GDEN - Earnings call transcript Q2 2018 | Golden Entertainment, Inc.

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Operator

Good day, ladies and gentlemen, and welcome to the Golden Entertainment Second Quarter 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions] As a reminder, today’s conference is being recorded. I would now like to turn the call over to Mr. Relations. Investor Jaffoni, Joe begin. may you Sir,

Joe Jaffoni

Company Thank you now, quarter afternoon, By on and earnings Investors under section. much, should have Chelsea, the found everyone be second which good at access www.goldenent.com, release, the everyone. can very website to XXXX our

expect, statements, in exercise updated our we which securities working recent We federal our we the a discussion statements. forward-looking you remind statements, today’s operating differ as in on risk usually need laws. financial XX-K subject believe, to them. are that including will, should everyone our our by and identified interpreting risks of or the future future you relying begin phrases, recent materially as use actual Before include words uncertainties and caution meaning on results quarterly forward-looking of to similar to discussion anticipate, the that are our reports that by impact not most risks performance. forward-looking will statements formal other remarks, such results within and cause could the These These refer factors to corporate other of guarantees statements detailed are should Form the and filings, condition more therefore, XX-Q could SEC subsequent for and our Form from of numerous

Executive earnings GAAP These Company’s information second or measure measures provided performance. financial to these accordance our XXXX XX, Strategy -- quarterly call for most management isolation months Chairman, American June Company’s and it’s earnings June Chief release. uses substitute sorry, is second Officer six Blake Charles financial operating Sartini, is then useful XXXX should combined and the considered Officer; non-GAAP today the evaluating accompanying Charles call release, statements which period the will the prepared Golden in available questions. supplementary Financial I’m income Officer. measures, recent to With our Golden review open Company’s on On for also quarter Protell, outlook, and reconciliation comparable for today’s XX, Sartini. directly discuss the we and strategic a pleasure the in quarter A a and your of During call, and over believes and are XXXX Founder, Chief which after not Entertainment with the GAAP. the as call in results ended and to we’ll President in turn Blake? that measures results, will initiatives, Blake be my to the Chief Blake the

Blake Sartini

Thank quarter you, everyone. call. to conference second Welcome Joe. afternoon, Good our XXXX

During we our to second strategic in EBITDA record on margins. EBITDA plan, quarterly continued execute revenues, quarter, resulting and

announced In be existing accretive the market. southern announced and scale expands addition, our two our Laughlin the few at quarterly of the over casinos further the on more and the our will the to that Nevada we Charles acquisition. immediately detail a in Nevada in acquisition casino and Laughlin, operations of Stratosphere wholly-owned our go operations segment recently on update but wanted in will discussing minutes to our I renovations shortly, current thoughts numbers

During and casino our segments. growth experienced the we business across second quarter, distributed revenue both

particular Vegas Arizona Charlie’s our in and two properties quarter our posted in property of Maryland. second adjusted our Las Resort with properties all Gap Importantly, our casino Aquarius Laughlin, Rocky increases EBITDA from in locals strength in

weekends particularly Stratosphere highlighted our limited project on room were we this towards we inventory, initiated of results slightly remodel timeframe. the May and there end the the as year-over-year into As up June had quarter,

second which locations way quarter to on and compared balance of for next XXXX, with to grow Nevada open additional On side, of the the week. three our one the continues distributed year tavern last portfolio three will more open

chain efficient the trends, calls to toward prior to more on Nevada discussed we work operate consumer be and changing of store shopping to business have our ways our impacted continue segment we continues that by distributed As of business. segment

our business to for total performance country. the and XXX across of well points increased approximately over retail potential segment, of profitability with preferred positioned opportunities sports and are Montana new state. quarter across our continued continues realized XX.X% the should to local year-over-year American in the distributed across strongly our wagering believe improve, from and is wagering as EBITDA as targeted our We second distributed casino the for we economy the portfolio. we Our basis improve to and strength acquisition distributed as sports identify and Montana, gaming our legalization rose growing EBITDA locations adjusted that synergies the the practical Reflecting margin XXX immerse outlet the

on grew Stratosphere. over the Stratosphere, Nevada casinos remain X% and EBITDA despite of operated at the We XX%, a track Our budget. on about construction and remain margin, over at start our renovations the EBITDA which at excited

we construction the ahead schedule and in In XXX have part first fact, progress, September. a current of are given should during bit rooms approximately of service

this thrill signage book. and scheduled addition for including of gastro will the are the amenity finishes brewer of a Our lighting, rooms, an These and space two new and will be year on tower. upgrades overall deck observation balance adjacent Also, year upgrades to that and new these retail of shopping include completely a both remodeled food XX the new levels. specialty offerings, the which and casino the remaining high-traffic remodeling for include of levels beverage view additional the AirBar and projects cosmetic upgrade ride of sports for upgraded the lounge, exterior experience,

to will an come interior room top are revenues, the will southern establish world Finally, this added renovations and new Stratosphere remain and receive overall rate food attractive experience. and competitive also beverage our from group to new Over When our the we allow EBITDA as the into the the while property, rooms, of We of of Stratosphere XX% remodeled unique, menu property upgrades Nevada, as all the restaurant group and in positioning believe exterior the of will and meeting is and complete investment XXXX, most space Nevada. award-winning from venues which reoccurring to X,XXX foreseeable esthetic refreshed our total future. the occupancy have midweek property. to revenues increased well

a stadium gaming along As Las the Center Vegas new the Convention growing projects, native, I includes proposed see including market Las non-gaming transformation this casino well progress This and major development day. construction the the strip corridor. as Vegas every expansion, Raiders as north of of projects strength the and

long to on and July, to Golden franchises expanding to investment from from current southern our Gaming, projects these high acquisitions. two additional Cup our continue increasingly Marnell to continued becoming benefit of on is our we acquisition economy resorts supporting and local including Colorado of expand continue return Gaming multiple historic of run and term announced Stanley Knights the Nevada, year. their We position economy. increased to Nevada. factors in portfolio the business growth, in gives confidence the Laughlin, addition, Vegas believe over diversified, execute us southern In our industries properties the this the Nevada to Las This and visitation professional Belle strategic through In sports business the all Edgewater

level, shareholders. forma times at a for a this X.X synergies are acquiring business post EBITDA our pro it making highly We transaction accretive

million our the contiguous These strategy. multiple riverwalk property the as us assets metrics purchase a on with premier driver features will is any with the and concerts periods. convenient along walking Laughlin’s and distance to revenues behind acquisition key market have important and Gaming growth as Aquarius combined a main and it within acres Laughlin approximately when As provide traffic healthy the XXX popular XX in to and Center, in experienced the Laughlin totaled Event events. recent market

an far as to which excess of were below The have residents weekend what Laughlin Marnell an million. to in who core getaway. portfolio southern visit Arizona XXXX, an southern in acquisition nine my peak years will wholly-owned remains believe long-term on and who views as forward increasing and Vegas, of revenues I’m Laughlin in from while of Nevada’s for view customers shares expands attractive conviction casinos X.X and alternative continue market Las our jurisdiction we country. the This a resorts can number $XXX to is have million Anthony will to locals southern California the a we market’s Nevada. our as the look shareholder, many Nevada, the casino in individual also and pleased attractive respected most known fundamental we will in network casino III solidifying However, growth

opportunities see businesses. the our all we with excited are of about We

over We are and ability of turn our to the are business beyond. growth remainder to on for our and committed to strategy XXXX I’ll confident call for the execute in Charles. our that, future With positioning

Charles Protell

Thanks, Blake.

achieved quarter revenue same with prior margin strong to of as range Adjusted over million, our was with we $XXX property a up year. in basis-point line performance $XXX full-year financial performance is for year-over-year mentioned, EBITDA XX.X% the adjusted the our Blake million and into $XX.X million. of guidance our up a continued on are quarter second the million, X.X% the $XXX.X we basis for reiterating expectations in improvement. XXX EBITDA This As

EBITDA increased our for Laughlin service. from of conference $XX.X Nevada potential rooms The locals over a growth Stratosphere with strength reflects occupancy and prior the even the up especially ongoing opportunities at was have adjusted Vegas our particular operational with attendees. midweek year second remain and million, was basis, growth our the EBITDA and slightly confident Las up period, on This been reinvestment We slightly period around strategy and resort. million meeting revenue changes X.X%. Casinos, at year existing prior our from revenue same the $XXX.X the quarter we the property group For Stratosphere, property and the revenue properties while EBITDA renovations increased making in from

yield they rates service. our renovated We come higher expect into from rooms as to

due at XX% X.X% $X.X Despite April compared Our our EBITDA the year, In Maryland in X.X%. with to weather offset be million million, XX.X% tax to by tavern for were in Adjusted quarter, of Nevada weather visitation distributed were locations. of EBITDA million Gap for disruption. quarter. weaker of EBITDA million X.X% rounds illustrate store growth last golf our a property’s year, $XX.X increase to from the our To July. chain even part in second revenue wholly-owned our reduced quarter as Rocky which that, a revenue continued slot year-over-year was down to portfolio $XX.X Rocky continues down last $XX being total last saw over Rocky in impact to Gap, and contribution Gap in was rate XX% on for the Resort the business, increases increased

profitability to periods. in have stated, of we future our chain we evaluating previously As ways improve are store locations the

$X.X was revenues recognition of $XX.X business an million Corporate generated of Adjusted period. year. This for the $X.X million of prior last the synergies business distributed quarter. from million, for in quarter, Montana was the to Montana the continued million cost $XX.X reflects in the lower increase acquisition. Our expense compared X.X% second EBITDA American year distributed than

We loyalty implement a Laughlin. we collateral, half roll prepare expect our over of the in two the to back expenses corporate program of out prepare our the to integration properties year branding as new for increase single card and pending

balance quarter, of the a end the cash we second first LTM net outstanding $X approximately of at sheet, Looking had and and at totaling the the the approximately was from at in equivalents leverage $XXX X.X debt quarter. total times X.X of million, second billion. down end cash

Total below for X.XX at of planned achieve million. to fund be be target were ratio approximately expenditures flow. by the intend track for operating with $XX from cash capital to our expenditures the our our capital line to on expectations continue net We end. quarter We year balance to year in the leverage

significant Operator, the cash open That to operations Our ourselves prepared generate flow, questions. line assets, remarks. and our reduce us our in accretive, free for concludes is strategic for to reinvest leverage, continue allowing existing position which transactions. please

Operator

[Operator Jefferies. from first question of our Katz Instructions] line And with the comes David

Your now line open. is

David Katz

I back we Could heard, to remarks, the I it what some going but had. -- a the and prepared missed wanted on through you to bit there? apologize I more elaborate it go I’m happened lower than of what came distributed just a bit your in I release if in gaming just what because business,

Charles Protell

fundamentally past, the our I in in that, demographics piece that have at if shift. look those chain you of Yes. mean, talked stores as we’ve about portfolio, the

that count coming drags transactions pretty is less less coming when the curbside supermarkets; these locations And with think Nevada. locations, traffic like that there for ATMs a Those So, impacts are negatively And you things machine and within business is cash. dramatic that’s portfolio. XX% about the there way. here of through roughly us delivery of out in that

market. and On out, don’t a which basis the business, our with locals profitability other side, wholly in owned from it line that topline was we we tavern got break while

Blake Sartini

So, some there in to in terms are regulatory of operate remarks, David, the just are to potential require to and But, that as that more through in business, and ways rent expectations with. I ways mentioned through add trends to regards deal business, to mitigate that parties to working going prepared that in addition, we efficiently changes. we that forward with of some going those are obviously, like in things bands third my

So that more trend-wise, operate. I efficient we those mitigate how as would become over think should things in we time

David Katz

a thinking XX, up? very way of it’s business, low, a if is total down doing Is sum portion that is that So, to XX% Nevada it good which it about that like other the sounds fair sort dragging well.

Blake Sartini

look, little based perspective, rate -- this filings. Those of our certain within rents a fee described on our that are over in fixed We we paying folks from think are I different. And those are period and locations, a a accounts public Yes. time.

the continue As us. having the to rightsizing contracts of we discussions to to for we do extent the our not businesses that the up with uneconomic you come conclusion, But, locations not for can are deals Company this be to we owners those are profitability for shareholders. ultimate of are about those do able and imagine come going those renewal, right

David Katz

at that doing us the talk about and Look, things give fundamentals is about there’s its can in back awful still over, or Can in from I whether go data in Strip and to specific general of think that you’re some underlying well? an looking bit Strip rolling our it’s -- one the concern more if least frankly, industry-wide that matter side. the whether moment, you is points Nevada lot that a been quite would confidence I at

Charles Protell

still our going in Blake is long-term well bit fundamentals. to Nevada of terms doing let a doing from I’m perspective in general, -- Yes. talk about which clearly very

As it with our Stratosphere us, in the relates for line to the trends, Strip performing is expectations.

last we’ve construction, us EBITDA in from bit doing in year-over-year as up has away of perspective. The highlighted expressing our are from trends calls We week, been views that Blake for terms a an I that think asset shied is little there. said don’t

city keep group XXX,XXX the as in we it think relates see the I rooms with we that are no for meeting to us, X,XXX what specifically mind, in Stratosphere, space. across the

are discussed have So, in that as for has past business that us. than that asset mean midweek the we weaker others. fine The weekends

recently asset. periods in I us seen in premium that think future a visibility performance attract just that of that to our drive to doing trends business terms and more and highlight more product forward have the midweek property the of reaffirm the we’re and create and and looking we’ve the investment that in allows what

Blake Sartini

Yes.

second two we seen that first frankly and Those property. us a don’t and quarters. I kind Strip the -- thrill think pools, beverage that is and and this with see think our these mind and expectations until we showroom, with specifically, year of It’s going the rate occupancy asset, for going or in Property into this in are we in my gap, as Charles plan with place the three-year rooms, property have property challenges of are -- mentioned property. but sits. particular numerous amenities that a get a X,XXX get we trend things which viable are when challenges food it and and through balance with in and renovating the midweek ways rides area we very you were challenges entertainment we into what rate of to if over our the we we the and these continuing along midweek midweek occupancy tower expecting many things doing think and competitive a will, options. context all one full-service justify But, upgrades filling in the outlets,

remains see in that Nevada. As to But, general and All my to don’t in strong. visitation rollover from we I the strong. balls Nevada we Vegas macro continues remain environment would macro word, what’s in be very to counts, seen macro be it’s got airport the southern in positive from in happening. use population look general. And Vegas trends, crystal mind the and And -- the everything them. everybody’s very see far and growth call, here given particular dangerous particularly Las anything sometimes Look, southwest, as forward. I positive a on very going standpoint, metrics a Las very into in that on your I’m rates, obviously continue to

Operator

you. Thank

question line Macquarie. with Beynon Chad next of Our from comes the

is now open. line Your

Chad Beynon

I prepared just At as the Aquarius, strong from in much the the think But, And new neighborhood. as because your outset, then, property this is attention get you announced here, and Laughlin the prettiest two location. in at remarks, its of properties market. noted you that a quarter, doesn’t believe I that you results this mentioned in acquisition investors it’s another viewed house in

you also with selling you what that thoughts how and is Laughlin? properties. you some when everything like Outside of of And who provide this high will You about the in partnership really a in a kind multiple, some is you look kind Is that just a guys? great executive on of this together comes levels Thank think well-respected noted Laughlin market for those you. just could undervalued?

Charles Protell

about get as peak have mentioned view threats a competitive XX% that that. where basically have impacted market at the we’re market proposition market This go about I forward the what Las are a peak. value is to perfect in away in there look a already And for this From from market. this to long particularly, opportunities, the those you those think back think -- concerns Vegas coming time levels. are ago. perspective, I if We when growth Blake market to

cheaper, you same these be fee cost not most going to provide driving are that versus at conscious a room level. the part market have folks you resort bit And this for flying. much have are the gaming So, that little rates do able and entertainment to a for experience that obviously are to you’re and

it. we’re excited very about So,

think other our I assets. with strategically, contiguous it’s

allows control think Center. control is but this the there through, And come well. and be for as our to the Laughlin synergies bookings to not really us there. obviously a driver traffic So, has if and the It I sure control importantly, we will properties market clearly controlling I’m the to ads, Event everyone

Blake Sartini

Chad, I things. and will Lag would Charles think, people will more benefit towards a Laughlin, what maybe alternative said an Vegas a to value-oriented platform, -- just add to I of move couple continues a as experience to and in continue more fee and reiterate casual as I enjoy. pricier regards that

thinking of to control of which kind revenues different if the up market. it, segmentation a And about most location we specifics approach With in you approximately three. the also to kind It’s tiers market on will give acquisition, three a the river. all three main those XX% with high I’m generating room of and base unique in in desirable end, higher really the we the combined will, unique how low of gives properties as represent few the of us the main. It’s this kind end along mid in and location you

now desirable control excited most we this about the market. along respect a unique Event on to adjacent there. joined have think Charles share very look Aquarius location over them Charles And potentially time. Center we a the existing acquisition this we’re of bullish the we I’m would room business. you there. I I would have years. properties, deep can with time, lot the lot coupled location, market mentioned growing focusing who perspective and our this bring with that talked achieve Board particular long are which of those with with Marnell down the and a XX% And And mentioned. property, agree so, I them about that They this Laughlin of what Anthony for family. Company, we And Anthony that that obviously is leader a very on as They and down to forward known have do. our working what known in to they in I

Chad Beynon

them guess competitors on an I you’ve balance increasingly of And we’re back then, my source use and to -- own these it kind with your for And follow-up, your of with sheets see of sheet the been of capital that, just REITs. chosen them. the finance balance expensive has acquisitions,

of how road, view own you the acquisitions portfolio, potentially REITs do grow or having going do out the more everything need to split do using you you Do continue in So, just down a potentially to separately, as structure? you how to or forward REITs general? view you some consider would type

Charles Protell

Chad. Yes,

own So, look, we don’t need indefinitely. everything to

what for of I think to accretive get that’s you at to each transaction, transaction. circumstance, for need -- capital looking are cost you create done each get and done

as us For to We have going just X.X a want leverage maintain our owning be mentioned. that real able to at times, the Blake which and multiple these equity we will case, a estate to end we to someone this shareholders, is issued point. ultimately up of assets at all accretive. And in some we are

whether a have specific forward transaction the always or will that with to it’s discussion, going engage in PropCo we more OpCo, broadly. So, optionality something

once my bet, perspective, made from and you’ve path. kind do of you’ve think you your taken that I that,

You can’t it. undo exactly

Vegas growth we our in of things we valuation. we that to continue estate as us, have our we Las business. to continue quite So, phase alternative as Boulevard REITs frankly as isn’t financing grow, that to sits going move probably estate, reflected are access But, among a are evaluate for that very do valuation, in the the we well for through real along our other real us, feel reflected have we

a looking how future them factored pure looking just day that all what’s or something space. and of we financing, how addition a that accretive most at you the create So, optionality to broadly. for the what’s familiar more deal to into with of PropCo players about are it’s future; going about one, accretion that very shareholder? in create just more the value addition of are OpCo, of they structures with the a at great source think are as to the for to and think transaction and all for going We it’s Again, all in we the figured either single -- us,

Operator

And next with from John comes Union our question Gaming. of the line Decree

is line Your open.

John Decree

have I question perhaps. about a Stratosphere the

the perspective further for As little And could pricier the and kind As a I’ve it of gateway things like and M&A relates downtown a an strip in realm. kind would off priorities seeing into our Vegas, you that follow-up Stratosphere? the a to the to to being pricier, you then seen are seen goers option to -- we’ve to Stratosphere? preference Las Las strip some future? if work an your with that the -- visitation, the considerable fit Have some you in amount Stratosphere seen you of strip for talk be of a little customers gets further from migrate strategic downtown and the would Vegas of have

Blake Sartini

your around in on prior of unique calls the I’ve settings. John. prior talked Stratosphere, or Look, position concur with the I about that public Yes, unique the and and location thoughts

of just on natural end that and kind we that draw and to thrill to Vegas. that renovation District it the property strip I is there, of the to that towards is has strip continues Arts us, think X with in and kind develop there. strip transitioning and its of to towards to north which mentioned, in this things what come north But this city energy through embracing to south we relationship we We all what go have as District out are continue is the also for Downtown already benefit, forward iconic we’re the of regards Las towards this and and As for of close plans partnership the there don’t strip. us with have, and situated offer north million end infrastructure partnership as as Stratosphere. or and we north and in Arts access result so stay close of move terms and addition, going city that continues in renovation I people this introducing amenities, the benefit our really of the the The views and development and of Sahara, in people rides connection that tower

in of connection, along are iconic In going of along iconic with last Vegas, bringing sign this right those with the executive view corridor, put this That, we mile you similar the welcome Sahara Vegas this city sign north who you team you is to strip Airport south Charles at this strip. to of the an a they Vegas what new doorstep night, of how will. are just for the if welcomes together Las they familiar and development fact, out our our see unveiled an that to Las by of kind indication kind entranceway to with to Las this on people last downtown XX-foot

very the very, location. So, about excited I’m

was all about push improved. city’s of it and area generate I because of And foot ago our but more, the just resort think it’s not of south. gets years this the or all excited very the more relevant even traffic to today facility XX only of as retain ability more kind development, traffic than XX within

John Decree

that. Thanks. That’s color, appreciate I good Blake.

guys for to as you to extent perhaps more talk can you occurs. gears granular Sounds the a little I great like a wanted bit. question, and you that guidance opportunity ask switch a little bit to

or the about the familiar are the about of we But, year? in as the with XQ think investors Vegas should on it’s the market, can seasonality then the most of how half business bit whether of from little you talk Las back kind kind seasonality we Vegas the a of strip. to bit think, I of kind little and in locals pretty Las XQ, Laughlin think about

Charles Protell

future. mean, guidance and I going look, experienced we’ve reaffirmed for are that seeing have what the our what year-to-date forward trends think we Yes. year obviously we and see we full I that into now the on we the based

from the hot That as is seasonality who as built local hotter summer perspective, still a tend and months. and think said, way. business locals they have know strong. months here of people business. is from their a the impacts comment heard But, on It’s I that our certain be guys models to you’ve market, there others I town, get the out locals

As up posted slightly. casinos an Nevada we growth over Stratosphere pointed EBITDA X% out, with our just

the So, guys with period. and perspective, that I date. the from a seasonality in think this sure think at of I’ve kind And better it not kind it’s the being that tougher of the to reflected rest about you period others summer models of of the business, as I’m seen modeling a is that’s look being

Operator

Thank like to I’m Mr. to this no Sartini for showing time. now back further remarks. closing turn you. at the call questions And some I’d

Blake Sartini

And Thank continued quarter third report today. everyone you, results. forward look you. We our when to our on for joining Thank updating everyone us operator. thanks progress we

Operator

This conclude Ladies day. you disconnect. have and participating the gentlemen, great may program does a conference. today’s thank Everyone, you for in and all

Golden Entertainment (GDEN) 11 Aug 182018 Q2 Earnings call transcript