Q4 2024 Red Rock Resorts Inc Earnings Call
Good afternoon and welcome to the Red Rock Resort fourth quarter and full year 2024 conference call. All participants will be in listen-only mode.
Let's start off by stating that the fourth quarter with another very strong one for the company by all measures.
Our Las Vegas operations achieved its highest fourth quarter net revenue and adjusted EBITDA in our history, while maintaining near record adjusted EBITDA margin.
For the year, our Las Vegas operations delivered their best performance ever in terms of net revenue and adjusted EBITDA, while achieving near record adjusted EBITDA margin for the year.
In addition to showing strong financial results, we continue to be pleased with the financial performance of our Durango Casino resort.
It continues to grow the Las Vegas locals market as the team continues to execute and improve the properties operational performance while at the same time driving incremental play from our existing customers and attracting new customers to our brand.
The full year under our belt. The property continues to increase visitation that theoretical win from our card customers in the surrounding area, while signing up over 85000, new customers to our database.
The property continues to ramp up and remains on track to become one of our highest margin properties as well as generate a return of almost 16% net of cannibalization in 2024.
Cannibalization is tracking as expected mainly affecting our red rock property like we've seen in the past we expect to backfill. This revenue over the next few years given the strong long term growth in the Las Vegas Valley, especially in Summerlin, where downtown Summerlin and someone west are set to bring in at around 34000 new households.
As stated on our last earnings call. We began construction last month on the next phase of our Durango Master plan.
This expansion will add over 25000 square feet casino space, including a new high limit slot area and bar.
In total 230, new slot machines will be added with 120 dedicated to the high limit room.
Additionally, we will be constructing a covered parking garage with nearly 2000 spaces.
Proving customer access and providing flexibility for future expansions.
The project with a budget of approximately $120 million is expected to be completed in January of 2026.
Some disruption on the south side of the property is anticipated during construction.
Across our portfolio, we've made operationally disciplined executing on our core strategy of reinvesting in existing properties to enhance the middle east while maintaining a focus on best in class customer service.
Despite a return to more typical seasonal patterns, we effectively manage expenses delivered record financial performance with near record margin reinvesting in our properties and return capital to our shareholders.
Now, let's take a look at our fourth quarter and full year results.
With respect to our Las Vegas operations, our fourth quarter net revenue was $492 6 million up seven 2% from the prior year's fourth quarter.
Adjusted EBITDA was $223 $9 million up one 6% from the prior year's fourth quarter. Our adjusted EBITDA margin was 45, 4% a decrease of 250 basis points from the prior year's fourth quarter.
On a consolidated basis, our fourth quarter net revenue of $495 7 million up seven 1% from the prior year's fourth quarter. Our adjusted EBITDA was $202 4 million up 5% from the prior year's fourth quarter or.
Our adjusted EBITDA margin was 48% for the quarter, a decrease of 267 basis points in the prior year's fourth quarter.
Let's turn to our full year performance.
With respect to our Las Vegas operations, our full year net revenue was $1 9 billion up 12, 6% from the prior year.
Full year, adjusted EBITDA was $879 $4 million up seven 4% from the prior year.
Our adjusted EBITDA margin was 45, 7% a decrease of 222 basis points from the prior year.
On a consolidated basis, our full year net revenue was $1 $9 billion up 12, 5% in the prior year, our full year adjusted EBITDA was $795 $9 million up six 7% from the prior year on a full year adjusted EBITDA margin was 41% a decrease of 222 <unk>.
This points in the prior year.
In the quarter, we converted 78% of our adjusted EBITDA to operating free cash flow generating $158 $6 million or $1 50 per share.
Looking at our 'twenty 'twenty four cumulative free cash flow, we covered we converted 57% of our adjusted EBITDA to operating cash flow generated $451 million or $4.27 per share does.
This significant level of free cash flow was either reinvested in our long term growth strategy reinvested into our existing properties will return to our stakeholders via debt paydown share repurchases and dividends.
As we finished 2024 remained focused on our core local gas as you continue to grow our regional national segments across our portfolio and comparing our results from last year to last year's fourth quarter. We continue to see strong carded slot play across the database, including a regional national segments.
Driven by strong customer engagement and robust spend per visit across our database, we achieved record revenue and profitability our gaming segment this quarter.
This was accomplished despite the broader market experiencing unfavorable hold and sports betting during the quarter.
Turning to the non gaming segments, both hotel and food and beverage continued to grow year over year and deliver record revenue and near record profitability in the fourth quarter.
Our hotel division experienced its highest fourth quarter revenue and near record profit driven by our team's success and continue to drive occupancy across our hotel portfolio not to be outdone, our food and beverage division also experienced its highest ever fourth quarter revenue and near record profit driven by higher average check and cover counts across our food and beverage outlets.
With regard to our group sales and catering businesses as mentioned on our last earnings call. We faced a tough fourth quarter comparable that said, we are seeing positive momentum in both of these business lines as we continue to build our pipeline into 2025.
As we look ahead to the first quarter, we are seeing stability in our core slot and table business in the locals market and across our card a database.
<unk> confident in our business prospects moving forward.
Now, let's cover a few balance sheet and capital items.
Companys cash and cash equivalents ended the fourth quarter was $164 $4 million and the total principal amount of debt outstanding was $3 4 billion.
<unk> and net debt of $3 3 billion at the end of the fourth quarter. The company's net debt to EBITDA ratio was four one times.
Also during the fourth quarter, we made distributions of approximately $39 million to the LLC unit holders of station Holdco, which included a distribution of approximately $22 $7 million to Red rock resorts.
The company used the distribution to make it required tax payment and pay its previously declared dividend of 25 per class a common share.
During the quarter the company repriced its term loan B credit facility, which is now bears interest at 2% over silver with good pricing further strengthens our balance sheet and reduces our interest expense by approximately $4 million per year.
Capital spend in the fourth quarter was $26 million, which included approximately $16 8 million in investment capital inclusive of Durango project for <unk>, as well as $9 2 million and maintenance Capex.
For the full year 2020 for capital spend was $283 9 million, which includes approximately $172 3 million of investment capital inclusive of the Wrangler project pertain it as well as the $111 6 million of maintenance capital.
As we look into our capital spend for 2025, we expect to spend between $375 million to $425 million, which includes $285 million to $325 million in investment capital as well as $90 million to $100 million of maintenance capital.
Yeah.
We also remain committed to strategically investing in and operating new amenities to our guests in order to drive incremental visitation and spend to our properties in the fourth quarter. We successfully opened a yard house restaurant at our Sunset station and added local favorite China Mama at Palace station property.
We are pleased with the results and the guest responded yes, it would be.
He's our guest responses early results in these new amenities and <unk>.
Addition to these amenities and as discussed on our last earnings call, we've been making investments into both our Sunset station and Green Valley Ranch properties into 2025.
That's our Sunset station property, we'd be building off the success Youre seeing with our recently renovated race and sports book and partial casino remodel by continuing through fresh podium in order to better position the property to capture the continued growth in Henderson, including the Masterplan communities of the Sky and cadence, which are both expected to add over 12.
<unk> thousand 500, new households, upon final completion of both communities.
As part of the project will be adding in an all new country Western bar and nightclub, our new Mexican restaurant, and all New center bar, along with a completely renovated casino space.
Work is already commenced on this project and a total cost of the renovation is expected to be approximately $53 million.
And our Green Valley Ranch property, we are expecting to start a complete refresh of our room and suite product as well as our convention space align the hotel with our most recent renovations made to our well received high limit table and slot rooms at the property.
Work is expected to start in June of 2025, with the majority of our rooms being back in service by year end.
The cost of the rumour convention renovation is expected to be approximately $180 million.
Like our other recently reduced introduced amenities. We expect these be solid investments how will we do expect some disruption challenges at these properties as we introduce these new amenities to our customers next year.
Turning now to North four we're extremely excited about this project, which is situated on a 305 acre site located north of Fresno, California.
Great Ingress egress off the heavily traveled highway 99 product.
It's one of the most convenient and accessible location in central California with over $4 2 million people located within two hours of the development site.
When complete this best in class resort will include approximately 100000 square feet of casino space with over 2400 slot machines, including 2000 factory games 42 table games and <unk>.
Food and beverage outlets and a fruitful many exciting options.
Construction is progressing well and we anticipate topping off the facility later this month keeping us on schedule for a mid 2026 resort opening.
The total project cost is expected to be approximately $750 million, which includes all design cost construction hard soft cost preopening expenses and any financing a development fee costs associated with the project.
We are also making steady progress on project financing anticipate closing on a for the facility later this quarter.
We're excited about these developments and we will continue to provide these updates during our quarterly earnings call.
Lastly, the Companys Board of directors has declared a cash dividend of <unk> 25 per class a common share payable on March 31 to class a shareholders of record as at March of the record March 17.
When we combine our share repurchases with our special and regular declared dividends, we returned approximately $224 million to our shareholders in 2024.
The company had a strong year and we remain confident in our business model as we head into 2025.
<unk> continues to validate our long term growth strategy and demonstrate the power of our own development pipeline in real estate Bank, which consists of over 450 acres of developable land position in highly favorable areas across the Las Vegas Valley.
This pipeline coupled with our best in class assets and locations gives us an unparalleled growth story that will allow us to double the size of our portfolio and capitalize on a very favorable long term demographic trends and high barriers to entry that characterized the las Vegas locals market.
We would like to recognize and extend our thanks to our team members for their hard work.
Our success starts with them and they continue to be the primary reason why our guests keep coming back we thank them again for voting us top casino employer in the Las Vegas Valley for fourth consecutive year.
Being certified by Great place to work for a third year in a row as well as being recognized by Forbes as one of them.
America's Best in state employers.
Finally, we thank our guests their loyal support in each of the last six decades.
Speaker Change: Operator. This concludes our prepared remarks for today and we are now ready to take questions.
Okay.
Speaker Change: Yeah.
Speaker Change: We will now begin the question and answer session. You ask any question you May Press Star then one on your Touchtone phone.
If youre using a speakerphone please pick up your handset before pressing the keys if at any time. Your question has been addressed and you would like to withdraw your question. Please press Star and then two are for.
Speaker Change: First question comes from Carlo Santarelli with Deutsche Bank. Please go ahead.
Carlo Santarelli: Hey, guys. Thank you for taking my question, Steve you alluded to it a little bit but didn't quantify and I know back in November coming off of a tough October on the sports side, I think you called out six or $7 million from a hold impact there incrementally December was was a struggle I think for the books <unk>.
Carlo Santarelli: Anything you can kind of quantify in terms of maybe the total sports betting hold impact whether it's year over year relative to normal.
Carlo Santarelli: In the fourth quarter.
Carlo Santarelli: Yes, no problem call. It I guess, one thing to mentioned the sports business overall was healthy with right being up 10%.
Carlo Santarelli: But as I've mentioned previously disclosed earnings.
Cost of $8 million in October and then additional six in December.
Carlo Santarelli: Year over year, Okay, Great and then if I could just just a follow up obviously.
Carlo Santarelli: A lot of moving parts.
Carlo Santarelli: With the <unk> just in terms of Durango being in for a stub period this year.
Carlo Santarelli: As we move into the first quarter and you talked a lot last call about kind of some of the seasonality that you anticipated in the <unk> would you be able to do something similar as it pertains to the <unk> acknowledging kind of low sports hold.
Carlo Santarelli: Did year over year comparison that we obviously saw with Durango, and how you see seasonality playing out quarter to quarter.
Carlo Santarelli: Yes, I mean, I think seasonality is.
Carlo Santarelli: Just look back to history right generally Q4 to Q1 from an EBITDA perspective is usually about up about six 6%.
Carlo Santarelli: Somewhere in that range.
Speaker Change: Very helpful. Thank you very much.
Speaker Change: And the next question comes from Shaun Kelly with Bank of America. Please go ahead.
Shaun Kelly: Hi, good afternoon, everyone. Thanks for taking my question.
Speaker Change: Steve wondering if we could get a little bit more color just on data consumer I think most of US did stare at a regional gaming data noticed a bit of an acceleration post election. The local is a little harder to glean just traffic trends from given sort of the macro nature. If we don't get property specific details. So what did you see did you guys see something similar in terms of.
Speaker Change: Be a pick up there in some of your core rated play after the election and just how is the mood felt maybe subsequent to that so far in Q1.
Scott: Yeah. This is Scott I'll take that one.
From a database perspective, we're seeing.
Scott: Consistent positive trends across the database and we've seen that in the past quarters and continuing to look at the beginning of the first quarter. We're seeing consistency there predominantly led by our high end network customer segments, our regional and national.
Scott: So across the database, we see stability.
Scott: As it relates to Durango, we continue to grow our new to brand customers were up to about 85000, new sign ups at the Durango zone.
Scott: At the same time.
Scott: We've seen really strong increases in new member sign ups across the core properties extra right.
Scott: Okay.
Scott: And this lorenzo relative to the election, we did see an acceleration which is typical we expected that typically get a low leading up to a presidential election people are not focus but after the election, we definitely saw.
Scott: So acceleration.
Scott: Thank you very much.
Speaker Change: The next question comes from Jordan Bender with citizens JMP. Please go ahead.
Speaker Change: Good afternoon, everyone on the backfill column that you guys have previously said that that could take about two to three years to backfill at Red rock Steve in the prepared remarks, you said that you could be a couple of years away from fully backfill that I might be splitting hairs. With this question, but is that taking maybe a little bit more time there.
Speaker Change: We anticipate it to kind of get back to pre <unk> levels.
Speaker Change: No no I'm sorry go ahead, yeah. My apology that was confusing I think with the statement of being on track. We generally have seen historically that it takes backfill it takes about two to three years.
Speaker Change: And that was our experience our past openings than we are.
Speaker Change: On pace.
Speaker Change: To hit those targets.
Speaker Change: Understood. Thanks, and then just the commentary around the quarter over quarter into one Q with seasonality.
Speaker Change: Just keeping in mind that we did have Super Bowl in the prior year is there any way to kind of quantify.
Speaker Change: What kind of positive impact that did have in the prior years, when we think about modeling.
Speaker Change: Yes, I mean, the Super Bowl I think from a from a whole perspective of down across the street. It wasn't a very good it wasn't it wasn't a very good last year was not a good outcome. This year was a better this year as the better off we needed to for United win last year, but from a hotel perspective.
Speaker Change: The cost is about $1 million across the board.
Speaker Change: Sure.
Speaker Change: Understood. Thank you very much.
Speaker Change: Yeah.
Speaker Change: And the next question comes from Steve <unk> with Stifel. Please go ahead.
Steve: Yeah, Hey, guys. Good afternoon, so Steve or Scott whoever wants to take this.
Steve: You know maybe from a high level perspective, just wondering if you could give us some color on how youre thinking about your customer base for for this year. It sounds like you know per Scott's commentary stable seems to be the words I guess you guys would describe but.
Steve: Just trying to gauge how you guys are kind of thinking about that spend level Cross maybe rated play versus non rated play and then maybe how youre thinking about the group business for.
Steve: 2025 as well.
Steve: Yes. This is Scott I'll tell you it will start out with just the core customer.
Steve: As I said, we've seen stability, we continue to anticipate the market to be stable with some green shoots we're looking forward to the year like Lorenzo said coming out of the election, which seems like we've picked up some steam.
Steve: And so as you can.
Steve: Look at all of our kind of customer and consumer metrics, they're all positive going forward.
Steve: As you look at group I think you mentioned I.
Steve: I think we had mentioned on previous calls as the fourth quarter was going to be a little tough tough for us from a crude perspective.
Steve: And that will fade into the first quarter as well and then for the remaining three quarters of 'twenty five and into 'twenty six we see strong pickup in the group segment the <unk>.
Steve: Note about the fourth quarter was we still had a record hotel revenue in the fourth quarter, because we were able to make up the gap in group through higher <unk> mix and other.
Steve: The other strategy. So we like where that is headed there is a direct correlation.
Steve: <unk> hotel catering so the fourth quarter was a little light and catering, but actually in the first quarter, we'll make it up we're seeing positive year over year.
Steve: Leases in theater and going forward. So we like the auto market business related to regional and National business right now so we're optimistic.
Carlo Santarelli: Okay, great. Thanks for that Scott and then a second question.
Steve: Steve just in terms of.
Speaker Change: There always seems to be rumors out there kind of around the M&A potential M&A across the gaming space and just maybe wondering if you could kind of give us your updated thoughts around current appetite for M&A and I'm guessing you guys, probably still don't have much of an appetite for buying versus building given your large landbank landbank, but just wondering if you wanted to hear.
Steve: If there if anything has changed on that front. Thanks.
Steve: Overall, we look at everything, but I think you hit the nail on the head.
Steve: We are sitting in probably the best regional gaming market in the United States with fixed prices of land ready primed and ready for development.
Speaker Change: Okay got you thanks, guys I appreciate it.
Steve: Alright.
Speaker Change: And the next question comes from Stephen Grambling with Morgan Stanley. Please go ahead.
Stephen Grambling: Hi, Thanks, I know you don't.
Stephen Grambling: Really provide explicit guidance, but just wondering if you could provide additional color on the puts and takes impacting EBITDA in 2025 versus 'twenty 'twenty four as we think through.
Stephen Grambling: All the different renovations that <unk> got going on underlying growth in Durango ramping.
Speaker Change: Yes, let me take some of it and then I think Steve might be able to add some color I will take the disruption piece I think we mentioned in the last call that we may see as much as $25 million of disruption in the year as we continue to add new amenities enhancements to the property.
Speaker Change: The flip side of that is that we are very encouraged by the capital investments that we've made thus far.
Speaker Change: Our high limit room, and some of that new restaurant amenities.
Speaker Change: We've put four so we anticipate that as these new capital investments come online, we're going to see incremental growth.
Steve: Steve maybe you can add some color.
Steve: Absolutely I mean, the biggest put and take is right we are lapping Durango.
Speaker Change: And so we were very happy that the team achieved 16%.
Steve: Cash on cash return in year one.
Steve: We are pushing to that 20% return over the next three years in order to hit our targets. So there's still room to grow on the Durango front.
Steve: And then we're obviously very heavily focused on the backfill of Red rock.
Steve: From an expense standpoint, I think one of the things. We are lapping is that in order to be competitive we proactively raise salaries and salaries were up on a same store sale basis up three 1%, we feel that the labor market is moderating some.
Steve: We're not only going to lap the salary increases, but also that we had to deal with the minimum wage increases in July so there's a put and take.
Helpful. Thanks, and one quick follow up does that 25 million is that that's incremental to any of the impact that you've seen this year is that right.
Steve: Yes, the first so far we've seen very little impact so.
Steve: So that.
Steve: Disruption is expected to be spread throughout the year with Green Valley obviously.
Steve: Not really hitting until June.
Steve: Got it thank you so much.
Speaker Change: And the next question comes from Barry Jonas with truly Securities. Please go ahead.
Speaker Change: Hi, guys.
Speaker Change: Jack mentioned eight acres in Reno that are ready for development.
Speaker Change: Don't believe that was in the last quarter stack can you maybe talk about your current thoughts on developing in that market overall and where it sits priority wise.
Speaker Change: Yeah. This is Scott Youre correct I do think it's always been in our in our deck is.
Speaker Change: <unk> insight of land.
Speaker Change: Beyond the actively marketed side.
So we've gone back and forth we've looked at developing that project. It is gaming entitled It is a great location in Reno.
And it does as I said have the entitlement from a priority perspective.
Speaker Change: Like the development opportunities, we have in Las Vegas.
Speaker Change: But we're always open to developing that at the right time in the right place given the priorities or if we get a proper offer for that we would divest and sell.
Speaker Change: Great. Thanks for that clarification, and then just a question on North Fork North four can you talk about where the tribe is out with compaq discussions and to what extent does that influence the timing or gaming composition when the casino opens.
Speaker Change: Yes, we actually.
Speaker Change: Went through secretary procedures. So there is no compact place that ultimately while it took us a long slightly a little bit longer to get to this place ultimately that leads to a bit higher margin.
Speaker Change: Outweighing the Ogden, we start operating.
Speaker Change: So youll be able to have class III games.
Speaker Change: But there's no limitations just to be clear.
Speaker Change: 2000, 2000 through 2000 class III 400 genes to the client.
Speaker Change: And that's for two years and then we've done there's no limit.
Speaker Change: Excellent alright, thank you so much guys.
Speaker Change: And our next question comes from Dan pulled Sir with Wells Fargo. Please go ahead.
Speaker Change: Hey, good afternoon, everyone. Thanks for taking my question.
Speaker Change: First.
Speaker Change: And in terms of the cadence for next year is it fair to say that the peak disruption theory from Green Valley Ranch and Sunset construction will take place in the third and fourth quarter.
Speaker Change: Yes.
Speaker Change: Okay, and then if you were.
Speaker Change: Well, we're coming off a super ball, obviously, we had at one in Vegas again.
Speaker Change: In the fourth quarter can you maybe talk about kind of what you observed over over the valley for these two big events, obviously to evolve.
Speaker Change: It's typically a big event Bagus Didnt take place there this year.
Speaker Change: Just maybe maybe opine on the demand levels that you've seen across your across your properties.
Speaker Change: Now a few months for these key events.
Speaker Change: But I think for FY <unk>.
Speaker Change: We're going to continue with the same answer why we think it's a wonderful event for Vegas.
Speaker Change: The city healthier than it really is a non event for for Red rock resorts. So I don't think we see any real impact noticeable impact shortfall is a different story.
Speaker Change: And the other question I think a couple of a couple of questions before we did need the 40 niners to win.
Speaker Change: But this year I think from a little bit better.
Speaker Change: From a gaming perspective, and then from a hotel perspective like I earlier I quantified the losses.
Speaker Change: Got to make up about $1 million in hotel business with us hosting the Super Bowl in Las Vegas last year.
Lorenzo: Lorenzo the Super Bowl was a significant impact for our business.
Lorenzo: Causing a barrel gaming and non gaming regardless of how the game turns out or whether we hold on to whatever happens, but it was a significant positive impact and as Steve said F. One while it's amazing are great for the city.
Lorenzo: Absolutely zero impact on our business either way, whether it's strong in Nashville.
Lorenzo: Got it and just one last quick housekeeping any.
Lorenzo: Any pointers on how to think about corporate expense growth for 25.
Lorenzo: Yes, I think right now I think it's about $21 million of probably expect we probably we can expect to be at that level.
Speaker Change: Got it thanks, so much.
Chad Beynon: And the next question comes from Chad Beynon with Macquarie. Please go ahead.
Chad Beynon: Hi, good afternoon, Thanks for taking my question.
Speaker Change: Wanted to ask on margins for 25, Steve You mentioned that you know labor is up a little over 3%.
Speaker Change: We think about some of the other components, whether it's utilities insurance marketing et cetera.
Speaker Change: Should we expect any major kind of inflationary growth in 25 of those settled down pretty.
Speaker Change: Pretty significantly and if we see revenue growth in 2005, we could actually.
Speaker Change: Hold margins all else equal.
Speaker Change: Yes, I mean, I think I think what youre seeing is from a marketing perspective, the market continues to be rational.
Speaker Change: I think from a from a labor perspective, we did we are overlapping not only the minimum wage, but largely our proactive large increase to make sure that we're competitive in the market. So we.
Speaker Change: We hope that that goes away.
Speaker Change: Obviously sports.
Speaker Change: About 150 basis points of margin degradation, just this quarter. So we were hoping for.
Speaker Change: Hoping for not only the better soufflot, which I think we got and what we're hoping for a better bench madness as well I think.
Speaker Change: And the thing that I think that is that we are nervous about are just looking at is the Cogs and food cost continues to be elevated AG proteins et cetera.
Speaker Change: Continues to be elevated thats something we're on the lookout for.
Speaker Change: We do have one outlier again sports wagering system once we get that out in Nevada gaming control Board audit there'll be a good chunk of duplicate expenses that we're incurring right now that will go live which will help margins.
Speaker Change: But overall do like where our margins profile was lucky sometimes it always helps to look back when you look back at our fourth quarter pre COVID-19.
Speaker Change: Margins were 36% and so sitting here today.
Speaker Change: Continuing with asked about the sustainability of margins and being north of 45%, we like the structural changes that this team put in place during the Covid period and continue to execute on.
Speaker Change: Great. Thank you.
And then given the projects that you have right now do you have any updated views on.
Speaker Change: The plan is to grow the tavern business bigger or is the focus on the internal projects in Durango to pointed out and then activating the land back. Thank you.
Scott Youre: This is Scott we're excited to say, we are bringing online two more time or we brought online two thousands were bringing online six more <unk> within the year.
Scott Youre: So that's a pretty full play for us the first two towers have been.
Scott Youre: Very pleasingly above our expectation and performance. So we think we're onto something there and we're working hard to make sure that we opened six.
Scott Youre: <unk> taverns in the right manner.
Scott Youre: And look Opportunistically these things come up and we look at.
Scott Youre: These opportunities are big.
Scott Youre: Our investment profile on the tavern and then we may.
Scott Youre: Acquire more or Billboard.
Scott Youre: Great. Thank you very much nice quarter.
Speaker Change: And the next question comes from Joe Stauff with Susquehanna. Please go ahead.
Joe Stauff: Okay. Thank you.
Joe Stauff: I wanted to ask about just visitation levels.
Speaker Change: In general Youre lapping Durango.
Joe Stauff: And.
Joe Stauff: Is it fair to say that the overall level of visitation given the different regions of the locals market have they stabilized in terms of.
Joe Stauff: Durango now.
A year later and then.
Joe Stauff: How do you drive.
Joe Stauff: Additional growth in your database.
Joe Stauff: Im here or is it more about.
Joe Stauff: Just.
Joe Stauff: Pushing people at different levels or is this do you feel so theres more organic growth to realize.
Scott Youre: Yeah. This is Scott, let's stick visitation just in its raw data visitation is generally flat.
Speaker Change: The database, but we are that being said, though Scott that's against like the.
Scott Youre: The Grand opening up Durango.
Scott Youre: That's good news could be comping against that's right. So we do see consolidation of visits but we do see it to the upside of spend per visit so in totality.
Scott Youre: See upside and to Frank's point, we are seeing one or other carded customers settled back in to what might be their home property.
Scott Youre: Durango trial.
Scott Youre: As Frank mentioned as well you are looking at kind of that year over year.
Joe Stauff: Good morning, Joe.
Scott Youre: Yes.
Scott Youre: Got you and.
Scott Youre: I'm sorry, Scott.
Speaker Change: As far as growth, we continue to lean into regional National Thats, an area of upside for us.
Speaker Change: Especially through our hotel product and we mentioned that after the first quarter, we are going to see really strong increases in group sales and strong increases in hotel visitation in general as it relates to our core and VIP customers products like the high limit rooms continue to.
Speaker Change: Grow incremental revenue.
Speaker Change: And the new amenities that we're bringing online as well as refreshing our product PBR.
Speaker Change: Sunset will bring incremental visitation and growth as well.
Speaker Change: No, it's Lorenzo and the market continues to be dynamic there continues to be population growth housing and as we've talked about before I mean, the interesting thing is that we're seeing it in our high limit rooms in some of our offerings from higher income person moving and relocating the Las Vegas, and we're continuing to see that.
Speaker Change: We keep our eye on home prices.
Speaker Change: Little bit of a.
Speaker Change: Fly demand issue right now, we're just hoping that the BLM release, there's more land so that warehousing can be developed and that's my understanding of what the governor is working on right now and we think that gets done, but there's certainly no lack of demand as far as people wanting to relocate here so the market dynamic.
Speaker Change: We think it's going to continue to grow as it has over the last two.
Speaker Change: The good news.
Speaker Change: The majority of the growth is taking place is in the suburbs, where our properties are located off of the beltway from major infrastructure.
Speaker Change: Got you and if I could squeeze in additional one.
Speaker Change: You've got 350.
Speaker Change: Project capital between the three triangle phase two GB on Sunset.
Speaker Change: Some of that spend kind of based on your guidance Scott.
Speaker Change: The first quarter of next year any any preview of.
Speaker Change: How youre thinking about additional projects at this point.
Speaker Change: No I think we'll be in a position probably by this time next year or two.
Speaker Change: <unk>.
Speaker Change: Our guidance from what the Nitro project is going to be but we're working very hard right now, but not in a position through.
Speaker Change: Disclose that right now.
Speaker Change: Okay. Thanks very much.
Speaker Change: Okay.
Speaker Change: And the next question comes from Brent month Tour with Barclays. Please go ahead.
Speaker Change: Good afternoon, everybody. Thanks for taking my question. So this isn't a it's like splitting hairs, but it looks like the capex expectation for <unk> went up.
Speaker Change: Just a slight amount I'm just curious if there's been any sort of change in scope to the project or maybe add ons or if thats, just sort of normal wage inflation or what that is.
Speaker Change: I think Brian when I think when we were taking a look at the hotel and the timing of the hotel construction I think the team thought that adding in and refreshing the meeting space was very important.
Speaker Change: Because these are hotel on the meeting space to really work together.
Speaker Change: So that was added to the project since the last earnings call.
Speaker Change: That's perfect. Thanks for that and then just a follow up on the the post election commentary.
Speaker Change: You did give some color some color on the broad stability of the market, but the Preelection law was well documented.
Speaker Change: The post election behavior.
Speaker Change: Can you maybe talk.
Speaker Change: The weighted versus sort of unrated behavior.
Speaker Change: And what specifically you saw accelerate visits or spend per visit and then and then and then if it exists and into January.
Speaker Change: Parts of that equation sustained and which parts may have felt fallen back off.
Speaker Change: Our percentage of carded and unrecorded remains consistent.
Speaker Change: We're about 26, 5% on a recorded.
Speaker Change: And the database.
Speaker Change: And as it relates to post election, we continue to see strength.
Speaker Change: Like I said, the VIP, which is our highest in segment, our core segment and regional and national.
Speaker Change: Expect to see that continue into the rest of the 25.
Speaker Change: Great. Thanks, everybody.
Speaker Change: The next question comes from John Decree with C. B R. E. Please go ahead.
Speaker Change: Good afternoon, everyone.
Speaker Change: Maybe one more for you on the group sales business, he talked quite a bit about that today and the momentum youre seeing in the back half.
Speaker Change: So if you could speak to the capacity you have to grow that so if you have a group room night target or how do you think about kind of balancing that with keeping rooms for your casino customer and just trying to get a sense of how many more groups out you could do how much headway you have or if it's more on pricing that you are getting on rooms and catering business.
Speaker Change: It's driving that momentum or just more groups that you're that you're going out and getting.
Speaker Change: Well I think it's both.
Speaker Change: One we have capacity still to go.
Speaker Change: So we're probably.
Speaker Change: 70, 60, 70% of the way there in the year for the year.
Speaker Change: Occupancy of the meeting space. The other thing is is because we have a premium product that we would put up against anybody in the market.
Speaker Change: Compete on price. So there is an opportunity to continue to grow price there was a little bit of a lull in the back half of 'twenty, four where people were spending right to their minimums and they werent growing over their minimums. So I think there is an opportunity to get incremental interest revenue.
Speaker Change: Of these customers.
Speaker Change: As we go forward.
Speaker Change: So I think there is upside there.
Speaker Change: Got it thanks, Scott maybe.
Speaker Change: One quick follow up on the same topic what are you.
Speaker Change: Guys seeing from those customers that come in and what they do on the gaming floor or you are they at a gaming more or are they kind of turning into gaming customers repeat groups and where you're getting new gaming customers have those periods of time good sign ups for you for gaming customers curious, how you're kind of cross selling from the group sales to gaming.
Speaker Change: Yeah, a couple of things one we have the benefit of being predominantly corporate.
Speaker Change: Our group mix, which comes with expense accounts.
Speaker Change: Customer thats more willing to gamble and eat in the restaurants.
Speaker Change: It's a better quality customer, let's say an association customer so we lean into that when we capture them through all the great new restaurants, So we have specifically of Durango and <unk>.
Speaker Change: Red Rock and now Green Valley Ranch, as our peak year Mediterranean restaurant.
Speaker Change: Sushi. So we have amenities to continue to grow that you had asked about kind of yielding rooms.
Speaker Change: It's our philosophy that putting the most profitable customer in the room is the goal.
Speaker Change: Total audience.
Speaker Change: Its a nuance and then arc right. So.
Speaker Change: We're constantly looking at the overall work of the gaming customer compared to Ah conventioneer or a group customer.
Speaker Change: We're probably a little bit more favoritism to the gaming customer because we have an opportunity for repeat visitation.
Speaker Change: Station.
Scott Youre: Thanks, Scott that's helpful. I appreciate that.
Speaker Change: Hey, guys.
Speaker Change: And the next question comes from Ben Chaiken with Mizuho. Please go ahead.
Speaker Change: Hey, nice quarter, just one quick one for me.
Speaker Change: I believe you have a development associated with the North Port development can you remind us of the value of that and then is that still 28 events ballpark to get that back.
Speaker Change: I'm sorry.
Speaker Change: Note. The note that note is about $156 million as of December 31.
Speaker Change: As I mentioned in the remarks, we're looking to complete our financing for the project.
Speaker Change: Later this quarter so.
Speaker Change: The resolve that we may be able to get some of that no back earlier than 2028.
Speaker Change: Potentially this year.
Speaker Change: Thank you that's all I appreciate it.
Speaker Change: And our final question comes from David Katz with Jefferies. Please go ahead.
Speaker Change: Hi afternoon. Thanks for taking my question I wanted to go back to one a bit earlier.
Speaker Change: Regarding what happens beyond the current.
Speaker Change: The current projects that you have on the board and it's not about asking what the project would be in 2026, Oh right details about them, but really more how youre thinking about.
Leverage on.
Speaker Change: Harvest mode versus investment mode.
Speaker Change: Balancing those in 2026 more of a general strategic question, what should we expect in the out year beyond this year. Thank you.
Speaker Change: No problem as I mentioned some of the Capex from 2025 would continue to bleed into 2026 and.
Frank: And Frank mentioned that.
Frank: We could possibly be in a position to announce our next project next year. This time next year.
Frank: Right now leverage is continuing to go down as we ramp up Durango and the Baxter Red rock.
Frank: Fruition said, we're sitting at four one times very comfortable at four one times interest expenses coming down.
Frank: <unk> interest rates coming down, but also due to the refinancing we'd like to see leverage consistent at this point, but if theres an opportunity.
Frank: And it came up we feel okay floating leveraged a little bit higher.
Frank: Okay.
Frank: Okay.
Frank: This concludes our question and answer session I would like to turn the conference back over to Steven Judy for any closing remarks.
Steven Judy: Thank you everyone for joining the call and look forward to talking again in 90 days take care.
Speaker Change: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.