Red Rock Resorts(US:RRR)2023-05-07 11:42Financial Data and Key Metrics Changes - The first quarter net revenue was $433.9 million, an increase of $32 million or 8% year-over-year [4] - Adjusted EBITDA was $194.2 million, up $15.4 million or 8.6% year-over-year, with an adjusted EBITDA margin of 44.8%, an increase of 28 basis points year-over-year [4] - The company generated $152 million in operating free cash flow, representing 78% of adjusted EBITDA [5] Business Line Data and Key Metrics Changes - Hotel revenue reached $43.9 million, up $7.2 million or 19.5% year-over-year, driven by higher occupancy and average daily rate (ADR) [6] - Food and beverage revenue was $78.1 million, an increase of $12.4 million or 18.9% year-over-year, with catering revenue surpassing 2019 levels [6] - The company reported a 25% increase in bowling revenue and a 24.6% increase in spa revenue [28] Market Data and Key Metrics Changes - Las Vegas operations saw net revenue of $430 million, up $30.3 million or 7.6% year-over-year, with adjusted EBITDA of $214.1 million, up $15.9 million or 8% year-over-year [18] - The company experienced strong visitation and spending across regional and national segments, contributing to record revenue and adjusted EBITDA results [19] Company Strategy and Development Direction - The company is focused on disciplined investment in its core strategy, including expanding its footprint in Las Vegas and enhancing amenities [7] - Capital expenditures in Q1 totaled $175.5 million, with expectations of $600 million to $650 million in growth capital for the full year [8] - The Durango project is expected to cost approximately $780 million, with plans to expand the casino area and add 360 gaming positions [9] Management's Comments on Operating Environment and Future Outlook - Management remains vigilant regarding macroeconomic conditions but is confident in the resilience of the business model and growth strategy [25] - The company anticipates a stable operating environment as it prepares for the opening of the Durango project in Q4 2023 [22] - Management highlighted the positive demographic trends in Las Vegas and the potential for growth driven by new sports teams and events [82] Other Important Information - The company declared a cash dividend of $0.25 per share, payable on June 30 [11] - Red Rock Resorts was recognized as the top casino employer in Las Vegas Valley for the third consecutive year [12] Q&A Session Summary Question: How broad-based was the non-gaming revenue growth? - Management indicated that non-gaming revenue growth was broad-based, with significant increases across food and beverage and catering segments [27] Question: What is the timing for the next development beyond Durango? - Management stated that the focus is on stabilizing Durango post-opening before considering further developments [29] Question: How are labor costs expected to trend with upcoming union negotiations? - Management acknowledged that wage inflation could impact costs but emphasized their competitive positioning in the labor market [39] Question: What is the impact of the A's land sale on future development? - Management expressed optimism about monetizing the Viva site and retaining land for future growth [41] Question: How is the company managing wage inflation and its impact on customers? - Management believes that wage growth in the valley will benefit their properties as it increases disposable income for customers [113]