GDEN - Earnings call transcript Q2 2022 | 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 2022 Earnings Conference Call. At this time all participants are in listen-only mode. A question-and-answer session will follow the formal remarks. call recorded this XXXX. August 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

good you everyone. Thank operator, and much, very afternoon,

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

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

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

financial is start our with second can of in of the update. and press find quarter We'll website. measures our XXXX results which GAAP a release, the reviewing on details business reconciliation the Charles You call available

Charles and Blake Protell. the please With Charles your over take pleasure to that, Following turn that, it's call ahead. go Charles, to questions. my will

Charles Protell

adjusted our quarter, strong second Joe. had We of Thanks, another history, by XXXX. highest EBITDA quarterly QX the only revenue in surpassed

and quarter, the margin. XX% a million adjusted we $XX During delivered of revenue and of million EBITDA $XXX

which speaks the continued EBITDA adjusted our sustainability over forward. margins margins the Our to our going have quarters, remained discipline four confidence of and last operating our in constant

revenue adjusted our Nevada grew trends of slightly revenue demonstrating positive million. demand adjusted while XX%, year, year-over-year over a respectively, million Resorts the of and Casino to growth EBITDA expected of comp QX. always be over and business. we and Sequentially, due the and $XX.X declined resorts million, impacting $XX.X and QX, XX% of EBITDA pent-up QX respectively, X% we stimulus While adjusted $XXX Revenues XX%, last challenging achieved sequential from EBITDA rose to to our XXXX for

of Our resorts and increase, our margins as declined which back primarily us The were hold chain versus In prior with STRAT. July night result and during inventory, us implemented the limiting and provider to as increased cost June goods linen significant $X XX,XXX year, largely STRAT of estimate million supply XXXX, issues this at forced June, well as labor cost a EBITDA of cost utilities. room primarily room to at of $X occupancy the We over million The quarter. second nights in

anticipate suppliers alternative issues to going have similar forward. not do transitioned We since and linen

to offers at which In material The would quarter, Given live upside nearly for business levels, our our we tickets our STRAT to much segment the citywide limits occupancy missing casinos. the the still continues visitation has XX,XXX in we Laughlin, business with entertainment continue improved Laughlin recover. to sold our to see as have XX points as various of events driving group increasing We're capitalize to at for occupancy during been unable which The concert at attendance QX anticipated. as XXXX relative STRAT, were midweek we on

were the for of $XX.X $XX.X was million in quarter $XX.X compared Local $XX.X adjusted and Nevada QX million revenues ago, our EBITDA to For year a million Casinos, to million compared XXXX.

reflects the decline year. to Our challenging the last quarter second comparison

half we EBITDA and year. revenue anticipate the stability adjusted the However, sequentially and were of flat second both over from continued QX,

in XX% a despite contributed market, maintain increases in to rational promotional labor margins around our costs. has the to see We other and ability continue to locals environment which

was over million Turning quarter contributed more in million revenue adjusted caused and Rocky $X.X primarily rate At already revenue XX% declining May. seen addition hotel XXXX. Rocky have disruption, Gap management compared transitioning to forward. some compared Gap, And our of million to This ago. adjusted we margins $X.X to labor effective QX revenue the in but grew was over occupancy to year and year cost EBITDA to Maryland, $XX.X last software going Sequentially, increases a XX% million in EBITDA for QX. $XX.X management

operations, were year Gaming million EBITDA Distributed revenue For flat were $XX.X was was $XX.X revenue within over last costs, labor Distributed Margins from at from our million, X%. prior in rents chain Nevada grew increased June X% EBITDA $XXX year-over-year last store of Sequentially, from prior year. to increased quarter, declined more to adjusted affected that while million year. adjusted up modestly established but and in portfolio impacted

from with perform our wholly well, benefit owned new continue Nevada Las to locations of continuing taverns influx Our to residents. Vegas

operations Distributed we continue locations the line should continue new perform have which since had Gaming our to Our to as in throughout year, year. us last benefit with in Montana also expectations,

$XX.X our senior of our common balance notes used million. to we QX, to In million Moving unsecured of repurchased million capital for repurchase sheet. $XX XXX,XXX shares our $XX.X of stock and

million Over revolver. cash, paid our debt borrowings is outstanding approximately debt $XX on $XXX ended total million stock. Currently, we outstanding our with quarter our no $XXX have nearly million of the $XXX repurchased quarters, our in four down second of $XXX We past common million. and the million

and returning improving net continued across opportunistically our same over to sheet the our trends business expect shareholders our low has remainder to remains we QX. our of the of macro reflected environment, year. Given capital on balance free refocus and and of strong the cash X.Xx, margin Despite July of the flow stable generate operations, this level the leverage we strength

remains longer-term same. Our the thesis

many the portfolio businesses, a demand Nevada, zero $XXX development our million liquidity, future Blake greenfield our in of shareholders. long-term now the That create Our projects, value strong well are I is remain from industry has and are remarks. With gaming to exclusively comprised questions. concludes Golden assets leverage over for ability our primarily cash wholly Southern and free low positioned in flow favorable we for prepared confident driven for drivers and and available for general. owned gaming of cash-generating long-term in which

Operator

we a [Operator The conducting At B. question from sir. Instructions] session. David question-and-answer be have from Riley. you, first Bain we will is this Thank time,

David Bain

I potential the intra-quarter, other execution Nevada now, areas would another been paydown continued that half perhaps Or utilize Is needed? that or on my form of just the is happen seen see or that volatile Board much. for half of focus lower or given that as quarter. generation obviously, we've capital we you Great, can debt your almost that opportunistic $XX or of on re-up out more has thank question EBITDA mean guess didn't a if in you something indicative, more so and share return being there, authorization. even than acquisitions? sort valuations market stock of casino I another first repurchase Congratulations million be,

Charles Protell

two Hi. Hi, exhausted buyback you've they done David, seen before we the authorizations, in if it's previous Charles. last were the authorization. actually Yes, so

back there future. come levels we or at for keeping So our Board like of right when it's is very easy shares we attractive it's to back us. that investment things, us opportunities mean, these up for needed we be at certainly, inter-quarter a eyes whenever think through I'd for feel we're terms say, the in that to But now, in and that. other I could the very buying get go out looking we that are things

balance we going We like point keep. be like our very flexible a are us, sheet. We low For those selective. to obviously have to that relatively leverage

so – decision. those make the arise put on hopper And when and the opportunities we'll to that right

David Bain

Great. more pick have to Okay. I one here.

do Or to Colorado ultimately how that asset going look because I'm in very portfolio hasn't monetize? you up that go So Is to brought it at the often. you point? with Belle been that this an view

Blake Sartini

our we're think as property. that is and a ability that use that traffic could market obviously, we different – operate to Well, down we The our gaming at alternatives some I are driver. significant maintaining view license I consider for there way point there

is the and I think potential we are there. egress piece forward, going and see to sufficient asset growth But down close A exploring piece that traffic. for to additional rooms we're market lot a opportunities the the that that have Z visibility that for is those. we a won't of has forward into which riverfront with think, multitude the can that. That a as one-of-a-kind I currently see get and of property to uses. offers superior drive inventory utilized, what capacity on best in that a We've proximity going assets, of And the be explored in our I two of I valuable located property. casino

David Bain

awesome. Okay, Blake. Thanks, Thanks, Charles.

Blake Sartini

Thank you.

Operator

The Santarelli is next from Deutsche we Bank. question Carlo from have

Carlo Santarelli

Charles. Hi, Blake. Hi. Hi,

Charles Protell

Hi, Carlo.

Carlo Santarelli

think that talked you ask and throwing that as of OI, you, other in potential know more the avenues, in to opportunity of think off, kind M&A you other I more do Or reduction could but been something you and of just an noise add buyback where Distributed? perspective? know about from a avenues, you're Charles, outside advantage arise it there's a you nicely? couple reference Is anything on perspective CapEx of you taking I flow some is is cash if existing states, normal. that's of outside the with from when about from Hi. where could assets you that debt fit when I think don't you might that in something an wanted

Charles Protell

Yes.

rate our we all been terms a to get get in ways. I obviously at we Nevada do We order in that have desk. we where said that I given the when hurdle above. equity a pretty grow Casino the any we is could of Carlo, bit our see M&A said, portfolio look geared I infrastructure leverage of in quarter. for we've now earlier, our more it's buying, and towards own across That we process, accretive comes think, that's in that the a we point high – that mean you could have that where use in an value see and potentially operations. think Like

near Now there we're to is things the But there start Yes. term? entertaining? that horizon in going is No. on that's something it the

Blake Sartini

Charles our the, just But going with existing very obviously, do balance to the significant forward. think continue meantime, would think, a repeat we've and leverage, take comments, been and continue of that done in your low potentially a some obviously, I we Carlo, that, something our question, investment free will to with said, goal just strategic our prepared is in meaningful last cash this But add invest revolver. me. undrawn In may we the within-budget STRAT, pro are regards with to there that a And to his really portfolio. I flexible we I has we as value position upside generation nicely good that to advantage of just Charles at to assets, the position, our our We're see be think, sheet. ultimate part good we with should – continue to on in But I said current is put we budget capital to come open-minded job targeted balance existing have had, property continuing with The our where where fits be in upside, significant to disciplined sheet be to think Yes, something to course. by that along productive. our in formas believe be what

Carlo Santarelli

is as year, Thanks, it locals earlier you kind for that anything if identify more the kind the doesn't guys eye? just if anything tavern of sense. appear anything of seen changed has of caught in anything to follow-up. It Blake. to believe growth. around business we've doesn't really the That shifted. that's it got peers with makes of you've there particularly numbers, casinos, from kind appear having household position Is if changed well anything how Las then has and inflation both And – your depending wage costs in significant But your and kind first I you than time one of could, be increased significant. habits you've distributed calculate patterns? or And there if there's weaker this obviously, paradigm on there as all I Vegas, some obviously, seen you

Blake Sartini

rewards no. is to seeing other that bit player we We us play. business, Carlo, similar our little prior think stimulus. folks mean a within on database are I of some answer, that of short carded I announced and to a which mostly from our the our retail the people lot normally of have benefited program The degradation end lower the think we're those in is

then done having that player of program actually reward that, and players and said of that better job However, higher end with the the we've overcome at good people those within replacing tiers. some a

theme headwinds forever. have is is common in a the to say terms would But one and particular, local of Travel entertainment to of everyone I inflation kind seeing. are as commodity So we Las that's right be as Nevada, the prices, in kind a pretty I unique as and place strong continues well and for general consumer, traveling. think People that growth. population just kind we're Vegas the going Vegas now. sports Las opportunities to of knows, continue significant of provide,

as So customer said, our patterns. we're any Charles and where disruptions sits, or major we we're material seeing our portfolio – current like not to

Carlo Santarelli

Really, take you appreciate and it, Blake. care. Thank

Blake Sartini

Thank you.

Operator

you. is next have The Jefferies. Katz from Thank question from we David

Cassandra Lee

Lee questions. taking you my asking Cassandra David. you… Thank for is this Hi, behalf on Could of

Blake Sartini

No problem.

Cassandra Lee

you the you. rated discuss different players groups compared to Thank of Could today versus mix maybe or pre-pandemic? unrated age

Charles Protell

about I'd little versus that's to – same But I about at basis. obviously lower relative higher STRAT, The overall, the play, portfolio bit local is say regional I'd XX% we're property. a property the Yes, is which than the to pre-pandemic, it that. and mean varies and materially say assets on our carded portfolio

been that we've Nevada-centric in group, mind, are from operators company. commentary And some our who about a customers other portfolio. there's So we're folks heard within certain missing keep a

have levels. again, all in some go this out gotten assets, those not We those actual we frequency, feel the we're regional of have point of at players. we've same their and with to seeing, spend Nevada-centric, same the We're to of do quite terms and, level like customers customers within ways some right the visitation said, local our level we're of terms those their feel spending frankly, that bodies seeing get those That we of back more portfolio. We're to but within same back trends now. we customers trying missing back. in But of cases, dealing players like in

Cassandra Lee

more. with Got very one up it. And much. Thank I you follow if may

instead point, it's So out with on among have leverage in certain debt there the more focus the lowest you after industry. a paydown? that already will target X.X, of buyback the a you Is at there

Charles Protell

said So we be Xx at we've always to wanted lower. or

this environment. to maintain So in level rate a rising we're trying

So we debt do the in structure. have that's cap some floating rate

to assets, floating a particularly debt, as that, then buying doing; investing our rate case. back necessitates me, at this reducing So a approach stock point balanced in base between we're which component; and also the

Cassandra Lee

Got you much. it. very Thank

Operator

is Omer Sander The we J.P. you. next from question Thank have from Morgan.

Omer Sander

taking my Hi, Blake, Charles. for question. Thanks

Charles Protell

Hi, Omer.

Omer Sander

peers. there seen labor unemployment The still today still your that demand you've commentary healthy. about. portfolio? across this macro talked are some from And We've some picture be talk data. headwinds there's need revenue-generating eased? obviously, looks that And filled? you We've about roles Can the heard Has your to

Charles Protell

XX%. From a labor cost perspective, our labor hourly wages are up year-over-year XX%,

So our been consistent those that we into in running on it. increases June last puts year, wage why pressure like in that the still you last we've the of is quarters. operating of July most which large said see relatively and four comments, went Again, over effect margins

most positions were year. finding to We're for find. of Specialized the getting tougher we're last not like I'd terms In we levels scrambling bodies, say are this at part, point okay. higher at

most in in those of on positions. bidding a comfortable. can terms more pretty short areas. people part, revenue talent not But And feel who we're revenue-generating – enhance think really there's we I finding for the

then The and For the rooms about be GRAs assist cleans us, that the the and that occupancy would at hiring getting with staff STRAT the back case. in that guests and the actually

those mind, those there. in would bringing people entirely So people be and revenue-generating, are out our on

Omer Sander

about question The that my and STRAT. into kind of next Thanks Awesome. bridges

You've bit a talked little about how below weight. it's its punching

you path occupancy. that to of missing full back back and You're rate? get the occupancy XX get run a Can to points talk it about

Charles Protell

Yes.

have the coming schedules, you conventions And citywide of without mean the we it's draft fall being test the see have have For and is full. Raiders full-night we'll when how larger masks, you really that simple, in back. city that are I you off that us,

we the part touch-up budget the theater our some attractive And some more players The work in product from as our amenities, into the other get point types some into us. the end plan conventioners freshening we our so things well the make of going third to of the perspective, of within thesis really the citywide that potentially that's test for to targeting all higher-end doing this of terms to capital some that adding actively when quarter, and up we're to end In the and Club. STRAT, – for meantime, as fourth at those suites, Players of those quarter are the

Omer Sander

with STRAT does? it Strip, Awesome. And just if more maybe maybe for group that one. and sneak that development all then I convention in one changes the front mix on of could versus the just going The last forward, activity you on if on how the the remind Can leisure

Charles Protell

don't I group group Yes. I'd meeting keep space way. meaningful mean, the – we mix direct say in any – any mind, in have

When the it's whittled is to guests north. XX% mix or from directly marketing OTA through always rest So we our mix. XX% or either on property, took to that been the the outreach relatively or now direct XX% low. our casino previous our website through program. was We've to down about bookings, over OTA an And

Blake Sartini

add that's I generate us, question, to our through that, occupancy would to to of material right, OTA. the answer avenue versus a your our own more for resources,

marketing So we've programs, improvements. mentioned, significant Charles as our just made casino

that over continued so significantly believe that room growth helps program. through in about, night speaking a get deficit the And filled we're we time,

Omer Sander

Great, thank you both.

Charles Protell

Thanks.

Operator

Macquarie. question The is we next have Chad from from Beynon

Chad Beynon

thanks question. for taking Charles, Blake, my

We continue downturns. to gaming prior and industry was during stable remind broader investors how reference the

locals, hit be downturn it last start do distributed? down? Thank if tick of But the would I see saw you how about people kind think on the Blake, or the during companies help lot to harder segments maybe you between revenues how would particularly Distributed think you you destination business you. and us of or could focusing kind are right now. think a that of business, the Which

Blake Sartini

a them, I've that the now have been course and as challenges, of of various want the so you through for time. XXXX – been part macro Chad, call industry whatever you Yes. since over know, to challenges,

or you being know put in particular, our Nevada Las downturns, route notwithstanding lived 'XX, in anticipate hyper-local consistent. we to as to was and, through which with I is consistent or reasons mind the is closed. being our business, it and forced also, business, 'XX 'XX through And in that those 'XXs, is downturns and any macro the together business, casino would Nevada. right, As our – early Vegas of through one extremely in business that primarily which local being local is portfolio through being the resilient Southern closed, tavern The focus

I think Las of – hyper-local market our market portfolio. Vegas locals the the the and most resilient that's is part

any the I see think the I context in downturn in of to impact, only was if seeing city rest The it a were put we at would the STRAT, that be but traffic. significant going would that

ever As had. you've of than higher had record seen, our in month it's visitation the airport June,

You Strip guys their the on back. about see business the talking group coming

significant or in Laughlin. across well locally the board our think terms I generated regionally So we're business of portfolio the being our with of positioned portion local with a

I I consistency the is where I assets history, portfolio, the to I Southern think, would a downturn sit primarily our Nevada. that say would that going in anticipate a continuing being in So And be think closure, right? so like upon my based not And there. I is within consistency,

Chad Beynon

compressing maybe couple roughly but ways, Perfect. this some bit we'd city, of that of weekday room you and The And frame STRAT. what said, group room really comes nice when then of terms weekday you're that's you that's lastly, to softer a follow-up you the difference back, the that and the in particularly a going asked see on rate? of just weekend international Thanks. Because Charles, was could Thanks. it rates as different touched compression. as business little out imagine it's in versus seeing another are in terms on kind

Charles Protell

mean, softness for of us, for that's I it's us. the definitely from a Yes. coming where lot is

rates. weekend typically we're we that And linen – that's on in the absent occupancy, mid little the is bit, issues weekends. our sold X.Xx our midweek talked So a about out our

from range from missing what And is think for lagging, get the to. in so the occupancy on the XX% part we property the piece that's to to we're rely for perspective, it midweek, most we could when an that levels when drive we're the where would

Charles Protell

Yes, thanks, Chad.

Chad Beynon

you much. it. great. I That's very Thank appreciate

Operator

is The next from Jordan Securities. Bender question have we from JMP

Jordan Bender

question. any and Nevada was my new taking taken you since from for have they've in the There's over. I Thanks the seen gaming afternoon. new Montana Good if wondering a guys operator impact operator distributed market.

Blake Sartini

probably in a No. I In company would from In Montana, – active. they little there's say emphatically more focus and pretty no. Nevada, we Montana, it that are seems

haven't continue we our there. across grow portfolio them. we Nevada, run And up to in So

Jordan Bender

think more any available? out And Okay. opportunity in untapped their licenses Or tapped continue for the might mature that and it at to about Gaming, as Distributed expand to there you Nevada potential is is this pretty point? come

Blake Sartini

with think in the population we the is think I is out the tavern spread business. continue the the hyper-local to and we throughout what Valley, opportunity growth continuing No, which to of city in business, see peak the

we we Distributed our it's So we our brand it's with be Gaming or seeing have business But are locations, be PT's – wholly in of that locations our they what and partners along. consider a We're Frankly, our location. anticipate going those XX% come some these which advantage scenario one we our taking owned of taking state, third-party we forward will opportunities either every brand locations the as primarily And route, in either on. whether or of not us pass. for with us worthy taking investment. of the to we

Jordan Bender

Awesome. Thank you.

Operator

is Edward Thank last we Capital Partners. question you. ROTH from The from have Engel

Edward Engel

for Thank my you Hi. taking question.

STRAT these they some issues XQ. current in quarter? impacting The mentioned You constraints the impacting Or Have yet? supply been eased the still are chain

Charles Protell

They're – very eased.

bit the little been it but otherwise, spillover with. has dealt a probably beginning, There's July. in of this with dealt we So in

Edward Engel

cost case much is to that you. you economic on how just, pull of questions Thank buckets per be are think some were actually just reduce how tight room trip is you've since lever And sort there been pandemic? the What we're a already spend if maybe decline? some you in overall, that expenses of one there then given managing does Great. bigger downturn, the to getting the of can just

Blake Sartini

pandemic, is answer lot learned obviously, The a levers pull. the which to Yes. yes. during I we mean

think as We some pretty be of need that right? now. they're control capital, control to wouldn't easily. spend as that can open there operations can through I our Certainly, open can we pull is labor some that often we

marketing Our continues be are there a disciplined, to probably there pull. can but we levers few

pretty we're we we headwinds have that So confident that business – if – that us way changing see are model we're current that our the necessitate those levers to pull.

Edward Engel

you. thank Perfect,

Operator

reached you. call I Protell Ladies to And we gentlemen, session. Thank the question-and-answer would and have of to our like for the Charles remarks. turn back end closing

Charles Protell

Okay. Thanks, you and to everyone, joining for next with look forward quarter. we speaking

Operator

Thank Ladies then and conference. you. us. gentlemen, for Thank concludes today's that you joining

You disconnect lines. your may now

Golden Entertainment (GDEN) 8 Aug 222022 Q2 Earnings call transcript