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RR

Red Rock Resorts, Inc. (RRR)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 delivered record fourth-quarter Las Vegas net revenue ($492.6M) and Adjusted EBITDA ($223.9M), but consolidated margins compressed as sports-betting hold and higher costs offset topline strength; consolidated net revenues grew 7.1% YoY to $495.7M while diluted EPS fell to $0.76 from $0.95 YoY .
  • Management highlighted Durango’s strong first full year: ~16% cash-on-cash return in 2024 (net of cannibalization) with >85k new sign-ups; still targeting ~20% ROI over three years and backfilling Red Rock cannibalization over 2–3 years .
  • 2025 will be an investment year: capex guided to $375–$425M (investment $285–$325M; maintenance $90–$100M), with ~$25M EBITDA disruption from GVR, Sunset, and Durango expansion; GVR budget raised to ~$180M as meeting space refresh was added .
  • Balance sheet actions are earnings-accretive: Term Loan B repriced to SOFR+2%, expected to cut interest expense by ~$4M per year; net debt/EBITDA at ~4.1x with $164.4M cash and $3.4B principal debt at Q4-end; dividend of $0.25/share declared for Q1 2025 .
  • Estimate comparison: S&P Global consensus was unavailable during this session due to provider rate limits; we could not quantify beats/misses vs Street for Q4 2024.

What Went Well and What Went Wrong

What Went Well

  • Record Q4 performance in Las Vegas: “highest fourth quarter net revenue and adjusted EBITDA in our history” with near-record margins; consolidated Q4 net revenue up 7.1% YoY to $495.7M and Las Vegas Adjusted EBITDA up 1.6% YoY to $223.9M .
  • Durango outperformed early: ~16% first-year return net of cannibalization, >85k new-to-brand sign-ups, on track to become one of the highest-margin properties; targeted 20% ROI over three years intact .
  • Nongaming records: Hotels and F&B set record Q4 revenues with near-record profits, driven by occupancy, higher ADR, higher average check and cover counts .

What Went Wrong

  • Margin pressure: Consolidated Adjusted EBITDA margin fell YoY; sports-betting hold alone was ~150 bps of margin degradation in Q4; unfavorable sports hold also impacted October and December (approx. -$8M Oct and -$6M Dec YoY) .
  • Higher costs: Labor (same-store salaries up ~3.1%), minimum wage increases in July, and elevated food input costs (eggs, proteins) weighed on profitability .
  • Event mix and comps: Loss of the 2024 Las Vegas-hosted Super Bowl comp in Q1 setup and tough group/catering comps persisted; management cited a ~$1M hotel impact last year when Las Vegas hosted the Super Bowl .

Financial Results

Consolidated P&L Snapshot (Amounts in USD)

MetricQ4 2023Q3 2024Q4 2024
Net Revenues ($ Millions)$462.7 $468.0 $495.7
Diluted EPS ($)$0.95 $0.48 $0.76
Adjusted EBITDA ($ Millions)$201.3 $182.7 $202.4
Adj. EBITDA Margin % (Consolidated)N/A39.0% 40.8%

Notes:

  • YoY: Net revenues +7.1%; diluted EPS down from $0.95 to $0.76; Adjusted EBITDA +0.5% .
  • QoQ: Revenue +5.9% vs Q3; Adjusted EBITDA +10.8%; margin improved to 40.8% from 39.0% .

Segment Breakdown (Amounts in USD)

MetricQ4 2023Q3 2024Q4 2024
Las Vegas Net Revenues ($ Millions)$459.4 $464.7 $492.6
Las Vegas Adjusted EBITDA ($ Millions)$220.3 $202.6 $223.9
Corporate & Other Net Revenues ($ Millions)$3.3 $3.3 $3.1
Corporate & Other Adj. EBITDA ($ Millions)$(19.0) $(19.8) $(21.5)
Las Vegas Adj. EBITDA Margin %N/A43.6% 45.4%

KPIs (Q4 YoY Revenue Mix; Amounts in USD)

KPIQ4 2023Q4 2024
Casino Revenue ($ Millions)$301.7 $326.5
Food & Beverage Revenue ($ Millions)$85.1 $92.1
Room Revenue ($ Millions)$52.2 $52.3
Other Revenue ($ Millions)$23.7 $24.8
Cash & Equivalents (end of period)N/A$164.4M
Total Principal Debt (end of period)N/A$3.4B
Net Debt/EBITDAN/A4.1x
Dividend Declared per Share$0.25 $0.25

Actual vs S&P Global Consensus (Q4 2024)

MetricActualS&P Global ConsensusSurprise
Net Revenues ($ Millions)$495.7 N/AN/A
Diluted EPS ($)$0.76 N/AN/A
Adjusted EBITDA ($ Millions)$202.4 N/AN/A

Note: S&P Global consensus data was unavailable due to provider rate limits during this session; we could not quantify beats/misses vs estimates.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total CapexFY 2025N/A$375–$425M (Investment $285–$325M; Maintenance $90–$100M) New
Renovation/Expansion Disruption (EBITDA impact)FY 2025~$23M (from Q3 call) Up to ~$25M Raised slightly
GVR Rooms & Convention Refresh2025 (start Jun; most rooms back by YE)~$150M ~$180M (added meeting space refresh) Raised
Sunset Station Podium/Casino/Yard House etc.Through 2025~$53M ~$53M (unchanged) Maintained
Durango Phase II (Casino + High-Limit + Garage)Complete by Jan 2026~$116M ~$120M Raised slightly
Term Loan B RepricingOngoingN/ASOFR+2%; ~$4M annual interest savings New
DividendQ1 2025$0.25/share (Q4 declared) $0.25/share declared for Q1 2025 Maintained
North Fork (CA) Total Project Cost2026 Opening~$785M (Q3) ~$750M; financing expected to close in Q1’25 Lowered
North Fork Opening Timing2026“Into 2026” Mid-2026 on schedule Clarified

Earnings Call Themes & Trends

TopicQ2 2024 (Q-2)Q3 2024 (Q-1)Q4 2024 (Current)Trend
Durango ramp/ROI+90% visitation, +88% net theoretical in zone; >55k new sign-ups; ramping to high margins +91% visitation, +92% net theoretical; ~70k sign-ups; ~15% Y1 ROI net cannibalization ~16% Y1 ROI net cannibalization; >85k sign-ups; on track for 20% over 3 years Improving, ahead of plan
Cannibalization & backfill (Red Rock)In line; backfill in 2–3 years In line; primarily Red Rock; backfill expected On pace for 2–3 years backfill Stable execution
Sports betting holdNot highlightedUnfavorable October (~$7.6M) Unfavorable Oct ($8M) and Dec ($6M) YoY; ~150 bps margin headwind Headwind moderating into 1Q
Group/cateringTough comps; building 2025 pipeline Tough comps into Q4 & Q1 (Super Bowl comp) Record hotel revenue in Q4; Q1 catering positive Y/Y; momentum into 2025 Improving after comps
Promotional environmentRational, consistent Stable/rational Market “rational” Stable
Labor & costsProactive wage increases; margins flat ex one-offs Minimum wage hit ~$1.2M in Q3 Salaries +3.1% same-store; July minimum wage ahead; elevated food COGS Mixed; labor moderating, food elevated
Capex/renovationsAnnounced Durango Phase II Budgets: Durango $116M; GVR $150M; Sunset $53M 2025 capex $375–$425M; Durango $120M; GVR $180M w/ meeting space Ramp up investment
Macro/electionStable locals; positive DB trends Seasonality returned; October stability Acceleration post-election; stable Q1 trends Improving
Sports wagering platform (GAN)——Duplicate expenses to roll off after NGCB audit → margin tailwind Positive once complete
Tavern expansionFirst unit planned Sept; 7 contracted First tavern opened; 2 more in Jan/Jun; 7 total planned 2 opened; 6 more in 2025; above expectations Positive growth vector
Regulatory/tribal (North Fork)Site work planned; 18–20 mo build ~$785M cost; 18–20 mo build ~$750M cost; financing close expected Q1; mid-2026 opening; Class III clarified Advancing; cost refined lower

Management Commentary

  • “Our Las Vegas operations achieved its highest fourth quarter net revenue and adjusted EBITDA in our history while maintaining near record adjusted EBITDA margin” .
  • “Durango continues to ramp up and remains on track to become one of our highest margin properties, as well as generate a return of almost 16% net of cannibalization in 2024” .
  • “In the quarter, we converted 78% of our adjusted EBITDA to operating free cash flow…$158.6 million” and finished 2024 at $451 million operating cash flow (57% conversion) .
  • “We expect to spend between $375 million to $425 million [in 2025], which includes $285 million to $325 million in investment capital as well as $90 million to $100 million in maintenance capital” .
  • “During the quarter, the company repriced its Term Loan B… at 2% over SOFR…reduces our interest expense by approximately $4 million per year” .

Q&A Highlights

  • Sports hold impact: “We closed with $8 million in October and then an additional $6 million in December year-over-year” reflecting headwinds to gaming margins; sports hold headwind pegged at ~150 bps of margin this quarter .
  • Seasonality and Q1 setup: Historically Q4→Q1 EBITDA up ~6.6%; management noted Super Bowl comp dynamics and indicated a better outcome this year vs last .
  • 2025 disruption: Renovations/disruptions could be “as much as $25 million” in EBITDA impact, spread through the year; limited disruption so far; peak GVR/Sunset disruption in 2H 2025 .
  • Corporate expense: Expect corporate expense around ~$21M run-rate for 2025 .
  • Capital allocation and leverage: Comfortable around ~4.1x net leverage; willing to flex modestly for compelling projects; term loan repricing reduces interest expense .
  • North Fork: Project cost ~$750M; financing closing expected in Q1; mid-2026 opening; Class III capacity clarified (2,000 initially, then no limit) .

Estimates Context

  • We attempted to pull S&P Global (Capital IQ) consensus for Q4 2024, but the provider returned a daily request limit error. As a result, we cannot quantify beats/misses versus Street for revenue, EPS, or EBITDA in this session. If desired, we can refresh consensus later to benchmark actuals [GetEstimates error].

Key Takeaways for Investors

  • Durango’s ramp strengthens the medium-term thesis: ~16% first-year ROI net of cannibalization with a clear glidepath to ~20% over three years is tracking ahead of plan; the expansion (slots/high-limit/garage) positions Durango for further growth into 2026 .
  • 2025 is a heavy reinvestment year: capex of $375–$425M and ~$25M disruption imply near-term EBITDA headwinds but should elevate asset quality and earnings power into 2026+; GVR budget increase (rooms + convention) aims to capture corporate/group upside .
  • Margin headwinds are identifiable and potentially transitory: sports hold accounted for ~150 bps of Q4 margin pressure; duplicate costs tied to the GAN sports wagering system should roll off post-audit, and labor pressure appears to be moderating .
  • Balance sheet momentum and lower interest expense are positives: repriced Term Loan B saves ~$4M annually; net leverage at ~4.1x with a clear deleveraging path as Durango ramps and Red Rock backfills .
  • Demand backdrop remains healthy: post-election acceleration, stability across core segments, and record hotel/F&B revenues underpin resilience; management expects typical Q1 seasonal uplift from Q4 .
  • Event/comp dynamics matter: the absence of Las Vegas-hosted Super Bowl in comps will weigh on sequential modeling, but management noted a better sports outcome this year and ongoing group/catering improvement into 2025 .
  • Watch catalysts: (i) North Fork financing close and construction progress; (ii) confirmation of 2025 disruption cadence; (iii) any update on next greenfield project (e.g., Inspirada/Cactus) by this time next year; (iv) sports hold normalization and GAN audit completion; (v) continued Durango ROI trajectory .

Citations

  • Q4 2024 press release and 8-K (including detailed financial tables):
  • Q4 2024 earnings call transcript:
  • Q3 2024 8-K and call (for trend analysis):
  • Q2 2024 call (for trend analysis):