Q2 2026 Red Rock Resorts Inc Earnings Call

August 4, 2026

Stephen Cootey: That's better. Sorry.

Speaker #1: That's better.

Speaker #2: Good afternoon, and welcome to Red Rock Resorts' second quarter 2026 conference call. All participants will be in a listen-only mode. Please note this conference is being recorded.

Operator 2: Good afternoon, and welcome to Red Rock Resorts' Q2 2026 conference call. All participants will be in a listen-only mode. Please note this conference is being recorded. I would now like to turn the conference over to Stephen Cootey, Executive Vice President, Chief Financial Officer, and Treasurer of Red Rock Resorts. Please go ahead.

Operator: Good afternoon, and welcome to Red Rock Resorts' Q2 2026 Conference Call. All participants will be in a listen-only mode. Please note this conference is being recorded. I would now like to turn the conference over to Stephen Cootey, Executive Vice President, Chief Financial Officer, and Treasurer of Red Rock Resorts. Please go ahead.

Speaker #2: 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 #3: Thank you, operator, and good afternoon, everyone. Thank you for joining us today for Red Rock Resorts' second quarter 2026 earnings conference call. Joining me on the call today are Frank and Lorenzo Fertitta, Scott Krieger, and our executive management team.

Stephen Cootey: Thank you, operator, and good afternoon, everyone. Thank you for joining us today for Red Rock Resorts' Q2 2026 earnings conference call. Joining me on the call today are Frank and Lorenzo Fertitta, Scott Kreeger, 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 the 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 and our earnings press release, Form 8-K, Investor Deck, which were filed this afternoon prior to the call. Also, please note that this call is being recorded. Before we begin discussing our Q2 results, I'd like to take a moment to recognize an important milestone for our company.

Speaker #3: 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.

Speaker #3: Developments and results may differ from those projected. During the 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 and our Earnings Press Release, Form 8K, and Investor Deck, which are filed this afternoon prior to the call.

Stephen Cootey: For definitions and complete reconciliation for these figures to GAAP, please refer to the financial tables and our earnings press release, Form 8-K, Investor Deck, which were filed this afternoon prior to the call. Also, please note that this call is being recorded. Before we begin discussing our Q2 results, I'd like to take a moment to recognize an important milestone for our company.

Speaker #3: Also, please note that this call is being recorded. Before we begin discussing our second quarter results, I'd like to take a moment to recognize an important milestone for our company. On July 4, Station Casinos officially kicked off celebrating our 50th anniversary at Palace Station, the property where our story began.

Stephen Cootey: On 1 July, Station Casinos officially kicked off celebrating our 50th anniversary at Palace Station, the property where our story began. Throughout the summer, we are celebrating the history of our company, our incredible team members, our loyal customers, and the Las Vegas community. As part of this celebration, we will incur approximately $8 million one-time anniversary and brand marketing expense, which will be reflected in our Q3 corporate expense. We view this as an investment in honoring our history, recognizing our team members, loyal customers, and local community that have made our success possible. The celebration also marks the launch of our new brand campaign, From Vegas, For Vegas, Always Vegas. Reflecting our enduring commitment to the city, we have proudly called home for the past 50 years and our confidence in the next chapter of our company's growth.

Speaker #3: Throughout the summer, we are celebrating the history of our company, our incredible team members, our loyal customers, and the Las Vegas community. As part of this celebration, we will incur approximately $8,001,000 anniversary in brand marketing expense, which will be reflected in our third quarter corporate expense.

Speaker #3: We view this as an investment in honoring our history, recognizing our team members, loyal customers, and local community that have made our success possible.

Speaker #3: The celebration also marks the launch of our new brand campaign: From Vegas, For Vegas, Always Vegas, reflecting our enduring commitment to the city we have proudly called home for the past 50 years. We are confident in the next chapter of our company's growth.

Speaker #3: Our second quarter results demonstrate that the company we have built over the past five decades is as strong as it’s ever been. Even against the strongest operating quarter in the company’s history a year ago, our Las Vegas operations delivered the second-highest second quarter net revenue and adjusted EBITDA in our history, while maintaining near-record adjusted EBITDA margin.

Stephen Cootey: Our Q2 results demonstrate that the company we have built over the past 5 decades is as strong as it's ever been. Even against the strongest operating quarter in the company's history a year ago, our Las Vegas operations delivered the second highest Q2 net revenue and adjusted EBITDA in our history while maintaining near record-adjusted EBITDA margin. These results demonstrate the strength, consistency, and resilience of our operating model and our ability to deliver long-term shareholder value through strong operational performance and disciplined capital allocation. Our Durango property continued to perform exceptionally well despite ongoing construction impacts, and it's firmly established itself as a meaningful growth driver within the Las Vegas locals market. The property's continued success reinforces our long-held understanding that investing in best-in-class integrated resorts can expand the market rather than simply redistribute existing demand.

Speaker #3: These results demonstrate the strength, consistency, and resilience of our operating model and our ability to deliver long-term shareholder value through strong operational performance and disciplined capital allocation.

Speaker #3: Our Durango property continues to perform exceptionally well despite ongoing construction impacts and is firmly established itself as a meaningful growth driver within the Las Vegas locals market.

Speaker #3: The property's continued success reinforces our long-held understanding that investing in best-in-class integrated resorts can expand the market rather than simply redistribute existing demand. Equally important, our core properties continue to generate growth, further demonstrating the strength of our broader portfolio.

Stephen Cootey: Equally important, our core properties continue to generate growth, further demonstrating the strength of our broader portfolio. Building on Durango's continued momentum, construction of the Durango North expansion is progressing well and remains on schedule to open in H2 2027. The continued strength of our existing property, together with the significant residential growth occurring in southwest Las Vegas, reinforces our confidence in the expansion and its long-term growth prospects. Durango continues to validate our approach to capital allocation, and we believe this expansion will further strengthen the property's competitive position, expand the Las Vegas locals market, gain market share, and generate superior long-term shareholder value. Now let's take a look at our Q2 results. With respect to our Las Vegas operations, our Q2 net revenue was $503.2 million, down 2% from the prior year's Q2.

Speaker #3: Building on Durango's continued momentum, construction of the Durango North expansion is progressing well, and remains on schedule to open the second half of 2027.

Speaker #3: The continued strength of our existing property together with the significant residential growth occurring in the southwest Las Vegas reinforces our confidence in the expansion and its long-term growth prospects.

Speaker #3: Just as importantly, Durango continues to validate our approach to capital allocation, and we believe this expansion will further strengthen the property's competitive position, expand the Las Vegas locals generate superior long-term shareholder value.

Speaker #3: Now, let's take a look at our second quarter results. With respect to our Las Vegas operations, our second quarter net revenue was $503.2 million down 2% from the prior year's second quarter.

Speaker #3: Our adjusted EBITDA was $227.5 million down 5% from the prior year's second quarter. Our adjusted EBITDA margin was 45.2%, a decrease of 143 basis points from the prior year.

Stephen Cootey: Our adjusted EBITDA was $227.5 million, down 5% from the prior year's Q2. Our adjusted EBITDA margin was 45.2%, a decrease of 143 basis points from the prior year. On a consolidated basis, our Q2 net revenue, which includes $3.8 million from our North Fork project, was $510.3 million, down 3% from the prior year's Q2. Our adjusted EBITDA, which includes $2.8 million from our North Fork project, was $208 million, down 9.3% from the prior year's Q2. Our adjusted EBITDA margin was 40.8% for the quarter, a decrease of 281 basis points from the prior year. During the quarter, we converted 48% of our adjusted EBITDA to operating free cash flow, generating $100 million or $0.95 per share. Year to date, we have generated $206.7 million of operating free cash flow or $1.97 per share.

Speaker #3: On a consolidated basis, our second quarter net revenue, which includes $3.8 million from our North Wharf project, was $510.3 million down 3% from the prior year's second quarter.

Speaker #3: Our adjusted EBITDA, which includes $2.8 million from our North Wharf project, was $208 million down 9.3% from the prior year's second quarter. Our adjusted EBITDA margin was 40.8% for the quarter, a decrease of 281 basis points from the prior year.

Speaker #3: During the quarter, we converted 48% of our adjusted EBITDA to operating free cash flow, generating $100 million, or $0.95 per share. Year-to-date, we have generated $206.7 million of operating free cash flow, or $1.97 per share.

Speaker #3: This strong free cash generation continues to validate our operating model and disciplined approach to capital allocation, enabling us to invest in our properties while continuing to return meaningful capital to our shareholders, through dividends and share repurchases.

Stephen Cootey: This strong free cash generation continues to validate our operating model and disciplined approach to capital allocation, enabling us to invest in our properties while continuing to return meaningful capital to our shareholders through dividends and share repurchases. As we begin Q3, we remain focused on serving our core local guests and will continue to grow our regional and national customer segments across the portfolio. Compared to Q2 of last year, we saw meaningful growth in overall carded spend per visit, together with higher net theoretical win across our local, regional, and national customers. These trends drove the second highest Q2 gaming revenue and profitability in our company's history, surpassed only by last year's historic quarter.

Speaker #3: As we begin the third quarter, we remain focused on serving our core local guests, while continuing to grow our regional and national customer segments across the portfolio.

Speaker #3: Compared to the second quarter of last year, we saw meaningful growth and overall carded spend per visit, together with higher net theoretical win across our local regional and national customers.

Speaker #3: These trends drove the second-highest second-quarter revenue and profitability in our company's history, surpassed only by last year's historic quarter. Turning to our non-gaming operations, our hotel and food and beverage divisions delivered a strong revenue quarter, reflecting healthy underlying demand across both businesses and the diversification of our operating model.

Stephen Cootey: Turning to our non-gaming operations, our hotel and food and beverage divisions delivered a strong revenue quarter, reflecting healthy underlying demand across both businesses and the diversification of our operating model. During the quarter, Green Valley Ranch hotel renovation reduced the available room night inventory by more than 21,000 room nights, impacting both revenue and profitability across both divisions. Even with this temporary disruption, hotel performance remained solid, supported by higher occupancy across the portfolio, while our food and beverage division benefited from higher guest volumes and higher check averages. We look forward to once again offering our guests the full Green Valley Ranch hotel product beginning in late September. As we look ahead to the balance of the year, we are seeing stable trends in our core slot and table business across the Las Vegas locals market and within our carded database.

Speaker #3: During the quarter, Green Valley Ranch Hotel renovation reduced the available room night inventory by more than 21,000 room nights. Impacting both revenue and profitability across both divisions.

Speaker #3: Even with this temporary disruption, hotel performance remained solid, supported by higher occupancy across the portfolio, while our food and beverage division benefited from higher guest volumes and higher check averages.

Speaker #3: We look forward to once again offering our guests the full Green Valley Ranch Hotel product beginning in late September. As we look ahead to the balance of the year, we are seeing stable trends in our core slot and table business across the Las Vegas locals market and within our carded database.

Stephen Cootey: We look forward to once again offering our guests the full Green Valley Ranch hotel product beginning in late September. As we look ahead to the balance of the year, we are seeing stable trends in our core slot and table business across the Las Vegas locals market and within our carded database.

Speaker #3: While we expect ongoing disruption from construction activity at our Durango Sunset Station and Green Valley Ranch properties, we are actively managing these projects to minimize operational disruption.

Stephen Cootey: While we expect ongoing disruption from construction activity at our Durango, Sunset Station, and Green Valley Ranch properties, we are actively managing these projects to minimize operational disruption. We believe these temporary disruptions are more than offset by the long-term benefits of these investments, which will enhance the guest experience, strengthen our competitive position, and drive long-term shareholder value. Now let's cover a few balance sheet and capital items. The company's cash and cash equivalents at the end of Q2 was $136.5 million, and the total principal amount of debt outstanding was $3.6 billion, resulting in net debt of $3.5 billion. As of the end of the quarter, the company's net debt to EBITDA ratio was 4.21 times. During the quarter, we made total distributions of approximately $59 million to the LLC unit holders of Station Holdco, including a distribution of approximately $34.5 million to Red Rock Resorts.

Speaker #3: We believe these temporary disruptions are more than offset by the long-term benefits of these investments, which will enhance the guest experience and strengthen our competitive position and drive long-term shareholder value.

Speaker #3: 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 $136.5 million and the total principal amount of debt outstanding was $3.6 billion, resulting in net debt of $3.5 billion.

Speaker #3: As of the end of the quarter, the company's net debt to EBITDA ratio was 4.21 times. During the quarter, we made total distributions of approximately $59 million to the LLC unitholders of Station HOCO, including a distribution of approximately $34.5 million to Red Rock Resorts.

Stephen Cootey: As of the end of the quarter, the company's net debt to EBITDA ratio was 4.21 times. During the quarter, we made total distributions of approximately $59 million to the LLC unit holders of Station Holdco, including a distribution of approximately $34.5 million to Red Rock Resorts.

Speaker #3: The company used its portion of the distribution to fund its previously declared quarterly dividend of $26 per class A common share. When combining the dividends and share repurchases made during the year, we have returned approximately $198 million to our shareholders.

Stephen Cootey: The company used its portion of the distribution to fund its previously declared quarterly dividend of $0.26 per Class A common share. When combining the dividends and share repurchases made during the year, we have returned approximately $198 million to our shareholders. Capital spend in the quarter was $139.8 million, which includes approximately $94.4 million in investment capital, as well as $45.4 million in maintenance capital. This brings our year-to-date capital spend to $257 million, which includes approximately $181.6 million in investment capital, as well as $75.4 million in maintenance capital. For the full year 2026, we still expect to spend between $375 to 425 million, which includes $275 to 300 million in investment capital, as well as $100 to 125 million in maintenance capital. In addition to the continued investment at Durango, we are making significant investments at our Sunset Station and Green Valley Ranch properties.

Speaker #3: Capital spend in the quarter was $139.8 million, which includes approximately $94.4 million in investment capital and $45.4 million in maintenance capital. This brings our year-to-date capital spend to $257 million, which includes approximately $181.6 million in investment capital and $75.4 million in maintenance capital.

Speaker #3: For the full year 2026, we still expect to spend between $375 and $425 million which includes $275 to $300 million in investment capital, as well as $100 to $125 million in maintenance capital.

Stephen Cootey: For the full year 2026, we still expect to spend between $375 to 425 million, which includes $275 to 300 million in investment capital, as well as $100 to 125 million in maintenance capital. In addition to the continued investment at Durango, we are making significant investments at our Sunset Station and Green Valley Ranch properties.

Speaker #3: In addition to the continued investment at Durango, we are making significant investments at our Sunset Station and Green Valley Ranch properties. At Sunset Station, we continue to make excellent progress on our podium refresh.

Stephen Cootey: At Sunset Station, we continue to make excellent progress on our podium refresh. The recently reopened Gaudi Bar has been met with positive customer feedback, and we are very encouraged by its early financial performance, reinforcing our confidence in both the renovation strategy and the underlying demand at the property. In the coming weeks, we look forward to opening Stoney Country, a new country western bar and nightclub, which will further expand the property's entertainment offerings. The renovation remains on budget with the remaining amenities expected to come online throughout 2026. Building on this momentum, we continue to execute the next phase of Sunset Station redevelopment. This phase includes enhancements to the movie theaters, the relocation of the temporary bingo operation into a permanent location, and the redevelopment of the former buffet space into a premium steak club, steakhouse, and high-limit slot and table game area.

Speaker #3: The recently reopened Gaudy Bar has been met with positive customer feedback, and we are very encouraged by its early financial performance, reinforcing our confidence in both the renovation strategy and the underlying demand at the property.

Speaker #3: In the coming weeks, we look forward to opening Stony's Rock 'n' Country, a new country western bar and nightclub, which will further expand the property's entertainment offerings.

Speaker #3: The renovation remains on budget, with the remaining amenities expected to come online throughout 2026. Building on this momentum, we continue to execute the next phase of Sunset Station redevelopment.

Stephen Cootey: Building on this momentum, we continue to execute the next phase of Sunset Station redevelopment. This phase includes enhancements to the movie theaters, the relocation of the temporary bingo operation into a permanent location, and the redevelopment of the former buffet space into a premium steak club, steakhouse, and high-limit slot and table game area.

Speaker #3: This phase includes enhancements to the movie theaters, the relocation of the temporary bingo operation into a permanent location, and the redevelopment of the former buffet space into a premium steakhouse and high-limit slot and table game area.

Speaker #3: These investments build upon a proven strategy that is consistently generated attractive returns across our portfolio. Further strengthening our confidence in the long-term opportunity at Sunset Station.

Stephen Cootey: These investments build upon a proven strategy that has consistently generated attractive returns across our portfolio, further strengthening our confidence in the long-term opportunity at Sunset Station. Construction remains on schedule, with the balance of the project expected to be completed throughout 2026 and into 2027. The total project cost remains $87 million. At Green Valley Ranch, we continue to make excellent progress on the comprehensive renovation of our hotel product. The West Tower and convention space have reopened to positive customer feedback and encouraging financial performance, validating our investment in the property. We expect to have the full East Tower Hotel product back online in September, completing the renovation of all of our guest rooms and suites.

Speaker #3: Construction remains on schedule, with the balance of the project expected to be completed throughout 2026 and into 2027. The total project cost remains at $87 million.

Speaker #3: At Green Valley Ranch, we continue to make excellent progress on the comprehensive renovation of our hotel product. The west tower and convention space have reopened to positive customer feedback and encouraging financial performance, validating our investment in the property.

Speaker #3: We expect to have the full East Tower hotel product back online in September, completing the renovation of all of our guest rooms and suites.

Speaker #3: On completion, Green Valley Ranch will feature one of the finest hotel products in the Las Vegas Valley, complementing the recently renovated high-limit slot and table game areas.

Stephen Cootey: On completion, Green Valley Ranch will feature one of the finest hotel products in the Las Vegas Valley, complementing the recently renovated high-limit slot and table game areas, and further strengthening its competitive position as one of Southern Nevada's premier integrated resorts. Building on this momentum of these investments, we continue to execute the next phase of Green Valley Ranch's long-term redevelopment strategy. This phase includes a comprehensive casino floor refresh, enhancements to its food and beverage offerings, and upgrading entertainment amenities. Construction is underway and is expected to extend into 2027, with the total project cost estimated at approximately $56 million. Turning to North Fork, construction continues to progress well as we move closer to opening. Last month, we successfully completed the turnover of the first phase of the casino podium and have begun installing slot machines and other gaming equipment.

Speaker #3: And further strengthening its competitive position as one of Southern Nevada's premier integrated resorts. Building on this momentum and these investments, we continue to execute the next phase of Green Valley Ranch's long-term redevelopment strategy.

Speaker #3: This phase includes a comprehensive casino floor refresh, enhancements to its food and beverage offerings, and upgrading entertainment amenities. Construction is underway and is expected to extend into 2027.

Stephen Cootey: Construction is underway and is expected to extend into 2027, with the total project cost estimated at approximately $56 million. Turning to North Fork, construction continues to progress well as we move closer to opening. Last month, we successfully completed the turnover of the first phase of the casino podium and have begun installing slot machines and other gaming equipment.

Speaker #3: With a total project cost estimated at approximately $56 million. Turning to NorthWork, construction continues to progress well as we move closer to opening. Last month, we successfully completed the turnover of the first phase of the casino podium and have begun installing slot machines and other gaming equipment.

Speaker #3: We expect turnover of the next phase of the podium later this month. Keep us on pace for an early fourth quarter of 2026 opening.

Stephen Cootey: We expect turnover of the next phase of the podium later this month, to keep us on pace for an early Q4 of 2026 opening. The project remains on budget and is fully financed, with total all-in costs expected to remain approximately $750 million. As of quarter end, the Red Rock Resorts' outstanding note receivable from the tribe was approximately $83.4 million. With construction progressing well and the project moving into its operational readiness phase, we remain excited about this best-in-class development and look forward to welcoming our first guests later this year. The company's board of directors has also declared its regular cash dividend of $0.26 per Class A common share, payable on 30 September to Class A shareholders of record as of 15 September. As we look ahead, we remain confident in the strength and resilience of our business model and long-term opportunities across our portfolio.

Speaker #3: The project remains on budget and is fully financed, with total all-in costs expected to remain at approximately $750 million. As of quarter end, Red Rock's outstanding note receivable from the Tribe was approximately $83.4 million.

Speaker #3: With construction progressing well and the project moving into its operational readiness phase, we remain excited about this best-in-class development and look forward to welcoming our first guests later this year.

Speaker #3: The company's board of directors has also declared its regular cash dividend of $26 per Class A common share, payable on September 30 to Class A shareholders of record as of September 15.

Stephen Cootey: The company's board of directors has also declared its regular cash dividend of $0.26 per Class A common share, payable on 30 September to Class A shareholders of record as of 15 September. As we look ahead, we remain confident in the strength and resilience of our business model and long-term opportunities across our portfolio.

Speaker #3: As we look ahead, we remain confident in the strength and resilience of our business model and the long-term opportunities across our portfolio. Our recent capital investments continue to perform well, reinforcing our disciplined approach to reinvesting in our existing properties while advancing our development pipeline.

Stephen Cootey: Our recent capital investments continue to perform well, reinforcing our disciplined approach to reinvesting in our existing properties while advancing our development pipeline. The continued success at Durango validates our long-term growth strategy and the embedded value of our more than 450 acres of owned development land located in some of the most attractive submarkets across the Las Vegas Valley. Combined with our portfolio of best-in-class assets, this unmatched development pipeline positions us to capitalize on the very favorable demographic trends and high barriers to entry that continue to define the Las Vegas locals market. Before we wrap up, we would like to sincerely thank all of our team members for their continued hard work, dedication, and commitment to delivering exceptional guest experiences every day. They are the foundation of our company's success and the driving force behind the results we continue to achieve.

Speaker #3: The continued success at Durango validates our long-term growth strategy and the embedded value of our more than 450 acres of owned development land, located in some of the most attractive submarkets across the Las Vegas Valley.

Speaker #3: Combined with our portfolio of best-in-class assets, this unmatched development pipeline positions us to capitalize on the very favorable demographic trends and high barriers to entry that continue to define the Las Vegas locals’ market.

Speaker #3: And before we wrap up, we'd like to sincerely thank all of our team members for their continued hard work, dedication, and commitment to delivering exceptional guest experiences every day.

Stephen Cootey: Before we wrap up, we would like to sincerely thank all of our team members for their continued hard work, dedication, and commitment to delivering exceptional guest experiences every day. They are the foundation of our company's success and the driving force behind the results we continue to achieve.

Speaker #3: They are the foundation of our company's success and the driving force behind the results we continue to achieve. Their efforts continue to be recognized both locally and nationally.

Stephen Cootey: Their efforts continue to be recognized both locally and nationally. During the year, Station Casinos was recognized by Forbes and Statista as one of America's best large employers of 2026, by Newsweek as one of America's greatest workplaces by state for the second consecutive year, as a top workplace in Nevada for the sixth consecutive year, and as a USA Today top workplace for the fourth consecutive year. Finally, as we celebrate our 50th anniversary, we want to extend our sincere gratitude to our loyal guests and the communities we have proudly served over the past five decades. Their trust and support has made this milestone possible. As we look to the future, we remain committed to investing in our team members, our properties, and our communities as we continue building on the foundation established over the past 50 years.

Speaker #3: During the year Station casinos was recognized by Forbes and Cicita, as one of America's best large employers in 2026, by Newsweek, as one of America's greatest workplaces by state for the second consecutive year, as a top workplace in Nevada for the sixth consecutive year, and as a USA Today top workplace for the fourth consecutive year.

Speaker #3: Finally, as we celebrate our 50th anniversary, we want to extend our sincere gratitude to our loyal guests and the communities we have proudly served over the past five decades.

Speaker #3: Their trust and support has made this milestone possible. As we look to the future, we remain committed to investing in our team members, our properties, and our communities as we continue building on the foundation established over the past 50 years.

Stephen Cootey: Their trust and support has made this milestone possible. As we look to the future, we remain committed to investing in our team members, our properties, and our communities as we continue building on the foundation established over the past 50 years. With that, operator, we would like to be happy to open the line for questions.

Speaker #3: With that operator, we'd like to be happy to open the line for questions.

Stephen Cootey: With that, operator, we would like to be happy to open the line for questions.

Speaker #1: We will now begin the question and answer session. To ask a question, you may press star, then one, on your touchstone phone. If you are using a speakerphone, please pick up your handset before pressing the keys.

Operator 2: We will now begin the question and answer session. To ask a question, you may press star then one on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. The first question today comes from Ben Chaiken with Mizuho. Please go ahead.

Operator: We will now begin the question and answer session. To ask a question, you may press star then one on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. The first question today comes from Ben Chaiken with Mizuho. Please go ahead.

Speaker #1: If at any time your question has been addressed and you would like to withdraw your question, please press star, then two. At this time, we will pause momentarily to assemble our roster.

Speaker #1: The first question today comes from Ben Chiken with Mizuho. Please go ahead.

Speaker #3: Hey, how's it going? Thanks for taking my questions. Maybe, if you could, just take us through the cadence of the quarter, to the extent you can.

Ben Chaiken: Hey, how's it going? Thanks for taking my questions. Maybe if you could just take us through the cadence of the quarter to the extent you can. I think we had heard that maybe June was potentially softer in Las Vegas. Not sure if that's calendar related or maybe anything underlying, just maybe what you're seeing to the extent you can break it down. Thank you.

Speaker #3: I think we had heard that maybe June was potentially softer in Las Vegas. Not sure if that's calendar related or maybe anything underlying. Just maybe what you're seeing to the extent you can break it down.

Speaker #3: Thank you.

Speaker #4: Hey, Ben. This is Scott. Thanks for the question. Let's start with slot revenue, which for us is our primary source and most of our business. Actually, we were very consistent across all three months of the quarter.

Scott Kreeger: Hey, Ben. This is Scott. Thanks for the question. Let's start with slot revenue, which for us is our primary source and most important aspect of our business. Actually, we are very consistent across all three months of the quarter. If you look at into April was definitely better than May and June, but only by a certain amount of whole percentage difference in race and sportsbook and table games, but otherwise pretty consistent across the quarter.

Speaker #4: And then, if you look into April, it was definitely better than May and June, but only by a certain amount of hold percentage difference in race, sportsbook, and table games.

Speaker #4: But otherwise, pretty consistent across the quarter.

Speaker #3: We actually got quite a pickup from the World Cup in June. Our properties really leaned into activation and promotion for the event, and drove a lot of bodies in overall.

Lorenzo Fertitta: We actually got quite a pickup from the World Cup in June. Our properties really leaned into activation and promotion for the event, drove a lot of bodies, and overall, I think it helped June from a traffic standpoint. It was positive.

Speaker #3: It was—I think it helped June from a traffic standpoint, so it was positive. Understood. That's very helpful. And then maybe just from a modeling standpoint, question—we'd love to touch on seasonality.

Ben Chaiken: Understood. That's very helpful. Maybe just from a modeling standpoint question, would love to touch on seasonality. Just as we sit here today, what's your best take on Q3, at least historically? Thanks.

Speaker #3: Just as we sit here today, what's your best take on 3Q, at least historically? Thanks.

Speaker #2: Yeah, thanks, Ben. I'm looking forward to typically from Q2 to Q3, season at Q3 being one of our softer quarters, usually you're down 10% from Q2 to Q3.

Stephen Cootey: Yeah. Thanks, Ben. Looking forward, typically from Q2 to Q3 being one of our softer quarters, usually you're down 10% from Q2 to Q3.

Ben Chaiken: Appreciate it. Thanks.

Speaker #3: Appreciate it. Thanks.

Speaker #1: The next question comes from Trey Bowers with Wells Fargo. Please go ahead.

Operator 2: The next question comes from Trey Bowers with Wells Fargo. Please go ahead.

Operator: The next question comes from Trey Bowers with Wells Fargo. Please go ahead.

Speaker #5: Hey, guys. Thanks for the question. Just wondering if you guys in the past have given some helpful detail around kind of the numeric impact of the disruption as we think about Q2, and then kind of making our way through the balance of the year as some of these projects kind of finish up and come online.

Trey Bowers: Hey, guys. Thanks for the question. Just wondering if you guys in the past have given some helpful detail around the numeric impact of the disruption. As we think about Q2 and then making our way through the balance of the year as some of these projects finish up and come online, any sense of just the impact in Q2 relative to Q1, and then what it might look like for the next couple of quarters? Thanks.

Speaker #5: Any sense of just the impact in Q2 relative to Q1, and then what it might look like for the next couple of quarters? Thanks.

Speaker #2: Yeah, sure. I think the team did a great job managing disruption both on-site at our Green Valley Ranch Sunset Station in Durango properties, as well as off-site.

Stephen Cootey: Yeah, sure. I think the team did a great job managing disruption both on-site at our Green Valley Ranch, Sunset Station, and Durango properties, as well as off-site, as NDOT is engaged in a pretty substantial infrastructure projects near several of our properties, including Durango, Green Valley, and Red Rock. While estimating disruption is never really an exact science, we did experience temporary disruption at Green Valley, to the extent about $7 million, which was slightly lower than the $9 million we have announced on our last earnings call. It was driven really by the primary loss of the 21,000 room nights, as well as the associated gaming, food and beverage revenue at the property. Durango, the team did a great job managing disruption. We really did not see too much disruption in Q2, still stick to our guidance as construction both on-site and off-site is progressing.

Speaker #2: As NDOT is engaged in a pretty substantial infrastructure projects across several of our properties, including Durango, Green Valley, and Red Rock. Well, estimating disruption is never really an exact science.

Speaker #2: We did experience temporary disruption at Green Valley, to the extent about $7 million which was slightly lower than the $9 million we have announced in our last earnings call.

Speaker #2: And it was driven really by the primary loss of the 21,000 room nights as well as the associated gaming, food, and beverage revenue at the property.

Stephen Cootey: It was driven really by the primary loss of the 21,000 room nights, as well as the associated gaming, food and beverage revenue at the property. Durango, the team did a great job managing disruption. We really did not see too much disruption in Q2, still stick to our guidance as construction both on-site and off-site is progressing.

Speaker #2: Durango, the team did a great job managing disruption. We really did not see too much disruption in Q2, but still stick to our guidances.

Speaker #2: Construction, both on-site and off-site, has kind of progressing. And so we're still guiding about two and a half million dollars in Q3, and then each quarter subsequent to the project completes in the back half of 2027.

Stephen Cootey: We're still guiding about $2.5 million in Q3, then each quarter subsequent to the project completes in the back half of 2027. I did want to remind everyone, by the way, that these impacts are temporary in nature, they're more than offset by the long-term benefits of the investments that we're making.

Speaker #2: I did want to remind everyone, by the way, that these impacts are temporary in nature, and they're more than offset by the long-term benefits of the investments that we're making.

Speaker #5: And then if I could just get a follow-up, appreciate the call-out of the $8 million impact from the 50th anniversary. This quarter, just offsetting that, anything that we should expect to see kind of from a top-line perspective, or just any further detail on what that means from the model that'd be super helpful.

Trey Bowers: If I could just get a follow-up. Appreciate the call out of the $8 million impact from the 50th anniversary this quarter. Offsetting that, anything that we should expect to see from a top-line perspective or just any further detail on what that means from the model? That'd be super helpful. Thank you.

Speaker #5: Thank

Speaker #5: you.

Speaker #4: Well, I think this, Scott, I think certainly there's a good degree of brand awareness and goodwill that comes into what we're doing here. We're part of the community, and being out in the community with the message is certainly going to have a positive impact.

Scott Kreeger: Well, this is Scott. I think certainly there's a good degree of brand awareness and goodwill that comes into what we're doing here. We're part of the community, being out in the community with the message is certainly going to have a positive impact going forward. I can tell you, looking at the quarter thus far, we're happy with the way things are going. If we stay on this track, I would imagine there is a net positive effect from it, from the top line.

Speaker #4: Going forward, I can tell you looking at the quarter thus far, we're happy with the way things are

Speaker #4: would imagine there is a net positive effect from the top line.

Speaker #5: Great. Thanks, all.

Trey Bowers: Great. Thanks, all.

Speaker #1: The next question comes from Chad Bannon with Macquarie. Please go ahead.

Operator 2: The next question comes from Chad Beynon with Macquarie. Please go ahead.

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

Speaker #3: Hey, good afternoon. This is Aaron Onford Chad. Thank you for taking our question. Maybe to start with just a higher-level question. We continue to hear about the C-shaped economy versus the K-shaped economy.

[Analyst] (Macquarie): Hey, good afternoon. This is Aaron on for Chad. Thank you for taking our question. Maybe to start with just a higher-level question. We continue to hear about the C-shaped economy versus the K-shaped economy. Are you seeing any notable differences in visitation or spend between your lower worth and higher worth customers?

Speaker #3: Are you seeing any notable differences in visitation or spend between your lower-worth and higher-worth customers?

Speaker #2: No, actually. I mean, I think as I mentioned, the trends are pretty stable across our entire business, both slots and tables. And that stems to, I think, both from a high-end to low-end customers.

Stephen Cootey: No, actually, I think as I've mentioned, the trends are pretty stable across our entire business, both slots and tables. That stems to, I think, both from a high-end to low-end customers.

Speaker #3: Okay, gotcha. Great to hear you guys did well on the World Cup. Just kind of sticking with the event theme, the third F1 Las Vegas race is coming up, and I know in the past you've said that F1 isn't really an event for your company.

[Analyst] (Macquarie): Okay. Gotcha. Great to hear you guys did well on the World Cup. Just sticking on the event theme. The third F1 Las Vegas race is coming up, and I know in the past you've said that F1 isn't really an event for your company. Just curious if that's still the case or maybe if the programming around it or the understanding of visitation and customer behavior has changed where there could be some opportunities for you guys. Thanks.

Speaker #3: So, just curious if that's still the case, or maybe if the programming around it, or the understanding of visitation and customer behavior, has changed—where there could be some opportunities for you guys.

Speaker #3: Thanks.

Speaker #2: Yeah, as Lorenzo said, the F1 event in Las Vegas is primarily tourist-driven, as we see it. You don't get a lot of rallying behind it from a local's perspective.

Lorenzo Fertitta: Yeah. This is Lorenzo. The F1 event in Las Vegas is primarily tourist-driven as we see it. You don't get a lot of rallying behind it from a locals perspective. The World Cup worked for us because the local fans were really into it. Obviously, with the different countries participating, depending on what game was going on, our sports books were just billowing with people all over. It was actually very positive, like I said, from a traffic standpoint. For us specifically, F1 doesn't really move the needle at all, and we don't really lean into anything relative to participation and promotion. My understanding is it's obviously very good for the higher-end properties on the Las Vegas Strip, though, so.

Speaker #2: The World Cup worked for us because the local fans were really into it. Obviously, with the different countries participating, depending on what game was going on—I mean, our sportsbooks were just billowing with people all over.

Speaker #2: It was actually very, very positive, like I said, from a traffic standpoint. But for us specifically, F1 doesn't really move the needle at all.

Speaker #2: And we don't really lean into anything relative to participation or promotion. My understanding is it's obviously very good for the higher-end properties on the Las Vegas Strip, though, so.

Speaker #3: Okay. Thank you. Next quarter.

[Analyst] (Macquarie): Okay. Thank you. Next quarter.

Speaker #1: The next question comes from Joe Stoffs with Susquehanna. Please go ahead.

Operator 2: The next question comes from Joseph Stauff with Susquehanna. Please go ahead.

Operator: The next question comes from Joseph Stauff with Susquehanna. Please go ahead.

Speaker #3: Thanks. I was wondering, if you could give maybe an assessment of the level of demand you're seeing or you saw in the second quarter and what you're seeing thus far, as far as you can see it, for destination and regional demand?

Joseph Stauff: Thanks. I was wondering if you could give maybe an assessment of the level of demand you're seeing or you saw in the second quarter and what you're seeing thus far, as far as you can see it, for destination and regional demand. Maybe an update with respect to the roadwork and all the things that the state is doing in and around the Durango property. Is it worsening? Is it the same as, let's say, it was a month or two ago? Just trying to assess that level of disruption there.

Joe Stauff: Thanks. I was wondering if you could give maybe an assessment of the level of demand you're seeing or you saw in the second quarter and what you're seeing thus far, as far as you can see it, for destination and regional demand. Maybe an update with respect to the roadwork and all the things that the state is doing in and around the Durango property. Is it worsening? Is it the same as, let's say, it was a month or two ago? Just trying to assess that level of disruption there.

Speaker #3: And then maybe an update with respect to the road work and all the things that the state is doing in and around the Durango property.

Speaker #3: Is it worsening? Is it the same as, let's say it was a month or two ago, just trying to assess that level of disruption there?

Speaker #4: Yeah, Joe, Scott, I'll take the first question and leave it up to maybe Steve to talk about the second. If I were to gauge demand, I'd look at kind of two areas.

Scott Kreeger: Yeah, Joe, it's Scott. I'll take the first question and leave it up to maybe Steve to talk about the second. If I were to gauge demand, I'd look at two areas, inbound gaming and then inbound hotel. We like the way the database and the customer segments performed in the quarter. We like what we're seeing in July and into the future relative to the gaming database. Specifically our regional, which is essentially drive market and out of town, which is fly market. We see positive trends there. From a hotel perspective, X the GVR, the impact of having about 21,000 rooms out in the quarter from GVR. The same store hotel performed very well for the quarter, Q2. We like the trends there. We like the trends in occupancy, ADR. We outpaced the Strip from an ADR perspective.

Speaker #4: Inbound gaming and then inbound hotel. Would you like the way the database and the customer segments performed in the quarter? Would you like what we're seeing in July and into the future relative to the gaming database?

Speaker #4: And specifically, our regional, which is essentially drive market and out-of-town, which is fly market. So we see positive trends there. From a hotel perspective, X the GDR, the impact of having about 21,000 rooms out in the quarter from GDR, the hotel same-store hotel performed very well for the quarter.

Speaker #4: For the second quarter, we like the trends there. We like the trends in occupancy and ADR. We outpaced the Strip from an ADR perspective, and then as we look into the future into Q3 and look at forward group sales bookings, we see green shoots and positive performance.

Scott Kreeger: As we look into the future into Q3, and then look at forward group sales bookings, we see green shoots and positive performance. Keeping in mind that the GVR rooms are going to come online in mid-September, and that's really going to put wind in the sails for us from a destination perspective.

Speaker #4: Keeping in mind that the GDR rooms are going to come online in mid-September, and that's really going to put wind in the sails for us from a perspective.

Speaker #2: Sure. Maybe to tackle the second question, Joe. I mean, in terms of this probably three or four items that are going on right now around Durango.

Stephen Cootey: Sure. Maybe to tackle the second question, Joe. There's probably three or four items that are going on right now around Durango. From a Roy Horn Way perspective, that was the construction we talked about earlier this year. That has been since completed. That was the connection, really the infrastructure connectivity into the multifamily development that's going up right next to Durango. Both the westbound on-ramp, eastbound on-ramp are kicking off actually in June of 2026 and expected to last pretty much the next year, as well as the triple left on Durango South. Three of the major infrastructure projects are just kicking off.

Speaker #2: So from a Roy Horn perspective, that was the construction we talked about earlier this year. That has been since completed. That was the connection, really, the infrastructure connectivity into the multifamily development that's going up right next to Durango.

Speaker #2: But both the westbound on-ramp and eastbound on-ramp are kicking off, actually, in June of '26 and are expected to last pretty much the next year, as well as the triple left on Durango South.

Speaker #2: So three of the major infrastructure projects are just kicking off.

Speaker #3: Got it.

Joseph Stauff: Got it.

Joe Stauff: Got it.

Speaker #2: And the same thing at Red Rock, as well as in Greenbound Valley. Yes.

Stephen Cootey: The same thing at Red Rock as well as in Green Valley. Yes.

Speaker #3: Yeah. And in the incremental $8 million that you're spending, just for clarification, if you're kicking off a marketing campaign, is it fair to say that some level of spending might stick in that corporate line and, say, in fourth quarter, out to maintain that marketing campaign to some degree?

Joseph Stauff: Yeah. The incremental $8 million that you're spending, just for clarification, if you're kicking off a marketing campaign, is it fair to say that some level of spending might stick in that corporate line, say, in Q4 out to maintain that marketing campaign to some degree?

Joe Stauff: Yeah. The incremental $8 million that you're spending, just for clarification, if you're kicking off a marketing campaign, is it fair to say that some level of spending might stick in that corporate line, say, in Q4 out to maintain that marketing campaign to some degree?

Lorenzo Fertitta: If you're referring to the $8 million. Look, me and Frank, it started as a family business. The business has been around for 50 years. We thought that the anniversary was a great opportunity for us to kick off so-called a branding campaign, to reinforce our position in the market here, in the locals market, a market that was really created by our dad. We just felt like that it was the perfect point to kick something like that off. We've had a ton of good feedback. There's been a lot of media coverage and PR and earned media as well, along with the media spend that we have in the marketplace around the brand campaign, which also right now is featuring a lot of our long-term team members, some of which have been with us almost 50 years.

Speaker #2: If you're referring to the $8 million, I mean, look, me and Frank, it started as a family business. We've been the business has been around for 50 years.

Speaker #2: We thought that the anniversary was a great opportunity for us to kick off so-called branding campaign to reinforce our position in the market here, in the locals' market, a market that was really created by our dad and we just felt like that it was the perfect point to kick something like that off.

Speaker #2: We've had a ton of good feedback. There's been a lot of media coverage and PR and earned media as well along with the media spend that we have and the marketplace around the brand campaign, which also right now is featuring a lot of our long-term team members, some of which have been with us almost 50 years.

Speaker #2: So look, we think that we're going to get benefit from this for a lot of years to come. We've done this in the past.

Lorenzo Fertitta: Look, we think that we're going to get benefit from this for a lot of years to come. We've done this in the past. We've had a number of different brand campaigns from We Love Locals to, we've been doing it for a long time, and we just felt like it made sense to do it around the 50th anniversary. Look, they do cost money, and it is a charge that's going to hit the quarter in Q3, but overall, we think it's the right thing to do for the long-term benefit of the business.

Speaker #2: We've had a number of different brand campaigns, from 'We Love Locals' to 'We've Been Doing It For a Long Time,' and we just felt like it made sense to do it around the 50th anniversary.

Speaker #2: Look, they do cost money, and it is a charge. That's going to hit the quarter. In the third quarter, but overall, we think it's the right thing to do for the long-term benefit of the business.

Speaker #3: Makes sense. Thank you.

Joseph Stauff: Makes sense. Thank you.

Joe Stauff: Makes sense. Thank you.

Speaker #1: The next question comes from Steve Pizzella with Deutsche Bank. Please go ahead.

Operator 2: The next question comes from Steven Pizzella with Deutsche Bank. Please go ahead.

Operator: The next question comes from Steven Pizzella with Deutsche Bank. Please go ahead.

Speaker #5: Hey, good afternoon, everybody, and thank you for taking our questions. As some of the ROI projects come back online and start contributing, how should we think about how fast the ROI projects ramp as we build a bridge in our models into 2027?

Steven Pizzella: Hey, good afternoon, everybody, and thank you for taking our questions. As some of the ROI projects come back online and start contributing, how should we think about how fast the ROI projects ramp as we build a bridge in our models into 2027?

Steve Pizzella: Hey, good afternoon, everybody, and thank you for taking our questions. As some of the ROI projects come back online and start contributing, how should we think about how fast the ROI projects ramp as we build a bridge in our models into 2027?

Speaker #2: I think we've always been pretty consistent in terms of targeting these projects over a three-year lifespan. So, the first year generally is around 10%.

Stephen Cootey: I think we've always been pretty consistent in terms of targeting these projects over a three-year lifespan. The first year generally is around 10%. The first project, the major project coming online is really the Green Valley, which should be online as of Q4.

Speaker #2: The first project, the major project coming online is really the Green Valley, which should be online as of Q4.

Speaker #5: Okay, thanks. And just as a follow-up, have you seen any impact from the strip operators becoming more aggressive on value including all-inclusive offerings and promotional packages?

Steven Pizzella: Okay, thanks. Just as a follow-up, have you seen any impact from the Strip operators becoming more aggressive on value, including all-inclusive offerings and promotional packages, or has demand in the locals market remained largely insulated?

Steve Pizzella: Okay, thanks. Just as a follow-up, have you seen any impact from the Strip operators becoming more aggressive on value, including all-inclusive offerings and promotional packages, or has demand in the locals market remained largely insulated?

Speaker #5: Or has demand in the locals' market remained largely insulated?

Speaker #4: Hey, Steve, this is Scott. First of all, we love what the strip did this summer by kind of offering an all-inclusive, if you will, for value packages.

Scott Kreeger: Hey, Steve, this is Scott. First of all, we love what the Strip did this summer by kind of offering an all approach, if you will, for value packages. I think it only helps the city. We provide value every day. It's in the core of what we do. Our model is a high-frequency model. We make sure that value is relative. Value isn't just about price.

Speaker #4: I think it only helps the city. We provide value every day—it's at the core of what we do. Our model is a high-frequency model.

Speaker #4: So we make sure that but value is relative. Value isn't just about price.

Speaker #2: Yeah, it's based on convenience. Value and friendly service the fact that our employees know our customers, there's a relationship there. We've kind of been asked this question literally ever since we went public the first time in 1993.

Joseph Stauff: Yeah. It's based on convenience.

Frank Fertitta: Yeah. It's based on convenience.

Frank Fertitta III: Value and friendly service. The fact that our employees know our customers, there's a relationship there. We've kind of been asked this question literally ever since we went public the first time in 1993. It's the same thing. The locals want to be at a convenient, value-oriented place that is consistently delivering to them what they want. No, I don't believe that we've seen any impact on us as a company from that, but I do think it is good for the Strip long term to offer value to their customers. Net-net, it should long term be good.

Frank Fertitta: Value and friendly service. The fact that our employees know our customers, there's a relationship there. We've kind of been asked this question literally ever since we went public the first time in 1993. It's the same thing. The locals want to be at a convenient, value-oriented place that is consistently delivering to them what they want. No, I don't believe that we've seen any impact on us as a company from that, but I do think it is good for the Strip long term to offer value to their customers. Net-net, it should long term be good.

Speaker #2: It's the same thing. The locals want to be at a convenient, value-oriented place that is consistently delivering to them what they want. And so, no, I don't believe that we've seen any impact on us as a company from that.

Speaker #2: But I do think it is good for the strip long-term to offer value to their customers. So net-net it should long-term be good.

Speaker #5: Thank you. I appreciate it.

Steven Pizzella: Thank you. I appreciate it.

Steve Pizzella: Thank you. I appreciate it.

Speaker #1: The next question comes from David Katz with Jefferies. Please go ahead.

Operator 2: The next question comes from David Katz with Jefferies. Please go ahead.

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

Speaker #6: Hi. Hi, afternoon, everybody. First, I wanted to looking ahead seeing a lot of these projects sort of getting to their final stages and in good form.

David Katz: Hi. Hi. Afternoon, everybody. First, looking ahead, seeing a lot of these projects sort of getting to their final stages and in good form. How soon might we be talking about the next casino project, and where it would be and, we're just anxious to start modeling that stuff in, too.

Speaker #6: How soon might we be talking about kind of the next casino project? And where it would be and we're just anxious to start modeling that stuff into.

Speaker #2: Sure. This is Lorenzo. I think, consistent with what we have been talking about the last couple of quarters, we're currently working on multiple projects from a design standpoint—both new build and greenfield projects.

Lorenzo Fertitta: Sure. This is Lorenzo. I think consistent with what we have been talking about the last couple of quarters, we're currently working on multiple projects from a design standpoint. Both new build greenfield projects, we've got two that we're actively working on right now, and we're going to have to figure out and determine which one is going to go first. As well as a master plan expansion we've been working on to add rooms and a spa facility at Durango. Obviously, on the heels of, potentially after opening this North Fork

Speaker #2: We've got two that we're actively working on right now, and we're going to have to figure out and determine which one is going to go first, as well as a master-planned expansion.

Speaker #2: We've been working on to add rooms and a spa facility at Durango. Obviously, on the heels of after potentially after opening this north expansion that we have going on now, which has all the different entertainment components.

David Katz: North

Frank Fertitta: North

Lorenzo Fertitta: expansion that we have going on now, which has all the different entertainment components. We're currently working with multiple GCs out in the market to determine pricing as we have, for the most part, kind of decided on scope of the various projects. Right now we're kind of actively trying to get our head around where pricing could potentially come up and whether or not we need to make any changes to design or VE anything. We're just working through it. We're hoping to have more information as we kind of turn the corner and get into the early part of 2027. Believe me, we're as anxious as anybody to get going with another project. We're a development company. We've had our best success by building projects from the ground up.

Speaker #2: We're currently working with multiple GCs out in the market to determine pricing, as we have, for the most part, kind of decided on the scope of the various projects.

Speaker #2: So right now, we're kind of actively trying to get our head around where pricing could potentially come up and whether or not we need to make any changes to design or VE anything.

Speaker #2: And we're just working through it. We're hoping to have more information as we kind of turn the corner and get into the early part of 2027, and believe me, we're as anxious as anybody to get going with another project. We're a development company; we've had our best success by building projects from the ground up.

Speaker #2: We've been able to have some of the highest returns in the gaming industry. By doing that and obviously off the success we've had with Durango, we're anxious and ready to go, but these things just take time to gestate and got to kind of slot them in at the right time.

Lorenzo Fertitta: We've been able to have some of the highest returns in the gaming industry by doing that. Obviously, off the success we've had with Durango, we're anxious and ready to go. These things just take time to gestate, and you got to kind of slot them in at the right time. We're actively working on it, and we'll have more news to come shortly.

Speaker #2: But we're actively working on it, and we'll have more news to come shortly.

Speaker #6: I appreciate that. And as my follow-up, I just wanted to ask about the advent of major sports in the valley. Right? I mean, the A's are coming.

David Katz: Appreciate that. As my follow-up, I just wanted to ask about the advent of major sports in the Valley, right? I mean, the A's are coming. We heard some talk this quarter about an NBA facility which has been talked about for a while. What strategy, if any, makes sense in leaning into those major sports in the Valley and do you get any tangible benefit from it?

Speaker #6: We heard some talk this quarter about an NBA facility, which is been talked about for a while. What strategy, if any, makes sense in leading into those major sports in the valley?

Speaker #6: And do you get any tangible benefit from it?

Speaker #2: I think, I mean, I think there's a number of different benefits we get. Obviously, there is a lot of interest as these professional teams come to Las Vegas.

Lorenzo Fertitta: I think there's a number of different benefits we get. Obviously, there is a lot of interest as these professional teams come to Las Vegas. They generate and draw a lot of fans, which helps the overall hotel room base for the city. For us specifically, we've had a lot of success partnering up with the Golden Knights. We do a lot of promotional activity around them. There's a large fan base and a lot of affinity for the Knights here. Obviously, the Raiders have been great as well.

Speaker #2: They generate and draw a lot of fans, which helps the overall hotel room base for the city. For us specifically, we've had a lot of success partnering up with the Golden Knights.

Speaker #2: We do a lot of promotional activity around them. There's a large fan base and a lot of affinity for the Golden Knights here. Obviously, the Raiders have been great as well.

Speaker #4: In the visiting teams wanting to stay at our properties.

Frank Fertitta III: The visiting teams want to stay at our properties.

Frank Fertitta: The visiting teams want to stay at our properties.

Speaker #2: Yeah, we do have a lot of the visiting NFL teams that stay at our properties. And I think you're going to see more of the same with the A's.

Lorenzo Fertitta: Yeah, we do have a lot of the visiting NFL teams that stay at our properties. I think you're going to see more of the same with the A's and potentially with an NBA franchise coming to Las Vegas. I think you start to get just that amount of heft and that amount of activity, Las Vegas is really turning into an events city. That's really what's driving a lot of these weekends is what's the big event, whether it's a major sporting event, a fight, entertainment, obviously. There always seems to be something going on and we benefit that.

Speaker #2: And potentially with an NBA franchise coming to Las Vegas. And I think you start to get just that amount of heft and that amount of activity.

Speaker #2: And Las Vegas is really turning into an events city. That's really what's driving a lot of these weekends is what's the big event, whether it's a major sporting event, a fight, entertainment, obviously.

Speaker #2: So there always seems to be something going on. We benefit that.

Frank Fertitta III: All of this critical mass is net-net going to be a positive.

Frank Fertitta: All of this critical mass is net-net going to be a positive.

Speaker #4: All the circle masses, net-net going to be a positive for the city of Las Vegas. Which we're a micro-cosm of the entire city and how it's doing.

Lorenzo Fertitta: Yeah

Frank Fertitta III: for the city of Las Vegas, which we're a microcosm of the entire city and how it's doing. It should be all good.

Frank Fertitta: for the city of Las Vegas, which we're a microcosm of the entire city and how it's doing. It should be all good. It helps our high-end play, too.

Speaker #2: And it helps our high-end play too. I mean, we get a lot of we're starting to develop a lot more robust business on our high-end table games play.

Lorenzo Fertitta: It helps our high-end play, too. I mean, we're starting to develop a lot more robust business on our high-end table games play. Anytime there's a large boxing event or UFC event, we see a lot of benefit from that. People flying in wanting to stay with us at Red Rock, Durango, and GVR. From a local guest standpoint, I think our casino marketing department does a good job taking a lot of our higher-end local guests to Golden Knights games and to Raiders games. Really just use them as the other casino properties do as a benefit and amenity to create brand loyalty and as a way to excite our guests about staying with us or playing with us. Overall, it's a big net benefit.

Lorenzo Fertitta: I mean, we're starting to develop a lot more robust business on our high-end table games play. Anytime there's a large boxing event or UFC event, we see a lot of benefit from that. People flying in wanting to stay with us at Red Rock, Durango, and GVR. From a local guest standpoint, I think our casino marketing department does a good job taking a lot of our higher-end local guests to Golden Knights games and to Raiders games. Really just use them as the other casino properties do as a benefit and amenity to create brand loyalty and as a way to excite our guests about staying with us or playing with us. Overall, it's a big net benefit.

Speaker #2: And anytime there's a large boxing event or UFC event, we see a lot of benefit from that. People flying in wanting to stay with us.

Speaker #2: At Red Rock Durango and GVR. And from a local guest standpoint, I think our casino marketing department does a good job taking a lot of our higher-end local guests to Golden Knights games and to Raider games.

Speaker #2: And really just use them as the other casino properties do. As in a benefit and amenity to create brand loyalty and as a way to excite our guests about staying with us or playing with us.

Speaker #2: So overall, it's just a big net benefit.

Speaker #6: I appreciate that. Thank you.

David Katz: Appreciate that. Thank you.

Speaker #1: The next question comes from Brant Montour with Barclays. Please go ahead.

Operator 2: The next question comes from Brandt Montour with Barclays. Please go ahead.

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

Speaker #7: Hey guys, it's Christian for Brant. Thanks for taking our question. Just as it relates to those next growth phases at GVR and Sunset that are coming online in 2026 and into 2027, what percent of those enhancing would you say would be coming online by year-end 2026?

[Analyst] (Barclays): Hey, guys. It's Christian for Brandt. Thanks for taking our question. As it relates to those next growth phases at GVR and Sunset that are coming online in 2026 and into 2027, what % of those enhancements would you say would be coming online by year-end 2026?

Speaker #2: In terms of the second piece, well, in terms of the majority, the first piece of Sunset will be coming online really the only remaining pieces of Letitious and Rosalita's, right?

Stephen Cootey: In terms of the second piece? Well, in terms of the majority of the first piece of Sunset will be coming online. Really the only real remaining pieces are Leticia's and Rosalita's, right? Those are the only two real remaining items. The rest of the items I can see coming online, maybe Bingo is going to be late this year, but then the rest of the remaining items will be 2027. From a Green Valley perspective, we're really focused on getting the hotel across the finish line. That's the asset that you're going to see placed in service in 2026, with the remainder coming online in 2027.

Speaker #2: Those are the only two real remaining items. The rest of the items, I can see coming online—maybe Bingo is going to be late this year—but then the rest of the remaining items will be 2027 from a Green Valley perspective.

Speaker #2: We're really focused on getting the hotel across the finish line. And so that's the asset that you're going to see placed in service in 2026 with the remainder coming online in 2027.

Speaker #7: Got it. Thank you. And just a clarification on the seasonality comments. Either in relation to 3Q, but more specifically 4Q, I know in the past you guys have said that's 4Q from 3Q is up 10 to 11 percent sequentially.

[Analyst] (Barclays): Got it. Thank you. A clarification on the seasonality comments, either in relationship to Q3, but more specifically Q4. I know in the past you guys have said that's Q4 from Q3 is up 10% to 11% sequentially. Is that a consolidated comment or is that specific Las Vegas operations?

Speaker #7: Is that a consolidated comment or is that specific to Las Vegas operations?

Speaker #2: Las Vegas operations, I think that's going to be a much more important distinction as we open up North Fork to our guests in Q4.

Stephen Cootey: Las Vegas operations. I think that's going to be a much more important distinction as we open up Northfork to our guests in Q4.

Speaker #7: Okay. Great. Thanks, guys, so much.

[Analyst] (Barclays): Okay, great. Thanks guys so much.

Speaker #1: The next question comes from Barry Jonas with Truist. Please go ahead.

Operator 2: The next question comes from Barry Jonas with Truist. Please go ahead.

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

[Analyst] (Truist): Hi, this is Jeremy on for Barry. Thanks for taking our questions. Can you talk about the promotional environment in the locals market right now and any changes in competitive behavior?

Speaker #8: This is Jeremy Office of Barry. Thanks for taking our questions. Can you talk about the promotional environment and locals market right now? And any changes in competitive behavior?

Speaker #4: Hey, Jeremy. It's Scott. Yeah. As we talked about in previous quarters, it's very irrational. And so we don't see any change in the market.

Scott Kreeger: Hey, Jeremy, it's Scott. Yeah, as we've talked about in previous quarters, it's very irrational. We don't see any change in the market, nor anything that would make us change our strategy.

Speaker #4: Nor anything that would change us or make us change our strategy.

Speaker #8: Got it. And then how has the tavern business trended? Have you seen any notable cross-sell from customers sourced there to your casino properties? Thanks.

[Analyst] (Truist): Got it. How has the tavern business trended? Have you seen any notable cross-sell from customers sourced there to your casino properties? Thanks.

Speaker #4: Yeah. So we just opened up our sixth of eight taverns. We have two more to go, one in October and one at the end of the year.

Scott Kreeger: Yeah, we just opened up our sixth of eight taverns. We have two more to go, one in October and one at the end of the year. We got into the tavern business for a couple of key business reasons, one of which was to get entrance into under-penetrated areas around the Valley. We do see incremental pickup in new customers that are new to brand. We also do see crossover play with customers that go to our big boxes as well. So far we like the performance of the taverns and we're excited about the two additional taverns to come online by the end of the year.

Speaker #4: We got in to the tavern business for a couple of key business reasons, one of which was to get entrance into under-penetrated areas. Around the valley.

Speaker #4: And so we do see incremental pickup in new customers that we didn't that are new to brand. And we also do see crossover play with customers that go to our big boxes as well.

Speaker #4: So far, we like the performance of the taverns and we're excited about the two additional taverns to come online by the end of the year.

Speaker #8: Thank you.

[Analyst] (Truist): Thank you.

Speaker #1: The next question comes from Dan Pulitzer with JP Morgan. Please go ahead.

Operator 2: The next question comes from Dan Politzer with J.P. Morgan. Please go ahead.

Operator: The next question comes from Dan Politzer with J.P. Morgan. Please go ahead.

Speaker #5: Hey, good afternoon, everyone. Thanks for the question. I wanted to touch on OpEx. A bit. I mean, can you talk a little bit about what you're seeing in terms of labor, utilities, insurance?

Dan Politzer: Good afternoon, everyone. Thanks for the question. I wanted to touch on OpEx a bit. Can you talk a little bit about what you're seeing in terms of labor, utilities, insurance? We've heard that some of those trends have been getting better. I guess more broadly, as you think about those investments ramping and taking into account the OpEx environment, how should we think about the margin lift into 2027?

Speaker #5: We've heard that some of those trends have been getting better. And then I guess more broadly, do you think about those investments ramping and taking into account the OpEx environment?

Speaker #5: How should we think about the margin list into 2027?

Speaker #2: Sure. I will start. From a labor perspective, we're in line with salary and wages up around 3% year over year. Utilities continue, particularly electric continues to be a drag.

Stephen Cootey: Sure. I will start. From a labor perspective, we're in line with salary and wages up around 3% year-over-year. Utilities, particularly electric, continues to be a drag on OpEx and my sense is will continue to be a drag for the remainder of the year. In terms of margin, when you take a look at our margin, our margin was down year-over-year, but that was primarily due to the Green Valley Ranch disruption, which we'll be getting our full suite of product back at the end of September. There's also the absence of the North Fork catch-up payment that we recognized prior year. There's several one-time repair and maintenance items and contributions we made during the quarter. I think this was kind of an anomaly from a margin perspective and hope to be getting back.

Speaker #2: On OpEx. And my sense is we'll continue to be a drag for the remainder of the year. In terms of margin, when you take a look at our margin, our margin was down year over year, but that was primarily due to Green Valley Ranch disruption, which we'll be getting our full suite of product back in the end of September.

Speaker #2: There's also the absence of the North Fork catch-up payment that we recognize prior year and in addition, there's several one-time repair and maintenance items.

Speaker #2: And contributions that we made during the quarter. And so I think this was kind of an anomaly from a margin perspective, and hopefully we're getting back.

Speaker #5: Got it. And then I'm sorry if I missed this, but were there any share repurchases in the second quarter? And if not, was there any reason for that?

Dan Politzer: Got it. I'm sorry if I missed it, but were there any share repurchases in Q2? If not, was there any reason for that?

Speaker #2: No, no. I think we've been very consistent with the balanced approach. They're taking the balanced approach to capital allocation. This quarter, we heavily spent on our existing projects, both Durango—cleaning up Durango Garage, which still has the retention payments—as well as rounding out Sunset and Green Valley Ranch project spend.

Stephen Cootey: No. I think we've been very consistent with taking a balanced approach to capital allocation. This quarter, we heavily spent on our existing projects, both Durango, cleaning up Durango Garage, which we still have the retention payments, as well as rounding out Sunset and Green Valley Ranch project spends.

Speaker #5: Got it. Thanks so much.

Dan Politzer: Got it. Thanks so much.

Speaker #2: No problem.

Stephen Cootey: No problem.

Speaker #1: This concludes our question and answer session. I would like to turn the conference back over to Stephen Cootey for any closing remarks.

Operator 2: This concludes our question and answer session. I would like to turn the conference back over to Stephen Cootey for any closing remarks.

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

Speaker #2: Well, thank you everyone for joining the call. And we look forward to talking to you about 90 days. Take care.

Stephen Cootey: Well, thank you everyone for joining the call, and we look forward to talking to you in about 90 days. Take care.

Operator 2: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

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

Q2 2026 Red Rock Resorts Inc Earnings Call

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