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DATE

Tuesday, Aug. 4, 2026 at 4:30 p.m. ET

CALL PARTICIPANTS

• Executive Vice President, Chief Financial Officer and Treasurer - Stephen Cootey

TAKEAWAYS

• Net Revenues -- $510.3 million for Red Rock Resorts, Inc. (RRR +2.85%), down 3.0% primarily due to the absence of a one-time catch-up payment in the Native American segment and construction disruptions at core properties.
• Net Income -- $76.6 million, representing a 29.3% decrease compared to the second quarter of 2025.
• Adjusted EBITDA -- $208.0 million, down 9.3% from the prior-year period.
• Las Vegas Net Revenues -- $503.2 million, a 2.0% decrease reflecting room night losses during the Green Valley Ranch renovation.
• Las Vegas Adjusted EBITDA -- $227.5 million, down 5.0% from the previous year's historic high.
• Las Vegas Adjusted EBITDA Margin -- 45.2%, a decrease of 143 basis points but remaining near record levels.
• Native American Net Revenues -- $3.8 million, down 62.0% from $10.0 million in the second quarter of 2025.
• Native American Adjusted EBITDA -- $2.8 million, down 72.0% from the prior-year quarter.
• Operating Free Cash Flow -- $100 million, representing a conversion rate of 48% of adjusted EBITDA.
• Cash and Cash Equivalents -- $136.5 million at the end of the second quarter.
• Total Principal Debt -- $3.6 billion at the end of the quarter.
• Net Debt and Leverage -- $3.5 billion in net debt with a net debt to EBITDA ratio of 4.21 times.
• Capital Expenditures -- $139.8 million in the second quarter, consisting of $94.4 million in investment capital and $45.4 million in maintenance capital.
• FY 2026 CapEx Guidance -- $375 million to $425 million, including $275 million to $300 million for investment capital and $100 million to $125 million for maintenance capital.
• Green Valley Ranch Renovation Impact -- $7 million in the second quarter, driven by the loss of approximately 21,000 available room nights.
• 50th Anniversary Expense -- $8 million, a one-time brand marketing and celebration expense expected to be recorded in the third quarter of 2026.
• North Fork Project Cost -- $750 million, with the development remaining on budget and fully financed.
• North Fork Note Receivable -- $83.4 million, representing the outstanding amount from the tribe at the end of the quarter.
• Sunset Station Redevelopment -- $87 million for a multiphase project including a new podium, steakhouse, and high-limit gaming areas.
• Green Valley Ranch Phase 2 -- $56 million for a casino floor refresh and upgraded food and beverage offerings expected to extend into 2027.
• Salary and Wage Growth -- 3% year over year, according to management reports on labor trends.
• Third Quarter Seasonality -- 10%, the typical sequential revenue decrease expected from the second quarter to the third quarter.
• Tavern Expansion -- Six of eight planned taverns are now open, with two additional locations scheduled to open by the end of 2026.
• Shareholder Returns -- $198 million returned to shareholders year to date through a combination of dividends and share repurchases.
• Quarterly Dividend -- $0.26 per Class A common share, payable on Sept. 30 to shareholders of record as of Sept. 15.

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RISKS

• Cootey stated, "Utilities continue, particularly, continue to be a drag... on OpEx," noting that these costs are expected to remain a headwind for the remainder of the year.

SUMMARY

Management reported that second-quarter performance was influenced by construction-related disruptions at core properties and the absence of a one-time payment from the previous year. Red Rock Resorts continues to execute a multiproperty redevelopment strategy while preparing for the opening of the North Fork project in the fourth quarter of 2026. The company stated that demand remains stable across its carded database, with growth in spend per visit offsetting temporary hotel room inventory reductions. Financial efforts are currently focused on a balanced capital allocation approach, prioritizing investment in the Durango expansion and podium refreshes at Sunset Station and Green Valley Ranch.

• Scott Kreeger noted that the property lean-in to the World Cup in June "drove a lot of bodies" and helped traffic and traffic-driven revenue during the month.
• The Durango North expansion remains on schedule to open in the second half of 2027, with construction on-site and off-site infrastructure projects currently underway.
• Lorenzo Fertitta stated the company is working on "multiple projects from a design standpoint," including two greenfield projects and a master plan expansion at Durango to add rooms and a spa.
• The North Fork project has begun installing slot machines and gaming equipment following the turnover of the first phase of the casino podium.
• Management reported that hotel ADR outpaced the Las Vegas Strip during the quarter, supported by healthy underlying demand despite the Green Valley Ranch renovation.
• Infrastructure projects by the Nevada Department of Transportation near Durango, Green Valley, and Red Rock properties are expected to cause approximately $2.5 million in quarterly disruption through 2027.

INDUSTRY GLOSSARY

• ADR: Average Daily Rate, a metric used to measure the average rental income per paid occupied room per day.
• Carded Spend: Gaming activity tracked through a player's loyalty card, providing data on customer behavior and theoretical win.
• Net Theoretical Win: The amount of money a casino expects to win from a guest based on the mathematical advantage of the games and the volume of play.
• North Fork Project: A tribal gaming development project in northern California managed by Red Rock Resorts.
• Tavern Business: Smaller-scale gaming and dining facilities located in local neighborhoods, intended to reach underpenetrated market segments.
• Theoretical Win: The expected house advantage on a specific game or player over a given period.

Full Conference Call Transcript

Operator: Good afternoon, and welcome to Red Rock Resorts Second Quarter 26 Conference Call. All participants will be in a listen-only mode. Please note this conference is being recorded. I would now like to turn the conference over to Stephen Cootey, Executive Vice President, Chief Financial Officer and Treasurer of Red Rock Resorts. Please go ahead.

Stephen Cootey: Thank you, operator, and good afternoon, everyone. Thank you for joining us today for Red Rock Resorts' second quarter 26 earnings conference call. Joining me on the call today are Frank and Lorenzo Fertitta, Scott Kreeger, and our executive team. I would like to remind everyone that our call today will include forward-looking statements under the safe harbor provisions of the United States Federal Securities Laws. Developments and results may differ from those projected. During the call, we will also discuss non GAAP financial measures. For definitions and complete reconciliation for these figures to GAAP, please refer to the financial tables in our earnings press release, Form 8-Ks and investor deck, which were filed this afternoon prior to the call.

Also, please note that this call is being recorded. Before we begin discussing our second quarter results, I would like to take a moment to recognize an important milestone for our company. On July 1, Station Casinos officially kicked off celebrating our 50th anniversary at Palace Station. The property where our story began. Throughout the summer, we are celebrating the history of our company, our incredible team members, our loyal customers, and the Las Vegas community. As part of this celebration, we will incur approximately $8 million 1-time anniversary and brand marketing expense, which will be reflected in our third quarter corporate expense.

We view this as an investment in honoring our history, recognizing our team members, our loyal customers, and the local community that have made our success possible. The celebration also marks the launch of our new brand campaign from Vegas for Vegas, always Vegas. Reflecting our enduring commitment to the city we have proudly called home for the past 50 years and our confidence in the next chapter of our company's growth. Our second quarter results demonstrate the company we have built over the past 5 decades is as strong as it has ever been.

Even against the strongest operating quarter in the company's history a year ago, our Las Vegas operations delivered the second highest second quarter net revenue and adjusted EBITDA in our history. While maintaining near record adjusted EBITDA margin. These results demonstrate the strength consistency and resilience of our operating model and our ability to deliver long term shareholder value through strong operational performance and disciplined capital allocation. Our Durango property continued to perform exceptionally well despite ongoing construction impacts, and has firmly established itself as a meaningful growth driver within the Las Vegas locals market.

The property's continued success reinforces our long held understanding that investing in best in class integrated resorts can expand the market rather than simply redistribute existing demand. Equally important, our core properties continue to generate growth further demonstrating the strength of our broader portfolio. Building on Durango's continued momentum construction of the Durango North expansion is progressing well, and remains on schedule to open in the second half of 2027. The continued strength of our existing property together with the significant residential growth occurring in Southwest Las Vegas, reinforces our confidence in the expansion and its long-term growth prospects.

Just as importantly, Durango continues to validate our approach to capital allocation, and we believe this expansion will further strengthen the property's competitive position expand the Las Vegas locals market, gain market share and generate superior long term shareholder value. Now let's take a look at our second quarter results. With respect to our Las Vegas operations, our second quarter net revenue was $503.2 million, down 2% from the prior year's second quarter. Our adjusted EBITDA was $227.5 million, down 5% from the prior year second quarter. Our adjusted EBITDA margin was 45.2% a decrease of 143 basis points from the prior year.

On a consolidated basis, our second quarter net revenue which includes $3.8 million from our North Fork project, was $510.3 million, down 3% from the prior year's second quarter. Our adjusted EBITDA, which includes $2.8 million from our North Fork project, was $208 million, down 9.3% from the prior year second quarter. Adjusted EBITDA margin was 40.8% for the quarter, a decrease of 281 basis points from the prior year. During the quarter, we converted 48% of our adjusted EBITDA to operating free cash flow, generating $100 million, or $0.95 per share. Year to date, we have generated $206.7 million operating free cash flow or $1.97 per share.

This strong free cash generation continues to validate our operating model, and disciplined approach to capital allocation enabling us to invest in our properties while continuing to return meaningful capital to our shareholders. Through dividends and share repurchases. As we begin the third quarter, we remain focused on serving our core local guests. We will continue to grow our regional and national customer segments across the portfolio. Compared to the second quarter of last year, we saw meaningful growth in overall carded spend per visit together with higher net theoretical win across our local, regional and national customers.

These trends drove the second highest second quarter gaining revenue and profitability in our company's history surpassed only by last year's historic quarter. Turning to our nongaming operations. Our hotel and food and beverage divisions delivered a strong revenue quarter. Reflecting healthy underlying demand across both businesses and the diversification of our operating model. During the quarter, Green Valley Ranch hotel renovation reduced the available room night inventory by more than 21 thousand room nights. Impacting both revenue and profitability across both divisions. Even with this temporary disruption, hotel performance remained solid supported by higher occupancy across the portfolio. Our food and beverage division benefited from higher guest volumes and higher check averages.

We look forward to once again offering our guests the full Green Valley branch hotel product beginning in late September. As we look ahead to the balance of the year, we are seeing stable trends in our core slot and table business across the Las Vegas locals market, and within our carded database. While we expect ongoing disruption from construction activity at our Durango, Sunset Station and Green Valley Ranch properties, we are actively managing these projects to minimize operational disruption. We believe these temporary disruptions are more than offset by the long-term benefits of these investments. which will enhance the guest experience strengthen our competitive position and drive long term shareholder value.

Now let's cover a few balance sheet and capital items. The company's cash and cash equivalents at the end of the second quarter was $136.5 million, and the total principal amount of debt outstanding was $3.6 billion, resulting in net debt of $3.5 billion. As of the end of the quarter, the company's net debt to EBITDA ratio was 4.21 times. During the quarter, we made total distributions of approximately $59 million to the LLC unitholders of Station HoldCo. Including a distribution of approximately $34.5 million to Red Rock Resorts. Company used its portion of the distribution to fund its previously declared quarterly dividend of $0.26 per Class A common share.

When combining the dividend and share repurchases made during the year, we have returned approximately $198 million to our shareholders. Capital spend in the quarter was $139.8 million, which includes approximately $94.4 million in investment capital, as well as $45.4 million in maintenance capital. This brings our year to date capital spend to $257 million, which includes approximately $181.6 million in investment capital, as well as $75.4 million in maintenance capital. For the full year 2026, we still expect to spend between $375 million and $425 million, which includes $275 to $300 million in investment capital. As well as $100 million to $125 million in maintenance capital.

In addition to the continued investment at Durango, we are making significant investments at our Sunset Station and Green Valley Ranch properties. At Sunset Station, we are continuing to make excellent progress on our podium refresh. The recently reopened Gaudi Bar has been met with positive customer feedback, and we are very encouraged by its early financial performance, reinforcing our confidence in both the renovation strategy and the underlying demand at the property. In the coming weeks, we look forward to opening Stoney's Rockin' Country, a new country western bar and nightclub, which will further expand the property's entertainment offerings. The renovation remains on budget with the remaining amenities expected to come online throughout 2026.

Building on this momentum, we continue to execute the next phase of the Sunset Station redevelopment. This phase includes enhancements to the movie theaters, relocation of a temporary bingo operation into a permanent location, and the redevelopment of the former buffet space into a premium steak club, a steakhouse, and a high limit slot and table game area. These investments build upon a proven strategy that has consistently generated attractive returns across our portfolio. Further strengthening our confidence in the long term opportunity at Sunset Station. Construction remains on schedule with the balance of the project expected to be completed throughout 2026 and into 2027. The total project cost remains $87 million.

At Green Valley Ranch, we continue to make excellent progress on the comprehensive renovation of our hotel product. The West Tower and Convention space have reopened to positive customer feedback and encouraging financial performance, validating our investment in the property. We expect to have the full East Tower Hotel product back online in September, completing the renovation of all of our guest rooms and suites. Upon completion, Green Valley Ranch will feature 1 of the finest hotel products in the Las Vegas Valley, complementing the recently renovated high limit slot and table game areas. And further strengthening its competitive position as 1 of Southern Nevada's premier integrated resorts.

Building on the momentum of these investments, we continue to execute the next phase of Green Valley Ranch's long term redevelopment strategy. This phase includes a comprehensive casino floor refresh, enhancements to its food and beverage offerings, and upgrading entertainment amenities. Construction is underway and is expected to extend into 2027. With a total project cost is estimated at approximately $56 million. Turning to North Fork. Construction continues to progress well as we move closer to opening. Last month, we successfully completed the turnover of the first phase of the casino podium, and we have begun installing slot machines and other gaming equipment.

We expect turnover of the next phase of the podium later this month, which will keep us on pace for an early fourth quarter 26 opening. The project remains on budget, and is fully financed with total all in costs expected to remain approximately $750 million. As of quarter end, the Red Rock's outstanding note receivable from the tribe was approximately $83.4 million, with construction progressing well and the project moving into its operational readiness phase, we remain excited about this best-in-class development and look forward to welcoming our first guests later this year.

The company's Board of Directors has also declared its regular cash dividend of $0.26 per Class A common share payable on September 30 to Class A shareholders of record as of September 15. As we look ahead, we remain confident in the strength and resilience of our business model. And long term opportunities across our portfolio. Our recent capital investments continue to perform well, reinforcing our disciplined approach to reinvesting our existing properties and advancing our development pipeline. Continued success at Durango validates our long term growth strategy and the embedded value of our more than 450 acres of owned development land located in some of the most attractive submarkets across the Las Vegas Valley.

Combined with our portfolio of best in class assets, this unmatched development pipeline positions us to capitalize on a very favorable demographic trends and high barriers to entry that continue to define the Las Vegas locals market. And before we wrap up, we would like to sincerely thank all of our team members for their continued hard work, dedication, and commitment to delivering exceptional guest experiences every day. They are the foundation of our company's success, and the driving force behind the results we continue to achieve. Their efforts continue to be recognized both locally and nationally. During the year, Station Casinos was recognized by Forbes and Statista as 1 of America's best large employers of 2026.

By Newsweek as 1 of America's greatest workplaces by state for the second consecutive year as a top workplace in Nevada for the sixth consecutive year and as a USA TODAY top workplace for the fourth consecutive year. Finally, as we celebrate our 50th anniversary, we want to extend our sincere gratitude to our loyal guests and the communities we have proudly served over the past 5 decades. Your trust and support have made this milestone possible. As we look to the future, we remain committed to investing in our team members, our properties, and our communities as we continue building on the foundation established over the past 50 years.

With that, operator, we would be happy to open the line for questions.

Operator: We will now begin the question and answer session. To ask a question, you may press star then 1 on your touch tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. At this time, we will pause momentarily to assemble our roster. First question today comes from Benjamin Chaikin with Mizuho. Please go ahead.

Ben Chaikin: Hey, how's it going? Thanks for taking my questions. Maybe if you could just take us through the cadence of the quarter to the extent you can. I think we had heard that maybe June was potentially softer in Las Vegas. Not sure if that is calendar related or maybe anything underlying. Just maybe what you are seeing to the extent you can break it down. Thank you.

Scott Kreeger: Hey, Benjamin. This is Scott. Thanks for the question. Let's start with slot revenue, which for us is our primary source and most important aspect of our business. Actually, we are very consistent across all 3 months of the quarter. And then if you look at it, April 2 was definitely better than May and June, but only by a certain amount of whole percentage difference in race and sportsbook and table games. But otherwise pretty consistent across the quarter. We actually got quite a pickup from the World Cup in June. Our properties really leaned into activation and promotion for the event, drove a lot of bodies, overall, I think it helped June from a traffic standpoint.

Analyst: So it was positive.

Ben Chaikin: Understood. that is very helpful. And then maybe just from a modeling standpoint question. Love to touch on seasonality. Just as we sit here today, what is your best take on Q3, at least historically? Thanks.

Stephen Cootey: Yeah. Thanks, Benjamin. Looking forward typically from Q2 to Q3 is seasonal, with Q3 being 1 of our softer quarters, usually you see it down 10% from Q2 to Q3. Appreciate it.

Ben Chaikin: Thanks.

Operator: The next question comes from Trey Bowers with Wells Fargo. Please go ahead.

Trey Bowers: Hey, guys. Thanks for the question. Just wondering if you guys in the past have given some helpful detail around kind of the numeric impact of the disruption. As we think about Q2 and then kind of making our way through the balance of the year as some of these projects kind of finish up and come online? Any sense of just the impact in Q2 relative to Q1 and then what it might look like for the next couple of quarters? Thanks.

Stephen Cootey: Yeah. Sure. I think the team did a great job managing disruption both on-site at our Green Valley Ranch, Sunset Station, Durango properties as well as off-site as NDOT is engaged in a pretty substantial infrastructure projects across near several of our properties, including Durango, Green Valley, and Red Rock. You know, while estimating disruption is never really an exact science, we did experience temporary disruption at Green Valley. To the extent about $7 million, which was slightly lower than the $9 million we had noted in our last earnings call. And it was really driven by the primary loss of the 21 thousand room nights as well as the associated gaming, food, and beverage revenue of the property.

Durango, the team did a great job managing disruption. We really did not see too much disruption in Q2, but still stick to our guidance as construction both on-site and off-site, is kind of progressing. So we are still guiding about $2.5 million in Q3, and then each quarter subsequent to the project completes in the back half of 27. I did want to remind everyone, by the way, that these income you know, these impacts are temporary in nature. And they are more than offset by the long-term benefits of the investments that we are making.

Trey Bowers: And then if I could just get a follow-up, appreciate the call out of the $8 million impact from the 50th anniversary this quarter. Just offsetting that, any anything that we should expect to see kind of from a top line perspective or just any further detail on what that means from the model, that would be super helpful. Thank you.

Scott Kreeger: Well, I think this is Scott. I think, certainly, there is a good degree of brand awareness and goodwill that comes into what we are doing here. You know, we are part of the community and being out the community with the message is certainly going to have a positive impact going forward. I can tell you, you know, looking at the quarter thus far, we are happy with the way things are going. And, you know, if we stay on this track, I would imagine there is a net positive effect from the top line.

Trey Bowers: Great. Thanks all.

Operator: The next question comes from Chad Beynon with Macquarie. Please go ahead.

Aaron: Hey, good afternoon. This is Aaron on for Chad. Thanks for taking our question. Maybe to start with just a higher level question. We continue to hear about the C-shaped economy versus the K-shaped economy. Are you seeing any notable differences in visitation or spend between your lower worth and higher worth customers?

Stephen Cootey: No. Actually, I mean, we I think as the I mentioned, the trends are pretty stable across our entire business, both slots and tables. And that stems to both I think both from the high-end to low-end customers.

Aaron: Okay. Gotcha. Great to hear you guys did well on the World Cup. Just kind of sticking on the event theme. The third F1 Las Vegas race is coming up, and I know in the past, you have said that F1 is not really, you know, an event for your company. Just curious if that is still the case or maybe if the programming around it or you know, the understanding of visitation and customer behavior has changed where there could be some opportunities for you guys? Thanks.

Lorenzo J. Fertitta: Yeah. This is Lorenzo. The F1 event in Las Vegas is primarily tourist driven as we see it. You do not get a lot of rallying behind it from a local's perspective. The World Cup worked for us because, you know, the local fans were really into it. Obviously, with the different countries participating depending what game was going on, I mean, our sports folks were just billowing with people all over. It was actually very, very positive. Like I said, from a traffic standpoint, But for us, specifically, F1 does not really move the needle, at all, and we do not really lean into anything to, you know, participate in a promotion.

My understanding is it is obviously very good for the higher end properties on Las Vegas Strip, though.

Aaron: So Okay. Thank you. Nice quarter.

Operator: The next question comes from Joe Stauff with Susquehanna. Please go ahead.

Joe Stauff: Thanks. I was wondering if you could give maybe an assessment of the level of demand you are seeing or you saw in the second quarter and what you are seeing thus far as far as you could see it for destination and regional demand, and then maybe an update with respect to the roadwork and, you know, all the things that the state is doing, in and around the Durango property. Is it worsening? Is it the same as you know, let's say, it was a month or 2 ago? Just trying to assess you know, that level of disruption there.

Scott Kreeger: Yeah, Joe. it is Scott. I will take the first question, and let me get maybe Stephen to talk about the second. If I were to gauge demand, I would look at 2 areas, inbound gaming and then inbound hotel. We like the way the database and the customer segments performed in the quarter? We like what we are seeing in July, and into the future relative to the gaming database. And specifically, our regional, which is essentially drive market and out of town, which is fly market. So we see positive trends there. From a hotel perspective, x the GVR, the impact of having about 21 thousand rooms out in the quarter from GVR.

The hotel same store hotel performed very well. For the quarter, Q2. We like the trends there. We like trends in occupancy, ADR. We outpaced the strip from an ADR perspective. And then as we look into the future into Q3 and then look at forward group sales bookings we see green shoots and positive performance. Keeping in mind that the GVR rooms are going to come online in mid-September, and that is really going to, you know, put wind in the sails for us from a destination perspective.

Stephen Cootey: Sure. Maybe to tackle the second question, Joe. I mean, in terms of this, probably, 3 or 4 items that are that are going on right now around Durango. So from a Roy Horn perspective, that was the construction we talked about. Earlier this year. That has been since completed. That was the connection really, the infrastructure connectivity into the multifamily development that is going up right next to Durango. But you know, both the westbound on ramp, eastbound on ramp are kicking off, actually. In June 2026 and expected to, you know, expected to last pretty much the next year. As well as the triple left on Durango South.

So 3 of the major infrastructure projects are just kicking off. Got it. And the same thing at Red Rock as well as at Green Valley, yes.

Joe Stauff: And the incremental $8 million that you are spending, just a clarification, you know, if you are kicking off a marketing campaign is it fair to say that some level of spending might stick in that corporate line, say, in fourth quarter out you know, to maintain that marketing campaign to some degree?

Lorenzo J. Fertitta: If you are referring to the million, I mean, this. We look. Me and Frank, the it started as a family business. The business has been around for 50 years. We thought that the anniversary was a great opportunity for us to kick off so called branding campaign, to reinforce our position in the market here in the locals market, a market that was really created by our dad. And we just felt like that it was the perfect point to kick off something like that. We have had a ton of good feedback, and there is been a lot of media coverage, and PR and earned media as well.

Along with the media spend that we have in the marketplace around the brand campaign, which also right now is featuring a lot of our long term team members, some of which have been with us almost 50 years. So, look, we think that we are gonna get benefit from this for a lot of years to come. We have done this in the past. We have had, you know, a number of different brand campaigns from we love locals to you know, we have been doing it for a long time, and we just felt like it made sense to do it around the 50th anniversary.

Look, They do cost money, and it is a charge that is gonna hit the quarter in the third quarter. But overall, we think it is the right thing to do for the long term benefit of the business.

Joe Stauff: Makes sense. Thank you.

Operator: The next question comes from Steven Pizzella with Deutsche Bank. Please go ahead.

Steven Pizzella: Hey, good afternoon, everybody, and thank you for taking our questions. As some of the ROI projects come back online and start contributing, how should we think about how fast the ROI projects ramp as we build a bridge in our models into 2027?

Stephen Cootey: I think we have always been pretty consistent in terms of targeting, the you know, these projects over a 3-year lifespan. So the first year generally is around 10%. The first project is the major project coming online is Really the green, you know, Green Valley, which should be online as of Q4.

Steven Pizzella: Okay. Thanks. So just as a follow-up, have you seen any impact from the strip operators becoming more aggressive on value, including all inclusive offerings and promotional packages, has demand in the locals market remain largely insulated?

Scott Kreeger: Hey, Steven. This is Scott. First of all, you know, we love what the strip did this summer by you know, kind of offering them all of if you will, for value packages. I think it only helps the city You know, we provide value every day. it is in the core of what we do. You know, our model is a high frequency model.

Frank J. Fertitta: So, you know, we make sure that but value is relative. Value is just about price. Yeah. Based on convenience, value, and friendly service the fact that our employees know our customers there is a relationship there. We have kinda been asked this question literally you know, ever since we went public the first time in 1.99 thousand. it is the same thing. The locals want to be the convenient value oriented it is consistently delivering to them what they want. And so no, I do not believe that we have seen any impact on us as a company from that. But I do think it is good for the strip long term to offer value to their customers.

You know? So net, it should long term be good.

Steven Pizzella: Thank you. Appreciate it.

Operator: The next question comes from David Katz with Jefferies. Please go ahead.

David Katz: You know, first, I wanted to, you know, I am looking ahead, seeing a lot of these projects sort of get to their you know, final stages and in good form. You know, how soon might we be talking about kind of the next casino project and you know, where it would be in you know, we are just anxious to start modeling that stuff in.

Lorenzo J. Fertitta: Sure. This is Lorenzo. I think consistent with what we have been talking about the last couple quarters, we are currently working on, multiple projects from a design standpoint, both new build greenfield projects We have got 2 that we are actively working on right now, and gonna have to figure out determine which 1 is going to go first as well as a master plan expansion that we have been working on to add rooms and a spa facility at Durango. Obviously, on the heels of after potentially after opening this expansion that we have going on now, has all the different entertainment components.

We are currently working with multiple GCs, out in the market to, determine pricing as we have, for the most part, kind of decided on scope of the various projects. So right now, we are kind of actively trying to get our head around, where pricing could potentially come up. And whether or not, you know, we need to make any changes to design or, know, be anything, and we are just working through it. You know? We are we are hoping to have, more information as we kind of turn the corner and get into the early part of 2027. And, you know, believe me, we are as anxious as anybody to get going with another project.

We are a development company. We have had our best success by building projects from the ground up. We have been able to have some of the highest returns in the gaming industry. You know, by doing that and, obviously, off the success we have had with Durango, we are anxious and ready to go, but these things just take time to gestate and we have got to kind of slot them in, at the right time. But we are actively working on it and have more news to come shortly.

David Katz: Appreciate that. And as my follow-up, I just wanted to ask about the advent of major sports in the valley, right? I mean, the, you know, the a's are coming. There we heard some talk this quarter about, you know, an NBA facility, which has been talked about for a while? What strategy, if any, makes sense in leaning into those, you know, major sports in the valley, and do you get any, you know, tangible benefit from it?

Lorenzo J. Fertitta: I think I mean, I think there is a number of different benefits we get. Obviously, you know, there is a lot of interest as these professional teams come to Las Vegas. They generate and draw a lot of fans, which helps the overall hotel room base for the city. Us specifically, we have had a lot of success, partnering up with the Golden Knights. Know, we do a lot of promotional, activity around them. there is a large fan base and a lot of affinity for the Knights here. Obviously, the Raiders have been great as well. And the visiting teams, what? Stay at our property? Yeah.

We do have a lot of the visiting NFL teams that stay at our properties And I think you are gonna see more of the same with the A's. And potentially with an NBA franchise, coming to Las Vegas. And I think you start to get just that amount of heft and that amount of activity. And, you know, Las Vegas is really turning into an events city. Know? that is where really what is driving a lot of these weekends is you know, what is the big event, whether it is a major sporting event, a fight, entertainment, obviously. So there always seems to be something going on.

We have been a critical mass that is net gonna be a positive for the city of Las Vegas. Which we are, you know, a micro cosm of the entire city and how it is doing. And it and it helps our high-end play too. I mean, we get a lot of we are starting to develop a lot more robust business on our high end table games play. And anytime there is a large boxing event or UFC event, we see a lot of benefit from that. People flying in want to stay with us. At Red Rock Durango and GVR.

And, you know, from a local guest standpoint, I think our casino marketing department does a good job, you know, taking a lot of our higher-end local guests to Golden Knights games and to Raider games and really just use them, you know, as the other casino properties do, as a benefit and amenity to, you know, create brand loyalty and as a way to, excite our guests about staying with us or playing with us. So overall, it is just a big net benefit.

David Katz: Appreciate that. Thank you.

Operator: The next question comes from Brandt Montour with Barclays.

Christy: Hey, guys. it is Christie on for Brandt. Thanks for taking our question. Just as it relates to the next growth phases at GVR and Sunset that are coming online in 2026 and into 2027. What percent of the enhancements would you say would be coming online by year end 2026?

Stephen Cootey: In terms of in terms of the second piece, well, in terms of the majority, the first piece of Sunset will be coming online. Really, the only real remaining pieces of the Leticia's and RosaLitas. Right? Those are the only 2 real remaining items. The rest of the items, can be seen coming online. maybe bingo is gonna be late this year, but then the rest of the remaining items will be 2027 from a Green Valley perspective. We are really focused on getting the hotel across the finish line. So that is the asset that you are going to see placed in service in 2026 with the remainder coming online in 2027.

Christy: Got it. Thank you. And then and just a clarification. On the seasonality comments. Either in relation to 3Q, but more specifically 4Q, I know in the past, you guys have said that April from March is up 10% to 11% sequentially. Is that a consolidated comment? Or is that specific to Las Vegas operations, Las Vegas operations, I think that is gonna be a much more important distinction as we open up North Fork to our guests in Q4.

Stephen Cootey: Okay.

Christy: Great. Thanks, guys, so much.

Operator: The next question comes from Barry Jonas with Truist. Please go ahead.

Jeremy: Hi. This is Jeremy on for Barry. Thanks for taking our questions. Can you talk about the promotional environment in the locals market right now? And any changes in competitive behavior?

Scott Kreeger: Hey, Jeremy. it is Scott. Yeah. As we have talked about in previous quarters, it is very rational. And so we do not see any change in the market nor anything that would change us to or make us change our strategy.

Jeremy: Got it. And then how has the tavern business trended? Have you seen any notable cross sell customers sourced there to your casino properties? Thanks.

Scott Kreeger: So we are we just opened up our 6 of 8 taverns. We have 2 more to go, 1 in October, 1 at the end of the year. We got into the tavern business for a couple of key business reasons, 1 of which was to get entrance into underpenetrated areas around the valley. And so we do see incremental pickup in new customers that are new to brand. And we also do see crossover play with customers that go to our big boxes as well. So far, we like the performance of the taverns, and we are excited about the 2 additional taverns to come online by the end of the year.

Jeremy: Thank you.

Operator: The next question comes from Dan Politzer with JPMorgan. Please go ahead.

Dan Politzer: I wanted to touch on OpEx a bit. I mean, you talk a little bit about what you are seeing in terms of labor, utilities, insurance? We have heard that some of those trends have been getting better. And then I guess more broadly, as you think about those investments ramping and taking into account the OpEx environment, how should we think about the margin lift into 2027?

Stephen Cootey: Sure. I will start. From a labor perspective, you know, we are in line with, you know, salary and wages up around 3% year over year. Utilities continue, particularly, continue to be a drag, you know, on you know, on OpEx. And my sense is we will continue to be a drag for the remainder of the year.

In terms of margin, when you take a look at our margin, our margin was down year over year, but that was primarily due to Green Valley Ranch disruption, which we will, you know, we will be getting our full suite of product back, you know, at the end of September. there is also the absence of the North Fork catch up payment that we recognized per prior year, and in addition, there is several onetime repair and maintenance items and contributions we made during the quarter. And so I think this was kind of an anomaly from a margin perspective. We are hopefully getting back.

Dan Politzer: Got it. And then I am sorry if I missed it, but were there any share repurchases in the quarter? And if not, was there any reason for that?

Stephen Cootey: No. No. I think we have been very consistent with a balanced approach. You know, we are taking a balanced approach to capital allocation. This quarter, we heavily spent on our existing projects, both you know, Durango cleaning up Durango Garage, which still have the retention payments, as well as Rounding Out Sunset and Green Valley Ranch project spend. Got it. Got it.

Dan Politzer: Thanks so much. No problem.

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

Stephen Cootey: Well, thank you, everyone, for joining the call, and we look forward to talking to you in about 90 days. Take care.

Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.