Red Rock Resorts(US:RRR)2023-08-06 09:03Financial Data and Key Metrics Changes - The second quarter net revenue was $416 million, down $6.1 million year-over-year, while adjusted EBITDA was $175.3 million, a decrease of $13.6 million year-over-year [30][11][28] - The adjusted EBITDA margin was 42.1%, a decrease of 260 basis points year-over-year [30] - For Las Vegas operations, net revenue was $412.6 million, down $7.5 million year-over-year, and adjusted EBITDA was $193.1 million, down $14.8 million year-over-year [31][11] Business Line Data and Key Metrics Changes - The food and beverage segment experienced near record second quarter revenue and profitability, driven by higher check averages and strong catering business, which surpassed 2019 levels with eight consecutive quarters of double-digit year-over-year growth [8][34] - The hotel division achieved its highest quarterly revenue and profit in the company's history, supported by higher occupancy and average daily rates (ADR) [35] Market Data and Key Metrics Changes - The company noted that April provided a particularly tough year-over-year comparison, accounting for the majority of the decline in results, while May and June performed more in line with last year's results [28][11] - The company reported a 5.2% increase in ADR, reaching nearly $194, with occupancy at approximately 88%, up 340 basis points year-over-year [68] Company Strategy and Development Direction - The company is committed to disciplined investing in its core strategy, including expanding its footprint in Las Vegas and enhancing amenities at existing locations [12][39] - The Durango project is targeted to open on November 20, with expectations for a successful launch and sufficient demand to meet targeted returns [39][98] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by tough year-over-year comparisons, particularly in April, but expressed confidence in the business's resilience and the ability to manage expenses effectively [18][46] - The company remains focused on maintaining adjusted EBITDA margins above 45% and is optimistic about the performance for the remainder of the year [29][67] Other Important Information - The company's cash and cash equivalents at the end of the second quarter were $100.9 million, with total debt outstanding at $3.2 billion, resulting in net debt of $3.1 billion [36] - Capital expenditures for the second quarter were $201.6 million, with expectations to spend between $600 million and $650 million in growth capital for the full year [38] Q&A Session Summary Question: What happened in April that affected performance? - Management noted that April was particularly challenging due to tough year-over-year comparisons and unfavorable gaming hold, but performance improved in May and June [56][58] Question: How do you see the relationship between revenue and operating expenses? - Management emphasized that while revenues were down, they are managing operating expenses effectively and maintaining margins above 45% [58][59] Question: What is the outlook for the Durango project? - Management confirmed that the Durango project is on track for a full-fledged opening on November 20, with plans for potential Phase 2 development [39][98] Question: How is the company addressing staffing for the new property? - Management indicated a strong internal recruitment campaign and confidence in filling positions with high-quality employees [24][25] Question: What impact do you expect from upcoming events like F1 and the Super Bowl? - Management expressed excitement about these events but noted they are just part of a busy calendar for Las Vegas, which should positively impact business [80][94]