Good afternoon, and welcome to Red Rock Resorts Fourth Quarter and Full Year 2025 Conference Call. [Operator Instructions] 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 today for Red Rock Resorts Fourth Quarter and Full Year 2025 Earnings Call. Joining me on the call today are Frank and Lorenzo Fertitta, Scott Kreeger and our executive management team. I'd like to remind everyone that our call today will include forward-looking statements under the safe harbor provisions of the United States federal securities laws. Developments and results may differ from those projected. During this call, we will also discuss non-GAAP financial measures. For definitions and complete reconciliation 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. The fourth quarter represented another period of exceptional performance for the company. Our Las Vegas operations set new fourth quarter records for net revenue and adjusted EBITDA while maintaining near record adjusted EBITDA margin. This marked the ninth consecutive record quarter for both net revenue and adjusted EBITDA. For the full year, our Las Vegas operations delivered their strongest performance on record, achieving all-time highs in net revenue and adjusted EBITDA, including producing more than $900 million in adjusted EBITDA for the first time in our 50-year history while maintaining near record adjusted EBITDA margin. These results marked the second consecutive year of record net revenue and the fifth consecutive year of record adjusted EBITDA, underscoring the strength, consistency and long-term earnings power of our operating platform. In addition to delivering strong financial results in 2025, we remain very pleased with the continued performance of Durango Casino Resort and the successful revenue backfill at our core properties. Durango continues to expand the locals market and drive incremental play from our existing customer…

[Operator Instructions] Our first question today is from David Katz with Jefferies.

Look, I think we look at the Las Vegas Valley as a whole, and I know we've discussed in the past the connection between what may go on the strip, what may go on in other destination pockets within the Valley. Can you just talk about what you're seeing in terms of demand levels as it relates to other areas? Because candidly, we've heard sort of pockets of weakness and forward-looking strength. Just give us an update on what you've seen and are seeing.

David, it's Scott. Thanks for the question. Probably the best place to start would be in the hotel, and then we can kind of transition into other revenue areas. For the quarter, it's important to note that you have to adjust for the rooms that were out at GVR. When you do that, we performed quite well. So the down in the hotel was essentially the room nights that we lost being down at GVR. So if you baseline that from an ADR perspective, from an occupancy perspective and an overall revenue perspective, we did quite well, and we did much better than what is publicly available from a RevPAR perspective compared to the Strip. That was really a function of strong sales effort on the part of our sales team and then also Red Rock and Durango from a leisure segment having very high ADR. So we like where we sit in hotel, and we think that our hotel product is differentiated from the Strip in that regard. The quality of our assets, the value proposition and the ease and location of our properties really lets us compete at a different level when it comes to the hotel. From a gaming perspective, we continue to see regional and national be one of our strongest performing areas of the database. And as Steve mentioned, we had a record fourth quarter revenue in gaming. And again, we think that's attributable to a couple of things. One, the investment in our high limit rooms and our move towards higher net worth customers as well as the quality of our assets where people are finding from a regional and national perspective that our offering is quite compelling versus the Strip from a convenience and quality perspective. Steve, I don't know if you want to add anything?

Yes. I mean, David, I know a lot of [ log ] comes between the Strip and the locals, but it kind of really does start that we don't rely on tourism. We don't rely on conventions. We don't rely on hotel-driven revenue, right? We are a locals market, incredibly gaming-centric. We offer a distinct value proposition to our guests, and we rely on our guests to come back multiple times a month. In fact, 50% of our guests come over 8 times a month. I think that is a differentiating factor between I think us and the Strip.

And I think the other thing is if you look at the locations that we have within the locals market, we have the best locations in the market, strategically located off the beltways. And where our properties are located is where all the new growth and new housing is taking place. So we feel great about where we are.

The next question is from Ben Chaiken with Mizuho.

There's a number of new projects you're working on, given there's some updated time lines in coordination with Phase 2 at Sunset and Phase 2 of GVR as well as Durango, which was previously announced. Can you help us with maybe the total construction disruption that you're thinking in '26 and maybe any cadence that would be relevant.

Sure. I can start, and I know the team can jump in. So if I kind of go back to Q4, Q4, we experienced probably about $5.1 million of disruption mainly at our Green Valley Ranch property. When I looked at our Sunset property -- our Sunset Station property, the disruption was minimal. So there's some slight differences what we had previously announced.

That being said, we don't know how much better we could have done if we weren't renovating...

It's a bit of a gut feel other than the hotel segment at Green Valley. We know we got 300 rooms now, so we can calculate that, obviously.

Exactly. And so -- and I think that Frank would echo that same point about Durango, where we're just beginning construction on the North Valley, and we're doing our best in both the Sunset project and the Durango project to mitigate and minimize the operational impact while maintaining construction time lines because moving into the first quarter, as Lorenzo mentioned, Green Valley Ranch is very easy to calculate because it's all rooms based, and we have a history on that. We are going to be in peak construction on the East Tower and the convention in Green Valley. So we expect disruption approximately about $9 million. And then as mentioned, we're going to continue to manage and monitor the potential impacts at Sunset Station and Durango on those projects as they move forward to what's called more active phases of construction. But I do want to remind everyone that while these impacts -- all these disruption impacts are short -- very short term in nature, the redevelopment of our properties to ensure that we remain best-in-class, we're equipped with amenities that keep allowing our guests to return time and time again, that is central to Frank and Lorenzo's strategy. So over the long run, we expect to generate significant return from these capital investments and further widen our competitive advantage from other locals in the market, but also the Strip.

Okay. That's helpful. I guess, is $9 million a good bogey then for the year? I mean that sounded like just the 1Q number.

That was actually the 1Q number. I think you're going to end up maybe like $4 million, $5 million probably in Q2 at Green Valley. And I'm hesitant right now to -- as Frank and Lorenzo talked about, the Durango and the Sunset seem more of a gut feel. So not ready to give guidance on that one just yet.

This is Lorenzo. On Green Valley, that disruption, those rooms should be coming -- will be coming online in July, kind of by summer. All the rooms should be delivered by then and the meeting space. So it's not far away. We're getting through the [indiscernible] right now.

Next question is from Barry Jonas with Truist Securities.

Generally, I think Q4 to Q1 EBITDA is usually up about, I guess, apologies, 6% to 7%. Any reason outside of the disruption to think that could fare better or worse this year?

Yes, Barry, I think the number might be a little high as I always thought of seasonality between Q4 and Q1. It depends how far you go back. We go back -- go back prior to COVID, so I'm usually about 5.5%. Yes, but I don't think that there's any reason that we can't achieve those returns. The one note being that $9 million disruption. And just note, so there's no confusion, right? That means roughly, if I'm going sequentially, as you just did, that would mean really $3.9 million in extra disruption at Green Valley versus Q4.

Great. And then just at a high level...

[indiscernible] Go ahead, Barry.

Got it. And then just as a follow-up, as we head towards tax refund season, maybe just give your latest thoughts about expectations for any top line benefits from the One Big Beautiful bill.

I mean -- Barry, I mean I think ultimately, we're looking forward to a tax returns just started. I mean the tax return season just started. I think the way these generally trend, if I look at '25 to '24, about 1/3 of these refunds are done by sometime, let's call it, late February and almost 50% of them are done by mid-March. But the key measures there, including the elimination of the federal tax on tips, you're looking at overtime, the new senior tax credit, the reduction in marginal tax rates and increased child and family tax credits as well as expanded standard deductions. We feel, especially given where our assets are positioned and where people are moving to and where people currently are that we are in prime position to take advantage of the excess discretionary income hitting the Las Vegas locals market.

The next question is from Chad Beynon with Macquarie.

With respect to the GVR and Sunset Station updates around additional capital, some of that going into '27, how does that affect the timing of the developmental pipeline for greenfield projects beyond this year?

Yes. This is Lorenzo. It doesn't affect it at all. It's just part of our kind of ongoing strategy. We really believe that the key to our long-term success is investing in our existing properties and keeping them fresh. And like Steve said, it helps continue to separate us from our competition. It also, I think, is allowing us to start to gain some market share or grab some market share from the Strip as we're seeing a lot of customers, particularly on the high end that are coming over -- that historically stayed at the Strip that are now staying with us based on the amenities we have and the services that we provide. So listen, any time that we go out and say that we're going to invest money in high-limit slots and high-limit table games at these properties, believe me, that's a great investment, and that's something that you guys should be really happy about. We've seen great returns on those investments historically. And it's just part of the process of how we've repositioned the properties and the brand coming out of COVID from all of those spaces prior to that were essentially buffets where a lot of those buffets people coming into the property, they were discounted buffets. They were -- it was a loss leader, and we've completely flipped that from that being a loss to being now assets that are generating substantial profit. As far as new builds, I mean, that is really what we believe is our one of the core competencies of our company is being able to go out, identify a piece of property, start from scratch, design the property first on ingress and egress and then figuring out what the product wants to be and how we're going to operate it. We're currently working on multiple properties right now, I would say, in kind of full-on design. We have -- we're going through the entitlement process on them. And it just takes time. And we'll have an update hopefully fairly soon on exactly what the time frame is going to be. But the investments that we're making in our current properties will have no effect at all on new properties and new builds.

Okay. Great for that extra color. And then it sounds like we're hearing some conflicting things in terms of just the buzz and activity at your properties and around the locals market for the Super Bowl. I think most of the headline media was around Strip prices, but we heard different things in the locals market. Can you maybe just talk broadly around how traffic was this weekend and given the game outcome, if this should be a negative headwind for the first quarter versus last year?

Yes, Chad, this is Scott. I can tell you, I had the pleasure of touring the properties on Sunday, walking with the general managers and want to give them and their team a lot of support for what they did. I can tell you, there's no better place to be on Super Bowl weekend than a Station Casino property. We had every property fully programmed, whether it was the bars, the restaurants, the race and sports book. VIP parties for our best guests, we were buzzing. And we had decent results from the Super Bowl from a betting perspective and even better results from a gaming perspective on slots and Food and Beverage. And if there was any slowdown elsewhere, it wasn't in our properties.

The next question is from Jordan Bender with Citizens.

I want to hit on the 90% deduction from the One Big Beautiful bill. From what we can see, it doesn't seem like there's much momentum to revert it back to what it was. So have you guys done any work around how much of a threat that could be, particularly for the higher-end business?

Yes, this is Scott. I'll take it first from a customer perspective and then maybe Steve can talk a little bit about what to do about it. For the most part, if there was an impact, it's relatively centered around just education and our customers trying to figure out what it means. So to the degree we can, we try to help them understand the language in the bill and how it affects them. Steve can probably elaborate a little more on the mechanics of it and what we're doing in conjunction with not only just us, but the whole gaming industry in trying to rectify the legislation to get it adjusted back to where it was.

Sure. I mean I'll go to keep it incredibly high level because I think you touched on it. I mean the rule is incredibly confusing. And so I think that the main goal here, particularly since legislative seems a little bit tougher to find, is work through administratively through the IRS just to give some clarity around what 90% -- how the 90% rule works. And so and making -- and then finding a mechanism industry-wide to get that out to our players and our customers.

Great. And I guess, Steve, sticking with you, as we think through your leverage, we kind of run the CapEx numbers through our model and what our model now is maybe leverage is going to stay at the current levels over the next year or so. Can you just remind us like where you are comfortable running the business as we think about if and when we do get a new build project?

Yes. I mean I think in the current leverage position right now, where we have an incredibly strong balance sheet, ample liquidity, very flexible credit agreement and no long-term maturities. So I think at 3.87x, that's the seventh consecutive quarter of deleveraging. We feel that the balance sheet will provide Frank and Lorenzo a good foundation in which to grow not only their existing capital projects, return capital to our investors, but also position us for the next greenfield -- the greenfield investments. If leverage were to creep up because there was a market opportunity, either that they wanted to accelerate their new projects or accelerate reinvestment where they saw that they were going to generate ample return, feel that we could temporarily move leverage beyond where we currently are and still be very comfortable with the balance of the balance sheet.

The next question is from Steve Pizzella with Deutsche Bank.

Just on the promotional environment, can you talk about what you're seeing in terms of promotional activity and the competitive behavior in the locals market?

Steve, this is Scott. It's been very consistent. So as we've mentioned on previous calls, there are small single unit operators that have always been competitive promotionally. But in the grand scheme of things, it's not changed a bit over probably the last couple of years. So a very stable environment.

Okay. And then just knowing that it is a smaller part of your business, but with the strong group calendar on the Strip expected this year and commentary that you believe you are getting some demand that might have gone to the Strip before, do you expect to receive any benefit from the group business as well?

Yes. This is Scott again. I can tell you, we had a great quarter in the fourth quarter as it relates to hotel sales and the associated catering. We see that moving into the first and second quarter of the year. And then as the booking window opens up for the back half of the year, we're encouraged as well. So we're pretty happy with the sales team's effort and the bookings that we have on the books so far.

The next question is from Dan Politzer with JPMorgan.

First, you guys have talked a lot about the benefits of your higher-end rooms, higher net worth customers. And as we're thinking about this kind of increasingly bifurcated consumer environment, I don't know, is there any way to kind of frame out how you think about your portfolio, whether it's the EBITDA contribution from the higher-end properties, the Durango, GVR, the Red Rocks of the world, just to kind of better -- so we can better appreciate the quality of the customer and the assets that you guys have?

Well, I mean, generally, Dan, as you know, we're not going to sit here and break down the segments. That's why we're all group -- we group up by division. But you can be fairly certain that all the assets across the database performing really well.

A lot of our customers don't just play at one property. We have a lot of crossover play, whether there's a property close to when they're getting off work or whatever is convenient. So they don't tend to be siloed into one singular property.

And some of the other properties, too, we've been encouraged just with the amount of higher in play that we're starting to see in places like Santa Fe and Sunset Station and even at Palace Station. We're seeing some of the high-end play. So it's pretty much throughout the system. Obviously, Green Valley, Durango and Red Rock kind of lead the charge there. But we're finding that as we add assets to these different areas of the valley and we upgrade the assets that it's pulling a higher-end customer overall to even those properties and growing the market where maybe somebody wouldn't have come to that property before. Now they're coming to those properties. So part of the market -- the function of the market is what's the quality of the product you provide. And so we're seeing that the service quality and the product quality is growing the market for us, casting a wider net as far as what we're able to attract to the properties.

Got it. And then just following up, I know you're not ready to give that disruption from Durango Phase 2, Phase 3 here. But as I think about $120 million expansion [indiscernible] the property that was owned now you have a $385 million expansion, which I get extends over a fairly long period of time. I mean, is there any way to kind of couch relative to that $4 million disruption impact you had on the prior phase just so we can kind of try to tweak our expectations and have them in the right place there?

Listen, a lot of it's a gut feel, but the reality is with the Durango North expansion is that what we've seen historically where you see the bigger parts of disruption is when you disrupt parking, which obviously affects convenience and which is all the locals market is all about is convenience or you take down hotel rooms like we've done at Green Valley Ranch because you just don't have the bodies in the building. Look, we certainly expect that we're going to be disrupted at Durango as we continue on with this. But we look at it is that it's short term. We're talking about 18 months or 16 months from now. And then when we open the property with all these entertainment amenities that we're going to have, we're as confident as we've ever been in that property that foot traffic in gaming traffic going through that property is going to explode with the number of bodies that are going to be there coming to these entertainment assets. So Steve, I don't know what you're thinking from a disruption standpoint if we're ready to put a number out there, but...

Yes, I don't think we're quite ready. I mean we're -- Dan, just -- I mean, I owe you an apology, we're literally just 1 month away from dispensing out the property and kind of getting logistics down. And so what Lorenzo said that it's a short term, about 16 months away really from completion.

You also have traffic improvements going on around that. We just -- we don't really know. We can't quantify it. Maybe after we get 90 days in and see what's going on with the property, we'll have a better ability to communicate on that. But that's -- it's just hard to put a number on. We don't know how much better we might be doing so.

That's the key. And look, we -- as part of the last expansion that we just opened with the VIP slot or the high-limit slots, we opened a new garage. And I can say that every week, we're increasing the car counts going into the new garage. So people are figuring it out. They're finding their way. So we're encouraged from that standpoint. But also, we've done this for a long time, and we know that you're definitely going to feel the impact of disruption when parking is disrupted.

And Dan, if I kind of revert back to the question that Barry asked, Barry asked in effect Q1 guidance. And so the way I answered them, I feel very comfortable given the seasonality output and then the disruption we gave on Green Valley Ranch to achieving that. So I think that kind of gives me a perspective on the Durango disruption right now.

The next question is from Joe Stauff with Susquehanna.

Just one quick follow-up on the Durango discussion. Is part of the disruption, as I understand it, is from the road work and so forth. Is the state doing that? Or who dictates essentially the disruption in the road work?

Yes, Joe, it's Scott. There's 2 projects that are going on. One, we have an apartment complex right next to us that's being developed. There is some trenching that's going on as we speak there. We're in tight coordination with them to minimize the disruption, but that should be going on for a couple of more months here. And then the county is working on an on-ramp off of the access frontage road on to the freeway and a widening of the left turn lane coming off of the freeway, both of which will make ingress and egress much better to our property over the long haul. But that project is going to probably go through the summer of next year. It has not started.

The bad news is we have traffic construction, roadway construction. The good news is we wouldn't have it unless the valley was growing. So we look at it as short-term pain, long-term gain.

Got it. And just one quick follow-up. What is the outcome or the effect of the California ruling in December? Does this adjust the opening date? What is the effect of that ruling?

I think as we indicated in the remarks, Joe, the impact is nothing. And so we believe that the ruling will not change our ability -- the Tribe's ability to do gaming on federally trust land. Construction is moving incredibly fast. The team out there is doing an amazing job, and we're looking forward to opening this project in the fourth quarter of '26 on schedule.

The next question is from Steve Wieczynski with Stifel.

So Steve, if we go back to all the -- there's been a lot of talk about the potential disruption this year, and you've given us a ton of helpful color. And some of it seems like you're still not certain in terms of what the overall impact is going to be. So I guess the simple question might be, with all this disruption, as we think about 2026 versus 2025, do you still think you can grow your Las Vegas EBITDA base this year with all this disruption?

We do.

Perfect. Okay. Second question, Steve, you gave -- or Scott, Steve or Scott gave color around the rated play side of things. I guess the word we're kind of pick on it sounds like it's very stable. Did you give any color? Did I miss it in terms of what you're seeing right now from a non-rated perspective?

Yes. For the quarter, non-rated was up. So we see it both in our rated customer, our non-rated customer, really a great quarter for the health of the database if you really dig into all the metrics.

It's Lorenzo, particular strength, like I said before, in the VIP segment, but also seeing strength in what I'll call kind of our younger segment demographic, 21 to 35, up substantially. Once again, I think partially because of the amenities that we've added over the years are really kind of [indiscernible] they're appealing to a younger guest. And look, we've been encouraged because they're finding their way to slot machines and table games as well. So...

The next question is from Stephen Gram with Morgan Stanley.

This is a bit of maybe a bigger picture question, but how do you generally think about the right level of maintenance CapEx across the portfolio, thinking about maybe some of the bigger properties versus the smaller properties? And maybe part of the question, [indiscernible] is trying to think through the amount of capital you've deployed maybe relative to what we're seeing on the Strip and if you could be seeing some kind of permanent share gains there?

We think one of the things that separates us is the fact that we're a wholly owned company. We're not an opco/propco structure. And Lorenzo and I take a long-term view towards the portfolio. And you have maintenance capital, which means what does it take to maintain where we are where customers are coming in. But we look at some of these repositioning of amenities and what we're doing at Durango in the next phase is literally investments to cast a wider net and draw more customers.

Look, we're owner operators. We've been doing this since we are teenagers. And we walk through the properties, obviously, on a regular basis, and we want to make sure that they are looking appropriate to our customers and that we -- all the equipment and everything that is needed for our team members to be able to provide their jobs and their function is provided. And I think as well, it's just -- it goes back to even historically when you look at what properties have outperformed on the Strip, right? I mean, if you look right now, you've got the properties that have always philosophically invested in their assets and even -- and we do the same thing. If we have a restaurant that's not performing, we'll rip it out and put a new restaurant in. And I think you see the same thing at the [indiscernible]. They've done that for decades. And it's not a surprise that relative to the rest of the competitive set that they continue to outperform. So it's a very kind of similar mentality, I think, in a way, even though Steve is not there, they've kind of carried that on. And I think you see it when you walk through the property, it just looks and feels different, and I think customers appreciate that. And we're committed to continue to operate our businesses like that as well.

Maybe one other follow-up kind of related here. But historically, I think there's always been this concern that some of the maybe weaker trends on the Strip could ultimately spill over into the locals market. It doesn't sound like that's happening at all, but curious where you would be looking out to see maybe the first signs of that? And should we have already maybe seen some of those to kind of highlight that there could be a decoupling here?

I mean I thought -- during the first question, I mean, we're just a fundamentally different business, right? So we tend to be a bit more recession resistant. I think if you look back since 1984, I believe the Strip has had 11 times in that instances where gaming GGR was down. The locals market is at 6, 3 of which are related to the great financial crisis. One is related to COVID and the other 2 are related to 2013 and 2014 when local GGR was down less than 0.3% versus the Strip at the same time period, down 2%. I think it just goes back to we're gaming-centric. We're not hotel-driven. We're not convention driven. We're driven by local repeat customers that keep coming time and time again. And then going back to what Frank and Lorenzo said, that's why we are continuing to invest in our properties. That's why we love our locations, and we love our locations because we think we are best positioned to not only separate ourselves from the Strip, but best positioned to gain from the long-term favorable demographic profile.

And I think one of the things that you have to remember and look at is while the Strip may have some revenue declines, they still are a business that has to fill their rooms. Even if the rates are down, they're filling their rooms, which means you still need guestroom attendance, you still need all those employees to keep those rooms full. And so look, we love our position in the market. We've been doing this for a long time. And the thing we love most about our strategy is that we have the right locations in the market. All locations are not created equal. We are in growing markets. We're not on surface streets. We're on the beltways where all the new rooftops are being built.

And we've talked a lot about the VIP and the high-end gaming play and the higher-end restaurants. But I think we've also positioned the brand and the company such that we also have a strong value proposition, $1.99 margaritas, food specials in the cafes. We don't charge for parking. So we provide a product that's accessible to people from all different demographic types. And look, at the end of the day, people use our properties as their form of entertainment and get away from a local perspective. And we're really leaning into that when you see the type of amenities that we're adding to a place like Durango.

$1.99 Margarita resonates with everyone.

The next question is from Brandt Montour with Barclays.

The first one is just full year '25 disruption. I think you guys are originally looking for $25 million. Could you just let us know how that came in to the best of your ability to calculate that?

Yes. I think it came in better than we thought, Brandt. As I even just alluded to last quarter, I think we gave roughly $9 million of disruption, almost $9.5 million disruption we expected in Q4 alone, and we came in at $5.1 million for that quarter.

Okay. And then on the new Durango phase, we'll call it Phase 2. I guess this is a second half '27 opening. Do you foresee opening this in one amenity at a time? Is it going to be one big grand opening? And then in terms of the breakout, I mean, you're not going to break out the $385 million, but just when we think about your return thresholds, how much of those -- how much of that total project spend is gaming versus non-gaming? Maybe we could do it that way to help us try and model out the returns on this.

This is Lorenzo. I mean our expectation is that we would get similar returns to what we've seen on the project so far itself, kind of low teens, growing to mid-teens and eventually growing to kind of our 20% threshold that we've seen historically. I think -- well, I know that we will open that property with all of the amenities open but for possibly one of the Food and Beverage amenities might trail by 2, 3, 4 months, still working on that. But the vast majority, call it, 90%, 95% of the amenities will open with one big bang. That's the way we like to do it like we open our new builds. And then relative to a breakout, I mean, I think when you look at the overall capacity that we have at Durango, we still have capacity even though we're obviously doing incredible business there. So we're adding -- how many slots we adding? 400 additional slots on our base is about 2,200. And we feel like with the entertainment amenities that we're adding there and just the sheer traffic and foot traffic that we're going to have flowing through the building, we're going to get that benefit on to the gaming floor now on both table games and slots. So I can say we're very confident in the prospects for that project.

The next question is from John DeCree with CBRE.

Covered a lot of ground. Maybe 2 to round it out. High level, can you guys talk about what you're seeing in terms of new database adds? I mean you're obviously performing quite well. But are you still seeing the database grow? And then specifically outside of first-time visitors to Durango as the rest of the portfolio, especially as you make these investments, GVR, Sunset, et cetera, are you seeing your database go new customers that you haven't had before?

Yes, this is Scott. So even last quarter, I think we mentioned that we saw the database grow from the perspective of actual carded customer count, we grew the database this year. And interestingly, it grew in every demographic segment of age. And then the contribution from a net DO perspective of that database grew in every category of age demographic as well year-over-year.

And John, we continue to grow Durango. We continue to see new sign-ups even around the Durango area, visits are up, net DO is up, spend per visit is up. So we love our positioning for that property and looking forward to the next phase opening up.

Awesome. I have one last one, Steve, for you. I think an easy one, not expecting much, but just to ask the outlook for OpEx inflation. Anything notable this year as we think about margins for 2026 other than the disruption, so specifically on any cost buckets?

I mean we like where we stand from a margin. This is the 20th quarter of the 22 that we've hit above 45% in LVL without really sacrificing service or operational or customer quality. Labor is the one notable. As you know, we live in a very competitive environment in the valley and our guests are -- our employees are first line to our customers. So I would expect that to go mid-single digits from a labor perspective. But ultimately, we've been managing COGS, we're managing utilities. Insurance expense is really tail wagging the dog, that's slightly up. But for the most part, costs are being managed.

The next question is from Trey Bowers with Wells Fargo.

This is Zach Silverberg on for Trey. First one, I believe last call, you mentioned there would be a handful of taverns opening this year. Could you remind us of the overall tavern strategy and your ability to source new or high-end customers and the return profile of the taverns?

Yes. This is Scott. We have currently 8 taverns. We just opened our third tavern about 1.5 weeks, 2 weeks ago. The thesis for taverns is relatively simple. It's a micro market strategy where you can get into neighborhoods in areas where maybe we don't have as great a penetration we have a thesis around our investments in taverns. We like to be in high net worth areas. We like to be in areas where there's growth versus the intercity population. And it's got a unique customer base from a demographic standpoint. It tends to skew [ male ], it tends to skew sports better and it tends to skew young. So we like accessing that customer and the hopes that they grow into our overall platform of larger properties. So we have 3 more properties coming online in the first half and then the remainder in the second half of this year. But the strategy from a growth perspective is highly selective for us. We want to make sure that if we do enter into a new tavern deal that it fits our thesis and it's accretive.

Got you. Appreciate that. And then one more. You previously stated the cannibalization backfill from Durango was about a 3-year process. We're approaching that later this year. Could you kind of update us on the timing and progress and if you're -- how you guys feel about it?

I think we feel very good about where we are from a cannibalization and for more equally as important, the backfill to our core properties. Our core properties are growing low single digits last quarter, which kind of proves out that fact. So we're in line with where we need to be to hit those targets.

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

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

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