Red Rock Resorts has announced stellar first-quarter earnings, buoyed by the recent inauguration of the Durango Casino & Resort in southwest Las Vegas. During the earnings call, Stephen Cootey, Executive Vice President and Chief Financial Officer, highlighted the company’s robust revenue and adjusted earnings alongside near-record adjusted EBITDA margins.
Cootey expressed satisfaction with the initial performance of Durango, stating: “We continue to be pleased with the customer feedback and financial performance of Durango.” He noted the ongoing efforts to enhance operational efficiency and attract both new and existing customers to the brand. Despite encountering some cannibalization effects at its Red Rock Casino & Resort, attributable to Durango’s presence, Cootey remains optimistic about the property’s trajectory. He emphasized the potential to achieve margin targets and return goals ahead of schedule, leveraging the burgeoning demographic growth in the Las Vegas Valley.
The plans for building the Durango Casino started to develop in the early 2000s but they had to be shelved for quite some time as Red Rock Resorts had to go through bankruptcy in 2009. The company then chose to modify the initial plans and sell a part of the property, namely 23 acres, for 23 million dollars. The casino was eventually inaugurated in December 2023.
While acknowledging disruptions at Palace Station and Sunset Station due to roadwork and renovation, respectively, Cootey underscored the consistent delivery of robust adjusted EBITDA margins by Red Rock’s Las Vegas operations for the 15th consecutive quarter. The first quarter witnessed record revenue and profitability in the hotels and food and beverage sectors, with notable growth in group business and catering. However, Cootey cautioned about facing tougher comparisons for the remainder of 2024, owing to postponed sales from the pandemic era.
Looking ahead, Stephen Cootey emphasized stability in the local market and expressed confidence in the company’s business prospects despite anticipated disruptions at Palace Station and Sunset Station in the second quarter.
Significant Amounts Allocated To Investments
Red Rock allocated $98 million to capital expenditures in the first quarter, with plans to invest $140 million to $180 million for enhancements across various properties throughout the year. These investments include restaurant additions at Green Valley Ranch and Palace Station, as well as upgrades to the race and sportsbook and partial casino remodel at Sunset Station.
With ambitions to expand its Las Vegas portfolio, Red Rock is considering an expansion of the Durango property and is actively developing plans for its Inspirada site in West Henderson. Scott Kreeger, President of Red Rock, highlighted the significant growth in the company’s database during the first quarter, with Durango contributing substantially to this expansion.
Lorenzo Fertitta, Vice Chairman of the Board, noted the recent upswing in the lower end of the business, attributing it to the strategic locations of their properties. CEO and Board Chairman Frank Fertitta echoed this sentiment, citing the rapid growth in areas like Summerlin and southwest Las Vegas, which aligns with the company’s customer acquisition strategy.
Kreeger, on the other hand, emphasized stability across all properties, except those experiencing disruptions, and downplayed competitive promotions, citing the influx of new residents as a key driver of performance. He affirmed the company’s unwavering strategy, underpinned by a steady market outlook.