Red Rock Resorts, Inc.

Good afternoon, and welcome to Red Rock Resorts' second quarter 2026 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.

Thank you, operator, and good afternoon, everyone. Thank you for joining us today for Red Rock Resorts' second quarter 2026 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 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 and our earnings press release, Form 8K, and investor deck, which are 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'd like to take a moment to recognize an important milestone for our company. On July 4th, 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 in one-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, loyal customers, and 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 in our confidence in the next chapter of our company's growth. Our second quarter results demonstrate that the company we have built over the past five 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 in adjusted EBITDA in our history while maintaining the 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 continues 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's 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's second quarter. Our 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 of operating free cash flow, or $1.97 per share. This strong free cash generation continues to validate our operating model and Discipline 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 while continuing 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 gaming revenue and profitability in our company's history, surpassed only by last year's historic quarter. Turning to our non-gaming 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 21,000 room nights. impacting both revenue and profitability across both divisions. Even with this temporary disruption, hotel performance remains 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 CARTA 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 unit holders of Station Holco, including a distribution of approximately $34.5 million to Red Rock Resorts. The 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 dividends and share repurchases made during the year, we have returned approximately $198 million to our shareholders. Capital spent 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 and $425 million, which includes $275 to $300 million in investment capital, as well as $100 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 continue to make excellent progress on our podium refresh. The recently reopened Goudy 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 of the property. In the coming weeks, we look forward to opening Stoney's Rocking 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 Sunset Station redevelopment. This phase includes enhancements to the movie theaters, the relocation of the temporary bingo operation into a permanent location, and the redevelopment of the former buffet space into a premium steakhouse and 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. On completion, Green Valley Ranch will feature one 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 one 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 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 have begun installing slot machines and other gaming equipment. We expect turnover of the next phase of the podium later this month to keep us on pace for an early fourth quarter 2026 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 Rocks' 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 26 cents per Class A common share payable on September 30th to Class A shareholders of record as of September 15th. 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 or advancing our development pipeline. The continued success of 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 sub-markets across the Las Vegas Valley. Combined with our portfolio of best-in-class assets, this unmatched development pipeline positions us to capitalize on the very favorable demographic trends and high barriers to entry that continue to define the Las Vegas locals market. And before we wrap up, we'd 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 in Sisseta as one of America's best large employers in 2026, by Newsweek as one 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 five decades. Their trust and support has 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'd like to be happy to open the line for questions.

We will now begin the question and answer session. To ask the question, you may press star then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. The first question today comes from Ben Chaikin with Mizuho. Please go ahead.

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's calendar related or maybe anything underlying. Just maybe what you're seeing to the extent you can break it down. Thank you.

Hey, Ben, 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're very consistent across all three months of the quarter. And then if you look at April 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, and overall, I think it helped June from a traffic standpoint. It was positive.

Understood. That's very helpful. And then maybe just from a modeling standpoint question, we'd love to touch on seasonality. Just as we sit here today, what's your best take on 3Q, at least historically. Thanks.

Yeah, thanks, Ben. Looking forward to typically from Q2 to Q3 season, Q3 being one of our softer quarters. Usually you're down 10% from Q2 to Q3.

Appreciate it. Thanks.

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

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 quarters? Thanks.

Yeah, sure. I think the team did a great job managing disruption both onsite at our Green Valley Ranch, Sunset Station, and Durango properties as well as offsite 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 in Green Valley to the extent of about $7 million, which was slightly lower than the $9 million we announced in our last earnings call. And it was driven really by the primary loss of the 21,000 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. And so we're still guiding about $2.5 million in Q3, and then each quarter subsequent to the project completes in the back half of 2027. I did want to remind everyone, by the way, that these impacts are temporary in nature. and they're more than offset by the long-term benefits of the investments that we're making.

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, 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.

I think this, Scott, I think certainly there's a good degree of brand awareness and goodwill that comes into what we're doing here. You know, we're part of the community and being out in 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're 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.

Great, thanks all.

The next question comes from Chad Baynon with Macquarie. Please go ahead.

Hey, good afternoon. This is Aaron on for Chad. Thank you 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?

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

OK, 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've said that F1 isn't really an event for your company. So just curious if that's still the case or maybe if the programming around it or the understanding of visitation and customer behavior has changed where there could be some opportunities for you guys. Thanks.

Yeah, this is Lorenzo. The F1 event in Las Vegas is primarily tourist-driven as we see it. You don't get a lot of rallying behind it from a local's perspective. The World Cup worked for us because the local fans were really into it. Obviously, with the different countries participating, depending on 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 doesn't really move the needle at all, and we don't really lean into anything relative to participation in promotion. My understanding is it's obviously very good for the higher-end properties on the Las Vegas Strip, though.

Okay, thank you. Next quarter.

The next question comes from Joe Stoffs with Susquehanna. Please go ahead.

Thanks. I was wondering if you could give maybe an assessment of the level of demand you're seeing or you saw in the second quarter and what you're seeing thus far as far as you can see it for destination and regional demand. And then maybe in an up An update with respect to the road work and all the things that the state is doing in and around the Durango property. Is it worsening? Is it the same as let's say it was a month or two ago? Just trying to assess that level of disruption there.

Yeah, Joe, it's Scott. I'll take the first question and leave it up to maybe Steve to talk about the second. If I were to gauge demand, I'd look at two areas, inbound gaming and then inbound hotel. We like the way the database and the customer segments perform in the quarter. We like what we're 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 things there. From a hotel perspective, X the GVR, the impact of having about 21,000 rooms out in the quarter from GVR. The hotel, same store hotel performed very well for the quarter, quarter two. We like the trends there. We like the 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 GBR rooms are going to come online in mid-September, and that's really going to put wind in the sails for us from a destination perspective.

Sure. Maybe to tackle the second question, Joe, I mean, In terms of this, probably three or four items that are going on right now around Durango. So from a Roy Horne 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's going up right next to Durango. but both westbound on-ramp, eastbound on-ramp are kicking off actually in June of 26 and expected to last pretty much the next year as well as the triple left on Durango South. So three of the major infrastructure projects are just kicking off. Got it. And the same thing in Red Rock as well as in Green Valley.

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

If you're referring to the $80 million, I mean, look, me and Frank, 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 a 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 something like that off. We've had a ton of good feedback. There's 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're going to get benefit from this for a lot of years to come. We've done this in the past. We've had, you know, a number of different brand campaigns from We Love Locals to, you know, we've 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's going to hit the quarter in the third quarter. But overall, we think it's the right thing to do for the long-term benefit of the business.

Makes sense. Thank you.

The next question comes from Steve Pizzella with Deutsche Bank. Please go ahead.

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?

I think we've always been pretty consistent in terms of targeting these projects over a three-year lifespan. So the first year generally is around 10%. The first project, the major project coming online is really the Green Valley, which should be online as of Q4.

Okay, thanks. 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, or has demand in the locals market remained largely insulated?

Hey, Steve, this is Scott. First of all, you know, we love what the Strip did this summer by, you know, kind of offering all-inclusive, if you will, for value packages. I think it only helps the city. You know, we provide value every day.

That's in the core of what we do.

You know, our model is a high frequency model. So, you know, we make sure that, but value is relative. Value is just about price.

Yeah, it's based on convenience, value, and friendly service. The fact that our employees know our customers, there's a relationship there. We've kind of been asked this question literally You know, ever since we went public the first time in 1993, it's the same thing. The locals want to be at a convenient, value-oriented place that is consistently delivering to them what they want. And so, no, I don't believe that we've 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-net should long-term be good.

Thank you. I appreciate it.

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

Hi. Hi. Afternoon, everybody. You know, first I wanted to, you know, looking ahead, seeing a lot of these projects sort of getting to their, you know, final stages and in good form, you know, how soon might we be talking about kind of the next phase and, you know, casino project and, you know, where it would be and, you know, we're just anxious to start modeling that stuff into.

Sure. This is Lorenzo. I think consistent with what we have been talking about the last couple quarters, we're currently working on multiple projects from a design standpoint, both new build, green build projects. We've got two that we're actively working on right now and we're going to have to figure out and determine which one is gonna go first as well as a master plan expansion we've been working on to add rooms and a spa facility at Durango. Obviously on the heels of after, potentially after opening this north expansion that we have going on now which has all the different entertainment components. We're 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're 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 be anything and we're just working through it you know we're hoping to have more information as we kind of turn the corner and get into the early part of 2027 and Believe me, we're as anxious as anybody to get going with another project. We're a development company. We've had our best success by building projects from the ground up. We've been able to have some of the highest returns in the gaming industry by doing that. And obviously, off the success we've had with Durango, we're anxious and ready to go. But these things just take time to gestate, and you've got to kind of slot them in at the right time. But we're actively working on it, and we'll have more news to come shortly.

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 A's are coming. We heard some talk this quarter about an NBA facility, which has been talked about for a while. What strategy, if any, makes sense in leaning into those major sports in the Valley, and do you get any tangible benefit from it?

I think there's a number of different benefits we get. Obviously, 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. For us specifically, we've had a lot of success partnering up with the Golden Knights. We do a lot of promotional activity around them. There's a large fan base and a lot of affinity for the Golden Knights here. Obviously, the Raiders have been great as well.

And the visiting teams want to stay at our properties.

Yeah, we do have a lot of the visiting NFL teams that stay at our properties. And I think you're going to 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. You know, that's really what's driving a lot of these weekends is, you know, what's the big event, whether it's a major sporting event, a fight, entertainment, obviously. So there always seems to be something going on.

All of this critical mass is net-net going to be a positive for the city of Las Vegas, which we're, you know, a microcosm of the entire city and how it's doing it.

and it helps our high end play too. I mean, we get a lot of, we're starting to develop a lot more robust business on our high end table games play and anytime there's a large boxing event or UFC event, we see a lot of benefit from that. People flying in wanting 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 using, 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's just a big net benefit.

Appreciate that. Thank you.

The next question comes from Brant Montour with Barclays. Please go ahead.

Hey, guys. It's Christian for Brant. Thanks for taking our question. Just as a relief to those next growth phases at GVR and Sunset that are coming online in 26 and into 27, what percent of those enhancements would you say would be coming online by year end 26?

In terms of the second piece, well, in terms of the majority of the first piece of Sunset will be coming online. Really, the only remaining pieces are Leticia's and Rosalita's, right? Those are the only two remaining items. The rest of the items I can see coming online, maybe Bingo is going to be late this year, but then the rest of the remaining items will be 2027. From a Green Valley perspective, we're really focused on getting the hotel across the finish line. and so that's the asset that you're going to see placed in service in 26 with the remainder coming online in 27.

Got it. Thank you. And just a clarification on the seasonality comments either in relationship to 3Q but more specifically 4Q. I know in the past you guys have said that's 4Q from 3Q is up 10 to 11% sequentially. Is that a consolidated comment or is that specific Las Vegas operations?

Las Vegas Operations. I think that's going to be a much more important distinction as we open up North Fork to our guests in Q4.

Okay, great. Thanks, guys, so much.

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

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?

Hey Jeremy, it's Scott. Yeah, as we've talked about in previous quarters, it's very irrational. And so we don't see any change in the market, nor anything that would change us to make us change our strategy.

Got it. And then how is the Tavern business trended? Have you seen any notable cross-sell from customers sourced there to your casino properties? Thanks.

Yeah, so we just opened up our sixth of eight taverns. We have two more to go, one in October and one at the end of the year. We got into the tavern business for a couple of key business reasons, one 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're excited about the two additional taverns to come online by the end of the year.

Thank you.

The next question comes from Dan Pulitzer with J.P. Morgan. Please go ahead.

Hey, good afternoon, everyone. Thanks for the question. I wanted to touch on OpEx. Can you talk a little bit about what you're seeing in terms of labor, utilities, insurance? We've 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? Sure.

I will start. From a labor perspective, we're in line with salary and wages up around 3% year over year. Utilities, particularly electric, continues to be a drag on OpEx, and my sense is 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 the Green Valley Ranch disruption, which we'll be getting our full suite of product back at the end of September. There's also the absence of the North Fork catch-up payment that we recognized prior year and in addition, there's several one-time 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 and hopefully getting back.

And then, I'm sorry if I missed this, but were there any share repurchases in the second quarter? And if not, was there any reason for that?

No, no. I think we've been very consistent with a balanced approach, you know, taking a balanced approach to capital allocation. This quarter we heavily spent on our existing projects, both 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. Thanks so much. No problem.

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

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

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