Red Rock Resorts, Inc. (NASDAQ:RRR) Q2 2020 Earnings Conference Call - Final Transcript

Aug 04, 2020 • 04:30 pm ET

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Red Rock Resorts, Inc. (NASDAQ:RRR) Q2 2020 Earnings Conference Call - Final Transcript

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Presentation
Executive
Stephen Cootey

for all guests, we've continued to make masks available to guests upon entering the property. All team members and all vendors and partners underwent FDA-authorized COVID-19 testing prior to reopening, and we have continued to test our team members, vendors and partners on a regular basis. We have completed over 12,000 tests as of today.

During the closure period, we've also taken time to review and assess every property and every department. Based upon that review, we have had to make some very difficult but necessary decisions in order to streamline our cost structure and guide the company through this crisis in an uncertain demand environment, including significantly reducing salaries for senior executives across the company; refining and optimizing our business processes, which led to staff reductions both at the property and corporate levels; reducing costs related to outside services through termination or renegotiation of vendor and other agreements; suspending our quarterly dividend; eliminating nonessential capital spending for the remainder of the year; and opening our new -- our properties in a phased approach to maximize flexibility in meeting business demand.

Through these actions, we have become a leaner and efficient -- much more leaner and efficient company as we remain confident in our ability to permanently achieve the approximate $150 million in cost reductions on an annualized run rate basis we referenced on our previous earnings call. These cost reductions do not include any labor expense savings related to those properties that did not open as part of our first opening phase nor does it include savings related to any amenities that were not initially provided in this phase. While we estimate that those additional labor expense savings were approximately $200 million on an annualized run rate basis, that amount would decline to the extent that our closed properties were to come back online or those amenities were again to be provided.

Now let's turn to our financial results. As you recall, on March 17, the governor of Nevada ordered a statewide shutdown of all nonessential businesses, including casinos, in an effort to reduce the spread of COVID-19. Similarly, the Graton Casino Resort, which is managed by the company, closed on March 17. What originally began as a 30-day shutdown on March 17 here in Nevada ended 79 days later when the government of Nevada allowed certain nonessential businesses, including casinos, to open with restrictions on June 4. The Graton Casino Resort also partially reopened on June 18.

On June 4, we opened 16 of our 20 properties: Red Rock, Green Valley Ranch, Santa Fe Station, Boulder Station, Palace Station, Sunset Station and our Wildfire properties. As we noted on our previous earnings call, if you exclude Palms from both 2019 net revenue and EBITDA, these first-to-reopen properties generated over 80% of our Las Vegas net revenue and over 90% of our Las Vegas EBITDA during the same period. Our Texas Station, Fiesta Rancho, Fiesta Henderson and Palms Casino Resort properties remain closed at this time. We will not