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Red Rock hails long-term strategy as revenue rises in 2023

| By Robert Fletcher
Land-based casino operator Red Rock Resorts has praised the impact of its long-term growth strategy after reporting a 3.6% increase in revenue to $1.72bn (£1.37bn/€1.60bn) in 2023.
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Though only modest growth, Red Rock says the increase in revenue is testament to its wider strategy. This, it says, includes acquiring and opening new properties, with several launching in 2023.

Among the newcomers to the Red Rock portfolio is the Durango, which opened its doors in Nevada in December. Also new in 2023 was the Wildfire Fremont in downtown Las Vegas, which launched in February.

Aside from this, Red Rock continues to make improvements to its other properties, including Palace Station in Nevada. While costs associated with these enhancements inevitably impact bottom line, Red Rock says they support its long-term growth efforts.

“In addition to showing strong financial results, 2023 was a year in which we continued to validate our long-term growth strategy across the Las Vegas valley,” Red Rock chief financial officer Stephen Cootey said. 

“The successful openings of the Durango and Wildfire Fremont properties not only validates our long-term growth strategy within the Las Vegas valley, it also demonstrates the power of our own development pipeline and real estate bank.

“Not only do we expand our physical footprint across the valley in 2023, we continue to execute on our core strategy of reinvesting in our existing properties to deliver fresh and relevant amenities to our guests.”

However, looking to 2024, while confidence is high, Cootey warned of challenging year-over-year comparisons. He also noted ongoing disruption at the Palace Station due to ongoing work at the property.

Net profit down despite revenue growth at Red Rock

Taking a closer look at the 2023 results, casino activity was by far the main source of revenue for Red Rock. Casino revenue for the year amounted to $1.13bn, up 0.5%.

Elsewhere, food and beverage revenue increased 10.8% to $313.6m, room revenue 11.3% to $183.1m and other revenue 8.4% to $94.4m. An additional $807,000 in revenue was drawn from management fees.

As for costs, total operating expenses were 5.7% higher at $1.17bn. Some $374.5m of this was attributed to selling, general and administrative activities and $294.0m casino costs.

Red Rock noted $3.1m in earnings from joint ventures but also a further $181.0m in interest costs. As such, pre-tax profit hit $380.8m, down 12.4% year-on-year.

Tax payments totalled $43.0m and Red Rock also discounted $161.8m of income from non-controlling interests, resulting in a net profit of $176.0m, down 14.4% from 2022. However, there was some good news as adjusted EBITDA edged up 0.3% to $746.0m.

Similar story in Q4

Turning to the final quarter of 2023, the figures made for similar reading. Revenue and adjusted EBITDA both increased year-on-year but net profit declined.

Q4 revenue was 8.7% higher at $462.7m. Casino revenue for the quarter reached $301.7m, food and beverage $85.1m, rooms $52.2m, other revenue $23.5m and management fees $205,000.

Costs-wise, operating expenses were 42.6% higher at $290.8m. Interest costs amounted to $48.7m while Red Rock noted $802,000 in earnings from joint ventures.

Pre-tax profit reached $124.0m, down 31.9% from the previous year. Red Rock paid $15.1m in tax and also discounted $52.6m in income from non-controlling interests. This left a net profit of $56.3m, down 38.7%, but adjusted EBITDA was 3.6% higher at $201.3m.

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