Red Rock Resorts NASDAQ: RRR reported second-quarter results that declined from a year earlier but remained among the strongest second-quarter performances in the company’s history, as its Las Vegas operations navigated renovation and construction-related disruption at several properties.
Las Vegas operations generated net revenue of $503.2 million, down 2% from the prior-year quarter, while adjusted EBITDA declined 5% to $227.5 million. The segment’s adjusted EBITDA margin was 45.2%, down 143 basis points year over year.
On a consolidated basis, including contributions from the North Fork project, revenue fell 3% to $510.3 million and adjusted EBITDA decreased 9.3% to $208 million. Consolidated adjusted EBITDA margin was 40.8%, a year-over-year decline of 281 basis points.
Chief Financial Officer Stephen Cootey said the Las Vegas business delivered its second-highest second-quarter revenue and adjusted EBITDA in company history, behind only the prior-year period. He said the company saw higher carded spend per visit and net theoretical win across local, regional and national customer segments.
Gaming and non-gaming trends
President Scott Kreeger said slot revenue, the company’s largest source of business, was relatively consistent across April, May and June. April performed better than May and June in race and sportsbook and table games, he said, but the differences were limited.
Cootey said World Cup-related promotions and activations during June helped drive traffic at the company’s properties. Management said it was seeing stable trends in core slot and table operations entering the second half of the year.
The company also reported strength in hotel and food-and-beverage revenue, though the Green Valley Ranch hotel renovation removed more than 21,000 available room nights during the quarter. Cootey said the reduction affected hotel, gaming and food-and-beverage revenue and profitability, estimating the Green Valley Ranch disruption at about $7 million, compared with a previously anticipated $9 million impact.
Kreeger said same-store hotel performance excluding Green Valley Ranch was strong, with favorable occupancy and average daily rate trends. He added that the company’s average daily rate outpaced the Las Vegas Strip during the quarter. The East Tower at Green Valley Ranch is expected to return to service in September, completing renovations to the property’s rooms and suites.
Management said demand and spending trends remained stable across customer segments, including higher-end and lower-end guests. Kreeger said the company had not experienced an impact from Strip operators’ value packages, arguing that Red Rock’s locals-focused business is supported by convenience, service and value.
Construction activity and expansion plans
Red Rock Resorts is managing construction at Durango, Sunset Station and Green Valley Ranch, alongside state infrastructure work near several properties. Cootey said Durango experienced little disruption in the second quarter, but the company continues to expect approximately $2.5 million of disruption in the third quarter and in subsequent quarters until work is completed in the second half of 2027.
The Durango North expansion remains on schedule for opening in the second half of 2027. Management said the property’s performance has supported its view that new integrated resorts can grow the Las Vegas locals market rather than merely shift demand among existing operators.
At Sunset Station, the company recently reopened the Gaudi Bar and plans to open Stoney’s Rockin’ Country, a country-western bar and nightclub, in the coming weeks. The broader $87 million redevelopment includes theater improvements, a permanent bingo location, and redevelopment of former buffet space into a steak club, steakhouse and high-limit gaming area. The project is expected to continue through 2026 and into 2027.
Green Valley Ranch’s next redevelopment phase includes a casino-floor refresh, food-and-beverage enhancements and entertainment upgrades. That work is expected to continue into 2027 and carries an estimated $56 million cost.
Meanwhile, the North Fork project remains on track for an early fourth-quarter 2026 opening. Cootey said the project is fully financed, remains on budget and is expected to have total all-in costs of about $750 million. Red Rock’s outstanding note receivable from the tribe was approximately $83.4 million at quarter-end.
Cash flow, capital spending and shareholder returns
The company generated $100 million of operating free cash flow during the quarter, or $0.95 per share, representing 48% of adjusted EBITDA. Year-to-date operating free cash flow totaled $206.7 million, or $1.97 per share.
- Cash and cash equivalents totaled $136.5 million at quarter-end.
- Total principal debt outstanding was $3.6 billion, resulting in net debt of $3.5 billion.
- Net debt to EBITDA was 4.21 times.
- Quarterly capital spending was $139.8 million, including $94.4 million of investment capital and $45.4 million of maintenance capital.
- Full-year 2026 capital spending guidance was maintained at $375 million to $425 million.
Red Rock Resorts said it has returned approximately $198 million to shareholders year to date through dividends and share repurchases. Its board declared a quarterly cash dividend of $0.26 per Class A common share, payable Sept. 30 to shareholders of record as of Sept. 15.
Looking ahead, Cootey said the third quarter is historically one of the company’s softer seasonal periods, with Las Vegas operations typically down about 10% sequentially from the second quarter. Management noted, however, that fourth-quarter comparisons will be affected by the expected North Fork opening.
The company also plans to record approximately $8 million of one-time 50th anniversary and brand-marketing expense in third-quarter corporate expense. The campaign, branded “From Vegas, For Vegas, Always Vegas,” is intended to reinforce the company’s position in the Las Vegas locals market, according to management.
About Red Rock Resorts (NASDAQ:RRR)
Red Rock Resorts, Inc NASDAQ: RRR is a publicly traded gaming and hospitality company headquartered in Summerlin, Nevada. The company owns and operates a diversified portfolio of full-service casino resorts and neighborhood gaming properties in the Las Vegas valley. Its core business activities include resort hotel accommodations, casino gaming, food and beverage operations, entertainment and convention services designed to meet the needs of both leisure and business travelers.
The company's flagship resort, Red Rock Casino Resort & Spa, features a full range of table games, slot machines, a luxury spa, convention space, multiple signature restaurants and live entertainment venues.
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