GDEN - Earnings call transcript Q2 2020 | Golden Entertainment, Inc.

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Operator

Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to the Golden Entertainment Second Quarter 2020 Earnings Conference Call. [Operator Instructions]. Please note that this call is being recorded today, August 6, 2020.

turn over to Investor Joe like Relations. I'd the to conference Jaffoni, Now sir. go Please ahead,

Joseph Jaffoni

those Officer; differ you, will of thank laws. call company's Chief On harbor company's Sartini, today's good provision Financial Chief statements materially is the Protell, statements. results contemplated Officer. Executive Actual under President and safe and Chairman call, in And securities founder, and forward-looking these Blake the Bridget, we from federal afternoon, today's Charles may the make and everyone. On the

information factors a no materially Commission. Exchange release with statements to obligation of in Additional concerning actual filings result that results statements information or undertake new and press differ is Except update could these to otherwise. as today's and cause Entertainment's Securities forward-looking in required Golden from by as those the we contained law,

also we performance. financial During will in our the discuss talking about non-GAAP call, measures

financial website. reconciliation can it's over press the on the ahead. Blake, turn GAAP find to release, the available call Blake. measures please You With pleasure in to go is our of my that, which

Blake Sartini

everyone, afternoon, Good joining you thank Joe. Thanks, us today. for and

better is by While pandemic, a whole, markets open first quarter impacted country in expected. of the our operations operate all as than to performing where to and stronger our be are business spoke markets, the continue place much on our we in in have today compared we a the when call. been Today,

diversity We reopening. gaming business properties as see distributed since of us EBITDA Maryland gaming XX. of our on nearly shutdowns. evidence and Montana on Nevada Our the mandated that June reopened recover operations quickly distributed in XXXX of early our and as With Gap by distributed derived gaming with operations financial June can casino property from XX% our Rocky our followed performance in casino and operations, oriented to regional foundation our May, of all X in locals from provides well the

Nevada total was last strip demand up XX% the over June in and same fewer with reduction. June about sustained XX% and exceeded positive Maryland, meaningful The strong reliant in Our Despite over to EBITDA in EBITDA days STRAT expectations in and XX in year, period STRAT from days and expense XX% grow continues fewer on X visitation, in occupancy reflecting to is convention declines July. June group the direct business. generated not and

Vegas We improvement expect occupancy continues recover. continued drive-in as capacity Las traffic airline in and to to

EBITDA growth led performance casinos collectively doubled Vegas by their last Our year. taverns, and Las June contribution Locals double-digit and achieved our over revenue was which

casinos increased X and grew Our reopened Laughlin EBITDA revenue XX%. by X% by

Laughlin total XX%. our While improved EBITDA

revenue, Our and X% experienced similar up when with XX% to last financial for casinos year. Pahrump up June results, EBITDA, compared

revenue EBITDA Our which Montana collective an distributed gaming of also well and saw Nevada of across more and operations, XX%. than increase X% our business both performed growth

Importantly, we segment. improvement, sustainable margin particularly will within have Casino seen substantial and Nevada be what we our believe

overhead labor and in total corporate the Excluding improvement reduced other Currently, our our the have payroll a These were to marketing XX% reduced Nevada point by June, Casino headcount by corporate expenses. last X,XXX and basis margin almost Headcount primarily driven reduced improvements year. margin expanded and compared approximately company's expenses EBITDA in XX%. reductions over to STRAT, XX%. has by we

expense we to year. compared have to marketing our significant reductions addition, In prior made

excess promotional to The headcount of our Moving million. meaningfully to the remain and of these and we run reductions grow, annualized is also environment expect current in forward, $XXX cost markets we do not anticipate subdued. rate

capital drew At began need had and the million time, have discussed Turning as that Last quarter, revolver to our no liquidity. we for down pandemic quick to we properties to liquidity. additional of took actions the at onset on the we access $XXX the close. our our markets

revolver, the on million the $XXX us repaid future. available which needed we to remains QX, in if During

In addition, estate most real our financial no of we and casinos. own maturities, to no the debt under covenants near-term have continue

leverage of position be as to growth result near our reduce will a term or of the cash expansion new reopening, performance tuck-in As future in us gaming since acquisitions. flow, act we on are and and jurisdictions opportunities, to pursue used targeted generating such distributed which

support I up Lastly, and a job properties and dedication for of our guest and service while great all as to and Golden delivering want running our goal members did to thank our as Entertainment getting safety. to back to they fantastic their in well team a their commitment health providing

our the members for way challenges is to now is ensure I'm normal. wellness team our recovery, to new health and team Our critical members and and of what our our guests the have the of of ability proud addressed

is most for we've of questions. certainly will environments on recover faced, call am opportunities. open ever business confident the and I our this challenging Although that position to please capitalize With that, one operating operator, the model us diversified future

Operator

Instructions]. [Operator

with comes Santarelli Our Bank. question Deutsche Carlo line of the from first

Carlo Santarelli

Just the somewhat you to new able for much in terms pub to gaming you remains guys do differently? the augment least the looking in being? strip And degree, being we of maybe your floor is optionality here, be that the that thinking able move model now about what subdued? whatnot climate of at as the a Stratosphere kind and property at. do customers of of how time are airlift the you're kind have What how helped the database of to forward right potentially And done and kind leverage operating assuming to expect that you on

Charles Protell

Carlo, it's Charles.

is or STRAT, travel. business a just group as international reminder, not think, is I Blake property it this on reliant mentioned,

our window. for on to driven used really has OTAs. we're property really The booking continued. I is customer been focused off think a core has demographic, having short So now, which That

from on of but mentioned, occupancy. month, over XX% weekends, XX% property to Blake touched average the was rates at As July XX% and for the XX% occupancy going we've on the the Xth weekend,

is to property catering the its known us, for think I demographic. So

continue. We that to expect

rated an the have On increase in gaming side, we play. seen

the from you small traffic a for base. Although, recall, as

certainly this occupancy expectations. the seeing flow STRAT. incremental by better property breakeven bottom we really the we're in direct But encouraged So think we're to for with and positioned through line us And step-ups most is that. this than to exceed are

Carlo Santarelli

And mentioned ability I guys a you if - to seek could, like the acquisitions. tuck-in potentially then bit talked little

As pole to today we today? to within about type what portfolio that make guess think fill is, sense ask kind I something easiest way within you of to consider the - would what look acquisition? with the you Or of would an it guys portfolio the do be

Charles Protell

- capital Yes. our start I let's with structure. I think mean,

to that capital. external think and have did of So raise few go the one out out I companies there not

access under revolver. million have $XXX approximately we So to existing

over We next, think months. balance assets call XX be opportunities X to there cash for it, sheet. the have on bite-size become And available smaller that we the will

acquisitions. In for terms lot Nevada looking other Maryland a our very potential say, get have in of also is performing do that we're I'd a of certainly, what is well. we well for, synergies But in Northern presence property We'll not Nevada. we're in We have covered Nevada.

our And say so at. for seaboard I adding certainly a focused density to very we'll the would something point. on leverage take us we're eastern look is

leverage be from And or anything to meaningfully looking so will do not increases this we point. that

make difference we where could So improving that feel we'll really the be in focused pretty we a on of asset. operations something

Operator

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

Chad Beynon

about If sustainability, active margins? Casino where now, your I with then and open to maybe the Boyd, comments it like could all particularly been Red margin drag on I this we and you've wanted labor-intensive these players expect how expand Can Could and a the decades. marketing. seem they profile, margin in within the margins Nevada down medium that and we message came market, major some the market, in be amenities change term, on and across Blake, items to seems up be Rock, right think of terms that major for of region? be this to the hurt could in and start clear, you longer closed back should loud you, but reducing the think

Blake Sartini

think I question. a that's Chad, Yes. great

constant see our first overhead or service is I'm of specifically, that affecting think being it - of question, I don't whatsoever. that is. extent to corporate properties your our reduced the I guest to the things confident the of one any And is part

we expect our much So you're corporate with right. a expect can much less going the you that a - smaller property forward, is running with or expense. properties, can Specific to

sustainable. forward, we or all - in current subdued call marketing targeting learning in I consumer. think to as the And sustainable. if at environment, the of see exercise, through it I operate it, as I target - efficiently better this do long can said, you pandemic - the that's we as course the - we're going that. is a want from the that use I marketing think comments. appropriate do think current customer As standpoint, That our more word we prepared

I in competitive general general is run but cost. I to think the seeing reduce the long in market, the pressure, to we're marketing susceptible the - think market all opportunities in

cost in business. In expense. you are addition, closest our an - the significant enormous for business, from cost an to the And experience they're thing I biggest the Frankly, that significantly my labor think buffets our us, mentioned buffets a thing enormous and were to expense. a are comp

bulk the how we are the offering And what buffets is see think those we I future. But see do going sustainable with And in we forward. buffets of forward. going going I I being can creative without costs do. that be certainly So we our we would Yes, as combined forward? operating in think combined mentioned, sustainable corporate expense - properties be marketing present

Chad Beynon

same you Great. like the versus day-to-day that And are changed taverns the social the expand quarter? in could as be on from And to to differences a level any the to before? at weekends you're I of guess, weekdays? if the standpoint, distancing the able bar seeing, played then what's just kind machines switching Nevada And what looks

Blake Sartini

Yes.

it business crisis. the pandemic. were in part - in the back the to our are closed. to probably when and saw our remarks, significant fully in the We Today, were the experiencing. of very business. We the We're 'XX distributed during most regards portfolio. see this - the during essentially a in operational. gaming we It's So resilient in it mentioned June economics bars we prepared taverns, XXXX We see resilient we let's that fact, and June that year-over-year go economic Chad, seeing

that's gaming our occurring no is there bar across tops. So

establish or we've been gaming or up by locations. games putting within upright our presence a restricted flat up games games to allowed stand However,

tavern have or I We XX% with at this locations is say about at bar top. that our stand-up performance what seeing It's impactful. exceeds point the you were very and the at just of done would

games standup as the will where, And our right long it's bar out top, the across so now in commerce the food, I continue strong. locations, as - restricting gaming, these for in to are mentioned, results foreseeable roll is the these we whether or future, state very beverage as

Operator

Our next David line the Jefferies. question Katz comes with of from

David Katz

corporate segment Just that looks think it amount a of two curious furloughing from and around should future corporate it expense the negative about like yourself one, at RIM or looked how advocating your just expense. I'm hear fair the short And that quarter. to the cutting corporate of Number be it is way around the we questions. have of you where is other, expense got it just kind been the right and that kind Not and industry, there's today? and the how level, quarters you of perspective where in you one the thoughts looking the about was and of at should like the breakeven. driver look, across

Charles Protell

David. Yes,

terms did keep portfolio, employees side, there's distributed on corporate on including we locations. the in mind, side less flexing by a And in XX%. of at headcount little ability the the So across reduce distributed about

harder basis, forward, annualized So on million we run rate side. right, roughly we million cut down perspective will even corporate on approximately year. From see $XX on a you probably of casino where $XX the our going last were an

some So our that I'd meaningful we a corporate peers do. certain mention cut. don't there's of pretty like also allocate costs that

that others not of an argue entirety see you of some might I corporate. necessarily of out what So is

David Katz

the about the year, of positivity us see to the of rest as talk as helpful cash flow Charles, would for it be just, well? cadence you can that And you

Charles Protell

example, Yes. flow that mean for you we're June, a discussed, look cash if take at month. certainly very let's I - for we that positive just take

terms we're up in As EBITDA. Blake of mentioned, XX%

seeing about give don't that think exceeding that you July. we to look, projections we're or year, we're So the But is June, last rate and if certainly at that seeing on call. and through a run for want

STRAT June, also if Given Gap, point it's their are out, we current can million a we by days we I'd even over the at month going i.e., for around little had we're that breakeven, And on the at assets. a that Rocky generally of environment, than $X level looked during you believed assets, if bit really the maintain track it's better only the the if least the that that's arguments July. open and level. the of - of you're improvement local existing at summer, make which going does XX those be operations of improving sustainability and was to to

my So the rest if year, look cash to it's you perspective, at certainly be flow through of going from the positive.

We have a of debt basically said our balance have CapEx we we enough service shut in CapEx as costs. down the the cash last unless for from our year. than quarter, necessary more flow to perspective, And carrying that's maintenance

Operator

JPMorgan. Our comes the next line question with Dan Politzer from of

Daniel Politzer

the you're or areas you segments what just could some in guys trends the and across July are what you acceleration if give significant maybe deceleration little into trends in seeing hoping highlight relative - bit positive of we detail there on Are more was saw you June? August. to any seeing I a In So saw or maybe a specific portfolio. you that

Charles Protell

were Dan, perform for open with business that when been we and May. a open think distributed June. continuation us, operations probably of in our I exceeding people sustainability. with has about operator ask mean, Montana I year. to public And continued operations us the last really That first it's Dan,

or of regional call back being that I of generated, local comes so most it, think And is XX% our it gaming. that EBITDA to portfolio, it

and that's For to be takes continue properties the going grow. strong if strip it time even to destination for to us,

continuation us, in So of a June. seen it's again, for we've what

as a for see certainly don't been business I demand and whether at August months into dramatically we as have visibility we again, that think we want into that's don't But a of and now, September. we And just very we that, fall. really for again, given, - to open tapering going encouraging. into We trends have ton two now. had off that continues have see those look don't get the

Daniel Politzer

it All right. of in that that. stable business vendors and business like generally that I fairly with take margins, any gaming, and to there's Is And in a third-party then been on you've distributed stable? terms that's agreements cost know out a manner? things fairly this Is able a significant

Charles Protell

yes. - I Yes, would say

we the There think of that model X report, look, that So third-party how you service, partners. think so of are the our where our if cut there's where cause pieces we and that third-party about I we business. that XXX% we are is biggest locations giving segment that to report revenue. And of

a So variable business. is piece of highly that the

costs where down. a fairly to figure stable how the those kind better, The of revenue going side. but fixed improvements downturn, that's or bit Blake into mentioned, the really piece right? to bet, up you're see meaningful tavern lot owned of and of going little as So a on in the wholly with but the are the business, resiliency move we to our they have And that of are not that be are in terms margins able

operations around business. in So in in creep hours and we've that hopefully made that streamlining decisions place, of menus, across the processes side and putting staffing happens kitchens procedures mitigate portfolio, F&B this the that cost of

that to some So impactful piece. do been have things we that been have to there able

Daniel Politzer

Okay. And then one additional one.

cost I takeouts. a So annual you $XXX mentioned think, run million, of rate

there. that I at cost there? this I'm of is So correctly there XX%-plus bearing doing portfolio to I the mind a given margins my the guys lot under if was pathway did There's XXXX, math on looking a STRAT take-out. current get Am what that construction. mean, in just in kind of you disruption

Charles Protell

probably to get in distributed that. whole to to lower keep say is is I'd after stop business a to going as could mid-XXs be close first close We mind more of piece. the piece the Again, a that corporate.

the business if about. you of and the Blake those sustainability think there margins, side is I reasons for talked that all at casino the the look

Blake Sartini

XX% the near going into We're pandemic.

nuances. upon your others to were near we give of versus or and that number. But are those already, question, XX% we So some us corporate take, depending allocation, already

at absolutely higher we level. believe can So operate a

Operator

from comes John with Union the question line next of DeCree Your Gaming.

John DeCree

maybe a of but I to ground, lot stick think VGT you with business. wanted covered the

and One So you out on the markets existing possible targets? like added get second looks as but maybe of any I Pennsylvania, missed that. new there's new if the June, curious it, until question, back for it a - questions. bill markets I fizzled And on out I two wanted then apologize. fall, view not to acquisition you kind but I'm do but view in prospects of there? there. it's How your tuck-in you new if VGT And momentum

Blake Sartini

Yes, John.

yes, So right. on you're Pennsylvania,

will that as expansion rather as later. come occur well it's it. We're that been to VGT have our continue to cautiously seek believe to You to tell here sooner Pennsylvania following management I efforts than optimistic that point. at our political some you going we in fruition is

the of With the working state can havoc the momentum there. is - result that pandemic. believe - all thing some assume legislatures out was same as having you wreaking and in of But we Pennsylvania. a the remotely Obviously, the

other for revenues. where know now that Pennsylvania, states also economic tax from in think standpoint, going for have not an to is gaming to consider consider a given form of stand maybe catalyst but other states believe I we or particular, that that only markets, there this are are we additional

In we think, enter activity But also, to to potential or as because markets to regards other a believe of result I open could in potentially our that's of obviously. and very funds. us, X state's are open markets up a we Pennsylvania last all times. needs continuing push there, X at our So strong for of existing years

the Illinois valuations of of at the - an we - types one of looking in whether on, at we we're some acquisitions. other it's early now. be would opportunistic And think some or states, if there's certainly, of the valuations look I opportunity, those of some

So the in industry. it are growth we are pursuing leave would active - that we of in I that part just

Operator

showing any further not I'm questions.

So I'll over now to the for turn remarks. call closing Sartini back Mr.

Blake Sartini

we operator, Thank Thank XXXX everyone Quarter updating look everyone, forward you, to joining today. our for when Results. Third us you. thanks, and We report

Operator

this does and the gentlemen, program. Ladies conclude

You disconnect. may now

Golden Entertainment (GDEN) 9 Aug 202020 Q2 Earnings call transcript