Red Rock Resorts Inc ((RRR)) has held its Q3 earnings call. Read on for the main highlights of the call.
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Red Rock Resorts Inc. recently held its earnings call, revealing a strong financial performance characterized by record-setting revenue and EBITDA. The company’s strategic expansions and shareholder returns were highlighted as key drivers of success, despite challenges such as ongoing construction disruptions and high debt levels. The overall sentiment was positive, with achievements in revenue growth and expansion outweighing the concerns.
Record-Breaking Financial Performance
Red Rock Resorts’ Las Vegas operations achieved new records for the highest third quarter net revenue and adjusted EBITDA in the company’s history. This marks the ninth consecutive quarter of record net revenue and the fifth consecutive quarter of record adjusted EBITDA, showcasing the company’s consistent financial strength.
Durango Casino Resort Expansion
The Durango Casino Resort continues to perform well, contributing to the expansion of the Las Vegas locals market. The current construction phase will add over 25,000 square feet of casino space and a new high limit slot area, with completion expected in late December at a budget of $120 million.
Consolidated Revenue and EBITDA Growth
In the third quarter, Red Rock Resorts saw a 1.6% increase in consolidated net revenue to $475.6 million, while adjusted EBITDA rose by 4.5% to $190.9 million. The adjusted EBITDA margin also increased by 110 basis points, reflecting the company’s robust financial health.
Strong Free Cash Flow and Shareholder Returns
The company successfully converted 67.3% of its adjusted EBITDA into operating free cash flow, generating $128.5 million. Year-to-date, Red Rock Resorts has returned $221 million to shareholders through dividends and share repurchases, underscoring its commitment to shareholder value.
Positive Hotel and Food & Beverage Performance
Both the hotel and food and beverage segments reported near-record revenue and profitability, with increased occupancy and cover counts across outlets, contributing to the company’s overall financial success.
Successful Share Repurchase Program
The Board has extended the share repurchase program to December 31, 2027, adding $300 million, which leaves $573 million available for future repurchases. This move reflects the company’s confidence in its financial stability and growth prospects.
Construction Disruption Impacts
Ongoing construction projects at Durango, Sunset Station, and Green Valley Ranch are expected to cause near-term disruptions, with a projected $8 million impact in the fourth quarter from Green Valley Ranch alone.
Debt Levels
Red Rock Resorts reported a total principal amount of debt outstanding at $3.4 billion, with a net debt-to-EBITDA ratio of 3.89x, indicating a significant leverage position that the company will need to manage carefully.
Forward-Looking Guidance
The company provided forward-looking guidance, highlighting record financial performance for its Las Vegas operations with a net revenue increase of 1% and an adjusted EBITDA rise of 3.4%. Red Rock Resorts plans to continue its expansion projects at Durango Casino Resort and invest significantly in Sunset Station and Green Valley Ranch. The extension of the share repurchase program and an increase in the quarterly dividend to $0.26 per share reflect confidence in the company’s long-term growth strategy.
In summary, Red Rock Resorts Inc.’s earnings call conveyed a positive sentiment with record-breaking financial results and strategic expansions. While challenges such as construction disruptions and high debt levels remain, the company’s achievements in revenue growth and shareholder returns provide a strong foundation for future success.