With the local economy churning, it makes sense that a locals-focused casino company could take advantage.
Executives of Red Rock Resorts Inc., parent company of Station Casinos Inc., told investors Tuesday that Southern Nevada’s supercharged economy has helped them weather construction disruptions at two major properties and the headache of the state’s largest highway construction project.
Company officials said in a first-quarter earnings call that the outlook is bright, with key economic indicators staying positive and the company taking advantage of new technology introduced on its casino floors.
Red Rock reported an 80.8 percent increase in net revenue to $82.1 million and a 2.9 percent improvement in adjusted cash flow to $140.1 million, despite a 1.1 percent decline in revenue to $421 million for the quarter that ended March 31.
Executives said it’s because Las Vegas is doing well in several economic growth categories, and the company has locals casinos properties right in the middle of it all.
Chairman and CEO Frank Fertitta III and Chief Financial Officer Stephen Cootey, as they did in their fourth-quarter earnings report, cited statistics reflecting Southern Nevada’s booming economy and how Station properties were capitalizing.
“With respect to population, Las Vegas is now designated as the fastest-growing major metropolitan statistical area in the United States having posted 2.2 percent growth in 2017,” Cootey said. “Also, the number of residents is at an all-time high with one-third of new arrivals being retirees, a key gaming demographic for us.”
Cootey also cited job and wage growth, increases in home sales and values and the more than $14 billion in capital projects underway around the valley — including Resorts World Las Vegas, Project Neon, the Raiders stadium project and the Las Vegas Convention Center expansion and renovation.
Project Neon has been a double-edged sword for Station, with Palace Station at the southern end of the $1 billion highway construction project possibly disrupting visitation while it provides construction jobs.
“I can tell you from a Las Vegas locals point of view, it definitely has created traffic problems and delays in traffic to get up and down Interstate 15, especially through that bottleneck called the Spaghetti Bowl,” Fertitta said on the call.
“So it’s hard to quantify, but it certainly isn’t helping, I can tell you that.”
Executives said upgrades to the company’s slot systems and the introduction of IGT’s Cardless Connect mobile technology that links the company’s Boarding Pass loyalty card to cellular devices will likely drive future casino revenue.
“The upgrade could be a game-changer from a guest perspective,” Cootey said. “As evidenced by the approximate 6 percent growth in casino revenue we have seen across our non-disrupted properties since its rollout, we believe our prediction (that the system could be a ‘game changer’) is correct.”
Union vote won’t affect earnings
In response to an investor’s question about the recent passage of union representation by Culinary Local 226 at the Palms, Cootey said he doesn’t expect contract negotiations to hurt earnings potential. He also said the company’s management of the Graton Resort & Casino in Rohnert Park, California, for the Federated Indians of Graton Rancheria tribe, is doing remarkably well after the devastating wildfires that scorched nearby Napa Valley wine country.
Red Rock Resorts Inc.
First-quarter earnings for Las Vegas-based Red Rock Resorts Inc. (Nasdaq: RRR).
2018: $421 million
2017: $425.7 million
2018: $82.1 million
2017: $45.4 million
Earnings per share
2018: 65 cents
2017: 30 cents