• Las Vegas Operations Q4 Net Revenue: $492.6 million, up 7.2% from the prior year's fourth quarter.
• Las Vegas Operations Q4 Adjusted EBITDA: $223.9 million, up 1.6% from the prior year's fourth quarter.
• Las Vegas Operations Q4 Adjusted EBITDA Margin: 45.4%, a decrease of 250 basis points from the prior year's fourth quarter.
• Consolidated Q4 Net Revenue: $495.7 million, up 7.1% from the prior year's fourth quarter.
• Consolidated Q4 Adjusted EBITDA: $202.4 million, up 0.5% from the prior year's fourth quarter.
• Consolidated Q4 Adjusted EBITDA Margin: 40.8%, a decrease of 267 basis points from the prior year's fourth quarter.
• Las Vegas Operations Full-Year Net Revenue: $1.9 billion, up 12.6% from the prior year.
• Las Vegas Operations Full-Year Adjusted EBITDA: $879.4 million, up 7.4% from the prior year.
• Las Vegas Operations Full-Year Adjusted EBITDA Margin: 45.7%, a decrease of 222 basis points from the prior year.
• Consolidated Full-Year Net Revenue: $1.9 billion, up 12.5% from the prior year.
• Consolidated Full-Year Adjusted EBITDA: $795.9 million, up 6.7% from the prior year.
• Consolidated Full-Year Adjusted EBITDA Margin: 41%, a decrease of 222 basis points from the prior year.
• Q4 Operating Free Cash Flow: $158.6 million, or $1.50 per share, converting 78% of adjusted EBITDA.
• 2024 Cumulative Free Cash Flow: $451 million, or $4.27 per share, converting 57% of adjusted EBITDA.
• Cash and Cash Equivalents (End of Q4): $164.4 million.
• Total Principal Amount of Debt (End of Q4): $3.4 billion, resulting in net debt of $3.3 billion.
• Net Debt-to-EBITDA Ratio (End of Q4): 4.1x.
• Q4 Capital Spend: $26 million, including $16.8 million in investment capital and $9.2 million in maintenance capital.
• Full-Year 2024 Capital Spend: $283.9 million, including $172.3 million in investment capital and $111.6 million in maintenance capital.
• 2025 Expected Capital Spend: Between $375 million to $425 million, including $285 million to $325 million in investment capital and $90 million to $100 million in maintenance capital.
• Q4 Dividend: $0.25 per Class A common share.
• 2024 Shareholder Returns: Approximately $224 million through share repurchases and dividends.

• Warning! GuruFocus has detected 6 Warning Signs with RRR.

Release Date: February 11, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Red Rock Resorts Inc (NASDAQ:RRR) achieved its highest fourth-quarter net revenue and adjusted EBITDA in its history for Las Vegas operations.
• The Durango Casino Resort continues to grow the Las Vegas locals market, signing up over 85,000 new customers and is on track to become one of the highest margin properties.
• The company successfully opened new amenities, including a Yard House restaurant and China Mama, which have been well-received by guests.
• RRR's Hotel and Food and Beverage divisions experienced record revenue and near-record profitability in the fourth quarter.
• The company returned approximately $224 million to shareholders in 2024 through share repurchases and dividends.

Negative Points

• Adjusted EBITDA margin decreased by 250 basis points in the fourth quarter compared to the previous year.
• Cannibalization from the Durango property is affecting the Red Rock property, with revenue backfill expected to take two to three years.
• The company anticipates disruption during the construction of the Durango expansion and renovations at Sunset Station and Green Valley Ranch.
• Sports betting experienced unfavorable hold impacts, with a reported $8 million loss in October and an additional $6 million in December year over year.
• Labor costs increased by 3.1% on a same-store sales basis, impacting overall expenses.

Q & A Highlights

Q: Can you quantify the total sports betting hold impact for the fourth quarter? A: Stephen Cootey, CFO, stated that the sports business was healthy overall, with a 10% increase in handle. However, there was an $8 million impact in October and an additional $6 million in December year-over-year due to hold issues.

Q: How do you see seasonality affecting the first quarter, especially with the Durango property now fully operational? A: Stephen Cootey, CFO, mentioned that historically, Q4 to Q1 EBITDA increases by about 6.6%. The company anticipates similar seasonal patterns, despite the low sports hold and the new Durango property.

Q: What trends are you seeing in consumer behavior post-election, particularly in the locals market? A: Scott Kreeger, President, noted consistent positive trends across the database, especially among high-end network customer segments. Lorenzo Fertitta, Vice Chairman, added that there was an expected acceleration post-election.

Q: Is the backfill of revenue at Red Rock taking longer than anticipated post-Durango opening? A: Stephen Cootey, CFO, clarified that the backfill process is on track and typically takes two to three years, consistent with past openings.

Q: How are you thinking about customer spend levels and group business for 2025? A: Scott Kreeger, President, indicated stability in core customer spend and positive trends in group business, with strong pickup expected in the latter part of 2025.

Q: What is your current appetite for M&A in the gaming space? A: Stephen Cootey, CFO, stated that while they consider all opportunities, the focus remains on developing their existing land bank in Las Vegas, which is seen as the best regional gaming market.

Q: Can you provide additional color on the EBITDA impact for 2025, considering ongoing renovations and Durango ramp-up? A: Scott Kreeger, President, mentioned potential $25 million disruption due to renovations but expects incremental growth from new capital investments. Stephen Cootey, CFO, highlighted the focus on achieving a 20% return on Durango over three years.

Q: What are your thoughts on developing the Reno market, and where does it sit in terms of priority? A: Scott Kreeger, President, acknowledged the gaming-entitled land in Reno but emphasized a focus on Las Vegas development opportunities. They remain open to developing or divesting the Reno site based on market conditions.

Q: How do you view the impact of major events like the Super Bowl and F1 on your properties? A: Stephen Cootey, CFO, noted that the Super Bowl had a significant positive impact on both gaming and non-gaming segments, while F1 had no noticeable impact on their business.

Q: What are your expectations for corporate expense growth in 2025? A: Stephen Cootey, CFO, expects corporate expenses to remain around $21 million, consistent with current levels.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.