Red Rock Resorts, Inc. Q4 FY2025 earnings call

Management Statement and Operational Highlights

• Financial Results: Fourth quarter and full-year 2025 were record-breaking for Las Vegas operations, with the ninth consecutive record quarter for net revenue and adjusted EBITDA, and second consecutive year of record net revenue.
• Durango Casino Resort: Continued strong performance. December 2025 expansion added over 25,000 sq ft of casino space. Groundbreaking on next phase in January 2026, with expansion adding ~275,000 sq ft, 400+ slot machines, and new amenities, expected to complete in 18 months at $385 million.
• Other Projects: Sunset Station has ongoing podium refresh; Green Valley Ranch has room and convention space renovations. North Fork project on track for Q4 2026 opening with total costs $750 million.
• Free Cash Flow: Converted 55% of adjusted EBITDA to operating cash flow in 2025, used for growth initiatives and returning value to stakeholders.
• Dividends and Share Repurchases: Declared special and regular dividends, repurchased shares, and reduced debt.

Segment Performance

• Las Vegas Operations:
  • Fourth Quarter: Net revenue was $505 million, up 2.5% year-over-year. Adjusted EBITDA was $231 million, up 3.2% year-over-year. Adjusted EBITDA margin was 45.8%, an increase of 32 basis points from the prior year's fourth quarter.
  • Full Year: Net revenue was just under $2 billion, up 2.9% year-over-year. Full-year adjusted EBITDA was $915.9 million, up 4.2% year-over-year. Full-year adjusted EBITDA margin was 46.2%, an increase of 56 basis points from the prior year.
• Consolidated:
  • Fourth Quarter: Net revenue was $511.8 million, up 3.2% year-over-year (including $3.7 million from North Fork project). Adjusted EBITDA was $213 million, up 5.4% year-over-year (including North Fork project). Adjusted EBITDA margin was 41.7%, an increase of 84 basis points from the prior year.
  • Full Year: Net revenue was $2 billion, up 3.7% year-over-year (including $17.6 million from North Fork project). Full-year adjusted EBITDA was $848.6 million, up 6.6% year-over-year (including North Fork project). Full-year adjusted EBITDA margin was 42.2%, an increase of 114 basis points from the prior year.
• Non-gaming: Hotel and food and beverage had strong quarters with near-record revenue and profitability. Hotel performed well despite Green Valley Ranch towers offline, and food and beverage had record revenue.

Guidance

• Capital Spend: 2026 capital spend expected to be $375-$425 million, including $275-$300 million investment capital and $100-$125 million maintenance capital.
• North Fork: On track for Q4 2026 opening, total costs $750 million.
• Disruption: Expect disruption from construction projects, with Green Valley Ranch expecting ~$9 million disruption in Q1 2026, but confident in long-term growth.

Risks

• Construction Disruption: Temporary operational impacts from ongoing construction projects at Durango, Sunset Station, and Green Valley Ranch.
• Regulatory and Legal: Unfavorable California court ruling in December, but not expected to interfere with North Fork project.
• Labor and Cost Pressures: Potential labor cost inflation, which could impact margins.

Question and Answer

• Q: David Katz on demand levels in Las Vegas Valley A: Scott Kreeger mentioned hotel performed well adjusting for Green Valley Ranch room loss, gaming saw strength in regional and national customers.
• Q: Ben Chaiken on construction disruption in 2026 A: Stephen Cootey and Lorenzo Fertitta discussed disruption from Green Valley Ranch (~$9M in Q1), minimal at Sunset Station, and ongoing at Durango, with long-term benefits.
• Q: Barry Jonas on Q1 EBITDA and tax refunds A: Stephen Cootey mentioned seasonality and expected returns, Scott Kreeger talked about tax refund season and potential benefits.
• Q: Chad Beynon on Super Bowl traffic and locals market A: Scott Kreeger said properties were fully programmed and had good results during Super Bowl week.
• Q: Jordan Bender on tax deduction and leverage A: Scott Kreeger and Stephen Cootey discussed educating customers on tax bill and strong balance sheet for leverage.
• Other questions: Covered topics like portfolio performance, Durango expansion disruption, California ruling impact, maintenance CapEx, database growth, tavern strategy, and cannibalization backfill.