Red Rock Resorts reported third-quarter revenue that was flat compared to 2021, even as the company remains bullish on fourth-quarter performance.
The earnings call spotlighted the contrast between the Las Vegas Strip and casinos that serve local residents. The Nevada Gaming Control Board reported Thursday that third-quarter locals-casino revenue fell 1.1% year over year, but it was still 20.6% higher than the third quarter of 2019.
In comparison, for the third quarter, the Strip was up 3.2% year over year and 29.1% higher than the third quarter of 2019.
Red Rock reported net revenues of $414.4 million for third quarter 2022, down from $414.8 million in the same period of 2021. Some $411.6 million of that was from Las Vegas operations.
Net income was $95.5 million for the third quarter, down $22.5 million from $117.9 million in the same period of 2021. Adjusted earnings were $181.9 million for the third quarter of 2022, a decrease $2.7 million (1.4%) from $184.5 million in the same period of 2021.
Executive Vice President and CFO Stephen Cootey said that based on same-store net revenue, the third quarter was the best third quarter in company history. The adjusted earnings marked the second-highest quarter, surpassed only by last year’s third quarter.
This is the ninth consecutive quarter Red Rock has delivered same-store adjusted-earnings margins in excess of 45%, Cootey said.
Visitation to properties was even with the second quarter, but there was strong spend per visit across the portfolio and those trends are consistent to start the fourth quarter, he said.
CEO and board chairman Frank Fertitta III said they don’t want to project into the fourth quarter, but historically, the third quarter has been the company’s weakest, while the fourth quarter is among the two best, along with the first quarter.
“We don’t see anything that would suggest that it will be any different than it has been historically, other than the last third quarter, when we had a bunch of stimulus money in the economy that may have made things a little harder to read,” Fertitta said.
Beyond gaming, the hotel and food-and-beverage segments recorded their most profitable third quarter results ever.
“While we recognize the headwinds of the economy and the adverse impact inflation has on both the company and our customers, our actions taken over the last 10 quarters and focused efforts to control the controlables have allowed us to generate strong adjusted (earnings), maintain (adjusted earning) margins, and return $1 billion in capital to our shareholders since we reopened in June 2020,” Cootey said.
Red Rock Resort’s Durango Station casino project was topped off in October and is expected to be fully enclosed by the end of February. The opening is still expected in fall 2023. The project is expected to cost $750 million.
Red Rock’s Wild Wild West property in Las Vegas has been closed permanently and the facility is slated to be demolished and the land repositioned for future development.
“With the closure of Wild Wild West, along with the eventual purchase of the 67-acre site at Losee at the 215 (Beltway), our land holdings around the Las Vegas valley will amount to almost 630 acres,” Cootey said. “These strategic holdings are the foundation for the future growth of the company and represent a continuation of our 46-year history of growth in the development of gaming sites located in attractive high-growth areas with superior ingress and egress along the major beltways.”
The company is working through the planning, zoning, and entitlement process for several holdings, including in the Inspirada master plan in west Henderson and Skye Canyon master plan in northwest Las Vegas. It’s also looking to divest of some land holdings and reposition its portfolio for the next chapter of growth, Cootey said.
“With our assets and locations, coupled with our current pipeline of seven development sites located in desirable locations in the Las Vegas valley, we have an unparalleled growth story that will allow us to double the size of our portfolio and position us to capitalize on the long-term demographic trends and high barriers to entry that characterize the Las Vegas locals’ market,” Cootey said.
