Core Points - Sterling Infrastructure Inc. will replace Light & Wonder Inc. in the S&P MidCap 400, while Red Rock Resorts Inc. will replace Sterling Infrastructure in the S&P SmallCap 600, effective November 13, 2025 [1][2] - Light & Wonder is expected to delist from the NASDAQ Stock Exchange around the same date and will maintain its primary listing in Australia [1] Index Changes - Effective November 13, 2025: - Addition of Sterling Infrastructure (STRL) to the S&P MidCap 400 in the Industrials sector [2] - Deletion of Light & Wonder (LNW) from the S&P MidCap 400 in the Consumer Discretionary sector [2] - Addition of Red Rock Resorts (RRR) to the S&P SmallCap 600 in the Consumer Discretionary sector [2] - Deletion of Sterling Infrastructure (STRL) from the S&P SmallCap 600 in the Industrials sector [2]

Financial Performance - For the three months ended September 30, 2025, net revenues were $475.6 million, a 1.6% increase from $468.0 million in the prior year period[124] - Casino revenues increased by 1.7% to $319.5 million for the three months ended September 30, 2025, compared to $314.2 million in the same period of 2024[124] - Operating income for the three months ended September 30, 2025, was $131.5 million, a slight increase of 0.6% from $130.6 million in the prior year[127] - Net income attributable to Red Rock for the three months ended September 30, 2025, was $42.3 million, a 45.9% increase from $29.0 million in the prior year[124] - Adjusted EBITDA for the three and nine months ended September 30, 2025 was $190.9 million and $635.3 million, respectively, reflecting year-over-year increases[142] - Net income for the three and nine months ended September 30, 2025 was $76.9 million and $271.1 million, respectively, compared to $55.4 million and $203.6 million for the same periods in 2024[142] Revenue Breakdown - Room revenues decreased by 8.0% to $41.6 million for the three months ended September 30, 2025, compared to $45.2 million in the same quarter of 2024[126] - Food and beverage revenues increased by 2.6% to $85.5 million for the three months ended September 30, 2025, compared to $83.3 million in the prior year[126] - The average guest check for food and beverage decreased by 5.7% for the three months ended September 30, 2025, compared to the prior year[129] - Development fee revenues recognized during the three months ended September 30, 2025, were $3.9 million from the North Fork Project[126] - Development fee revenue for the three and nine months ended September 30, 2025 was $3.9 million and $13.9 million, respectively, including a $10.0 million cumulative revenue catch-up[131] Expenses and Costs - Casino expenses decreased by 5.5% to $83.3 million for the three months ended September 30, 2025, primarily due to bad debt recoveries[128] - SG&A expenses increased by 3.5% to $112.9 million and 1.4% to $329.6 million for the three and nine months ended September 30, 2025[133] - Depreciation and amortization expense increased by 3.4% and 4.6% for the three and nine months ended September 30, 2025, primarily due to new assets placed in service[134] - Interest expense, net decreased to $50.5 million and $152.2 million for the three and nine months ended September 30, 2025, compared to $58.0 million and $172.6 million for the same periods in 2024[136] Cash Flow and Capital Expenditures - For the nine months ended September 30, 2025, net cash provided by operating activities was $453.0 million, an increase from $400.0 million in the prior year[159] - Cash paid for capital expenditures for the nine months ended September 30, 2025, totaled $240.1 million, compared to $257.0 million for the same period in 2024[160] - Anticipated cash uses for the remainder of 2025 include approximately $85 million to $110 million for capital expenditures, $40.1 million in principal payments, and $49.1 million in interest payments[151] - Cash flows from investing activities included $110.5 million received from the repayment of Native American development costs for the nine months ended September 30, 2025[160] Debt and Financial Position - At September 30, 2025, the company had $129.8 million in cash and cash equivalents, with borrowing availability under the Revolving Credit Facility at $933.2 million[150] - The company reduced its outstanding indebtedness by $46.8 million during the nine months ended September 30, 2025[161] - The company is subject to significant operating and financial restrictions due to covenants in its credit agreements, including a maximum Consolidated Senior Secured Net Leverage Ratio of 5.00 to 1.00[163] - The company expects cash on hand and cash generated from operations to be sufficient to fund operations and capital requirements for the next twelve months[155] Market Conditions - The unemployment rate in the Las Vegas metropolitan area was 5.6% in August 2025, down from 5.9% in September 2024[119] - Room revenues decreased by 8.0% and 3.6% for the three and nine months ended September 30, 2025, primarily due to hotel renovations at Green Valley Ranch[130] - Average daily rate (ADR) decreased by 4.0% and 3.5% for the three and nine months ended September 30, 2025, while revenue per available room decreased by 1.3% and 1.0% respectively[130] Shareholder Returns - During the nine months ended September 30, 2025, the company paid $105.4 million in dividends to Class A common stockholders and $106.4 million in cash distributions to noncontrolling interest holders[161] - The company has authorized $600 million for repurchases of Class A common stock, with an additional $300 million authorized on October 27, 2025, increasing the total remaining amount to $573 million[153] Other Income - The company recognized a gain on Native American development of $8.5 million for the nine months ended September 30, 2025[138]

Core Viewpoint - Red Rock Resorts (NASDAQ:RRR) is a significant entity in the Consumer Discretionary sector, primarily operating casino and entertainment properties in Las Vegas, competing with major players like Sony [1] Company Performance - Stifel Nicolaus has set a price target of $68 for RRR, indicating a potential price increase of approximately 27.56% from its current price of $53.31, supported by RRR's strong performance metrics [2][5] - RRR's stock price has shown volatility, with a recent decrease of 0.48, or approximately -0.89%, and fluctuating between $52.49 and $53.90 on the day [3][5] - Over the past year, RRR's stock has experienced a high of $63.60 and a low of $35.09, showcasing its volatility and growth potential [3][5] Market Position - RRR's market capitalization is approximately $3.17 billion, indicating a significant presence in the market [4] - The stock has a trading volume of 630,177 shares on the NASDAQ exchange, reflecting active trading interest [4] - RRR holds a Zacks Sector Rank of 10 within the Consumer Discretionary sector, suggesting strong potential for short-term market outperformance [2][5]

Group 1: Company Overview - Red Rock Resorts (RRR) is part of the Consumer Discretionary sector, which includes 264 individual stocks and currently holds a Zacks Sector Rank of 10 [2] - RRR has a Zacks Rank of 2 (Buy), indicating a favorable outlook based on earnings estimate revisions and improving earnings outlooks [3] Group 2: Performance Metrics - The Zacks Consensus Estimate for RRR's full-year earnings has increased by 6.7% in the past quarter, reflecting stronger analyst sentiment and an improving earnings outlook [4] - RRR has returned approximately 13.1% year-to-date, outperforming the average loss of 2.7% in the Consumer Discretionary sector [4] Group 3: Industry Context - RRR belongs to the Gaming industry, which includes 40 stocks and currently ranks 72 in the Zacks Industry Rank; the industry has gained an average of 18.4% this year, indicating that RRR is slightly underperforming its industry [6] - In contrast, Sony (SONY), another stock in the Consumer Discretionary sector, has outperformed with a year-to-date return of 33.2% [5][6]

Core Insights - Diamond Hill Capital's "Select Fund" underperformed the Russell 3000 Index in Q3 2025, returning 4.98% compared to the index's 8% gain [1] - The fund highlighted Red Rock Resorts, Inc. as a key stock, which has seen a one-month return of -14.89% and a 52-week gain of 1.61% [2] - Red Rock Resorts controls over half of the Las Vegas locals market and is experiencing steady growth, although it is not among the top 30 most popular stocks among hedge funds [3] Company Performance - Red Rock Resorts, Inc. closed at $52.29 per share on October 29, 2025, with a market capitalization of $5.357 billion [2] - The company is recognized for its fundamental strength, contributing positively to the fund's performance in the quarter [3] Hedge Fund Interest - Interest in Red Rock Resorts among hedge funds increased, with 32 portfolios holding the stock at the end of Q2 2025, up from 26 in the previous quarter [3] - Despite this interest, the fund suggests that certain AI stocks may offer better upside potential and lower downside risk compared to Red Rock Resorts [3]

Core Insights - Red Rock Resorts (NASDAQ:RRR) reported a revenue increase of 1.6% in Q3, reaching $475.6 million [2] - Net income surged by 38.8% to $76.9 million, indicating strong profitability growth [2] - Adjusted EBITDA rose by 4.5% to $190.9 million, reflecting improved operational efficiency [2] Revenue Breakdown - Revenue from Las Vegas operations slightly increased by 0.8%, totaling $468.6 million [2] - The performance in Las Vegas indicates stable demand despite a modest growth rate [2]

Core Insights - The article discusses the importance of enabling Javascript and cookies in browsers to prevent access issues [1] Group 1 - The article highlights that users may be blocked from proceeding if an ad-blocker is enabled [1]

Core Insights - Red Rock Resorts (RRR) reported quarterly earnings of $0.68 per share, exceeding the Zacks Consensus Estimate of $0.36 per share, and up from $0.48 per share a year ago, representing an earnings surprise of +88.89% [1] - The company posted revenues of $475.57 million for the quarter ended September 2025, slightly missing the Zacks Consensus Estimate by 0.12%, but up from $468.02 million year-over-year [2] - Red Rock Resorts has surpassed consensus EPS estimates in all four of the last quarters and has topped consensus revenue estimates three times during the same period [2] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.44 on revenues of $504.2 million, while for the current fiscal year, the estimate is $1.82 on revenues of $2 billion [7] - The stock has gained approximately 26.4% since the beginning of the year, outperforming the S&P 500's gain of 16.9% [3] Industry Context - The Gaming industry, to which Red Rock Resorts belongs, is currently ranked in the top 17% of over 250 Zacks industries, indicating a favorable outlook for stocks within this sector [8] - GDEV Inc., another company in the same industry, is expected to report quarterly earnings of $0.42 per share, reflecting a year-over-year decline of -46.8% [9]

Financial Data and Key Metrics Changes - The third quarter net revenue was $475.6 million, up 1.6% from the prior year's third quarter, with adjusted EBITDA of $190.9 million, up 4.5% [10] - The adjusted EBITDA margin was 40.1%, an increase of 110 basis points from the prior year [10] - The company generated $128.5 million in operating free cash flow, translating to $1.21 per share, bringing year-to-date cumulative free cash flow to $335.3 million, or $3.17 per share [10][11] Business Line Data and Key Metrics Changes - Las Vegas operations achieved a record third-quarter net revenue of $468.6 million, up almost 1% year-over-year, with adjusted EBITDA of $209.4 million, up 3.4% [9] - The hotel segment performed exceptionally well, generating near-record results despite renovations, with occupancy increasing across the portfolio [12] - The food and beverage segment achieved record revenue and near-record profitability, supported by higher cover counts [12] Market Data and Key Metrics Changes - The company reported continued strength in carded slot play across its database, including regional and national segments, with robust visitation and net theoretical win [11] - The local market is expected to add more than 6,000 new households within a three-mile radius of the Durango property over the next few years [9] Company Strategy and Development Direction - The company is focused on executing its development pipeline, including significant investments in Durango Casino Resort, Sunset Station, and Green Valley Ranch [11][17] - The next phase of the Durango Master Plan will expand the property significantly, adding new amenities to enhance guest experience and drive repeat visitation [8][9] - The company aims to maintain operating discipline and enhance shareholder returns through a balanced capital allocation strategy [22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strength and resilience of the business, despite ongoing construction disruptions [13][22] - The Las Vegas locals' market is viewed as fundamentally different from the Strip, with a loyal customer base driving consistent revenue [42] - The company anticipates continued stability in its core slot and table games business, with a return to normal hold in sports betting [12][32] Other Important Information - The company approved an increase in regular cash quarterly dividends to $0.26 per Class A share, reflecting confidence in long-term earnings power [20] - The total project cost for the Durango expansion is estimated at approximately $385 million, with construction expected to begin in January [8][9] Q&A Session Summary Question: Can you talk about the rationale for the Durango expansion? - Management highlighted the strong performance of Durango and the lack of competition in the area, expecting similar returns on the expansion as the initial build [27][28] Question: What was the impact of sports betting hold this quarter? - Management noted a return to normal hold after an unfavorable hold last year, estimating a disruption impact of about $2.5 to $3 million for the quarter [32] Question: How did the hotel segment perform compared to the Strip? - The hotel segment showed resilience, with occupancy up and RevPAR only slightly down, outperforming the Strip by about 25% on an ADR basis [38] Question: What is the expected disruption from ongoing construction projects? - Management expects disruption to extend beyond 2025 into 2026, with estimated impacts of around $8 million for Q4 [32][94] Question: How is the tavern business performing? - The company has eight taverns under contract, with two operational and positive early performance indicators, attracting a younger customer base [96][97]

Financial Data and Key Metrics Changes - The third quarter net revenue for Las Vegas operations was $468.6 million, up almost 1% from the prior year's third quarter [9] - Adjusted EBITDA for Las Vegas operations was $209.4 million, up 3.4% from the prior year's third quarter, with an adjusted EBITDA margin of 44.7%, an increase of 110 basis points from the prior year [9][10] - Consolidated third quarter net revenue, including $3.9 million from the North Fork project, was $475.6 million, up 1.6% from the prior year's third quarter [10] - Consolidated Adjusted EBITDA was $190.9 million, up 4.5% from the prior year's third quarter, with an adjusted EBITDA margin of 40.1%, an increase of 110 basis points from the prior year [10] Business Line Data and Key Metrics Changes - The hotel segment generated near-record results despite the West Tower at Green Valley Ranch being offline for renovation, driven by increased occupancy across the portfolio [11] - The food and beverage segment achieved record revenue and near-record profitability for the quarter, supported by higher cover counts across outlets [11] - Group Sales and Catering delivered near-record third-quarter revenue, with positive momentum expected to continue into early 2026 [11] Market Data and Key Metrics Changes - The company saw continued strength in carded slot play across its database, including regional and national segments, with robust visitation and net theoretical win driving record revenue and profitability in the gaming segment [11] - The local market is expected to add more than 6,000 new households within a three-mile radius of the Durango property over the next few years, supported by the development of downtown Summerlin and Summerlin West, projected to add approximately 34,000 new households [9] Company Strategy and Development Direction - The company is focused on executing its development pipeline, maintaining operating discipline, and enhancing shareholder returns through a balanced capital allocation strategy [21] - Significant investments are being made in the Durango Casino Resort, Sunset Station, and Green Valley Ranch properties, with ongoing renovations and expansions aimed at enhancing guest experience and driving growth [17][18] - The company plans to expand the Durango Casino Resort with additional casino space and amenities, including a bowling facility and luxury movie theaters, to capture additional market share [8][9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strength and resilience of the business, despite near-term disruptions from ongoing construction projects [13][21] - The Las Vegas locals' market is viewed as fundamentally different from the Strip, with a loyal customer base and a gaming-centric business model that does not rely heavily on tourism [40] - The company anticipates continued stability in its core slot and table games business, with a return to normal hold in the sports business as the fourth quarter begins [12][40] Other Important Information - The company's cash and cash equivalents at the end of the third quarter were $129.8 million, with total principal debt outstanding at $3.4 billion, resulting in a net debt of $3.3 billion [13] - The board approved an increase in the regular cash quarterly dividend to $0.26 per Class A share, reflecting confidence in the business's strength and long-term earnings power [20] - Capital expenditures for the third quarter were $93.7 million, with a full-year expectation of $325 million to $350 million, down $25 million from previous guidance [16] Q&A Session Summary Question: Can you talk about the rationale for the expansion at Durango? - Management highlighted the strong performance of Durango and the lack of competition within three miles, indicating the potential to drive additional traffic and guests through the expansion [25] Question: What was the impact of sports betting hold this quarter? - Management noted that the hold returned to normal levels after an unfavorable hold in the previous year, with an estimated disruption impact of $2.5 million to $3 million for the quarter [30] Question: How did the hotel segment perform relative to the Strip? - The hotel segment performed well, with occupancy up 244 basis points, and the company outperformed the Strip by about 25% on an ADR basis [35] Question: What are the early thoughts on the tavern business? - The company has eight taverns under contract, with two operational and five expected to open in the coming months, showing promising early performance [92][93] Question: What is the expected disruption from ongoing construction projects? - Management anticipates approximately $8 million in disruption from the Green Valley Ranch project in the fourth quarter, with minor disruptions at other properties [30][90]