Strength in its core Las Vegas operations drove Red Rock Resorts to a 10.4 percent increase in revenue in the fourth quarter.
Red Rock (Nasdaq: RRR) beat a consensus estimate of analysts polled by Zacks to post $431.5 million in revenue for the three months ended December 31, a 7.8 percent increase over the same period last year.
Fueling the performance was the $409.5 million contributed by the company’s 17 casino hotels in Las Vegas, up from $370.1 million in Q417.
Moreover, the gains were achieved despite dislocation from the remodeling and expansion of the company’s off-Strip Palms Casino Resort and Palace Station Hotel & Casino and the expiration of a casino management agreement with Michigan’s Gun Lake Indian Tribe.
“The positive performance was spread across the entire portfolio,” CEO Frank Fertitta III told analysts on a conference call.
Although adjusted EBITDA was up a robust 10 percent to $135.1 million, net income took a hit from a one-off write-down of $23.9 million in the value of certain derivatives and an accounting change that boosted interest expense on a corporate office building lease by $9.3 million. In all, the bottom line was down from $46 million, or 35 cents per share, in Q417 to $13.2 million, or 11 cents per share.
Plusses in the quarter included completion of the Palace Station renovations, a $191 million project that has given the property 178,000 square feet of a new gaming and entertainment space, a remodeled exterior, 300 more parking spaces and a nine-screen cineplex.
Management said it expects to complete the second phase of the Palms’ $690 million remake by the end of June and the third phase by the fall. Two new restaurants were added during the December quarter, along with 15,000 square feet of renovated meetings and events space. The end of March is expected to see the completion of room and suite renovations in the casino’s Fantasy Tower.
The company also added 40 acres of undeveloped land in the northwest Las Vegas Valley community of Skye Canyon. The purchase was completed in November at a cost of $36 million.
“We want to be in control of our own destiny, and we see (Skye Canyon) as potential area for growth in the future,” CFO Steven Cootey said.
The company also plans to add a casino to its California portfolio in partnership with the North Fork Tribe pending approval from the state Supreme Court for the development, located near Fresno.
