictions on customer capacity inside the Nevada casinos remains at 25%, lower than when the state’s gaming industry reopened in early June following a 78-day shutdown. However, he said the state’s COVID-19 indicators – the two-week daily average of new cases was at its lowest level Tuesday since Oct. 24 – are moving in the right direction.
“I’m not going to get out over my skis relative to the governor,” Fertitta said when asked if Gov. Steve Sisolak might loosen the restrictions that are due to expire next week. “All the indicators seem to be headed in the right direction.”
Red Rock ended 2020 with a fourth quarter net income of $29.7 million, compared to $4.8 million a year ago. Total revenues in the quarter declined 35.5% to $343.4 million, which included a 27.8% drop in Las Vegas revenues.
For all 2020, Red Rock had net revenues of $1.2 billion, a decline of 36.3% due to the ongoing pandemic.
The company’s Native American management fees increased 20.8% in the fourth quarter to $25.6 million.
On the Native American front, Red Rock said it was moving toward a groundbreaking by the end of June for a long-stalled tribal casino project near Fresno, California with the North Fork Rancheria of Mono Indians.
Red Rock Chief Financial Officer Stephen Cootey said the project, which is 17 years in the making, initially calls for 213,000-square-foot-facility with a 100,000-square foot casino, two restaurants, and a food hall project.
Cootey said North Fork casino would have a 15-month-to-18-month building timeline and Red Rock has already invested between $62 million and $63 million into the project. It was originally was budgeted at $350 million.
It comes just Red Rock exited its seven-year management agreement last Friday with Graton Rancheria Tribe for Graton Resort north of San Francisco. Cootey said the company had hoped to extend the contract a few months due to losses suffered when the casino was closed during the pandemic.
Toward the end of the conference call, Red Rock management was asked about a potential change in Nevada gaming regulations that require in-person registration for sports wagering, something the company continues to strongly support.
However, Fertitta and Cootey said the company could “adjust” if the law were to change, primarily due to its “large database” of Las Vegas-area locals.
Meanwhile, Red Rock, which laid off some 39% of its workforce during the pandemic, did keep its full-time employees on payroll and provided health benefits during the shutdown.
At the outset of the conference call, Cootey outlined the steps the company took in 2020. The medical, dental, and health benefits for employees making less than $100,000 per year covered more than 98% of the workforce. Red Rock said it contributed more than $8.6 million to the employees’ 401(k) retirement program.
Share of Red Rock Resorts, traded on the Nasdaq, closed at $27.81 Tuesday, down 15 cents or 0.54%. However, the company’s shares were up nearly 7% in after-hours trading.
Howard Stutz is the executive editor of CDC Gaming. He can be reached at hstutz@cdcgaming.com. Follow @howardstutz on Twitter.
