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RR

Red Rock Resorts, Inc. (RRR)·Q3 2025 Earnings Summary

Executive Summary

  • Mixed headline: consolidated revenue of $475.6M (-$2.8M vs S&P Global consensus*), while Primary EPS beat (0.418 vs 0.385*), and company-reported diluted EPS was $0.68 .
  • Las Vegas operations posted record third‑quarter results: net revenue $468.6M (+0.8% YoY) and adjusted EBITDA $209.4M (+3.4% YoY), with consolidated adjusted EBITDA of $190.9M (+4.5% YoY) .
  • Capital allocation positive: regular dividend raised to $0.26/share and buyback authorization increased by $300M and extended to 2027 (remaining capacity ~$573M) .
  • Durango expansion catalyst: new $385M phase to add gaming and entertainment amenities; construction expected to start in January for ~18 months; near‑term disruption expected on north side .
  • Near-term puts/takes: management flagged Q4 EBITDA seasonality up ~10–11% vs Q3, offset by ~$8M disruption at GVR and ~$1–$1.5M at Sunset; sports book hold normalized vs last year’s unusual Q3 .

What Went Well and What Went Wrong

What Went Well

  • Record Q3 at Las Vegas operations: net revenue $468.6M and adjusted EBITDA $209.4M; consolidated adjusted EBITDA up 4.5% YoY to $190.9M .
  • Cost discipline and mix: adjusted EBITDA margin expanded YoY; consolidated margin 40.1% (+110 bps); Las Vegas margin 44.7% (+110 bps) .
  • Strong cash generation and capital returns: 67.3% EBITDA-to-operating FCF conversion ($128.5M); dividend raised to $0.26 and buyback authorization expanded by $300M/extended to 2027 .
  • Quote: “Our Las Vegas operations once again set new records… ninth consecutive quarter of record net revenue and the fifth consecutive quarter of record adjusted EBITDA” .

What Went Wrong

  • Top‑line miss vs Street: revenue of $475.6M vs $478.3M S&P Global consensus* (≈ -0.6%); Primary EPS beat but headline revenue miss is a modest negative*.
  • Construction disruption: Q3 impact ~$2.5–$3.0M at GVR; additional Q4 disruption ~$8M at GVR and ~$1–$1.5M at Sunset; further disruption expected into 2026 at GVR .
  • Sports segment variability year over year: reminder that Q3’24 had ~$4M unfavorable hold; this year normalized, but highlights ongoing volatility in sports hold .

Financial Results

Sequential performance (2025)

MetricQ1 2025Q2 2025Q3 2025
Net Revenues ($M)$497.9 $526.3 $475.6
Adjusted EBITDA ($M)$215.1 $229.4 $190.9
Adjusted EBITDA Margin (%)N/A43.6% 40.1%
Diluted EPS – Class A ($)$0.75 $0.95 $0.68

Year-over-year headline comparison

MetricQ3 2024Q3 2025
Net Revenues ($M)$468.0 $475.6
Net Income ($M)$55.4 $76.9
Adjusted EBITDA ($M)$182.7 $190.9
Diluted EPS – Class A ($)$0.48 $0.68

Segment breakdown (Q3 year over year)

SegmentNet Revenues Q3’24 ($M)Net Revenues Q3’25 ($M)Adj. EBITDA Q3’24 ($M)Adj. EBITDA Q3’25 ($M)
Las Vegas Operations$464.7 $468.6 $202.6 $209.4
Native American (dev. fees)$0.0 $3.9 $0.0 $3.9
Corporate & Other$3.3 $3.1 ($19.8) ($22.4)
Total Consolidated$468.0 $475.6 $182.7 $190.9

KPIs and balance sheet

KPIQ2 2025Q3 2025
Operating Free Cash Flow ($M)$124.3 $128.5
FCF Conversion (% of Adj. EBITDA)54% 67.3%
Cash & Equivalents ($M)$145.2 $129.8
Total Principal Debt ($B)$3.4 $3.4
Net Debt / EBITDA (x)3.96x 3.89x
Capital Expenditures ($M)$78.2 $93.7
Share Repurchases~672K shares; $31M ~92K shares
Regular Dividend Declared ($/sh)$0.25 (for Q3 pay date 9/30) $0.26 (declared for Q4 pay 12/31)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
2025 Total CapexFY 2025$325–$375M (down $25M vs prior) $325–$350M (down $25M vs Q2) Lowered upper end
2025 Capex MixFY 2025Invest $235–$275M; Maint $90–$100M Invest $235–$250M; Maint $90–$100M Narrowed investment range
Q4 SeasonalityQ4 2025N/AQ4 typically +10–11% vs Q3 EBITDA; to be offset by disruptions New color
Construction DisruptionQ4 2025FY disruption earlier framed at ~$25M GVR ~$8M; Sunset ~$1–$1.5M; tracking below full‑year $25M Updated detail; tracking better
Regular DividendOngoing$0.25/quarter $0.26/quarter (effective Q4 pay date) Raised
Share RepurchaseThrough 2025$600M capacity expiring 12/31/25 +$300M added; extended to 12/31/27; ~$573M remaining Increased/extended
Cash Taxes2H 2025N/ANo estimated cash tax in Q3 or Q4 due to tax legislation New color

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2 2025)Current Period (Q3 2025)Trend
Las Vegas Locals vs Strip MacroEmphasized Locals resilience; VIP and high‑limit driving growth Reinforced locals model stability; 9 record revenue quarters, 5 record EBITDA; frequent visits anchor loyalty Stable/positive
Construction DisruptionPeak disruption expected Q3–Q4; GVR room/convention remodel underway; Sunset sequencing adjusted Q3 impact ~$2.5–$3.0M at GVR; Q4 ~$8M (GVR) and ~$1–$1.5M (Sunset); disruption into 1H26 at GVR Peaking in Q4; extends into 2026
Durango ExpansionGarage and high‑limit build as precursor to larger expansion $385M next phase (bowling, theaters, ~400 slots) starting Jan; 18‑month build; significant north‑side disruption Accelerating investment
Tax Reform BenefitsNo cash taxes rest of 2025; +$60M FCF benefit from reduced tax distributions; bonus depreciation No cash taxes in Q4; ~$300M capex eligible for accelerated depreciation across projects Continuing tailwind
Database/VIP FocusHigh‑limit investments paying off; VIP and uncarded growth strong Carded and uncarded slot win up; VIP/regional/national segments up; promotions remain rational Durable
Sportsbook HoldQ2: favorable hold; best table/slot hold in company history Hold normalized in Q4; reminder of Q3’24 ~$4M unfavorable hold Normalizing
New Formats (Taverns)Not highlighted in Q1/Q2 PRs2 taverns open, 5 coming in early–mid 2026; early performance on thesis, skewing younger Early ramp

Management Commentary

  • Strategic positioning: “Our Las Vegas operations once again set new records… underscoring the strength, consistency, and long-term earnings power of our operating model.”
  • Durango expansion rationale: “We expect to get similar returns on the expansion that we have gotten so far on the initial build… giving our customers what they’re asking for” .
  • Locals market differentiation: “Unlike the Strip, [Locals] doesn’t rely on heavy tourism… supported by incredibly loyal guests who… come over eight times a month.”
  • Expense control: “Overall operating expenses were flat to down… utilities and R&M down slightly; payroll up due to a 3% raise… as long as marketing remains rational, these are sustainable.”
  • Capital allocation/taxes: “We do not anticipate [cash tax] occurring in the fourth quarter due to the [tax bill]… accelerated depreciation eligibility a little bit over $300M of capital.”

Q&A Highlights

  • Durango Phase/North disruption and returns: Phase adds non‑gaming amenities with expected returns similar to initial build; management expects “significant disruption” on the north side during construction .
  • Disruption sizing: Q3 GVR impact ~$2.5–$3.0M; Q4 expected ~$8M (GVR) and $1–$1.5M (Sunset); parking constraints at Durango during peaks; disruption extends into 2026 at GVR .
  • Margin/flow‑through sustainability: Cost discipline and rational marketing underpin sustainable flow‑through; VIP/high‑limit strategy continues to benefit mix .
  • Leverage and funding: Comfortable at 3.89x; plan to fund development from free cash; any leverage uptick to be temporary; tax law accelerates depreciation on major projects .
  • Taverns: Two open, eight under contract, five slated to open through summer; early signs show younger customer acquisition that migrates to large box properties .

Estimates Context

Metric (S&P Global)Q3 2025 Consensus*Q3 2025 Actual*Surprise
Revenue ($M)478.3*475.6*-0.6% (miss)*
Primary EPS ($)0.385*0.418*+8.7% (beat)*
EBITDA ($M)186.9*180.5*-3.4% (miss)*

Notes:

  • Values retrieved from S&P Global.* The company-reported adjusted EBITDA was $190.9M and diluted Class A EPS was $0.68, which differ from S&P Global’s standardized metrics .

Key Takeaways for Investors

  • Core locals engine remains resilient: record Q3 at Las Vegas operations, with continued VIP/high‑limit momentum and disciplined costs supporting margin expansion .
  • Modest top‑line miss vs consensus offset by EPS beat; mix and expense control helped drive profitability despite construction headwinds .
  • Capital deployment constructive: dividend lifted to $0.26 and buyback authorization increased/extended, signaling confidence and ongoing cash return capacity .
  • Near‑term modeling: bake in Q4 seasonality (+10–11% EBITDA vs Q3) and ~$9–$9.5M disruption; expect continued GVR/Sunset impact into 1H26 .
  • Growth pipeline: Durango’s $385M expansion (18 months from January) plus GVR/Sunset repositioning should support medium‑term share gains and returns; disruption likely a sentiment overhang during build .
  • Tax tailwinds boost FCF: no cash taxes in Q4; significant accelerated depreciation eligibility across current projects enhances near‑term cash generation .
  • Watchlist: magnitude/duration of construction disruption, Durango ramp post‑expansion, promotional intensity in locals market (currently “rational”), and sports hold variability .

Supporting Data and Sources

  • Q3 2025 results press release/8‑K (revenue, EPS, EBITDA, segment detail, dividend, buyback):
  • Q3 2025 earnings call transcript (margins, FCF conversion, capex, leverage, disruption, Durango expansion detail):
  • Prior quarters for trend analysis: Q2 2025 PR and call ; Q1 2025 PR .

Values retrieved from S&P Global.*