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Red Rock sees losses widen after Covid-19 hit in 2020


Casino operator Red Rock Resorts saw revenue fall 36.3% year-on-year in 2020, and its net loss widen, due to the 79-day statewide shutdown and subsequent social distancing measures in place for its Nevada properties. 

Full-year revenue declined to $1.18bn (£853.5m/€974.1m). Its core Las Vegas locals business accounted for $1.09bn of the total, down 37.8%.

Management fees from properties it operates on Native American lands were down 10.6% at $81.4m, and corporate revenue made up the remaining $6.6m. 

Looking at revenue by source, casino was by far the main contributor, bringing in revenue of $764.3m. Food and beverage revenue was more than halved to $192.9m, as did revenue from its hotels, to $87.0m.

As well as the $81.4m in Native American management fees, Red Rock reported a further $56.3m in revenue from other sources. 

The operator’s chief financial officer Stephen Cootey said its properties had seen post-reopening trends continue throughout the second half, with a younger demographic increasingly visiting the casinos. Spend per visit increased, with more time spent on devices, and the core customer’s return had been “slow but steady”. 

Operating costs for the year declined 34.5% to $1.09bn, comprised predominantly of selling, general and administrative costs, casino expenses, as well as food and beverage spending. However across these main outgoings, spend was down year-on-year. 

Depreciation and amortisation expenses, however, rose marginally to $231.4m. This left an operating profit of $88.6m, down 52.4%, rising marginally to $89.7m after Red Rock’s share of joint venture profits was factored in. 

Interest expenses and other financial costs then fell to $150.1m, leaving a pre-tax loss of $60.5m. After taxes of $114.1m – compared to a $1.7m income tax benefit for 2019 – Red Rock’s net loss for the year came to $174.5m. 

After a $24.1m gain from the operator’s non-controlling stake in other interests, this was reduced slightly to $150.4m, though this was still far above the $3.4m loss reported for the prior year. 

Adjusted earnings before interest, tax, depreciation, amortisation and tax (EBITDA), factoring in Red Rock’s non-operating outgoings, was down 27.6% at $368.5m for 2020. 

Its fiscal year ended with revenue of $343.4m in the fourth quarter, down 25.5% year-on-year. 

October in particular was strong, CFO Cootey said, though November and December were slower months, especially with the slowdown caused by the November 3 election, and the 25% capacity restriction imposed on its venues. 

After costs, Red Rock’s Q4 operating profit came to $79.4m, while lower financial expenses left a pre-tax profit of $50.5m, significantly higher than Q4 2019’s $5.0m total. After income taxes and a $19.9m contribution from its non-controlling interests, net profit for the quarter was up significantly, at $29.7m. 

Red Rock chairman and chief executive Frank Fertitta said the influx of younger patrons post-reopening was being complemented by the return of its core audience, of customers aged 65 and above. With vaccination programmes ramping up across Nevada, Fertitta said he was “cautiously optimistic” of this core base returning. 

This, he said, potentially left the operator in a “sweet spot” in which its older audience was complemented by a younger demographic.

The business’ vice chair Lorenzo Fertitta, meanwhile, talked up the potential benefits of Nevada opening up its online market. While the state currently permits mobile sports betting, players are still required to register in-person. 

Frank Fertitta said this in-person requirement was an important part of Red Rock’s business, considering its local properties gave it access to around 90% of Nevada’s population. However Lorenzo added that it could still benefit should remote registration be introduced.

“We do think that there is value creation, when you have land-based casinos along with, an online channel,” he explained. “I think, probably over time you’ll see that in some of these other markets as well. There is a benefit to having the land-based and the database, and then the online, all put together.”