Red Rock Resorts, Inc. Q3 FY2025 earnings call

• Third quarter was strong for the company, with Las Vegas operations setting new records for net revenue and adjusted EBITDA. - Durango Casino Resort continues to expand the Las Vegas locals market, despite construction disruptions, and is in the next phase of its master plan. - Non-gaming operations (hotel, food and beverage, group sales, catering) had strong results. - Balance sheet: Cash and cash equivalents $129.8 million, net debt $3.3 billion, net debt-to-EBITDA ratio 3.89x. - Capital spend: Third quarter $93.7 million, year-to-date $240.1 million; full-year 2025 spend revised to $325-$350 million. - North Fork project construction progressing well, expected to open in Q4 2026. - Board approved increase in regular quarterly cash dividend to $0.26 per Class A common share.

Las Vegas operations: Third quarter net revenue was $468.6 million, up almost 1% from prior year; adjusted EBITDA was $209.4 million, up 3.4%; adjusted EBITDA margin 44.7%. Consolidated net revenue (including $3.9 million from North Fork project) was $475.6 million, up 1.6% from prior year; adjusted EBITDA (including $3.9 million from North Fork project) was $190.9 million, up 4.5%; adjusted EBITDA margin 40.1%. Non-gaming operations: Hotel and food and beverage had strong quarters. Hotel near record despite West Tower at Green Valley Ranch offline; Food and Beverage achieved record revenue and near-record profitability.

• Full-year 2025 capital spend revised to $325 million to $350 million, down $25 million from previous estimate. - Durango North construction expected to begin in January 2026, take ~18 months. - North Fork project expected to open in Q4 2026. - Board authorized extension of share repurchase program to December 31, 2027, with additional $300 million, totaling $573 million available. - Regular quarterly cash dividend increased to $0.26 per Class A common share payable December 31.

• Disruption from ongoing construction projects at Durango, Sunset Station, and Green Valley Ranch. - Potential impact of sports betting hold disruption. - Possible near-term disruption from strip softness on non-locals market.

Q: Dan Politzer asked about Durango Phase 3, rationale, disruption impact, and returns.

A: Lorenzo Fertitta said Durango opened strong, location has no competition in growing market, expects similar returns; Stephen Cootey said customers expect entertainment amenities, giving them what they ask for.

Q: Daniel Politzer asked about sports betting hold in the quarter and disruption impact.

A: Stephen Cootey said last year had unusual hold, referenced $4 million hold last October, hold is normal now.

Q: Brandt Montour asked about hotel performance and strip weakness.

A: Scott Kreeger said hotel performance was resilient, occupancy up, RevPAR off slightly; outperformed Strip on ADR by ~25%.

Q: Stephen Grambling asked about new development opportunities and ROIC.

A: Scott Kreeger said Durango North is shovel-ready, doesn't slow down other projects; Lorenzo Fertitta said continuing to plan and design other projects.

Q: David Katz asked about leverage and tax benefit.

A: Stephen Cootey said comfortable with leverage, plan to fund resorts from free cash; tax bill favorable, can accelerate depreciation on projects.

Q: Benjamin Chaiken asked about free cash flow conversion next year.

A: Stephen Cootey said still in operating budget and capital plan, flow-through should be sustainable despite lumpy consolidated flow-through.

Q: John DeCree asked about gaming business database and promotional environment.

A: Scott Kreeger said carded and uncarded slot win increased, prioritizing higher valued customers; promotional environment business as usual.

Q: Chad Beynon asked about OpEx sustainability and North Fork economics.

A: Scott Kreeger said OpEx sustainable due to operating leverage; Stephen Cootey said North Fork development fee accrued, expect cash influx upon opening and true-up later.

Q: Joseph Stauff asked about backfill process and regional/national demand.

A: Stephen Cootey said on track to backfill Red Rock; Scott Kreeger said regional and national demand up in the quarter.

Q: Jordan Bender asked about casino margins.

A: Stephen Cootey said function of mix and expense management; Scott Kreeger said shift to high-limit rooms and table games post-COVID.

Q: Patrick Keough asked about construction impact and taverns business.

A: Stephen Cootey said tracking below $25 million full-year construction impact; Scott Kreeger said 2 taverns operational, 8 under contract, 5 coming online, seeing young customer base and new customers migrating to large box properties.