RRR - Earnings call transcript Q2 2018

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good afternoon, and welcome to Red Rock Resorts Second Quarter 2018 Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Daniel Foley, Vice President of Finance and Investor Relations. Please go ahead.

Daniel Foley

Andrea. you, Thank welcome Earnings and Rock Second Resorts' Good Call. to XXXX Conference Quarter afternoon, Red

Joining call Officer; on Financial Vice Fertitta, Steve me President the Executive Officer Chairman are Rock Cootey, Operating Joe and Frank and Resorts and Treasurer; Chief Hasson, President, Chief Executive Vice Rich and President; today Haskins, Chief from Executive Red Officer.

those forward-looking Federal projected financial our filings harbor in provisions may United States with Securities Our a Developments factors. safe differ implied variety call these results, detailed of The uncertainties or the company's from today due SEC. to risks and the statements under future operating are will related results Laws. include statements, and of conditions the to and

financial During this measures. call, we non-GAAP will discuss also

[indiscernible] which I being we Also, this the the Cootey. call a please in please this over definitions GAAP, to note tables Stephen financial to is like complete refer filed X-K, press recorded. the For release Form that would turn call. our now reconciliation to to afternoon prior and to and call

Stephen Cootey

and afternoon, everyone. you, Dan, Thank good

see from can Red second release, Resort. earnings outstanding one you As for quarter was Rock the another our

since the marks to construction increased at our to This increased increased XX.X%. $XXX.X quarter margins For the XX.X% net million XX to and consolidated of this revenues increased increased quarter X.X% adjusted revenue and Station X.X% and to our and second same-store the both impact adjusted approximately respect disruption With points to increased million net ongoing EBITDA net basis by million XXXX. million the EBITDA for adjusted operation, highest EBITDA all X.X% Palace X.X% substantial revenues Palms. XX basis to quarter to $XXX.X $XXX.X margins $XXX.X points Vegas Las

across points by increased range. growth over a and bottom-line increased basis by saw expanded and Notably, properties This average constant Las rate stellar overall solid once and XX%, seen nearly with the properties have initiatives. gaming was through flow revenue outpacing was an Las cost we solid and far growth as not revenues margins be operations during category the to are increase four Vegas growth by XX% driven our net also our last now more the of of the solid targeted disrupted every major our focus of non-gaming revenues top-line two over the non-disrupted XX% over X% Vegas again gaming to together nearly amenities on adjusted was quarter. market within Excluding even and of performance XXX impressive impact and performance quarters EBITDA outdone X.X% XX% the

allow up the Las new arrivals XX% of XXXX. number Vegas population States. is the is is respect the as quarter The metropolitan new the outlook, which key as strength those are gaming platform one the From one in to the consistently nearly and at by future market nation state in are economy and growing indicators results particularly second of an Vegas an Las residents unparalleled fastest confirms. a such growing best-in-class of economic demographic standpoint, the Las review forecasted key of one-third approximately at Nevada United The to residents for area we statistical in as Moreover with experiencing fastest all-time economies second of XXX,XXX us. now. remains locations being retirees increase us in With illustration the represented is growing distribution major fastest Vegas our scale and the irreplaceable nearly high assets outperform nation an our of of powerful Las Vegas

is the mark. the eclipsed recently million X all-time at employment, an of at Having Looking number job jobs high.

the job sector XXXX. On growth nation growth seen additional unemployment of discretionary the was now up consecutive job have May Also, rate since love. by wage home in to is a up creation. which respect of spending broad-based note, housing, in XXX% X.X% down lead in now guests. our XX.X% from now lowest XX Las to private continues related we in With existing months to We and of and X.X% the form the medium month have the up are prices seen trailing were June the Vegas XX

games homes XX% XXXX discretionary the to one Vegas continues And in have consumer. sales so from consumers in clear their have most Even is indicative homeowners increased with States. Vegas over in Importantly that from Las become in the share more housing spending multiple of with affordable up a seen equity allocating discretionary the be now Taxable of X.X% these across positive towards XXXX. however XX% markets data it United of also becomes healthy which greater comfortable their categories budget of gaming. far strong a Las the

including In investments directly as is Project Convention Raider seat Neon, Stadium, expansion Resort such from $XX Vegas major of located capital the new Rock projects Red park Casino. Center and and underway ball the addition, across billion new planned or the XX,XXX new Las

Lastly both states both other growth. continue its which further also weather Las businesses and for great and will taxes, low residents attracted population amenities to Vegas and fuel to in be affordability, high tax employment

and dynamic along pipeline the of and our to excited for economic supply combination lowest take United fundamentals is positive nation of positioned deep thesis the advantage leading the best local Resorts believe are the Las uniquely with in these favorable rate regulatory future stable market And very of to about this gaming outlook market only reasons, States. serve factors. reinforce Vegas. we in Las all These environment remains For a demand gaming extremely distribution Rock Red and strong development market Vegas tax economic scale with we

real-time capabilities all and new growth. mover the This resonates initial very to the unique lap upgrade entertainment slot our has our which Turning of predicted year played of a first revenue first with system well technology now system our initiatives, marketing provides accelerating experience balancing is to a premium in technology begin key role as gaming our guests. IGT and a of role innovation including apparent as and

we as visit. the believe as to technology investments throughout human maximizing even fourth we convene on device far engaging that dividends forward result, have of system. personalized year increases the into system system time we with to strategic But new in make across to this an companywide marketing continuing provide such will anniversary initiatives channel we one visit analytics and long in that believe per will reward rewarding metrics as slot with term well such business, key including full so our XXXX regard, seen innings of a spend we all spend the additional hotel would of guests as believe rollout, we In the and slot look enhancements, quarter our in impact the we per engines, the segment expect respect in that and still and other meaningful more potential in experience on programs early the demographic card introducing in the beginning which on-device are and enhancements are near initial further extremely areas we pay resource As we've for roll-out Moreover, device, as we win, data ago. positive significant since seen drive the time pleased bonusing future. increases

improved East art beds neighborhood to Vegas been range approach rooms beverage lawn, exterior now fully adjacent your and Station race XXX,XXX come look access two final raised on A completed Boathouse throughout renovated premium expanded of its initial begin hotel expect to exceptional Palace making phase with feast to look and and burgers biggest prior and floor. exciting new open company and May bBd the are XXX a which style that taper-off, Station opportunities completely nearly is featuring to their boutique on games underway. to and event our and late from to to to and New A low-end and seamless counts. the Vegas additional What bar include space amenities along redevelopment offerings the renovated redevelop to bringing will which seen burger offers Asian will fully Japanese level Palms gaming still pool an expected well completion. parking Francisco all disruption its fully debut movieplex reposition Eatery we December floor one marquee dining concept. Station square located property We redevelopment gaming recently be luxury both innovative projects. expected seating million refreshed video the $XX end the resort respect stated making new Asian fully XXXX state area, now buffet and The concept Ralph highlights featuring will new screen renovated updated it very offering to turn gaming of the private square conveniently in to sports and cuisine. latest floor response we've property has with let's into the feet upon to million right expanded York at area nine cabanas bar property market our for With remain our cine-bar and at these to Palace the these XX,XXX Now be San At contemporary year. A approximately the new the of will The the of the the machines construction in both include positive. of a returns based suites. XX plan tourists time the and the day provides award-winning is Palace table a room, and and around XXX of its LED the sign, of phase appeal on complete previously reviews enhancements add first range, with two for to based which Perrazzo's XXX $XX to which mix and foot and of the and with spaces. be seat. generate includes Upcoming Palace entertainment food upgrades a the Kleiner to poker very the and delivered residents Regal include restaurant Entertainment eclectic significant property redevelopment the alike foray the increase Chef bullish Palms disruption of book our ability to Las machines a a an to Once to slot and poker guest quarter completed third elements, ground

will which will of in Fantasy the we reminder, second new well renovated come additional XXX an to of online a parking hotel redesigned that late service luxury fully in phase as August. of in covered end hotel unfinished suites include as have and highlights previously XXX construction spaces and As which in tower expect was the majority Tower October. that The space. by XX rooms rooms vast

restaurant night be we from with which will with of Bobby Group following on strip. developed plan we premier high views the award-winning will XX,XXX Group. and Symon Marc the Towards club also critically in American foot who Michael TAO Vegas the partnership be partnership Italian renovated unveil a XXXX, Vetri chef end quarter club first of will end pool foot feet XX,XXX celebrity At his expect and making barbecue a will Las Group. the square debut, completely Vetri, beard the also on pool acclaimed James chef of with making XX,XXX twist additional the the seafood experience TAO day same the Vegas. a debut world energy another restaurant around square in James his space premium net restaurant an Las developed And year, from innovative club Vegas in Beard concept open meeting open who Flay. redefine of A a with award-winning time, developed a new Las with the year-round in the basis. chef partnership Notably class will new in square TAO convention A to be spectacular celebrity we

by spa wellness ahead XXXX. of respect quarter of and with the will the the foot third we end schedule. XX second state-of-the-art treatment completing anticipate a rooms open redevelopment, now which during salon of the now is phase X Lastly, quarter square new phase XX,XXX facilities that XXXX of to With

confident to this of the the as we property casino see directly seen art and and newly the in include Palms the famed that create Michelin garage integrating floor. are Other throughout today tower digital announce slot XXX the entered expansion with most Chinese bring this its directly town expanded Phase XX connector Collaborations and Vegas. expanded look from an Tim gaming ingress of that be restaurant casino forward entertainment approximately seamlessly iconic to into the the floor the in Las Wan elements to to Kong Palms vibrant the into location redevelopment exciting as an Once machines indoor self-park state world renowned Palms to featuring This artists returning Place and XXX floor phase. excited have restaurant. Hong tower property's sum are be signage The Ho casino connector rooms complete, the The will dim three to the hotel in new games. adjacent table Star one world part we addition We casino key first Vegas will of fully of Las destinations pre-existing a with to status to The agreement and and into a exterior. place for we third class

previously As phase significant disruption redevelopment The we the at completion expect to plan. of two discussed, construction the Springs Palm of

projects. our reported pieces management to Native fees partially the continues February important Turning our the the the to working at expiration of in in Lake quarter with the North great We federal when was negative driven and will a The coverage California a agreement our for were a and in million which American Gun of was down that the of the items. took from the respect Palms the high Palace we interest at continuing primarily million billion. our step EBITDA equivalents won Capital in decision end will cover Station of outstanding second project. Tribe. That quarter between X.X in $XXX few property cash and cash that $XX.X segment, string the in year level. continue ratios spend progress million $XXX XXXX, forward $XXX Palms litigation redevelopment. at capital XX.X project, by management to of prior fees amount second end remain a quarter we federal balance $XXX quarter, we net as were Also through million agreement to from of $X.XX $XX.X XXXX increase end positive debt and In I was includes quarter and sheet results and anticipate a by Fork respectively. expenditures Palace now offset impact we debt total the principal the the and regarding be management X.X both recently courts. inclusive very perform the and court of second million with At of capital company's few Station

be the July of shareholders XXXX. cash on to dividend record a XX, its September on company $X.XX the of XXXX quarter second that addition, September share board declared to In had announced XXXX payable for XX, per payable XX, on directors of

and March the order of to that allow redevelopment Finally, October to to Investor all showcase planned has Operator are from then and wanted extent call. year be we participants now next the of fully at this ready take our Palms. make us Station to to both and place moving taken Palace remarks aware you on at from prepared Day now we'd questions in between we concludes the today The

Operator

go And from the comes [Operator We ahead. Joe Greff Instructions] of Please begin will question-and-answer now our JPMorgan. first question session.

Joseph Greff

Good afternoon everybody.

Stephen Cootey

Hi Joe.

Joseph Greff

better the both give EBITDA look Steve, us to the than quarter you was from Palm the impact visualize. I revenue the their you second in going in when are the as and in contribution XQ detail and the But contribution know XQ? can not meaningfully relative Palace the second XQ at in as to much quarter or you

Stephen Cootey

a some We Yes, comment more by on I you're perspective so that side property property. contribution EBITDA could from say generally Palace the don't seeing meaningful on QX. than

Joseph Greff

presentation the can well one May we're up Unless development opened The and topic. qualitative to want project, in then or I I'm Maybe or in know to about the leave there. way. a some been And mid-late talk Okay. about you phase it you early early talk in it I Palm curious it's quantitative tree about this in or performance to terms commentary talk a in going because just results way but occupancy early or want

Stephen Cootey

problem. No, No sure.

comments, mentioned The Flamingo, Palms to people now and up received had past May Palms. before. in Bellagio actually Palms. to think turned have never wanted I have at reviews. the the As I of now go corner that I now down in want It's as come and eat The The hang out they and opened People the elements it's believe have rave turned in,

all revenue, trends. up positive May If you XX food opening. still is this our at very gaming revenue our are our look Again, trended those since while beverage and have early

I of think XXX catering one that's but if there over we've that pockets had on we're redeveloping. not is and surprising because hotel behind our was thing rooms we're

room almost XX,XXX that's So nights.

So, disruptive the property to progress. continue but does we're very happy the very with be

Joseph Greff

expect and XQ Station. Okay how that you disruption experienced is then or you seeing XQ that a sheet? the final in whatever the great. that to Palace Would than question are your renovation impact you in And balance less

Stephen Cootey

I in casino will think waning in be disruption the the QX.

Primarily, the there. the think should we I sports be going on they're book be disrupted the have and the this over but hotel we in poker and turned room, that renovation over fact, nearing those get QX completion In is been have week turned disruption to this suite racing in week. going

are we casino and the the end buffet section feast But getting at opened since feedback tunnel. a the Palace week-to-week the like definitely of feels Station the see at the few results of we it's have new It it's traction of service right there. had quite out light now. down new So, rooms great and we've definitely

good very right So, working now. on

Joseph Greff

results. Congrats guys. the good Thanks of Great.

Stephen Cootey

Joe. Thanks

Operator

of ahead. Carlo comes Santarelli Our from Bank. next Please Deutsche question go

Carlo Santarelli

with Hi of for mentioned afternoon. the points everybody. to through and Vegas this XX% Steve, bit question. relative taking Could talk the XXX-basis terms XX% what year? kind margin for you Las Good to the just seeing was a within wondering respect color the you dollars market on locals last maybe same-store environment the range. thanks that the my you're obviously marketing within little Thanks obviously to in I promotional performance. and the about time expansion competitive in of flow

Stephen Cootey

feel in to Las the for the environment extremely question. promotional thanks Carlo, continues I rational. Vegas mean

Carlo Santarelli

Great. more in of you're going the would IGT tough to kind the in what and plus systems to and would attribute the in much of the to And the be terms how you guys past say it you much terms but over gaming I some of have changes have would imagine how team you – much it's how the to say you X% promotional answer, seeing general? just that amounts upgrade to seen strength market overall the made of here would growth kind you of that market revenue guys technology from year of

Stephen Cootey

a I different lot factors. think of a of it's combination

think market which at company so, our pretty we is performance back our and nearly over look strong through market, of rate we the those and XXXX the than this in the at other if location at innovative or we've the the XXXX best of it's system that think in downturn you if we've and a I double think to in what factors to is been the us together. year went We're performance out market last with and the of the very you the technology have combination really XXXX last several recently about company's look I public historically there's I all roll best One we've remainder for market. But of over out assets the the And market, excited the since think IGT year rolled always late I through get out has XXXX. outperformed pipeline think year. grown factors. good in we

Carlo Santarelli

much very you Thank Great. guys.

Operator

go of of Kelley comes ahead. America. Please question Shaun next Bank Our from

Shaun Kelley

to but up just expect I a from just the giving everyone. specific afternoon a like ramp of or I that you're at mean about or there? start can is at numbers, Steve, on back Palms. some kind seeing least cadence given we improvement last there fourth what's of balance go Good basis to third time property year a when of we hard this modest it's think we year kind of were for quarter and perspective the move through Hi. sort seasonality the to the year-on-year expectation of know baseline to as -- the from rate what not just

Stephen Cootey

seasonality commentary hotel is significant biggest mentioned When here so some the not activating it's one online. Well, drags getting room and comments I the the much question. is of in of the disruptions, some property undergoing the suites as property on really that a

Joseph Hasson

then place is as around walk missing last mean towards spring the has And from XXXX, completely very to rooms the will get the the including suites new renovation, with us. pool, Marc the plus by that in Kong. pretty of Fantasy it But then night, suites Tower good. be amenities majority though, through Wan just property quarter, we I new [indiscernible] all will restaurants in felt from all on in Michael be quarter. And come around brand and the the had The spots from throughout should LED right new the of Hong within renovated. been should floor So, can will more for XX. Ho for go We the will quarter theatre show at system, sound we end a will this renovated year, of electronics you All the By late one I over Symon, come only those the of online garage if there. expansion phase help XXX new fourth the amenities. start you the the be end packed, three facility. the Vetri now And Saturday we and much year having go of the one big-big more have was floor tell undergoing it fourth is two we online. all are to end we missing thing assets third will which done the entire parking which and casino and have spring additional Tim restaurant of the the the and

that to online reviews very feeling but disruption But And lot through, of that so, we're that. is the be currently week-to-week. a work about at assets getting are we're want that property from excited still we we to the and the know good from people we're have

Shaun Kelley

That's looking of great. And you to bit are them mean more, renovation the was marketing super the I at little yet. a I just like maybe that's add doesn't website some look earlier and it actively done

So, make least Do when destination year. to of do of by how to or you thing have hope not at this it summertime really at and big the do kind push you that kind middle or relates as least next marketing to until splash of ramp about think or is it it? try you

Stephen Cootey

Fine.

a more when we So, like through becomes to out socially. Palms campaign renovation of the a But and as you both where Vegas database here But campaign be marketing it get seen bit activate to people disrupted things all right have image spa day a repositioning as lacking our you garage we club, parking on new once started want We're club, in I go AKQA pool, the locally, expansion. a opening and look trial can The digitally, to That that also restaurants. the are a in easier with positive imagine, have lot is facility. resort now under locally rolled an as with the through to right still the has Las place open we way at multiple casino to this parking feedback communicate. had a and all phase, mean are it's difficult little night

And ramped as the so, a quarter. first during and near effort the say of big will end be we third, push it fourth, the a

Shaun Kelley

very you Thank Great. much.

Operator

comes question Macquarie. next of Beynon ahead. Please from Our Chad go

Chad Beynon

boarding XQ it just program terms Congrats nice slot you're ballpark we're also quarter. on noted within is model needs something additional technology you terms pass this in that Can about within and the at data segments that any your within in is you talking then be or Hi. minimus guys time? can what tiers? de the related card of seeing the you what talk different Good afternoon. And to could CapEx this investment of about amount our Thanks. roughly to communicate

Joseph Hasson

the last part repeat question? you your of Can

Chad Beynon

Sure.

you enhancements already in noted some some if in of to analytics respect guidance was out big quarter, you were that the that of and terms that laid investment that in the data Just with number a think I in was roll I fourth included to planning kind CapEx the know didn't out. if you

Joseph Hasson

measure. take of is in me we in Let quarter across the segment portion growth second was saw segment speaking. What the that. we This Joe which every Hasson solid

our business from national that also the Now destination so of of There's coming end, our business. growth top regional and in the includes middle pack the portion market. to speak and retail end of

an the innings early we a of slot drove So, is that some to as resonate we as have to it really a enhancements how we're we Steve few in and also minutes our in see and spoke both with growth and of to platforms traveler's. the that see do results the we the future ago. the that kind continue local in very to ongoing comfortable it When that a destination fuel guests comes again the pipeline, and and to systems that uptrend view

longer on data device guest a Our a I campaigns us would also with the once that more ability more time sticky to create personalized campaigns engaged and analytics attractive is call experience, and experience. use rewarding marketing to

the All of that is future. we contributing to what how we well see currently, as see as

Stephen Cootey

CapEx other, second the the now I'll question. take

add, going I million system So, $X should HRA data we're minus. the initiatives plus that to or that to that's $X million be talking analytics about about probably know

Chad Beynon

currently a in is be is market in to tap Thank operator what market guys of gaming for of really repeal that you partner or another obviously maybe a that good and job. another are while With PASPA, opportunity in growth sports United to there kind in could a had States. to My related do guys you. Okay. so has the follow-up you an with

betting. Just in history your given knowledge your and Thanks. and experience sports your

Stephen Cootey

We've is And evaluating to definitely opportunity you, outside announcements of couple think activity expertise Nevada. take I flurry of and an last and still days. seen those a there we're this for I of agree take over of opportunities our to advantage with the us

Chad Beynon

Okay. Thank much. you very

Operator

And question Sachs. from Please our ahead. Grambling of Stephen go next Goldman comes

Stephen Grambling

you follow-up how post room's that a if pricing think of question about specifically expect kind ramp the I ramp. Station? here Okay. renovation of the property that's you you maybe specific on Palms property how The do versus what Thanks. magnitude how to pre and guess too I maybe uplift and kind initial would Palace you guess characterize might to for Shaun's and that generally others versus just benchmark on post

Stephen Cootey

as look pay as look can of terms that have. premier of will a Palms for and rooms great see ramp upwards the of a rest experience assets the we we for we renovate from product we at simply the an Certainly, consumer the and as concerning it's in to kind dollars terrific quality

forward. an but ramp nothing going up So,

Joseph Hasson

of rooms, to to for have a going lot And bring we -- be to amenity pricing fabulous reasons we than be whole that Plams rooms. want people we'll to we'll believe The because ramp they're at of online significantly the once that the going able other package then be there

amenities the nicest restaurants have the spa day But other once think I leverage. pricing the to the club, have suites we I city. a more entire the pool, club, of and lot we're the the think going night some in

Stephen Cootey

know XXX there of as And is just, these. only you

the rooms So, we'll be yield properly. able to

Stephen Grambling

space guess guess that. follow-up kind discussion? or I booked already And advance rates, effectively rooms I ongoing that still Have meeting booked of and an is you one in the on

Joseph Hasson

terms future in more bookings. With of come. Certainly, to underway lots

you of future more square coming footage in I that and finished form think mentioned there the Steve is developments redevelopment.

Our now, that is advantage to front of sell we process out that underway so that and take of can good terrific assets. curve get in

Stephen Grambling

are how have here? last growth but elaborate the if FNB same-store the on maybe missed guess revenue just I maybe and from And I And like you this one quarter. would grown can this and corner to takes I turned this, puts looks non-casino think quarter

Stephen Cootey

if to exclude like you I one looks down. you're you that's at I if basically the hotel is it's look press same-store their saying referring mean think you the factors, non-disruptive Are mean all I release because I – mean that

XXX the rooms and You in we The XX,XXX have of other Palms. took took or of almost lights factor out the XX,XXX room in to The Palms out palace rooms that we

those up if same could up the food non-disruptive basis. revenue we on is which out actually is said So, take a X% high be single-digits beverage undisruptive on on our And an hotel basis. approximately

non-gaming that So, kind of really leaves the amenities.

Stephen Grambling

so Thanks much. great. That's

Operator

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

Stephen Cootey

about Well, thank we Take look XX joining everyone talking for all to days. you forward in and care.

Operator

now The conference today's you attending has Thank presentation. concluded. for

now may disconnect. You

Red Rock Resorts (RRR) 31 Jul 182018 Q2 Earnings call transcript