Red Rock Resorts (RRR) 7 Nov 242024 Q3 Earnings call transcript

Good afternoon, and welcome to Red Rock Resorts Third Quarter 2024 Conference Call. [Operator Instructions] Please note, this conference is being recorded. I would now like to turn the conference over to Stephen Cootey, Executive Vice President, Chief Financial Officer and Treasurer of Red Rock Resorts. Please go ahead.

Thank you, operator, and good afternoon, everyone. us Conference Red Call. joining Quarter Resorts for Earnings XXXX you today Rock on Third Thank

management Joining Frank Scott executive and on Lorenzo me the Fertitta, Kreeger call and today are team. our

everyone from that would forward-looking under those Developments States projected. safe the and to United I provisions the securities our statements of like harbor federal today will call results include remind laws. may differ

call, During also measures. will financial we this non-GAAP discuss

in prior to our of reconciliation these to the complete being X-K financial refer investor note filed tables call. recorded. press and which definitions For is please and earnings GAAP, figures this Form to release, were please call Also, that deck, this the afternoon

any the quarter stating Let us strong by start represented third off measure. company quarter that by another for the

and margin our had EBITDA, of the In our Las in history revenue EBITDA terms best their while -- net adjusted in operations history near-record the in quarter third quarter. at Vegas operating adjusted

to market our quarter, showing while, the to Resort. strong addition continue Las Durango attracting time, to as improve incremental our performance execute Durango In to with customers Vegas in driving existing from continues brand. Casino to at grow play financial the the of the financial we be locals results pleased our new same operational property's customers the and continues the team performance and

XX% margin and and a by XX% increased net as properties year through one theoretical to new and approximately to our database. return net visitation win XX,XXX highest to become respectively, its X the cannibalization generate up operation. ramp property first up our track surrounding our quarters well full on Durango of the of the continues With customers Durango of while over approximately area remains belt, as under of in signing XX%,

between demographic Consistent and next of this within and expect long-term Summerlin with years Valley new over have communities, expectations the performance our Las Red final at felt in West our strong impact line couple Rock Downtown revenue XX,XXX in we build-out. to Summerlin remains profile growth Cannibalization of to backfill primarily Vegas with and, is which, the approximately expect property. upon households past its particular, our history, given the area, Summerlin the we

As earnings planning expansion with later of call, stated last on move this our forward are Durango to we our the year. property

Durango Our XXX add over square slot feet current expansion of XXX new including slot will additional including area. new the the add total, plans of dedicated bar casino the floor, next for to room. machines slot high-limit will Durango casino phase a and our space, In to machines XX,XXX high-limit

garage we parking addition for access to an is the Durango. future is budget at almost In take spots, project complete. additional months expected the adding approximately to providing convenient space, covered us and around to the expanded XX significantly expansion improving parking with current expansions $XXX for be while The casino the flexibility customer will property X,XXX to million,

the disruption some period. south to of expecting construction during are property the We side the

on execute we while the and focused deliver to in remaining on existing customer to Regarding of our remain the relevant properties the operationally and within we core best-in-class to our of quarter, portfolio, disciplined continue all guests, amenities strategy service. our rest reinvesting fresh

properties pattern, As the shareholders near-record maintain the expenses, to our reinvest to within performance, return we a traditional margins, more to seasonal and generate our financial quarter. return our record company manage capital continues in

$XXX.X net revenues at us our was third third take a million, With Vegas Now to from quarter. let closer the Las prior XX.X% third quarter up our year's our respect quarter. operations, look

year's prior EBITDA X.X% Our up million, third $XXX.X adjusted was the from quarter.

basis prior was decrease of XX.X%, year's points third a XXX margin from Our quarter. the adjusted EBITDA

prior third basis, On year's XX.X% the million, $XXX from revenue was our up net quarter consolidated third a quarter.

from X.X% prior up was the Our third million, quarter. year's adjusted EBITDA $XXX.X

Our adjusted points quarter, was prior the third XX% quarter. of basis EBITDA the a decrease in margin year's XXX for

year-to-date $XX.X $XXX.X per flow we per cash quarter, or million or free share. our into long-term in cash of repurchases cash $X.XX flow to million free our strategy, properties was operating share. the flow either year-to-date return $X.XX This via generated existing level debt The our In of cumulative stakeholders significant dividends. reinvested reinvested and paydown, brings or free our share to growth

across database, comparing third card continue third quarter, our results the focused remain to regional spend per our our our to database, strong to majority segments. guests visitation last national quarter. continue we quarter, across portfolio. in finish local majority with near-record we play across of the we as national This and of and we and enjoy allowed strength, grow gaming slot core to coupled the profitability us When on the visit our in including our year's As our segments revenue regional segments see strong across and the our

delivered Turning in and to profitability grow record and nongaming revenue and third quarter. both segments, and our to beverage the year-over-year food continue hotel

Hotel quarter team's its experienced Our and drive the our ADR maintaining and to history, while by across occupancy portfolio. our division hotel driven third profit higher revenue in continue highest success,

Not call, mentioned and year. division to check and also for near cover our we across the higher quarter comparables quarter be to outlets. business, group sales our of and by as a expect outdone, counts last profit, comparable and record faced our tough face highest-ever beverage and tough third our to earnings third remainder revenue regard on catering average food experienced the Food its driven and Beverage With

we market catering prospects our group and stability and in across our fourth tables playing sports the locals quarter, as business discussed sales core As remain business October the we previously database lines, moving we in in carded forward our slot unlucky and in strength forward. in in and seeing the look other to and are confident than softness our business

$X.XX amount cash few and million, resulting the total of company's the was equivalents sheet cash debt $XXX.X let's balance cover outstanding of items. billion, capital a at the net quarter end billion. in Now The was third $X.XX and and principal

net the X.Xx. company's at the of As debt-to-EBITDA quarter, of flat remained ratio the end third

Also, distribution Resorts. million a per $X.XX of Holdco, during pay we payment unitholders $XX.X The quarter, tax Red common and $XX.X distribution company of its of Rock the the approximately of LLC to the used which dividend share. declared million A Class previously approximately made required included distributions third to its make Station to

Capital retainage, $XX.X in spend in capital. of $XX.X investment the third million project $XX.X well quarter was in which capital, Durango as maintenance million includes million, approximately inclusive as

out year $XXX full our investment million maintenance spend including between to expect the capital. project, million, be $XXX For spend Durango and between not to spread close capital now we XXXX, the and

in amenities in and spend visitation remain our drive at guests to to successfully We incremental Station. investing properties. order strategically committed to Yard offering also and days. month, But a we are early to restaurant Last Sunset we House new our opened

are We results early with guest new and the from this amenity. response pleased the

Station adding We XXXX, Mama Palace expect invest to favorite at properties existing continue our including local later year. to China throughout in this property our

continued these households and of At final In renovated upon make are success to Green Sunset are both growth off partial we continuing communities Skye of position and and property capture better the the investments our in planned in completion communities. Station and we Valley podium Sunset including Cadence, sportsbook recently the XX,XXX properties to property, race addition to refresh by to amenities, which we casino expected our to with remodel the XXXX. seeing expect in order Ranch in both our to new Station master add building the are Henderson, over the

total renovated with be As all-new completely of $XX be of cost adding country center part all-new this project, along is the an approximately we'll Mexican restaurant, bar, renovation bar, already an on Workers expected million. western casino this in commenced a and the new project, to space.

our Valley beyond of customers hotel with cost challenges The to to made million. to product, properties expected disruption solid aligning refresh property. new is to our room introduce our is introduced we these expecting and we're the property, table our the next well-received slot forward amenities year. start amenities, through to moving other Like At are recently our the a XXXX. expect rooms of and most recent we Green the start approximately of Work June be investments these will to these November looking be in renovation as complete $XXX expected our continue Ranch XXXX high-limit of to at and Room of renovations

now North Fork. Turning to

this with great million which California, are of is excited of development heavily ingress-egress within on the accessible project, located people of California, the situated about over We a in X.X Highway off with Fresno. north extremely XX, most and X the locations traveled is XXX-acre Central located site. one site in hours convenient project the

court food resort and many and games, this XXX,XXX best-in-class include space, machines, beverage XX including will casino over slot games When of with square food feet options. exciting X approximately and X,XXX outlets Class a II X,XXX table complete, with

The XX and continue We design. and for months, between construction total construction into time is have project to as started the work XXXX. to of site currently opening we anticipated finalize the the resort putting XX

development expected costs, soft and approximately of preopening all financing current expenses project cost The and with be $XXX associated costs, million, project. hard which design to the fees construction, the includes any is and

earnings be to excited to continue provide further are on our updates We progress, calls. quarterly making and we'll

have a as Board returned and have share When $XXX.X approximately to combine payable Class shareholders with special our share, million company's of our Directors common shareholders XX. our $X.XX of dividend December declared dividends, December the Class on as in record cash A of A of XX we regular Lastly, to we per XXXX. repurchases

and of to continues land The the development of Valley. validate pipeline XXX demonstrate consists growth Vegas across to the areas our over real highly Las our and acres company favorable long-term Durango a year, bank, of in estate which power developable continues and positioned have strong own strategy

This that barriers of an current and growth the the entry and long-term with characterize the portfolio the market. size assets Las and our demographic Vegas unparalleled capitalize story locations, us trends pipeline, high allow gives on our us best-in-class locals will very to double that favorable to coupled

team recognize like for to our members hard extend and thanks work. their to We'd our

why us fourth after certified again the Las time. consecutive third Vegas return with year Our the by and in Great our being they year, as time as well Top to Employer voting Casino them a for starts reason for We thank to continue row. a in guests success be Work the Valley them, primary Place for

for our of thank support in last the guests we decades. loyal X Finally, each their

questions. take our to now prepared and are Operator, this concludes ready we remarks,

JPMorgan. Instructions] Joe at question Today's Greff first comes [Operator from

renovation answering Looking is, perform? maybe did back sort if the trend seasonality, of kind way it normal that of you the directional cannibalization, performance unique of call is extreme of change that's Rock the at Durango or there less or heat a look portfolio in performance how you out the as And would Red whether onetime at sort a the of of anything outside XQ, mathematical disruption? rest or

mentioned basically a EBITDA Maybe way? delta Rock if And of $XX the cannibalization, you XQ, I then that flat. Red have that answer portfolio in of quick it I million the the Durango know you net in with can follow-up. was balance basically year-over-year the

Hopefully, Joe. just quick,

Let piece me of no quarter, that typical real first items other start seasonality. than of question. just the that third return quarter with throughout There's the unusual

For in example, at was look down if QX almost years to XXXX, QX you past XX%.

when you net of about deliver -- investment. what look about return is we XX% Durango, So here at of talked our the first net to XX% investment kind year in of on expect we

So it's actually we XX%. promised promised. actually higher than We

up the quick it's apply low $XXX revenue. end of million math, $XXX cost, digits some net terms the have if impact do you you what of that when was million an getting down you in single to portfolio When a you core cannibalization, cannibalization. is implying So

particularly And about or think think you sort we expenses of XX.X% as flow-through And or that of Great. sort how then margins margins what increase? forward, XX%, going do then drove anticipate? maybe more impact XX% as talk in you assets XXXX might maybe you that kind year? of terms a about disruption of being of can existing in And reinvestment about renovation

just the it simply. kind margin, frame of of just terms I'll in So very

did lower -- then moving XXX us the so I part minimum quarter. And $X.X of couple cost contributed think revenues which basis are seasonality. million with to of to points brunt bearing Durango. existing cannibalization, that the wage, we about that to for then you the over And as QX our margin is about of we revenue properties

impacts. And then you XXXX touch maybe can anticipated renovation in on terms of

Yes.

that. about Sorry

Sorry.

terms $X.X million approximately an about GVR, in renovation the it Station, down if Sunset $XX.X about on impact; by impact, our then Durango, so $X.X and estimates So run I initial from million. million; roughly of EBITDA property,

with Santarelli Deutsche next our from Carlo And question comes Bank.

you stretch. Steve, How noise and lot generally of that as think to particular, kind comparability. quarter you that for about last obviously, of period and returned year your XQ? normal. the harder the And when a seasonality, little a just seasonality. But about segment, thinking of do third in of moving XQ Durango seasonality And obviously bit Palms with to makes look go acknowledging to the the relative local stub relative said, you model, at back in XQ XQ parts

couple You got to of a a if the pre-COVID in in up million. we general, that have did tune to this EBITDA here, the XX%, factor of sports took noise unfriendly Palms, play $X.X factors around you of year Carlo. in terms a you little . But taking in is but bit out about usually

October? In

In sorry. October,

Okay.

up So million in less from assuming million, $XX November think $X and about the December? that of doesn't almost it as kind sports, reconcile

Correct.

$XXX Durango clarify correct? -- accurate? million. excludes just year $XX that CapEx Okay. just And year, an closeout. the for that said to -- I Durango was Am about $XXX you to for of something. million. million just the then closeout And this is Is item

for year about left $XX close million . closeout We is -- have almost still about the Durango that Yes. $X out. to million.

And Steve from today question our Wieczynski next comes Stifel. with

And you color just if wondering sales Steve, been that driving more you just what if we couple Beverage somewhat to you think some potentially look business. mentioned wondering could you little lower that what on a bit Food than at been line, softer have the if softness. expecting than been think of margin we've due that on I'm lower I quarters. guys little last that group expecting. the over and guys that's it's bit been have are a And give group

Yes. is Scott. Steve, this

me Let quarter we to X catering. are the and you still We'll sales, year-over-year then of that relates we'll a pieces: group digesting Hotel; correspond probably the the at When take take rebooks. into notable it as one, it piece is, tough in COVID one. look quarter, comp most

good of relative million in $X about year's there's rebookings. last to number So news COVID

when in that adjust, we're add to and basically were nights. comes you Hotel If room to flat it sales,

But comps that quarter in effect catering out 'XX, quarter into years. then encouraged 'XX really into go first going to and going mirrors hotel. into Bowl because group pace tough as you better next the night well, a future have well we and look quarters if 'XX have we're as comp with to and then further expect sales very the as our room We we're on-the-books the of little Super of tough those somewhat and in And X outcomes as where same we're kind does to the a into 'XX. fourth

of answer pretty what you're to F&B, exactly Steven, softness And the a that last follow-up, as in said, it's revenue quarter. predominantly catering, terms seeing experienced record Scott it's all in F&B

normal Steve, in XXXX, guidance. the to understand is would about Okay. anything start anything whether as to you give there formal cadence whether would then in of about don't out think we or And call disrupt think we guys start tailwinds But terms next year XXXX? it's you it's headwinds, that as I

-- a group mean, I -- you're company? perspective what or from or entire think I the Yes, an entire

company, entire The sorry.

Okay.

is with onetime bigger one talked of issues. the think about one we probably Greff I just the

big you together, those onetime remodel in room the experience worth about If that $XX Durango. really you're Sunset, -- then remodel at -- the That's podium attach of Valley, we of million garage continue add disruption all going to at really start Green as . the are at and high-limit the room we the to kind items.

QX. to you're Super go And up Bowl going against in

Correct.

as... as well royalty So

As well look others as ConAg that. and a of at couple

the of seems I most think, come October back. that that note business the into and sports It's handle I on whole games, been have all a to have Lorenzo. very it's hasn't QX, due NFL back slots, percentage going our challenge. It's table the But good to is generally -- stable, that has But bit great. a operators important Obviously, said seasonality feels to core both rate. bounced QX. think

question next from Jefferies. our with And Katz comes David

times. the and was betting the we strong Was dive -- hospitality the sports bit? in hard into perhaps of couple of is the Can was within the it what's Super easy not. up comps terms just Bowl Super and part Bowl It Super Bowl What's volume little piece? the part a a -- levels came

Lorenzo. is this Well,

I is the think Hotel benefited year. events, whether I Bowl you it I like last the the things from events all of well. huge Actually, versus Food think Super Super was at, -- we city. benefit say, on FX, be were the tough name year. and game and obviously, city I look as last it, we just we going has think Bowl And comp obviously, that if you lost having money a be to overall to Beverage, would the not a had, citywide that, that

did. We

saying Just we did. that, yes,

So a headwind or repeat comp a be perspective. from that, not -- will it hopefully, but

I see. I see.

but volume was very So some impact? were levels overall sports an there strong, got

of That . year. came last the out negative

Negative.

the we win typically just [indiscernible]. time, Bowl. that over money Historically, It's Super would to last

And just Perfect. we would longer cetera. to how or when term sort about Yes. get and those or with The that them? et could characterize soon time of today Anything through would we last like as my talked what follow-up. expansions, Durango, look you'd expansions walked

is this Scott. David, Yes,

just need opportunities opportunities. and Cactus want in a high-limit at phases. order really in that as I as X set look for garage do we've we of the casino We well. is reiterate for preliminary kind up compare we to ourselves optionality And about also those as First, and spoken to other the our know that the expansion to phase phases, potential Durango. and greenfield Inspirada

to of want decision. we've the want existing into going the and is what second the the remodels the in and market a first got are how garage, irons year the we fire first is, going probably see quarter we half the before to into with property think to make do of I a lot

Morgan Grambling question from comes of Stanley. Stephen our next And

when and about guess impact out business? think of I taxes, the your policies is corporate your that's that on radar the been from aside put Well, perhaps could we some there, election what

go think I -- ahead.

No for tax a our on chips, I be positive think, business. would

Yes. But neighborhood been from. year we think we economy -- know which, really We've looked has it a here, would add Not economic if about at the I local to million somewhere don't it. anything some published obviously, $XXX of benefit on the could analysis. in

would million Yes. million $X to think well. save it the $X I tax company And in payroll about as

depreciation in accelerate terms on is And radar investment? or there the helpful. That's -- for incentives anything other of tax that's

But with rate GVR -- in Sunset is my put think -- think, I and XX%, that sense I in Durango. once tax Durango. as below do accomplished is look due work our our I and that good mean side garage asset we've the later so we'll effective some for to That's in Durango the that as 'XX. that's to, tax well on they're service on

next our with from Truist question And comes Barry Securities. Jonas

front You section. the the of on in added slide Cactus development a new the new at deck pipeline

curious Just focused what stands where you'll on this of terms be in next.

think of the a point for consideration. of that we where as lot maturity thing greenfield I up projects, is is look them population they're about the a to getting our all growth at good

when Inspirada look different we attributes Kyle site. So say, at Cactus, than, it Canyon has positive or

well market Cactus it by location. as that is surrounded It the The Strip Vegas as lucrative sits on around very a as local a are Las well. specifics hybrid it is

an the makes It of Inspirada. be the something a would of than, can opportunity of aspect or it hybrid advantage unique So probably location. larger say, because it scale take property the development you

cons pros capital weigh contribution as well. and that we of the So

it. then there development focus the your any And moment? Or Vegas tribal just other is pipeline? just non-Vegas Las really the looking at Got at, you're deals or Got are it.

Well, no.

we As North incredibly about remarks, mentioned Fork. I are we think excited prepared the during

this throes XX-month on forward XX project and over the we're ground the to -- XX- looking So in after construction period. of in an years, we're and working

people Yes. have built million best drive, far, a going dominant And think the the and product market. we're By X-hour market. X.X designed the property in and we to to in the

Fork. clarify, just of to And outside North Yes.

obviously, market. our focus, Yes. Las I core mean, Vegas Vegas, Las is locals

core have a tribal competency developing do of we managing casinos. and However,

the to So with, in Steve it's a we're location. ground addition Frank great in and which mentioned North Fork,

or But side, the kind just timing, development it's on We are be tribal been it looked have looking active the right the last opportunity, all just new as years has the year. opportunities, for right and X of to over last actively we XX side. mean, I probably line But up. the got for at we've the on to X

Just one we'll found but for a works standpoint. look -- that we yet, continue development haven't from us to

Barclays. And today comes our next question from Montour with Brandt

we would went about talk lot potential curious, Maybe what of Rock, that as the tailwinds, X, the in sort back well bit next typically greenfield year I'm construction see a the or headwinds. getting specifically could a to year growth X we year, there? added Durango you little through mitigating you've cannibalization so new a Red seen far headwinds as disruption of before

XX,XXX West, Scott. in Great if project. completion its incremental behind final Rock Howard Hughes over Red the location. we Red will this it an households, past is Summerlin the you take is up first, the Rock Yes, spoke which Summerlin In add the next the question. just few about of years, phase

So growth a the relates to that not is average have see we growth, to one and income do highest area in of in in income the continue it we but Valley, as in the story area. household great average the only

Red in we're backfill Rock near about the the So optimistic term.

in sits city. surrounding of is, and When has area. far, by the of the at probably called the of Durango enterprise city in remaining what's you look district buildable area the the acreage largest It fastest-growing amount Durango, the

excited So have well. year its story we're into the to Durango next about continuing growth own as

and we gears going continued area see that switch upside from one got the key growth in well. you little Cadence a bit and Sunset the refreshing as Sunset, growth, Valley think that of we're reasons Henderson quite to is the we're has look area you dynamic at around of If it's

of state, seen that back in distractions sure is your I post election But helpful. it traditionally that well. at us, and just swing looked you've and to gone sort election? elections A players you have a guys if can State the pick before. think that state, question, remember had I'm now the sort your of you this pickup your in behind That's post second can't you remember And activity similar see the you'll how Nevada, election? up of database

there an as previous an looked this during you In we quite years, at year honestly, right at when QX did But point. and if we're Olympics definitely drag encouraged Well, now, is on December. well. pretty during election elections, will, previous Lorenzo an it impact, as said, opportunities with year, into

Yes.

question And with comes today our John CBRE. from DeCree next

covered promotional the You've maybe little a of your operators guess couple in been or lot I more environment, a the speaking, aggressive. neighborhood have of a some about abating across ground. have Maybe largely peers the bit maybe of one talked on stabilizing single-asset market. I locals it guess, and,

So you're and think seeing had another any on impact and if curious at your stabilized -- down if one or died what way all or you it's it's business?

manageable. unchanged Yes. think very environment a that rational what stable, our is It remains is in we view. And

a for And it. missed I CapEx on maybe Steve, year. clarification, maybe for if one next just Got the it,

Steve, I heard the $XXX million be Would follow-up, $XXX Steve? think I a we sorry, And it for Durango? million then -- disruption. I'm quick was for And would GVR.

Yes.

it Valley Sunset. and $XXX $XX Sorry, for for Green $XXX million million for million Durango, was

for Sunset. million $XX And

XH heavier kind And that. some of expect I straight occurs? be where year? going there maybe should really XH the throughout Okay. projects, disruption you've be a or disruption That's timing to that that helpful. to of the the kind we of outlined, those appreciate line of The Is

in June be period. going Valley and that focused Green is really Well, to November

the expected really likely not So pinpoint. can online probably -- that Durango, the of last as the year that's being throughout the before of is -- holiday to similarly, portion really middle come Sunset one it's of year construction yeoman's where part construction bleed the would going to year. done. And you is project is the is the end I at say, in is the

Our Dan Fargo. next Instructions] from Politzer question [Operator comes Wells with

of strategy the a mean in that talked First, just about your units or about an bit the you taverns update in few give past. thinking open terms years? on of expect over element how that you're us you've you can I to next CapEx

Dan, it's the say weeks town. tavern Happy first to opened our back, a part that in few Scott. of we north

expectations. outpacing is our performance early So

we're happy about that. So

X happens very have us. in which Las online We a underpenetrated be area area the for to more coming Vegas, . general North in

have We a and X will next third the And we year, X.X tavern remaining coming X coming and June. the of be January total the then scattered product opportunities, then have in online over in years. online a

think, in successes market. I that first of because part, we're of that large underpenetrated of fact program early interlinkage attributing the we're Pass in out the the Boarding relatively tavern the and the

North that? that the And then on Is do it. Got get get it you X% of -- the it, along the just is fee Or property on the Fork, the development pieces presumably way, $XXX receive do million. opening? you upon you do of kind

on $XXX and the construction some there. million. puts It's financing, it's not be and Yes. There's to full going on takes the

question-and-answer turn management And any over to team this for remarks. closing I'd back the session. like the conference concludes our to

again we for in call, look to Take Thank you X the months. care. forward you, and joining everyone, talking to about

attending presentation. today's today's Thank for all thank This concludes We you. you call. conference

now may evening. and lines, have a your You wonderful disconnect