Casino operator Red Rock Resorts said that despite third quarter revenue falling 24.2% year-on-year, l0wer costs helped it post a profit for the period
Net revenue for the three months to September 30 amounted to $353.2m, down from $465.9m in the same period last year.
During the reporting period, Red Rock continued with a phased reopening of its properties, which had been forced to temporarily close in mid-March in line with novel coronavirus (Covid-19) restrictions.
Red Rock, Green Valley Ranch, Santa Fe Station, Boulder Station, Palace Station and Sunset Station, together with its Wildfire properties and the Graton Casino Resort, have all now reopened, but are operating at reduced capacity.
Though casino revenue only edged up 0.7% year-on-year to $239.9m, this total was 217.3% higher than the $75.6m posted in Q2, a period in which most of the operator’s properties were shuttered by the pandemic.
Covid-19 restrictions also weighed on other revenue streams, with food and beverage revenue falling 61.1% to $45.9m. Revenue from hotel rooms dropped to just $22.1m, and other revenue 47.9% to $14.5m, though revenue from management fees climbed 30.9% to $30.9m.
In terms of geographical performance, revenue from its operations in Las Vegas, Nevada, stood at $320.8m, down 27.2% year-on-year. However, Native American management revenue – from tribal casinos it operates – increased 31.2% to $30.7m in the quarter.
Looking at costs, Red Rock was able to significantly cut expenditure during the quarter, with operating expenses falling 44.1% to $252.3m.
Casino expenses were reduced by 35.3% to $57.7m; food and beverage costs by 68.5% to $40.4m, and hotel costs by 45.1% to $11.1m. Selling, general and administrative costs were 26.3% lower at $79.5m, while write-downs and other charges stood at just $1.4m, compared to $34.1m last year.
As a result of lower spending, operating income for Q3 stood at $101.6m, some 595.9% higher than at the same point last year. After accounting for $29.5m in other costs, including $29.8m in interest expenses, income before tax amounted to $72.0m, a significant improvement on a loss of $27.6m in 2019.
Red Rock did not pay any tax in Q3, which meant net profit for the period stood at $72.0m, compared to a $26.8m loss last year. Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) was 44.8% higher at $160.9m.
Analysing Red Rock’s year-to-date performance, revenue for the nine months to the end of September amounted to $839.0m, down 39.9% from $1.40bn at the same point in 2019.
Revenue was down across all of Red Rock’s business segments, including casino, where revenue fell 28.1% to $523.7m, primarily due to Covid-19 closures and restrictions.
Operating costs were 34.7% lower at $829.0m, leaving an operating profit of $10.0m, but after factoring in $121.2m in additional costs – including $99.8m in interest expenses – this left a loss before tax of $111.0m, compared to a $13.5m loss last year.
After paying $113.2m in tax during the period, this left Red Rock with a net loss of $224.2m, compared to a $13.6m loss in 2019, while adjusted EBITDA in the nine months fell 41.3% to $217.9m.