GDEN - Earnings call transcript Q4 2018 | Golden Entertainment, Inc.

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Operator

Good afternoon, ladies and gentlemen, thank you for standing by. Welcome to the Golden Entertainment Fourth Quarter 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode, a question-and-answer session will follow the formal remarks. Please note, that this call is being recorded today March 14, 2019.

Now, I would like to turn the conference over to Joe Jaffoni, Investor Relations. sir. ahead, go please Sir,

Joe Jaffoni

company’s Thank you now, quarter afternoon, By on and earnings Investors under section. much, should have Kelsey, the found everyone be fourth which good at access www.goldenent.com, release, the everyone. can very website to XXXX the

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

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

today Chief Blake Strategy is the pleasure call to after Charles Founder, that President results, my company’s Officer. and Company’s the the to Chief and initiatives, quarterly review we’ll Blake Charles review call Officer to Chairman, Financial and Officer; the On it’s the Executive Chief the operating open Protell. Sartini, Protell, call With turn and questions. Charles? that, over strategic will the Charles and recent will

Charles Protell

Thanks, Joe. million quarter $XX.X million on versus prior the year. in the were a X.X% Casinos. million, basis American quarter, Fourth combined to X.X% at total revenues on prior the with up compared up year combined Adjusted $XX.X EBITDA basis, a $XXX.X for was

comments taking the we segments some improve will the As steps and our I in to we provide review of are results. around businesses future challenges in QX

increased up For while Casinos, million, to EBITDA our fourth the same-property from quarter X.X% $XXX.X X.X% revenue adjusted a basis, on year Nevada million. $XX.X prior is

construction property, quarter. was at With EBITDA X% the The Strat’s the down roughly ongoing for the

are Rocky as of three on Pahrump, with focused which a million to minimal Strat, declined and In allowed their these EBITDA is that visitation X% intend Rocky costs Maryland our in the X.X% a Arizona’s synergies market. Laughlin visitation all performance of casinos on in towards year-over-year marketing in the from environment. in XXXX. business on three total of properties the the $X.X in We saw year, in the disruption our of tavern the a EBITDA market our end the local pressure of to midweek us last as structure to we local maintained will Vegas, Conversely, a renovations decline future Charlie’s with Nevada property our In in to at locations. casino market distributor pleased where X.X% significant $XX.X revenue some integrating our move during competitive and fourth third-party on identified of a realizing our basis as some and further access focused the properties. across players At investment employment. s our in cost increased two aspects assets we With eb which our million tight declines XX% property has year the West compared generated the offset has Outside overcome sports the year-over-year casinos store and some as Gap as experienced by a increase. two are revenues these was well built year-over-year the in of Laughlin generated new Virginia, we down increased for to construction books disruption early Gap opening X.X% Blake approach improvement of million. quarter, to mitigate construction. in expect quarter project cost increasingly keep the increase manage phased was subsided while through to we X.X% The migrating Las business. $X.X our the gaming our Adjusted part our at continued weekend in EBITDA, Aquarius capital quarter, to enhancing speak was plan performance our which fourth we EBITDA ability group chain properties,

XXX% of the pay with from stores of to a we our a XXX approximately revenue We Nevada business XXXX. improvement through locations. these in employees We see chain chain and to established monthly move and new collect locations, machines staff as in rents in Nevada third-party, the expect the areas structures at rent gaming have gaming our store where we distributed approximately XX%

of a fourth basis. Montana distributed on for EBITDA to the quarter, improvement XX.X% Adjusted strong year-over-year year-over-year business distributed grew XX.X% $X.X million. $XX.X Montana Our showed generating revenues the business up million in

our investments compared revenue as Our and of year. Montana market QX million quarter prior million in the rebranding our roll $XX.X fourth out, having in marketing new us well from our ongoing expense product share to benefited 'XX. Corporate on. operations card drive was of milder and Corporate weather the Blake and one in gaming to expenses True slightly gains the Rewards as help growth to QX the expense in include corporate will touch related lower initiatives than $XX.X IT

Moving on to and and quarter. $X leverage fourth million end cash million against outstanding net X.X January, million $XXX of revolving at at of the In the we billion. had total LTM a properties times with $XX.X balance the of $X.X Stratosphere approximately we to fourth approximately pro Total was quarter cash totaling debt on $XXX our quarter. $XXX the the in borrowed for sheet, the in end these on capital credit facility X.X fund acquired properties. forma consideration the renovations acquisition we hand spent Net and for leverage of Laughlin. the two remained used expenditure million times at cash the the for million, the quarter was cash equivalents

space book year investment projects to spending space million sports the and XXXX, cash Konami total appropriate budget in Blake convention was as by scheduled intend completed integrated scope taverns all in we $XX the to and design finalizing for as evaluating our property end. casino and on is currently company six approximately In new the new size XXXX. meeting be company of anticipates anticipates $XX XXXX million operations. The budgeted Strat such million remained lounge, As $XX the projects at of the of soon The projects have a approximately to million approximately for $XXX as XXXX, be December to Stratosphere which the the other and Golden with on new well company's Entertainments $XX spending completed from as which system. million be the in as total includes maintenance completed, in CapEx well for flow will moment. review We fund management CapEx the with on

share $XX.XX repurchase consideration repurchase average shares of Marnell, in shares transaction previous previous we share. million program, activity Our XX.X common the Board January, XX of Reflecting currently our million authorized shares Anthony outstanding. to-date, the million recently Under in our for program, to properties million Laughlin stock XX two to of related November. we issued $XX.X which as at new Laughlin. we entities repurchase X.X an per his approved program million the and repurchase have part In to spent XXX,XXX price a replaces the

forma estimated add of is important and see not capital to interest accretive properties or and ‘XX in opportunistic so anticipate our per and over payer I'll maintenance an reduction we initiatives. the over not to in from cash do is allocate years. a in metric our the strategic recent Blake share EBITDA were leverage acquired We contribution cash CapEx. continue you review where return flow two to EBITDA, to ‘XX shareholders. the being now cash the cash pro call to ‘XX, flow tax our several expense reinvestment asset, will opportunities on progress Free we capital turn between $X.XX inclusive If share our free over to next Laughlin per the

Blake Sartini

towards you to for Strat. share progress are Thank we positioning Charles. company The plan like you with capital future and I’s our growth with the going now the forward making

we Entertainments look life of and and visit As the lower time owned XX% serve of future resorts people an of move country to environment coming trends is appeal continuing from only all rapidly economic high growth to supporting is all for total future. and Las in at Vegas Nevada Southern place a Las quality our mostly casino Vegas grow can from from as in and With levels benefit Nevada living. only stronger the record Golden over near particular, of at wholly Las Nevada in to as Vegas better Nevada the over future. the of revenue population these Visitations gets cost at economic

Laughlin of in From entertainment including be as the added, in currently to market biggest now assets leading worldwide from and Edgewater and with improvements For the necessary footprint, XXX owned we $XX Center, the the few and three the to expansion neighboring new relevant thoughtful are focus we drivers a of food our XXXX drive casino The restaurant our Aquarius outlets. Tower restaurants, a other comes We attractions our property. premium ADR few traffic which Strat’s a product, realize several as open, Starting be and wholly world elevated meaningful approach EBITDA leads These enhanced disciplined performance. renovated full and and room and Belle. Colorado attractions new concentration award-winning revenue rate. to to beverage, properties our and Vegas value level, including deck Tower beverage which the portfolio, signature as and continue of are expensive company's making its reinvestment being top Convention on touched over amenities. will visitation, focus The our renovations and is the attractions well the strong repressed to and and Strat a food Strat believe observation iconic all base The our our the that of rooms, city-wide blocks Las order we've from blocks generating

We to renovations also Café to floor, Starbucks and exterior a and lighting finished the The Strat significant the casino new property’s completed made landscaping. new upgrades on the

We the this & book are sports for new now lounge our floor, opening which BLVD MAIN were nearing casino of the opening and earlier initially Taphouse, on targeted the year.

casino plan the our our to While include remains investment XXXX which budget floor, a and our remodel complete remodeling we offerings while to program, deliver will continuing unchanged to environment. suites upgrading towards shift entertainment more room guest invest

and By to to convention The into more in By we approximately the the new upgrade this the unique approximately will rebrand entertainment ultimately In midweek, on and and around continue XXXX Las drive The especially any options design visitors outlets, spend Strat to end at more spend the top state-of-the-art and give XX% visitors casino our product lead add of nature will plan Tower build to allow exterior food to annual new Tower that planned value that The for the while world. at to visitors entertainment guests access be create visitor to Strat timing owned completed dining will these are The those retail casino million rooms us and finalize refresh OTAs, the over future Tower of and and of X.X the renovate iconic addition, from a new the time Suite Group year its will Vegas. property. development invested of also occupancy, the concepts competitive volume luxuring Strat. and food longer reposition the guests the to dependency with meeting to XXXX, suites, the comprise meeting skyline important new space goal of interior book, opportunities of have and Tower the alike. property. property as with to allow we property to experience $XX will feature the Vegas the the space we reduce remodel to renovations property. casino is a and SkyPod the and sports will at and end we of the the group The million opportunities for renovate of the Las and rebrand and of and truly

we performance. space to will As approximately million, meeting and The group over property’s evaluate remains financial and XXXX, the complete design our $XXX the we cost impact also by end the of evaluate our renovations XXXX. budget intend on of Strat renovations of we

looking gaming revenue Arizona is Vegas a becoming room event to last own away. Las population The five increasingly Now across which the significant for properties. XX Laughlin drive $XXX destination market largest profitability positions to base, has convenient grow now approximately currently value our levels. Southern market’s for over We turning is are below potential one-third over centers. of consistent experience that weekend gaming market approximately believe growth Annual Laughlin, to and very of locals Laughlin synergies the market oriented XX% through three minutes and also the have is major peak years, we operations million, the for a shown Laughlin for from only traffic the XX% It the and Laughlin California driver center. is

in forward on the are our marketing. I'm Laughlin Colorado you grow on We share We of Edgewater our updating in of the Belle over also completed acquisition opportunities the progress XXXX. embarking through market tier course January, looking and and targeted to to

distributed of strategy. been We a While throughout In established growing piece and platform time as operations, Nevada recently markets including has the part our this beyond. to our extension XXXX gaming, Company's we an successful a our our focused considerable view Montana on owned chain and casino gaming history portfolio. store in and wholly to tavern a are opportunities business of core our devoted go-forward economics markets of gaming of critical regional local robust in leases renegotiating Nevada, we third-party remains

of Nevada. course future XXXX the our the economics will locations half throughout approximately store Over of of XXX improve and chain periods, we in

We returns continue first have to to open XXXX. strong and an to new locations we where six when within have also six the planned open taverns opportunity for and will new generate months

there for wagering quickly state. is operations way Montana the strong year-over-year are and showing locations the distributed growth Our Montana and gaming across sports distributed to potential within lead allowing

ones catalysts this We legislative as continue be gaming and environment all active improve the regional and of has new distributed types of to built, operated, pursuing owned biggest the potential Having distributed the growth XX-year jurisdictions, establishments I'm be for gaming in as well potential gaming changes confident one that to career, over for business. in industry operating markets. the to gaming existing my

casino including assets. combined revenues and gaming With across from portfolio at guests the our across our management improve we system, with believe casino initiatives Strat we entire under new businesses of way new our player our rewards program, one-card can economic The

for to wallet Rewards True us to in We new in millions rewards club will program and time properties. market order database cross share players within to our to remain Our players committed targeted of success. our increase allow the questions? call creating Entertainment will I future best value for believe our long the for position please term. firmly up planned XXXX you Golden open can over beyond and Operator, that And initiatives

Operator

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

open. Your line is

David Katz

good and the may disruption, well driver and among just The property you how back the the performance Can players to may and be that were as dynamics the think quarter dynamics overall we serve construction related just a would some where operators at of we so, a were Strat. or the larger portion, you, a drive degree If as the on at your to ability I look to impacts about talk when performance a not to the or or its in which, Strip other stringer that the helpful. Strip went have

Blake Sartini

question, assets many specific minute, is a think I understand the think above a to year. of for our QX, if just the of I QX comparison. QX segue in Well, that prior proper significantly performed to dynamic I

was the strip expectations delta think the the for construction, and terms of ongoing did trends specific therein was and of I at there The properties a think question, lot the but lies talking that in was property I in Strat meet -- course us that that -- the year, the story for the not about I driving to do self Stratosphere. fourth demand believe your you're rooms our the the at of quarter occupancy throughout were

to did experienced specific prior that the we I as year self think, same in on X. strip experience in the particular, October was the the year-over-year, that of result a us QX event in not downturn properties

same, were the if let's So answer let not, quarter. I say, know know fourth answers not don't our your I for comps the me And that if -- after you can question.

David Katz

us investing when updated an I respect rank does. us you're on order if in just there going be share a returning And to, point you Charles, it, the lot could on can of could at or to linking investing those and And choices you how mean, this The I repurchases, view -- at give that philosophy holistic just you and a with would between delevering, if take allocation is in Strat, capital M&A, those your on helpful. just just perspective look philosophy, No, there. it update

Charles Protell

the certainly on forward. taking Nevada priority this us tuck-in standpoint, than really with the our of last, if other for a go is starting M&A opportunistic side, we from and which the first. business maybe part first distributed see plan, as certainly Montana acquisitions think of year, half a I we is from Yes, back seat

capital, priority about Blake investment front this outlined, as number of the on clearly year. in one certainly you think for the the Stratosphere, it is half If

In to addition months are this the that, we in to first open that six of new taverns have six slated year.

the So portfolio investing for own in priority months. the is next our six

goals the achieving As I terms within capital I a leverage said, the really terms two the and we the reduction in and we've to That take of market, conditions we to that we our not other we I've perspective, market areas where are are set we just then could are we the in priorities time. other if hitting Stratosphere gives think and in look terms evaluate presented performance the share a shares opportunity we how at us stakeholders chance about quarter, valuation of year, into where of wed the in back acquiring in our allocation where versus based of that half the think a and look buybacks. fourth saw of us the get -- prongs we at returning on capital to the were in as an clearly the to think at that you from outlined

Operator

question Thank the you. Chad of Beynon line comes [Operator And with our Macquarie. from next Instructions].

is Your line open.

Chad Beynon

mentioned take we XX to guess I EBITDA, that roughly at roughly what cash think the XXXX EBITDA, we free $X.XX TTM flow if calculate we add be free simple more math of of of EBITDA Charles, $XX in now projected you I flow. prepared remarks your the of million cash or on derive --

in Strat positive, think should which aware XXXX be just I kind disruption think of slightly there we and will taverns positive, terms the would of anything be algorithm else of about margins be a chain giving when that which outside should improve from is stores, new offset by for that understanding you're a potentially better So, six those the be we not some XXXX? that renovations, guidance on

Charles Protell

obviously I outlined -- Blake we Chad, initiatives. of think mean, a Look, lot I

economics, card them, our own of putting some system into mentioned about we've You the We talked and that plan. we're place. one expectations have obviously

in business is relative share the you was said, the take are you're today, As this it now trading at cash best sits space we're that The at, right that ready it's outlined, giving I per as the we not yield purpose probably guidance. to discretionary free if to where point. math,

point the So, that to was out. really

cash takes through you regardless our still some I said at Strat, that very the of some think of to we ongoing feel and puts we get trade disruption there attractive. relative the year. as The that that is for up shares those, out And but flow generation this the is the out and the yields of coming business, maybe of again,

Chad Beynon

And we agree. thank you. Okay,

wildly when On books Marnell kind and but the results, some had originally the wing did different gaming they to close dramatically from reported anything of I just at know change acquisition. of had finalized, last take revenues under you think that numbers the when your be EBITDA, the announced them? -- the of as you here, than about we as were you

Charles Protell

Marnell? For

Chad Beynon

Yes.

Charles Protell

the I'd closed approximate we've about So, year earnings talked our $X Marnell an next two basis, still say in for those over is look, roughly the we plus that LTM that that, for we'd in years. on million and where expectation the synergies past synergies the

Chad Beynon

Okay, the great. but some you And then you the Strat, think return question, of the just overall returns, tweaked on XX% on targeting been still a The are my plus have project? final about details as Blake,

Blake Sartini

say would in investments culminates I would all I've Chad, of outlined XXXX. these will gestation I fair. say, it's the say that's of really as I

the the slate in campaign, very past that property investment. not we've on now get along this which together full positive when outlined it all doing we regarding marketing right in are really we I the of think that the amenities a think results I return is we're on concerted with achieving

Charles Protell

asset, And of too Chad, our that it roughly nights you basis. within on about annual an think XXX,XXX room the into if it's not to get But details sold much.

the on tell not we visitors We and two linked. are almost have can the million to come those Tower best experiences X.X that

percentage a casino overlap guests So small is that very that. our there

margins if is to achieving, our trying about that that where investment touch we're do what each getting year, those returns. another of So is $X $XX a you we're making points think out to and generate you we're the with this think we're as points that million with about touch investment

at that we've of making every looking in through outlets, there to we've got rooms, return making that point F&B end investment project in looked investment the at every we're but the to we're profile. to So that order that get the we to obviously are full get

Blake Sartini

a think want to rooms thesis the guests in We investment I complicated, as completed experience, of just us options invest venues our right. we and and have think amenities it. to town of out focused the more overall result minimizing good in spending from helpful the and real to meant disruption providing I I more on maybe are here, fully, will of summarize, basis, retail and those points, lastly, are effectively at really is an resort realizing -- longer the operating overall returns while Chad, investments and snippet And really of a as targeted are keep not competes guests for Nevada. the entertainment that say we which a

on the meaning us continued or has end investments bit So World Charles of as currently completed X.X opened, that also a Cafe, we've comfortable floor Strat from restaurant as have or but nice who just The XXX it's more of with those said, realized outlined. there we XXX been of the that this, challenge that's the with we spoken have are just share think, we're at returns highlights are that's completed. the there are the and a giving -- the And are I restaurant going about returns That is bit whether those construction -- the the people on, million Charles at saying Top realizing the the with investments Tower is not part second that drawing thesis, visiting property. wallet been

Operator

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

Blake Sartini

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

Operator

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

Golden Entertainment (GDEN) 14 Mar 192018 Q4 Earnings call transcript