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Red Rock Resorts says casino revenue ‘stable and healthy’

Updated February 7, 2023 - 7:54 pm

Red Rock Resorts on Tuesday reported a steady locals casino environment, as it moves forward with developing its long-term growth strategy in the Las Vegas Valley.

The parent company of Station Casinos reported its best fourth quarter in history for same-store net revenue and second-best fourth quarter in adjusted cash flow and adjusted cash flow margins, said Stephen Cootey, Red Rock Resorts’ executive vice president and chief financial officer.

The company, operator of Red Rock Resort, Green Valley Ranch Resort and several other locals properties, reported net income of $170.2 million, $1.49 per share, on revenue of $425.5 million for the quarter ended Dec. 31. In the same quarter a year earlier, the company reported net income of $200.1 million, $1.66 per share, on revenue of $422.4 million.

For the company’s Las Vegas operations, net revenue in the fourth quarter was $419.6 million, down 0.2 percent year over year.

Executives said they were encouraged by “stable and healthy” casino revenue across both low- and high-end spenders, propelled by strong spend per visit and returning regional and out-of-town travelers.

President Scott Kreeger said growth is more apparent in other business verticals that missed out on that kind of guest during the pandemic.

“When you look at all metrics, whether that’s food and beverage, hotel, ancillary entertainment options like bowling, salon and spa — all of them are up double digit, and we’re really encouraged by that,” Kreeger said. “When we look forward into this year, we’re seeing strength in all of those areas, specifically the return of convention guests and also strong catering revenues as we go forward.”

For 2022, Red Rock posted net income of $390.4 million, $3.36 per share, on revenue of $1.66 billion. That’s compared to a net income of $354.8 million, $2.84 per share, on revenue of $1.62 billion in 2021.

The management team told investors it was well-positioned to continue working on its long-term growth strategy to double its real estate portfolio in the valley by the end of the decade. Its new 21,000-square-foot Wildfire on Fremont casino will open Friday, and the $750 million Durango resort-casino in the southwest valley is on track to open in fall 2023.

Analysts asked executives when and where its next major resort might be, considering the company has previously identified sites in North Las Vegas, Henderson’s Inspirada community and Skye Canyon in the northwest valley. Chairman Frank Fertitta III said it was dependent on how the Durango site is received before another project is greenlighted.

“We want to see continued stability in the Las Vegas market,” Fertitta said. “Everything we see right now continues to back up our long-term thesis of the macro environment, with population migrating into Las Vegas continuing to grow, limitations on supply, where all the rooftops are being built, which is part of the thesis. Inspirada fits right into that.”

Some analysts were encouraged by the development plans despite the modest growth.

Carlo Santarelli, analyst with Deutsche Bank, said it expected higher marginal growth given locals competitor Boyd Gaming’s recent report of 6.7 percent sequential net revenue growth.

“While the results could be perceived as being below recent expectations, we see limited signs of headwinds in the Las Vegas locals market, continued promotional disciplines across the market, and we believe the RRR development pipeline remains a compelling attribute to the story,” Santarelli wrote in a research note after the call.

Red Rock Resorts, traded on the Nasdaq, ended Tuesday at $48.48, up 3.11 percent. Shares fell 0.68 percent to $48.15 in after-hours trading.

McKenna Ross is a corps member with Report for America, a national service program that places journalists into local newsrooms. Contact her at mross@reviewjournal.com. Follow @mckenna_ross_ on Twitter.

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