Q1 2025 Red Rock Resorts Inc Earnings Call
Operator: Good afternoon and welcome to Red Rock Resorts first quarter 2025 conference call.
Good afternoon, and welcome to Red Rock Resorts first quarter 2025 conference call.
Operator: All participants will be in a listen-only mode.
All participants will be in a listen only mode.
Operator: Please note, this conference is being recorded.
Please note this conference is being recorded.
Operator: 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.
Speaker Change: I would now like to turn the conference over do you think the executive Vice President Chief Financial Officer, and Treasurer of Red Rock Resorts. Please go ahead.
Stephen Cootey: Thank you for joining us today for Red Rock Resorts' Joining me on the call today are Frank and Lorenzo Fertitta, Scott Kreeger, and our executive Mattis.
Speaker Change: Thank you operator, and good afternoon, everyone. Thank you for joining us today for Red Rock Resorts first quarter 2025 earnings conference call.
Speaker Change: Joining me on the call today are Frank and Lorenzo Fertitta, Scott Kreger, and our executive management team.
Stephen Cootey: I'd like to remind everyone that our call today will include forward-looking statements under the safe harbor provisions of the United States Federal Security Law. Developments and results may differ from those projected. 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 that this call is being recorded.
Speaker Change: I'd like to remind everyone that our call. Today will include forward looking statements under the safe Harbor provisions of the United States Federal Securities laws developments and results may differ from those projected during this call. We will also discuss non-GAAP financial measures.
Speaker Change: The definitions and complete reconciliation 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.
Speaker Change: Also please note that 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 all measures. Our Las Vegas operations achieved its highest first quarter net revenue in adjusted EBITDA in our history, while maintaining the record adjusted EBITDA margin. In addition to delivering strong financial results, we remain pleased with the continued performance of our Durango Casino Resort. Following a successful first year, Durango has continued to grow the Las Vegas locals market as well as drive incremental play from our existing customer base while attracting new guests to the station casino's brand. The property continues to show positive momentum with increased visitation and higher net theoretical win from Carter customers in the surrounding Durango area, while adding over 95,000 new customers to our database.
Speaker Change: Let's start off by stating that the first quarter represented another strong quarter for the company by all measures.
Speaker Change: Our Las Vegas operations achieved its highest first quarter net revenue and adjusted EBITDA in our history, while maintaining near record adjusted EBITDA margin.
In addition to delivering strong financial results. We remain pleased with the continued performance of our Durango Casino resort.
Speaker Change: Following a successful first year Durango is continue to grow the Las Vegas locals market as well as drive incremental play from our existing customer base.
Speaker Change: Tracking new guests to the station casinos brand.
Speaker Change: The property continues to show positive momentum with increased visitation and higher net theoretical win from Carter customers into surrounding Durango area.
Speaker Change: Adding over 95000, new customers to our database.
Stephen Cootey: The property remains on a solid ramp trajectory and is on pace to become one of our highest margin properties, generating return net of cannibalization of nearly 16% through the first quarter of 2025. As we've noted on prior earnings calls, some cannibalization has occurred primarily at our Red Rock property as a result of Durango's opening. However, we are encouraged that the revenue backfill is ahead of pace and early trends suggest that the worst of the cannibalization impact is behind us. Consistent with our historical experience, we continue to expect full revenue recovery over the next couple of years, supported by the strong long-term demographic growth across the Las Vegas Valley, particularly in Summerlin, where the combined build-out of downtown Summerlin and Summerlin West is projected to add approximately 34,000 new households.
Speaker Change: The property remains on a solid ramp trajectory and is on pace to become one of our highest margin properties generating return net of cannibalization of nearly 16% through the first quarter of 2025.
Speaker Change: As we've noticed noted on prior earnings calls some cannibalization has occurred primarily at our Red rock property as a result of Durango is opening.
Speaker Change: However, we are encouraged that the revenue backfill is ahead of pace and early trends suggest the worst of the cannibalization impact is behind us.
Speaker Change: Consistent with our historical experience, we continue to expect full revenue recovery over the next couple of years supported by the strong long term demographic growth across the Las Vegas Valley, particularly in Summerlin, where the combined buildout of downtown Summerlin and someone west is projected to add approximately 34000 new households.
Stephen Cootey: As stated on our last earnings call, construction continues on the next phase of our Durango master plan. This expansion will add over 25,000 square feet of additional casino space, including a new high-limit slot area and bar. In total, the project will introduce 230 new slot machines, with 120 allocated to the high-limit region. As part of this phase, we are also building a new covered parking garage with nearly 2,000 spaces, which will enhance customer access and provide infrastructure flexibility to support future growth of the property. The total project cost is approximately $120 million and is currently operating under a guaranteed maximum price contract, with completion of the project expected in late December.
Speaker Change: As stated on our last earnings call construction continues on the next phase of our Durango Master plan.
Speaker Change: This expansion will add over 25000 square feet of additional casino space, including a new high limit slot area and bar in total the project will introduce 230, new slot machines with 120 allocated to the island at room.
Speaker Change: As part of this phase we are also building a new covered parking garage with nearly 2000 spaces, which will enhance customer access and provide infrastructure flexibility to support future growth of the property.
Speaker Change: The total project cost is approximately $120 million and is currently under operating under a guaranteed maximum price contract with completion of the project expected in late December.
Stephen Cootey: Where there has been some construction disruption on the south side of the property, we are taking proactive steps to minimize gas impact.
Speaker Change: Where there has been some construction disruption on the south side of the property, we are taking proactive steps to minimize gas impact.
Stephen Cootey: Across the rest of the portfolio, we maintain strong operational discipline, continue to execute our core strategy of reinvesting in our existing properties to enhance amenities while remaining focused on delivering best-in-class customer service. Despite a return to more typical seasonal visitation patterns, we effectively managed expenses, delivered record financial performance with near record margins, reinvested in our properties and returned capital to our shareholders.
Speaker Change: Across the rest of the portfolio, we maintained strong operational discipline continue to execute our core strategy of reinvesting in our existing properties to enhance amenities, while remaining focused on delivering best in class customer service.
Speaker Change: Despite a return to more typical seasonal visitation patterns, we effectively managed expenses delivered record financial performance with near record margins reinvested in our properties and return capital to our shareholders.
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 $495 million, up 1.9% from the prior year's first quarter. Our adjusted EBITDA was $235.9 million, up 2.7% from the prior year's first quarter. Our adjusted EBITDA margin was 47.7%, an increase of 34 basis points from the prior year. On a consolidated basis, our first quarter net revenue was $497.9 million, up 1.8% from the prior year's first quarter. Our adjusted EBITDA was $215.1 million, up 2.8% from the prior year's first quarter. Our adjusted EBITDA margin was 43.2% for the quarter, an increase of 42 basis points from the prior year.
Speaker Change: Now, let's take a look at our first quarter.
Speaker Change: With respect to our Las Vegas operations, our first quarter net revenue was 495 million up one 9% from the prior year's first quarter.
Speaker Change: Our adjusted EBITDA was $235 9 million up two 7% from the prior year's first quarter.
Speaker Change: Our adjusted EBITDA margin was 47, 7% an increase of 34 basis points from the prior year.
Speaker Change: On a consolidated basis, our first quarter net revenue was $497 9 million up one 8% from the prior year's first quarter.
Speaker Change: Our adjusted EBITDA was $215 1 million up two 8% in the prior year's first quarter.
Speaker Change: Our adjusted EBITDA margin was 43, 2% for the quarter, an increase of 42 basis points from the prior year.
Stephen Cootey: In the quarter, we converted 43% of our adjusted EBITDA into operating free cash flow, generating $93 million, or 88 cents per share. This strong level of free cash flow was strategically deployed to support our long-term growth initiatives, including our most recent projects at Durango, Sunset Station, and Green Valley Ranch, or return to stakeholders through debt reduction and dividends.
Speaker Change: In the quarter, we converted 43% of our adjusted EBITDA into operating free cash flow generating $93 million or 88 per share the.
Speaker Change: The strong level of free cash flow was strategically deployed to support our long term growth initiatives, including our most recent projects at Durango Sunset station and Green Valley Ranch will return to stakeholders through debt reduction and dividends.
Stephen Cootey: As we begin 2025, we remain focused on our core local guests, we'll continue to grow our regional and national customer segments across the portfolio. Compared to the first quarter of last year, we saw continued strength in card and slot play across a majority of our data. Strong customer engagement and robust spend per visit helped drive near record revenue and profitability in our gaming segments for the quarter.
Speaker Change: Okay.
Speaker Change: As we begin 2025, we remain focused on our core local guests, while continuing to grow our regional and national customer segments across the portfolio.
Speaker Change: Compared to the first quarter of last year, we saw continued strength in carded slot play across a majority of our database.
Speaker Change: Strong customer engagement and robust spend per visit helped drive near record revenue and profitability in our gaming segments for the quarter.
Stephen Cootey: Turning to our non-gaming operations, both hotel and food and beverage divisions eluded a strong quarter, achieving near-record revenue and profitability in the first quarter. Our hotel division recorded its second highest first quarter revenue and profit, driven by our team's success in driving increased occupancy across the portfolio. Not to be outdone, the Food and Beverage Division also achieved near-record performance, supported by high cover counts across our Outlook.
Speaker Change: Turning to our non gaming operations, both hotel and food and beverage division. So it's a strong quarter, achieving near record revenue and profitability in the first quarter.
Speaker Change: Our hotel Division recorded its second highest first quarter revenue and profit driven by our team's success in driving increased occupancy across the portfolio.
Speaker Change: Not to be outdone, the food and beverage Division also achieved near record performance supported by high cover counts across our outlets.
Stephen Cootey: Regarding group sales and catering, as noted on our last earnings call, we faced a challenging year-over-year comparison in the first quarter. However, we are seeing positive momentum in both lines of business and expect stronger performance throughout the remainder of 2025.
Speaker Change: Regarding group sales and catering as noted on our last earnings call, we faced a challenging year over year comparison in the first quarter.
Speaker Change: However, we are seeing positive momentum in both lines of business and expect stronger performance throughout the remainder of 2025.
Stephen Cootey: As we look ahead into the second quarter, we are seeing stability in our core slot and tables business, in the locals market, and across our Carta database. We remain confident in our business prospects moving forward.
Speaker Change: As we look ahead into the second quarter, we are seeing stability in our core slot and table business in the locals market and across our card a database we remain confident in our business prospects moving forward.
Stephen Cootey: Now let's cover a few balance sheet and capital. The company's cash and cash equivalents at the end of the first quarter was $150.6 million, and the total principal amount of debt outstanding was $3.4 billion, resulting in net debt of $3.3 billion. As of the end of the first quarter, the company's net debt to EBITDA ratio is 4.1 times. Also during the first quarter, we made distributions of approximately $27.6 million to the LLC unit holders of Station Holco, which included distribution of approximately $16.1 million to Red Rock Resorts. The company used the distribution to pay its previously declared dividend of $0.25 per Class A common share.
Speaker Change: Now, let's cover a few balance sheet and capital items.
Speaker Change: The company's cash and cash equivalents at the end of the first quarter was $150 6 million and the total principal debt outstanding was $3 4 billion, resulting in net debt of $3 3 billion.
Speaker Change: As at the end of the first quarter the company's net debt to EBITDA ratio was four one times.
Speaker Change: Also during the first quarter, we made distributions of approximately $27 6 million to the LLC unitholders of station Holdco, which include a distribution of approximately $16 1 million to Red rock resorts.
Speaker Change: The company used the distributions paid previously declared dividend of <unk> 25 per class a common share.
Stephen Cootey: Capital spent in the first quarter was $68.2 million, which includes approximately $32.2 million in investment capital, as well as $36 million in maintenance capital. For the full year 2025, we now expect to spend between $350 and $400 million, down $25 million from our previous earnings call, mainly due to the timing of capital payments. The full year capital spend includes $260 to $300 million in investment capital. as well as $90 to $100 million in maintenance capital.
Capital spend in the first quarter was $68 2 million, which includes approximately $32 2 million in investment capital as well as 36 $36 million and maintenance capital.
Speaker Change: For the full year 2025, we now expect to spend between 350 and $400 million down $25 million from our previous earnings call, mainly due to the timing of capital payments.
The full year capital spend includes $260 million to $300 million investment capital.
Speaker Change: As well as $90 million to $100 million in maintenance capital.
Stephen Cootey: As mentioned on our last earnings call, we are making investments in both our Sunset Station and Green Valley Ranch properties. At our Sunset Station property, we are building off the success we are seeing with our recently renovated race and sports book and partial casino remodel by continuing to refresh the podium in order to better position the property to capture the continued growth in Henderson. including the master-planned communities of Sky and Cadence, which are expected to total over 12,500 households upon final completion of both communities. As part of the project, we are adding an all-new Country Western bar and nightclub, a new Mexican restaurant, an all-new center bar, along with a completely renovated casino space.
Speaker Change: As mentioned on our last earnings call, we're making investments in both our Sunset station and Green Valley Ranch properties.
Speaker Change: At our Sunset station property, we are building off the success, we're seeing with our recently renovated race and sports book and partial casino remodel.
Speaker Change: To refresh the podium in order to better position the property to capture the continued growth in Henderson, including the master planned communities of Sky and cadence, which are expected to total over 12500 households upon final completion of both communities.
Speaker Change: As part of the project, we are adding an all new country Western bar and nightclub, our new Mexican restaurant, and all New center bar, along with a completely renovated casino space.
Stephen Cootey: Work continues to move forward on this project, and the total cost of the renovation is expected to be approximately $53 million.
Speaker Change: Work continues to move forward on this project and the total cost of the renovation is expected to be approximately $53 million.
Stephen Cootey: At our Green Valley Ranch property, we are expected to start a complete refresh of our room and suite product, as well as our convention space, aligning 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 room and convention renovation is expected to be approximately $200 million. Like our other recently introduced amenities, we expect these to be solid investments.
Speaker Change: At our Green Valley Ranch property were expected to start a complete refresh of our room and suite product as well as our convention space, allowing 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 bring back in service by year end.
Speaker Change: The cost of the room and convention renovation is expected to be approximately $200 million.
Like our other recently introduced amenities, we expect these to be solid investments. However, we do expect some disruption challenges as these at these properties, while we introduce these new amenities to our customers.
Stephen Cootey: However, we do expect some disruption challenges at these properties while we introduce these new amenities to our customers.
Stephen Cootey: Turning now to North Fork, construction is progressing well. We anticipate completing the slab on grade in July and closing the facility by October, keeping us on track for a mid-2026 resort open. The total all-in project is expected to be approximately $750 million and is currently operated under a guaranteed maximum price contract. When complete, this best-in-class resort will include approximately 100,000 square feet of casino space with over 2,400 slot machines, including 2,000 Class III games, 42 table games, and two food and beverage outlets and a food court with many exciting options.
Speaker Change: Turning now to north for construction is progressing well, we anticipate completing the slab on grade in July and in closing the facility by October keeping us on track for a mid 2026 resort opening.
Speaker Change: The total all in project is expected to be approximately $750 million and is currently operating under a guaranteed maximum price contract.
Speaker Change: When complete this best in class resort will include approximately 100000 square feet of casino space with over 2400 slot machines, including 2000 class III games, 42 table games, and two food and beverage outlets and a food court many exciting options.
Stephen Cootey: Subsequent to quarter end, we are pleased to announce a successful closing of construction financing for the project, which is both a major milestone in our 20-plus year relationship with the North Fork Tribe, and we believe a landmark transaction in the arena of tribal greenfield development. The $750 million financing package will consist of a $25 million revolving credit facility maturing in 2030, bearing interest at $450 million over so far. $340 million delayed term loan A credit facility maturing in 2030, also bearing interest at $450 million over SOFR. and a $385 million delay-draw term loan B credit facility maturing in 2031, bearing interest at $725,000 over so far.
Speaker Change: Subsequent to quarter end, we are pleased to announce the successful closing of a construction financing for the project, which is both a major milestone in our 20 plus year relationship with the North Fork tribe, and we believe a landmark transaction in the arena of tribal Greenfield development.
Speaker Change: The $750 million financing package will consist of over $25 million revolving credit facility maturing in 2030 bearing interest at $4 50 oversaw for.
Speaker Change: A $340 million delayed draw term loan a credit facility maturing in 2030 also bearing interest at $4 50 over sofa.
Speaker Change: And a $385 million delayed draw term loan B credit facility maturing in 2031 bearing interest at 725 over sofa.
Stephen Cootey: The delayed draw structure of the project financing will significantly reduce the project's cost by lowering capitalized interest expense by nearly $100 million. In addition, the majority of the credit facility is immediately accessible without the need of a declination letter, providing the tribe with more cost-effective capital structure while simultaneously ending Red Rock Resorts' need to fund the project off its own balance As part of the financing, Red Rock Resorts received $110.5 million in return capital, along with accrued interest it invested in the project over the past 20 years. After this repayment, Red Rock Resorts' outstanding note balance for the tribe stands at approximately $69.6 million.
Speaker Change: The delayed draw structure of that project financing will significantly reduce the project's cost by lowering capitalized interest expense by nearly $100 million.
Speaker Change: In addition, the majority of the credit facility is immediately accessible without the need of a declination letter, providing the tribe with more cost effective capital structure, while simultaneously ending red rock resorts need to fund the project Opex of our balance sheet.
Speaker Change: As part of the financing Red Rock resorts received $110 5 million and return capital along with accrued interest and invested in the project over the past 20 years.
Speaker Change: After this repayment Red rock resorts outstanding note balance with the tribe stands at approximately $69 6 million.
Stephen Cootey: We are excited about this project, very happy with the execution of the financing, and look forward to providing further updates on future earnings. Consistent with our balanced approach to investing in long-term growth while returning capital to our shareholders and following the return of a significant portion of our capital invested at the North Fork project.
Speaker Change: We are excited about this project very happy with the execution of the financing and look forward to providing further updates on future earnings calls.
Speaker Change: Consistent with our balanced approach to investing in long term growth, while returning capital to our shareholders.
Speaker Change: Following the return of a significant portion of our capital invested at the North Fork project. We are pleased to announce that the company's board of directors has declared a special cash dividend of $1 per class a common share.
Stephen Cootey: We are pleased to announce that the company's Board of Directors has declared a special cash dividend of $1 per Class A common share, payable on May 21st to Class A shareholders of record as of May 14th. This action reflects the continued confidence of our board and the management team in the strength of our business model and the resilience of the Las Vegas locals market. Lastly, the company's board of directors has also declared its regular cash dividend of $0.25 per Class A common share, payable on June 30 to Class A shareholders of record as of June 16.
Speaker Change: Payable on May 20, <unk> to class a shareholders of record as of May 14th.
Speaker Change: This action reflects the continued confidence of our board and the management team and the strength of our business model and the resilience of the Las Vegas locals market.
Speaker Change: Lastly, the company's board of Directors has also declared its regular cash dividend of <unk> 25 per class a common share payable on June 30th to class a shareholders of record as of June 16th.
Stephen Cootey: After the payment of our special dividend and our regular dividend, we have returned approximately $159 million to our shareholders in 2025.
Speaker Change: After the payment of our special dividend and our regular dividend, we have returned approximately $159 million to our shareholders in 2025.
Stephen Cootey: The year is off to a strong start and we remain confident in the strength and resilience of our business. Durango continues to validate our long-term growth strategy and highlight the value of our own development pipeline and real estate bank, which includes more than 450 acres of developable land positioned in highly desirable locations throughout the Las Vegas Valley. combined with our existing portfolio of best-in-class assets in premier location. This pipeline positions us for significant growth and enables us to fully capitalize on the favorable long-term demographic trends and high barriers to entry that define the Las Vegas locals market.
Speaker Change: The year is off to a strong start and we remain confident in the strength and resilience of our business model.
Speaker Change: Durango continues to validate our long term growth strategy and highlight the value of our owned development pipeline in real estate Bank, which includes more than 450 acres of developable land position in highly desirable locations throughout the Las Vegas Valley.
Speaker Change: Combined with our existing portfolio of best in class assets in Premier locations. This pipeline positions us for significant growth enables us to fully capitalize on the favorable long term demographic trends and high barriers to entry that define the Las Vegas locals market.
Stephen Cootey: We want to take a moment to recognize and sincerely thank all of our team members for their continued hard work and dedication. Our success begins with them, they are the driving force behind the exceptional experiences that keep our guests coming back. Thanks to their efforts, we are proud to have been voted Top Casino Employer in the Las Vegas Valley for the fourth consecutive year, certified as a great place to work for three years running, recognized by Forbes as one of America's best in-state employers, and named Top Place to Work by USA Today. Finally, we extend our heartfelt gratitude to our loyal guests for their unwavering support over the past six decades.
Speaker Change: We want to take a moment to recognize and sincerely. Thank all of our team members for their continued hard work and dedication.
Speaker Change: Our success begins with them they are the driving force behind the exceptional experiences that keep our guests coming back.
Thanks to their efforts we are proud to have been voted top casino employer in the Las Vegas Valley for the fourth consecutive year.
Speaker Change: Certified as a great place to work for three years running recognized by Forbes as one of America's best in state employers and named top place to work by USA today.
Speaker Change: Finally, we extend our heartfelt gratitude to our loyal guests for their unwavering support over the past six decades.
Operator: Operator, this concludes our prepared remarks for today and we are now ready to take questions. We will now begin the question and answer session.
Speaker Change: Operator. This concludes our prepared remarks for today and we are now ready to take questions.
Speaker Change: We will now begin the <unk>.
Speaker Change: <unk> and answer session.
Operator: To ask a question, you may press star then 1 at your touch-tone phone. If you are using a phone, please pick up your handset before pressing. If at any time your question has been addressed and you would like to withdraw your question, please press star and two.
Speaker Change: To ask a question you May press Star then one.
Speaker Change: If you are using it please pick up your hand.
Speaker Change: Kind of in the cage.
Speaker Change: Anytime Youre question has been addressed and he would like to withdraw your question. Please press Star then two.
Operator: At this time, we will pause momentarily to assemble our roster.
Speaker Change: At this time, we will pause momentarily to assemble our roster.
Carlo Santarelli: The first question today comes from Carlo Santarelli with Deutsche Bank. Please go ahead. Hey guys, thanks. Good evening. Steve, in Las Vegas, obviously, OPEX growth seemed very subdued in the first quarter. Flow-through was north of 60%.
Speaker Change: The first question today comes from Carlos <unk> with Deutsche Bank. Please go ahead.
Speaker Change: Oh, Hey, guys. Thanks, good evening.
Speaker Change: And Las Vegas, obviously, opex growth seemed very subdued in the first quarter flow through was north of 60%.
Scott Kreeger: I would imagine, just given March Madness and your sportsbook, that knowing, acknowledging you guys had some sportsbook headwinds in the first quarter of last year, could you maybe talk about the ability to kind of garner the flow-through you got on relatively modest revenue growth, and then any other maybe headwinds that were included in the first quarter, such as the sportsbook?
Speaker Change: I would imagine just given March madness, and your sports book that knowing acknowledging you guys had some some sports book headwinds in the first quarter of last year.
Speaker Change: Could you maybe talk about the ability to kind of garner the floats, where you got on relatively modest revenue growth and then any other maybe headwinds that were included in the first quarter such as the sports.
Scott Kreeger: Yeah, Carlo, this is Scott. I'll take the beginning of it, and then I'll let Steve pipe in as well. We performed better from a sports wind perspective, both in Super Bowl and in March Madness. So that was some upside. From a payroll perspective, which is one of the larger impacts to margin, we saw that leveling off. Our payroll rose about 2%, mostly attributable to last summer's minimum wage increase. We continue to see IT costs shift from CapEx to OpEx, so there's a little bit of that in there. But on a solid front, COGS remained flat year over year, and utility costs were down over 35%, which in the past you might have remembered that we were struggling with high utility costs.
Speaker Change: Yeah. Carl this is Scott I'll take the beginning of it and then I'll, let Steve Python as well, we performed better from a sports win perspective, both in the Super Bowl and in March Madness, so that with some upside from a payroll perspective, which is one of them.
Speaker Change: The larger impacts to margin.
Speaker Change: Sure that leveling off our payroll rose about 2%.
Speaker Change: Mostly attributable to last summer's minimum wage increase.
Speaker Change: We continue to see cost shift from from Capex to Opex, So theres, a little bit of that in there but on the sorry.
Speaker Change: Solid.
Speaker Change: Cogs remained flat.
Speaker Change: Over here and utility costs were down over 35%.
Speaker Change: In the past you might remember that we were struggling with high utility costs. So those things attributed mainly to the margin.
Scott Kreeger: So those things attributed mainly to the margin improvement. especially if you look sequentially, quarter over quarter.
Speaker Change: Improvement, especially if you look sequentially quarter over quarter.
Scott Kreeger: I think the only thing I would add to Scott on the cost side is that we are seeing insurance costs creep up, and we expected that to remain some headwind as we go through 2025. And Carlo, to point to some revenue growth, we are coming off the trial period of Durango, and so the fact that we've actually had revenue growth on top of Durango really kind of points to the growth in our core six business. much of which was, some of it was driven by slots as well, which is high margin. Great.
Speaker Change: The only thing I would add to Scott on the cost side is that we are seeing insurance costs creep up and we expected that remain.
Speaker Change: Some headwind as we go through 2025 and call. It a point to some revenue growth we are coming off the trial period of Durango.
Speaker Change: And so the fact that we've actually had revenue growth on top of Durango really kind of points to the growth in our core <unk> business.
Speaker Change: Much of which was some were driven by slots strike as well, which is high margin that's right. So our gaming.
Speaker Change: A bit.
Scott Kreeger: And then, Steve, you talked a little bit about, you know, in year two here, the backfill efforts at Red Rock.
Steve Python: Great and then Steve you talked a little bit about <unk>.
Steve Python: In year two here the backfill efforts at Red rock.
Scott Kreeger: I don't know that you're going to answer this, but to the extent that you guys have seen a trough there, could you quantify what that trough was relative to 2023 or prior to open of Durango and how you see that progressing back towards 2023 levels in the time frame? Yeah, again, as we kind of walk through, the one thing we have working in the locals market for over six decades is plenty of data. So we modeled the potential impact of backfill using our sunset in Green Valley as a template. And that's where we came up with backfilling usually occurs around the three-year period.
Speaker Change: I don't know that Youre going to answer this but to the extent that you guys have seen a trough there could you quantify what that that trough was relative to kind of a 2023 or prior to open of Durango and.
Speaker Change: Where how you see that progressing back towards 2023 levels in the timeframe.
Speaker Change: Yeah again, as we kind of walk through the one thing we have working in the locals market for over six decades as plenty of data. So we modeled.
Speaker Change: Potential impact of backfill using our sunset and Green Valley as a template.
Speaker Change: And Thats, where we came up with backfill it usually occurs around the three year period.
Scott Kreeger: And we've been giving you guidance that we expect the cannibalization to be about 10% of Red Rock, and we think we nailed it. Right now, again, I think we're running probably about six months ahead of schedule in terms of that backfill. So we're pretty happy with that.
Speaker Change: And we've been giving you guidance that we expect cannibalization to be about 10% of Red rock and we think.
Speaker Change: We nailed it.
Speaker Change: Right now again, I think we're running probably about six months ahead of schedule in terms of that backfill. So we're pretty happy with that.
Scott Kreeger: Great.
Carlo Santarelli: And then just one clerical thing.
Speaker Change: Great and then just one clerical thing Steve.
Scott Kreeger: Steve, the $110,000 that you got back post the closing of the financing, is that in your first quarter or is that coming back subsequent to first quarter in the 2Q upon the closing of the transaction? It will be in the second quarter. Great.
Speaker Change: 110 that you got back post the closing of the financing.
Speaker Change: In your first quarter or is that coming back subsequent to first quarter and the Tokyo upon the closing of the transaction.
Speaker Change: It will be in the second quarter.
Carlo Santarelli: Thank you, guys.
Speaker Change: Great. Thank you guys.
John Decree: The next question comes from John DeCree with CBRE. Please go ahead. Hey, guys. Quick question, maybe two to follow up there on Carlo. So the decision to pay a special dividend, does that coincide with a receipt, a return of capital from North Fork? And then in terms of capital allocation, I think you still have a couple hundred million left on the buyback. So thinking about balancing share repurchases and the special dividend in this situation. Yeah, no problem.
Speaker Change: The next question comes from John Decree with CBRE. Please go ahead.
John Decree: Hey, guys.
John Decree: Quick question, maybe on maybe to just follow up there on Carlo So the decision to pay a special dividend.
John Decree: Does that coincide with a receipt a return of capital from North Fork and then.
John Decree: In terms of capital allocation I think you still have a couple hundred million left on the buyback so thinking about balancing share repurchases and the special dividend in this situation.
Stephen Cootey: I think the Special Dividend, to answer your first question, really does reflect our balanced approach to investing in long-term growth. Through Sunset Station, Green Valley Ranch, Durango, our returning capital, our shareholders. But as you pointed out, with the successful closing of the North Fork financing and the return of $110 million of capital that were previously invested into the project, along with the strength of our balance sheet and the continued confidence in our business model, the board determined that this was the right time to reward the shareholders for their long-term support over 20 years of support of North Fork.
John Decree: Yeah, No problem I think the special dividend to answer your first question really does reflect our balanced approach of investing in long term growth.
John Decree: Yes drew Sunset station Green Valley Ranch, Durango, while returning capital to shareholders, but as you pointed out with the successful closing of the North Fork financing and the return of $110 million of capital previously invested into the project along with the strength of our balance sheet and the continued confidence of the board.
John Decree: <unk> built a business model the board determined that this was the right time to reward the shareholders for their long term support for 20 years and.
John Decree: Support North Fork.
Stephen Cootey: With regard to the allocation of capital, as we've always said, we're going to take a balanced approach. We continue to evaluate all options, and the board determined the special dividend for all the reasons we talked about. It should be noted that since 2021, we purchased over 14.3 million shares for $646 million, reducing our share count by over 12 percent, so we're not adverse to buying shares back. We have about $309 million left of capacity under that current program, which gives us flexibility to execute on that program when conditions are favorable. Thanks, Steve.
With regard to kind of the.
John Decree: Allocation of capital.
John Decree: As we've always said, we're going to take a balanced approach we continue to evaluate all options.
John Decree: Again, the board determined the special dividend for all the reasons, we talked about and it should be noted that since 2021, we purchased over $14 3 million shares for $646 million, reducing our share count by over 12%. So we're not adverse to buying shares back we have about 300 million $309 million left and left.
John Decree: Left of capacity under that current program, which gives us flexibility to execute on that program when conditions are favorable.
John Decree: Maybe one bigger picture, since we're getting questions about the consumer in a number of different ways, given policy changes in D.C. and the potential for recession. So, I guess what I'll ask you guys, obviously, you're seeing really strong trends in your business, but the big picture, you put out a great slide deck with everything that's going on in Las Vegas.
John Decree: Thanks, Steve maybe one bigger picture since we're getting questions about the consumer and a number of different ways given policy changes.
John Decree: In D C and the potential for recession, So I guess, what I'll ask you guys.
John Decree: Obviously, you're seeing really strong trends in your business, but a big picture you put out a great slide deck with with everything that's going on in Las Vegas.
Stephen Cootey: I don't know if you could give us some color about how you see Las Vegas locals market your business being positioned to manage a recession now, perhaps, versus the last one we've seen, the great financial crisis, given all the things that have changed. Assuming you'd expect your business to be more durable if there's any recession, kind of some of the things you'd look at that differentiate the market today than, say, maybe 15 years ago. Yeah, I think I think, John, I think we got to look further back to 2008. I think when you think of 2008 crisis, along with COVID, we're talking about two very unique, you know, situations, right?
John Decree: I Wonder if you could give us some color about how you see Las Vegas locals market your business being.
John Decree: Positioned to manage a recession now perhaps versus the last one we've seen the great financial crisis, given all the things that have changed.
John Decree: Assuming you would expect your business to be more durable.
John Decree: If theres any recession kind of some of the things you could look at that.
John Decree: <unk> the market today than say maybe.
John Decree: 15 years ago.
Speaker Change: Yes, I think I think John I think we got to look farther back in 2008, I think when you think of 2008 crisis, along with Covid. We're talking about two very unique situations right. The former was driven by a complete collapse of the housing and credit markets with the epicentre being Las Vegas, primarily in the latter being a government mandated shutdown.
Stephen Cootey: The former was driven by a complete collapse of the housing and credit markets with the epicenter being Las Vegas, primarily in the latter being a government management shutdown. But overall, when you think about the resilience of the Las Vegas locals market, any particular Red Rock Resorts, you know, we look back at, let's call it typical recessions, Red Rock, in fact, grew in the recessions in the early 80s, the early 90s, and the early 2000s. And it's pretty much what you said, the customer, you know, values, convenience, proximity and affordability. And that supports consistent visitation, even in softer economic environments, which is slightly different than the way the strip reacts during a recession.
Speaker Change: But overall, we can think about the resilience of the Las Vegas locals market at a particular red rock resorts.
Speaker Change: We look back at it.
Speaker Change: Let's call. It typical recessions Red rock in fact grew and the recessions in the early eighties, the early nineties and the early two thousands and it's.
Speaker Change: Pretty much what you said the customer values convenience proximity and affordability.
Speaker Change: And that supports consistent visitation, even in softer economic environments, which is slightly different than the waste strip reacts.
Stephen Cootey: Now, to combine that with our efficient business model, and a strong balance sheet, you know, we're well positioned, we believe, to manage through any recession.
Speaker Change: During during a recession, the combine that with our efficient business model.
Speaker Change: Our balance sheet, we are well positioned to manage through any recession.
John Decree: Great. Thanks, Steve.
John Decree: Thanks, all.
Speaker Change: Great. Thanks, Steve Thanks Al.
Speaker Change: Yeah.
Speaker Change: No.
Shaun Kelley: The next question comes from Shaun Kelley with America. Please go ahead. Hi, great. Good afternoon, everybody. Thanks for taking my question. You know, Steve or team, just wondering if you could give us your thoughts on sort of the broader construction environment. Obviously, development is a little bit of a key part to your story, which differs from others in the industry. So, sort of what's the backdrop today as it relates to sort of the uncertainty around some of the construction cost elements, and does this impact either staging or ordering of how you're thinking about your development pipeline going forward?
Speaker Change: The next question comes from Shaun Kelley with America. Please go ahead.
Shaun Kelley: Hi, great. Good afternoon, everybody. Thanks for taking my question.
Shaun Kelley: Steve or team just wondering if you could give us your thoughts on sort of the broader construction environment. Obviously development is a little bit of a key part of your story, which differs from others in the industry. So sort of what's the backdrop today as it relates to sort of the uncertainty around some of the construction cost elements and does this impact either.
Shaun Kelley: Aging or ordering of how youre thinking about.
Lorenzo Fertitta: Thank you.
Shaun Kelley: Your development pipeline going forward. Thank you.
Lorenzo Fertitta: This is Lorenzo. We've obviously spent a hot topic of discussion with what has been going on with tariffs in the marketplace. We have spent the last month working closely with different procurement companies because we're in the ground right now with the project in North Fork and we're currently in the ground with the project at Durango and getting ready to start the project we already announced with the room remodel at Green Valley. Certain materials, obviously, that are coming out of China and materials that you just can't source in other places, like lighting packages, stone finishes, electrical gear, those will be affected.
Lorenzo Fertitta: This is lorenzo.
Obviously, it's been a hot topic of discussion with what has been going on with.
Lorenzo Fertitta: With tariffs in the marketplace.
Lorenzo Fertitta: <unk> spent the last month.
Lorenzo Fertitta: Working closely with our different procurement companies because we're in the ground right now with the.
Lorenzo Fertitta: Project in North Fork and we're currently in the ground with the project Durango and getting ready to start the project, we already announced with the room remodel at Green Valley.
Certain materials, obviously that that are coming out of China and materials that you just can't source and other places like lighting packages stone finishes electrical gear.
Lorenzo Fertitta: Those will be affected.
Lorenzo Fertitta: We have been successful as far as procuring things like steel and concrete on a domestic basis and working through FF&E items that we're able to procure through other sources that maybe in the past typically came through China, but we're able to source in other areas. So while there is certainly some challenges, I feel like that we have... We are all over the details relative to trying to manage through this the best we can. With all that said... We really don't think that there will be any material impacts to the projects that have been announced and that we're working on.
Lorenzo Fertitta: We have been successful as far as procuring things like steel and concrete on a domestic basis.
Lorenzo Fertitta: And working through F. Any items that were able to procure through other sources that maybe in the past typically came through China, but we're able to source and other areas.
Lorenzo Fertitta: So while there is certainly some some challenges I feel like that we have.
Lorenzo Fertitta: We are all over the details relative to trying to manage through this the best we can with all that said.
Lorenzo Fertitta: We really don't think that there will be any material impacts to the projects that we're currently have been announced and that were working on we think that the impact may be somewhere in the neighborhood of 4% to 6% of the project cost.
Lorenzo Fertitta: We think that the impact may be somewhere in the neighborhood of four to six percent of the project cost, and managing through the contingencies that we already have and looking at other ways to manage the cost in the project, we're comfortable that, like I said before, there shouldn't be any material impact to the project. to answer your questions. Sorry, that's perfect.
Lorenzo Fertitta: And managing through the contingencies that we already have.
Lorenzo Fertitta: And looking at it.
Lorenzo Fertitta: Other ways to manage the cost and the project we're comfortable that.
Lorenzo Fertitta: Like I said before there shouldn't be any material impact of the projects.
Lorenzo Fertitta: That answer your question.
Lorenzo Fertitta: And then maybe just the follow-up, but what's the mechanic in a – I mean, you guys operate under GMPs and those, I know, offer a level of protection. But I think I have heard a little bit about there being tariff clauses put into these or some of the more recent contracts for I think the contractors themselves to protect themselves about some of this stuff. So how does that work? I mean not obviously specific to your individual contracts, but just generically at a high level. Does that protect you, or is that still an area that could be passed through to you?
Lorenzo Fertitta: Alright thats.
Speaker Change: That's perfect and then maybe just a follow up but whats the mechanic and I mean, you guys operate under GMP is a nose.
Speaker Change: I know offer a level of protection, but I think I have heard a little bit about there being tariffs clauses put into these are some of the more recent contracts for I think the contractors themselves to protect themselves about about some of the stuff. So how does that work I mean, not obviously specific to your individual contracts, but just generically at a high level does that protect you or is that.
Speaker Change: It's still an area that could be passed earlier.
Lorenzo Fertitta: Go ahead. I mean, look, at the end of the day, you're right. Contracts going forward, I think, are going to address this in a more detailed manner where maybe they were a bit more vague in the past, even in a GMP contract, which means, look, it's going to have to work through it, it's going to be a negotiation, and we're going to figure it out. We wouldn't expect that, you know, we certainly wouldn't bear the full brunt of the tariffs, whether it be in the past on a contract or on a go-forward basis. But like I said before, I mean, we're literally going line by line through each piece of procurement and where these items are coming from and what alternative sources are.
Speaker Change: And I think.
Speaker Change: I mean look at the end of the day you are right contracts going forward I think are going to address this in a more detailed manner, where maybe they were a bit more vague in the past even energy E&P contract, which means look it's going to have to work through it it's going to be a negotiation, we're going to we're going to figure it out.
Speaker Change: We don't we Wouldnt expect that we certainly wouldn't bear the full brunt of the tariffs.
Speaker Change: It would be in the past on a contract or on a go forward basis, but.
Speaker Change: Like I said before I mean, we're literally going line by line.
Speaker Change: Through each piece of procurement and where these items are coming from and what alternative sources or so.
Lorenzo Fertitta: So you know, it's just a little bit more of a puzzle we've got to put together, but I think we're effectively, the team, our construction, design, development, financial team, are successfully kind of working through this stuff, and you know, on a go-forward basis, like I said, I think it's definitely going to be an issue addressed in contracts going forward. And just, Shaun, to kind of put a point on it, right, you know, as Lorenzo said, this should have, you know, this will have a minimum effect on project budgets through these announced projects.
Speaker Change: It's a little bit more of a puzzle we got to put together, but I think we're effectively the team. Our construction design development financial team are successfully kind of working through this stuff in on a go forward basis like I said I think it's definitely going to be an issue addressed and contracts going forward and is showing that kind of put up.
Speaker Change: At a point on it right.
Speaker Change: <unk> said this should have.
Speaker Change: This will have a minimal effect on project budgets through these announced projects.
Shaun Kelley: Thanks for all the detail. Appreciate it.
Speaker Change: Thanks for all the detail I appreciate it.
Speaker Change: Yeah.
Barry Jonas: The next question comes from Barry Jonas with Truist Securities. Please go ahead. Hey, guys, just following up on that theme, in terms of what you're seeing with tariffs, or you're expect to see in the near term, how do you think about managing FX margins? You know, are there ways to offset it either by passing it through to the customer or by other means?
Speaker Change: The next question comes from Barry Jonas with <unk> Securities. Please go ahead.
Speaker Change: Hey, guys just following up on that theme in terms of.
Speaker Change: What youre seeing with tariffs or you expect to see in the near term how do you think about managing Opex margins.
Speaker Change: Yeah.
Speaker Change: Are there ways to offset it either by passing it through to the customer or by other means thank you.
Scott Kreeger: Thank you.
Scott Kreeger: Yeah, this is Scott. Maybe I'll take the operating side of that. Steve, you can take the design and construction side. As of right now, we are not seeing major impacts in our operational procurement and costs. That doesn't mean that those things won't start to trickle in. It is our hope that we can manage that through alternative sourcing and negotiating with our vendors. I think it would be a last ditch effort on our part to start to pass on cost to the customer.
Speaker Change: Yeah. This is Scott maybe I'll take the operating side of that Steve you can take the design and construction site as of right now we are not seeing major impacts.
Speaker Change: Our operational procurement cost that doesn't mean that those things will start to trickle in it is our hope that we can manage that through alternative sourcing and negotiating with our vendors I think it would be.
Speaker Change: Last ditch effort on our part to start to pass on cost to the customer.
Scott Kreeger: I think on the DNC side, to piggyback on what Scott said, I mean, we haven't really seen the impact there yet, and these tariff situations are incredibly fluid, but as Lorenzo mentioned and so did Scott, alternative sourcing, life-like material substitutions, and just disciplined cost control is how we plan to get through it. Got it.
Speaker Change: Yes, I think on the D&C side to piggyback on what Scott said I mean, we haven't really seen the impact there yet and the <unk> tariff situations are incredibly fluid.
Speaker Change: But as Lorenzo mentioned that Scott alternative sourcing like for like material substitution and as disciplined cost controls, how we plan to get through it.
Scott Kreeger: Then, just for a follow-up question, I noticed you recently added TI for your sports betting product.
Speaker Change: Got it.
Speaker Change: Just just.
Speaker Change: For a follow up question I noticed you recently added Ti for.
Speaker Change: Your sports betting product.
Scott Kreeger: I'm curious how to think about this from a strategy or a philosophy, since this kind of moves you beyond your core locals market to a more strip, porous segment. Thanks.
Speaker Change: Curious.
Speaker Change: How to think about this from a strategy or philosophy. Since this kind of moves you beyond your core locals market to a more stripped course segment. Thanks.
Scott Kreeger: Yeah, this is Scott. Yeah, those announcements were just in the paper. Take a step back and look at our sports, STN Sports mobile product and over-the-counter business. This is a very robust business. We continue to see people embracing the mobile app. So our enrolled active customers, our deposits on account are all up for the quarter year-over-year.
Scott Kreger: Yes. This is Scott.
Speaker Change: Yes.
Speaker Change: Announcements, we're just in the paper or take a step back and look at our sports and sports mobile product over the counter business. This is a very robust business. We continue to see people embracing the mobile app. So are enrolled active customers or deposits on account are all up.
Speaker Change: <unk>.
Speaker Change: For the quarter year over year.
Scott Kreeger: The idea of adding new locations outside of our brand is simply to have better market penetration in areas where we don't have access. So right now, Nevada requires an in-person registration, so having convenient locations for people to sign up and use our sports tools is creative to the overall revenue of the division.
Speaker Change: The idea of adding new locations outside of our brand is simply to have better market penetration.
Speaker Change: In areas, where we don't have access so right now Nevada requires an in person registration so having convenient locations for people to sign up.
Speaker Change: And use our sports tools is accretive to the overall revenue of the division.
Lorenzo Fertitta: This is Lorenzo. I'll also add, look, this is kind of our, one of our core competencies. We've been in the sports book business. We may actually, yeah, Frank, when was it? Since the late, early 80s, late 70s. So. I don't know if this is actual, but we may actually be the longest running. Sportsbook operator in the So, with that said, there are also, there are obviously a lot of properties on this strip, particularly if you own one property and you don't have scale. It doesn't really make sense to book a lot of these games and you're not really able to take a lot of risk and offer limits to your customers maybe that you want to, so you go look to bring in a third party.
Lorenzo Fertitta: This is Lorenzo also add this is kind of our one of our core competencies, we have been in the sports book business.
Frank Fertitta: We may actually yes, Frank <unk>.
Speaker Change: Early eighties lately have released 70 so.
Speaker Change: I don't know if this is actually the actual but we may actually be the longest running.
Speaker Change: <unk> operator.
Speaker Change: So.
Speaker Change: With that said there are also there are obviously a lot of properties on the strip, particularly if.
Speaker Change: One one property don't have scale it doesn't really make sense to us to book a lot of these games and you're not really able to take a lot of risk and offer limits to your customers. Maybe that you want to say you go look to bring in a third party and I think we I think it's something that is advantageous the guys on the strip like the Fontainebleau and treasure Island.
Lorenzo Fertitta: And I think it's something that is advantageous to guys on the strip, like the Fontainebleau and Treasure Island, because they don't look at us as competition, you know, we don't really share a lot of, you know, casino customers per se. So, it seems to be, you know, a good fit for us and an avenue for us to grow, you know, here in the city.
Speaker Change: Because they don't look at us as competition.
Speaker Change: Really share a lot of cash.
Speaker Change: <unk> customers per se. So it seems to be a good fit for us and an avenue for us to grow here in the city and maybe just a bit more clarification not only are we in the ski Casablanca and version of <unk>, but we're also.
Scott Kreeger: And maybe just a bit of more clarification, not only are we in Mesquite at Casablanca and Virgin River, but we're also adding Treasure Island, and then we operate the bookmaking for Fountain. and Neal Cortez. Got it. All right. Very helpful. Thank you so much.
Speaker Change: Adding treasure island.
Speaker Change: And then we operate the.
Speaker Change: Bookmaking for Fountain Bleu.
Speaker Change: And the equities and they will protest.
Speaker Change: Got it alright very helpful. Thank you so much.
Speaker Change: Yeah.
Jordan Bender: The next question comes from Jordan Bender with Citizens. Please go ahead.
Speaker Change: The next question comes from Jordan Bender with citizens. Please go ahead.
Jordan Bender: Afternoon, everyone. Thanks for taking my question. This is your first involvement with a REIT and Vichy answered a lot of questions this morning around the structure. But curious to get your thoughts around how this all came together. And should we view this as a unique opportunity, just given the tribal aspect? Or does it change your views on using a REIT for Red Rock owned and operated properties in the future? Thank you.
Jordan Bender: Good afternoon, everyone and thanks for taking my question.
Jordan Bender: Your first involvement with the re <unk> answered a lot of questions. This morning around the structure, but curious to get your thoughts around how this all came together and should we view this as a unique opportunity just given the tribal aspect or does it change your views on using a REIT for Red rock owned and operated properties in the future.
Jordan Bender: Thank you.
Lorenzo Fertitta: No, I mean, we really appreciate the relationship with Vichy.
No I think listen.
Speaker Change: We really appreciate the relationship with <unk>. It goes back it goes back as long as they have been in existence. So they've been I guess always very close contact with us in terms of the tribal deal.
Lorenzo Fertitta: It goes back as long as they've been in existence, so they've been, I guess, always very close contact with us. In terms of the tribal deal, this is a true loan, and Vichy really stepped forward and offered best-in-class capital at fantastic terms. So we do appreciate, as well as the tribe appreciates, the partnership, because they really important to get this financing across the finish line.
Speaker Change: This is a true loan and <unk> really stepped forward and offered best in class cabin capital Fantastic terms.
Speaker Change: So we do appreciate a lot as well as the tribe appreciate the partnership.
Speaker Change: They were really.
Speaker Change: They are really important to get this financing across the finish line.
Scott Kreeger: Okay, and Scott, I want to circle back to something you said. Utilities costs down 35% in the quarter. In past years, it was a continued call out of a headwind.
Shaun Kelley: Okay, and Scott I wanted to circle back to something you said utilities costs down 35% in the quarter in past years.
Scott Kreeger: But is there something special that happened in the quarter? Or could we see this be a tailwind for margins moving forward? Well, look, I can't predict the market and what, you know, what these energy costs will be in the future. But they usually don't move, you know, quarter to quarter, it's usually on a longer trend. So we're hoping that we'll enjoy these reductions for the near term. And it was mainly electric, and that's generally driven by gas. Got it. Understood.
Shaun Kelley: Continued to call out as a headwind, but is there something special that happened in the quarter or could we see this be a tailwind for margins moving forward.
Shaun Kelley: Well look I can't predict the market.
Shaun Kelley: What these energy cost will be in the future, but they usually don't move quarter to quarter, it's usually on a longer trend. So we're hoping that we'll enjoy.
Shaun Kelley: These reductions for the near term and it was mainly electric and Thats generally driven by gas prices.
Jordan Bender: Thank you.
Shaun Kelley: Got it understood. Thank you.
Shaun Kelley: Okay.
David Katz: The next question comes from David Katz. Please go ahead. Hi. Good evening. Thanks for taking my question.
Shaun Kelley: The next question comes from David Katz with.
Shaun Kelley: Please go ahead.
Shaun Kelley: Hi, good evening, Thanks for taking my question.
David Katz: I do want to follow up on the first portion of it and, you know, ask is there a, you know, is there a path at some point in the future and what, you know, what would be the, you know, hypothetical circumstances around, you know, whether you would, you know, operate leased properties? You know, how could that make sense for you?
Shaun Kelley: I do want to follow up on the first portion of it.
Shaun Kelley: Ill ask.
Shaun Kelley: Is there a.
Shaun Kelley: Is there a path at some point in the future and what what would be the.
Shaun Kelley: Hypothetical circumstances around whether you would.
Shaun Kelley: <unk>.
Operating leased properties.
Shaun Kelley: Yes.
Shaun Kelley: Good that Pos how could that makes sense for you.
Stephen Cootey: I think David to start off, I don't think we would never rule anything out, right? We always take a look at every opportunity. I think I think over the years, since we've been public, I think we've been blessed with the owning our properties, which is which is kind of suited us very well in the past, both from a, you know, an upside standpoint, it allows us to really kind of take a long term view of how we take care of our assets and amenities for our for our customers. And then on the downside, as we saw during COVID, not having the variable cost of rent allowed us to keep all of our employees through the downturn.
Shaun Kelley: I think David to start off I don't think we would never rule anything out right. We always take a look at every opportunity I think I think over the years since we've been public I think we've been blessed with the owning our properties, which is which is very.
Shaun Kelley: Very well in the past both from a upside standpoint allows us to really kind of take a long term view, how we take care of our assets in the middle East for our for our customers and then on the downside as we saw during Covid not.
Shaun Kelley: Not having the variable cost of rent allowed us to keep all of our employees through the downturn.
Stephen Cootey: So we do like owning our properties.
Shaun Kelley: So we will do like owning our properties, but as I kind of started.
Stephen Cootey: But as I kind of started, you know, I started with this, it's, you will never say never and take a we'll always take a look at anything. Understood.
Shaun Kelley: With this bill.
Shaun Kelley: We'll never say never and take a we'll always take a look at it on anything.
Scott Kreeger: And then just double clicking on something you've talked about for probably a couple of years is kind of the lowest end of your database has been a little on the soft side.
Shaun Kelley: Understood and then just.
Shaun Kelley: Double clicking on something you've talked about for probably a couple of years is kind of the lowest end of your database that has been a little on the soft side is there any change in that any improvement or any deterioration we should vote.
Scott Kreeger: Is there any change in that, any improvement or any deterioration we should note?
Scott Kreeger: Hey David, this is Scott. Short answer is no. Very consistent and stable. We do see upside growth in our VIP, core, regional and national segments for the quarter. So when you look at our new member sign-ups, taking out Durango because of the first couple of months, the high volume of sign-ups, if you exclude Durango and look at our new member sign-ups for the quarter, we were up substantially across the core six. So we like the way that the database is heading.
Scott Kreger: Hey, David This is Scott.
Speaker Change: Short answer is no its very consistent.
Speaker Change: And stable, we do see upside growth in our VIP core regional and national segments for the quarter. So when.
Speaker Change: When you look at our new member sign ups, taking out Durango because of the first couple of months the high volume of sign ups, if you exclude <unk>.
Speaker Change: Our new member sign ups for the quarter.
Speaker Change: We were up substantially across the core six so we like the way the database is heading.
Lorenzo Fertitta: One other thing to point out, this is Lorenzo, is that the way we look at our database, obviously segmented through age groups as well, and every age group was up year over year as well.
Speaker Change: One other thing to point out Mr. Lorenzo is that the way we look at our database that are obviously segmented through age groups as well in every age group was up year over year as well.
Scott Kreeger: Thank you all very much.
Speaker Change: Thank you all very much.
Speaker Change: Okay.
Wieczynski: The next question comes to you, Wieczynski, with a sequel. Please go ahead. Yeah, hey, guys. Good afternoon. So, Steve or Scott, if I heard you guys correctly, it sounds like, you know, trends in April, you know, haven't really changed much relative to what you guys were witnessing back in the first quarter. And you just kind of went through the database tiers and what you're kind of seeing there. But I guess the question I want to ask is, you know, are you seeing any changes in terms of non-gaming spend, meaning, you know, folks still coming to the properties, but as they get there, they're still gambling, but they're maybe not doing as much as the, you know, the other stuff, whether that's food and beverage, retail, you know, you kind of name it.
Speaker Change: The next question kind of things like <unk> with Stifel. Please go ahead.
Speaker Change: Yeah, Hey, guys. Good afternoon, so Steve or Scott if.
Speaker Change: If I heard you guys correctly it sounds like trends in April.
Speaker Change: Haven't really changed much relative to what you guys are witnessing back in the first quarter.
Just kind of went through the the database tiers and what youre kind of seeing there, but I guess the question I wanted to ask is are.
Speaker Change: Are you seeing any changes in terms of.
Speaker Change: Non gaming spend meaning folks still coming to the properties, but as they get there they're still gambling, but there maybe not doing as much as the.
Speaker Change: The other stuff, whether thats food and beverage retail you name it.
Scott Kreeger: Yeah, this is Scott.
Speaker Change: Yeah. All right. This is Scott let me take that couple of things I want to mention first to answer your question directly and then I'll talk a little bit about disruption as well.
Scott Kreeger: Let me take that. A couple of things I want to mention. First, to answer your question directly, I want to talk a little bit about disruption as well. You are going up against the opening of the Durango property where we had a lot of food and beverage trial. When you parse that out and you look at our food and beverage for the quarter, covers were actually up. Revenue was just slightly down, less than 2%. So if you look at food and beverage, probably one of the more discretionary spends, it looks healthy to us. When you look at hotel, as we had said for a couple of earnings calls, January or the first quarter was going to be a tough comp in group and catering sales.
Speaker Change: You are going up against the opening of.
Speaker Change: The Durango property, where we had a lot of food and beverage trial. When you parse that out and you look at our food and beverage for the quarter covers were actually up revenue was just slightly down less than 2%. So if you look at food and beverage is probably one of the more discretionary.
Speaker Change: <unk> it looks healthy to us.
Speaker Change: When you look at hotel as we had said for a couple of earnings calls January or the first quarter was going to be a tough comp and group catering sales.
Scott Kreeger: It did end up being a tough comp. The bright side of that was the operating teams were able to backfill that substantially with wholesale and casino segment rooms. So net, net, we like what we see going forward in hotel. Our group bookings for the remainder of 25 and what we can see in 26 are substantially up to previous year. And so that would include catering as well.
Speaker Change: It did end up being a tough comp.
Speaker Change: The bright side of that was the operating teams were able to backfill that substantially with wholesale and casino segment.
Speaker Change: So net net we like what we see.
Knowing forward and hotel are.
Speaker Change: Our group bookings for the remainder of 2005 and what we can see in 'twenty six are substantially up to previous year.
Speaker Change: And so that would include catering as well.
Stephen Cootey: With all of that confidence, I would just point out, and maybe Steve can articulate a little more in detail, we are going to start to see. Sr. Yes, I can put a little bit more color. So, you know, as you recall, at Sunset, we gave a disruption number of $5.4 million during the year. We really haven't seen much disruption during the quarter. But during this quarter, as Scott mentioned, we're starting to dig into the table games area as well as the Gowdy Bar, really the center of the construction period. So we do expect some disruption there.
Speaker Change: With all of that confidence.
Speaker Change: Just point out and maybe Steve can articulate a little more in detail.
Speaker Change: Are going to start to see.
Speaker Change: Heavier disruption as you go into the summer summer months with Durango.
Speaker Change: Room going down <unk> <unk> for the room remodel and for some of the more meatier remodel areas at Sunset.
Speaker Change: Yes, I can I can give you put it a little bit more color. So as you recall at Sunset. We gave the disruption number of a $5 $4 million during the year, we really haven't seen much disruption during the quarter, but during this quarter is as Scott mentioned, we're starting to dig into the table games area as well as the goudy by really the center of the construction period. So we do expect.
Stephen Cootey: In Green Valley, you know, we've always stated that the majority of the good portion of disruption is going to start post-June when we take our rooms down. And in Durango, you know, we really haven't seen too much disruption, if you recall. We gave a number roughly of almost $6 million there, but we're starting the concrete pouring and the expansion into the casino. So while we will do our best to mitigate any disruption and mitigate any impact on the customer experience, you know, we're getting to the throes of the potential disruption this quarter. Okay, gotcha.
Speaker Change: Some disruption there in Green Valley, we've always stated that the majority of the good portion of the disruption is going to start at post June when we take our rooms down and then Durango.
Speaker Change: Really haven't seen too much disruption if you recall that we gave a number roughly five almost $6 million there, but we're starting to concrete pouring and expansion into the casino. So while we will do our best to mitigate any disruption and mitigate any impact on the customer experience.
Speaker Change: We're getting to the throes of potential disruption this quarter.
Scott Kreeger: Thanks for that, guys. My second question was actually around forward group booking, Scott, but you already hit on that, so I'll stop there. Thanks, guys. Appreciate it.
Shaun Kelley: Okay got you. Thanks for that guys. My second question was actually around forward group bookings, Scott, but you already hit on that so.
Speaker Change: I'll stop there thanks, guys appreciate it.
Speaker Change: Steve.
Joe Stauff: The next question comes from Joe Stauff with Susquehanna. Please go ahead. Thanks. Good evening, Lorenzo, Scott, Steve. I wanted to ask, just to follow up on your response to the backfill question, six months ahead, is that a just, why is it six months ahead? Is that a function of just, you know, more effective marketing programs, you know, population growth? That's the first question. The second, I wanted to ask about your California-based customer, what you saw from them in the first quarter and, you know, how you think about, you know, the demand from them thus far in the second quarter and going forward.
Speaker Change: The next question comes from Joe Stauff with Susquehanna. Please go ahead.
Joe Stauff: Good evening.
Steve Python: Ransom Scott Steve.
Speaker Change: I wanted to ask just follow up on your response to the backfill question.
Speaker Change: Six months ahead is is that it just why is it six months ahead is that a function of.
Speaker Change: Just.
Speaker Change: Yes.
Speaker Change: More effective marketing programs pop.
Speaker Change: Population growth. That's the first question the second one I wanted to ask about.
Speaker Change: Youre, a california based customer.
Speaker Change: What you saw from them in the first quarter.
Speaker Change: And how you think about.
Speaker Change: The demand from them, thus far in the second quarter and going forward.
Scott Kreeger: Well, I'll take the first part.
Scott Kreger: Well I'll take the first part this is Scott.
Scott Kreeger: This is Scott. I think that... From a California perspective, you probably had heard some visitation numbers where we saw visitation going down. But from our perspective with the drive-in market, we didn't see anything materially impactful as it relates to California visitation. No, I think you just point to, well, we're in an inflationary market, just point to gas prices, right? When you look at, you know, California gas prices repeat, you know, June of 22 at $6.40 a gallon and now sit at $4.78. And so driving in from California is still a cheap date, from Las Vegas is still a cheap date.
Scott Kreger: I think that.
Speaker Change: From a California perspective.
Speaker Change: You probably heard some some visitation numbers, where we saw visitation going down from but from our perspective with the drive end market.
Speaker Change: We didn't see anything materially impactful as it relates to California institution.
Speaker Change: No I think I'd just point to where we are in an inflationary market just point to gas prices by when you look at California gas prices repeat.
Speaker Change: June 22 at $6 40, a gallon and now sit at $4 78.
Speaker Change: So.
Speaker Change: Driving in from California is still a cheap Dave Las Vegas is still cheap date.
Scott Kreeger: Yeah, if you look back every quarter since COVID, we've been up in that, in that segment in California. That's right. And continue to be up in first few 20 of this this year.
Speaker Change: Yes, if you look back every quarter since COVID-19, we've been up in that in that segment from California, Thats right driving regional and continue to be.
Speaker Change: In first Q 'twenty.
Speaker Change: <unk> this year.
Scott Kreeger: That's it. And then, on the back, though, so first of all, I think Steve mentioned this is kind of using historical statistical trends from our other openings. And the other guys might have some view here. One, I think Red Rock is an incredibly dynamic property. It's our flagship property. It has grown every year we've been in operation. You know, it sits in a very high net worth area. And it's essentially... It's one of the fastest growing parts. That's right. So you've got the Summerlin West expansion of the Howard Hughes Summerlin project, which eventually will represent about 34,000 new rooftops.
Speaker Change: Got you.
Speaker Change: Okay.
Speaker Change: And then.
Speaker Change: On the backfill so first of all I think Steve mentioned this is kind of using historical statistical trends from our other openings and the other guys might have some some view here one I think red rock is an incredibly dynamic property, it's our flagship property.
Speaker Change: Has grown every year.
Speaker Change: When in operation.
Speaker Change: It's in a very high net worth area.
Speaker Change: And it's essentially one of them.
Speaker Change: One of the fastest growing part.
Speaker Change: So you've got the Summerlin west.
Speaker Change: Expansion.
Speaker Change: Howard you Summerlin project, which eventually will represent about 34000, new rooftops.
Scott Kreeger: And so it is growing very quickly. Yeah, to kind of put some numbers on that, to Frank and Scott's point, well, the Valley is growing one to one and a half percent. You have downtown Selma growing, you know, within one mile radius, over six percent. You have Selma and West growing at 3.6 percent. So this is an area that sits in one of the fastest-growing, it's one of the fastest-growing areas in Las Vegas Valley. Thank you.
Speaker Change: And so it is growing very quickly.
Speaker Change: Yes.
Scott Kreger: Put some numbers on that to Frank and Scott's point, where the value is growing 1%, one one and one 5% you have downtown summerlin growing within one mile radius over 6%.
Scott Kreger: Somewhat less growing at three 6%. So this is an area that system have the fastest growing again, it's one of the fastest growing areas in Las Vegas Valley.
Yes.
Scott Kreger: Thank you.
Ben Chaiken: The next question comes from Ben Chaiken with Majuho. Please go ahead. Hey, good afternoon. Good evening. Thanks for taking my questions. You know, you have several projects this year. Are there any that you see as maybe higher or more compelling from an ROI perspective versus ones that are more maintenance or strategic oriented? And then one quick follow up. Thanks. I think we all we do expect returns on all of them.
Speaker Change: The next question comes from Ben <unk> with Mizuho. Please go ahead.
Hey, good afternoon. Good evening, thanks for taking my questions.
Speaker Change: You have several projects. This year are there any that you see is maybe higher or more compelling from an ROI perspective versus ones that are more maintenance or strategic oriented and then one quick follow up thanks.
Speaker Change: I think we all we do expect returns on all of that and I think right.
Scott Kreeger: I think right if I focus on one and Frank and Lorenzo may have a different view about what we're doing at Sunset, it has been it's been pretty neat and revolutionary from a property perspective that hasn't been touched since open. And when you look at the race and sports book as well as the partial casino remodel, we've got great customer feedback and almost immediate return on just that section. And as we roll across the podium there, we are seeing great customer feedback and it's being well received, including the Yardhouse Restaurant for example. So that one I think I think the team is incredibly proud of.
Speaker Change: Our focus on one and frankly the ones that may have a different view back, but what we're doing at sunset.
Speaker Change: It has been it's been pretty neat and revolutionary from a property perspective that hasn't been touched since open.
Speaker Change: And when you look at the race and sports book as well as the partial casino remodel we've got great customer feedback and almost immediate return on just that section and as we roll across.
Speaker Change: The podium there we are seeing great customer feedback and is being well received and Couldnt yard house restaurants. For example, so that one I think I think the team is incredibly proud of Durango, a little bit different I think it serves a couple of purposes want it sets the kind of the it lays down the infrastructure necessary to Frank and Lorenzo.
Scott Kreeger: Durango, a little bit different. I think you know it serves a couple purposes. One, it sets the kind of the it lays down the infrastructure necessary for Frank and Lorenzo to make a call on the future master planning of Durango. But we can't forget that there we're putting in most likely will be the best high-limit slot room in Las Vegas. And you've known from our past history that we are very good at the high-limit slot and tables business and have outstanding returns when we put in those amenities in both Red Rock and Green Valley.
Speaker Change: Paul on the future Master planning of Durango, but we can't forget that we're putting in most likely will be the best high limit slot room in Las Vegas.
Speaker Change: And you've known from our past history that we are very good at the high limit slot and table business and have had outstanding returns.
Speaker Change: Let me put it in those amenities in both Red rock and Green, VAT, and Red Rock and Green Valley.
Scott Kreeger: I think that the GDR room convention remodel has a quite immediate impact as well. When you come online with the quality of the room that we're creating at Creek Valley Ranch, and you have a refreshed convention space, pricing is going to be immediate. So immediate when it comes to in terms of ADR and from a group booking standpoint, in terms of just confirming and actually booking more business at hopefully a higher price. we're seeing a broader demographic coming to the property as a result of some of the that we put in. And we would expect that to continue as we open the Country Western Dance Hall and some other restaurants in the Mediterranean.
Speaker Change: Yes, I think that the <unk> room convention remodel has quite immediate impact as well, where new come online with the quality of the room that we're creating value or edge and <unk>.
Speaker Change: <unk> convention space pricing is going to be.
Speaker Change: So.
Speaker Change: Mediate when it comes.
Speaker Change: In terms of ADR and from a group bookings standpoint in terms of just confirming and actually booking more business hopefully at a higher price.
Speaker Change: Alright, thank you.
Speaker Change: We're seeing a broader demographic.
Speaker Change: Coming to the property as a result of some of the new amenities.
Speaker Change: We've put in.
Speaker Change: We would expect that to continue as we open the country western.
Speaker Change: That's all.
Speaker Change: Some other restaurants and amenities.
Speaker Change: Okay.
Stephen Cootey: That's all very helpful. Then one quick follow-up. I know with the construction financing, you mentioned it before, and then to Carlo's question, you get the one pen. But my understanding is there should be accrued interest in there as well. I think it should be in the ballpark of like $50 million or $60 million. Is that correct? What's the accrued interest? Well, the note right now, with the $110 million, we pretty much paid off all the accrued interest. So what you have now is 69.6 million, roughly, of principal. That said, you know, the note immediately started accruing at SOFR plus 12%, so we're still getting a good return on that.
Speaker Change: That's all very helpful. And then one quick follow up I know.
Speaker Change: With the conduct of construction financing you mentioned it before and then to Carla's question you get the one thing, but my understanding is there should be a crude interest in there as well.
Speaker Change: It should be in the ballpark of about 50 or $60 million is that correct, what's the accrued interest.
Okay.
Speaker Change: While the a note right now with the $110 million, you've pretty much paid off all the accrued interest. So what you have now is $69 6 million roughly of principal that said. The note immediately started accruing itself were plus 12%. So we are still getting a good return on that investment.
Stephen Cootey: Okay, understood, thanks.
Speaker Change: Okay understood. Thanks.
Chad Beynon: The next question comes from Chad Beynon with Macquarie. Please go ahead. Afternoon, thanks for taking my question.
Chad Beynon: Your next question comes from Chad Beynon with Macquarie. Please go ahead.
Chad Beynon: Afternoon, Thanks for taking my question.
Chad Beynon: Notwithstanding the comp differences with catering and Super Bowl and some of those items in the first quarter, can you just talk about the Core 7 properties versus, I guess, the other group within the portfolio, the wildfires? Are you continuing to see, you know, a percentage basis, or are you seeing the portfolios kind of grow along the same rate? Thank you. Just to be clear, I'm assuming you're talking about the wildfires in the tavern. Yes, you're correct. Okay, so you're talking about other types of products that we offer in the market.
Speaker Change: Notwithstanding the comp differences with catering and Super Bowl.
Speaker Change: Some of those items in the first quarter can you just talk about the core seven properties versus.
Speaker Change: I guess the other group within the portfolio of the wildfires are you continuing to see.
Speaker Change: Separation in terms of trends, meaning the core seven.
Speaker Change: Outgrowing from a percentage basis are you seeing the portfolios kind of grow.
Speaker Change: Along the same rate thank you.
Speaker Change: Just to be clear im assuming youre talking about the wildfires and the taverns.
Speaker Change: Yes, you're correct.
Speaker Change: Oh, okay. Okay. So you're targeting about other types of products that we offer in the market.
Scott Kreeger: Yeah, I guess comparing the full resort properties versus the ones where you don't have hotel rooms in the rest of the portfolio. Thank you. From a top-line perspective, we're seeing very similar trends amongst all of the product classes. Okay.
Speaker Change: Comparing the full resort properties versus the ones, where you don't have hotel rooms, and the rest of the portfolio. Thank you.
Speaker Change: From a topline perspective, we're seeing very similar trends amongst all the product classes.
Speaker Change: Okay.
Lorenzo Fertitta: And then just kind of thinking back to the management opportunity that you're getting into, is it a priority to explore other management contracts in California or other tribal areas? Not sure if there's contracts that are expiring with others. I know usually these come about with new builds or expansionary builds, but is this something that you plan to focus on more in the next several years?
Speaker Change: Okay, and then just kind of thinking back to the management opportunity that youre getting into is it a priority to explore.
Speaker Change: Other management contracts in California, or other tribal areas not sure if there is.
Speaker Change: Contracts that are expiring with others I know usually these come about with with new builds are expansionary builds but is this something that you plan to focus on more.
Speaker Change: In the next several years.
Lorenzo Fertitta: Look, this is Lorenzo. We've been focused on this. I think we, when did we open our first tribal casino? That was in... Thunder Valley. Thunder Valley, so early 2000s. So yeah, and even prior to that in the 90s, we were looking at a number of development opportunities for tribes all across the country. And it is something that we continue to look at. The reality is, though, that there just doesn't seem to be that there's that many. opportunities out there. Now they do pop up and because of our history and performance of what we've done in the past with Thunder Valley and Great Resort.
Lorenzo Fertitta: This is lorenzo.
Lorenzo Fertitta: Then focused on this I think we did we opened our first travel casino that was in <unk>.
Lorenzo Fertitta: Under balance so early two thousands.
Lorenzo Fertitta: Every year.
Lorenzo Fertitta: So yeah and even prior to that in the nineties, we were looking at a number of development opportunities that drives all across the country.
Lorenzo Fertitta: And it is something that we continue to look at the reality is though.
Lorenzo Fertitta: Does it seem to be that there is that many opportunities out there now they do pop up and because of our history and performance of what we've done in the past with Thunder Valley and great and resort.
Lorenzo Fertitta: the development of Getty Gun Lake in Michigan and what we're doing with Norfolk, we get all the looks. Like, if there's a substantial opportunity in tribal gaming from a development ground up standpoint, we are getting the calls because, you know, people obviously can see what we've done in the past, and I think we've got a good reputation in that end of the business. So... With that said, you know, sometimes, as we know, like with Norfolk, these are, these take a while and we have shown that we have the fortitude and the patience and the resilience to stand, you know, once we make our commitment to a tribe, we're going to, we stick with them and we see it through.
Lorenzo Fertitta: The development of <unk> in Michigan, and what we're doing with Norfork, we get all of them.
Lorenzo Fertitta: Like if there is a substantial opportunity in.
Lorenzo Fertitta: And travel gaming from a development ground up standpoint, we are getting the calls because people obviously can see what we've done in the past and I think we've got a good reputation in that into the business. So.
Lorenzo Fertitta:
Lorenzo Fertitta: With that said, sometimes as we know like with Norfolk. These are these take a while.
And we have shown that we have the fortitude and the patients and the resilience to stand once we make our commitment to drive we're going to stick with what we see it through.
Lorenzo Fertitta: And yes, we are looking, but I can't say that, you know, I wouldn't expect this to be to where there are multiple opportunities down the road.
Lorenzo Fertitta: And yes, we are looking but I can't say that I wouldn't expect this to be.
Lorenzo Fertitta: To where there are multiple opportunities down the road.
Lorenzo Fertitta: Great, thank you very much.
Lorenzo Fertitta: Great. Thank you very much.
Lorenzo Fertitta: Okay.
Operator: This concludes our question and answer session.
Lorenzo Fertitta: This concludes our question and answer session I would like to turn the conference back over to Steven Li for any closing remarks.
Stephen Cootey: I would like to turn the conference back over to Stephen Cootey for any closing remarks. Thank you, everyone, for joining the call, and we look forward to hearing from you next quarter. Take care.
Steven Li: Well. Thank you everyone for joining the call when we look forward to hearing for you next quarter take care.
Operator: The conference has now concluded. Thank you for attending today's presentation.
Steven Li: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Operator: You may now disconnect. © BF-WATCH TV 2021
Speaker Change: Good morning.
Steven Li: Yes.
Steven Li: [music].
Steven Li: Okay.
Steven Li: [music].
Steven Li: Okay.
Steven Li: [music].