Casino developer and operator Red Rock Resorts has reported its financial results for the third quarter of the year. The Nevada-based firm posted $414.4 million in revenue, flat from $414.8 million in the same period last year. Meanwhile, net income was down by $22.5 million to $95.5 million. Officials said they haven’t seen inflation or other macroeconomic pressures affecting demand at its resort casinos.
Red Rock Resorts, which operates Green Valley Ranch Resort, Palace Station, Red Rock Resort, and other locals-focused properties, said that its flat year-over-year growth in net revenue and cash flow for the quarter ending September 30 indicates seasonality is normalizing following the effects of the pandemic.
“While the quarter presented a return to normal seasonality, significant economic uncertainty, and record inflation, our disciplined approach to running our business coupled with our unparalleled distribution scale resulted in near record high (cash flow and cash flow margin), even as we continue to execute on a long term growth strategy and continue to return capital to our shareholders,” Chief Financial Officer Stephen Cootey told investors, as reported by the Las Vegas Review-Journal.
The assurance didn’t stop analysts from looking for details about inflation’s impact. Analysts asked whether the older demographic — often on a fixed income — had changed their visitation or spending patterns. According to President Scott Kreeger, the 55-and-older customers were a stable segment of the business that’s fully returned. The company also expects the segment to grow, in part because of incoming residents.
Kreeger also said wage inflation appears to be leveling off and the operations team was mitigating costs by scheduling labor according to demand. The company has been able to fully staff its verticals, he said. Inflation’s biggest hit has been on the food and beverage segment, but the company uses dynamic pricing and menu engineering to offset the costs.
Scott Kreeger, Station Casinos President
Analysts further inquired about how the company would react to an economic downturn. “From a leverage perspective, we have a billion-dollar revolver with ample liquidity,” Cootey said, as reported by the cited source. “We’re prepared to weather a storm if one was to come,” he added according to the above-mentioned media.
Regarding its current developments, earlier this month the company identified six swaths of land in the Las Vegas Valley that it plans to develop within about 10 years. Officials confirmed the business is completing the permit and zoning processes for land holdings in Inspirada, in the southeast, and Skye Canyon, in the northwest.
Furthermore, the operator’s $750-million Durango Resort project in the southwest valley is expected to be enclosed by February. Crews topped off the development in early October. Leadership also said a new 21,000-square-foot Wildfire casino, on Fremont Street south of Charleston Boulevard that’s part of its smaller casino brand, is expected to open before the Super Bowl.
Durango Casino Resort
Other results for the second quarter include an Adjusted EBITDA of $181.9 million, a decrease of 1.4% or $2.7 million from the same period of 2021. As for the company’s specific Las Vegas operations, these delivered net revenues of $411.6 million, slightly down by 0.3%; while the Adjusted EBITDA from these operations was $199.9 million, a decrease of 0.9%.
As for cash and cash equivalents on September 30, these were $101.1 million, and the total principal amount of debt outstanding at the end of the quarter was $2.91 billion. The company’s Board of Directors has now declared a cash dividend of $0.25 per Class A common share for Q4 of 2022, which will be payable on December 30. Red Rock Resorts shares closed Thursday up 0.03%, to $39.05 per share.