GDEN - Earnings call transcript Q2 2019 | Golden Entertainment, Inc.

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Operator

Good day, ladies and gentlemen and welcome to the Q2 2019 Golden Entertainment, Inc. Earnings Conference Call. [Operator instructions] As a reminder, this conference call is being recorded. I would now like to turn the call over to Mr.

Joe Jaffoni, investor relations. Mr. begin. may you Jaffoni,

Joe Jaffoni

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

begin or federal These and other we need and statements, cause as our from usually forward-looking numerous on relying uncertainties which similar securities future today's phrases, laws. materially are everyone to the not within identified remarks, interpreting working could anticipate, forward-looking statements should risks believe, use therefore, expect, are them. such guarantees of include These will, you that actual performance. will differ corporate to statements results formal of by should to are meaning we remind that exercise Before discussion of subject words the our the in or caution statements,

in most impact by and SEC quarterly detailed statements. to operating refer forward-looking recent XX-Q for could the filings, risk discussion updated financial and results as future our other XX-K more of our factors risks including our on Form Form that We the our reports you condition subsequent recent

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

review Protell, chief the of strategic we'll officer. with and call chief initiatives, president, which open the Sartini, strategy Charles will will the results, officer On operating review questions. recent executive and is company's financial the Blake to chief today officer; a quarterly Blake Charles and company's chairman, while after and the the call start founder, call

call turn over your Charles? to my it's with pleasure And Charles the that, that. now Thank you with Protell. patience for to

Charles Protell

Golden growth delivered second quarter its distributed of we and straight both generated record casino in Joe. and revenue as operations. Thanks, our adjusted EBITDA gaming

further we reviewing We progress the made also several discuss initiatives will numbers. after across that

For million, X.X% a grew of two revenue includes $XXX.X full EBITDA $XX.X operations the in to net XX.X% Laughlin million and which rose from January. quarter adjusted acquired second quarter, properties the to

was while For XX.X% year adjusted our second-quarter to up Nevada million. prior casinos, million, from revenue EBITDA XX.X% grew the $XX.X $XXX.X

quarterly at Growth The at Colorado Strat. quarter offset full disruption our contribution Nevada construction and reflects ongoing the in the Laughlin, casinos Belle for Edgewater primarily a partially from by

Laughlin half first balance track we new For the $X and realize we year-end capture in on our are to targeted will roughly half of million the properties, synergies two of cost our by XXXX.

of rollout of system casino casino our the all completed and card properties. loyalty at new player program management related TrueRewards also We X our

the from see lounge performance SkyPod year. in The F&B as sports taproom to in we renovated cross-play areas to we've we well in connected the improved marketing Strat end of book, as increased and to continued expect toward upgrades At quarter, and see We evidence new targeted renovated, have the to benefits our such of the as completed some our several outlets. second

floor to With the over of floor, which expect the year-end, year. our renovations the to to rooms. casino over remaining see we continue property's the May, $XX throughout year. push renovated we the premium balance on approximately casino end rate second renovations in the addition, standard room by began our see In ADR we disruptions At will operations to increased continue complete the half of the of

been the Strat revenue finished of other about the in rooms renovated QX years. almost X,XXX This this will out last XXX expected and half in within pressure approximately about in be which our Gap has to legal on renovated In the started XXX the sports At wagering promotional end year, have increased neighboring QX. Gap. remodeling includes increased of from XXXX. basis addition, at with we completed declined resulting Competitive of prior in in XXX marketing half Rocky three property immediately rooms acquisition a is to in X.X% hotel At jurisdictions to million. Rocky EBITDA rooms higher year-over-year X.X% expenses Maryland, $X.X while and

our distributed Turning Nevada to business.

up revenues of X.X% $XX.X reflecting rents across quarter. second performance end of of chain those six increase. locations, million, of well taverns locations new store prior a year-over-year year, roughly million $XX.X the of quarter X.X% second EBITDA improved as from over of a Total XX% were our during Adjusted as since XXXX types renegotiated the as opening result was the the

EBITDA We grew X.X% also to largest In distributed in for July. can And of operations year. year our current support believe, the expansion. over Adjusted operator generated as we business state, opened Montana tavern XX.X% up future in Montana, million, million. year distributed revenues over the XXth $X.X their infrastructure the year our $XX.X meaningful

are games in of of second our Montana location $XX the was line in communicated quarter addition the expense growth our proprietary as Our million higher approximately revenues. locations, previously which in with generating well per as Corporate expectation reflects million new of quarter. $XX.X

seven-year April, offerings completed In notes sheet. at balance the a unsecured priced million, we senior to X.XXX%. Moving $XXX

totaling and $XXX outstanding total with have million million cash outstanding second approximately borrowings borrowings, Currently, outstanding million $XXX loan offerings to term of the equivalents our first-lien under X.X%. we of a of of million repay $X.XX loan, We retire interest and of billion. cost to term loans. $XXX an second-lien had revolver debt revolver first-lien and million million term quarter which our no the our used were $XXX and have cash $XX Proceeds a from ended $XXX

also tavern X.X the quarter includes $XX new the for million maintenance at of to and casino of capex than As our ongoing June management LTM on leverage our related were install expenditures our system. capital million costs renovations new The was approximately Strat. approximately our XX, net the quarter with $XX times. spent capex, Other for Total builds

spend renovations. to We of expect million of year, additional to capex $XX is $XX the million approximately Strat this approximately which related

cash and expenditures will be will Strat year remodeled flow operations. spent funded of work rooms, have with the end capital our year, since and By The will have renovation on of XXX starting entertainment almost property. All book, and million completed approximately last we of $XX new the this casino concepts from entire the the floor, the exterior on added remodeled refreshed SMB state-of-the-art created features excess Jump venues, new of experience, and built lightning existing sports Sky a and land the updated venue SkyPod

to uses for the renovation The design level space other consider to look we for of projects and meeting future As phase group property. mezzanine we the Strat, continue

cohesively We the don't end until The investments the the earliest. this made by mid-XXXX on It we've spending any anticipate the that can year. level operate feels Start of mezzanine with at

view we estimates While our consensus for factors don't current the formal full-year which provide guidance, remain future at comfortable XXXX, The in we Strat. disruption on with

As flow, we shareholders continue free back year, wholly generated our Based to that between initiatives. discretionary cash Blake which this call portfolio owned color to for the allocation free reinvestment shareholders. us. value now and share to move to provide $X.XX on discretionary over I'll themselves our our year's returning casino estimates, half per to additional create in of we're acquisition opportunities we over assets, flow of the capital cash future to the on to opportunities when positions long-term present reduction, evaluating debt considering turn consensus us well in the

Blake Sartini

construction Starting operating with I'd key initiatives. the members and Charles. disruption, everyone the strategic Thanks, on The to and receive the several team share making across progress we extremely growth ongoing positive. perspectives at our from has continued first been like my renovations we Despite feedback are Strat. guests with

spend that opened The are more financial guests. our Strat a return or rate. View revenue continue performance food sports Lounge will our Early and continue drive meet popular to standard for become to expectation. capital generate refreshed premium room gathering Renovated results renovation from beverage and at the over completed spot our and and venues producing newly projects rooms book our reinforce our expectations have The improved

SkyPod. guests The million each thesis restaurants Our Approximately hotel in our year, the Strat experience investment obviously visit or and rides at stay simple. remains the X

reason a small the rooms. and experiences floor give In A a results. focus will to level half pull-through second property that every We operating on of people Strat's more. casino want hotel incremental little significantly a just in the a to stay give chance spend one longer will improve offering our The of by of to a them we updating additional little the these of year, spend the on remodel

construction, May no We will remodel at be one central given renovations which casino need disruptive floor. as started August, than we the remove are staged through temporarily of number other of bit more than more a That working and the table the XX% to we end property time, casino This mitigate this a the the complete casino of have part the any on the at said, games of complete disruption. section. to now should floor

end However, this through this needed complete the casino of extended the renovation time year. the to

assets. group compete will by this construction to to us potential to targeted year, of meeting with continue and balancing we design year-end be the evaluate will property to the the cash ahead I other We these Even finalize end The By space progress renovations. intend add disciplined appropriate upgrades if to effectively at we as and more timing the with allow amenity Strip complete flow when through the will project, to believe Strat. this we will of

the The Las well-positioned to drivers in Vegas. Conexpo, as of current the season citywide NFL will XXXX pick-up our in Strat investment, Raiders such Draft and on traffic be advantage Based take

Turning in Edgewater have to we Belle and acquired January. our the that efforts of Colorado at integration Laughlin, the completed we

of As second our to of expect from of in the Charles this half the year. realization begin for benefit synergies we about to noted, targeted these properties XX%

we initial We that are improve confident our with remain operations assets drive pleased expansion. with can margin very progress and these and

at XX% casino Nevada margin hottest margin. while at Laughlin in EBITDA a over operates property our a close operating EBITDA to XX% is Our

highlighting rollout very upside in in loyalty of program, well at In Edgewater margins our player and Arizona particularly Colorado received players, the by our of new the our Belle locals regards The has the acquisition. the TrueRewards Las properties. our confidence below Vegas been it XX%, operate Charlie's to

and XXX integrate certain the to grocery will the taverns and approval, with gaming we create locations, industry. largest program regulatory carving our stores, including loyalty represent taverns of players to our location distributed which of any intend Pending casinos, a network total network locations

distributed and by the our continued of in business profitability Moving our improved gaming. growth Montana operations. on Nevada encouraged to We're

in We a market in position dominant have Nevada Montana. share growing and

As jurisdictions, regulatory the is environment well-positioned across stable, of Golden to limited. or distributed our business gaming and growing our operator new Nevada-centric. population design, into the markets. multiple is The gaming existing portfolio the By location is largest expand supply assets future is is

owned Las support wholly With supporting for and Nevada for Golden open and will highest properties see of Vegas call our our return strategy acquisition the the have questions. of I operator, an pursued casino in please capital trends positioning the deliberately where growth we term. business, have over increase economic We Nevada on no for are the shareholders. future favorable reinvesting value Southern up and long the success that, doubt

Operator

Thank with you. [Operator Our comes Chad instructions] Macquarie. from Beynon question first

You may with proceed your question.

Chad Beynon

resort to And you updated to bit a regarding rooms more do we the able fully they're have questions. Strat on or Good the design should open? about renovations that little the will secondly these there's type of renovated? fees Charles, on and Blake, year, ADR what afternoon. on Thanks be more something once And rooms? the that until you've you want product you that, of a for then anything for be you similar talked taking the to back similar cautious my half room with expect lift of will already The

Blake Sartini

consistent To we're answer is, product the rooms short be current will answer question, producing. with first the your The yes.

differentiated initiate room suite the to design type on that a product. yes, which product. are receive of We the And obviously, from the going we product, anticipate and we're new FIT premium be some would continue to to receiving bit currently

yes, to that of So is, question. I the say the answer part would

-- true be represents be as a XX, the said with always it's this significantly The of property is to that positioning at a we're a I we're And XX-ish far pragmatic think the solid and property. this of that spend stay fees, that As really mean the approaching on been the point how to our mid-market to has cautious property years. our touched approach and Strat the the fact to value and with is five-star this, a property for capital experience disciplined overall We we've I and renovation, going fees. resort given a course resort continue

free very with have early well. are -- revenue is renovations we if that And new continue positioning in be the results to in which product parking, that our well-received. We along I will the our think of indication with property going an as

Chad Beynon

Illinois, And I on then guess a two-parter.

pretty the saw attractive. gaming had route large Illinois that acquisition which And a makes all there some secondly, we operations then expansion, the the what years? that outlook does full in change potentially the Firstly, acquiring justify a your you you've multiple. of built build Thanks. this of it was more potentially over just in on business Does Or operations? the route someone kind

Charles Protell

Look, think both. of a it's I little bit

our what's the or of this in we're two casinos significantly piece think place terms We -- than best latter of I in us, former have our I business more of business to believe at is for we probably the that through it's looking whether is a the distributed, capital. an bit say deploy terms units, undervalued. ability justifying. that

look in that multiples assets at or next we that casino acquisitions assets can pretty multiple. Illinois a that better-blended where the was time. opportunities we at we made full operate look have wholly So And synergy at at to decision can that the owned right we we

for happens watching expansion gaming say than we Illinois there that others seeing build is for better are and So market. probably within what that and some

And plays and who gets really supply tax that the for to you out in future. more have see increases as developed, uses how machines if potential more any there's future so really

Chad Beynon

for Thanks, the guys. Thanks Charles. results,

Charles Protell

Chad. Thanks,

Operator

Katz comes with you. our Thank question And David next from Jefferies.

proceed with question. may your You

Charles Protell

David? there, you Are

Operator

unmute. your line please mute, on is If

Charles Protell

to back Mr. circle Katz. we'll Maybe

Operator

problem. No

question Our from with John comes Union Gaming. DeCree next

You proceed with question. your may

John DeCree

looks these things Las Just on the a year? hearing market, disruption window, looking better in we're as The half on overall. time Las earnings that back Vegas question, on calls or are a how the like what Strat of some of than and guess, on the It to some much have operators market larger for realizing high-level have I at the wanted the we they Vegas were don't sounds the you thoughts XQ in you and broadly for speaking did your from phone on but booking get of maybe for last Strip

Charles Protell

Sure, John. Yes.

its got know, Strat's limited perspective, So forward reliance high RTA you our channel. from on into as The given visibility bookings

That So performs well. of when said, -- you're the us, amount Strat coming for performs well a XX-day going The rest to have the bookings significant a of Strip within window.

occupancy perspective being making. the said, And so we've That within with disruption and offset that rate seen that's that property. from on a that's room room going with we're renovation that

Blake Sartini

short-term bit speaking, in Strat rooms. RevPAR think, the or consistent. generally little John, was of the pretty window, ADR feel been the I in up I you question, X%. to have a Strip if The over RevPAR close up ADR on things QX, second even your mean, little X%, and at better pretty answer in quarter in may look almost terms

good. feeling is Vegas Las think I

window, my I addressed I quarter, our around limited is the as always We've talking into of continuing There well. But second-quarter and that. some feel to and general kind Charles people said think that. feeling town we're but booking visibility hearing going as downs, ups as are feeling am far into be is what and it the like to they this consistency third somewhat and has

John DeCree

about talked Or That's remarks, of steady on think, first split year? will helpful. And around the a from I you as being some XQ, I'm additional move Stratosphere to more disruption give as impactful your prepared August. kind pretty a The of at games in the you back little to the rest the XQ Strat, between kind color. half, Blake, bit? could wondering get pretty abate you stay impacted guys I through of table appreciate half that of start for into that if but XQ we us than if sense and disruption

Charles Protell

-- I'd So we'd for EBITDA. this comfortable I consensus that mentioned there's with estimates we're think say full-year -- still

doing of balance we'd of it We the in the renovations be disruption this. linear year. are need terms of over so expect the We're that fairly the at the starting casino floor. in We're to in phases, on

versus look at for the Strat first to EBITDA To of give half, far. about sense X% X% year The you half first disruption the of is if context, of a last-year so

expectations, the even our within little maybe that's bit realm So a of better.

of the we we're that And job that. doing through to good of back half similar a again, managing the see So cadence year. expect type of

John DeCree

Got it. Thanks helpful. guys. Really for the questions,

Operator

Thank Our next David instructions] you. comes [Operator Katz question from with Jefferies.

proceed with may You question. your

David Katz

Hi. Good gentlemen. afternoon,

this around we're afternoon. a Sorry, bit jumping quite

Charles Protell

Okay.

David Katz

which any place right? levels is what get you or -- haven't us wanted put property that can degree as addressed on of I And the can is now? to the there I I already, question but looks last to get Are Strat in affect of and change the renovations or a ongoing, at have you put this when infrastructures some What The XXXX, part the then? sort in you like OTA to or try or my are within guess strategies the place we improvement paint that you picture qualitative of hope degree the to impact you

Blake Sartini

Yes.

So question, under guess, to I while we're your David, litigation, OTA first on construction. the

We have marketing high-level more business casino to and part team adding our are adding begun continuing a have members casino of through some robust hosts. and and program, that attack

the program. We one-card have implemented

about people casino signing The month for think card. at a now our up the I Strat X,XXX one-card, we're for

a So program SkyPod front the we initiating beginning our the that more of information, through and that through connectivity and desk terms their of in program. between to guests are

close remodeled been and time, XXX in other room prior the about displacing that with hotel OTAs improvement ramp our retail-oriented we rooms new a our of more our rooms anticipate XXX to FIT our larger customers. continued have remodel in ownership, with that and only of program in At as casino up room the that of inventory to So gets point will being finished.

ongoing is are that as construction. it's and So we under happening

As as I a think, Stratosphere. XXXX, year pivotal the far that's for

construction for is is our time much be through from disruption anticipation consumer Our the the and we our program the what enter will first on property floor complete. pretty entire remodel visible the

mentioned, XXX slate, going lot our program, feel slot our rooms. with one-card remodels, is a we casino about program, think, look to and in Strat New as clean marketing product, The I room differently. And XXXX, a

result in continues of result, performance XXXX of change for is the in from macro assuming And feel I property perspective, environment and a be think, -- going change the going consistent, a property. the the our as in that property, to expectations to my to look, change is

David Katz

Thank it. Got you very much.

Blake Sartini

you. Thank

Operator

And you. showing at any any questions this turn to the would over not Thank I call back like further remarks. further am now time. Sartini to Mr. I for

Blake Sartini

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

Operator

gentlemen. Thank participating conclude may This in and does ladies program Everyone today's day. you all you, Thank disconnect. a conference. you today's wonderful have and for

Golden Entertainment (GDEN) 9 Aug 192019 Q2 Earnings call transcript