Q1 2024 Red Rock Resorts Inc Earnings Call

Operator: Good afternoon, and welcome to Red Rock Resorts' first quarter 2024 conference call. All participants will be in a listen-only mode. Please note, this event is being recorded. I would now like to turn the conference over to Stephen Cootey, Executive Vice President, Chief Financial Officer, and Treasurer of Red Rock Resorts. Please go ahead.

Good afternoon, and welcome to Red Rock Resorts' first quarter 'twenty 'twenty four conference call.

Operator: All participants will be in a listen only mode.

Operator: Please note this event is being recorded.

Stephen Cootey: I'd now like to turn the conference over to Steven Coody, Executive Vice President Chief Financial Officer, and Treasurer of Red Rock Resorts. Please go ahead.

Stephen Cootey: Thank you, operator, and good afternoon, everyone. Thank you for joining us today for Red Rock Resorts' first quarter 2024 earnings conference call. Joining me on the call today are Frank and Lorenzo Fertitta, Scott Kreeger, and our executive management. I'd like to remind everyone that our call today will include four forward-looking statements under the safe harbor provisions of the United States federal securities law. However, developments and results may differ from those

Stephen Cootey: Thank you operator, and good afternoon, everyone.

Stephen Cootey: Thank you for joining us today for Red Rock resorts first quarter 2024 earnings conference call joining.

Stephen Cootey: Joining me on the call today are Frank and Lorenzo Fertitta, Scott pretty good and our executive management team.

Stephen Cootey: To remind everyone that our call today will include forward looking statements under the safe Harbor provisions of the United States Federal Securities laws.

Stephen Cootey: Developments and results may differ from those projected during this call. We will also discuss non-GAAP financial measures.

Stephen Cootey: During this call, we will also discuss non-GAAP financial measures. For definitions and complete reconciliation of these figures to GAAP, please refer to the financial tables in our earnings press release, Form 8K, and Investor Deck, which were filed this afternoon prior to the call. Also, please note this call is being recorded.

Stephen Cootey: For definitions and complete reconciliation conciliation of these figures to GAAP. Please refer to the financial tables in our earnings press release form 8-K, and Investor deck, which were filed this afternoon. Prior to the call also please note. This call is being recorded.

Stephen Cootey: Let's start off by stating that the first quarter represented another strong quarter for the company by any measure. In terms of net revenue and adjusted EBITDA, our Las Vegas operations had their best first quarter in our history. And in terms of adjusted EBITDA margin, our Las Vegas operations experienced a near record adjusted EBITDA margin. In addition to showing strong financial results in the quarter, we continue to be pleased with the customer feedback and the financial performance of our Durango Casino Resort.

Stephen Cootey: Let's start off by stating that the first quarter represented another strong quarter for the company by any measure.

Stephen Cootey: In terms of net revenue and adjusted EBITDA, Our Las Vegas operations had its best first quarter in our history and in terms of adjusted EBITDA margin, our Las Vegas operations experienced near record adjusted EBITDA margin.

Stephen Cootey: In addition to showing strong financial results in the quarter, we continue to be pleased with the customer feedback and the financial performance of our Durango Casino resort.

Stephen Cootey: While we are still in the early days, the team at Durango continues to execute and improve the property's operational performance while at the same time driving incremental play from our existing customers and attracting new customers to our brand. In past earnings calls, we have stated that we believe Durango will be one of our highest-margin properties over the medium to long term and will generate a return consistent with or in excess of our prior greenfield development.

Stephen Cootey: While we are still in early days the team at Durango continues to execute and improve the properties of operational performance. While at the same time driving incremental play from our existing customers and attracting new customers to our brand.

Stephen Cootey: In past earnings calls, we have stated that we believe Durango will be one of our highest margin properties over the medium to long term and will generate a return consistent with or in excess of our prior greenfield developments.

Stephen Cootey: With one full quarter under our belt, we are confident that Durango is well on its way to achieving both its margin target and its return goal, even faster than originally planned. That said, and as stated in past earnings calls, we expect to experience, and we have experienced, cannibalization, primarily at our Red Rock property, due to the Durango opening. But this has been largely in line with our expectations.

Stephen Cootey: With one full quarter under our belt, we are confident the Durango is well on its way to achieving bolt its margin target. It's return goal even faster than originally planned.

Stephen Cootey: That said and as stated in past earnings calls, we expect to experience and we have experienced cannibalization primarily at our Red rock property due to the drag of opening but this has been largely in line with our expectations.

Stephen Cootey: Consistent with our past performance history, we expect to backfill this revenue, given the strong, long-term demographic growth profile of the Las Vegas Valley and the proximity of our properties to those high-growth areas within the Valley. With regard to the rest of the portfolio, we continue to execute on our core strategy of reinvesting in our existing properties to deliver fresh and relevant amenities to our guests, all while remaining focused on best-in-class customer service.

Stephen Cootey: Consistent with our past performance history, we expect to backfill. This revenue given the strong long term demographic growth profile of the Las Vegas Valley and the proximity of our properties to those high growth areas in the valley.

Stephen Cootey: With regard to the rest of the portfolio, we continued to execute on our core strategy of reinvesting in our existing properties to deliver fresh and relevant amenities to our guests all while remaining focused on best in class customer service.

Stephen Cootey: Despite this disruption, we experienced a palisdation from the road work that significantly impacted the ingress and egress to the property and the significant disruption we experienced at Sunset Station from a major renovation upgrading the race and sportsbook and casino. The team delivered another strong quarter across all business, with this quarter marking the 15th consecutive quarter that the Las Vegas operations delivered adjusted EBITDA margins in excess of 45 percent. Now, let's take a look at our first quarter.

Stephen Cootey: Despite this disruption we experienced at palace station from the roadwork that significantly impact impacted the ingress and egress to the property and the significant disruption we experienced a sunset station from a major renovation and upgrading the race and sports book in Casino. The team delivered another strong quarter across all business lines with this quarter, marking the 15th consecutive quarter that the law.

Stephen Cootey: Las Vegas operations delivered adjusted EBITDA margins in excess of 45%.

Stephen Cootey: Now, let's take a look at our first quarter with respect to our Las Vegas operations. Our first quarter net revenue was $485 6 million up 12, 9% from the prior year's first quarter. Our adjusted EBITDA was $229 8 million up seven 3% from the prior year's first quarter.

Stephen Cootey: With respect to our Las Vegas operations, our first quarter net revenue was $485.6 million, up 12.9% from the prior year's first quarter. Our adjusted EBITDA was $229.8 million, up 7.3% from the prior year's first quarter. Our adjusted EBITDA margin was 47.3%, a decrease of 247 basis points from the prior year's first quarter. On a consolidated basis, our first quarter net revenue was $488.9 million, up 12.7% from the prior year's first quarter. Our adjusted EBITDA was $209.1 million, up 7.7% from the prior year's first quarter. Our adjusted event margin was 42.8% for the quarter, a decrease of 200 basis points from the prior year's first quarter.

Stephen Cootey: Our adjusted EBITDA margin was 47, 3% a decrease of 247 basis points from the prior year's first quarter.

Stephen Cootey: On a consolidated basis, our first quarter net revenue was $488 9 million up 12, 7% from the prior year's first quarter.

Stephen Cootey: Our adjusted EBITDA was $209 1 million up seven 7% from the prior year's first quarter. Our adjusted EBITDA margin was 42, 8% from for the quarter, a decrease of 200 basis points from the prior year's first quarter.

Stephen Cootey: In the quarter, we converted 64% of our adjusted EBITDA to operating free cash flow, generating $128.6 million, or $1.22 per share. This significant level of free cash flow was either reinvested in our long-term growth strategy, including our Durango project, reinvested in our existing properties, or returned to our stakeholders via debt pay-down and dividends. As we begin 2024, we will remain operationally disciplined and focused on our core local gas as well as continue to grow our regional and national segment.

Stephen Cootey: In the quarter recorded every we converted 64% of our adjusted EBITDA to operating free cash flow generating 126, $28 6 million or $1 22 per share the.

Stephen Cootey: This significant level of free cash flow was either reinvested in our long term growth strategy, including our Durango project reinvested in our existing properties will return to our stakeholders via debt Paydown and dividends.

Stephen Cootey: At the beginning as we begin 2024, we remain operationally disciplined and focused on our core local gas as well as well as continue to grow our regional and national segments.

Stephen Cootey: In comparing our results to last year's first quarter, we continue to see upside from the strong visitation in play in our local, regional, and national segments. This strength, coupled with strong spend per visit across the majority of our carded play, allowed us to enjoy near record first quarter revenue and profitability across our gaming segments, despite both the Super Bowl and the NCAA tournament not being so kind to us in the quarter. Turning to the non-gaming segments, both hotel and food and beverage continue to grow year over year and deliver record revenue and profitability in the first quarter.

Stephen Cootey: When comparing our results to last year's first quarter, we continue to see upside from the strong visitation and playing out of local regional national segments.

Stephen Cootey: This strength, coupled with strong spend per visit across the majority of our carded play allowed us to enjoy near record first quarter revenue and profitability across our gaming segment. Despite both the Super Bowl and the NCAA tournament, not being so kind to us in the quarter.

Stephen Cootey: Turning to the non gaming segments, both hotel and food and beverage continued to grow year over year and to deliver record revenue and profitability in the first quarter.

Stephen Cootey: Our hotel division experiences the highest quarterly revenue and profit in our history, driven by our team's success on a team to drive higher occupancy and ADR across our hotel portfolio. Not to be outdone, our food and beverage division also experiences the highest ever quarterly revenue and profit, driven by higher average check and cover accounts across our food and beverage outlets, as well as continued growth in our catering business within the quarter. With regard to our group sales, we continue to grow this segment within the quarter, driven by growth in both room nights and ADR, as we continue to work to grow our pipeline in 2024 and beyond.

Stephen Cootey: All right Hello Division experienced its highest quarterly revenue and profit in our history driven by our team's success on good team to drive higher occupancy and ADR across our hotel portfolio.

Stephen Cootey: Not to be outdone, our food and beverage division also experienced its highest ever quarterly revenue and profit driven by higher average check and cover counts across our food and beverage outlets as well as continued growth in our catering business within the quarter.

Stephen Cootey: With regard to our group sales business, we continue to grow this segment within the quarter driven by growth in both room nights and ADR as we continue to work to grow our pipeline in 2024 and beyond.

Stephen Cootey: While both our group sales and catering revenues grew in the first quarter, as we mentioned on a prior call, we expect tougher comparables in both these business lines for the remainder of 2024, driven mainly by COVID sales that were postponed and booked into 2023.

Stephen Cootey: For both our group sales and catering revenues grew in the first quarter as we mentioned on our prior call. We expect we expect tougher comparable in both these business lives for the remainder of 2024, driven mainly by Covid sales that were postponed and booked into 2023.

Stephen Cootey: As we look ahead, we are seeing stability in the local market and across our entire database and remain confident in our business prospects moving forward, though we will continue to face disruption in our Palace Station and Sunset Station properties for the majority of the second quarter. On the expense and labor side, we remain operationally disciplined and continue to look for ways to become more efficient while continuing to provide best-in-class customer service to our guests and remaining the employer of choice in the Las Vegas Valley.

Stephen Cootey: As we look ahead, we are seeing stability in the locals market and across our entire database and remain confident in our business prospects moving forward, though we will continue to face disruption in our palace station and Sunset station properties for the majority of the second quarter.

Stephen Cootey: On the expense and labor side, we remain operationally disciplined and continue to look for ways to become more efficient. We will continue to provide best in class customer service to our guests and remain the employer of choice in the Las Vegas Valley.

Stephen Cootey: In the quarter, the company continued to manage expenses, generate record financial performance, near record margins, reinvest in our properties, and return capital to our shareholders. Our results demonstrate the resilience of our business model, the sustainability of our operating margins, and the ability of our management team to execute on our long-term growth strategy while taking a balanced approach to returning capital to our shareholders. Now, let's cover a few balance sheet and capital items.

Stephen Cootey: Within the quarter. The company continued to manage our expenses generate record financial performance near record margins reinvest in our properties and return capital to our shareholders.

Stephen Cootey: Our results demonstrate the resilience of our business model the sustainability of our operating margins and the ability of our management team to execute on our long term growth strategy, while taking a balanced approach to returning capital to our shareholders.

Stephen Cootey: The company's cash and cash equivalents at the end of the first quarter were $129.7 million, and the total principal amount of debt outstanding was $3.5 billion, resulting in net debt of $3.4 billion. At the end of the first quarter, the company's net debt to EBITDA ratio was 4.4 times.

Stephen Cootey: Now, let's cover a few balance sheet and capital items.

Stephen Cootey: The company's cash and cash equivalents at the end of the first quarter was $129 7 million and the total principal amount of debt outstanding was $3 5 billion, resulting in net debt of $3 4 billion.

Stephen Cootey: At the end of the first quarter the company's net debt to EBITDA ratio was four four times.

Stephen Cootey: As we stated on previous earnings calls, our leverage has peaked and is now beginning to ramp down as we look to de-lever to our long-term net leverage target of three times. During the quarter, the company completed two refinancing transactions. The first transaction involved a $500 million offering of senior notes due in 2032 at an interest rate of 6.58% per annum.

Stephen Cootey: As we stated on previous earnings calls, our Leverages peaked and it's now beginning to ramp down as we look to delever to a long term net leverage target of three times.

Stephen Cootey: The proceeds of this offering were used to pay down a portion of our revolving credit facility as well as our term loan aid credit facility. The second transaction involved an amendment to our Senior Secure Credit Facilities, pursuant to which various lenders will provide a revolving credit facility of $1.1 billion, maturing in 2029, bearing interest at 1.5 percent over SOFR, and a Term Loan B credit facility of $1.57 billion, maturing in 2031, bearing interest at 2.25 percent over SOFR.

Stephen Cootey: During the quarter the company completed two refinancing transactions.

Stephen Cootey: The first transaction involved a $500 million offering of senior notes due 2032, and an interest rate of six and five eighths percent per annum.

Stephen Cootey: The proceeds of this offering were used to pay down a portion of our revolving credit facility as well as our term loan credit facility.

Stephen Cootey: The second transaction involved the amendment to our senior secured credit facilities pursuant to which various lenders will provide a revolving credit facility of $1 1 billion maturing in 2029.

Stephen Cootey: Interest at one 5% over sofa and a term loan B credit facility at 1.57 billion maturing in 'twenty 31 bearing interest at 2.25% over sofa.

Stephen Cootey: The aggregate proceeds of this amendment were used to refinance our revolving credit facility and term loans outstanding under our existing credit agreement. These refinancings increased our financial flexibility by strengthening our balance sheet, extending our debt maturities, and modestly decreasing our interest expense. In May, our board authorized an extension to our existing share repurchase program to December 31st, 2025. The program has $313 million remaining available for future purchases. As a reminder, since we began purchasing shares either through our share repurchase program or the 2021 tender, we have purchased approximately 14.2 million Class A shares at an average price of $45.29 per share, reducing our share count to approximately 105.6 million shares.

Stephen Cootey: Proceeds of this amendment were used to refinance our revolving credit facility in term loans outstanding under our existing credit agreement.

Stephen Cootey: These refinancings increased our financial flexibility by strengthening our balance sheet, extending our debt maturities and modestly decreasing our interest expense.

Stephen Cootey: In May our board authorized an extension to our existing share repurchase program to December 31 2025.

Stephen Cootey: The program has $313 million remaining available for future purchases as a reminder, since we began purchasing shares either through our share repurchase program or the 2020. One tender we have purchased approximately $14 2 million class a shares at an average price of $45 29 per share reducing our share count for <unk>.

Stephen Cootey: $105 6 million shares.

Stephen Cootey: Capital spent in the first quarter was $98.1 million, which included approximately $77.3 million in investment capital, inclusive of Durango project retainage, as well as $20.8 million in maintenance capital for the full year 2024, not including the spend to close out our Durango project. We still expect capital spend to be between $140 million and $180 million, spread between maintenance and investment capital.

Stephen Cootey: Capital spend in the first quarter with $98 1 million, which includes approximately $77 3 million of investment capital inclusive of Durango project <unk> as well as $20 8 million in maintenance capital for the full year 2024, not including the spend to closeout, our Durango project, we still expect capital spend.

Stephen Cootey: To be between $140 million and $180 million spread between maintenance and investment capital.

Stephen Cootey: During the quarter, we remain committed to strategically investing and offering new amenities to our guests at our existing locations in order to drive incremental visitation and spend to our properties. During the quarter, we successfully opened a new high-limit slot room and Blue Ribbon Sushi Bar and Grill at our Green Valley Ranch property and opened a Federal Donut Chicken Restaurant as well as remodeled the Sand Bar Grill, which is our pool bar and outside eatery at our Red Rock property.

Stephen Cootey: During the quarter remain committed to strategically investing in offering new amenities to our guests at our existing locations in order to drive incremental visitation and spend to our properties.

Stephen Cootey: During the quarter, we successfully opened a new high limit slot room, and Blue Ribbon Sushi bar and Grill Green Valley Ranch property and open a federal donut chicken restaurant as well as remodeled the sandbar grill, which is our pool bar and outside ear at our Red rock property.

Stephen Cootey: We are pleased with the guest response and the early results from these new amenities. We expect to continue to invest in our existing property throughout 2024, including adding additional restaurant offerings at our Green Valley Ranch and Palace Station properties, as well as an upgraded race and sports book and a partial casino remodel, plus a new yardhouse restaurant at our Sunset Station property. Like our other recently introduced amenities, we expect these to be solid investments over the medium to long term and are looking forward to moving beyond the challenges created by construction disruption at these properties as we introduce these new amenities to our customers later this year.

Stephen Cootey: We are pleased with the guest response and the early results from these new amenities.

Stephen Cootey: We expect to continue to invest in our existing properties throughout 2024, including adding additional restaurant offerings at our Green Valley Ranch and Palace station properties as well as an upgraded race and sports book and a partial casino remodel plus a new yard house restaurant at our Sunset station property.

Stephen Cootey: Like <unk> like our other recently introduced amenities, we expect these to be solid investments over the medium to long term and are looking forward to moving beyond the challenges created by construction disruption at these properties as we introduce these new amenities to our customers later this year.

Stephen Cootey: Turning now to North Fork, as we mentioned on our February call, our management agreement with the Tribe was approved by the Chairman of the National Indian Gaming Commission in early January, with the clearing of the last hurdles to the development of this project, which will be located on the Tribe's 305-acre parcel of trust land. The site is north of Fresno, California and offers convenient ingress and egress and excellent visibility from Highway 99.

Stephen Cootey: Turning now to North work as we mentioned on our February call. Our management agreement with the tribe was approved the chairman of the National Indian Gaming Commission in early January with clearing the last hurdles through the development of this project, which can be located on the tribes 305 acre parcel of trust land.

Stephen Cootey: The site is located north of Fresno, California, and offers convenient ingress and egress and excellent visibility from highway 99.

Stephen Cootey: The design is near complete, we have retained a general contractor, and we expect to break ground on the project in the third quarter this year. We are very excited about moving forward with this project, and we'll continue to provide updates on our quarterly earnings calls. Lastly, the company's Board of Directors has declared a cash dividend of 25 cents per Class A common share, payable on June 28 to Class A shareholders of record as of June 14.

Stephen Cootey: Design is near complete we have retained a general contractor and we expect to break ground on the project in the third quarter. This year.

Stephen Cootey: We are very excited moving forward with this project and we will continue to provide updates on our on our quarterly earnings calls.

Stephen Cootey: Lastly, the company's board of directors has declared a cash dividend of <unk> 25 per class a common share payable on June 28th to class a shareholders of record as of June 14th.

Operator: The company is off to a strong start in 2024, and with the opening of Durango, we continue to validate our long-term growth strategy and demonstrate the power of our own development pipeline and real estate bank, which now consists of over 441 acres of developable land positioned in highly favorable areas across the Las Vegas Valley. This pipeline, coupled with our current best-in-class assets and locations, gives us an unparalleled global story that will allow us to double the size of our portfolio and capitalize on the very favorable long-term demographic trends and the high barriers to entry that characterize the Las Vegas locals market.

Stephen Cootey: The company is off to a strong start in 2024 and with the opening of Durango, We continue to validate our long term growth strategy and demonstrate the power of our own development pipeline of real estate banks, which now consists of over 441 acres of developable land position in highly favorable areas across the Las Vegas Valley.

Operator: This pipeline coupled with our current best in class assets and locations gives us an unparalleled global story that will allow us to double the size of our portfolio and capitalize on the very favorable long term demographic trends and the high barriers to entry that characterized the Las Vegas locals market.

Operator: We'd like to recognize and extend our thanks to all of our team members for their hard work. Success starts with them, and they continue to be the primary reason why our guests return time after time. We'd also like to thank them for recently voting us a top casino employer in the Las Vegas Valley for the fourth consecutive year. We'd also like to make a special shout out to our Sunset Station team members for placing their trust in us. Finally, we thank our guests for their loyal support over the last six decades. Operator, this concludes our prepared remarks today, and we are now ready to take questions.

Operator: We'd like to recognize and extend our thanks to all of our team members for their hard work our success starts with them and they continue to be the primary reason why our guests return time and after time.

Operator: We'd also like to thank them for recently voting us a top casino employer in the Las Vegas Valley for the fourth consecutive year.

Operator: Also like to make a special shout out to our Sunset station team members for placing their trust in us.

Operator: Finally, we thank our guests for their loyal support each of the last six decades.

Operator: Operator. This concludes our prepared remarks today and we are now ready to take questions.

Operator: We will now begin the question and answer session. To ask a question, you may press star, then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been answered and you would like to withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. The first question today comes from Joe Greff with J.P. Morgan. Please go ahead.

Speaker Change: We will now begin the question and answer session.

Joseph Richard Greff: To ask a question you May Press Star then one on your Touchtone phone.

Joseph Richard Greff: If you are using a speakerphone please pick up your handset before pressing the keys.

Operator: Is it any time your question has been addressed and you would like to withdraw your question. Please press Star then two.

Operator: At this time, we will pause momentarily to assemble our roster.

Operator: The first question today comes from Joe Greff with J P. Morgan. Please go ahead.

Operator:

Stephen Cootey: Good afternoon, guys. Steve, I heard your comment about the stability of the entire database, which is great. We thought maybe you had a proactive prepared comment about that in light of other comments from your peers and competitors. I was hoping maybe you could cut it a little bit differently and maybe if there's a way to sort of isolate it for red rock cannibalization. But if you look at your higher-end properties versus those that are more middle or lower price point properties, has that disparity widened within your portfolio? It's another way of asking the low-end versus the high-end customer within the database, but maybe cut differently by property.

Joseph Richard Greff: Afternoon, guys.

Stephen Cootey: Steve I heard you on your comment to that stability in the entire database, which is great. I thought maybe you have a proactive but prepared comments about that in light of other comments from Europe.

Stephen Cootey: Your peers and competitors I was hoping maybe you can cut it a little bit differently and maybe if there's a way to sort of isolate that for isolation isolated for red rock cannibalization, but if you look at your higher end properties.

Stephen Cootey: Is that are you know more middle or lower price point properties.

Stephen Cootey: That disparity widening within your portfolio I mean, it's another way of I guess I'd ask him to the low end versus the high end customer within the database, but maybe put differently by property.

Stephen Cootey: Well, generally, we kind of look at the customers as a Red Rock brand as they hop around from place to place, Joe. So let's start from there.

Stephen Cootey: Well generally we kind of look at the customers as a red rock brand as they hop around from place to place Joe So let's start from there, but generally what we're seeing is is.

Stephen Cootey: But generally, what we're seeing is, you know, we like what we're seeing across the database from all players. So we're seeing stability. From a Durango perspective, we've seen growth in the Durango zone, both from a net deal perspective, as well as visitation, which is consistent with our strategy. From a new signups perspective, we've had our highest growth of new signups since the fourth quarter of 2021, including over 37,000 people signing up at Durango. So we're bringing new customers into the brand.

Stephen Cootey: We like what we're seeing across the database from all players. So we're seeing stability from.

Stephen Cootey: From a Durango perspective, we've seen growth in the Durango sell them both from a net perspective as well as visitation, which is consistent with our strategy from a new new sign ups perspective, we've had our highest growth and new sign ups since the fourth quarter of 2021, including over 37000 people signing up of Durango, So, we're bringing new customers into.

Stephen Cootey: The brand.

Stephen Cootey: Do you want.

Scott Kreeger: Yeah, Joe. This is Scott. Maybe I can provide a little more detail. And as Steve said, we like to look at it from a plan level versus a property level. But when we kind of look at each segment in the database, we're encouraged by what we're seeing across all of those segments, inclusive of all of the demos. So not only are we up in win visits and spending visits across our segments, but we're also seeing positive growth in all demos. We saw our active database grow by a mid-teens percentage. And as Steve said, we saw a strong increase in new member signups, and Durango ended up being about 25 percent of that growth in the quarter.

Stephen Cootey: Yes, Joe This is Scott, maybe I can provide a little more detail and as Steve said, we like to look at it from a ground level versus a property level, but when we kind of look at each segment in the database.

Scott Kreeger: We're encouraged by what we're seeing across all of those segments inclusive of all of the demos. So not only are we up and win visits and spend per visit across our segments, but we're also seeing.

Scott Kreeger: Positive growth in all demos.

Scott Kreeger: We saw our active database grow.

Scott Kreeger: In the mid teens percentage and as Steve said, we saw a strong increase in new member sign ups and Oh, sorry, Durango ended up being about 25% of that growth.

Scott Kreeger: In the quarter.

Stephen Cootey: And again, Joe, just to kind of articulate this, we're seeing this across all properties as well as all demos, to add to what Scott said.

Speaker Change: And again, Joe just to kind of articulate we're seeing that across all properties as well as all demos to what Scott said and we're seeing continued strong growth in our out of town.

Lorenzo J. Fertitta: And we're seeing continued strong growth in our out-of-town business as well.

Lorenzo J. Fertitta: Business as well.

Lorenzo J. Fertitta: But, Lorenzo, I will point out that on the low end of the business, it's actually up for the last two quarters in a row. Yeah.

Lorenzo J. Fertitta: But I would just Lorenzo will point out that on the low end of the business, it's actually up for the last two quarters are up.

Lorenzo J. Fertitta: And what do you think is driving that, Lorenzo? Because that's sort of maybe counter to either what maybe others are experiencing potentially or kind of what maybe people on this call listening to you guys probably believe the opposite. What do you think is driving it?

Lorenzo J. Fertitta: And.

Lorenzo J. Fertitta: What do you think is driving that when does that sort of may be countered to either.

Lorenzo J. Fertitta: What maybe others are experiencing potentially or kind of what maybe people on this call listening to you guys probably believes the opposite but what do you think is driving it.

Lorenzo J. Fertitta: I think a lot of it has to do with the location of our properties. I mean, if you guys go and look at where all the growth in Las Vegas is occurring, and Summerlin West, and the Southwest. Part of the valley where Durango is. They're growing it two to three times the growth rate of the city. So we have a little bit of a wind in our backs with new customers coming online literally every month.

Lorenzo: I think a lot of it has to do with the location of our properties.

Lorenzo J. Fertitta: If you guys go and look at where all the growth in Las Vegas was occurring.

Lorenzo J. Fertitta: In Summerlin West and the southwest part of the Valley, where Durango.

Lorenzo J. Fertitta: They're growing at two to three times, what the growth rate of the city. So we have a little bit of a wind at our back with new customers coming online in literally every.

Lorenzo J. Fertitta: Every month.

Stephen Cootey: Great. And then just a follow-up to some of the comments you made before. You're not the only one with the sports book hold issues, but you said the Super Bowl and the NCAA weren't kind to you. And you also referenced, in general terms, the Palace Station construction disruption as well as at Sunset Station. Are you able to quantify maybe in the aggregate what the EBITDA impact from those three items was in the quarter, as we look at those as sort of one-time and not recurring in the future? Yeah, I mean, sports is, it's a sport for those people.

Lorenzo J. Fertitta: Yeah.

Speaker Change: Great and then just I just don't follow ups to some of the comments you made before.

Stephen Cootey: You're not the only one with the sports book hold issues, but you said Super Bowl anti double as Mark Klein to you.

Stephen Cootey: You also referenced it in general terms.

Stephen Cootey: Palace station construction disruption as well as at Sunset station.

Stephen Cootey: Can you quantify maybe in the aggregate with the EBITDA.

Stephen Cootey: The impact from those three items were in the quarter as well.

Stephen Cootey: We look at those as sort of onetime and not recurring in the future.

Stephen Cootey: Yeah, I mean, sports for those particular events probably cost about $4.4 million for the quarter. In terms of disruption, as I mentioned in our script, we expect some disruption to extend into Q2, so it's not a one-time event, but it probably cost us, let's call it about $4 million all in.

Stephen Cootey: Yes, I mean sports, it's a sports for those particular events, probably cost us about $4 4 million for the quarter and.

Stephen Cootey: In terms of disruption as I mentioned in our script.

Stephen Cootey: We expect some disruption to extend into Q2, so it's not a onetime event, but.

Stephen Cootey: Probably cost us, let's call it about $4 million all in.

Speaker Change: Thank you.

Stephen Cootey: Yeah.

Operator: The next question comes from Carlo Santarelli of Deutsche Bank. Please go ahead.

Stephen Cootey: The next question comes from Carlo Santarelli with Deutsche Bank. Please go ahead.

Scott Kreeger: Hey guys, thank you. I wanted to just more or less follow up on Joseph's questions, and I guess a different way of maybe asking is if you took the subset of properties X Red Rock, what's happening there, and Durango, and X, the two disruptive properties, Sunset and Palace Station. What kind of the rest of the portfolio look like from a year-over-year perspective? Whether or not you could talk about that from a revenue EBITDA perspective, however you would approach it.

Carlo Santarelli: Hey, guys. Thank you I wanted to just more or less follow up on on Joseph questions and I guess, a different way of maybe asking is if you took the subset of properties ex Red rock, what's happening, there and Durango and X.

Scott Kreeger: The two disruptive properties Sunset and Palace station what is what is kind of the the rest of the portfolio look like from a year over year perspective.

Scott Kreeger: Whether if you could talk about that from a revenue EBITDA perspective. However, you you would approach it.

Scott Kreeger: Carlo, this is Scott. I think probably the best way to categorize our feeling about our performance and where we're headed is that we see stability across all of our properties with a slight bit of upside. So we're seeing, absent the disruption that Steve spoke about, strong performance. We're pretty confident with where we're at right now.

Scott Kreeger: Yeah Carlo This is Scott I think probably the best way to categorize our feeling of our performance and where we're headed is that we see stability across all of our properties.

Scott Kreeger: With a slight bit of upside so we're seeing.

Scott Kreeger: Absent the disruption that speeds.

Scott Kreeger: Steve spoke about.

Scott Kreeger: <unk> performance.

Scott Kreeger: We're pretty confident with where we're at right now.

Stephen Cootey: Okay, great. And then just one quick follow-up. Corporate expenses tend to be a little bit higher in the first quarter. Is kind of that, you know, $18 to $20 million a quarter for the rest of the year a decent rate?

Speaker Change: Okay, Great and then just one quick follow up.

Scott Kreeger: Corporate expenses tend to be a little bit higher in the first quarter is kind of that.

Speaker Change: 18 to 20 million a quarter the rest of the year a decent place.

Stephen Cootey: Yeah, I think I would. It's more on the higher side. We're looking to consolidate our warehousing, so one of the ups in this quarter was the warehouse coming online.

Speaker Change: Yeah, I think I would its more to the higher side.

Stephen Cootey: And we're looking to consolidate our warehousing. So one of the one of the ups and this quarter was the warehouse coming online.

Operator: Got it. All right. Thank you. Thank you both.

Speaker Change: Got it alright. Thank you. Thank you both.

Operator: The next question comes from Steve Wieczynski with CIFL. Please go ahead.

Operator: The next question comes from Steve <unk> with Stifel. Please go ahead.

Operator: Okay.

Scott Kreeger: Yeah, guys, good afternoon. So Steve, you obviously talked a lot here about how you're still seeing the Las Vegas Valley and it still seems pretty healthy in terms of consumer spending trends, and Durango is clearly off to a very solid start. You know, we've also heard from your competitors about the, you know, there has been a slight change in the promotional environment across the valley. You know, it seems like there might be some competitors out there that are trying to disrupt the market, and I was just wondering what you guys would you know what you would say on that.

Steven Moyer Wieczynski: Yeah, Hey, guys good afternoon.

Scott Kreeger: So Steve I was just.

Scott Kreeger: Talked a lot here about how youre still seeing the Las Vegas Valley still seems pretty healthy in terms of.

Scott Kreeger: Consumer spending trends in Durango is clearly off to a very solid start.

Scott Kreeger: Also heard from your competitors about.

Scott Kreeger: There has been a slight change in the promotional environment across the valley. It seems like there might be some competitors out there that are trying to more disrupt the market and just wondering what you guys would say on that front.

Scott Kreeger: Yeah, this is Scott. I think I will take it in two categories. One, the dynamic growth in the valley that you can see, not only in our investor deck but even as recently as today, an article in the Review Journal about the growth of the valley and the inbound new residents, bolstering our performance and our look forward. I think when we talk about competition, from our point of view, we're not seeing anything in the market that would change our strategy, or we're not seeing anything in the market that we haven't We've said before that there are some one-off single operator properties within the local market that are competitively promotional and have been, but we're not seeing anything out of the normal.

Scott Kreeger: Yes. This is Scott I think I'd take it in two categories. One the dynamic growth in the value that you can see not only in our investor deck, but even as recently as today article in the review journal about the growth of.

Scott Kreeger: The valley and the inbound new residents.

Scott Kreeger: Bolstering our performance and our look forward.

Scott Kreeger: I think when we talk about competition from our view.

Scott Kreeger: We're not seeing anything in the market that would change our strategy or we're not seeing anything in the market. We haven't seen over the last couple of years.

Scott Kreeger: <unk> said before that there are some one off single operator properties within the local market that are competitively promotion aerie.

Scott Kreeger: Have been but we're not seeing anything out of the norm there.

Stephen Cootey: Okay, thanks for that, Scott. And then, Steve, you mentioned that Durango is up to, you know, already up to, you know, on pace to exceed your internal return projections. So, this is somewhat of a hypothetical question. But as you guys start to think about additional projects down the road, based on what you've seen so far at Durango, would you start to increase your return projections based on some of the, you know, maybe the learnings coming out of Durango? Or, you know, is Durango such a, you know, one-off type asset that its return profile might be totally different from anything else you do across the valley, and I hope that question makes sense.

Speaker Change: Okay. Thanks for that Scott.

Stephen Cootey: And then Steve you mentioned the Durango is off to a you know already else too on pace to exceed your internal return projections. So this is somewhat of a hypothetical question but.

Steve: You guys start to think about additional projects down the road based on what you've seen so far the Durango.

Stephen Cootey: Do you start to increase your return projections based on some of the maybe the learnings coming out of Durango or Durango, such a one off type asset that its return profile might be.

Stephen Cootey: Totally different than anything else you do across the valley and I hope that question makes sense.

Stephen Cootey: Yeah, I'm not sure we believe Durango's a one-off. We love the area, and as Scott mentioned, I think Lorenzo talked about it, the Enterprise District is growing about three times faster than the rest of the Valley. That actually includes some of our other development properties, namely Cactus and Esparada. So in general, I don't think anyone's more bullish on Las Vegas than we are.

Steve: Yeah, I'm not sure. We believe Durango is a one off we loved the area and as Scott mentioned I think Lorenzo talked about the enterprise district is growing about three times faster than the rest of the valley that actually includes some of our other development properties, namely cactus and its product. So in general like I don't think anyone's more bullish on Las Vegas than we are I mean part.

Stephen Cootey: I mean, the population continues to grow at a 2.3% clip. We're getting 38% of our residents from California. In addition to population growth, you're actually seeing net income growing, or discretionary income growing about 8% and expected to continue that way through 2029. So we view all of our opportunities as special. We have six of them.

Stephen Cootey: <unk> continues to grow at a two 3% clip, we're getting 38% of our residents from California. In addition to population growth you're actually seeing net income growing your discretionary income growing about 8% of expected to continue that way through 2029. So we view all of our opportunities are special we.

Stephen Cootey: We have six of them I think the team right now is going through entitling and getting these properties ready.

Stephen Cootey: I think the team right now is going through the title process and getting these properties ready. And right now, we're just enjoying the growth of Durango. The team is doing a fantastic job really ratcheting down and making the property more efficient. And at the end of the day, we're looking forward to that property being one of our highest-margin properties in the system, and then getting returns that are, you know, they're at or in excess of what we've experienced in the past. And as I alluded to on the call, I think, you know, we're seeing that happening much quicker than the three-year timeline that we've previously given guidance.

Stephen Cootey: And right now were just enjoying the growth of our Durango. The team is doing a fantastic job really ratcheting down making the property more efficient and at the end of the day, we're looking forward to that property being one of our highest margin properties in the system and then getting returns either at or in excess of what we experienced in the past and as I alluded to on the call I think.

Stephen Cootey: We're seeing that happening much quicker than three year timeline that we've previously given guidance to.

Speaker Change: Yes Lorenzo.

Lorenzo J. Fertitta: Yes, Lorenzo.

Lorenzo J. Fertitta: Same, kind of similar to what Steve said, but we remain confident that, you know, building out the portfolio of undeveloped land over the next 10 years, we're going to be able to kind of grow into that historical return on investment, which, what, Steve, is around 20-ish percent. Yeah, we're 20 percent. High leveraged return on investment. That's correct.

Lorenzo J. Fertitta: Same kind of Schindler with Steve said, but we remain confident that.

Lorenzo J. Fertitta: Building out the portfolio of undeveloped land over the next 10 years, we're going to be able to.

Lorenzo J. Fertitta: Kind of grow into that historical return on investment, which what Steve is frowned twentyish percent or 20% Levered return on <unk>, we're not saying that's going to happen to year, one but by <unk>.

Stephen Cootey: You know, we're not saying that's going to happen year one, but by, you know, year three, we'll get there. I think what Steve obviously has said in his comments is that we're well on our way, maybe ahead of schedule a little bit on Durango, but when you look at the overall portfolio, we're still confident we can get to that 20 percent return on these Greenfield projects. And we're not in a position to say that we think we're going to get more at this point, but we think that, you know, a 20 percent return is pretty solid.

Stephen Cootey: There are three.

Stephen Cootey: We get there I think what Steve Obviously, you said in his comments is that we're well on our way maybe ahead of schedule a little bit on Durango, but when you look at the overall portfolio.

Stephen Cootey: We're still confident we can get get to that 20% return on these greenfield projects.

Stephen Cootey: And we're not in a position to say that we think we're going to get more at this point, but we think that 20% return is pretty solid.

Operator: Okay, great. Thanks, guys. I appreciate the color.

Speaker Change: Okay, great. Thanks, guys appreciate the color.

Operator: Yes.

Operator: The next question comes from David Katz with Jeffreys. Please go ahead.

Operator: The next question comes from David Katz with Jefferies. Please go ahead.

Operator: Hi, afternoon. Thanks for taking my question. Just to tack on to the end of that last discussion, I'm not sure that we got a ton of commentary about what's next. And I know that you've occasionally talked about looking at Durango, maybe Inspirato, maybe something else. Is there any update that you can share, any thoughts you can share around what's next for you?

David Brian Katz: Hi afternoon, Thanks for taking my question.

Speaker Change: Just two.

Operator: Tack onto the end.

Operator: On that last discussion I'm not sure that we got a ton of commentary about what's next and I know that you've occasionally talked about looking at.

Operator: Maybe it's for auto maybe something else is there any update that you can.

Operator: Share any thoughts you can share.

Operator: What's next for.

Operator: Red rock.

Stephen Cootey: Yeah, I mean, first up is going to be North Fork, probably around the end of the third quarter or beginning of the fourth quarter. And then, as we've always said, we are actively working on plans for an expansion at Durango, which will be in a position to go forward, if we decide to, by the end of the year or the beginning of next year. And then we're working on plans at Ensebarada to have them in a position to make a decision when we want to go forward. And those plans should be ready, what, Lorenzo?

Operator: Yeah.

Operator: I think first drop is going to be.

Speaker Change: North Port.

Lorenzo: Probably around the end of the third quarter beginning of the fourth quarter.

Stephen Cootey: This year and then as we've always said we are actively working on plans for an expansion of Durango, which will be in a position to go forward. If we decide through by the end of the year or the beginning of next year and then we're working on plans events brought it to have that in our position.

Lorenzo: Well make a decision when we want to go forward and that those plants should be ready what runs ruined.

Lorenzo J. Fertitta: I mean, we're finishing up all the entitlements and all the plans, and we should have costing on the project by the end of the year, and we'll be able to kind of, at that point, communicate to everybody kind of what our timing is and what our budgets are. In addition to that, we've seen that we've been able to generate a great return on investment by reinvesting in our current existing portfolio by building high-limit areas for both tables and slots.

Lorenzo J. Fertitta: I mean, we're gonna Henderson up all the entitlement and all the plans that we should have costing on the project by the end of the year, we'll be able to kind of at that point will evaluate Munich, a two two the two everybody kind of what our timing is and what our budgets are.

Lorenzo J. Fertitta: In addition to that we've seen that we've been able to generate great return on investment by reinvesting in our current existing portfolio through building high limit areas for both tables and slots I'm really happy with the results. There we're definitely seeing the benefit of the valley Ranch in Santa Fe.

Lorenzo J. Fertitta: We're really happy with the results there, and we're definitely seeing the benefits of Valley Ranch and Santa Fe, as well as we've talked about Red Rock in the past. So we're going to continue to focus on those as well. I think part of the issue that we have here is just getting these projects in a place where we have tight budgets, tight plans, so we can get these things going. It's really what we're focused on right now. And we should have information for you guys on, as we said before, timing and budgets in the near future. So...

Lorenzo J. Fertitta: As well as we've talked about red rock in the past.

Lorenzo J. Fertitta: So we're going to continue to focus on those as well.

Lorenzo J. Fertitta: Part of the issue that we have here in these projects in a place to where we have tight budgets type plans. So we can get get these things going.

Lorenzo J. Fertitta:

Lorenzo J. Fertitta: He is really what we're focused on right now and we should have information for you guys on what we said for timing and budgets in the near future. So yeah, and I think it'd be unfulfilling answer anybody's out here.

Lorenzo J. Fertitta: Yeah, and I think it would be interesting if anybody's out here in the next several months or whatever to take a look at the new race and sports book at Sunset. We're going to open a yardhouse there, and it's really turned out nice. I think the customers are going to accept it and be really happy with it.

Lorenzo J. Fertitta: And the next several months or whatever it would take a look at the new race and sports book at Suntrust and we're going to open a yard house there.

Lorenzo J. Fertitta: And it's really turned out.

Lorenzo J. Fertitta: Customers are going to accept it and be really happy with.

Stephen Cootey: I appreciate that. And if I can just follow up, is one of the potential permutations, you know, sort of both expansion and inspiration? And, you know, does that sort of change, you know, Steve, any of the kind of leverage commentary? Or, you know, are those sort of happening at different times?

Speaker Change: I appreciate that and if I can just follow up it is one of the potential for mutations.

Stephen Cootey: Sort of both expansion.

Stephen Cootey: And sporadic.

Stephen Cootey: Does that sort of changed Steve any of the kind of leverage commentary or those sort of happening at different times.

Stephen Cootey: I mean, while we're saying it's an option, I think, David, we're very cognizant of the balance sheet. And, you know, as we said, leverage is peaking, has peaked, and we're looking to de-lever the balance sheet and pay for that next year.

Speaker Change: I mean, what we're saying it's an option I think David we're very cognizant of the balance sheet.

Stephen Cootey: As we said leverages, peaking.

Stephen Cootey: And we're looking to Delever the balance sheet for that next stage of growth.

Operator: Okinawa. Thank you.

Speaker Change: Okay. Thank you.

Operator: The next question comes from Barry Jonas with Truist Securities. Please go ahead.

Operator: The next question comes from Barry Jonas with choose Securities. Please go ahead.

Scott Kreeger: Hey guys, I'm wondering if you are still actively looking to sell any of your undeveloped land banks here?

Barry Jonathan Jonas: Hey, guys wondering are you still actively looking to sell any of your undeveloped land banks here. Thanks.

Scott Kreeger: Yeah, this is Scott. So I think we're in the same position as we mentioned on the last call, where we have two pieces of land that are actively being marketed. One would be the Wild Wild West land, which is essentially 100 acres of contiguous land just off the strip. And then there is a portion of our cactus development site, which is a total of 128 acres. There are about 40 acres of that site that are non-critical to what we want to do there, and so we've got that actively marketed as well. And then we do have a small, entitlement parcel in Reno as well, which, if the right offer came about, we'd be interested in selling as well.

Scott Kreeger: Yeah. This is Scott so I think we're in the same position as we mentioned in the last call where we have.

Stephen Cootey: Got it. Great.

Stephen Cootey: Two pieces of land that are actively being marketed one would be the wild wild West <unk>, which is essentially 100 acres of contiguous land just off the strip and then there's a portion of our cactus development site.

Stephen Cootey: Which is a total of 128 acres, there's about 40 acres of that site.

Stephen Cootey: Is non critical to what we wanted to do there and so we've got that actively marketed as well and then we do have a small entitled parcel in Reno as well, which if the right offer came about we'd be interested in selling as well.

Stephen Cootey: And then just as a follow-up, more clarification, I noticed on the deck that your convention and meeting space is 231,000 square feet. I think that's down like eight, 9% from the last deck. So is that sort of 20,000 reduction a function of construction or anything else?

Speaker Change: Got it great and then just just as a follow up more of a clarification I noticed in the deck Your convention and meeting space in 231000 square feet thick, that's down like eight 9% from the last deck. So is that sort of 20000 reduction a function of construction or anything else.

Stephen Cootey: Now we'll have to check. It shouldn't be down, Barry.

Stephen Cootey: I'll wipe the check; it shouldn't...

Speaker Change: Now I'll have to check it shouldnt be that Barry.

Speaker Change: Okay. Thanks.

Operator: The next question comes from Dan Politzer with Wells Fargo. Please go ahead.

Stephen Cootey: The next question comes from Dan Polzer with Wells Fargo. Please go ahead.

Operator: Hey, good afternoon, everyone. Thanks for taking my question. I know you guys had a couple one-offs in the quarter that impacted margins a little bit, but as we think about that Durango contribution over time, I think you've said that should be the most efficient margin property. So as we think about the coming quarters and the ramp of it, when do you think we might see that impact start to flow through?

Daniel Brian Politzer: Hey, good afternoon, everyone. Thanks for taking my question.

Operator: I know you guys had a couple of one offs in the corner that impacted margins a little bit, but as we think about that Durango contribution over time I think you said that should be the most efficient margin property. So as we think about the coming quarter is in the ramp of it when do you think we might see that that impacts start to flow through.

Lorenzo J. Fertitta: I think it'll be incremental over the remainder of the year, but you don't get it all at once. I think one of the great things that we were able to accomplish, which was very difficult, was have a very smooth opening at Durango and focus, you know, basically exclusively on the customer experience. And as business starts to settle in to what normal business levels are going to be by day of the week and time of the day, we're going to continue to refine operations, but I would say it'll probably take, you know, towards the end of the year to really get it where we've

Speaker Change: I think it will be incremental over the remainder of the year, but you don't get it all at once I think one of the great things that we were able to accomplish which is very difficult to have a very smooth opening at Durango and focus.

Lorenzo J. Fertitta: Basically exclusively on the customer experience.

Lorenzo J. Fertitta: And.

Lorenzo J. Fertitta: As business starts to settle in to what normal business levels.

Lorenzo J. Fertitta: We're going to be by day of the week and the time of the day, we're going to continue to refine our operations, but I would I would say it would probably take you know towards the end of the year are really good at where we feel that as.

Lorenzo J. Fertitta: It's going to be.

Lorenzo J. Fertitta: Going forward, yes, with that said I mean, just so this is literally our first full quarter of operations.

Lorenzo J. Fertitta: going forward. Yeah, and with that said, I mean, this is literally our first full quarter of operations, and the project is highly profitable, generating very high margins, pretty much in line with the rest of our properties already. So as Frank said, as we really start to understand business volumes and whatnot, we can start to tweak margins, and we're confident we'll get there by the end of the year.

Lorenzo J. Fertitta: <unk> is highly profitable generating very high margins pretty much in line with the rest of our properties already so as Frank said as we as we really start to understand business volumes and whatnot. We can start to tweak margin and confident we'll get there by the end of the year.

Scott Kreeger: Got it. And then, just for my follow-up, I don't know if maybe you could talk about the cadence over the course of the quarter. We obviously got the industry numbers, and so it seems, you know, like things softened a bit over the course of the quarter. I don't know if that was what you guys saw in terms of your own operations, but any kind of, you know, reconciliation there, and then, you know, any detail, if you can, on April, just if that's been a continuation or that stability that you guys have kind of called out. I think I'll address it in...

Speaker Change: Got it and then just for my follow up I don't know if maybe you could talk about the cadence over the course of the quarter, we obviously get the industry numbers and so it seems like things softened a bit over the course of the quarter I don't know if that was what did you guys saw in terms of your own operations, but any any kind of reconciliation there and then any detail.

Scott Kreeger: If you can on April just if that's been a continuation or of that stability that you guys have kind of called out.

Scott Kreeger: Yeah, Dan, I think I'll address it and allow the others to add in, but you don't want to get into month by month, but what we saw was stability across the quarter, and we're seeing that going in through April. I would say that March, the only real weakness there, as we already articulated there, you saw some weakness in race and sports, which I think was universal across the Strip, mainly due to those two large events in the Stroop Bowl and the NCAA Tournament. Otherwise, stability throughout the quarter.

Speaker Change: Yes, Dan I think I'll I'll address it and they have a lot of the I'll just add in.

Scott Kreeger: You don't want to get into month by month, but will be saw a stability across the quarter and we're seeing that going into April I would say that marks the only real weakness there as we've already articulated there you saw some weakness in race and sports, which I think was universal across the strip mainly due to those two large events in the Super Bowl Nancy W tournament, otherwise stability throughout the quarter.

Scott Kreeger: Yeah.

Speaker Change: Thanks, so much.

Operator: The next question comes from Chad Beynon with Macquarie. Please go ahead.

Scott Kreeger: The next question comes from Chad Beynon with Macquarie. Please go ahead.

Operator: Thanks for taking my question. I was wondering if you could revisit the topic of getting bigger or getting into the tavern business as a medium or long-term goal. Has anything changed in terms of how you're thinking about that? Thanks.

Chad C. Beynon: Hello, and thanks for taking my question.

Operator: Wondering if you could revisit the topic of.

Operator: Getting bigger getting into the tavern business as a medium or long term goal or has anything changed in terms of how youre thinking about that thanks.

Scott Kreeger: Hey Chad, it's Scott. Nothing has changed. We still think it's a great place to invest in, and for all the reasons that we talked about in the past, that it's a unique customer with a different profile than our core customer, so it skews younger and skews towards the sports better, so we like that kind of a customer. And we think it's an opportunity for us to kind of expand into what we call the micro market within the Valley.

Operator: Hey, Todd It's Scott Nothing has changed we still think it's a great place to invest in and for all the reasons that we talked about in the past that it's.

Scott Kreeger: Our unique customer with a different profile than our core customer so it skews younger and skews towards the sports better. So we like that kind of a customer we have seven units currently under contract first one will come online in September the second one will come online in December and then.

Scott Kreeger: We have two coming online in January and then the remainder of the units throughout 2025. So we're actively out there seeking to grow.

Scott Kreeger: The number of units that we have in the market.

Scott Kreeger: It's a it's a opportunity.

Scott Kreeger: Opportunity for us to kind of expand into what we call the micro market.

Scott Kreeger: Within the law and this is Lorenzo from a health standpoint, I know everybody is focused on different segments of the market that that end of the business. What we call kind of a smaller properties seems to be very healthy and very consistent actually growing so as assigned relative as a very local market.

Lorenzo J. Fertitta: And this is Lorenzo, from a health standpoint. I know everybody's focused on different segments of the market. That end of the business, what we call kind of a smaller property, seems to be very healthy and very consistent and actually growing. So as a signed relative, it's a very local market, but that is going very well from an operating standpoint.

Lorenzo J. Fertitta: With that he is going very well from an operating standpoint.

Scott Kreeger: And then on the food and beverage side, I think that was a big standout in the quarter, just kind of the year-over-year growth, and I'm sure most of that or a lot of that growth came from Durango. You made a comment about group bookings. Should this food and beverage revenue become more regular, or is there still some significant seasonality around how we should think about that with different, you know, groups and weddings and those types of things? I was just trying to figure out the magnitude of the growth that we saw and how that should look throughout the remainder of the year.

Speaker Change: Thank you and then.

Scott Kreeger: On the food and beverage side I think that was that was the big standout in the quarter, just kind of your year over year growth in and I'm sure most of that or a lot of that growth came from Durango.

Scott Kreeger: Is this you made a comment about group bookings.

Scott Kreeger: Should this food and beverage revenue become more regular or is there still some significant seasonality around how we should think about that with different groups and weddings and those types of things just trying to figure out the magnitude of the growth that we saw in and how that should look throughout the remainder of the year. Thank you.

Scott Kreeger: Yeah, let me split it up into two segments so that it's a little bit easier because they have a kind of different behavior. When we talk about our retail food and beverage operations, I think you're going to continue to see strong performance across the properties. We're bringing on great restaurant tours and great offerings across the valley. So we see that continuing.

Speaker Change: Yeah, Let me split it up into two.

Scott Kreeger: Segments, so that it's a little bit easier because they have a kind.

Scott Kreeger: Kind of a different behavior, when we talk about our retail food and beverage operations I think youre going to continue to see.

Scott Kreeger: <unk> performance across the properties, we're bringing on great restaurant tours and great offerings Cross the volume so we see that continuing.

Scott Kreeger: When we look at catering, which is a function of group nights and social catering, while we saw strong numbers across the first quarter, we have been kind of signaling that we're about to lap ourselves with COVID rebookings and COVID cancellation fees on a year-on-year basis. So this quarter, the second quarter, and a little bit into the third quarter, we'll kind of trail off those difficult comps. And then going forward, if I had to say anything that we have a little work to do, it's probably in the summer months, but then in the fourth quarter, it starts to pick back up for us.

Scott Kreeger: When we look at catering, which is a function of group room nights and social.

Scott Kreeger: While we saw strong numbers across the first quarter, we have been kind of signaling that we're about to lap ourselves with COVID-19 re bookings in COVID-19 cancellation fees on a year on year basis. So this quarter the second quarter.

Scott Kreeger: We ended the third quarter will kind of trail off those difficult comps.

Scott Kreeger: And then going forward, if I had to say anything that we have a little work to do it's probably in the summer months, but then in the fourth quarter. It starts to pick back up for us.

Operator: Thanks for the additional color. I appreciate it.

Speaker Change: Thanks for the additional color I appreciate it.

Operator: The next question comes from Brant Montour with Barclays. Please go ahead.

Operator: The next question comes from Brent <unk> with Barclays. Please go ahead.

Brant Montour: Hey, good evening, everybody and thanks for taking my questions.

Operator: Good evening, everybody. Thanks for taking the time to answer my questions. So, actually, just one, but it's a bit of a two-parter. I was curious, when you think about Phase 2 for Durango, which I probably remember correctly, it's something you planned alongside Phase 1. What have you learned five months in, six months here, that may have made you want to tweak anything in Phase 2? I know we don't know Phase 2 yet, but maybe just qualitatively, has anything made you want to adjust those plans?

Operator: So actually just just one but it's a bit of a two parter I was curious when you think about phase III for Durango, which which I if I remember correctly, it's something you planned alongside phase one.

Operator: What have you learned five months and six months in here that May may have made you want to tweak anything to phase III I know, we don't know phase two yet, but maybe just qualitatively.

Operator: Anything made you want to adjust those plants and then the second part of that especially around the F&B and the lease model, which you have in Durango I mean, we see these F&B results and helps drive the segmented for you is there a thought to maybe.

Lorenzo J. Fertitta: And then the second part of that is specifically around the F&B and the lease model, which you have in Durango. I mean, we see these F&B results and how strong the segment is for you. Is there a thought to maybe convert or do any more of that F&B on an owned basis to capture those EBITDA dollars? How are you thinking about that?

Lorenzo J. Fertitta: Or do any more of that F&B on an owned basis.

Lorenzo J. Fertitta: Capture those EBITDA dollars of how you're thinking about that.

Lorenzo J. Fertitta: Yeah, Lorenzo, I'll take a stab at that. As far as what we've learned after a few months of being open here, I think the biggest change potentially from what we thought prior to opening is that we need to solve for some additional parking before we get into, you know, phase two, what we had originally planned, which is a good thing, by the way. You know, we kind of used all of our historical metrics and what we had historically seen.

Speaker Change: Yeah, and so Lorenzo I'll take a stab at that as far as what we've learned after a few months to be an open here I think the biggest change potentially but we thought prior to opening is that we need to solve for some additional parking.

Lorenzo J. Fertitta: Before we get necessarily get into.

Lorenzo J. Fertitta: The phase two what we had originally planned which is a good thing by the way.

Lorenzo J. Fertitta: We kind of use all of our historical metrics than what we had historically seen the volumes at peak period of Durango, primarily partly driven by the success of the food Hall, and so we'd rather restaurant offerings. We just we just need more parking. So we're working on our sulfur that because we don't want to completely rip up the parking lot and do an expansion at the same.

Lorenzo J. Fertitta: The volumes of Durango's peak period are primarily partly driven by the success of the food hall and some of the restaurant offerings. We just need more parking, so we're working on a solution for that because we don't want to completely rip up the parking lot and do an expansion at the same time, so we're trying to figure out timing on that. Relative to, you know, the success we have had on the food and beverage side, I think where we are is that we want to just focus on what we think we do really well, which is run slot machines and table games and hotels and let experts who run restaurants kind of run the restaurants.

Lorenzo J. Fertitta: Time, so we're trying to figure out timing on that.

Lorenzo J. Fertitta: Relative to <unk>.

Lorenzo J. Fertitta: The success, we have had on the food and beverage side.

Lorenzo J. Fertitta: Where we are is we wanted to just focus on what we think we do really well, which is run slot machine to table games in hotels and led expert to run restaurants kind of run the restaurants.

Lorenzo J. Fertitta: It, I think, allows us to drive higher-margin business overall throughout the portfolio and, you know, as we've learned from doing this for 35 years or whatever long it's been, restaurants are very difficult to run, and it's very challenging. And if we can find great operators to bring in that are their sole focus, we'd much prefer to do that.

Lorenzo J. Fertitta: I think allows us to drive higher margin business overall throughout the portfolio.

Lorenzo J. Fertitta: <unk>.

Lorenzo J. Fertitta: As we've learned from doing this for.

Lorenzo J. Fertitta: 35 years, or however, long, it's been restaurants are very difficult to run it.

Lorenzo J. Fertitta: It's very challenging and if we can find great operators to bring in and so focus we'd much prefer to do that.

Scott Kreeger: And, Brianne, just one kind of note, the F&B line item that you're seeing in the press release is for our owned and managed restaurants. The lease revenue that Lorenzo spoke about is going to fall in the other category.

Lorenzo J. Fertitta: And Brad just one kind of note the F&B line item that youre seeing on the in the press release that is our owned and managed restaurants. The lease revenue that Lorenzo spoke to is going to fall in the other category.

Scott Kreeger: Make sense? Thanks for all the comments.

Speaker Change: Makes sense, thanks for all the comments.

Scott Kreeger: Yeah.

Operator: As a reminder, if you would like to ask a question, please press star then 1 to be joined into the question queue. The next question comes from Joe Stauff with CIG. Please go ahead.

Speaker Change: As a reminder, if you would like to ask a question. Please press Star then one to be joined into the question queue.

Operator: The next question comes from Joe Stauff with C. I G. Please go ahead.

Operator: Thank you. Good morning or good afternoon.

Joe Stauff: Thank you good morning.

Joe Stauff: Good afternoon.

Stephen Cootey: I wanted to ask, you know, just maybe a broader question just on the local market. And, you know, all the migration and most of the migration coming from California and so forth. You know, you're spending a lot of capital to build and expand sort of the premium product in the market. I think most of us understand what Boyd is doing.

Joe Stauff: I wanted to ask just maybe a broader question just on the locals market and all the migration and most of the migration coming from California, and so forth.

Stephen Cootey: You're spending a lot of capital.

Stephen Cootey: To build and expand so that the premium product in the market.

Stephen Cootey: I wonder if you can comment on other competitors in the market and are they trying to match you, or are they staying with a more low cost model in terms of their approach to the Las Vegas market? Las Vegas locals market and then, I wanted to ask, you know, just specifically, you had a reference in one of your slides, regarding Durango at $180 million plus. Does that imply that, you know, Whether it be the parking lot and the expansion, you're thinking about a hundred million of capital invested at some point, you know, as you kind of green light those projects?

Stephen Cootey: Think most of us understand what Boeing is doing.

Stephen Cootey: Wonder if you can comment on.

Stephen Cootey: Other competitors on the market and are they trying to match you or are they staying with more low cost model in terms of their approach.

Stephen Cootey: In the Las Vegas market.

Stephen Cootey: Las Vegas locals market and then.

Stephen Cootey: I wanted to ask.

Stephen Cootey: Specifically you had.

Stephen Cootey: You know a reference in one of your slides.

Stephen Cootey: Regarding Durango at 180 million plus.

Stephen Cootey: Does that imply that.

Stephen Cootey: Whether it be the parking lot and the expansion you're thinking about 100 million of capital invested.

Stephen Cootey: Some point.

Stephen Cootey: Greenlight those projects.

Stephen Cootey: Yeah.

Stephen Cootey: Yeah, I think I think what you're talking about is the landslide. And that was really just to show the value creation that we get by purchasing your raw dirt. And so, and as Frank and Lorenzo always said, well, we tend to get our greenfield return within three years. But these assets don't stop at year three; they continue to grow. So we just wanted to provide a metric to show that we plan to grow this asset beyond that 20% ROI.

Speaker Change: Yes, I think I think what you're talking about is the landslide and that was really just to show that the value creation that we get by purchasing rodarte.

Stephen Cootey: And so and shrank in the Rins are always said lower tend to get our Greenfield return within three years. These assets don't stop at year three they continue to grow. So we just wanted to provide a metric to show that.

Stephen Cootey: We plan to grow this asset beyond that 20% ROI.

Stephen Cootey: Uh huh.

Stephen Cootey: You're basically trying to demonstrate the value of the gaming-entitled real estate portfolio by developing projects.

Stephen Cootey: You are basically trying to demonstrate the value of the gaming entitled Real estate.

Stephen Cootey: Portfolio.

Stephen Cootey: Developing projects.

Stephen Cootey: But it doesn't include the garage But Joe, it does kind of lead into that slide is probably a good segue into it's really your first question I can't really comment on what other competitors are doing, but we know we're doing Franklin Lorenzo for you know for 40 plus years is focused on Delivering the best-in-class assets and most importantly the best-in-class locations. You know, we live in a Very regulated market the locals market is protected by SB 208 which you know restricts the amount of gaming and title land It can come off the strip and fortunately and I think to these guys credit over the past 40 years They've bought up pretty much every piece of gaming and title land that comes available and then no different Then this is something that's built into our DNA our Sky Canyon purchase and our low-seat purchases We continue to look for gaming title land that we view as potential Developable, you know resort down in the future.

Stephen Cootey: It doesn't include the garage.

Stephen Cootey: But Joe it does kind of lead into that slide is probably a good segue into its really your first question I can't really comment on what other competitors are doing but we know we're doing.

Stephen Cootey: Frank and Lorenzo for 40, plus years is focused on delivering the best in class assets and most importantly, the best in class locations, we live in.

Stephen Cootey: Very regulated market.

Stephen Cootey: The locals market is protected by SB, two eight which restricts the amount of gaming entitled land to come off the strip and Fortunately and I think these guys credit over the past 40 years, they've bought up pretty much every piece of gaming entitled Land that comes available and then no different and this is something that's built into our DNA, our Skye Canyon purchasing our low see purchases we can.

Stephen Cootey: And to look for gaining title land that we view as potential developable resort down in the future. So that's where it starts from us and that's really where it at and so locations. It's tough to repeat a location is only one once it's gone it's gone.

Stephen Cootey: So that's where it starts with us. And that's really where it ends. Locations, it's tough to repeat a location. There's only one, you know, once it's gone, it's gone. And right now, we feel we have the best of the six available. Yeah, that's right.

Stephen Cootey: And right now we feel we have the best the best sex available, yes, that's part of the value of the platform right as having the best locations and trying to project out where growth is going to happen.

Lorenzo J. Fertitta: Yeah, that's part of the value in the platform, right, being in the best locations and trying to project out where growth is going to happen, where the city's dynamics from a demographic standpoint are going to change over time, trying to be ahead 10, 20 years so that, you know, we're positioned. And I think that, you know, as we started really thinking about this in the late 1990s, that's starting to pay off here. You know, kind of 20, 25 years later, we're starting to see the benefit of that.

Lorenzo J. Fertitta: Are there cities dynamics from a demographic standpoint are going to change over time to try and be ahead 10 20 years.

Lorenzo J. Fertitta: <unk>.

Lorenzo J. Fertitta: We're positioned and I think that.

Lorenzo J. Fertitta: As we started really thinking about this in the late nineties.

Lorenzo J. Fertitta: That's starting to pay off here.

Lorenzo J. Fertitta: 2025 years later, we're starting to see the benefit of that and that's why we're able to develop something like Durango get outsized outsized returns and I think part of the reason for the deck that Steve had put together as Frank mentioned, we're just I think a lot of people think about our company, saying they have 500 acres of additional land, let's put a value per acre.

Lorenzo J. Fertitta: And that's why we're able to develop something like Durango and get outsized returns. And I think part of the reason for the deck that Stephen put together, as Frank mentioned, was just, you know, I think a lot of people think about our company and say, oh, they have 500 acres of additional land. Let's put a value per acre on it, you know, 300,000 an acre or 500,000 an And what we're trying to demonstrate is that we are a development company.

Lorenzo J. Fertitta: $300, an acre of 500000 acre and what we're trying to demonstrate is that.

Lorenzo J. Fertitta: We are a development company, that's really what our core principles are what our what we're capable of doing and by taking a raw piece of dirt and converting that into an operating asset we feel like that we're literally creating.

Lorenzo J. Fertitta: That's really what our core principles are and what we're capable of doing. And by taking a raw piece of dirt and converting that into an operating asset, we feel like we're literally creating billions of dollars of value, for instance, in the case of Durango. So trying to think about, you know, what the future of this company holds and what the embedded growth in the company is, all with opportunities that we own and control, and we can bring them on board whenever we want; they're not going away.

Lorenzo J. Fertitta: Billions of dollars of value for instance in the in the case of a Durango, So I'm trying to think about.

Lorenzo J. Fertitta: What the future of this company holds what the embedded growth in the company is all with with opportunities that we own and control and we can bring online whenever one they're not going away.

Lorenzo J. Fertitta: So we think that there is a lot of value there.

Lorenzo J. Fertitta: Yeah, Durango's performing great, right out of the box. But there are like 4,500 new housing units planned or under construction currently in that zip code, you know, and that's kind of the built-in growth that's going to continue to make Durango better and better and better.

Speaker Change: Thanks <unk>.

Lorenzo J. Fertitta: Durango is performing great right out of a box.

Lorenzo J. Fertitta: But there is.

Lorenzo J. Fertitta: 4500, new housing units planned or under construction currently.

Lorenzo J. Fertitta: And that Zip code.

Lorenzo J. Fertitta: That's kind of the built in growth that's going to continue to make durango, better and better and better.

Lorenzo J. Fertitta: Okay.

Lorenzo J. Fertitta: Yeah.

Lorenzo J. Fertitta: Okay.

Stephen Cootey: This concludes our question and answer session. I would like to turn the conference back over to Stephen Cootey for any closing remarks.

Lorenzo J. Fertitta: This concludes our question and answer session I would like to turn the conference back over to Stephen <unk> for any closing remarks.

Stephen Cootey: Well. Thank you everyone for joining the call today, and we look forward to talk to you about 90 days take care.

Stephen Cootey: Thank you everyone for joining the call today, and we look forward to talking to you in about 90 days.

Operator: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

Stephen Cootey: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.

Operator: [music].

Operator: Yes.

Operator: [music].

Operator: Okay.

Operator: Right.