GDEN - Earnings call transcript Q1 2019 | Golden Entertainment, Inc.

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Operator

Good day ladies and gentlemen. Welcome to the Golden Entertainment First Quarter 2019 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 Thursday, May 9th, 2019. to call like to now would turn over the Mr. I Investor Relations. Jaffoni, Joe Sir, you begin. may

Joe Jaffoni

which and Victor should Entertainment's earnings the the to you, afternoon www.goldenent.com at have Golden found under release, company's XXXX website quarter section. Thank first good access everyone everyone. Investors be on can By now

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

directly our measures quarter and or which these reconciliation accordance in is call, isolation not XXXX performance. earnings uses with considered are available measures in results A should first financial today's substitute in discuss company's a management financial be measure non-GAAP for as to evaluating operating most the measures During GAAP These our we of will release. comparable useful prepared GAAP. believes the in

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

Charles Protell

record and both operations. Thanks gaming quarter adjusted growth casino our Golden's first EBITDA revenues across distributed from benefited Joe. and

addition, on operating in will call. more several progress we've In that made Blake and in initiatives strategic detail discuss the

adjusted first For X.X% revenues to grew the quarter, million. to EBITDA $XX.X and XX.X% million $XXX.X net rose

for we initial At locals' Strat a prior both work our the Lounge and book, reflects For quarter, newly year, rollout casino EBITDA last and Nevada which, View our the million. Taphouse quarter revenue Club, to completing particularly Las Vegas disruption The partially $XXX.X the by XX.X% of primarily all at the our increased construction properties our grew the to full-service was gaming properties. and Growth on of are displaced the which related Strat of compared south two area devices to first new casino at The Nevada from year casinos million, contribution expense our adjusted offset for was quarter casinos, the up X.X% Laughlin our $XX.X two while Players bar. substantially sports from in on acquired new

regional increased quarter Gap X.X% Resort performance began renovations year, year-over-year to were million. during while one Rocky last X.X% Maryland, million basis to from as competition, trends At anniversary Nevada over the X.X% our into the EBITDA up forward through year, improved EBITDA million, about was so $XX.X flow Strat the the for disruption. summer anticipate a reflecting first QX a before EBITDA chain increase. the prior X.X% total we construction still Our of we store get locations. of end $XX.X increased increased on in quarter any Adjusted business, distributed have remained part at The at compressed improved Rocky of more due in we revenue $X.X our Gap. year-over-year months revenues but In the

structures the XX% approximately expect locations the our we store As we so established of fourth on through call, discussed the continued we year. improvement chain new balance in quarter rent of

XX% prior new of to $XX.X locations. compares proprietary games we bringing benefit investments anticipate the total and of end corporate from expense quarter. opened we since XX marketing million addition, and the QX $X.X already operations $XX.X having the focus spending expenses IT more of XX ongoing to to In initiatives Corporate with at to three the year, in consistent the adding to taverns year. end last and the new our Two opened have on taverns first with rate QX our of been have communicated. increased million we distributed in on continuing include wholly-owned generated taverns QX. Montana, from million, up In end in business $XX basis. of previously on Montana of the new EBITDA million X% grew the of for run distributed expense Corporate Adjusted operations the quarter a our operational by year-over-year year-over-year revenues approximately relative

Colorado seven-year, balance proceeds million had consideration million to and by the which priced our of loan borrowings million cash $XXX X.X% first off has we second proceeds lien unsecured of offering funded five The cash outstanding approximately expenses. and April, for is per first of at $XXX cash Belle. payments borrowings and our from under with the new of million Edgewater maintenance which for including $XXX $X.XX repay casino million facility. costs And the outstanding about equivalents first the used paid The term new from we remaining contribution completed totaling have under facility. and million existing notes, the the our have offering notes the properties, term quarter no primarily sheet, X.XXX%. Laughlin reduced the annual addition fees our our revolver credit our and the year. a capital loan retired financing, unsecured outstanding CapEx. and our management $XX for new expenditures net on total acquisition two offering We billion. renovations. to $XX expenses quarter million of credit In Moving The million and on spent $XXX the $XX the a $XXX at revolving $XXX We were taverns, Reflecting debt currently capital of senior we LTM lien million end to the of times, half in Total acquisition $XXX million, our approximately system approximately balance the leverage and Strat of lien this

the XXXX $XX company's renovation total well March, product. an the we casino approximately have Strat was and renovation floor and as renovate ongoing of additional million, As room second additional budgeted in investment of as million for to The suite $XX

targeted The budget renovations for total million, Our at completion for remains in with XXXX. the approximately project $XXX Strat

We expenditures million to from cash be funded $XX to CapEx capital in including be expect XXXX, $XX million operations. for all total with for flows CapEx approximately maintenance

have our first to share repurchases million available repurchase we continue We shares as in March $XX for the authorization not quarter. under any did

which the flow ongoing those formal generated Nevada. are the from XXXX, estimates, the mostly considering from I represent free resorts our guidance we cash whole is published for Strat as of not Street for While most that year share renovations. is believe disruption wholly-owned a providing fairly Using X.XX the our per expected discretionary casino in about estimates prospects southern

debt capital shareholders. we of to clover evaluate capital returning M&A, portfolio, allocation capital color on between this year's be complete strategic we to now turn our to positioned further reinvestment the will future the or Blake I'll reduction, plan, As to initiatives. provide

Blake Sartini

Strat. several making now my to with on approach flow. disruption and on I'd to important strategic while the property we're From formed the progress phased perspective to at in we minimize reinvestment the like operating in Strat The initiatives a to maximizing starting renovations cash our beginning, share Charles. The growth and Thanks disciplined order our

Over a refreshed over nine able we've approximately well food months, of property. million menu, $XX sports state-of-the-art exterior rooms, including the existing as new signature add the the we've last and of restaurants XXX beverage book, renovated as remodel and created World Top hotel been venues, our the to spent

XXX the of our recently prior in revenues the the tower, are observation the at the include; significant will renovations, our XX% $XX on of rate refreshed several the investment remodel times as look and this of we attractive level entertainment will opened add and and an of the their space. half consider View restaurant additional Strat. a will the update The in additional XX% hotel to were ADR room renovated floor. we suites be QX; in an revenues and return renovated support highlights of meeting for Lounge we two on XXX We of updated and Over portion and remainder on floors at full end over Taphouse modernized complete early over first East, food rooms the work our number our such, operations. that our for investment venues million group earn have able main QX; revenues of before month experiences, XXXX, Top suites, the some casino the in capital add base casino property, the of $XX we rooms expectation earned up a tower a feel believe to rooms our By the premium concept up strongly QX; World approximately XXXX, tower improved and new And

to to-date the providing guests for our received drive loyalty. at the customers have property. made community changes Strat environment will the increase seeing, positive initial which believe clear the and are customer increased brand renovations and of from The It's at to spending In addition the new are economic feedback we our and opportunities guest we that benefits improving all have we recognition

the by our of To We tower Drew, the development Convention our XX% of person we a increase each believe Our is trying as our people to traffic with have drivers thesis captive an Vegas and we X additional Vegas further major what thesis to and under we spend supported simple; per see visitation future currently are projects approximate each will returns, to pull-through. and Las north the hotel $XX Strat. strip. Vegas guests of end the capture of million which World investment Resorts strip to Las visitation include an Las year. over between expansion targeted Center, audience The generate North believe is we The

concepts will add for we to and meeting when to convention if design As group on midweek longer we guests, build believe amenity similarly decide continue properties and with group move will to positioned us Ultimately, property. compete allow we we potential dependency and XXXX, this access reduce visitors. help provide to our lead-time space the through occupancy, meeting with strip Strat finalize space The OTAs, in renovations

complement which In own on one-third market-leading now Resort acquisition In the of Belle, to market's Event of market's completed grow gaming our Center. our The traffic several Edgewater initiatives largest the at Laughlin in addition to positions Aquarius key room the other Strat, Laughlin. we also focused and market's We the business. we're base, January, XX% approximately the driver the of and Colorado

Our earn Aquarius to while margins XX%, the property at excess in of mid-XXs. the properties low we acquired operates

XXXX, confident As materially these are and we two acquired margin we resorts. we the of move can newly through XXXX improve

Nevada chain ability renegotiating through Turning the and to to we grow improve business to our our economics distributed demonstrated wholly-owned footprint. have continuing operations, store branded tavern contracts gaming our of this

of casinos in of contracts complete We there taverns We take with new new and opening Nevada view the as to improvement room our ROIs of we build balance six the chain hyper-local June. grow more this continue XXXX plenty expect year-over-year the store is proven XXXX and XX% renegotiated of and to by to taverns throughout in XX% as business. effect

and properties, chain are Another and Club have Players believe club True installation XXX begun new critical management this is will new only network system store locations, rollouts This casino loyalty and our our by customers' February and complete we to be locations. our loyalty positioned we players that the of at the substantially the and and property allows unique between will as began of of of over casino the of points, points program. the players Nevada our Rewards club June. wallet. True include Rewards intend redemption rollout end share will all of We initiative Southern opportunities in redeem uniquely which which installations end the of process increase earn giving to taverns,

combined and in organic with We footprint, the built casino portfolio industry-leading business strongly growth southern Nevada ultimately years, continue over to that wholly-owned success economic of Over with the of gaming the for assets, the Nevada. the revenues believe two development, have from I primarily Nevada. gaming and will of unique combined our creates consisting resorts lead come previously support population our When our in nation reinvestment we of when outlined. which growth XX% distributed last initiatives

disruption, future this create that, however, Some up cause near-term capital please believe for that call will reinvestment our may plan success shareholders. for Golden With of and open value the we our Entertainment for operator, position current questions. long-term

Operator

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

You may begin.

David Katz

afternoon quarter. Hi, everyone. Nice

Charles Protell

Dave. Thanks

David Katz

point XXXX. relatively a and to million $XXX I more and will the reading got go the whether and The a release to discussions a want there's the the after Strat, on and to I back happening Strat because taking commitments admit question it of if late I guess, gradual that around The you're -- that some is been approach definitely just to by a and I dollar moment ironclad we've had, of or

Charles Protell

of to balance for we're terms capital and plan. we the meeting evaluate this as design of Blake this finalizing be space are we No, the our going and disciplined the I the of to in But year. over course returns clearly in for articulated, committed the think year, future how that we're group

Our to end get both we the environment and is we'll The portfolio, performance Strat are in. in economic of the specifically, where year, of the terms the we're as that view we see of

David Katz

Right.

were say, but I things, -- other are or and to as if to not? look, likely spend all So, that you it if which admittedly up unlikely, if remain is things all is, I follow

Blake Sartini

forward-looking forward-looking question Yes, yes. my answer, I mean, say in would I a with

from property hotel venues -- it's the described, say the early, tower. I to as the audience is the more points revenue that it the that the we currently we supporting continue early -- touchpoints will in that retail between are within see are more and captive we've positive currently results we in property that the have we thesis driving and have that positive our completed, experiencing As

being be we in As the widely determining that, see that are would at would continue space. I that convention point think, would build positive end confidence at the together year. those Vegas Las a economy say factor come the broader all things way, where the our to grows. point, begin And this that point, to I of of we out where But if in we is

Charles Protell

David, unlike about opportunity the M&A captive we have to us is great or other always things. thing this it. It's

we terms of as at within we're or it exists means an portfolio XXXX again, Blake indications a specifics as in opportunity that But whether little the XXXX always it So, that around starting But of that have the that positive. or too the early the timing. end XXXX, have. this initial into very to view we'll been has on we tell we spent said, in have the capital

David Katz

that's affect are of right. your the Drew? much process whether tethered thought All lastly, that The is projects how to do near you, they decision? How Genting And or your

Blake Sartini

space, I think the probably regard convention not to specific in much.

is or not those going have being new venues the traffic, convention think that I occur from to we that we foot anticipating are space. that traffic driven whether

convention be going more property. done at driving our of to I that of long-term profit in space revenue is kind view and think the

is As property we of continue be the look would context within -- to new to results north. to made that that traffic coming going that drivers the are improve, decision that made be it versus

David Katz

occur discussion last is of if it M&A sorts throw of right. about through that around distributed one gaming, Nevada the those can I And All one outside growth and things. in there, just or potential may

been What's in next expect we we been sellers a expectations think what that gating a from of and the more like I of landscape past; it when discussed in several has you reasonably the factor. should matter quarters? price look it that's

Charles Protell

the in whether get calls all that's we imagine that jurisdictions perspective, or we can M&A that an from operate we you don't. ones Well,

line take the more have of business view for growth do that. we come and you're we markets So, on at look And model a price at jurisdictions. gaming view states and those. is in our regional take our new that act a seeing expectations distributed look active that gaming we're this in in need again, from and get a mean I us expectations pursuing could in to more to with fairly

are And time those efforts. a spending lot so of on we

David Katz

you Got it. them. taking Thank you very much. Appreciate

Charles Protell

Thank you.

Operator

question comes Chad And from from line next Macquarie. our the of Beynon

begin. may You

Chad Beynon

for afternoon question. my thanks Hi, good and taking

Charles Protell

Hey Chad.

Chad Beynon

Blake, of the look couple a Charles, worse past were for projected. of the over years, than that, at financials most when varied seasonality I acquisitions, and quarters there's of certain reasons your or it's number better that

just at where in your help don't I are just and know it You kind was bit little where most guidance, put a portfolio bit The And here Thanks. if up you now but a quarter of a than more different looks little as it I estimates prior wondering XXXX, characteristics of that a XX% percentage think Stratosphere strong us I bit about than that us for disruption could additional a seasonality of give help was guess with you little any has some years. or is.

Charles Protell

Yes.

we're Chad, beginning the being month in of at that We're in and of disruption on to think, and I start front, the that that our disruption property, the disrupt last cautious that end relative terms how the and year. very renovations to floor. revenues could asset casino doing potentially on guests where to with we That to in have ultimately were phases should sections. some said we're this

several the look for those terms the obviously, down over Similarly, look year In the -- the business, business. have through those With we've the the two months. being you quarter local in at winter you in is with you if then Stratosphere the almost assets consistent in visitation of most and lower. than as our assets But town, at The the summer example, and acquisitions stronger into last Laughlin other dynamic cadence years. the same distributed most assets, months is than with mostly you gone of the seasonality through get for if Rocky which of fourth here Gap. opposite our during And have you

Chad Beynon

Okay. in I betting, believe few will the last ironed for? sports needed in lay bill what Thank be the providers. kind helpful. restaurants switching and the you And the will sports lottery actual a to couple of days for gears could Montana but system then that and that still details allows out. bars were I you. it. news kiosks Appreciate online there out have there know was And by I of Super licensed I believe exactly But be run betting, believe.

you kind little could just how this better should So, business? your us of bit that a help understand Thanks. fold and into

Blake Sartini

I passed think point, your you're true wagering did a but versus this our going traffic option machines, we've more support. bill that the accurate continue and -- was, looking those to we or is point, We it's those license -- more get to that to to process. a the the state. What in will product. true product presented this Chad, sports kiosks a operator lottery articulated additional the locations kind through we're bill I'll presented lottery-type are The point, in to little wagering distributed product a a state it's you understanding. I pass. of to versus A that bit pretty drive through overwhelming to time, in with cloudy. accurately. the the of this this on murky. driven would say murky, At actual I a operate, by are a that of Tavern do of say kind will bit a -- your At Yes. still a still it we random have locations the unfortunately, not pursue sports product activity lottery And which on a minute, that kiosks occur legislative liquor believe provided at When

product of However, surprised kind an left and murky decision with outgoing this governor everyone kind place. of this in

a of William through good more we kiosks working what driving was which do for think continue on pursue to pursue will product of be and there beneficial between wagering traffic we're is wagering is direct product would rolling ourselves is these of versus facilities Hill, out avenue a forward. think more into true news and So, passed. we be driven us, a supportive an The a so do and going more wagers we kind much sports product of to that

Chad Beynon

you Appreciate much Okay. very Thank Blake. it.

Blake Sartini

Thank you.

Operator

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

may You begin.

John DeCree

Charles. hi Blake, Hi

Blake Sartini

Hey John.

Charles Protell

John. Hey

John DeCree

-- the target. owned the in to question particularly on giving five per looks wanted a distributed Just was the think that like year by Nevada. historically, business, new hit six will And you midyear. to for It just I locations taverns

or change in wondering build continue active you couple a strategy next do timing to on the that to of And approvals that's taverns over runway much of if then get kind Just more have more how that a of of base years? follow-up, front. owned to

Charles Protell

John, terms permitting it the was build-out a from that of as licensing, each that on dictated available location timing. perspective based cadence, Yes. both process, that The individual in really well to and was just as us. estate real

County, there's of In of in southern rate, locations. types Clark terms Nevada, XX we'll XXX of to these have close run distributed probably within the

from have in a the We to like far. this to want we the extent footprint perspective, So, our valley accelerate investment we the ways clearly our now. model. by largest to We're business go within quite

with cadence we new communicated forward. comfortable in have tavern and the And we're out builds that we have of again, so going rolling terms

John DeCree

Vegas chain is think topline. the the the in on renegotiating the there more follow-up of helpful. lot business, not area. contracts. if on great bit Obviously, wondering that's in first talked maybe a that saw on is I provide quarter you the it's could particularly Thanks in about color, Charles, you've the so macro Las too you a a little with business the know granular, store And growth where coming backdrop growth you distributed a if

on from. of you kind your give where business maybe the think wondering -- Just strength coming is if the of you comments the could

Charles Protell

both view And mentioned, control as We So, these as to the tavern casinos. as environment. on Blake the the topline SMB gaming our as environment well side, hyper we revenue that soups portfolio. local from environment entire nuts within it's clearly

to within would And just XX% them the it, have, We patrons. locations. XX% of casino incentivizing gaming revenues is rated local these we're our call play as we

that perspective, from from line a better perspective. business growth actually our even So, that, local see perform you'll and than some able will cases, revenue drive so to to revenues assets slightly we're that in casino in

this what really we trying here saw think articulating which store with quarter what chain to been a is I we've and for stabilize the is while, locations. do

come that we've economics through So, done the more to locations, the of throughout recalibrating those many year. of

do that. we that that, hope So, accelerates as we're able do to

John DeCree

if acquisitions margin And between to close to could Edgewater addition in the margins sneak outlook When more Belle. now doing I about and one that of think Colorado in of the Aquarius and those and you've terms on in color recent sort the what properties outlined any you some the differential the efforts two in of those is overlap? gap, synergies getting on [Indiscernible]. of to you're your Just that

Charles Protell

million revenues we earlier filed X-K that year -- call of property last over an of million we acquired, so properties the roughly the $XX of it and this out $XX EBITDA. the outlined Sure, properties those

the to So, synergies that way to all you over articulated that Clearly, million discussing. already call next margin number synergy get $X two we're it, the was you margins not operating Blake those that XXs low to that's the $X million the get We've Aquarius. in does out past, of of the also years. how

there? hopefully we the of we Laughlin. way most the next over properties get there the market-leading Now, asset two Aquarius the integrate not. least at is way should are But get the Probably there all going years. down as to in we

John DeCree

all good. Appreciate the color. additional Very for Thanks it.

Operator

Bank. our Steve next question of And Pizzella comes Deutsche the from from line

You may begin.

Steve Pizzella

color longer the medium Appreciate Hey, Tavern on thanks to guys. business. term the

if in the trends we business Just wanted see update an get to to-date. on Tavern QX from can

Charles Protell

-- tell provide anecdotal little trend of bit So, you maybe don't it we a color. I specifically was you -- are would what trend --

win we premium performs on a break playing, on those tell bit and yield Tavern year Knights, I'd tell business segments, per those XX% unit taverns basis, don't the chain specifics give so you operations last from But and meaningful away, Tavern i.e., I or wholly-owned at continued. And our operate XX% XX% we premium parties. the out the stores. two also home the location is when Golden and saw third time it the from that versus third-party to at taverns on or a to Knights We other you So, to quite are this and the anywhere that chain store our our versus revenues during a very depending that that and bar benefit locations. beverage up year, that XX% that times are food they're whether in that continued period. will

segments. not I'm don't So, we those breakout give sure or the again, not in helpful of but if between you for detail that's any terms

Steve Pizzella

great. Okay, it. Appreciate Thanks.

Operator

back Blake Sartini for Thank you. remarks. to time. I further And call the no am showing questions this closing at I'd turn like to Mr.

Blake Sartini

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

Operator

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

Golden Entertainment (GDEN) 11 May 192019 Q1 Earnings call transcript