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Red Rock Q2 2023 Profits, Revenue Head In Opposite Directions

Written By Derek Helling | Updated:
two wooden arrows pointing in different directions next to the red rock logo

There’s a simple explanation for when a publicly traded company announces a shareholder dividend after a quarter that saw a 7% decrease in its internally calculated Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA). In that instance, such a company likely benefitted from significant cost savings.

That is the case for Red Rock Resorts as it reported its earnings for the second quarter of 2023. Despite revenue seeing a small decrease, the bottom line grew tremendously during the quarter. There’s one reason for that growth and it represents boosting profits in the vilest way.

Red Rock says net income grew by over 130%

According to a news release from Red Rock Resorts, the bottom line for the company during the quarter that ended on June 30 was stellar. Net income for the period, tantamount to operating profit, grew to $74.9 million. In the second quarter of 2022, that figure was $32.4 million.

Why the improvement of nearly 131%? It wasn’t that Red Rock’s casino properties saw a tremendous increase in sales. In fact, net revenue for the quarter wwas down very slightly compared to the same period last year at $416.1 million. Revenue from gaming activity declined about 4% year-over-year.

Nonetheless, as a result of the profits, Red Rock announced a forthcoming dividend of $0.25 per share. The financial details show a 18.3% decline in expenses compared to Q2 2022. Among the biggest annual deviations is a $78.9 million asset impairment that the company showed in Q2 2022.

However, that alone is insufficient to explain a 130% increase in net income. Some shareholders might not like the rest of the story.

Red Rock’s labor issues point to explanation for cost savings

Red Rock is the largest casino operator in Nevada that does not have standing contracts with the two largest unions representing casino workers in Las Vegas. It’s also among the only such corporations to operate that way. It seems a deliberate decision as well.

Two years ago, the National Labor Relations Board (NLRB) issued an injunction requiring Red Rock Resort in Las Vegas to bargain with employees after the board determined that Red Rock interfered with workers’ unionization vote at the property. In May 2022, the board determined that Red Rock engaged in the same behavior again, citing more than 20 acts that it called “flagrant and pervasive.”

In fact, another complaint is currently outstanding before the NLRB regarding Red Rock Resorts’ employment of a company-wide policy of giving preference to workers who were not perceived as supportive of unionization in violation of state law. The reason for that preference is quite obvious.

According to the United States Department of Labor, non-union workers cost companies 15% less than unionized labor does. Simply put; refusing to share profits with the people most responsible for creating them is one way that Red Rock Resorts produce a 130% increase in net income.

While a dividend might satiate shareholders looking for a return on their investments, those dividends are to some extent coming directly out of Red Rock Resorts workers’ pockets.

Photo by PlayUSA
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Derek Helling

Derek Helling is the assistant managing editor of PlayUSA. Helling focuses on breaking news, including finance, regulation, and technology in the gaming industry. Helling completed his journalism degree at the University of Iowa and resides in Chicago

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