Red Rock Resorts reported a 16.9% year-on-year increase in revenue and adjusted EBITDA in Q2, mainly due to growth within its gaming business. The land-based casino operator also posted higher revenue and earnings during H1.
Net revenue at Red Rock in the three months to 30 June hit $486.4 (£377.4m/€448.4m). This is comfortably ahead of $416.1m in Q2 of 2023 and only marginally lower than $488.9m in Q1 this year.
The stand-out figure for Red Rock in Q2 is its casino segment, where revenue jumped 18.6% to $319.6m. This represents a record Q2 performance for the gaming business, helped by the opening of its new Durango Casino & Resort in Nevada last December.
Located in Las Vegas, Durango opening in phases, with Q2 being only the second full quarter of operations. Phase Two, which is due to begin soon, will include an additional 25,000sqft of casino space. This includes 230 slot machines, 120 of which will be located in a new high-limit room.
“The team at Durango continues to execute and improve the property’s operational performance while at the same time, driving incremental play from our existing customers and attracting new customers to our brand,” Red Rock executive vice-president and chief financial officer, Stephen Cootey, said during the earnings call on Wednesday (24 July).
“While we’re still in the planning and budgeting stages of the expansion, we currently expect construction to start later this year. We’ll provide more information on this expansion on future earnings calls.”
Accompanying gaming growth was higher revenue across all other core segments. Food and beverage revenue in Q2 was 18.2% ($91.7m), room revenue increased 11.6% ($50.1m) and other revenue rose 3.3% ($24.9m).
Higher costs dent bottom line in Q2
Turning to spending, total operating costs at Red Rock during the quarter were $346.2m, up 19.7% year-on-year. Expenses were higher in almost all areas, with selling, general and administrative the main outgoing at $111.3m. Casino expenses also reached $87.9m.
Meanwhile, Red Rock also noted $721,000 in earnings from joint ventures, as well as $59.2m in finance-related costs, including $57.4m in interest payments. As such, it ended Q2 with a pre-tax profit of $81.6m, down 2.0% from last year.
Red Rock paid $11.8m in taxes and also discounted $34.1m in net profit from non-controlling interests. This left a net profit of $35.7m, a drop of 9.6% from last year. There was, however, better news in terms of adjusted EBITDA, with this rising 15.1% year-on-year to $201.7m.
Despite higher expenses, Cootey was positive about this spending, saying Red Rock is in control of costs. This, he adds, fits in with the operator’s long-term growth plans.
“Within the quarter, the company continued to manage our expenses, generate record financial performance near record margins, reinvest in our properties and return capital to our shareholders,” Cootey said.
“Our continued success demonstrates the resilience of our business model, the sustainability of our operating margins and the ability of our management team to execute on our long-term growth strategy, while taking a balanced approach in returning capital to our shareholders.”
Similar story for Red Rock in H1
Turning now to the first half, key financial figures make for similar reading. Net revenue for H1 was 14.8% higher year-on-year at $975.3m, with this again being driven by growth in the casino business.
Gaming revenue increased 14.1% to $636.5m, partly due to the opening of the new Durango venue in Las Vegas. Elsewhere, food and beverage revenue climbed 18.7% to $185.0m, room revenue jumped 16.0% to $103.0m and other revenue edged up 7.2% to $50.8m.
Costs-wise, total operating expenses increased 16.0% to $679.5m, with selling, general and administrative again the main area of spending at $216.1m.
Earnings from joint ventures were $1.4m while finance costs hit $130.9m, of which $114.6m was interest expense. This left $166.2m in pre-tax profit, down 7.2% year-on-year.
Red Rock paid $18.2m in taxes for the first half, and also took off $69.7m in earnings from joint ventures. As such, net profit attributable to the operator in H1 was $78.5m, down 6.8% from last year.
However, as was the case in Q2, adjusted EBITDA made for more positive reading, with this rising 11.2% to $410.8m.
“We’d like to recognise and extend our thanks to all of our team members for their hard work,” Cootey said. “Our success starts with them and they continue to be the primary reason why our guests return time after time.”
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