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Red Rock on course for record year despite Q3 declines

| By Robert Fletcher
Land-based casino operator Red Rock Resorts says it is on course for a record performance in 2023 despite reporting a decline in revenue, adjusted EBITDA and net profit in Q3.
Red Rock Q3

Revenue in the three months to 30 September was only marginally down – 0.7% to $411.6m (£335.3m/€385.2m). Red Rock says this was due to a decline in casino activity, with all other areas seeing increases in Q3.

However, such was its success in the previous two quarters that it remains confident of full-year growth. Red Rock chief financial officer Stephen Cootey went as far as to say 2023 could be a record year for the operator.

“Similar to our results in the first half, the third quarter represented another strong quarter for the company,” Cootey said. “The quarter represented our third best Q3 in the history of the company in terms of same-store net revenue, adjusted EBITDA and adjusted EBITDA margin, only surpassed by the unprecedented third quarters of 2021 and 2022.

“When comparing our results to last year’s Q3, we continue to see upside from strong visitation in our regional, national and VIP segments. This strength, coupled with strong spend per visit across most of our portfolio, allowed us to enjoy near-record Q3 revenue and adjusted EBITDA results across our gaming segments.”

Casino revenue down 3.4% in Q3

Taking a closer look at the results, casino was by far the main source of revenue in Q3. These activities generated $272.7m in revenue, down 3.4% year-on-year.

However, growth in other operations stopped revenue falling further. Food and beverage revenue was 4.3% higher at $72.8m, room revenue 7.4% at $42.0m and other revenue 3.5% at $24.0m.

Las Vegas operations drew $408.0m of total revenue in Q3, down 0.9% from last year. The remaining $3.6m of revenue came from corporate and other activities.

Higher costs and lower net profit for Red Rock 

Turning to spending where operating costs at Red Rock in Q3 were 5.6% higher at $289.1m. Costs were up in almost all areas, with the main outgoing being selling, general and administrative at $91.9m.

Red Rock noted an additional $45.5m worth of interest expense and $640,000 joint venture earnings. This left a pre-tax profit of $77.7m, down 27.5% from last year.

The operator paid $9.3m in income tax and discounted $32.9m in net profit from its non-controlling interests. As such, net profit for Q3 reached $35.5m, down 28.4%.

In addition, adjusted EBITDA slipped 3.7% year-on-year from $181.9m to $175.2m.

On track for record full year

Looking at the year to date, revenue in the nine months to 30 September was $1.26bn, up 1.9% on last year. Casino activities generated $830.5m in revenue, while food and beverage revenue hit $228.5m, rooms $130.9m and other $71.5m.

To go alongside revenue growth, operating costs were reduced by 2.7% to $874.6m. Interest expenses amounted to $132.3m and joint venture earnings $2.3m, leaving pre-tax profit of $256.7m, up 1.6%.

Red Rock paid $27.9m in income tax and accounted for $109.2m in net profit from its non-controlling interests. This meant net profit attributable to Red Rock was $119.7m, up 5.3% year-on-year.

However, Red Rock did note that adjusted EBITDA slipped 0.9% to $544.7m for the period.

“Through the first nine months of the year, we remain on pace to have the best financial year in our history,” Cootey said.

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