Durango project sees progress as Red Rock Resorts reports record 1Q

Red Rock Resorts has locked in on a guaranteed maximum price for its $750 million casino project in southwest Las Vegas, the company reported Tuesday.

The detail came during the company’s first-quarter earnings call that revealed Red Rock Resorts achieved the highest first-quarter net revenue, adjusted cash flow and adjusted cash flow margins in the company’s history.

“This marks the seventh quarter in a row that the company has achieved record same-store adjusted cash flow and adjusted cash flow margin,” said Stephen Cootey, executive vice president, chief financial officer and treasurer of the company.

As for the Durango property, Cootey said, “The project is progressing nicely and is on schedule.”

Company officials broke ground on the project in March.

When completed after an 18-to-24-month construction period, the Durango, which has no nonrestricted gaming competition within a 5-mile radius of the site, will have 2,000 slot machines and 46 table games in a 73,000-square-foot casino, 200 hotel rooms and suites, four full-service food and beverage outlets and a food hall. It’s located in the fastest-growing neighborhood in Las Vegas.

Roughly 70 percent of construction expenses are built into the maximum guaranteed price contract.

Red Rock, whose Station Casinos Inc. division operates Red Rock Resort, Green Valley Ranch, Palace Station and several other casinos, also gave no indication when the company’s Texas Station, Fiesta Rancho and Fiesta Henderson properties would reopen.

Company leaders had little to say about the fate of Texas Station and the two Fiesta properties, noting that the company continues to monitor market conditions before making a decision on when to reopen the properties. The company is still carrying $2.1 million in expenses to maintain the closed properties.

“The combination of the omicron (variant) and inflationary pressures offset by the lifting of the mask mandate across the state on Feb. 10 resulted in a quarter-over-quarter reduction in visitation,” Cootey said. “But this trend was more than offset by increased time on device by our customers as well as strong spend-per-visit across our entire portfolio.”

Cootey said the company’s cashless gaming system has been rolled out to all properties except for Sunset Station and the company’s Wildfire properties with the rest expected to adopt it later this year. He said customers have warmly received the new system that enables customers to gamble and pay for amenities through a single digital wallet in a smartphone.

Customer levels, while weak in January because of the omicron outbreak, returned to higher levels in February and March exceeding pre-pandemic customer levels.

Cootey said customers are spending at higher levels, prompting a plan to open a VIP high-limit table game room at Red Rock Resort later this week.

Red Rock reported net income of $92.2 million, 77 cents a share, on revenue of $401.6 million for the quarter that ended March 31.

A year earlier, Red Rock reported a net loss of $106.6 million, 92 cents a share, on revenue of $352.6 million.

The company also reinstituted its dividend policy and will pay a cash dividend of 25 cents per common share for the second quarter. The dividend will be payable June 30 for shareholders of record on June 16.

A total of $36.5 million has been returned to shareholders in 2022 and the company still has $146 million available for additional share buybacks.

“Like with every other U.S. company in our coverage universe that thus far has reported first-quarter earnings, Red Rock’s consumer was slower in January with the omicron variant, but rebounded in February and March, as well as into April, as the omicron impact lessened and the Nevada mask mandate, in February, was removed,” gaming analyst Joe Greff of New York-based J.P. Morgan said in a report to investors.

“In terms of how the Las Vegas Locals consumer is performing, Red Rock did indicate that its lower-end consumer did see some softness in the latter part of the quarter but has snapped back a bit in April/quarter to date and has been more than offset by improving trends from its higher-end casino patron,” he said.

Red Rock shares, traded on the Nasdaq exchange, were down 30 cents, 0.7 percent, to $44.95 a share in average volume trading Tuesday. After hours, shares gained 3 cents, 0.07 percent, to end at around $44.98 a share.

Contact Richard N. Velotta at rvelotta@reviewjournal.com or 702-477-3893. Follow @RickVelotta on Twitter.