Q2 2025 Red Rock Resorts Inc Earnings Call
Good afternoon.
And welcome to Red Rock Resorts' second quarter 2025 conference call.
All participants will be in a listen only mode.
Please note this event is being recorded.
I would now turn the conference over to Stephen Curry Executive Vice President Chief Financial Officer, and Treasurer of Red Rock resorts.
Go ahead.
Thank you operator, good afternoon, everyone. Thank you for joining us today for Red Rock Resorts second quarter 2025 earnings Conference call.
Joining me on the call today are Frank and Lorenzo Fertitta, Scott, Craig and our executive management team.
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.
For definitions and complete reconciliation for these figures to GAAP. Please refer to the financial tables in our earnings press release form 8-K, and our Investor deck, which were filed this afternoon prior to the call.
Also please note that this call is being recorded.
The second quarter was an exceptional one for the company by every measure our Las Vegas operations delivered its highest quarterly net revenue and adjusted EBITDA in our 49 year history, all while sustaining near record adjusted EBITDA margin.
In addition to delivering strong financial results. We remain highly encouraged by the continued performance of our Durango Casino resort and the revenue backfill at our core properties.
<unk> continues to expand the Las Vegas locals market drive incremental play from our existing customer base and attract new guests to the station casinos Brad.
The property once again demonstrated strong momentum with <unk>.
Quarter with increased visitation higher spend per visit and elevated net theoretical win from our current customers and the surrounding Durango area.
And since opening in December 2023, Durango is added over 108000, new customers to our database.
The resort remains on a solid trajectory and is on pace to become one of our highest margin properties delivering net return net of cannibalization of over 50% through the second quarter of 2025.
Regarding the cannibalization impact, which occurred primarily at our Red rock property. Following Durango is opening we are encouraged by the pace of the revenue backfill with suggest that the worst of the impact is behind us.
System with our historical experience, we continue to expect full recovery over the next couple of years supported by strong long demographic growth across the Las Vegas Valley.
Particularly evident summerlin, where the combined buildout of the downtown Summerlin and <unk> West is projected to add approximately 34000 new households.
Across the rest of our portfolio, we demonstrated our ability to successfully manage costs, while driving top line growth, resulting in what was easily the best quarter in our company's history strength was evident across all business lines as we execute our core strategy of reinvesting in existing properties to enhance amenities and deliver best in class customer service will all.
So returning capital to our shareholders.
Now, let's take a look at our second quarter.
With respect to our Las Vegas operations, our second quarter net revenue was $513 3 million up six 2% from the prior year second quarter.
Our adjusted EBITDA was $239 4 million up seven 3% from the prior year second quarter our.
Our adjusted EBITDA margin was 46, 7% an increase of 47 basis points from the prior year.
On a consolidated basis, our second quarter net revenue, which includes $10 million from our North Port project was $526 3 million up eight 2% from the prior year second quarter.
Our adjusted EBITDA, which also includes $10 million from our North Fork project with $229 4 million up 13, 7% from the prior year second quarter.
Our adjusted EBITDA margin was 43, 6% for the quarter, an increase of 212 basis points from the prior year.
In the quarter, we converted 54% of our adjusted EBITDA into operating free cash flow generating $124 3 million or $1 18 per share.
This brings our year to date cumulative free cash flow to $217 3 million or $2 <unk> per share.
The strong level of free cash flow was strategically deployed to support our long term growth initiatives, including our most recent project at Durango Sunset station and Green Valley Ranch will return to our stakeholders through debt reduction dividends and share repurchases.
As we begin the third quarter, we remained focused on our core local gas will continue to drive our regional and national customer segments across the portfolio.
Compared to the second quarter of last year, we saw continued strength in carded slot play across our entire database.
Robust visitation and strong spend per visit coupled with a strong table games business helped drive the highest revenue and profitability in our gaming segment in the company's history.
Turning to our non gaming operations, both hotel and food and beverage Division has delivered a strong quarter, achieving near record revenue and profitability in the second quarter.
Our hotel Division recorded its highest second quarter revenue and profit driven by our team's success, increasing both ADR and occupancy across our portfolio.
The food and beverage Division also achieved near record results for the quarter supported by higher cover counts across our Opex.
The group sales and catering the team delivered near a near record second quarter revenue and profit and we continue to see Pos momentum in both business lines for the remainder of 2025 and into 2026.
As we look ahead to the third quarter. We are seeing continued stability in our core slot and table games business within the locals market and across our card a database.
While we do expect a return to more typical seasonal visitation patterns and some near term disruption impact from our ongoing construction projects at Durango Sunset station and Green Valley Ranch, we remain as confident as ever in the strength of our business and long term growth prospects.
Now, let's cover a few balance sheet and capital items.
The company's cash and cash equivalents at the end of the second quarter was $145 2 million and the total prints amount of debt outstanding was $3 4 billion, resulting in net debt of $3 3 billion.
As at the end of the second quarter, the company's net debt to EBITDA ratio was 396 times.
During the second quarter, we made total distributions of approximately $200 3 million to the LLC unitholders of station Holdco, including a distribution of approximately $116 9 million to Red rock resorts.
The company utilized this portion of the distribution to fund its first and second quarter estimated tax payments payments previously declared quarterly dividend of <unk> 25 per class a common share and a special dividend of $1 per class a common share and the repurchase of approximately 672000 class a common shares for $31 million at an average <unk>.
Rice of $45 94 per share under its previously announced $600 million share repurchase program.
The second quarter share repurchases bring the total number of class a common shares repurchased including the 2021 tender offer and open market repurchases to approximately 15 million shares at an average price of $45 35 per share reducing the company's share count to approximately $105 4 million shares for the quarter end.
Capital spend in the second quarter was $78 2 million, which includes approximately $59 8 million investor investment capital as well as $18 $4 million in maintenance capital.
This brings our year to date capital spend to $146 4 million, which includes approximately $92 million in investment capital as well as $54 million in maintenance capital.
For the full year 2025, we now expect to spend between 325 and $375 million down $25 million from our previous earnings call, mainly driven by the timing of capital expenditures.
Full year capital spend includes $235 million to $275 million investment capital as well as $90 million to $100 million in maintenance capital.
As mentioned on our last earnings call, we are making significant investments in our Durango Casino resort Sunset station and Green Valley Ranch properties.
At Durango construction continues on the next phase of our Durango Master plan. This expansion will add over 25000 square feet of additional casino space, including a new high limit slot area bar in total the budget will June 230, new slot machines with 120 allocated to the high limit room.
As part of this phase we are also building a new covered parking garage with nearly 2000 spots, which will enhance customer access and provide infrastructure flexibility to support the future growth of the properties.
Total project cost is approximately $120 million and is currently operating under a guaranteed maximum price contract.
The project remains on budget and is expected to be completed in late December.
At Sunset station, we are advancing our podium refresh to better position. The property for continued growth in Henderson, particularly from the Masterplan communities of the Sky and cadence, which are expected to deliver over 12500, new households at full build out.
$53 million renovation includes an all new country Western bar and nightclub.
New Mexican restaurant, a new center bar and a fully renovated casino floor.
We're pleased to report that customer feedback on the completed portions of the renovation has been overwhelmingly positive reinforcing our confidence in the projects direction.
The property remains on budget with the new amount of these expected to come online throughout the remainder of 2025.
In the first half of 2026.
Yes.
At Green Valley Ranch, we have commenced a comprehensive refresh of our guest rooms suites and convention space aligning the hotel experience with our recently renovated and well received high limit table and slot rooms at the property.
Work on the rooms in the West Tower is currently underway with the majority of all rooms at both tower is expected to return to service by year end.
The total investment for the room convention remodel or renovation is projected to be approximately $200 million.
As with our recently introduced amenities. We believe these upgrades will generate strong returns. However, we do anticipate some temporary disruption at the property as we bring these new offerings online for our guests.
Turning now to north for construction is progressing well we've completed the slab on grade and we anticipate closing the facility by October keeping us on a pace for early fourth quarter 2026 open.
The total all in project cost is expected to be approximately $750 million is fully financed and is currently being executed under a guaranteed maximum price contract.
When complete this best in class resort will include approximately 100000 square feet of casino space with over 2400 slot machines, and putting 2000 class III games 44 table games, and two food and beverage outlets and a food court with many exciting options.
In addition to the work continuing to progress as planned the project remains on budget. We were also pleased to report that we're now able to begin and have begun recognizing our development fee revenue starting this quarter.
This will continue the project's opening marketing and marketing another meaningful milestone in the advancement of this long term project.
Also at the end of the quarter Red rocks outstanding balance due from the drive stands at approximately $72 3 million.
We are excited about this project very happy with the progressive construction and look forward to providing further updates on future earnings calls.
Lastly, the Companys Board of Directors has also declared its regular cash dividend of <unk> 25 per class a common share payable on September 30 to class a shareholders of record as of September 15th.
Following the payment of this dividend and the share repurchases completed during the quarter. We have returned approximately $189 million to our shareholders year to date.
With two record quarters under our belt the year is off to a strong start and we remain confident in the strength and resilience of our business model.
<unk> continues to validate our long term growth strategy and highlight the value of our own development pipeline of real estate Bank, which includes more than 450 acres of developable land position in highly desirable locations throughout the Las Vegas Valley.
Combined with our existing portfolio of best in class assets in Premier locations. This pipeline positions us for significant growth enable us to fully capitalize on the very favorable long term demographic trends and the high barriers to entry that define the Las Vegas locals market.
We don't want to take a moment to sincerely. Thank all of our team members for their continued hard work and dedication our.
Our success begins with them. They are the driving force behind the exceptional experiences that keep our guests coming back time and time again.
Thanks to their efforts we are proud to have been recognized with multiple accolades, including being a top.
No employer in the Las Vegas Valley for five years five consecutive years certified as a great place to work for three years running a named one of the America's best in state employers by Forbes.
We're also honored as a top place to work by USA today, and recently recognized by Newsweek as one of America's greatest workplaces in Nevada.
Finally, we extend our heartfelt gratitude to our loyal guests for their unwavering support over the past six decades.
Operator. This concludes our prepared remarks for today and we are now ready to take questions.
We will now.
And an answer session.
Correct.
Hi, Glenn.
Great.
Thank you Lee.
Okay.
One question Nicky.
Question.
And you would like to withdraw your question. Please press star two.
At this time, we will pause momentarily to assemble our roster.
The first question today comes from Jordan Bender with citizens. Please go ahead.
Hey, everyone. Good afternoon.
Backing out the native American contributions in the quarter flow through still incredibly strong are you may be able to help us unpack kind of where you're finding incremental operating leverage and I guess I'll just put the second part of the question there any impact from the renovation in.
In the quarter that you can call out for EBITDA. Thank you.
Yes, I think I mean, the thing I think I think the strength Jordan is evident across all business lines from our casino perspective.
Obviously, we had the best table and slot hold in the history and the history of our company.
Led by Great volume and some favorable hold we also had our <unk>.
Our best Hotel hotel revenue and record profitability.
And then not to be outdone food and beverage.
<unk> had its second best revenue rate second best revenue quarter only to be outshine by last quarter, which obviously you have the trial from Durango.
And the.
The Big change there and then you saw this in our in our margin you had some revenue mix, which shifts from let's call it lower margin food and beverage and hotel into higher margin gaming and gaming actually had a flow through north of 70%.
Great and then I guess on the renovation disruption in the quarter.
Yes, we haven't seen too much impact from the renovation and the.
In this quarter that said.
Yes, we're still sticking to our guns on the on some of the disruption as we're in the sixth or the peak construction period now for all three projects, although the Durango Sunset station and Green Valley Ranch with the majority of that disruption almost $15 million occurring at Green Valley as the West and East tower is going to be taken down over the next two quarters.
Great. Thank you very much.
The next question comes from Joe Stauff with Susquehanna. Please go ahead.
Thank you good afternoon.
I wanted to ask just a follow up on the construction disruption.
Yes, Steve you said Youre sticking to your guns in terms of kind of what you outlined for each property.
Yes.
Is is <unk>.
By August September.
The.
The largest concentration of that disruption could you just remind us of the timing of that.
And then I was wondering if you could share your analysis.
Of how the tip tax relief kind of affects the locals market and your customer in particular.
Hey, Joe It's Scott I'll take the disruption kind of schedule and timeline foreseeable will take the second question.
A couple of quarters ago, Steve were pretty descriptive what we thought disruption was going to be when he just mentioned that in the Q2 timeframe was a little lighter than we thought some of that is due to just the timing of construction and in some respects.
We switched around the order of what we were doing.
So at Sunset instead of going into our main pit.
We went into an area that contained an entertainment lounge, so that switched around the impact a bit.
So youll see sunset impact could be more like Q3 Q4.
And maybe a little bit of a bleed into 'twenty six.
<unk> disruption has been relatively light.
Which is a good thing, but we are seeing impacts to parking, especially on the weekends, we're getting above 80% parking and what's left over is less convenient parking in our world That's pretty impactful and then the second piece of Durango is worrying closed now and so the interior.
Fit out is going to start which tends to have more noise.
And kind of disruption that's on the adjacent construction work than you saw in the past, but all in all we still think that the bulk of the disruption youre going to see in Q3, and Q4 and Green Valley is just getting started with the room renovation. That's right. Yeah. So green valley schedule is that will be through.
Tower, one late September 1st week of October and then we'll be into the tower too.
In October with with the goal for us to be done at the end of the year and then in October will also kick in on the conference Center remodel, which will be early January completion, and then suites will be done in March. So that gives you a kind of a.
Timeline at Green Valley Ranch.
Great I'll take the second but Joe Im going to congratulate you because you gave the ultimate back to school question. One question 27 parks.
Okay.
Thank you actually just look at no tax on chips, we think ultimately the tax legislation can only be viewed as a good one for Las Vegas, and just given our position in the locals market.
We do expect to benefit in the legislation and the increase of discretionary income it's going to bring to our customers. The key measures as you mentioned tax on tips, but there's also the elimination of federal tax on overtime pay that new senior tax credit as well as expanded deduct standard deductions family tax credit.
And some reductions in marginal tax credits, all which would significantly.
We enhanced the discretionary income.
Well, it's tough to say how much of this income is going to flow to red rock. We can start framing that I think you and I have talked to this in a for example, when we ran our initial analysis on no tax for tips for example.
We estimated approximately $5 million annual would flow into Clark County.
And then when you kind of even view over time, which is a little trickier theres about $1 2 million workers in Clark County, and using some national estimates roughly four 4% to 8% of those typical people actually get receive overtime pay.
And ultimately this could benefit.
Each worker up to $300.
<unk> thousand $800 per worker annually, and then not to be outdone. It's just to remind you remind everyone that there are about 390000 seniors over 65.
And just given the marginal than the median household income of that cohort.
Would expect a substantial portion of those seniors will qualify for at least part of the new senior deduction. So all of this is fantastically good for our company and then.
Yes.
Next 27 parts of the question.
Okay.
Right I mean, I think with the expansion of <unk> you can expense immediately R&D expenses, the acceleration of bonus depreciation and the relief from interest deductibility that is going to have an immediate impact on our cash flow for the remainder of 2025, we do not expect to pay cash taxes for the remainder of 2025 and further we do not.
Back to make.
Any tax distributions to station Holdco for the rest of the year, which we estimate will increase our operating free cash flow by $60 million for the rest of the year.
Thanks, guys.
Thank you.
The next question comes from Steve.
With Stifel. Please go ahead.
Hey, guys. Good afternoon, so Steve wanted to ask.
About your new database sign ups across your properties in the quarter and I guess.
What I'm trying to understand here is if you guys had seen any pickup in new customers given.
Well, let's call it the well documented slowdown along the strip basically trying to understand if the strip has.
Essentially over priced itself and some customers are now looking for other alternatives.
Hopefully that makes sense.
Yes, Steve This is Scott, let me take that one so from an overall database perspective, we saw strong positive performance.
All of the segments.
As its been trended from past quarters, because of our focus because of the investments we're making in our properties, we're seeing particularly strong growth in our VIP, our core customer our regional and national customer, but in this quarter, specifically not to be outdone. We also saw.
Considerable improvement in what we would call our retail customer are non rewards customers so across the database.
It's pretty much homogeneously, we've seen positive increases in you mentioned new member sign ups.
Particularly.
Interesting that if you you've got to take into account the opening of Durango and the impact it had in the second quarter of last year.
<unk> has signed up $108 in new to brand customers.
Yes.
As of this quarter or as of the end of Q2.
So it's a sizable rather or sorry database increase that comes from drag or if you take that comparison of Durango and you just look at the core six were up almost 10% and new sign ups, which is really quite sizeable effort on the part of the operating teams to grow that.
Database in general.
The other thing that we look at is when we look at demographics across all the age categories. We saw positive increases in.
In the quarter and most interesting.
As an absolute customer account and the database, we saw under 35 grow 15% and I think thats attributable to the relevant amenities that we're putting in our properties.
Way that we've positioned our properties and quite honestly the team the marketing team and how they resonate with the younger demographic. So we're seeing strong demographic increases and then not to be outdone. When we look at on carded.
Second quarter slot coin in was the highest.
Quarter of increase in on carded play that we've seen in the last two years, so really when you take a broad brush stroke crossed.
All of the aspects of demographics and customer database, we're seeing positive growth and then as we look into Q3, we're seeing very similar trends as we go it's early but as we look into the future trend into Q3, it's very consistent and Stephen just to piggyback on what Scott.
Scott was saying that really highlights the difference between the strip in Las Vegas locals right. While the strip relies heavily on tourism Convention hotel driven revenue we are anchored by a gaming centric business model right. We focused on deeply loyal customer base. Many of these customers that our customers 75% for a car to play that is over four times a month.
And so we feel locals offers a stronger value.
Value proposition, which is driving more people to our fiscal year, which include successful pricing convenient locations personalized service.
And that continues to resonate not only with our locals guests, but it started to increasingly resonate with our out of town guests as well.
Okay Gotcha.
That's great color guys and then.
I assume this is probably for Scott.
Apologize if Steve you had this in your prepared remarks, but wondering if we could get an update Scott in terms of what youre seeing from a from a group perspective maybe into.
Into the fourth quarter of this year and then what Youre seeing so far for 2000.
Yeah, we're seeing really positive forward bookings so we're talking.
In the mid 20% increases in group and then catering kind of ride shotgun with group sales and we're seeing similar increases not only through the remaining quarters of this year, but into 2006 as well.
Okay got you thanks, guys appreciate it.
Got it.
The next question comes from Shaun Kelly with Bank of America. Please go ahead.
Hi, good afternoon, everyone. Thanks for taking my question.
Steve or whoever wants to take it I know, it's probably hard to put a finer point on it but it sounds like there are several upside surprises in the quarter. Both to backfill comment you made in a number of times in the prepared remarks and then the.
The strength of unrated play, which has been a segment that I think has come back.
Better than expected across the local.
So if you were to kind of divide out by those two.
Could you venture a guess or help us think a little bit about how much either of those two things in particular contributed to the kind of the outsized growth or the reacceleration in growth we saw in the quarter.
I think if you really look at really what the big contributor was I think Scott touched upon this.
It's the VIP play in slots and table games and as we mentioned I mean, we've invested.
Quite a bit and high limit areas.
Amenities over the past I guess four years five years coming out of Covid, and we're really starting to see that pay off as.
As we feel like that we're getting more than our fair share in those two areas.
From a gaming revenue standpoint, I would add to that Steve you can jump in when you really look at the market in general.
Durango was the star of the show a year ago, but as Durango kind of matures into the market one of the things that we're seeing and we mentioned it last quarter and again in Q2 as is the performance of our core six properties and growing market share and growing in the market. So we're seeing all of our <unk>.
Liberty's contribute.
To the.
So the revenue increases.
Thanks for that and then maybe just to kind of dig in on seasonality or however, you want to think about it but there have been a lot of call outs and it's certainly a warning from one of your peers about concerns on sort of strip rate compression as you move into the summer months here and some pretty serious discounting out there I think we can all see on social media.
Are you seeing that reflected in any of the hotel product or the prevailing rate. There. How are you kind of insulated from that and just sort of yes. Thanks Scott.
Around that for the Red rock portfolio.
Yes, Great question. This is Scott.
One mystery.
Just go back and say that Q2 was a great quarter for hotel.
As we look into the current trends.
Short term booking window, yes across the board you are seeing kind of an ADR War. If you will out there now how do we play into that certainly we have to be competitive with the market rates, but we're certainly not completely dropping our rates to <unk>.
<unk> levels I think it's also important Frank and Steve just mentioned this.
We are a different makeup of business than the strip. So a majority of our revenue comes through casino.
<unk> hotel is important to us it really only represents about 10% of our overall revenue stream and then when you look at <unk> and transient it's really only about 20% of the overall hotel mix. So while it is important to us and we stay competitive it really doesn't represent the law.
Lions share of the revenue stream of the company.
Yeah.
Thank you.
Yes.
The next question comes from Chad Beynon with Macquarie. Please go ahead.
Good afternoon, Thanks for taking my question and nice quarter guys.
Just in terms of the lower leverage at this point and maybe you know the business.
Humming along slightly better than than anyone would have expected.
Obviously, you have a full plate with with some of the renovation projects that you outlined and that'll that'll hit in the end of 'twenty five 'twenty six but as we think further down the track.
Some of the bigger development.
Developmental sites has anything changed just given your cash position.
With respect to the timing of maybe green lighting, one of those next opportunities distance.
This is Lorenzo obviously chime in but nothing has changed.
Clearly we are.
Our development company I mean, Thats really what our focus is we've got all of this real estate in Las Vegas at strategic locations.
<unk>.
With Durango, we proven again that we can develop these these projects and get attractive returns.
From a timing standpoint.
In a position I think as we said before we're just continuing to design and go through the process of trying to figure out which projects. We think we're going to be able to get the best return that and have the most impact.
Create equity value for the company.
And these projects just take time, we want to make sure that we get good drawings go out on this really get good pricing so that.
When we do announce with our next project is and what the pricing is that we're confident.
Delivering for everybody I think we had said at one point a quarter or two ago that we would probably have an update when we report Q4 of this year Frank.
Great.
Great. Thanks, guys and then in terms of the Red rocks impact.
What inning are we in in terms of just getting back on the.
The right glide path.
<unk> returned to what some of the prior <unk>.
<unk> I know you guys are looking at net of cannibalization, but.
But I know that that's kind of a key model driver just getting some of that back filling some of that business back back into Red rocks.
Yeah, I think as I mentioned in the prepared remarks.
Generally these backfill historically has taken a little bit over three years.
And so we feel very comfortable in the position we are from a backfill perspective as Scott alluded to the market share growth the market share comment when you looked at the 12 months Durango is really driving the ship when you look at six demand three months nine months is now really the core six kind of driving the shift which kind of shows you the power of the platform and our ability to backfill at our <unk>.
<unk> property, so we like where we are.
Mid inning, right, where you're kind of entering our second year of that backfill.
Thanks, Steve I appreciate it guys.
The next question comes from Barry Jonas with Chewy Securities. Please go ahead.
Yeah.
Yes.
Just for Steve.
Whether you can give about.
Just thinking about seasonality for Q3, as we refine our models. Thanks.
Yes, no problem and it's obviously, it's coming off of a big quarter.
And I think the first thing you have to do is just recognize that north fork is in there at $10 million and so not really part of seasonality just to give you. Some guidance. There we would expect that number to be $3 million a quarter through opening.
Just to get that out of the way and then usually Q4 to Q3 or Q3 to Q.
Q2, Q3 to Q2 is usually down about 10% from an EBITDA perspective.
That's helpful.
Okay.
Okay. So just to mention it alright.
Paul.
No I was just going to tell you I was just going to reiterate.
To reiterate that.
Also that disruption that we talked about but I think you got that.
Yeah understood and then.
We will get the big reveal later on but any early puts and takes you can offer for the finalist for your next big Greenfield project you'd sort of identified.
A few areas that that you are thinking about so just curious if the if the order is changed or any puts and takes you'd be willing to share now.
Yeah, I mean, I think the one thing that we've shared with you guys.
The precursor to potential.
Janssen of amenities to radio as the garage.
Setting this up to be able to have more amenities accommodate the guests with convenient parking at all so that is definitely an option and in terms of the greenfield.
I think we'll do that.
On our year end call.
Okay.
Great. Thanks, so much.
Right.
The next question comes from Ben Chaiken with Mizuho. Please go ahead.
Hey, good afternoon, Thanks for taking my question.
You know as you get into some of the renovation work, primarily <unk> and Sunset, maybe you could just help us flush out some of the larger opportunities that each project do you hope to sell for what the current renovations because.
These are largely either more than at least from my perception is even larger than just refreshes of the existing product. Thanks.
Yes, I can start that this is Scott and then Steve you can kind of jump in so.
Let's start with <unk>.
Sean So sunset.
Incredibly vibrant new emerging area of the valley.
Ill call cadence so for that matter.
It represents about 12500, new rooftops over the phasing of the project at one time.
It was kind of a particular property for us and as the valley fills in on the east side.
Sunset is being remodeled and refurbish to represent kind of the red rock of the east side for us.
So an incredibly dynamic property, it's fully integrated property.
So we started about a year and a half ago with the race and sports book in the yard house restaurants.
Paul has been incredibly successful and then we've gone through.
<unk> subsequently remodeling the entire casino floor.
Adding.
Country Western Dance Hall.
We will go in and refurbished the lobby.
Exterior of the property.
A Mexican restaurant redo the center bar.
And so essentially the main center or heart of the overall property.
Will be refurbished as we've been doing that over the last year and a half.
It's been incredibly well received by our customers.
Each segment of the properties that we are.
Renovate and reopen we're seeing positive return and visitation and the expansion.
The demographic profile, but we're able to attractive properties.
We feel like we have pretty good traction over there and we really believe.
The return on investment that will get over there at FEMSA.
Given the.
Area in the market that return, which is growing and the ability for us through attracted younger gaming profile and I think we've seen since post COVID-19 with all these investments that we've made we really have been able to lower.
<unk> age group, they were able to attract with property, which I think is very important for the long term growth.
And then switching to <unk> same story, it's an incredibly vibrant area one of our higher net worth areas of the valley.
DVR rooms were in need of a refresh we really started with adding high limit rooms, which we've done on all of our core properties pretty much all of the core properties, which we've seen incredible return on investment and so we did that first at Green Valley, New high limit rooms, both slots and table.
<unk> new restaurants, so we're bringing the hotel rooms up to.
Five star level of finish to complement the higher limit rooms and the.
<unk> restaurants, and at the same time, bringing our meeting space in alignment with that level of quality. So we aren't going to have fresh new rooms, fresh new we mentioned and meeting space.
Sweet product, great higher limit rooms, new hire class restaurants, and so and I think what youll see when you see the Green Valley Ranch.
Room product I mean, it is more than just a refresh or rerouting the road to reposition it as a complete repositioning of the property into the luxury space, where the bathrooms are being completely redone.
And I think we'll have work versus room products in the city. So we're excited about and.
And we have some of the renderings for those in the Investor deck you.
I want to take a look.
Got it helpful. And then just a really quick one I think you helped us with some of the benefit to free cash flow for the remainder of the year.
Tied to a 100% bonus depreciation.
How do we think about that number in 2006, even just in broad strokes.
Yes.
I wonder who depend on what we actually do it that's exactly what was going to be opening so let's assume that the interest limitation is going to be a good guy.
The main driver here in 2006 is going to be the accelerated depreciation we're going through our capital planning right now.
But I think that puts us in a good stat that any investment that frankly runs I want to make sure. We know we're going to be able to take that tax credit immediately.
Thanks.
The next question comes from David Katz Jefferies. Please go ahead.
Hi afternoon covered a lot of ground already I appreciate it.
I just wanted to get a sense for.
Steve how you're sort of thinking about your sort of ideal leverage range.
Given the spending which has been so productive given the capital return plans et cetera.
Or would you like to sort of range that overtime.
Yes, David I don't think Theres any change right now as you can get we've kind of knocked out leverage over the last several quarters, just naturally through generating higher EBITDA, so very comfortable with the balance sheet and the overall leverage position again as I mentioned previously it is supported by a very flexible credit agreement and no near debt term maturities.
And thats the financial flexibility that enables Frank and Lorenzo to give kind of operator, a balanced and disciplined approach to capital allocation you did mentioned that this quarter.
We did take an opportunity to return a lot of capital to the 670000 share repurchases, our quarterly dividend as well as our special dividend thing to focus in the back half of the year is primarily going into.
The focus on getting Green Valley, Sunset and Durango online.
Got it okay. Thanks, congrats on your quarter.
Thanks, David.
As a reminder, if you'd like.
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The next question comes from John Decree with CBRE. Please go ahead.
Oh, Hey, thanks for taking my question.
Maybe just one in regard to the 100000 plus customers you've acquired since opening Durango.
I'm curious if you could give us any insight into the behavior of that segment of the database relative to previous customers do they spend more do they visit more frequently.
Do they move about your other properties.
Behavior any different if theyre required at the rank out versus the rest of the portfolio.
Yes, John this is Scott.
I think generally because you are talking about a large sample size of people. They behave very similarly to the rest of our customers.
Our in and among three to five mile radius of other customers now.
I guess I'll enhance your question by saying does Durango behave a little differently than some of other properties and the answer would be yes, I think that Durango is catering to a younger demo.
We tend to see a lot of industry folks coming off the strip.
And stop on op at Durango, maybe on the way home. So we had a little bit more visitation on the later date, our Durango and I think it's a function of the incredible food and beverage programming. We have there that it's kind of a lifestyle oriented property and youre seeing a younger than just the location is unbelievable.
And that's a growing area of the valley both residential a commercially there's a lot of activity.
Going on roller.
Got it.
And the demographic profile and definitely higher spend per person on food and beverage.
Yes.
That's all helpful. Okay. Thanks, guys.
Okay.
This concludes our question and answer session I would like to turn the conference back over for any closing remarks.
Well. Thank you everyone for joining the call and we'll see you and talk again in 90 days take care.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Okay.
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