GDEN - Earnings call transcript Q3 2020 | Golden Entertainment, Inc.

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Operator

Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to the Golden Entertainment Third Quarter 2020 Earnings Conference Call. At this time all participants are in a listen only mode. A question-and-answer session will follow the formal remarks. call recorded this XXXX. November that note is today, being X, Please

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

Joe Jaffoni

may Golden everyone. you, under and Sartini; the materially forward-looking contemplated of today’s the differ Chief provisions today’s Thank call, good and Protell, Founder the afternoon, safe in President laws. Officer. and call CEO, harbor Jimmy, Charles Actual is those federal statements Financial statements. Entertainment Company’s Blake we Chairman, and make results On from securities these On will

factors no to SEC. and the concerning are to as statements obligation in these of information contained that differ statements undertake with filings Except Additional update information could these as cause results forward-looking or result release otherwise. our a materially required actual in by new press today’s we from law,

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

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

Charles Protell

Thanks, Joe.

the Our regional record achieved rebounded with operations of the mandated STRAT results Nevada for of third third from our diverse March. distributed bar-areas performance quickly impacted gaming in mandated our performing most the the shutdowns has XXXX gaming these locals oriented business. which results that levels and portfolio We our of quarter even below and the demonstrated negatively closure of quarter,

revenue. combined casinos over casinos led and The EBITDA versus the quarter. doubled exceeded combined year, X with casinos, The XX% exceeded properties achieved only growth X which opened lower for EBITDA EBITDA year. by EBITDA XX% for last In collectively X% for for margin locals Our locals Laughlin Laughlin, on the our Vegas our now third we grew quarter. the X third contribution double-digit EBITDA quarter by our margin was Vegas Las Las adjusted their revenue last

Pahrump weekends. also to X the EBITDA guest of of on with revenue remain lower XX% seeing and per STRAT revenue. our continues to and XX% For XX%, XX% overall in improve, room STRAT’s with flat are margins EBITDA has The spend casinos, achieved we almost than XX% on improved XX%. range spend XX% increased year, last occupancy on higher-margin but most over approximately that gaming some revenues occupancy

Gap margin points EBITDA Nevada combined operations excluded casino margin up our grew over XX% EBITDA by XX%. casinos, X,XXX to STRAT, year, total the EBITDA our total be If we and XX% more it our labor show EBITDA structure the gaming, property within sustainable, believe third EBITDA Given our improvement XX% EBITDA we combined year. we Maryland, on over most to margin property. led last resort. bookings, directly is than that Rocky the customer with X% two STRAT fact for STRAT a saw XX% In as better This With of in the on from believe the also the in point cost changes the than would margins spend generating a Rocky and casino to increase basis has on the We at increased performing conventions a is to revenue. or XX%. that levels depended never fundamental our properties and Strip these X,XXX expenses. grew performance Gap marketing international based basis would over with last improved casino on improvement primarily are our by

closing costs mandated is our We areas. $X and areas of Needless Nevada as beverage XX by gaming September the were of million These take significantly all and challenges to we the have to us excited decreased forward. closure XX% activity revenue associated upside while in July our from areas with most our year, as to going bar. are the last say, cost which reopened, these place reopening to to compared business. quarter obviously the sales distributed approximately challenged for as at Turning well bar XX EBITDA bar

operations without third strong bar Montana points, in EBITDA our XXX trends EBITDA continue total of is at performance since local basis XX% areas we we accounts operating tavern all and from it since and to have existing our regional new perform closed X%. continued of ‘XX X.X% over well locations, revenue. despite led a the total levels through performing October. Our improved for margin improved Revenue reopening lower Nevada EBITDA quarter. opened even up again, This The In the with to through and combination substantially in year-over-year aggregate, is $XX.X up seen and million properties STRAT to of improved May. while company

the in quarter, are on $XXX the facility. million And paid positive of generating $XXX credit cash raise any essentially $XX remaining same million our did sustain the shutdown, million capital to revolving or at cash now prior need our level we hand, balance not borrowed to flow. operations. is or With debt under our additional sheet was of and we We restart to as equity it the

sustaining performance new as focus well reduce of as cash near-term across and in Maryland, distributed to position better opportunities. leverage is operations, returning These jurisdictions capital while the to our on and gaming flow for us opportunities shareholders. forward, wagering expansion improving sports excess our include in Looking future using

members team and has contributed team to has Finally, company prepared open questions. call our our been extraordinary continued providing remarks. our to our Operator, success. from for all to want commitment to for dedication our greatly to The guests. and our concludes thank please exceptional That effort their we the service

Operator

Santarelli question comes first with Deutsche [Operator Instructions] Bank. Carlo from Our

Carlo Santarelli

it the opportunities guys potential on little of front the ball kind us share that states the maybe might what’s of to further at you latest is the with time? this to the anything are around hearing there expansion Charles, pandemic kind in Just Is that could for route a bit where expansion out of what down? in new you able of tell coming business, you pertains opportunities starters, terms as be

Charles Protell

to is the jurisdictions, X more several think, a in and wagering think think I We’ve generation form going obviously forward, that. about now while. saw advance otherwise. considered states states, this we and a of ever, we’re in it’s expanding be Pennsylvania sports for than revenue you country and talked Look, for gaming just to trying referendum We to going across likely a

We’re the still that very to once of start market. work noise others. I again, and see settled to out people get And think movement, we’re we active hopefully, in some the going well state that the of year, at as as of in the get election

Carlo Santarelli

could was potential with come settlement sports and was to disclosure there change a in your the in a that thoughts Nevada And a share event operations expectations in obviously, was that of way kind made there pertaining that anything would around and recently to your Great. Is then your us book there that? control. you pertain

Charles Protell

closes, all I certainly that would when Sure. But transaction that that that look, receive has we expectation our obviously, first. payment. the deal of it’s mean, to close

want comment. beyond to make any So wouldn’t that, we

We’re look obviously forward that year. it that to next sometime and closes hopeful

Carlo Santarelli

the obviously, what business? find do Or And new? Charles, then, potentially stick -- do you existing could someone you regime? you same with with Is to need your there

Charles Protell

and do we that like sports the No. the form state. Maryland at throughout point Montana, the with in to a that Hill have in some I look, partnership wagering a and, in we extent Nevada comes relationship that intent hopefully, same future, that mean, to have William to

-- be that crafted think would these gets I hopeful we for initiative around actually iGaming specific wagering. be So law to of year. a next are Obviously, relationships the Maryland is also sports part as

Operator

with Bain Capital. David from ROTH comes question next Our

David Bain

Congratulations on the quarter.

for and First, looking other would I would was plans of scheme there? licenses it to a to Maryland at kind perspective, say do any be or from other looking we’ve a passed with you out point? premiums of online license thoughts of skins, sports understand terms that yesterday and in go at in early the for be in is that hoping assuming state, seen understand-- around the getting of the the confirm get you markets? in sort amount some to this that an Or the what Maryland. sports casino too to Just there And potential limited

Charles Protell

I we so. look, we’re X And Yes. mean, operators. of X think look,

to in should anything or associated else in But be legislative the Rocky details Maryland. fashion, January into would us, out licenses property the that. in and in state obviously, would fees into primarily big our for and the that us our and of that, a worked operators, expect Baltimore-D.C. terms hope. get with in would starting for the in driver areas, be We to other certainly, ability go session Obviously, those is our and with operations helpful Gap very market populated area, a of that limited rate value other and tax

David Bain

asking was if on Okay, done. could to I timing mean, shortfalls, on I there’s budget up then Carlo budget clearly, just confines what Pennsylvania. follow get great. And

on terms it have should our mean, about number terms way somewhat think there we standpoint. like rollout. opportunity mobilization passed? partnerships from in potential thought and Is or can of that a I of looks you’ve of maybe flavor So promising locations secured already just just the sort any of a that in

Charles Protell

talking been we’ve years. obviously, Look, this about for several

we doing think a extent state, perspective. that it both within wouldn’t extensive and and we we that had I goes from saying the regulatory felt So relationships deep an that to developed operating be without that that

about So it. we’re excited

It’s to number in across is in or We gaming any Pennsylvania think And an you at not are that that form opportunity locations. you can. the of think look specifically the committed only which a market, of exceed core looking part $X country to approximately if back come expanding Illinois, to distributed based that on Pennsylvania business. our I but and we we shape has billion at a state,

that it But budget We are state tough others. should call. about if happens. constraints within it happen to given excited we’re think the processes and it legislative So

PA, working next months you in jurisdictions heads as X optimistic on it only for well. over But where we’re see, so not the we’ve other about or As been again, but in years. it XX

David Bain

casino that those think the terms opportunities current I seat taking in landscape versus a opportunities? of And are M&A front

Charles Protell

at look, I M&A. always we Yes. mean, look

on M&A seeing are fairly surprisingly, process fairly that there M&A is think, -- activity surprisingly, I prices is And equally the robust. side. we’re the the

So industry. our to deploy in is how capital that, of for us, I we But resources think the excess healthy and going for flow. that cash terms fairly and be good disciplined we’re

more looking the we be us in forward And and so the side than unless to it’s nature, term. side accretive brick-and-mortar distributed near in on the in strategic will going extraordinarily

Operator

with And Chad question our from next Macquarie. comes Beynon

Chad Beynon

guess, believe little the I cost margins of you some Can here. between talked a you I reductions? that roughly of reductions. I more terms just bit labor quarter, Last just in And it’s split today, you’re the flow elaborate about confirming and believe about improve, the and sustainable who think comfortable current the customers come labor to through marketing. of that how the that maybe goes But as beyond rising some as to marketing attributable weren’t revenues? revenues with should situation, back start those currently we are

Charles Protell

Yes. Chad. Thanks,

marketing that So mean, us, we industry. entirely components, by -- only I not believe those look, are controllable, labor, and us, but for by the two

within over in restaurants normal that piece within labor was that and STRAT, and regards rate. we be at think that quarter, some into at over business operating of the in I’d So XX% consolidated mainly even higher, certainly would where would we something of times. -- in the saw, both two. markets, say And Laughlin our which of X we’ve other the welcome, housekeeping the we reinvestment some more could side operations labor be ancillary down properties to would only labor in reduction and increase particularly the the

volume property. smallest town. market, player much the not here be we marketing, With so rate through particularly that the within ones not I reinvestment taverns. we respect will within So from -- when perspective, be But more you be we coming good. a to locals are have driving factor mean the in the would casino the local that ultimately,

profitability and sure. But We controlling not I’m own highly. will be that watching our

I think that’s much we offer thing. realized kind to our or And everyone so a don’t spend to into has so good properties. of get much need customers our

Chad Beynon

Or as properties they levels? the online? quarter, because a calling some occupancy But just other their in operators, was the you see different STRAT wouldn’t it do opened Charles, independent them or think degradation even any some as think in competitors fairly did up go market. on Great. operate they others throughout I the of then, as I coming the you from results of STRAT, And Strip the

Charles Protell

Southern we California I independent. mean property a it from anyway, primarily is Well, not. did Arizona. fairly mostly It’s drive-in and

we off. see again, be going understand did We So -- announcements closing. certainly that of there’s not that that to recent properties properties drop are

driver given the the EBITDA did an of may again, because that quarter. think it’s on heavy pretty really we’re OTAs feet large bit convention of space. And little we’re not that and to it’s as international. the and help do STRAT have X/X direct X% bookings environment I not on property XXX,XXX has a square than traffic STRAT that, bookings. a are of really extent. ultimately, last asset the been we the pleased the reliant less the But the convention visitation We doing And of of

big never piece those of direct So were business. really components the

that bit performance better sustained you of see little the so terms in And than being others. a

Chad Beynon

Congrats great on results. a of set

Charles Protell

Chad. Thanks,

Operator

Our next comes from Gaming. John question with Union DeCree

John DeCree

some characterize there really that’s Laughlin? would I EBITDA wondering expect because missing one What not robust. that open? as of compared and casinos you where And had from? was that. Laughlin. the performance it basis us then Just about could there? could events still very not But you’d question buildings, one to for Is a of good. improvements that you if on some come And the on tell year-over-year if is Is other was

Charles Protell

Yes.

perform bit that would to the Laughlin quite extent we a better allowed the have at So concerts . to were

do piece of it, we where So book XX,XXX-seat relatively to business right obviously a we a on depending have That acts. the how arena is now. XX,XXX- not orient there large we

back. So we’re When comparing right the X that the closed we’re to performance, even having It’s as assets straight comparison that upside a of market. to excited asset we now. we’re -- Laughlin about for come again, including of for our assets talk the leaders drag being for market within X, doing and that clearly

be ongoing costs Colorado with that some to going the away maintaining there’s with. to Belle you’re So fixed able not get just

pure a apples-to-apples really it’s So comparison.

We’re pretty X% us pleased assets. in up that EBITDA for X roughly market X with versus

John DeCree

of trend have piece And has a Laughlin that can booking? same winter of Any on results. which as any in great few be you on business seeing type look, on the into years? nice that in stay any in you still or is Wondering would differently a of if of periods. It’s out behaving insight Or customers bookings, and the quite winter. normal Are those extended terms helpful. sense you forward those would that holding for come snowbirds a Yes. down

Charles Protell

mean, are I seen increasing. that Yes. trends look, we’ve and those sustained --

also So get Inland restrictive or we lot either maybe an do Pahrump, Nevada. in away from get where what than the that the environment in fires RV one of in see have folks perspective from living are coming away out California the get a we even have. to Empire RV of we we that And best parks more of from of the Southern State

booked So that is absolutely solid.

So yes, coming I are of, in California spend more environment continuing. in think again, snowbird the is people RV restrictive and to a time wanting living And Nevada. trend the more out and

John DeCree

of spite on Congratulations the strong the challenges. in results all

Charles Protell

John. Thanks,

Operator

comes question Our JP Morgan. next Dan from with Politzer

Dan Politzer

generally trends. the on uptick important the any give seeing detail kind quarter you what Vegas. for XQ given I the the of market give in October, today that was the we’re COVID there’s if commentary just you’re hoping most could any through is in which just there’s recent in you cases? month on Obviously, could If

Charles Protell

October. saw So through now. November our continue right that we third Obviously, just we’re quarter trends, to starting

into or for you don’t election any general don’t cycle, that at a go seeing know, of time see local of regional people time. no we’re or see all in this in down so sense traveling beyond their and Certainly, As this -- slowing that, different point we spending every with and week. in bit a other We casinos, any in either there’s visiting slowdown.

Dan Politzer

closing? on quarter, a you leisure do And helpful. about lot the strength the seen mix the think STRAT, the and of what and given you for of seeing lot mean significantly changes fourth think STRAT, properties I a we’re weekends. on the that as in then That’s Okay. you’ve Strip across midweek

Charles Protell

I week mean, XX% operating really been during on a really a midweek tale being It’s the around look, the of has and STRAT full asset. been weekends the anyway. never

group to their high-margin business, very group a very convention and So business business. profitable goes weekends supplemented convention again, had back a and and other it with midweek was it that properties,

had never that. property Our

we’re not across extent, think, certainly made well other permeates investment million the our I is Strip, it STRAT, full does visiting really just restaurant weekends so having dormitory So whether it’s capacity entertainment, at we falloff again, levels, on the the as for volume. the Where is other in week, and to the reason the other the same not to properties. that’s the open just as straight amenities. helpful not back -- And a guests. that for would us people previously but not things be it to $XXX extent to visitor seeing our during in And some

And performance year, the seen capacity even continued think revenue grossing performance a environment actually and where it that the it helping in World, people a some in in us that’s #X for created and have from of last want time revenues relatively Top of spend Vegas. trends year, the also or country restaurant Xth can last limitations. to lot no the of Top of maintaining World we’ve Those ranked I we’ve in perspective with, level terms stay. example, because with in although we restaurant that restaurant. an is falloff Las property of of for was

Operator

comes our And next from David with question Katz Jefferies.

David Katz

a right? recall look of and I it, all the and, color. the so secondarily, sort structure to I was unhinged, impacts have top what back wanted endure? appreciate and of that, of sort or everything million and Charles, may. able to notional world think to drive degree go $XX has Because right, is bottom changed, the or reset may that around, came either you EBITDA the line, anything margins can been I line of given visitation at so that much which level Has property that call to I can STRAT, before if to there going how the like we altered people’s of just

Charles Protell

say So business up having time. -- I from clearly, the mean, having the that, that benefit and citywide to town those group over thinking during would levels, that forecast, we I STRAT and index about pick were as full allows

whether back for that XXXX late signs that the in or that will us regional to to and I time you next that lot the back guys. more from of being when we those focus some entertainment or not Again, able we’ll think leave about but later, is business assets STRAT, manner. help other our get the there’s You it’s back, rate perspective, Nevada, local drive bit certainly, closer X a in but making really are you know only And and are Raiders play positive coming year from a early markets. run to comes a if EBITDA guys think of coming levels. XX% forecast But in things fulsome on like a regional the in and

than But the and been of building. things be right made in And where a the look, recovery in to the the which things trying EBITDA is things. So -- a think, to can modest than that’s we’ve clubs like of has right we’ve the a we’re those. think reopening helping and terms doing very seen proud types of to -- in bit of that we than that again, the building, line like of with we’re levels and investment now. profile. farther we we shows done. that may we’re And of time we terms maintain, We better social can position to back what a obviously leadership talking opening little sharp take We sustain distancing and business, comedy rest which what in the those other

David Katz

obviously been yourself and a you’ve up lot And set you’ve Understood. yourself free setting to generate of up cash.

you just temptation activity down some coming With about that deploy level Or M&A the having think is what out appetite, around, to yourself should leverage amount get bounce of this? a under of certain started sort of to of we that? your level

Charles Protell

basically, structure. capital, capital think, we of back pretty underneath done a if debt throughout managing raise or back the paid in I everything this. external equity, job you terms Again, any So, go we’ve our didn’t We’ve to good revolver. --

we availability. of plenty So have

for highest way, extent what that opportunities. clearly that to point I deleveraging could we the comes think it seems of even us, the use I’d time. the about is the balance at better it in for say so best momentum be and And And that with sheet, undervalued. and it’s some down this positioned we’re

at shareholders. looks hard return taking how be to capital going efficiently we We’re to

Operator

showing for no questions the And like to the remarks. back turn queue any this closing to call I’m at in time. management further I’d

Charles Protell

we thanks results. So, quarter joining to updating when fourth forward look report for us, we and you our

Operator

your your you participation and thank This does program, conclude today’s on for disconnect. may Ladies conference. gentlemen, you and now

Golden Entertainment (GDEN) 8 Nov 202020 Q3 Earnings call transcript