Good afternoon. And welcome to the Red Rock Resorts First [ph] Quarter 2020 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 today’s Red Rock Resorts’ second quarter 2020 earnings conference call. We hope that all of you and your families are staying safe and healthy. Joining me on the call today from Red Rock Resorts are Frank Fertitta, Chairman and Chief Executive Officer; Bob Finch, Executive Vice President and Chief Operating Officer; and Rod Atamian, Executive Vice President of Development and Strategy. 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 the definitions and complete reconciliation of these figures to GAAP, please refer to the financial tables in our earnings press release and Form 8-K, which were filed this afternoon prior to the call. Also, please note that this call is being recorded. Before we get started, I want to take a moment to acknowledge the passing of Rich Haskins, our President. He passed away in an accident on July 4th. For over 25 years Rich was a trusted advisor to the company through both good times and bad. He was instrumental not only in the successful growth of the company, but in the development of the Station Casinos family culture. Those who interacted with him were inspired by his steady leadership in any situation and as anything as possible attitude which defined what he was all about. While Rich may have left us, his accomplishments and legacy remain and live here at Station. Now onto the quarter. Before moving on to our financial results we will take a moment to remind you of some of the actions we have taken during the first two…

Thank you. [Operator Instructions] The first question today will come from Joe Greff with JP Morgan. Please go ahead.

Hi, guys. Lumer Sandara [ph] on for Joe. Thanks for taking our questions. First off, the $46 million EBITDA in Las Vegas in June, what’s in the close properties do in terms of EBITDA drag, were you able to manage it lower in July and can 45% margins for the reopening of the properties and sustain themselves in the current environment?

Okay. So I will start with the easy one. And so the closed properties for June had a drag of about $1.4 million. That will remain fairly consistent in July that we think we can get it a couple of hundred thousand dollars lower going forward. Regarding the sustainability of the margins, I think, we have done -- the team has done a great amount of work reevaluating and retooling the business during the closure, and our cost structure it is in a position to deal with these very uncertain times from a revenue perspective. So we feel confident that we can deliver margins in excess of our historical margins.

Thanks. And then, can you discuss what you have seen in July in the locals market in terms of gaming patron behavior there? How much is revenue per day down versus June levels? What are you seeing with July with respect to customer mix, which you have been holding up better since the end of June, young, older and do you get a sense of the CARES stimulus driving this?

Sure. What we did -- what July, we generally don’t comment on, again, our current quarter, but to give you some general sense, we -- the trends in July have been very -- have been basically consistent what we have seen in June. We have seen less visitation. We have seen more spend per visit. We have seen more time on device. We have seen a younger demographic in our database show up or older demographic to be expected due to current pandemic has stayed at home. I think this point here is encouraging, because it’s an opportunity for growth when our seniors -- you have our seniors start returning when the situation subsides.

Okay. Thanks. And then just last one for us, is there a market for assets to scale up prices that you can seriously accept or is it too early? And then, lastly, what’s the future of Palms?

I think it’s too early to assess right now. Right now we have very little clarity on our current economic environment. And so, we currently, Palms is currently undecided whether we are going to open it right now.

Yeah. We don’t know what -- if or when we are going to reopen any of the closed properties. We think it’s too early to make that decision at this time. I think so far we are very pleased with the results that we have had. The ability to move some of the play from the close properties to our existing properties and we are going to continue to try to get clarity and navigate the situation to make well-informed decisions. But rest assured whatever decisions we make will be in the best interest of shareholder value.

Okay. Thanks so much.

Thanks.

And the next question will come from Barry Jonas with Truist Securities. Please go ahead.

Hey. Thank you. First off, I just want to extend my condolences for your loss. So, I guess, the first question is, I appreciate some of the color on trends you are seeing, but is it possible to give any sense of what the drive to business maybe from California is looking like right now and any color on group, is group pretty much non-existent, just we would like to get one more layer down into how your -- how the segments are doing?

I think…

I think if you look at our -- the short-haul traffic coming into Vegas, that is down, it’s down not nearly as significantly as longer haul business, group business, convention business, things of that nature, down much more significantly. I don’t know if you want to add to that, Steve?

No. I think, Frank, you are spot on in terms of you -- yeah, how you delineate between short-haul and long-haul and from a group business, I think, just like the Strip we are suffering from group and so I think 2020 and the beginning of 2021 will be tough sledding.

I think one important thing for people to notice is really the difference is our business model though. I mean we are primarily a gaming company that happens to have hotel, catering and convention business as an amenity. Primarily 80% of our business comes from the casino and so we are able to have the results like we did in the short-term without having the benefit of strong hotel, catering and conventions that hopefully will return as we get the COVID crisis under control. But our primary business is really suburban Las Vegas local business that’s close proximity to our facilities.

Great. And I guess which of that in Nevada has closed as far as I am wondering if you have seen any tailwinds or just any impact from those closures?

It’s definitely not helpful. We have about 650 bar machines in the company in Las Vegas. Those of which have been closed. So we look forward to the ability to get those open as soon as possible. This is kind of an ebb and flow thing with changing requirements, whether it be at the pools, whether it be at the bars, whether it be that you have to wear mask or you don’t have to wear mask. And so, every day is trying to navigate through kind of a new set of circumstances and I think our team has done a very good job so far.

Got it. And then last, just touching on the promo environment, is it fair to say pretty rational folks are just more focused on margins at this point or are you seeing anything heat up amongst the competition?

I think it is a very unique situation where every operator has found themselves in the exact same situation, which is that, we have a lot of unknowns from lack of visibility and as focus is made everyone, I think, we focused on what really matters in the business. And I can tell you for us, we took to, I don’t know, 79 days or 80 days that we were closed and we probably working more hours and longer hours, I am just trying to unpack and really go through and think through what was meaningful in our business and what were things that were maybe just taking a lot of time and not creating a lot of results. And I can tell you whether it be at the corporate level or how much labor we need or what amenities really drive the profits at the facilities. It’s led us back to where we really started in this business and every survey you have ever done for Las Vegas local since we started in 1976 for the most part hasn’t changed. It’s all about convenience, the value proposition and the relationships that being today. And sometimes maybe we have, all over complicated it a bit too much. But I think, we are definitely back to the basics. I think we have a lot of good things going for us. We have the best properties. We have the best distribution in the valley. If you take the six properties that we have opened today, five of those are all in the suburbs with growing population off of major interstates, great ingress and egress, they were purpose built you know for the local business and with the [inaudible] Palace was built the same way, but it is in the center of town. But as the town has grown into more of a suburban town, I mean, I think, that’s where we are going to rely on great properties, great service, great relationships and great value. And we are going to much more laser focused on marketing and advertising, and things that we can really measure and I know that they were.

That’s great. Thank you so much, guys.

And the next question will come from Chad Beynon with Macquarie. Please go ahead.

Hi. Good afternoon. Thanks for taking my question. I wanted to, I guess, dive into another metric for June. Could you see any major difference in terms of weekday versus weekend, compared to what you have seen, I guess, pre-COVID as you run the business and do you think margins may have been elevated compare to prior weekday periods just because of extra traffic? Thank you.

We have seen kind of changes -- change at least a subtle change in some of the traffic patterns. Most notably, Saturday, is kind of, which is normally one of our busiest days has been slightly down. We believe that’s due to the COVID crisis and you are seeing a lot of that same traffic returned during the midweek or Sunday. So the people coming back are just choosing to stay there and spending their time and visits throughout the week.

Okay. And then from a CapEx standpoint, I don’t know if you have an updated view, is there a new level of maintenance that we should be thinking about just to run the business? I know you have suspended all projects and really most of the maintenance CapEx, but should we think about something coming back now that your business is back to a new normal rate?

Yeah. So just to give you an update on Q2, we spent approximately $10.5 million in Q2. We still expect to be in that $50 million to $60 million CapEx range. We think $60 -- around $60 million is a good number going forward for maintenance CapEx.

And I think, the fact is, we have maintained the properties very, very well. They are all in great shape. And I think we still have a lot of unknowns in front of us relative to the COVID crisis and what the future is going to look like? And so we are going to be very, very diligent on any CapEx that we spend until we have more clarity.

Thank you both very much and I will pass along my condolences as well.

Thank you. Thanks.

The next question will come from Jared Shojaian with Wolfe Research. Please go ahead.

Hi. Good afternoon, everyone. Thanks for taking my question. Just going back to the $150 million of potential longer term run rate savings, can you parse that out and help us understand with some of the biggest items are that are in there? And I guess what will be different about the operating model once we are through this pandemic that allows you to keep those costs out of the business and do you worry about any risk of impairing the overall consumer experience?

I can…

We don’t worry about the consumer experience. I think one thing that you have to look at is that we have made significant reductions at the corporate office building, which I don’t think will affect the guest experience in any way whatsoever. Again, it’s easier to reach in the car when it’s not going to 80 miles an hour down the road and we had close to three months to really focus on every aspect and challenge everyone as to what we can live with and what we can live without. And the other thing is that unfortunately we have a lot of amenities that I don’t know if they will return. They were amenities that maybe generated a lot of traffic but not necessarily high margin business. And we have foreclosed properties and we have been able to move a good portion of those revenues to some of our other facilities. So, I think, I can’t predict the future, but I can tell you that what we have seen so far doesn’t impact, I think, we have a great customer experience. We spend a significant amount of time and energy on health, safety, testing, convenience for the customers through thermal camera scanners at all the entrances and everything. And I think the customer experience is great. I think our team members have done a great job. And hopefully we can move forward and be able to operate the business in a much more efficient basis. Our team member headcount today is about 50% of what it was going into this crisis. It’s like I say forced us to really challenge and rethink everything we do.

Got it. Thank you. And then other regional operators have talked about a new and younger customer that’s driving some of the performance right now. My question is, are you seeing that in the locals market here as well and do you have an estimate for what percentage of your guests are employed by the Vegas Strip in some form?

Look, a healthy Las Vegas Strip is super important to a long-term healthy Las Vegas economy. That being said, we have seen a very strong housing market here in Las Vegas. I think you have a lot of migration out of other states and everything to a place like Nevada and where it’s more affordable housing cost of living. I think the retirement community here is growing at double the rate of the regular population growth here in Las Vegas. We are still seeing population growth. I can’t tell you exactly what percentage of our business is employed by the gaming industry. I can tell you we do have a fairly substantial retiree customer base. I can tell you that we have seen a pretty significant increase in the younger demographic in our business, which we are very focused on relationship marketing, capturing the information and being able to continue to market to them and we have seen a decline in the older guest that is more concerned about the COVID virus. So I don’t know what the future brings, but if we can get some stickiness from retain some of these younger people who are coming into our facilities, get the COVID virus under control to where our older demographic feels comfortable coming back, it could be a very good thing for us.

Okay. Thank you very much and my condolences as well for your loss.

Thank you.

And the next question will come from John DeCree with Union Gaming. Please go ahead.

Hi, everyone. Thank you for taking my questions and like everyone else, I think, my sympathies and condolences, I know Rich was a dear friend and valued colleague to all of us and you as well, and just very, very tragic, so my sympathies. Question, I know you have touched on it a little bit already and there’s only been a few weeks of operation to really look at, but we will kind of well grasping at consumer behavior so far and I am not sure if I’d missed in the prepared remarks. But is there any commentary or color you could provide on some of the typical metrics what you are seeing in rated versus unrated play realizing so much of your plays local and rated. But any bifurcation there and with limited perhaps entertainment options such as bars are you seeing an increase in new customers sign-ups or anything that might kind of give us a little bit more insight on consumer behavior so far in the first couple of weeks since reopening.

I will tell you anecdotally, but if we go back to what we were just talking about, pre-COVID a big part of our database in cards play was from an older demographic, retirees and things like that, that really are staying home at this point with their concerns over the virus. We have had a pretty significant increase in younger uncarded demographic but our focus is basically to convert that uncarded younger play into carded play.

And perhaps a follow up is, I mean, I think, from what you have said so far with extrapolate, but to asked directly, is the amount of visitation from your carded customer is down but maybe spend per visit healthy when they come or how has that been playing out?

Yes. John, the answer -- the short answer to your question is, yes. You are seeing visitation down, spend up and spends offsetting the visitation.

Thanks very much for taking my questions, guys.

At this time, there are no further questions in the question queue and I would like to turn it back over to management for any closing remarks.

Yeah. Thank you everyone for joining us on the call and we look forward to talking to you in 90 days.

Thank you. This concludes today’s conference and I would like to encourage everyone to disconnect at this time.