Red Rock Resorts (RRR) Q2 2024 earnings summary

Executive summary

• Net revenues for Q2 2024 increased 16.9% year-over-year to $486.4 million, driven by strong Las Vegas operations and the opening of Durango Casino Resort, which continues to ramp up and attract new customers.

• Adjusted EBITDA for Q2 2024 was $201.7 million, up 15.0% year-over-year, with Las Vegas operations contributing $223.1 million, up 15.6%.

• Net income attributable to the company was $69.8 million, down 6.8% year-over-year, reflecting higher interest and operating expenses.

• Durango Casino Resort increased visitation and net theoretical win in its area by approximately 90% and 88%, respectively, and signed up over 55,000 new customers in two quarters.

• Announced plans for Durango expansion, adding 25,000 sq ft of casino space, 230 slot machines, and a new parking garage, with construction expected to start later this year.

Financial highlights

• Q2 2024 net revenues: $486.4 million, up from $416.1 million in Q2 2023; Adjusted EBITDA: $201.7 million, up from $175.3 million year-over-year.

• Las Vegas operations net revenue: $483.2 million, up 17.1% year-over-year; Adjusted EBITDA: $223.1 million, up 15.6% year-over-year; Adjusted EBITDA margin: 46.2%.

• Casino revenues grew 18.6% year-over-year to $319.6 million; food and beverage and room revenues increased 18.2% and 11.7%, respectively.

• Converted 58% of Adjusted EBITDA to operating free cash flow, generating $117.6 million ($1.11/share) in Q2; year-to-date free cash flow at $246.2 million ($2.33/share).

• Cash and cash equivalents at quarter-end: $136.4 million; total debt: $3.5 billion.

Outlook and guidance

• Expect continued stability in the locals market and positive momentum in group sales and catering, with tough comparables for the remainder of 2024 but green shoots anticipated in 2025.

• Capital spend for 2024 (excluding Durango project closeout) expected between $140 million and $180 million, split between maintenance and investment.

• Durango expansion construction to begin later in 2024; North Fork project site work to start next month, with opening targeted for 2026.

• Management expects continued impact from inflation, higher interest rates, and commodity price volatility through 2024.

• Cash on hand, operations, and credit facility are expected to be sufficient to fund requirements and service debt for the next twelve months.