Red Rock Resorts reported the highest third-quarter revenue and second-highest profitability in the gaming company’s history on Tuesday during its earnings call.
“These results reflect the strength and resilience of our business we have built over the past five decades,” said Stephen Cootey, Red Rock’s executive vice president, CFO, and treasurer.
The parent company of Station Casinos’ net revenue was $479.1 million, off 2.3% year over year, with adjusted EBITDA down 2.3% to $204.6 million. On a consolidated basis, net revenue, which includes $6.2 million from North Fork, was $488.7 million, up 2.8% year over year.
As part of the company’s 50th anniversary celebration, Cootey said they made every full-time and part-time employee an owner in the company, granting more than 72 million shares in Class A common stock.
The stock grant will result in approximately $79 million in compensation expense, including non-cash, stock-based compensation and associated payroll taxes. These costs will be allocated to the respective departments in which the employees work, according to the company.
Broken down by departments, Cootey reported approximately $26 million in casino operations, $26 million in food and beverage, $6 million in rooms, $1 million in other operations, and $20 million in SGNA.
“This milestone reflects our belief that our team members should share directly in the company’s success,” Cootey told analysts. “These expenses will be reflected in our gap operating results, but excluded from adjusted EBITDA.”
During the third quarter, Cootey said the company converted 45% of adjusted EBITDA into operating free cash flow, generating $81.7 million, or 77 cents per share. To date, Red Rock has generated $288.4 million in free cash flow, or $2.75 per share.
Cootey explained the consistent cash generation provides “us with the flexibility to reinvest in our properties and develop a pipeline, while returning meaningful capital to our shareholders, through dividends and share repurchases.”
Turning to Durango, Cootey said the property continues to deliver exceptional operating performance, despite ongoing construction activity in and around the resort, “reinforcing our confidence in the property, and validating our broader development strategy.”
To date, he said, the property has added more than 168,000 new customers to its database, while generating increased spend per visit and higher net win from carded customers in the surrounding market during the quarter, supported by strong residential growth in southwest Las Vegas.
Cootey said construction continues to advance on the Durango north expansion, with an anticipated opening in the third quarter of 2027. The project will add more than 275,000 square feet of space, including nearly 400 slot machines and other gaming offerings.
Red Rock revised the total cost of the expansion upward to $430 million, but Cootey said they remain confident in the project’s underlying economics and ability to achieve their target 20% return on investment over time.
Overall, Red Rock now plans to spend between $550 million to $570 million on total capital expenditures in 2026, including on projects at their Sunset Station and Green Valley Ranch properties.
Cootey explained the updated capex spend reflects construction delays and cost overruns with the recently completed hotel and convention renovation at Green Valley Ranch, enhancements to the scope of the Durango casino, and accelerated pace of construction activity associated with all the company’s development projects.
For example, the initial budget for the Green Valley Ranch project was $200 million, but ended up being close to $250 million due to a one-time cost overrun. The Durango expansion went from $385 million to $430 million.
“Despite these increases, we remain comfident in the underlying economics of our investments and our ability to generate attractive long-term returns,” he said.
Cootey said the opening of the North Fork Mono Casino on October 27 marked a significant milestone for the company and the North Fork Rancheria of Mono Indians.
“The approximately $700 million development was completed on budget and features more than 2,400 slot machines, 40 table games … establishing a significant new gaming and entertainment destination in California’s Central Valley,” he said/
Cootey said Red Rock has begun to realize the financial benefits of this investment, through a seven-year management agreement, and receiving $26 million, a first installment of the development fees owed to the company.
