Red Rock Resorts(US:RRR)2023-08-07 19:06Financial Performance - Net revenues for Q2 2023 were $416.1 million, a decrease of 1.4% from $422.2 million in Q2 2022; for the first half of 2023, revenues increased by 3.1% to $849.8 million from $823.9 million[96]. - Operating income for Q2 2023 was $126.9 million, an increase of 86.0% compared to $68.2 million in Q2 2022; for the first half of 2023, operating income rose by 32.7% to $264.2 million from $199.0 million[98]. - Net income attributable to Red Rock for Q2 2023 was $39.5 million, a significant increase of 150.9% from $15.7 million in Q2 2022; for the first half of 2023, net income rose by 31.4% to $84.2 million from $64.1 million[96]. - Net income for the three months ended June 30, 2023, was $74.9 million, compared to $32.4 million for the same period in 2022, and for the six months, it was $160.4 million compared to $124.7 million[113]. - Adjusted EBITDA for the three months ended June 30, 2023, was $175.3 million, a decrease from $188.9 million in the same period of 2022, while for the six months, it was $369.5 million, slightly up from $367.6 million[113]. Revenue Breakdown - Casino revenues decreased by 4.0% in Q2 2023 to $269.5 million and slightly decreased by 0.5% for the first half of 2023 to $557.7 million compared to the prior year[100]. - Food and beverage revenues increased by 5.2% in Q2 2023 to $77.6 million and by 11.7% for the first half of 2023 to $155.8 million compared to the same periods in 2022[97]. - Room revenues increased by 1.4% in Q2 2023 to $44.9 million and by 9.6% for the first half of 2023 to $88.8 million compared to the prior year[102]. - Average daily rate (ADR) for rooms increased by 5.2% in Q2 2023 to $193.35 and by 11.1% for the first half of 2023 to $195.83 compared to the prior year[102]. - The occupancy rate improved to 88.6% in Q2 2023 from 85.3% in Q2 2022, and for the first half of 2023, it increased to 87.8% from 81.2%[102]. Expenses and Costs - Interest expense increased by 54.2% in Q2 2023 to $44.3 million and by 56.6% for the first half of 2023 to $86.8 million compared to the prior year[99]. - SG&A expenses increased by 3.6% or $3.3 million for the three months ended June 30, 2023, and by 5.4% or $9.5 million for the six months ended June 30, 2023, compared to the prior year periods[104]. - Depreciation and amortization expense decreased by 1.1% for the three months and by 4.0% for the six months ended June 30, 2023, due to the cessation of depreciation for closed properties[105]. - Write-downs and other, net totaled $10.1 million and $29.7 million for the three and six months ended June 30, 2023, respectively, primarily from development and preopening expenses[106]. - Interest expense, net increased to $44.3 million and $86.8 million for the three and six months ended June 30, 2023, respectively, due to higher variable interest rates and increased borrowings[108]. Cash Flow and Capital Expenditures - Cash and cash equivalents as of June 30, 2023, were $100.9 million, with borrowing availability under the revolving credit facility at $613.0 million[121]. - Anticipated capital expenditures for the remainder of 2023 are expected to be between $290 million and $360 million, including the development of Durango[122]. - Cash paid for capital expenditures for the six months ended June 30, 2023 totaled $377.1 million, significantly higher than $101.4 million for the same period in 2022[129]. - Net cash provided by operating activities for the six months ended June 30, 2023, was $235.2 million, compared to $277.7 million for the same period in 2022[126]. - For the six months ended June 30, 2023, net cash provided by operating activities was $235.2 million, a decrease of 15.3% compared to $277.7 million for the prior year period[128]. Shareholder Returns and Debt - The board of directors authorized $600 million for repurchases of Class A common stock through June 30, 2024, with $312.9 million remaining available as of June 30, 2023[123]. - During the six months ended June 30, 2023, the company paid $29.5 million in dividends to Class A common stockholders, compared to $30.3 million in the prior year[130][131]. - The company borrowed $270.0 million under the Revolving Credit Facility during the six months ended June 30, 2023[130]. Future Outlook and Challenges - The company expects to spend $780 million on the Durango project, which is set to open in Q4 2023[86]. - The company is experiencing inflationary pressures, particularly in food costs, supplies, energy costs, and construction costs, which are expected to continue through the remainder of 2023[137]. - The company anticipates that rising inflation and higher interest rates could adversely affect consumer demand and overall business performance[143]. - The company is subject to extensive regulation by gaming authorities, which may impact future operations and expansion efforts[139]. - There were no material changes to the terms of the company's indebtedness during the six months ended June 30, 2023, except for the replacement of LIBOR with SOFR[141]. - The company has development agreements with the North Fork Rancheria of Mono Indians to assist in developing a gaming and entertainment facility in California[138].