GDEN - Earnings call transcript Q3 2018 | Golden Entertainment, Inc.

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Operator

Good day, ladies and gentlemen, and welcome to the Golden Entertainment 2018 Third Quarter 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 like to introduce your host for today's conference, Mr. Relations. Investor Jaffoni, Joe ahead. go please Sir,

Joe Jaffoni

Company Thank you now, quarter afternoon, By on and earnings Investors under section. much, should have Michelle, the found everyone be third 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

ended A These in accompanying the XXth, earnings these Golden Company’s or performance. most financial XXXX Golden accordance release, for management isolation GAAP. reconciliation and income the directly uses and also and substitute period financial comparable provided operating Entertainment useful for should September considered for available our quarter non-GAAP evaluating third XXXX information Entertainment. the release. which quarter will months statements prepared measures, our measures American earnings combined nine today’s discuss supplementary third GAAP measure to is the we of in a During call, believes are not with as in results in measures be

then today Chief Strategy is will call Charles Founder, President Company’s Officer. and Company’s the Chief results, after call the and to review Blake Blake Charles Thank Officer Chairman, turn pleasure Financial to and patience And the Officer; recent the with it’s your the On which Executive outlook, we’ll my now Chief the quarterly Blake that. initiatives, Sartini, Protell, your for call to strategic and and Blake? you Sartini. over questions. open

Blake Sartini

Thank and third our you, afternoon, quarter everyone. Welcome conference good Joe to XXXX call.

the of softness Third short Vegas our Strip quarter the Stratosphere. reported addition market on results we today impacted Las were as stratosphere in expectations the

disruption the September. of XXXX closed our Stratosphere addition and Cafe in with construction of food beverage some And occurring the Strat room August. In bulk to entire the was of had renovations and outlets July busiest one month

compared our a third over when anticipated quarter I with the disruption in the result in our categorize associated the ongoing lower disruption calls, occupancy retail revenues quarter As last room And spoken at levels. as the have and prior third I year. the the and property, within Stratosphere would rate had to minimal work about

and the for a rate down set and occupancy were the ADR disciplined higher weekends. to was maintained the Stratosphere to properties. result pricing a when reliant of trends was week are and than about our business, weakness we bookings room meeting compared strip, group Occupancy on the group being lower Stratosphere materialized volatility pronounced Strip X.X% given X.X%. Additionally, for more lack and other at as quarter as strategy OTAs room space highly is during Without

business general gaming our to remains growing. healthy turning Now which distributed and in

payment increased consumer options, home of have from curbside deliveries. cashless use behavior. Such as continued in We well pressure resulting seen our within Nevada as store and changing locations as chain rapidly

our operations million Edgewater two we growing either pending presence wholly the confidence quarter. Gaming's to are and will Despite Vegas, more increasing in economic our existing and travel. With with third and two this assets. resort outlook see dialogue of pace calls these major such invest falling segment growth Las unemployment, are EBITDA strip We and underway. healthy to year, this on gaming is excited during locals a these this destination our our generated We expected the Southern north casino the as our in the currently Tavern the Center overtime consumer control new the Convention of gaming owned point Highway to Arizona that Elsewhere from Rising factors Boulder leisure XXXX. Laughlin economy. and for to is no we losing to help active Las and locations our Vegas on an relationships terms locations. overall programs. and be the place gaming of leading at our and Further, acquisition and million Edgewater contrast Las of Aquarius in projects the properties discussed are in owners change on are $XXX our in reinforce to growing over environment the development distributive market. non-gaming ourselves Vegas a remove of Charlie's is increases on locals' development Belle, several and or for expansion, room prior have modest XX inventory visitors strip continue we Colorado Laughlin long-term recent portfolio challenging Decatur and the market, the Raider with Las as continue To business in resorts, profitable, trends our elevated in efficiencies attract third continue quarter to properties, marketing spending the of Las When X% ongoing declines, stadium well grow signs prices, Nevada was to to its Vegas the casinos property Colorado revenue operations combined in Vegas and and home we convention Marnell the wage Belle our Las market. further XX% approximately Vegas improve as local stark see a the of

In and market. of operate a properties, the Laughlin street addition, to driver from the own we will our is Center which key directly the and Events across visitation

quality strength strip of the expect our at entertainment from All well, Edgewater three properties, a Las without leading serve California our the expense Arizona weekend delivered seeking the customers with Southern the Belle quarter, joined as diverse us the strip Vegas We and residents Aquarius, third getaway growth the Colorado will in markup. shares highlighting by convenient Laughlin driving core and are market portfolio. of EBITDA particularly

Stratosphere. Turning to at redevelopment our the plan

and completion one for budget Phase renovations in on remain on time Our early XXXX.

refreshing the of top and renovation six the the world. restaurant have rooms, of We our Strat already Cafe completed XXX the of

and We open in of sports are and a concept, XX rooms main and tap room XXXX. an process lounge and new of now the floor early in lighting by casino area the completing mid-December exterior landscaping book renovations on will additional

after renovated into room service Day, seeing range went our that are For over rooms a our to rate. ATR $XX base Labor of we an premium $XX

results our confidence While the renovate, the rooms of out over portion with of far reinforces in X,XXX observed and in a these we line rate the our so is small expectations, project. are early premium intend to

the preparations for our which renovation beginning rooms. phase now additional include hotel are of will work over XXX We two

sports Stratosphere the competitive CapEx occupancy flow. in continue business, have our will and to from on return have spent interior and We XXXXand a make beverage increase food book various ultimately are Through XXXX, space. remodel, X,XXX, and with on the of floor property casino renovated $XX open area, south design the and new to properties and we refresh anticipate minimum for outlets meeting plan intend a When invested approximately Our believe the Stratosphere lounge of in spend. on million renovations created strip allow new the the XX% we us space business complete the reduce capital. and necessary coming seven and other each the our midweek To bookings renovation operating meeting to to group reliance attractive food targeting expect our exterior cash target added funding million $XXX to entire Vegas property, Stratosphere customers concepts OTAs we year. travelers approximately million Las renovations and complete September remaining more review

provides the we certain As or with opportunity discussed, and these have This a should phases view property. modify planned change with our the long-term of to delay this three-year approach us period. on we aspects project renovations over flexibility

to we I've assets store performance. have operating look several mentioned make our renovations in and at already pending Laughlin, acquisition improvement in grow of improvements two further business. we drive chain opportunities complementary have As of XXXX, and completed to the the the we completion our continuing our the to Nevada business of expected Stratosphere, are and

five are and Tavern additional we the addition, in new opening Tavern quarter In fourth plan openings in XXXX. one

jurisdictions. partnership our to also books wagering manage in should will become relationship sports expanded extend Maryland into and our We Hill in all Montana William legal these have sports Nevada our and with

We be continued markets evaluating this new inevitably distributed and expansion that entry will our the of are business country. still across into gaming there believe

we gaming business that entire in value to Lastly, grow with our prospects through which loyalty portfolio. remain out to create early in customers card our allow coming the one eager XXXX We our already of program M&A. across organically will are in both earn confident new would to our initiatives place rewards roll year our shareholder and

to buyback has be in equity. million price significant don't growth authorized belief, long to program. our reflected to and operations, Reinforcing the believe term, our our generate positioning market that this we focused on current closing, $XX Directors cash refining we existing for over our of In competitive are be flow. However, share company free continue prospects the Board continuing our a

call Charles. increase to the targeted are value. now which of to I over turn will All shareholder

Charles Protell

Blake. Thanks

a million $XX and of third million weakness with be Stratosphere, distributed Adjusted to by to on the prior compared $XX.X combined can quarter, performance for the chain quarter we Most were to For of the in EBITDA the Nevada. X% also down this in million, decline to down basis the year store prior casinos. a was $XXX revenues a locations were impacted attributed American but X% year.

As quarter. to to that we what in we as think trends year-over-year third improvement as quarter well some fourth the improvement, expect suggest see about the

room foresee in the and occupancy the Stratosphere quarter, meet will fourth we However, prior do its EBITDA not therefore for not the and increases in XXXX. company at guidance rate the full-year dramatic

EBITDA revenue prior same million. the For down on casinos, property X.X% million, Nevada X.X% to $XXX for quarter is year adjusted third our $XX.X basis, while declined the

Arizona in by X.X%, while EBITDA grew Laughlin these X.X%, of our by grew in diverse casino property unique reflecting Vegas the our Las strength casinos locals Charlie's Aquarius Our markets. EBITDA operation

color to to $X.X what as we quarter, this and remained last this by EBITDA I Stratosphere and remain slightly invest at to XX% to the the down want year-over-year capital add in affected Revenue while with quarter widely million. asset. opportunity why Stratosphere's in some for occupancy happened confident weaker was along strip. the reported declined Rocky flat EBITDA However, rates the Vegas Las the Resort Gap room

seven XX% the done property the is meaning As support you OTAs only and Las just in XX% rates arrival. property XX% days days competitive Vegas; XXX,XXX bookings the challenged booked rooms hotel to out X,XXX through represents rooms longer XX base almost With the midweek of space booking with at are within to business, over know, with a of a rooms visibility. of no of almost reservations group of within build approximately

Obviously, pressure with In to wide our Stratosphere database. and RevPar will trends room some specifics the leaders make than to for are benefits in strip price. levels, the quarter. property's up overall not and up dropping the the early prices those fourth picking both quarter, was To encouraged on was Conversely, the increased our quarter, the see up to occupancy drive and marginal rate market plan Stratosphere limits improving the city players for When this maintain conventions the ability Stratosphere's rooms addition, this and in direct for rated X%. suffer occupancy casino to occupancy, third occupancy of currently the put when strip, down fill X% less are on increased which events. offers we

F&B adding cash has uses, flow meeting disciplined are the However, be the million asset outlets, understand around make group we and we project. renovating free updating budget prudent and room the believe half this $XXX to the the Upgrading Stratosphere to of property renovations almost space. for at competitive. more visually our we and the necessary We feel will highlights alternative this continue why product,

as during increase. business. to $X.X to growth year-over-year slight third X.X% quarter Turning year, $XX.X Nevada chain continues owned be contribution revenues distributive portfolio million, million Total our our down to wholly a Adjusted Tavern was compared store EBITDA were offset weaker locations. by in last from the

to chain share given and $X periods the third properties the revenues business Laughlin. compared which the likely in quarter is lower flat next our million growth integrate we our card margins people year, to of of our close these in pending an continue in rollout of Montana increase renew quarter future and We agreements. gains. but American year. of as X% expect Belle store to new Adjusted revenue prepare our prior the continue recorded million Nevada and Montana, invest helping of acquisition the unprofitable is to not expenses than quarter $XX.X as increase generated loyalty see expenses in distributed improvement drive and program million the in X.X% at distributed to in business will the are distributed year, our In operations we commitment near-term fourth acquisition last for our continued compressing in for of million, of Colorado initiatives was in EBITDA and sales Corporate product $XX.X game for Edgewater market which efforts energies reflecting single recognition costs of from the $X.X properties. Corporate expense roughly Montana,

balance sheet. the to Moving

We outstanding net total at billion. was third of and the cash debt $X of totaling leverage equivalents $XXX in the the X.Xx end and have quarter. third million cash quarter LTM approximately

quarter the of end acquisition. to cash revolver complete and the cash that Marnell our portion tick $XXX the up net intend million to We pay in hand approximately We will of Gaming expect see the year unfunded use first on Xx at the of slightly to acquisition we as and assets. XXXX leverage, likely

of debt at years Given financial rate. the six our I'd the our of credit and credit no with rate is hedged I've in and highlight highlight want about leverage facility concerns some covenants to blended also facilities X% funded rate debt, floating on in the XXXX. of heard has our I our nearest approximately October outstanding current XX% maturities debt

or In facilities. in capacity upsize $XXX of $XX.X expenditures terms on the we existing spent quarter addition, the revolver Stratosphere pricing today our $XX approximately our million with credit without quarter. capital were of for million changing any Total million the

we annually? issuing Gaming. pro Blake cash in fund in of Laughlin be future first equity intend we in of all for having anticipate operated million quarter for travel outstanding mentioned, acquisition approximately forma million our XXXX, As flow. expenditures to will In planned Which Marnell after XX excess shares $XXX

stock yield do So equity you math to price. our relative the can on cash free our current

discretionary Our gaming free continue operations and distributed generate flow. cash significant casinos to

Over assets, tend please our the near it call term, to return use questions. and remarks. the prepared to open our we capital That reinvest to existing reduce our Operator, up concludes leverage for shareholders.

Operator

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

ahead. open. is line Please Your go

Eric Lockenvitz

How Hi, guys. you This today? are on Lockenvitz David. for Eric Great.

going of Can those trends you in quarter? on I some on about little you're touch the side. seeing to some you of So want quarter talk weakness the to saw how of about, the distributed talk the and the renegotiation bit but you the just just just fourth contracts mentioned

Charles Protell

mean of was an stores to to So quarter a we give Their these chain fallen. perspective, double same how trends basis year. far those period I stabilizing. sense EBITDA you last contribution actually just fourth from in business the see from the the have

and parties. we've again growth basis. Taverns that on quite fallen quite we've So third our a business in bit a distributed seen with frankly base healthy very the That's year-over-year massed

move and will said, profitable and we our operate forward the to we excited So extent them are to continue can't company. locations to not make pursue we like changes for we've these

Eric Lockenvitz

Great.

new just lot growth? seeing of On existing the the Tavern that in Tavern, or improvement openings a from are you organic

Charles Protell

that better. format in to on quarter, our our the Vegas within that. that a performed done say openings, market got better on would bit they overall perform you so the locals are has both, revenue Las if line a and third new our taverns new than I a that. than where basis lower taverns we've depending little are Tavern clearly Where old located compare So,

Eric Lockenvitz

midweek are talking of more is switching just results the you you've there, do then weekends? And been and in seeing great. the coming seeing you quarter about improvement the mostly in like the Okay, or improvements Stratosphere, that feel to fourth the kind

Charles Protell

it; For want we space. we quarter assets we've which I already around see us the that relatively this guidance we see fourth meeting with as don't visibility too where what other both. I we At much group again, is modest to that low relative is it's point, mean improvement. said give are think than other to our said

seeing weekend is we as modest midweek. both on improvement So basis growth are in third year-over-year the where the well a quarter on the as across modest board

Eric Lockenvitz

about dynamics Can Great reliance how last OTAs. lately? the you've up to you talk OTAs? on been and on And reduce then the that's just the how one just trying shaping question of seen

Charles Protell

perspective it's buying on again, you our don't a we property from as need we when are that our we to sales assets into relying knew have and these lot make investment. channels the this of OTAs. the alternative And is going this Look, this why now sits view

done. and put XX% that make going to X% right than business room There space room the of it's less don't relying Couple to have that out get asset of that lists get of nights we that that, once for into that's rolling early meeting to to a going in addition of we're be again The compete out things group XX% a in we as next see will the to be lift we're the we'll some should the the us space. the And occupancy one better card and up help I visibility all mentioned, roughly as place, of loyalty allow So casino database. able now. the out OTAs. on year of that as you're said to meeting but is which program when

Operator

no would the Thank I this And to you. any to Mr. over I'm further remarks. time. Sartini closing like at questions conference showing Blake And back turn for

Blake Sartini

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

Operator

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

Golden Entertainment (GDEN) 8 Nov 182018 Q3 Earnings call transcript