Red Rock Resorts(US:RRR)2025-10-28 21:32Financial Data and Key Metrics Changes - The third quarter net revenue for Las Vegas operations was $468.6 million, up almost 1% from the prior year's third quarter [9] - Adjusted EBITDA for Las Vegas operations was $209.4 million, up 3.4% from the prior year's third quarter, with an adjusted EBITDA margin of 44.7%, an increase of 110 basis points from the prior year [9][10] - Consolidated third quarter net revenue, including $3.9 million from the North Fork project, was $475.6 million, up 1.6% from the prior year's third quarter [10] - Consolidated Adjusted EBITDA was $190.9 million, up 4.5% from the prior year's third quarter, with an adjusted EBITDA margin of 40.1%, an increase of 110 basis points from the prior year [10] Business Line Data and Key Metrics Changes - The hotel segment generated near-record results despite the West Tower at Green Valley Ranch being offline for renovation, driven by increased occupancy across the portfolio [11] - The food and beverage segment achieved record revenue and near-record profitability for the quarter, supported by higher cover counts across outlets [11] - Group Sales and Catering delivered near-record third-quarter revenue, with positive momentum expected to continue into early 2026 [11] Market Data and Key Metrics Changes - The company saw continued strength in carded slot play across its database, including regional and national segments, with robust visitation and net theoretical win driving record revenue and profitability in the gaming segment [11] - The local market is expected to add more than 6,000 new households within a three-mile radius of the Durango property over the next few years, supported by the development of downtown Summerlin and Summerlin West, projected to add approximately 34,000 new households [9] Company Strategy and Development Direction - The company is focused on executing its development pipeline, maintaining operating discipline, and enhancing shareholder returns through a balanced capital allocation strategy [21] - Significant investments are being made in the Durango Casino Resort, Sunset Station, and Green Valley Ranch properties, with ongoing renovations and expansions aimed at enhancing guest experience and driving growth [17][18] - The company plans to expand the Durango Casino Resort with additional casino space and amenities, including a bowling facility and luxury movie theaters, to capture additional market share [8][9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strength and resilience of the business, despite near-term disruptions from ongoing construction projects [13][21] - The Las Vegas locals' market is viewed as fundamentally different from the Strip, with a loyal customer base and a gaming-centric business model that does not rely heavily on tourism [40] - The company anticipates continued stability in its core slot and table games business, with a return to normal hold in the sports business as the fourth quarter begins [12][40] Other Important Information - The company's cash and cash equivalents at the end of the third quarter were $129.8 million, with total principal debt outstanding at $3.4 billion, resulting in a net debt of $3.3 billion [13] - The board approved an increase in the regular cash quarterly dividend to $0.26 per Class A share, reflecting confidence in the business's strength and long-term earnings power [20] - Capital expenditures for the third quarter were $93.7 million, with a full-year expectation of $325 million to $350 million, down $25 million from previous guidance [16] Q&A Session Summary Question: Can you talk about the rationale for the expansion at Durango? - Management highlighted the strong performance of Durango and the lack of competition within three miles, indicating the potential to drive additional traffic and guests through the expansion [25] Question: What was the impact of sports betting hold this quarter? - Management noted that the hold returned to normal levels after an unfavorable hold in the previous year, with an estimated disruption impact of $2.5 million to $3 million for the quarter [30] Question: How did the hotel segment perform relative to the Strip? - The hotel segment performed well, with occupancy up 244 basis points, and the company outperformed the Strip by about 25% on an ADR basis [35] Question: What are the early thoughts on the tavern business? - The company has eight taverns under contract, with two operational and five expected to open in the coming months, showing promising early performance [92][93] Question: What is the expected disruption from ongoing construction projects? - Management anticipates approximately $8 million in disruption from the Green Valley Ranch project in the fourth quarter, with minor disruptions at other properties [30][90]