It was a solid end to 2022 for Red Rock Resorts, whose returns were relatively flat year over year despite the economic headwinds impacting the rest of the country and a disrupted supply chain.
“This demonstrates the resilience of our business model, the sustainability of our margins and the ability of our management team to execute on our strategy even in an extremely challenging, even in an extremely challenging macro environment,” said Stephen Cootey, Executive Vice President, Chief Financial Officer, and Treasurer of Red Rock Resorts.
Top line Red Rock Resort Q4 and 2022 numbers
Here is a look at top-line numbers from the Red Rock Resorts Q4 report:
Net revenues: $425.5 million, up .7% YoY
Net income: $170.2 million, down 14.9% YoY
Adjusted EBITDA: $194.4, up 2.5% YoY
And here is a look at full-year numbers:
Net revenues: $1.66 billion, up 2.8% from 2021
Net income: $390.4 million, up 10% from 2021
Adjusted EBITDA: $743.9 million, up 0.4% from 2021
Focus on Vegas locals’ casino experience still working
During the call, Cootey reiterated the company’s commitment to catering to the local population of Nevada, which has experienced tremendous growth over the past couple of years, particularly with higher-income retirees. He credited that commitment for the strong fourth-quarter performance. He cited the addition of a new high-limit room at Red Rock Resort and the opening of the prestigious Thai restaurant Lotus of Siam as examples of the effort in action.
The addition of nationally recognized food and beverage was also credited with helping keep locals on property instead of traveling to the Strip, as those kinds of amenities were generally not available in the past.
Non-gaming revenue in Vegas grew well year-over-year, while gaming revenue was down slightly.
High hopes for Durango Station project
Most of the company’s capital expenditure for the year went to the development of its forthcoming Durango Station project in southwest Las Vegas. The total cost of the project will be roughly $750 million to build, $258 million of which was spent last year. Durango Station is on track to open in the fourth quarter of this year.
One of the company’s other projects, a Wildfire Casino on Fremont Street, is set to open this weekend.
When asked about pending projects in the Skye Canyon and Inspirada neighborhoods of Vegas, Red Rock Chairman and CEO Frank Fertitta said they want to see proof of performance at Durango Station before moving forward.
“That being said, we’re very confident in Durango, its location, the product that we’re going to build there,” he added. “I think the market is going to really, really like what we’re doing. So, we’re excited about it. And once we believe that we have stability, whether it be over two, three, four quarters, we’ll decide that based on the strength of the business.”
Fertitta also noted the quality location of Durango Station as something the company is excited about. The property is not within five miles of another casino and is also located in a part of the Las Vegas Valley that is fastest-growing. Even with housing prices on the decline, the Fertittas are not too concerned that another bubble like 2008 is on the horizon.
“Although housing prices are down from where they were, they were really what I would consider to be an unsustainable peak. And so, what you’ve had as you guys talked about with increases in interest rates and things like that, you’ve just had a bit of a slowdown, but you still have a lot of people that have significant equity in their homes right now. It’s not like I think in 2008, we were like 74% of the homes were underwater in equity. This is not what we’re seeing right now. We’re seeing a healthy slowdown or reduction from what I think was unsustainable,” said Vice Chairman Lorenzo Fertitta.