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Good day and welcome to Red Rock Resorts Second Quarter 2025 Conference Call. [Operator Instructions] Please note this event is being recorded. I would now turn the conference over to Stephen Cootey, Executive Vice President, Chief Financial Officer and Treasurer of Red Rock Resorts. Please go ahead.

Thank you, operator, and good afternoon, everyone. Thank you for joining us today for Red Rock Resorts Second Quarter 2025 Earnings Conference Call. Joining me on the call today are Frank and Lorenzo Fertitta, Scott Kreeger and our executive management team. I'd 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 this 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-K and our investor deck, which were filed this afternoon prior to the call. Also, please note that this call is being recorded. The second quarter was an exceptional one for the company by every measure. Our Las Vegas operations delivered its highest quarterly net revenue and adjusted EBITDA in our 49-year history, all while sustaining near record adjusted EBITDA margin. In addition to delivering strong financial results, we remain highly encouraged by the continued performance of our Durango Casino Resort and the revenue backfill at our core properties. Durango continues to expand the Las Vegas locals market, drive incremental play from our existing customer base and attract new guests to the Station Casinos brand. The property once again demonstrated strong momentum within the quarter with increased visitation, higher spend per visit and elevated net theoretical win from our carded customers in the surrounding Durango area. And since opening in December 2023, Durango has added over 108,000 new customers to our database. The resort remains on a solid trajectory and is on pace to become one of our highest margin properties, delivering a return net of cannibalization of over 15% through the second quarter of 2025. Regarding the cannibalization impact, which occurred primarily at our Red Rock property following Durango's opening, we are encouraged by the pace of the revenue backfill, which suggest that the worst of the impact is behind us. Consistent with our historical experience, we continue to expect full revenue recovery over the next couple of years, supported by strong long demographic growth across the Las Vegas Valley, as particularly evident in Summerlin, where the combined build-out of the Downtown Summerlin and Summerlin West is projected to add approximately 34,000 new households. Across the rest of our portfolio, we demonstrated our ability to successfully manage costs while driving top line growth, resulting in what was easily the best quarter in our company's history. Strength was evident across all business lines as we executed our core strategy of reinvesting in existing properties to enhance amenities and deliver best-in-class customer service while also returning capital to our shareholders. Now let's take a look at our second quarter. With respect to our Las Vegas operations, our second quarter net revenue was $513.3 million, up 6.2% from the prior year second quarter. Our adjusted EBITDA was $239.4 million, up 7.3% from the prior year second quarter. Our adjusted EBITDA margin was 46.7%, an increase of 47 basis points from the prior year. On a consolidated basis, our second quarter net revenue, which includes $10 million from our North Fork project, was $526.3 million, up 8.2% from the prior year second quarter. Our adjusted EBITDA, which also includes $10 million from our North Fork project, was $229.4 million, up 13.7% from the prior year second quarter. Our adjusted EBITDA margin was 43.6% for the quarter, an increase of 212 basis points from the prior year. In the quarter, we converted 54% of our adjusted EBITDA into operating free cash flow, generating $124.3 million or $1.18 per share. This brings our year-to-date cumulative free cash flow to $217.3 million or $2.06 per share. This strong level of free cash flow was strategically deployed to support our long-term growth initiatives, including our most recent project at Durango, Sunset Station and Green Valley Ranch or return to our stakeholders through debt reduction, dividends and share repurchases. As we begin the third quarter, we remain focused on our core local guests while continuing to drive our regional and national customer segments across the portfolio. Compared to the second quarter of last year, we saw continued strength in card and slot play across our entire database. Robust visitation and strong spend per visit, coupled with a strong table games business helped drive the highest revenue and profitability in our Gaming segment in the company's history. Turning to our non-gaming operations. Both hotel and food and beverage divisions delivered a strong quarter, achieving near record revenue and profitability in the second quarter. Our hotel division recorded its highest second quarter revenue and profit, driven by our team's success increasing both ADR and occupancy across our portfolio. The Food and Beverage division also achieved near record results for the quarter, supported by higher cover counts across our outlets. In group sales and catering, the team delivered near record second quarter revenue and profit, and we continue to see positive momentum in both business lines for the remainder of 2025 and into 2026. As we look ahead to the third quarter, we are seeing continued stability in our core slot and table games business within the locals market and across our Carded database. While we do expect to return to more typical seasonal visitation patterns and some near-term disruption impact from our ongoing construction projects at Durango, Sunset Station and Green Valley Ranch, we remain as confident as ever in the strength of our business and long- term growth prospects. 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 $145.2 million, and the total principal amount of debt outstanding was $3.4 billion, resulting in net debt of $3.3 billion. As of the end of the second quarter, the company's net debt-to-EBITDA ratio was 3.96x. During the second quarter, we made total distributions of approximately $200.3 million to the LLC unitholders of Station Holdco, including a distribution of approximately $116.9 million to Red Rock Resorts. The company utilized its portion of the distribution to fund its first and second quarter estimated tax payments, pay its previously declared quarterly dividend of $0.25 per Class A common share and a special dividend of $1 per Class A common share and to repurchase approximately 672,000 Class A common shares for $31 million at an average price of $45.94 per share under its previously announced $600 million share repurchase program. The second quarter share repurchases bring the total number of Class A common shares repurchased, including the 2021 tender offer and open market repurchases to approximately 15 million shares at an average price of $45.35 per share, reducing the company's share count to approximately 105.4 million shares at the quarter end. Capital spend in the second quarter was $78.2 million, which includes approximately $59.8 million in investment capital as well as $18.4 million in maintenance capital. This brings our year- to-date capital spend to $146.4 million, which includes approximately $92 million in investment capital as well as $54 million in maintenance capital. For the full year 2025, we now expect to spend between $325 million and $375 million, down $25 million from our previous earnings call, mainly driven by the timing of capital expenditures. The full year capital spend includes $235 million to $275 million in investment capital as well as $90 million to $100 million in maintenance capital. As mentioned on our last earnings call, we are making significant investments in our Durango Casino Resort, Sunset Station and Green Valley Ranch properties. At Durango, construction continues on the next phase of our Durango master plan. This expansion will add over 25,000 square feet of additional casino space, including a new high limit slot area bar. In total, the project will introduce 230 new slot machines with 120 allocated to the high limit room. As part of this phase, we are also building a new covered parking garage with nearly 2,000 spots, which will enhance customer access and provide infrastructure flexibility to support the future growth of the property. The total project cost is approximately $120 million and is currently operating under a guaranteed maximum price contract. The project remains on budget and is expected to be completed in late December. At Sunset Station, we are advancing our podium refresh to better position the property for continued growth in Henderson, particularly from the master planned communities of the Skye and Cadence, which are to deliver over 12,500 new households at full build-out. The $53 million renovation includes an all-new country Western bar nightclub, a new Mexican restaurant, a new center bar and a fully renovated casino floor. We are pleased to report that customer feedback on the completed portions of the renovation has been overwhelmingly positive, reinforcing our confidence in the project's direction. The property remains on budget with the new amenities expected to come online throughout the remainder of 2025 and the first half of 2026. At Green Valley Ranch, we have commenced a comprehensive refresh of our guest rooms, suites and convention space, aligning the hotel experience with our recently renovated and well-received high limit table and slot rooms at the property. Work on the rooms in the West Tower is currently underway with the majority of all rooms in both towers expected to return to service by year-end. The total investment for the room and convention remodel renovation is projected to be approximately $200 million. As with our recently introduced amenities, we believe these upgrades will generate strong returns. However, we do anticipate some temporary disruption at the property as we bring these new offerings online for our guests. Turning now to North Fork. Construction is progressing well. We've completed the slab on grade, and we anticipate closing the facility by October, keeping us on a pace for an early fourth quarter 2026 open. The total all-in project cost is expected to be approximately $750 million, is fully financed and is currently being executed under a guaranteed maximum price contract. When complete, this best-in-class resort will include approximately 100,000 square feet of casino space with over 2,400 slot machines, including 2,000 Class III games, 44 table games and 2 food and beverage outlets and a food court with many exciting options. In addition to the work continuing to progress as planned, the project remains on budget. We are also pleased to report that we are now able to begin and have begun recognizing our development fee revenue starting this quarter. This will continue the project's opening marketing another meaningful milestone in the advancement of this long-term project. Also as of the end of the quarter, Red Rock's outstanding balance due from the tribe stands at approximately $72.3 million. We're excited about this project, very happy with the progress of construction and look forward to providing further updates on future earnings calls. Lastly, the company's Board of Directors has also declared its regular cash dividend of $0.25 per Class A common share payable on September 30 to Class A shareholders of record as of September 15. Following the payment of this dividend and the share repurchases completed during the quarter, we have returned approximately $189 million to our shareholders year-to-date. With 2 record quarters under our belt, the year is off to a strong start, and we remain confident in the strength and resilience of our business model. Durango continues to validate our long-term growth strategy and highlight the value of our own development pipeline and real estate bank, which includes more than 450 acres of developable land positioned in highly desirable locations throughout the Las Vegas Valley. Combined with our existing portfolio of best-in-class assets in premier locations, this pipeline positions us for significant growth and enable us to fully capitalize on the very favorable long-term demographic trends and the high barriers to entry that define the Las Vegas locals market. We do want to take a moment to sincerely thank all of our team members for their continued hard work and dedication. Our success begins with them. They are the driving force behind the exceptional experiences that keep our guests coming back time and time again. Thanks to their efforts, we are proud to have been recognized with multiple accolades, including being voted a top casino employer in the Las Vegas Valley for 5 years -- 5 consecutive years, certified as a Great Place to Work for 3 years running and named one of America's best in-state employers by Forbes. We are also honored as a top place to work by USA TODAY and recently recognized by Newsweek as one of America's Greatest Workplaces in Nevada. Finally, we extend our heartfelt gratitude to our loyal guests for their unwavering support over the past 6 decades. Operator, this concludes our prepared remarks for today, and we are now ready to take questions.

[Operator Instructions] First question today comes from Jordan Bender with Citizens.

Backing out the Native American contributions in the quarter, flow-through still incredibly strong. Are you maybe able to help us unpack kind of where you're finding that incremental operating leverage? And I guess I'll just put the second part of the question there. Any impact from the renovations in the quarter that you can call out for EBITDA?

Yes. I think the strength, Jordan, is evident across all business lines. From a casino perspective, obviously, we had the best table and slot hold in the history of our -- in the history of our company, led by great volume and comparable hold. We also had our most -- our best hotel revenue and record profitability. And then not to be outdone, Food and Beverage, had its second best revenue -- second best revenue quarter only to be outlined by last quarter, which obviously have the trial from Durango. And the big change there and you saw this in our margin. You had some revenue mix shift from, let's call it, lower margin Food and Beverage and Hotel and higher- margin Gaming and Gaming actually had a flow-through north of 70%.

Great. And then I guess on the renovation disruption in the quarter.

Yes, we haven't seen too much impact from the renovation in this quarter. That said, we're still sticking to our guns on some of the disruption as we're in the thick or the peak construction period now for all 3 projects, the Durango, Sunset Station and Green Valley Ranch, with the majority of that disruption of almost $15 million occurring at Green Valley as the West and East towers are going to be taken down over the next 2 quarters. .

The next question comes from Joe Stauff with Susquehanna..

I wanted to ask just a follow-up on the construction disruption. Steve, you said you're sticking your guns in terms of kind of what you outlined for each property. Is July, August, September, say, the largest concentration of that disruption. Could you just remind us of the timing of that? And then I was wondering if you could share your analysis of how the tip tax relief kind of affects the locals market and your customer in particular?

Joe, it's Scott. I'll take the disruption kind of schedule and time line, and I think Steve will take the second question. A couple of quarters ago, Steve was pretty descriptive of what we thought disruption was going to be, and he just mentioned that in the Q2 time frame was a little lighter than we thought. Some of that is due to just the timing of construction. And in some respects at Sunset, we switched around the order of what we were doing. So at Sunset, instead of going into our main pit, we went into an area that contained an entertainment lounge. So that switched around the impact a bit. So you'll see sunset impact to be more like Q3, Q4 and maybe a little bit of a bleed into '26. Durango disruption has been relatively light, which is a good thing, but we are seeing impacts to parking, especially on the weekends. We're getting above 80% parking and what's left over is less convenient parking in our world, that's pretty impactful. And then the second piece of Durango is we're enclosed now. And so the interior fit out is going to start, which tends to have more noise and kind of disruption that's on the adjacent construction wall than you saw in the past. But all in all, we still think that the bulk of the disruption you're going to see in Q3 and Q4.

And Green Valley is just getting started with the room renovation.

That's right. Yes. So Green Valley schedule is that we'll be through Tower 1 late September, first week of October. And then we'll be into the Tower 2 in October with the goal for us to be done at the end of the year. And then in October, we'll also kick in on the conference center remodel, which will be early January completion. And then Sites will be done in March. So that gives you kind of a time line at Green Valley Ranch.

I'll take the second, Joe, I'm going to congratulate you because you gave the ultimate back-to-school question, one question, 27 parts. I don't think you can actually just look at no tax on tips. I think ultimately, the tax legislation can only be viewed as a good one for Las Vegas. And just given our position in the locals market, we do expect to benefit from the legislation and increase of discretionary income it's going to bring to our customers. The key measures, as you mentioned, tax on tips, but there's also the elimination of federal tax and overtime pay, the new senior tax credit as well as expanded standard deductions, family tax credit and some reductions in marginal tax credits, all of which would significantly enhance the discretionary income. Well, it's tough to say how much of this income is going to flow to Red Rock. We can start framing that. I think you and I have talked through this. For example, when we ran our initial analysis on no tax for tips, for example, we estimated approximately $85 million annually would flow into Clark County. And then when you kind of even view overtime, which is a little trickier, there's about 1.2 million workers in Clark County and using some national estimates, roughly 4% to 8% of those typical people actually get -- receive overtime pay. And ultimately, this could benefit each worker up to $300 to $1,800 per worker annually. And then not to be outdone, just remind -- remind everyone that there are about 390,000 seniors over 65. And just given the marginal -- the median household income of that cohort, we would expect a substantial portion of those seniors will qualify for at least part of the new senior deduction. So all of this is fantastically good for our company. And then the next 27 parts of the question right? I mean I think with the expansion of -- you can expense immediately R&D expenses, the acceleration of bonus depreciation and the relief from interest deductibility, that is going to have an immediate impact on our cash flow for the remainder of 2025. We do not expect to pay cash taxes for the remainder of 2025. And further, we do not expect to make any tax distributions to Station Holdco for the rest of the year, which we estimate will increase our operating free cash flow by $60 million for the rest of the year.

The next question comes from Steven Wieczynski with Stifel.

So Steve, I want to ask about your new database sign-ups across your properties in the quarter. And I guess what I'm trying to understand here is if you guys have seen any pickup in new customers given the well -- let's call it, the well-documented slowdown along the strip. Basically trying to understand if the strip has essentially overpriced itself and some customers are now looking for other alternatives. Hopefully, that makes sense.

It does. Steve, this is Scott. Let me take that one. So from an overall database perspective, we saw strong positive performance across all of the segments. And as it's been trended from past quarters, because of our focus, because of the investments we're making in our properties, we're seeing particularly strong growth in our VIP our core customer, our regional and national customers. But in this quarter specifically, not to be outdone, we also saw a considerable improvement in what we would call our retail customer, our non- rewards customers. So across the database, pretty much homogenously, we've seen positive increases. And you mentioned new member sign-ups particularly. interesting that if you -- you've got to take into account the opening of Durango and the impact it had in the second quarter of last year, Durango has signed up 108,000 new-to-brand customers as of this quarter or as of the end of Q2. So that's a sizable -- whether -- or sorry, database increase that comes from Durango. If you take that comparison of Durango out and you just look at the core 6, we're up almost 10% in new sign-ups, which is really a quite sizable effort on the part of the operating teams to grow the database in general. The other thing that we look at is when we look at demographics, across all the age categories, we saw positive increases in the quarter. And most interesting as an absolute customer count in the database, we saw under 35 growth 15%. I think that's attributable to the relevant amenities that we're putting in our properties, the way that we position our properties and quite honestly, the team -- the marketing team and how they resonate with the younger demographic. So we're seeing strong demographic increases. And then not to be outdone, when we look at uncarded, second quarter slot coin in was the highest quarter of increase in uncarded play that we've seen in the last 2 years. So really, when you take a broad brush stroke across all of the aspects of demographics and customer database, we're seeing positive growth. And then as we look into Q3, we're seeing very similar trends as we go. It's early. But as we look into the future trend into Q3, it's very consistent.

And Steven, just to piggyback on what Scott was saying, that really highlights the difference between the Strip and Las Vegas locals, right? While the Strip relies heavily on tourism, conventions, hotel-driven revenue, we are anchored by a gaming-centric business model, right? We focused on deeply loyal customer base. Many of these customers, in fact, our customers, 75% for our card to play business over 4x a month. And so we feel locals offers a stronger value proposition, which is driving more people to our casino, which includes accessible pricing, convenient locations, personalized service, and that continues to resonate not only with our locals guests, but it's starting to increasingly resonate with our out-of-town guests as well.

Okay. Got you. That's great color, guys. And then I assume this is probably going to be for Scott. And I apologize if, Steve, you had this in your prepared remarks. But wondering if we can get an update, Scott, in terms of what you're seeing from a group perspective, maybe in the fourth quarter of this year and then what you're seeing so far for '26.

Yes, we're seeing really positive forward bookings. So we're talking in the mid-20% increases in group. And then catering kind of ride shotgun with group sales and we're seeing similar increases not only through the remaining quarters of this year but into '26 as well. .

The next question comes from Shaun Kelley with Bank of America.

Steve or whoever wants to take it, I know it's probably hard to put a finer point on it, but it sounds like there were several upside surprises in the quarter, both the backfill comment you made a number of times in the prepared remarks and then the strength in unrated play, which has been a segment that I think has come back better than expected across the locals. So if you were to kind of divide out by those 2, do you -- could you venture a guess or help us think a little bit about how much either of those 2 things, in particular, contributed to the kind of the outsized growth or the reacceleration in growth we saw in the quarter?

I think if you really look at really what the big contributor was, I think Scott had touched upon this. It's the VIP play in slots and in table games. And as we mentioned, I mean, we've invested quite a bit in high-limit areas and amenities over the past I guess, 4 years, 5 years coming out of COVID, and we're really starting to see that pay off now as we feel like that we're getting more than our fair share in those 2 areas from a gaming revenue standpoint.

I would add to that, Steve, you can jump in. When you really look at the market in general, Durango was the star of the show a year ago, but as Durango kind of matures into the market, one of the things that we're seeing, we mentioned it last quarter and again in Q2 is the performance of our core 6 properties in growing market share and growing the market. So we're seeing all of our properties contribute to the revenue increases.

And then maybe just to kind of dig in on seasonality or however we want to think about it, but there have been a lot of callouts and certainly a warning from one of your peers about concerns on sort of strip rate compression as we move into the summer months here and some pretty serious discounting out there that I think we can all see on social media. Are you seeing that reflected in any of the hotel product or the prevailing rate there? How are you kind of insulated from that? And just sort of yes, bank shots around that for the Red Rock portfolio?

Yes, great question. This is Scott. One, let's just go back and say that Q2 was a great quarter for hotel. But as we look into the current trends and short-term booking window, yes, across the board, you are seeing kind of an ADR war, if you will, out there. Now how do we play into that? Certainly, we have to be competitive with the market rates, but we're certainly not completely dropping our rates to unreasonable levels. I think it's also important, Frank and Steve just mentioned this that we are a different makeup of business than the strip. So a majority of our revenue comes through casino. While hotel is important to us, it really only represents about 10% of our overall revenue stream. And then when you look at FIT and transient, it's really only about 20% of the overall hotel mix. So while it's important to us and we stay competitive, it really doesn't represent the lion's share of the revenue stream of the company.

The next question comes from Chad Beynon with Macquarie.

Macquarie Research Just in terms of the lower leverage at this point and maybe the business humming along slightly better than anyone would have expected. You obviously have a full plate with some of the renovation projects that you outlined and that will hit in the end of '25 and '26. But as we think further down the track some of the bigger development -- developmental sites. Has anything changed just given your cash position with respect to the timing of maybe greenlighting one of those next opportunities?

This is Lorenzo and obviously, Frank chime in. But nothing has changed. I mean, clearly, we are a development company. I mean that's really what our focus is. We've got all of this real estate in Las Vegas in strategic locations. And with Durango, we've proven again that we can develop these projects and get attractive returns. From a timing standpoint, we're in a position, I think, as we said before, where we're just continuing to design and go through the process of trying to figure out which project we think we're going to be able to get the best returns at and have the most impact to be able to create equity value for the company. And these projects just take time. We want to make sure that we get good drawings. We go out on the street, we get good pricing. so that when we do announce what the next project is and what the pricing is that we're confident we're delivering for everybody. I think we had said at one point a quarter or 2 ago that we would probably have an update when we report Q4 of this year. I don't know, Frank, if you have anything to add.

Macquarie Research Great. And then in terms of the Red Rock's impact, what inning are we in, in terms of just getting back on the right glide path to return to what some of the prior numbers are? I know you guys are looking at net of cannibalization but I know that's kind of a key model driver, just getting some of that -- backfilling some of that business back into Red Rock.

Yes. I think as I mentioned in the prepared remarks, generally, these backfill historically has taken a little bit over 3 years. And so we feel very comfortable in the position we are from a backfill perspective. Scott alluded to the market share growth -- the market share comment where you looked at the 12 months, Durango is really driving the ship. When you look at 6 months, 3 months, 9 months, it is now really the core 6 kind of driving the ship, which kind of shows you the power of the platform and our ability to backfill at our existing properties. So we like where we are. We're mid-inning, right? We're kind of entering our second year of that backfill.

Our next question comes from Barry Jonas with Truist Securities.

Maybe just for Steve. Any color you can give about thinking about seasonality for Q3 as we refine our models?

Yes. No problem. And obviously, it's coming off of a big quarter. And I think the first thing you have to do is just recognize that North Fork is in the $10 million. And so not really part of seasonality, just to give you some guidance there. We would expect that number to be $3 million a quarter through opening just to get that out of the way. And then usually, Q4 to Q3 or Q3 to -- Q3 to Q2 is usually down about 10% from an EBITDA perspective.

That's helpful. And -- okay. Just to mention it [Indiscernible]. All right. if you have a follow-up.

No, I was just going to just reiterate that there's also that disruption we talked about, but I think you got that.

Yes, understood. And then I know we'll get the big reveal later on, but any early puts and takes you can offer for the finalist for your next big greenfield project. You could sort of identified a few areas that you're thinking about. So just curious if the order has changed or any puts or takes you'd be willing to share now.

Yes. I mean I think the one thing that we've shared with you guys is that the precursor to potential expansion of amenities in Durango is the garage setting this up to be able to have more amenities accommodate the guests with convenient parking at all. So that is definitely an option. And in terms of the greenfield, I think we'll do that at the end of the year on our year-end call.

The next question comes from Ben Chaiken with Mizuho.

Mizuho Securities USA LLC, Research Division As you get into some of the renovation work primarily GVR and Sunset. Maybe you could just help us flush out some of the larger opportunities that each project you hope to solve for with the current renovations because these are largely -- these are more than -- at least from my perception, they seem larger than just refreshes of the existing product?

Yes, I can start that. This is Scott. And then Steve, you can kind of jump in. So let's start with Sunset. So Sunset is in an incredibly vibrant new emerging area of the valley. There's a development called Cadence over in that area of the [indiscernible] that represents about 12,500 new rooftops over the phasing of the project. At one time, Sunset was kind of an anchor property for us. And as the valley fills in on the East side, Sunset is being remodeled and refurbished to represent kind of the red rock of the East side for us. It's an incredibly dynamic property. It's a fully integrated property. And so we started about 1.5 years ago with the race and Sports book and a Yard House restaurant, which both have been incredibly successful. And then we've gone through and we're subsequently remodeling the entire casino floor. We're adding a country Western dance hall. We'll go in and refurbish the lobby, the exterior of the property at a Mexican restaurant, redo the center bar. And so essentially, the main center or heart of the overall property will be refurbished. As we've been doing that over the last 1.5 years, we've been -- it's been incredibly well received by our customers. Each segment of the property that we renovate and reopen, we're seeing positive return.

In visitation and in the expansion of the demographic profile that we're able to attract to the property. So I mean, we feel like we have pretty good traction over there. and we really believe in the return on investment that we'll get over there at Sunset, given the area in the market that it's in, which is growing and the ability for us to attract a younger gaming profile. And I think we've seen since post- COVID with all these investments that we've made, we really have been able to lower the age group that we're able to attract to the property, which I think is very important for the long-term growth here.

And then switching to GVR, same story. It's an incredibly vibrant area, one of the higher net worth areas of the valley. GVR rooms were in need of a refresh. We really started with adding high limit rooms, which we've done on all of our core properties, pretty much all of the core properties, which we've seen incredible return on investment in. And so we did that first at Green Valley, new high limit rooms both slots and tables, new restaurants. So we're bringing the hotel rooms up to a 5-star level of finish to complement the high limit rooms and the restaurants and at the same time, bringing our meeting space in alignment with that level of quality. So you're going to have fresh new rooms, fresh new we mentioned in meeting space, fresh suite product great high limit rooms, new higher-class restaurants and so.

And I think what you'll see when you see the Green Valley Ranch room product, I mean, it is more than just a refresh or a rerag of the room.

The repositioning.

It's a complete repositioning of the property into the luxury space where the bathrooms are being completely redone. And I think we'll have one of the nicest room products in the city. So we're excited about that.

And we have some of the renderings for those in the investor deck. Do you want to take a look.

Mizuho Securities USA LLC, Research Division Got it. Helpful. And then just a really quick one. I think you helped us with some of the benefit to free cash flow for the remainder of the year tied to the 100% bonus depreciation. How do we think about that number in '26, even just in broad strokes?

A lot of it depends on what we actually do.

That's exactly where I was going to go in. So let's assume that the interest limitation is going to be a good guy. The main driver here in '26 is going to be the accelerated depreciation, and we're really going through our capital planning right now. But I think that puts us in a good step that any investment that Frank or Lorenzo want to make. We know we're going to be able to take that tax further immediately. .

The next question comes from David Katz, Jefferies.

I covered a lot of ground already. I appreciate it. I just wanted to get a sense for, Steve, how you're sort of thinking about your sort of ideal leverage range given the spending, which has been productive given the capital return plans, et cetera, where would you like to sort of range that over time?

Yes, David, I don't think there's any change right now. As you can -- we've kind of knocked down leverage over the last several quarters just naturally through generating higher EBITDA. So very comfortable with the balance sheet and the overall leverage position. As I mentioned previously, it's supported by a very flexible credit agreement and no near debt term maturities. And that's the financial flexibility that enables Frank and Lorenzo to kind of operate a balanced and disciplined approach to capital allocation. You did mention that this quarter, we did take an opportunity to return a lot of capital through the 670,000 share repurchase, our quarterly dividend as well as our special dividend. I think the focus in the back half of the year is primarily going to be focused on getting Green Valley, Sunset and Durango online.

Congrats on your quarter.

Thanks, David. .

[Operator Instructions] The next question comes from John DeCree with CRE.

Maybe just one in regard to the 100,000-plus customers you've acquired since opening Durango. Curious if you could give us any insight into the behavior of that segment of the database relative to previous customers, do they spend more? Do they visit more frequently? Do they move about your other properties? Is there a behavior any different if they're acquired at Durango versus the rest of the portfolio?

Yes, John, this is Scott. I think generally, because you're talking about a large sample size of people, they behave very similarly to the rest of our customers. I mean the are in and among 3 to 5-mile radiuses of other customers. Now well, I guess I'll enhance your question by saying, does Durango behave a little differently than some of our other properties and the answer would be yes. I think that Durango is catering to a younger demo. We tend to see a lot of industry folks coming off the strip and stop an off at Durango, maybe on the way home. So we have a little bit more visitation on the later day parks at Durango. And I think it's a function of the incredible food and beverage programming we have there that it's kind of a lifestyle or in a property you see in a younger [indiscernible].

And just the location is unbelievable. And it's a growing area of the valley, both residentially, commercially, there's a lot of activity going on around there. And as Scott said, it's broadened the demographic profile.

And definitely a higher spend per person on to beverage.

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

Well, thank you, everyone, for joining the call, and we'll see you and talk again in 90 days. Take care.