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Red Rock Resorts delivered record Q1 2026 net revenue of $507.3 million, driven by strong performance in Las Vegas and the successful ramp-up of the Durango property. Despite consolidated adjusted EBITDA dipping 1.2% to $212.6 million due to construction-related disruptions at Green Valley Ranch, the company maintained high margins and generated significant free cash flow. Management announced the $385 million Durango North expansion, which will significantly increase gaming and amenity offerings by Summer 2027. The North Fork tribal project is progressing toward an early Q4 2026 opening and is expected to be immediately profitable. Capital allocation remained aggressive, with $170.5 million returned to shareholders through dividends and buybacks. While facing headwinds like higher gas prices and ongoing construction disruption—estimated at $11-12 million for Q2—management remains bullish on the Las Vegas locals market. They are actively planning new greenfield developments from their 450-acre land bank. The call highlighted a shift toward premium, high-limit gaming segments and stable promotional competition. With a healthy balance sheet and a robust development pipeline, Red Rock is positioned for long-term growth as it nears its 50th anniversary in the hospitality industry.

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RED ROCK RESORTS: Fertitta ATM Funded by High-Stakes Leverage and Aggressive Project Accounting

Full Earnings Call Transcript — Q1 • 2026-04-29

Operator: Good day, and welcome to the Red Rock Resorts First Quarter 2026 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Mr. 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 First Quarter 2026 Earnings Conference Call. Joining me on the call today are Frank 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 of these figures to GAAP, please refer to the financial tables in our earnings press release Form 8-K and investor deck, which were filed this afternoon prior to the call. Also, please note this call is being recorded. Let's start by noting that the first quarter represented another strong quarter for the company across all key measures. Our Las Vegas operations delivered the highest first quarter net revenue and the second highest first quarter adjusted EBITDA in our history while maintaining near record adjusted EBITDA margin. This performance was achieved despite several headwinds later in the quarter including higher gas prices, air travel-related disruption and temporary construction impacts at and around several of our properties, underscoring the strength and resilience of our business model. In addition to delivering strong first quarter results, we remain very pleased with Durango's performance and the successful revenue backfill at our core properties. Durango continues to expand in the Las Vegas locals market and drive incremental play from our existing customers reinforcing its position as a meaningful growth driver in our portfolio. Since completing our December expansion, adding more than 25,000 square feet of casino space, the premier high limit slot area, and nearly 2,000 additional covered parking spaces. We've continued to see strong financial performance alongside positive guest feedback. With more than 4 months of operating history for the new high limit slot area, results continue to validate our strategy of investing in premium slot and table offerings across our portfolio. Building on Durango's momentum, we continue to advance the next phase of the property's master plan, the Durango North expansion. With more than 6,000 new households expected with a 3-mile radius over the next few years, this expansion is designed to broaden Durango's customer appeal and strengthen its competitive position. The project will add more than 275,000 square feet on the north side of the property, including nearly 400 additional slot machines and other gaming along with new amenities to drive repeat visitation, highlighted by a 36 lane bowling facility, luxury movie theaters and new dining and entertainment venues, including our partnership with Moonshine Flats, which brings its signature Country Western Bar and live music concept to Las Vegas for the first time. The project is scheduled to open in the summer of 2027 with a total cost estimated at approximately $385 million. Now let's take a look at our first quarter. With respect to our Las Vegas operations, our first quarter net revenue was $499.5 million, up 0.9% from the prior year's first quarter. Our adjusted EBITDA was $232.4 million down 1.5% from the prior year's first quarter. Our adjusted EBITDA margin was 46.5%, a decrease of 113 basis points from the prior year. On a consolidated basis, our first quarter net revenue which includes $4.7 million from our North Fork project, was $507.3 million, up 1.9% from the prior year's first quarter. Our adjusted EBITDA, which includes $2.9 million from our North Fork project, was $212.6 million, down 1.2% from the prior year's first quarter. Our adjusted EBITDA margin was 41.9% for the quarter, a decrease of 129 basis points from the prior year. In the quarter, we converted 50.3% of our adjusted EBITDA into operating free cash flow, generating $107 million or $1.03 per share. The significant level of free cash flow was strategically deployed to support our long-term growth initiatives, including our most recent projects at Durango, Sunset Station and Green Valley Ranch and returning capital to our stakeholders through dividends and share repurchases. As we begin 2026, we remain focused on our core local guests, which continue to grow our regional and national customer segments across our portfolio. Compared to first quarter last year, we saw continued strength in Carter slot play across the majority of our database, robust spend per visit and net theoretical win across our local, regional and national customer segments, helped drive the highest first quarter gaming revenue and profitability in the company's history. Turning to our non-gaming operations. Both the hotel and food and beverage divisions delivered a strong quarter, achieving near record revenue and profitability. The hotel operations performed well, generating near record results, driving higher ADR across the portfolio despite the loss of room nights at Green Valley Ranch due to the renovation of our hotel product. Not to be outdone, the Food & Beverage division delivered its second best first quarter revenue in our history and its third best first quarter profit in our history, supported by higher cover counts and higher average guest checks across our outlets. In group sales and catering, our teams delivered their third highest first quarter revenue in our history. And if we exclude the lost room nights from our Green Valley Ranch room renovation, we continue to see positive momentum into the first half of 2026. As we look ahead into the second quarter, we are seeing stable trends in our core slot and table business across the Las Vegas locals market and within our gardens database, consistent with a return to more typical seasonal patterns, but we continue to where we expect continued near-term disruption from our ongoing construction at and around Durango Sunset Station and Green Valley Ranch, and we're actively managing these impacts to minimize operational disruption. We remain highly confident in both the strength for our business and the investments we are making at these properties, which we believe support our long-term growth trajectory. Now let's cover a few balance sheet and capital items. Company's cash and cash equivalents at the end of the first quarter was $134 million, and the total principal amount of debt outstanding was $3.6 billion, resulting in net debt of $3.4 billion. As of the end of the quarter, the company's net debt-to-EBITDA ratio was 4.07x. During the quarter, we made total distributions of approximately $139.9 million to the LLC unitholders of Station Holdco, including a distribution of approximately $82.1 million to Red Rock Resorts. The company used its portion of the distribution to fund its previously declared special dividend of $1 per Class A common share, its previously declared quarterly dividend of $0.26 per Class A common share and to fund a portion of the repurchase of approximately 635,000 Class A common shares at an average price of $6.32 per share under its previously announced $900 million share repurchase program, reducing total shares outstanding to approximately 104.4 million. When combining the dividends and the share repurchases made in the quarter, we returned approximately $170.5 million to shareholders. demonstrating our ongoing commitment to disciplined capital allocation and delivering sustainable long-term value to our shareholders. Capital spend in the quarter was $117.2 million which includes approximately $87.2 million in investment capital as well as $30 million in maintenance capital. For the full year 2026, we expect to spend between $375 million and $425 million, which includes $275 million to $300 million in investment capital as well as $100 million to $125 million in maintenance capital. In addition to our continued investment at our Durango property, we're making significant investments at our Sunset Station and Green Valley Ranch properties. At Sunset Station, we continue to make strong progress on the podium refresh. The $53 million renovation is well underway and includes an all-new country Western bar night club, a new Mexican restaurant, a new center bar and a fully renovated casino floor. Customer feedback and performance from the completed portion of this project have been encouraging, reinforcing our confidence in the direction of the renovation and the underlying demand in the property. The project remains on budget with the remaining amenities expected to come online throughout 2026, including the iconic gouty bar, which is expected to reopen in the coming weeks. Building on this momentum, we are advancing the next phase of Sunset Station designed to further strengthen the property's competitive position and broaden its customer appeal, positioning it to capitalize on the continued growth in Henderson market, particularly from the master planned communities of a Skye and Cadence. This phase will continue with the comprehensive casino refresh, including the expansion and enhancement of the movie theaters as well as the relocation of the temporary bingo area to a new permanent location. Upon completion of Bingo relocation, the former buffet space will be converted into a new Highland steakhouse and the high limit table games room leveraging a proven strategy that has consistently generated strong returns across our portfolio. Work in this space is expected to begin this quarter with the remainder of the project commencing in the back half of 2026 and extending into 2027. The total cost of this phase remains approximately $87 million. At Green Valley Ranch, we continue to make strong progress on the comprehensive refresh of our guestrooms, suites and convention spaces, align the hotel experience with the recently renovated and well-received high limit table and slot rooms at the property. Renovations to the West Tower and convention spaces are now complete with both the tower and convention areas have reopened to strong customer views and encouraging financial performance despite ongoing property disruption.  Renovations to the East Tower are well underway and are expected to extend into late summer 2026. Continuing with Green Valley Ranch long-term development -- redevelopment strategy, we're advancing the next phase of enhancements of this resort. This phase is designed to further strengthen the property's competitive position as one of the premier resort destinations in Las Vegas and broaden its customer appeal through a fully refreshed casino floor, along with upgraded food and beverage and entertainment offerings. These enhancements build on the performance we are seeing from the high limit product and the renovated room and convention inventory and our intent to drive increased visitation and deeper customer engagement. Work in the space is underway and is expected to extend into 2027 with the total cost of this space estimated at approximately $56 million. Turning to North Fork. Construction continues to progress. The facility now is permanent power, and we're working toward turnover of the first phase of the casino floor in late June, keeping us on pace for an early fourth quarter 2026 open. Total all-in project cost remains approximately $750 million and the project is fully financed. As of the end of this quarter, Red Rock's outstanding note balance due from the Tribe was approximately $80.6 million. We remain excited about this best-in-class development and are pleased with the continued progress of construction and look forward to providing further updates on future earnings calls. The company's Board of Directors has also declared its regular cash dividend of $0.26 per Class A common share, payable on June 30 to Class A shareholders of record as of June 15. With the first quarter behind us, we remain highly confident in the strength and resilience of our business model, as well as in the recent capital investments we have made across the portfolio. Durango continues to validate our long-term growth strategy and underscores the value of our owned development pipeline and real estate bank which includes more than 450 acres of the developed land in the highly desirable locations across the Las Vegas Valley. Combined with our portfolio of best-in-class assets in premier locations, this pipeline positions us for significant long-term growth and enables us to capitalize on the favorable demographic trends and high barriers to entry that define the Las Vegas locals market. Looking ahead, we remain focused on executing our development pipeline, maintaining operational discipline and delivering enhanced shareholder returns through a balanced, consistent and disciplined capital allocation strategy. Before we wrap up, we'd like to sincerely thank all of our team members for their continued hard work and dedication. They are the heart of the company and the driving force behind the exceptional guest experiences to keep our customers coming back time and again. In recognition for their efforts, we are proud to share that Station Casinos has been recognized by Forbes and Statista as one of America's best large employers in 2026. We are also proud to have been recognized for the sixth consecutive year as Top Workplace in Nevada. In addition, we've earned national recognition as USA TODAY Top Workplace for the third consecutive year and for the first time as a top workplace in the hospitality industry. Lastly, as we approach our 50th anniversary, we extend our heartfelt gratitude to our loyal guests for their unwavering support. We are deeply thankful for the trust they place in us and look forward to continuing to serve our communities for many years to come. With that, operator, we'd be happy to open the line for questions.
Operator: [Operator Instructions] And our first question for today will come from Trey Bowers with Wells Fargo.
Zachary Silverberg: This is Zach Silverberg here filling in for Trey. In your prepared remarks, you mentioned a couple of headwinds. I'd like to touch on the first 2, the higher gas prices in their travel. Could you quantify those 2 buckets what the impact was in 1Q and kind of what you're seeing in 2Q thus far?
Stephen Cootey: No. I mean I can qualify -- I mean clearly, we're experiencing higher gas prices in Nevada. I think we're in early days. as judged by our Q1 performance and what we're seeing in April, we've seen no impact from higher gas prices. And what was the second one, Zach?
Zachary Silverberg: The air travel?
Stephen Cootey: The air travel, given the fact, while 87% of our hotel guests are generally out of town, the majority of these folks are driving from the regional states. So the TSA impact has been de minimis.
Zachary Silverberg: Okay. And just -- I appreciate the color. And just for the follow-up, just on seasonality for 1Q to 2Q. Could you remind us of the typical cadence? And are there any one-timers to call out either last year or this year that could affect performance?
Stephen Cootey: Yes, sure. I mean I think generally, seasonality, Q1 is definitely our peak quarter moving from Q1 to Q2, generally were down 8% to 9%. And from a onetime -- there's no real one timers other than the $9 million disruption number that we've previously quoted in our last call, which still stands. And given some of the construction delays we're seeing at Green Valley. We're expecting another $9 million of disruption to occur in Q2. And then as we start bringing cranes, cement trucks and start erecting steel at our Durango site, we're anticipating another $2 million to $3 million of disruption starting next quarter.
Operator: Your next question will come from Barry Jonas with Truist Securities. .
Barry Jonas: Steve, just wanted to follow up on Durango. Obviously, you got a new slide in the deck somewhat detailing and there's a great video there, too. I was just curious, I think the projects in the vicinity goes through July of '27. How should we be thinking about disruption between now and then beyond the -- what you outlined for next quarter?
Stephen Cootey: Sure. I mean, I think as you saw from the video and from the map, we did experience significant traffic disruption in the first quarter. I think the team on the ground did an exceptional job managing through that disruption that this is early days in a $385 million construction project. So now we start beginning the heavy lift and the cement has effectively poured. We're starting to mobilize cranes early this quarter. and we're going to start erecting steel. So this is why we're expecting a bit more significant disruption as we go through the main poor part of the build. So the $2 million to $3 million estimate for disruption sticks pretty much through the summer to the completion of the project.
Barry Jonas: Understood. And just for a follow-up, tax refunds are sort of kicking in now. Curious if that's showing in your business at all, especially with the no tax on tips and some of the other positives in the one big beautiful bill?
Stephen Cootey: I mean, Barry, I think the build is job. I think you saw where return processing was pretty constant. The amount of refunds this year versus last year was almost $43 billion to the United States economy up 17%. And the average refund was up almost $333 or 11%. So the build did have its intended consequence of providing more discretionary income into the economy from our perspective where there's a lot of moving parts in the quarter, as you know. But I think we clearly demonstrated we had a great quarter in Q1, our second best Q1 on record. And then what we're seeing in April, we like what we're seeing in April.
Operator: Your next question will come from Joe Stauff with Susquehanna.
Joseph Stauff: Steve, on your comments about, say, the new phases at Suncoast and GVR. I was just wondering what the update is on the greenfield project and how you think about maybe when those might layer in at this point?
Lorenzo Fertitta: I want to comment on Suncoast.
Stephen Cootey: Well, the sunset and the Green Valley projects, Joe, I think as I articulated in the marks, we are progressing on said we are progressing well. We're going to open the Gaudi Bar in the weeks and then we expect the rest of the menus in our phase to open up throughout 2026. In terms of Green Valley, the West Tower and the convention center have been open, and we have seen very promising financial results, even though they're early days. the East Tower, we're limping along a little bit, and so we're expecting kind of the suite product and the final rooms to be delivered in mid-September.
Lorenzo Fertitta: Yes. This is Lorenzo. Look, we're continuing to work through the pipeline that we have. We're currently working on what is a potential to add rooms at Durango, rooms, spa, handsome additional meeting space -- in addition to that, we're actively working on 2 additional new greenfield projects going through the process of working on the plans, the scale of the project, working on pricing -- and as that process goes, it's really not something that you can necessarily rush. There's times when we go through it and we sit back down and start over again because it's not perfect. So we are making progress, and we don't have anything to announce now or necessarily in the very near future. But as we kind of turn the corner into next year, I think we'll have more visibility into what the development plan is going to look like. I mean we do have 6 development properties here in Las Vegas, plus 1 up in Reno for a total of 7, which is, we believe, the most robust pipeline anybody has in the gaming industry. So we're very bullish on it. We just want to make sure we get things right. It takes time to develop these projects.
Operator: Next question will come from Dan Politzer with JPMorgan.
Daniel Politzer: It's been a few months since you opened the new part of Durango. Can you talk about what you've seen there and how you're thinking about the returns? I know it's still relatively early, but at this point, you should have, I think, probably a good idea of how that's progressing. .
Scott Kreeger: Dan, this is Scott. Yes, we're really happy with the early results of the Durango expansion. If you recall, we not only increased the casino floor with slot machines, but also added the new slot limit room. And just about every quarter Steve have been reporting on what we call the Durango zone. And that area saw notably increased net deal for the quarter over last year. And it really is confirming the thesis that continued capital investment in Durango is a good thing. And that's with the team fighting through some of this disruption that you probably see on the investor deck with the traffic situation. So we're really encouraged with what's going on there.
Daniel Politzer: Got it. And just for my follow-up, just to clarify, the disruption for the second quarter, you said $9 million for GVR and then an incremental $2 million to $3 million related to Durango. So just 11% to 12%, correct? Just clarifying that.
Stephen Cootey: That is correct, Dan. .
Operator: The next question will come from John DeCree with CBRE.
John DeCree: I would love a little bit more detail on the EBITDA margin declines year-over-year, trying to unpack what might be attributable to disruption in the quarter and transitory versus perhaps a little bit more persistent OpEx inflation?
Stephen Cootey: Not a problem. But one thing I did want to point out that from an EBITDA perspective, we feel very comfortable with our margins given some of the structural changes we've made over the last several years in terms of -- and proud to say that Q1 represented the 21st quarter of the last 23 since Cove where Las Vegas operations was about 45%. But then to get to your question, I think we've done a great job managing payroll. Payroll is probably up a little under 3%, which is in line with the Valley COGS, which is another large cost flat to down, really, the majority of the EBITDA margin degradation can be contributed to the really-the Green Valley hotel disruption. -- which is probably almost half of that margin degradation and then a few uncontrollable such as we had elevated utilities costs this quarter as well as loss and some loss of damages.
John DeCree: Great. And just as a quick follow-up, -- any insight into hotel demand at the renovated Green Valley Ranch rooms or the business more broadly as we think about differentiating that hotel customer from the strips hotel customer that's facing some weakness right now?
Scott Kreeger: This is Scott. Let me take the broad-based performance. We were really happy with the performance in the hotel for the overall brand. Now you have to caveat that we had about 27,000 room nights offline or about 10% of our inventory at Green Valley Ranch. Given that we still were positive year-over-year in hotel revenue. So the rest of the portfolio did a nice job of addressing some of the headwinds that Steve talked about with TSA issues, fuel prices and then, of course, those units being done. As far as the West Tower that is available and the new banquet space, customer feedback, both from a transient customer and from a sales customer standpoint, it's been phenomenal. And it's our view that those rooms are probably the nicest rooms in town right now. from a competitive standpoint and a quality standpoint. We're seeing increased ADR growth as we expected out of refreshing those rooms. And really, the story for Green Valley is to get through the rest of the room remodel and call it, late September to kick in to maximizing the full capital investment where we've got all the rooms up and running and we've got the banquet space. And so we look forward to that happen soon. As far as general health going forward, we like where we are in April relative to hotel -- it's early in the summer booking window. But if you kind of look at competitive set, let's call it, on the 60-day booking window, we are seeing green shoots in core and 5-star hotel ADRs. And we do like the fact that the strip is addressing some of the tourism concerns around value. There's a lot of inclusive packages available in the market for that customer that's seeking value. So we're optimistic about the summer, but it's really early in the booking window to come.
Operator: Your next question will come from Grant Montour with Barclays.
Unknown Analyst: It's Christie off for Brad. I just wanted to clarify on the seasonality from 1Q to 2Q. I just want to make sure I heard that right that you said it was typically down 8% to 9%. And then in terms of -- I appreciate the color on the 2Q disruption costs of $9 million at GVR and $2 million to $3 million at Durango I just wanted to clarify, what was that in 1Q? I think last quarter, you mentioned it was $9 million for GVR.
Stephen Cootey: Yes. So the clarification point, you did hear the seasonality, right, typically going back that we are down 8% to 10% between -- excuse me, 8% to 9% between the first quarter and the second quarter. On terms of -- or, I'm sorry, I lost your second question again, my apologies. .
Unknown Analyst: The -- I appreciate the color on the 2Q disruption costs, but how did that compare to 1Q for GVR and Durango?
Stephen Cootey: 1Q GBR was -- we previously announced $9 million that you came in pretty much spot on $9 million and Durango, despite seeing a lot of traffic disruption the teams kind of managed through it to have just a marginal impact. .
Unknown Analyst: And then switching over to North Ford. Can you guys provide any color how you expect that property to ramp? I think in the past, you have seen a potential to be similar to Gun Lake?
Scott Kreeger: Yes. I think -- look, I think just optically looking at ramps, we're pretty good at understanding these traditionally -- each market has its own competitive pressure. Certainly, there are 3 competitive properties in the area. We expected in the early days that they might be promotionary in how they approach our opening -- but we expect in the typical projects, it may take a couple of years to ramp up and to really get the database acclimated and to grow that database. But given our location, given the quality of the product and our knowledge of that kind of, call it, mid-California market and the team that we have there, we expect to do quite well.
Lorenzo Fertitta: Yes, we would expect the property to be profitable from day 1. So it's just a matter of fine-tuning it and growing the revenue base and managing the expenses on a go-forward basis. So probably a little bit of a shorter ramp than, say, Las Vegas typical .
Scott Kreeger: Two years maybe .
Lorenzo Fertitta: Typical Las Vegas as I think so. .
Stephen Cootey: Yes. And then -- and I think we've articulated maybe several quarters ago that stabilization this is about a $40 million to $50 million revenue product for us.
Operator: Your next question will come from Stephen Grambling with Morgan Stanley.
Stephen Grambling: Maybe a follow-up just on GVR and the room renovations. What does the total spend of somebody who's staying on property there kind of compared to the average. I mean when you're quantifying that disruption, is that purely the hotel revenue that's come out? Or are you able to kind of decipher what other netting, you can see if you get that customer coming back somewhere else or getting other spend?
Stephen Cootey: Yes. You can actually -- it's pretty much by the room. So you can pretty much nail this. From a disruption standpoint, this is absolutely not an exact...
Frank Fertitta: Room revenue and gaming revenue.
Stephen Cootey: It's come a -- that's what I was going to say. And so -- well, an exact size when it comes to rooms, there's more science to it. And so where Frank was getting to it's a combination. The majority is going to be room revenue majeure. And then the second point is going to be convention revenue and catering, right? You'd expect that given the rooms that are out and the catering spaces are out. but then it's all -- then there is a significant portion of food and beverage and gaming that are associated with those rooms.
Stephen Grambling: Right. And so I guess you're including that in that disruption as part of that estimate because I guess what I'm trying to think through is as we bring those rooms back, I imagine that's a higher spending customer, perhaps the benefit that you get is when it comes back, should be theoretically much bigger than the disruption that you're describing. Yes.
Frank Fertitta: Once we get it dialed in. Yes, absolutely. That's right.
Operator: Your next question will come from Jordan Bender with Citizens.
Jordan Bender: Steve, I want to go back to the higher gas price comments. You kind of made it sound like April were back to normal, and the consumer is acting normal. Were those comments in March, you were seeing higher gas prices impact foot traffic into the casino? Or how should we think about that?
Stephen Cootey: I mean, I think as we kind of go through the progression of the quarter, right, January was strong, February was strong. March was impacted by everything you read in the news, which included some higher gas prices. And then -- but we were very happy with the way April right now is tracking to be 1 of the best Aprils on record. So far, gas, but we haven't seen too much of an impact from higher gas prices. .
Lorenzo Fertitta: Yes, March was a -- it wasn't a bad month. It was fine, but we think it was affected by that, by gas, by the war, the uncertainty as well as just the TSA situation was a bit untenable. The goodness it's over and behind us, at least it seems. But for that 2- or 3-week period, I think people just were hesitant to get on a commercial airline because they didn't want to wait in the airport for 2 to 3 hours to get on their flight. So it definitely affected things. But in no way was it a bad performance money.
Jordan Bender: Got it. And then the other part, the construction disruption that you're seeing around town -- are you able to capture those players at other properties via your database? Or are you just losing those visits from those players to specific properties?
Scott Kreeger: This is Scott. Yes, I think you hit it on the head. We have quite a broad distribution of properties in very convenient drive times of each other, and we kind of call it crossover play. And what we'll see is if we can't mitigate that disruption with the customer, they'll typically land in an adjacent property of ours. And we watch that very closely from a database perspective as well. So if we see decline in any known customer. We certainly have programs to address that. .
Operator: Your next question will come from Chad Beynon with Macquarie.
Chad Beynon: You mentioned that you're starting to do some of the early work on additional greenfield projects. So with the outline CapEx that you have going on over the next 18 months, in the current leverage, what's the maximum leverage that you'd be comfortable levering up against in this market?
Stephen Cootey: We kind of articulate right now, we're about 4.07x. The balance sheet is we feel it's very strong. Interest expense has come down for the past 4 quarters in a row right now. There's no short-term maturities and the credit agreement is incredibly flexible. And as we said in the past, Chad, that while we'd love to keep maintaining leverage on and around 4 for the right opportunities that we would spike leverage up. I think once you start topping -- that's really where you start kind of -- kind of you start getting a little concerned Doria project .
Frank Fertitta: Look, we have North Fork coming on. We have a note receivable from North Fort around $80 million we expect that thing to be profitable from the day that we opened it up. And we're going to continue to have some of these new investments come online where we're upgrading the properties we have at Sunset, Green Valley, et cetera. So...
Lorenzo Fertitta: Durango [indiscernible] the summer. So like Frank said, our expectation is that we'll be getting a return on the capital is currently in the ground. So our expectation is that EBITDA will grow. And then we're going to make a decision on what property or what project is next and how we're going to layer these things in. But I think we're very comfortable with...
Frank Fertitta: While you're on reproduction.
Stephen Cootey: And knowing that as you're investing in new assets, you're going to generate new EBITDA, which is going to once they open, obviously, get you back in line to where you want to be long term.
Chad Beynon: Okay. Yes. That makes sense. And then you kind of touched on this a little bit with the database and what's going on the strip with some of the all-inclusive deals. But are you starting to see strip operators start to market locals in a way that we haven't seen for several years, whether it's slot credits or hotel rooms or anything else that could increase the promotional or competition landscape? -- in the near term.
Scott Kreeger: Yes. We don't see anything that would cause us to change what we're hearing or expect that it was anything different than what's happened in the past.
Lorenzo Fertitta: Yes, ship operators historically have always taken a shot at local some maybe with more success than others, but nothing has necessarily changed that I've seen. You haven't seen anything, Scott, right?
Scott Kreeger: No.
Operator: Your next question will come from David Katz with Jefferies.
David Katz: Heard some earlier this week commentary from a hospitality company on a little bit of change in the shape recovery and seeing some strength in the lower end, which has shown up in some of the hospitality numbers. Are you seeing anything like that? Because it's as though we've talked about the bottom of your database being a little pressured for quite a while.
Scott Kreeger: I think the place to look for any kind of change there is in the absolute discretionary. So if you look at eating out I'll reference food and beverage and entertainment -- we had a great quarter. We were up year-over-year. We increased cover count. We increased average check. Overall revenue and profit in Food and Beverage is up. And to me, that's probably 1 of the more absolute discretionary items in our business, and it's kind of a bellwether for us as to the health of that customer. And like Steve said, we had a record gaming quarter. So they're also here plan slots and other gaming casino games. And so right now, it looks healthy.
Frank Fertitta: It's not that our low end has been under pressure for a while. It's Post-COVID, we changed our business level. And we've really reinvested in high limit slot rooms, high limit table games. We're not in the promotion business anymore we're relying on our best-in-class locations, best-in-class buildings, having the best employees to take care of the guests. And it's just -- it's been a pivot from what used to be a very promotional market. And it's just where our focus is. It's not that it's under pressure.
Scott Kreeger: Yes, I think that saying that customers basically doesn't have the discretionary income is probably not the way we look at it. We do have customers that seek value. So it's kind of a bit of a magic recipe as to how to provide what a customer perceives as value based on their demographic tier. And so we think we do a really good job offering a value to just about every demographic in the spectrum.
Lorenzo Fertitta: Yes. The art is having a hang in steakhouse under the same roof that you're serving $1.99 margaritas and balancing that.
Frank Fertitta: So you appeal to all the segments and the market demographically. So the one thing that we've done is try to provide a lot of value propositions for the repeat local customers and give them real value. And I think we do a better job at that than anyone else in the market. .
David Katz: Understood. And if I can just follow up quickly, do you -- are you seeing anything? Or can you talk to destination volumes that impact the business? Probably not the core, but on the margin, is there any notable impact or trends you can cite?
Scott Kreeger: Well, look, I think the most finite place and measurable place to look is in our database out of town. And our database out of town, I don't know how many quarters it's been steep, but we are incredibly consistently growing that national and regional segment of our database, inclusive of the first quarter. So it continues to be an area of opportunity and growth for us.
Stephen Cootey: At least 10 -- these 10 quarters Scott. .
Operator: The next question will come from Steve Pizzella with Deutsche Bank.
Steven Pizzella: First, maybe we can get an update on what you're seeing in the promotional environment?
Scott Kreeger: Stable. I think just as we've said in previous earnings calls, you do have the single proprietary one-off casinos that their kind of core DNA is to be a bit promotional. But nothing has changed there. And the market continues to be very stable, and we don't intend on changing any of our current strategies as a result of anything we're seeing.
Steven Pizzella: Okay. Great. And then just as a follow-up, curious if the World Cup has had a material impact in the past more visitation perspective for you guys at your properties?
Scott Kreeger: Yes, the World Cup is unique this year, and we really got ahead of it. The fact that of where it's located, the time slots for viewing and the number of games creates a great opportunity. We have the best race and sports book experiences in town. Customers know to come to our books for that kind of communal viewing experience. And so the operating teams have a very comprehensive plan to put our best foot forward during the World Cup.
Operator: And this will conclude our question-and-answer session. I would like to turn the conference back over to Mr. Stephen Cootey for any closing remarks. Please go ahead.
Stephen Cootey: Well, thank you, everyone, for joining us. Take care.
Operator: The conference has now concluded. Thank you for your participation. You may now disconnect.