Red Rock Resorts Announces Fourth Quarter and Full Year 2023 Results
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Insights
The reported financial results from Red Rock Resorts, Inc. indicate a mixed financial performance. The increase in net revenues by 8.8% in Q4 and 3.6% for the full year suggests a positive trend in top-line growth, which could be attributed to strategic initiatives or market expansion. However, the decline in net income by 36% in Q4 and 13.5% for the full year raises concerns about the company's profitability and cost management. This divergence between revenue growth and profitability could be driven by increased operating expenses, one-time charges, or changes in the competitive landscape.
Investors should note the Adjusted EBITDA figures, which provide insight into the company's operational efficiency by excluding non-cash expenses and other non-operational items. A modest increase in Adjusted EBITDA suggests that the core operations remain relatively stable. The balance sheet highlights, including the cash position and debt levels, are crucial for assessing the company's liquidity and financial leverage. The debt figure of $3.4 billion warrants attention to the company's debt servicing capabilities and potential impact on future cash flows.
The declaration of both a regular and a special dividend suggests confidence by the board in the company's cash flow generation, though investors should analyze whether such distributions are sustainable given the net income decline. The dividend payout could be a positive signal to investors seeking income, but it is essential to balance this with the need for reinvestment in the company's growth.
From a market perspective, the performance of Red Rock Resorts provides insights into the broader gaming and hospitality industry. The increase in net revenues, particularly from Las Vegas operations, indicates a potentially resilient demand for leisure and gaming despite any macroeconomic challenges. This resilience might be reflective of Las Vegas's enduring appeal as a tourist destination and could signal positive trends for other companies in the sector.
The company's financial results, especially the revenue growth, could be indicative of effective market strategies or consumer behavior shifts. However, the decrease in net income suggests that the industry might be facing margin pressures, possibly from increased competition or rising operational costs. These factors could have implications for other companies in the sector, potentially affecting their stock performance and investment attractiveness.
Furthermore, the special dividend announcement can be seen as a strategic move to return value to shareholders, which might influence the stock market perception of the company. Such corporate actions often lead to short-term stock price movements, but the long-term impact depends on the company's ability to maintain its financial health and operational performance.
An economist would consider the broader economic implications of Red Rock Resorts' financial results. The reported revenue growth could suggest a healthy consumer spending environment, particularly in the discretionary sector. This might be indicative of broader economic trends such as consumer confidence or disposable income levels. However, the decline in net income could point to inflationary pressures, with rising costs potentially outpacing revenue growth.
The company's performance in Las Vegas, a key indicator of the health of the tourism and entertainment industry, provides data points for assessing the sector's recovery post-pandemic or adjusting to new consumer patterns. The ability of Red Rock Resorts to manage its substantial debt amidst these financial results will be an important aspect to monitor, as it may reflect the company's resilience to economic cycles and interest rate fluctuations.
The declared dividends could also have a multiplier effect on the economy, as they might increase shareholder wealth and subsequently consumer spending. However, this must be weighed against the company's need to invest in capital expenditures to maintain competitiveness, which can also have significant economic impacts.
Fourth Quarter Results
Consolidated Operations
- Net revenues were
$462.7 million 8.8% , or$37.2 million $425.5 million
- Net income was
$108.9 million 36.0% , or$61.3 million $170.2 million
- Adjusted EBITDA(1) was
$201.3 million 3.6% , or$6.9 million $194.4 million
Las Vegas Operations
- Net revenues from
Las Vegas operations were$459.4 million 9.5% , or$39.7 million $419.6 million
- Adjusted EBITDA from
Las Vegas operations was$220.3 million 6.5% , or$13.4 million $206.9 million
Full Year Results
Consolidated Operations
- Net revenues were
$1.72 billion 3.6% , or$60.3 million $1.66 billion
- Net income was
$337.8 million 13.5% , or$52.6 million $390.4 million
- Adjusted EBITDA(1) was
$746.0 million 0.3% , or$2.1 million $743.9 million
Las Vegas Operations
- Net revenues from
Las Vegas operations were$1.71 billion 3.6% , or$58.9 million $1.65 billion
- Adjusted EBITDA from
Las Vegas operations was$818.8 million 0.7% , or$6.0 million $812.8 million
Balance Sheet Highlights
The Company's cash and cash equivalents at December 31, 2023 were
Quarterly Dividend
The Company's Board of Directors has declared a cash dividend of
Prior to the payment of such dividend, Station Holdco LLC ("Station Holdco") will make a cash distribution to all unit holders of record, including the Company, of
Special Dividend
The Company's Board of Directors has declared a special dividend of
Prior to the payment of such dividend, Station Holdco LLC ("Station Holdco") will make a cash distribution to all unit holders of record, including the Company, of
Conference Call Information
The Company will host a conference call today at 4:30 p.m. Eastern Time to discuss its financial results. The conference call will consist of prepared remarks from the Company and include a question and answer session. Those interested in participating in the call should dial (888) 317-6003, or (412) 317-6061 for international callers, approximately 15 minutes before the call start time. Please use the passcode: 2244930. A replay of the call will be available from today through February 14, 2024 at www.redrockresorts.com. A live audio webcast of the call will also be available at www.redrockresorts.com.
Presentation of Financial Information
(1) Adjusted EBITDA is a non-GAAP measure that is presented solely as a supplemental disclosure. We believe that Adjusted EBITDA is a widely used measure of operating performance in our industry and is a principal basis for valuation of gaming companies. We believe that in addition to net income, Adjusted EBITDA is a useful financial performance measurement for assessing our operating performance because it provides information about the performance of our ongoing core operations. Adjusted EBITDA includes net income plus depreciation and amortization, share-based compensation, write-downs and other, net (including gains and losses on asset disposals, demolition costs, preopening and development, business innovation and technology enhancements, contract termination costs and non-routine items), asset impairment, interest expense, net, provision for income tax and other.
Company Information and Forward Looking Statements
Red Rock Resorts is a holding company that owns an indirect equity interest in and manages Station Casinos LLC ("Station Casinos"). Station Casinos is the leading provider of gaming, hospitality and entertainment to the residents of
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements include, without limitation, statements regarding our expectations, hopes or intentions regarding the future. These forward-looking statements can often be identified by their use of words such as "will", "might", "predict", "continue", "forecast", "expect", "believe", "anticipate", "outlook", "could", "would", "target", "project", "intend", "plan", "seek", "estimate", "pursue", "should", "may" and "assume", or the negative thereof, as well as variations of such words and similar expressions referring to the future. Forward-looking statements involve certain risks and uncertainties, and actual results may differ materially from those discussed in any such statement. Certain important factors, including but not limited to, financial market risks, could cause our actual results to differ materially from those expressed in our forward-looking statements. Further information on potential factors which could affect our financial condition, results of operations and business includes, without limitation, the impact of rising inflation, higher interest rates and increased energy costs on consumer demand and the Company's business, financial results and liquidity; the impact of unemployment and changes in general economic conditions on discretionary spending and consumer demand; the impact of our substantial indebtedness; the effects of local and national economic, credit and capital market conditions on consumer spending and the economy in general, and on the gaming and hotel industries in particular; the effects of competition, including locations of competitors and operating and market competition; changes in laws, including increased tax rates, regulations or accounting standards, third-party relations and approvals, and decisions of courts, regulators and governmental bodies; risks associated with construction projects, including disruption of our operations, shortages of materials or labor, unexpected costs, unforeseen permitting or regulatory issues and weather; litigation outcomes and judicial actions, including gaming legislative action, referenda and taxation; acts of war or terrorist incidents, pandemics, natural disasters or civil unrest; risks associated with the collection and retention of data about our customers, employees, suppliers and business partners; and other risks discussed under the heading "Risk Factors" in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2022, and in the Company's other current and periodic reports filed from time to time with the Securities and Exchange Commission. All forward-looking statements in this document are made based on information available to the Company as of the date hereof, and the Company assumes no obligation to update any forward-looking statement.
View source version on http://redrockresorts.investorroom.com/:
INVESTORS:
Stephen L. Cootey
Stephen.Cootey@redrockresorts.com
(702) 495-4214
MEDIA:
Michael J. Britt
Michael.Britt@redrockresorts.com
(702) 495-3693
Red Rock Resorts, Inc. | |||||||
Consolidated Statements of Income | |||||||
(amounts in thousands, except per share data) | |||||||
(unaudited) | |||||||
Three Months Ended | Year Ended | ||||||
2023 | 2022 | 2023 | 2022 | ||||
Operating revenues: | |||||||
Casino | $ 301,660 | $ 283,265 | $ 1,132,154 | $ 1,126,058 | |||
Food and beverage | 85,071 | 73,813 | 313,619 | 283,067 | |||
Room | 52,236 | 44,385 | 183,103 | 164,502 | |||
Other | 23,542 | 21,597 | 94,403 | 87,089 | |||
Management fees | 205 | 2,410 | 807 | 3,070 | |||
Net revenues | 462,714 | 425,470 | 1,724,086 | 1,663,786 | |||
Operating costs and expenses: | |||||||
Casino | 81,946 | 71,228 | 293,993 | 279,537 | |||
Food and beverage | 66,050 | 58,532 | 244,786 | 224,903 | |||
Room | 14,636 | 13,211 | 55,064 | 52,017 | |||
Other | 8,084 | 8,641 | 32,549 | 32,258 | |||
Selling, general and administrative | 96,659 | 84,984 | 374,494 | 353,043 | |||
Depreciation and amortization | 36,168 | 31,057 | 132,536 | 128,368 | |||
Write-downs and other, net | (12,792) | (63,747) | 31,976 | (47,660) | |||
Asset impairment | - | - | - | 80,018 | |||
290,751 | 203,906 | 1,165,398 | 1,102,484 | ||||
Operating income | 171,963 | 221,564 | 558,688 | 561,302 | |||
Earnings from joint ventures | 802 | 791 | 3,095 | 3,469 | |||
Operating income and earnings from joint ventures | 172,765 | 222,355 | 561,783 | 564,771 | |||
Other expense: | |||||||
Interest expense, net | (48,725) | (40,180) | (181,023) | (129,889) | |||
Income before income tax | 124,040 | 182,175 | 380,760 | 434,882 | |||
Provision for income tax | (15,124) | (11,958) | (42,984) | (44,530) | |||
Net income | 108,916 | 170,217 | 337,776 | 390,352 | |||
Less: net income attributable to noncontrolling interests | 52,617 | 78,462 | 161,772 | 184,895 | |||
Net income attributable to Red Rock Resorts, Inc. | $ 56,299 | $ 91,755 | $ 176,004 | $ 205,457 | |||
Earnings per common share: | |||||||
Earnings per share of Class A common stock, basic | $ 0.97 | $ 1.59 | $ 3.04 | $ 3.48 | |||
Earnings per share of Class A common stock, diluted | $ 0.95 | $ 1.49 | $ 2.94 | $ 3.36 | |||
Weighted-average common shares outstanding: | |||||||
Basic | 58,053 | 57,547 | 57,875 | 58,976 | |||
Diluted | 103,139 | 102,859 | 103,217 | 104,663 | |||
Dividends declared per common share | $ 0.25 | $ 1.25 | $ 1.00 | $ 2.00 | |||
Red Rock Resorts, Inc. | |||||||
Segment Information and Reconciliation of Net Income to Adjusted EBITDA | |||||||
(amounts in thousands) | |||||||
(unaudited) | |||||||
Three Months Ended | Year Ended | ||||||
2023 | 2022 | 2023 | 2022 | ||||
Net revenues | |||||||
$ 459,365 | $ 419,647 | $ 1,709,951 | $ 1,651,048 | ||||
Native American management | - | 2,207 | - | 2,207 | |||
Reportable segment net revenues | 459,365 | 421,854 | 1,709,951 | 1,653,255 | |||
Corporate and other | 3,349 | 3,616 | 14,135 | 10,531 | |||
Net revenues | $ 462,714 | $ 425,470 | $ 1,724,086 | $ 1,663,786 | |||
Net income | $ 108,916 | $ 170,217 | $ 337,776 | $ 390,352 | |||
Adjustments | |||||||
Depreciation and amortization | 36,168 | 31,057 | 132,536 | 128,368 | |||
Share-based compensation | 5,158 | 4,716 | 19,673 | 17,515 | |||
Write-downs and other, net | (12,792) | (63,747) | 31,976 | (47,660) | |||
Asset impairment | - | - | - | 80,018 | |||
Interest expense, net | 48,725 | 40,180 | 181,023 | 129,889 | |||
Provision for income tax | 15,124 | 11,958 | 42,984 | 44,530 | |||
Other | - | 20 | - | 866 | |||
Adjusted EBITDA | $ 201,299 | $ 194,401 | $ 745,968 | $ 743,878 | |||
Adjusted EBITDA | |||||||
$ 220,268 | $ 206,864 | $ 818,820 | $ 812,849 | ||||
Native American management | - | 4,639 | - | 1,071 | |||
Corporate and other | (18,969) | (17,102) | (72,852) | (70,042) | |||
Adjusted EBITDA | $ 201,299 | $ 194,401 | $ 745,968 | $ 743,878 | |||
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SOURCE Red Rock Resorts, Inc.
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