Red Rock Resorts(RRR)2025-05-01 20:30Financial Data and Key Metrics Changes - In the first quarter, Las Vegas operations achieved net revenue of 235.9 million, up 2.7% year-over-year [7][8] - Consolidated net revenue for the first quarter was 215.1 million, up 2.8% year-over-year [8] - The adjusted EBITDA margin for Las Vegas operations was 47.7%, an increase of 34 basis points, while the consolidated adjusted EBITDA margin was 43.2%, up 42 basis points [7][8] Business Line Data and Key Metrics Changes - The hotel division recorded its second highest first quarter revenue and profit, driven by increased occupancy [9] - The food and beverage division achieved near record performance, supported by higher cover counts across outlets [9] - Group sales and catering faced challenges but are expected to improve throughout 2025 [10] Market Data and Key Metrics Changes - The Durango Casino Resort has added over 95,000 new customers to the database and is on track to become one of the highest margin properties, generating a return net of cannibalization of nearly 16% [4][5] - The Las Vegas Valley is projected to add approximately 34,000 new households due to demographic growth, particularly in Summerlin [5] Company Strategy and Development Direction - The company is focused on reinvesting in existing properties to enhance amenities while maintaining operational discipline [6] - Expansion plans for Durango include adding over 25,000 square feet of casino space and a new parking garage [5][6] - The company is also investing in Sunset Station and Green Valley Ranch properties to capture growth in Henderson [12][13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the business prospects moving forward, citing strong customer engagement and robust spending [10] - The company anticipates full revenue recovery from cannibalization effects over the next couple of years [5] - Management highlighted the resilience of the Las Vegas locals market, which has historically performed well during recessions [38] Other Important Information - The company declared a special cash dividend of 350 million and 25 million from previous estimates [12] Q&A Session Summary Question: OpEx growth and flow-through in Las Vegas - Management noted subdued OpEx growth with a flow-through above 60%, attributed to better sports win performance and flat COGS [20][22] Question: Backfill efforts at Red Rock - Management indicated that cannibalization is expected to be about 10% and they are ahead of schedule in backfilling revenue [27] Question: Special dividend and capital allocation - The special dividend reflects a balanced approach to long-term growth and shareholder returns, with ongoing evaluations of capital allocation [32][34] Question: Resilience of the Las Vegas locals market - Management emphasized the market's resilience during past recessions and its ability to maintain consistent visitation [38] Question: Construction environment and cost management - Management is actively managing procurement to mitigate impacts from tariffs and expects minimal material impact on current projects [42][48] Question: Non-gaming spend trends - Non-gaming spend remains stable, with food and beverage covers up despite slight revenue decline [78][80] Question: California-based customer demand - Management reported stable visitation from California, with gas prices making travel to Las Vegas still affordable [91][92]