Red Rock Resorts, Inc. Q4 FY2024 earnings call

• Las Vegas operations had strong fourth quarter and full year results, with highest fourth quarter net revenue and adjusted EBITDA, and best full year net revenue and adjusted EBITDA.
• Durango Casino Resort continues to grow, with over 85,000 new customers signed up, and is on track to be a high-margin property with near 16% return net of cannibalization in 2024. Construction on Durango Master Plan expansion began, adding casino space, slot machines, and a parking garage.
• Operationally disciplined, reinvesting in existing properties for amenities and customer service. Non-gaming segments like hotel and food and beverage grew in fourth quarter.
• Plans for renovations at Sunset Station (approx. $53 million) and Green Valley Ranch (approx. $180 million) to refresh products and attract more visitation.
• Progress on North Fork project in California, with construction progressing and anticipation of mid-2026 opening.

For Las Vegas operations, fourth quarter net revenue was $492.6 million, up 7.2% from prior year; adjusted EBITDA was $223.9 million, up 1.6%; adjusted EBITDA margin 45.4%. Full year Las Vegas net revenue was $1.9 billion, up 12.6%; adjusted EBITDA $879.4 million, up 7.4%; margin 45.7%. Consolidated fourth quarter net revenue $495.7 million, up 7.1%; adjusted EBITDA $202.4 million, up 0.5%; margin 40.8%. Full year consolidated net revenue $1.9 billion, up 12.5%; adjusted EBITDA $795.9 million, up 6.7%; margin 41%. Non-gaming segments: hotel had highest fourth quarter revenue; food and beverage had highest ever fourth quarter revenue.

• Capital spend expected to be between $375 million to $425 million in 2025, including $285 million to $325 million in investment capital and $90 million to $100 million in maintenance capital.
• Durango expected to reach a 20% return over the next three years.
• Disruption from renovations in 2025 expected to be spread throughout the year, with Green Valley Ranch's renovations starting in June.
• Margin considerations with labor costs up 3.1% on a same-store basis and minimum wage increases in July.

• Disruption from construction projects at Sunset Station and Green Valley Ranch.
• Sports betting hold impact that cost $8 million in October and $6 million in December year-over-year.
• Margin pressure from labor cost increases and minimum wage hikes.
• Market dynamics affecting housing supply in Las Vegas, which could impact customer base growth.

Q: Carlo Santarelli asked about sports betting hold impact in 4Q.

A: Stephen Cootey responded that sports business was healthy with right up almost 10%, but cost $8 million in October and $6 million in December year-over-year.

Q: Shaun Kelley asked about consumer state.

A: Scott Kreeger said consistent positive trends across the database, led by high end network, regional, and national segments; Lorenzo Fertitta added an acceleration post-election was typical.

Q: Jordan Bender asked about backfill of Red Rock.

A: Stephen Cootey said backfill takes about 2-3 years as historically seen and they are on pace.

Q: Steve Wieczynski asked about customer base and M&A.

A: Scott Kreeger talked about stable customer base and Stephen Cootey said they look at all opportunities but focus on Las Vegas development.

Q: Stephen Grambling asked about EBITDA puts and takes.

A: Scott Kreeger mentioned $25 million disruption expected, and Stephen Cootey talked about lapping Durango, labor costs, and minimum wage increases.

Q: Barry Jonas asked about Reno development.

A: Scott Kreeger said Reno site is gaming entitled and available, but priority is Las Vegas developments.

Q: Daniel Politzer asked about peak disruption periods.

A: Scott Kreeger said peak disruption from Green Valley Ranch will be in third and fourth quarter.

Q: Chad Beynon asked about margins and taverns.

A: Stephen Cootey and Scott Kreeger talked about margin considerations and plans to open more taverns.

Q: Joseph Stauff asked about visitation and growth.

A: Scott Kreeger and Lorenzo Fertitta talked about stabilized visitation and growth in regional/national segments.

Q: Brandt Montour asked about GVR CapEx change.

A: Stephen Cootey said adding meeting space to GVR project was the reason for increased CapEx.

Q: John DeCree asked about group sales capacity.

A: Scott Kreeger talked about group sales capacity and cross-selling from group to gaming.

Q: Benjamin Chaiken asked about North Fork development note.

A: Stephen Cootey said note was $156 million as of Dec 31 and financing expected later in the quarter.

Q: David Katz asked about leverage and future projects.

A: Stephen Cootey talked about leverage at 4.1 times and potential to announce next project next year.