Earnings call transcript Q2 2023

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Operator

Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to the Golden Entertainment Second Quarter 2023 Earnings Conference Call. At this time all participants are in a listen-only mode, a question-and-answer session will follow the formal remarks. Please note that this call is being recorded today.

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

Joe Jaffoni

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

today Executive Protell, call Chairman Chief the is the Sartini, On Company's Financial and Officer. Chief Company's Officer; the Charles and President and Blake Founder,

the we materially of from in statements. securities today's those harbor call, under safe results make contemplated will On laws. statements Actual forward-looking the provisions federal differ may these

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

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

measures the press You reconciliation our is on financial GAAP of our in available find website. which release, can

reviewing the quarter start with results call the will business and second We details update. Charles of the the

will Following that, Charles and Blake questions. take your

the Charles my pleasure With ahead. please over Protell. call to that, go Charles, it's turn to

Charles Protell

Thanks, Joe.

disruption ongoing we second wanted strong by revenue with the complete and million of EBITDA last the of Vegas well $XXX Las from we later before generated million, For flat as as pressures calendar but STRAT EBITDA $XX for cost room year, impacted year. renovations essentially revenue the of to quarter, this

XX-month of on of XX sale the updates previously consideration trailing EBITDA. announced our million the representing a Gap M&A for on Before week based into times few we Last we operations, on $XXX getting closed have the Casino properties approximately activity. multiple aggregate Rocky resort

close term refinancing partner our that J&J Gaming, balance of In sale forward for used we Nevada our in of announced our Montana remained the including outstanding gaming and Immediately year both our confident remain that J&J cash. in transactions proceeds to $XXX as our distributed look to we million, and repay $XXX having We Nevada million after by approximately of will the end, March, to May. after businesses the we loan original taverns. closing

of attractive the businesses and casino results, of at will transactions EBITDA Within gaming leaving our in declined revenue footprint our owned while accomplish with our goal at Nevada These segment resorts declined us divesting portfolio tavern casino state. assets the a non-core largest valuations, XX%. X.X%, Nevada

due Revenue were room was we that rooms million to in lost X for for with the this of STRAT revenue XX% XX%, majority EBITDA down to mid-June, new XXX less part QX in completed EBITDA X estimate in Those we XX%, disruption. the having quarter down and rooms the from about and in available due renovations. in million

June, were table reduced weaker The by Rocky The rooms commenced in another from also Gap sale. our proceeds be game rooms spend XXX higher with XXX STRAT's we of room impacted per QX budget renovation volumes. tower on for labor renovations million will results the and our funded in guest, property. oldest completion the is Upon $X expense, and at these

end drive the capitalize further to meaningful on complete and renovations conference Atomic so we schedule, citywide it and to can Golf, opening by fourth the STRAT. expect increase these We in expect prior expect Atomic FX, on quarter, which open to we room remains construction the to fall. the new to Golf the of year, we the attendance of visitation

more to by last year, event up In a robust supported Laughlin, slightly revenue compared is calendar.

and well last XX%, for of compared the declined higher events, costs to added expenses labor EBITDA utilities as the impact reflecting While year. higher as

of the this have Edgewater. riverfront Since from and the City, driving June, our anticipate results the additional bingo initiated offering a initial In local by we strong our traffic campaign end room, marketing we new bingo in in we Bullhead Laughlin year. seen highlighted opening accelerating at throughout

for EBITDA relative local to line casinos Nevada XXXX. strong their XXXX, both performance were in QX Revenue with continuing in

at refresh slot are restaurant and offerings properties these new to in the investing loyal experience modestly We capital customer for base. our

tavern down last by in partially sales. declines increased with a was in and food from operation, quarter revenue gaming EBITDA revenue year, For Nevada beverage offset second

at Margins prior continue impacted labor by also taverns our expenses and operating for to other increased this be year.

QX. to additional continue and our acquire tavern support Vegas year taverns expect We this We to by favorable Las quarter to the demand or six committed opened tavern end business. have our drivers in XXth

across for partners, own addition, Nevada distributed quarter. Total last down compared sites similar some decreased performance tavern third-party third-party We weakness Nevada X% while future saw have In is locations. to tavern which we XX%. three revenue year, our for our development in is EBITDA to the

declined revenue this was in Nevada EBITDA which Montana while slightly, of up and Montana, start locations, higher Both expense. to of year. slightly have new online reflecting the half strong payroll will pipelines second come In

the original Rocky first-lien current of to remaining Moving $XXX XX of the term facility by loan and extending loan our basis After $XXX and million term May, Gap our successfully using on our Revolver, balance of our proceeds outstanding our in lowering to debt interest term million million rate our sale refinanced maturities. in we our sheet, credit new consists senior loan, portion the points notes. existing first-lane repay unsecured $XXX primarily of

and maintain net sale we balance quarter, the current full At we on million $XXX and availability forward. our forma to intend times of Rocky Pro our net leverage below of leverage Revolver sheet. is X.X the cash million Gap, times, for end $XXX our going had of three on the the

we future Given are the initiatives. strength of accelerating return our our confidence our balance generation, sheet and in capital of cash

increase announced our we to $X million. in special repurchase a authorization XXX an per share and dividend share end, that To

forma businesses Looking and declines forward, leverage the this of distributed X.X for our dividend, net sale our special pro times. to

the believe in local remains and demonstrate we properties of drivers company and benefit half the positioned year. Our the growth will Nevada's better of uniquely from markets, to our resort performance back

core a evaluate and alternatives. basis, future shareholders allow will structure our strengthened our maximum assets, capital in invest for strategic capital flexibility regular on to addition, return In

prepare That questions. concludes I for are our now Blake and available remarks.

Operator

[Operator Instructions] with The first go David Please ahead. Riley. from question comes Bain B.

David Bain

start Charles. up to and was first I hoping to I of Blake if versus Hi. And Thanks. maybe being with could to know capital. regard some specials some with recurring. you end special could made Great. the recurring. speak considerations you return

do I later was with similarly here at things? about there. you think a at those Wayne look like think it we and the a quarter then is on known potential more is set of you and of How to more mentality average is be move-up But or just Are thing for of the kind a dividends looking opportunistic will the or recurring a versus date that. this or a one-time that buybacks mix?

Charles Protell

Yes.

monetize dividend we XX question XXX an in at EBITDA that the validated mind. that for million. did asset when We keep me that On just XX approximately million acquired at asset, the times first, let we time

like of mind our dividends the to given and point in of the to capital we seems pro-forma seems it the a right So do and accelerate leverage time on of and form company that it in shareholders buybacks. return the like basis, both

this are through as distributed going something transactions think that that been year continue year. as forward dividends announced regular, and clearly we regular We forward. evaluate I evaluate on the we'll to focused move As the that's closing we'll have far

M&A particular another I but single out a terms opportunistic for or anyone ready there, tool. opportunity don't think a amount the most frankly, invest own is think compelling In company. program, buyback we're what the to over view in drive it of is that see our in the buyback, of as powder we as quarter we just which we year, play

David Bain

questions operation. get Okay. know on Great. And I you'll then,

maybe Is towards ask So up, one new I'm in looking that in talked of there an more and not some thoughts for because this brands, I Nevada is existing expanding existing as that. that, is think a of about expansion or in new at point? there about of as branding any to we quarter markets? processes. about opportunity M&A, on, new, that markets hammering last something But small at Nevada, outside your sorry, markets had distributed your open strategy well the using either potentially outside can discussion markets

Charles Protell

I with new about in pretty home states Yes. They're look, operating other largest. in obviously our we we're state in partnership obviously but jurisdictions. the excited a looking at mean, They're decent Illinois, here pipeline J&J. in the have Nevada,

but think And so will immediate that focus opportunities, we here Nevada. this our is partnership in those some to be of just

Blake Sartini

Yes.

by think when brick-and-mortar true. we we that's the And I partners, mentioned the I that, our tavern I call, I think David, I mean, own last on the, think party side. third outperformed on on asset significantly as we, our

with comments, particularly capitalize So we're the on with that. positioned, acquisition potentially uniquely J&J Charles think along to I

David Bain

guys. it. Got good. Very you Thank

Blake Sartini

you. Thank

Operator

Santarelli Carlo go next Excuse Please with Deutsche me. from ahead. Bank. The question is

Carlo Santarelli

million what question, marking my is the ask STRAT. just million clarify Hey, at disruption service three guys. just the hotel and exactly… of I out you're the afternoon. Good that want the Charles, did assuming I'm two or to that's being rooms just being the, hotels before the for I

Charles Protell

That's right, right. that’s

Carlo Santarelli

decline Okay but the bit so spend little more not segment about of the in the cost STRAT at impact about. the allocate how to than obviously impact you're a if ask Nevada ancillary your that pressures I think guests much would Casino the that specific question you could you presumably year-over-year that those then spoke the this margin profile capturing if versus but you of if

Charles Protell

impact at it within I'd say segment is is the other related of the look I stride. that think most the way to that to

stride under here revenue renovations tough think you terms of local back though what guests last in in here for going staying casino I'm otherwise the company line said we other if servicing entire that extra kind You been. of with to in missing disruption or and the this the or deal the disruption I'm property are at the consistent even terms but the to where four side the we as or I construction were bit down whole eliminate across particularly have quarters people who of fairly as you just it's saying been spending cost time if drive other where we from much this would of out that's of a look had to on we're so pool unpack, whether we've side we not in then because be you at said did say margins

a in not in other labor yet in over four if at last again QX look of quarters, we and going QX forward continuous be haven't a we of perspective going we that the and we year this In a increases confident been back workforce segment good stable had margin resort the fairly lot we we bit the within that But think year margins just those numbers think the and trends wage the the to at of consistent you our feel margins competitive comp, are the will the just to have feel had from the increases why that's that's from utility the I so better think cost be improve a last had should which costs. comp versus minimum improves STRAT a rise half year. last tougher just year relatively

Carlo Santarelli

stretch just now a bunch half that first margin what of on were in And Atomic year out you the the with what the would could of year show rooms say faced complement the Charles, to the relative left the Golf coupled the you based back would not know more of in that kind full last obviously with back easing of half that the back this kind a given resumption little situation be or XQ bit coupled One you expansion getting kind Formula half as mentioned you of goal. of in of

Charles Protell

think Yes achievable. I look that mean that is I

that a negotiated with labor we're piece culinary that a think I segment big larger There's And that I goal will think of by of does union thinking on being achievable folks right a be within yes right is bit obviously in about our now, that the in of come wild contract strip. but that expectations labor within forecast. line the then within what it card is now puzzle. the

Blake Sartini

into year about this see Carl quick that let not. towards there through back additional by We, this existing all room with especially. course process be coming question back into going the that line -- the end are should -- we've done we XXX property Golf margin there that's real September normal that forward. you piece the only our the even That’s mentioned operated as Atomic me best catalysts in towards your can also add we the of construction

of into November, the north We Golf a the the mentioned inertia which this year, And will brings to driving strip. You assets around that's worth believe additional think the our we at real options patrons thousand the Fontainebleau Atomic on estate end STRAT. which hundred more will many December. open annually looking plus undeveloped I open think property we for through the have traffic

yet realized So position -- to is master in that we the run but be there yet long is plan I hasn't the our think, changed.

returning of EBITDA to property. achievable goals than we that state at believe Our are more

Carlo Santarelli

Thank up some I to true, one you taverns. if and I'm of guys. could and mind party seeing a been locals Understood. antenna kind before at all popped And was that sit here little of just of guys and you Historically sense? kind back? and going a talked bit or those you seen of not customer of it other. kind that assets have that general. kind kind to you're if what's I it's get you that don't you've at Is blip weakness Charles about for has prolonged, this more third going the of some of perhaps in you indicator of your the Do be tell historically a know it but leading trend ask this

Charles Protell

the the country seeing in two seasonality Carlo. kind is on Vegas Las still plates would say normalized years. one of communities as bit three population. we're shifted would so context. the last latter in latter, from fastest back COVID the have of or the terms I clearly growing The A, in and of I come the the of tavern, a little say

is as it's the a an ever consistent bit there's look forward. of a and as anomaly anticipation June, that we been of So my bit are they've but as in taverns

Carlo Santarelli

Great. Guys, much. you thank very

Charles Protell

Carlo. Thanks,

Operator

is question Katz from next Jefferies. go ahead. David The with Please

David Katz

Thanks M&A opportunities. about look everyone. afternoon, think wanted bit Hi, questions. of for and taking I sort my a to potential forward little

for If us we in and some leverage so individual more give along. tolerance you be or or might dilution great just what you around prepare your corporate might boundaries it's assets comes could case updated a be whether opportunity ourselves think

Charles Protell

Yes.

pro forma be in less two said than share I our a times the dividend. a As even with comments, leverage will $X

look obviously have out and we for So deals. capacity go to

$XXX portfolio. that I for meaningful value the $XX can a through us portfolios to of in casinos $XX with would at. size. synergies think plus, To importantly, And us, think our target to the million to million where those opportunities West, look more of in operations create are that's things be we or would we need we the existing

lens do that that. that think I So narrow at look acquisitions, is will but a we fairly to

buying is I given our think and think sheet from the other the we the will buyback we're that on be balance trying highlight that to against the thing as we about own stock future the simply that authorization board. capacity going weighed our have forward

David Katz

in that walking can sort I there's to follow the sometimes of door. add up, If value

your that Sometimes to stuff until realize value. it takes three How what's for start patient, that? year patience like to level

Charles Protell

We synergy those. to revenue perspective, at synergies. of look been Look, We in pretty are underwritten from I the acquisitions. synergies a and through XXX through those company more but terms tend one we've the think achieving we day patient not in past, built cost

Blake Sartini

David, but patience very well. I'm My level, patient, I'm as opportunistic is

I Charles think there focused is on. the the look M&A the own We of board, we're value landscape lot our lot he that through right And as look is about at. company, but now our see that in M&A, to as in for capacity said, lens the in a talked a narrow kind of value something on of shares. we own see us we

Charles current we synergies and plus. that looking that organization. at the can use million mentioned I within think move things our We're XX needle

but patient, So opportunistic.

David Katz

Understood. Thanks very much.

Operator

ahead. from Please is Bender Securities. go question with next The Jordan JMP

Jordan Bender

you're of kind taking EBITDA think to of returns next the well would the that the come I on way slate of then those still from rooms about out five said seeing renovations the stride? four from previously you had us question. of about right for similar a that. Is as return? and this update maybe Thanks that think as hotel Can Great. kind uplift to million you ADR my

Charles Protell

seeing on the ADR rooms. we're $XX a Yes. currently to We $XX about premium see, renovated

a you're issue still up we're still mind, the nights case the QX and just of weaker making seeing in again, same is in of weekends. all But room when that underwriting past, the than So almost the improvements. in are been that lot it's Keep we're midweek still is that incremental those XXXX. terms look in alone, almost room if missing, you relative we And are midweek of XX,XXX even to during nights.

and the on first still the million that's the an year current of of think average property lack some is travel and has the and revenue through the group EBITDA. that of meaningful do but opportunity and that to $XX that annualized quarter, to lack part due international we at doing for spend in half fairly in that back, with the So we're substantial renovations XX an throughout property basis about in million the business about

and out that's town us as premium be the for capture that renovations and in to fall a to to rep and the retail and the underwriting MBA we're the drivers then that what as terms that table convention pickup the to these into rodeo what's traffic capitalize on. will when to playing at demand that able one those drive back side Bowl that's well to the property on So Super really of comes the both be will able through room there the side business rolling we're nights the it the at on

Jordan Bender

monetization the balance some message de-leverage Belle drive further STRAT it’s then to the of seems to still the just value. around balance be laying sheet Great. have land I leverage of shareholder change up whether and or has the Colorado the in for the And my guess you follow terms thinking land sheet

Blake Sartini

only the given flexibility of some in add facilities think our with gives with along our just we the we remains or we ownership. the the us estate on I may like next has like and opportunities think amenities described in I no property long the real No that run Charles that value the that synergistic the to put success

changed. at has not So that in this point attitude time

Jordan Bender

Got appreciate it. I the questions.

Operator

The Benyon go is next ahead. question Chad from Macquarie. Please with

Chad Benyon

for you weren't guess Wanted the what on lot got in a and the know to opened obviously certainly you bring that my it thanks of through patterns to ask back the seemed when if did or generally like any year, as just STRAT just one ask taking got the FX was for the programming some it to kind expected? that, see one, what another and going I wanted Afternoon kind change was in part we're macro related to it would that, the of windows versus Thanks. general if of about any that and question. two we've exposed change known but new the about after in was Vegas you who whether some time, attention kind additional quarter booking in with and saw we people of what content related sphere familiar outlook you have booking

Charles Protell

XX% the the around year on from the to of for we or last occupancy handle as July look, STRAT and us. perspective. XX that obviously I bit what closer in think such through say August a ran we've from based Chad. mean are that's tell. occupancy now; thanks, pushing we meaningfully of properties looks offline we definitely on Those had a look I a pretty I and XX% forward good year catch-up will playing got last tough up about we're Yes books what's terms room to given significant our like an were we ran amount of

and rate So improvement has that's fairly stable. meaningful been a

to Blake where which again playing room our I the property to the investment past. getting like and the large at and and those again, strip been property So in other like the we is as We where or has they've modest heading property at been them relatively fall operators said. think a for getting premium back nights we're

Chad Benyon

so of which the of Charles. back Thanks Blake, seasonality operators of reported quarter, promotional on you're was and throughout consumer locals the went impact performance see in the slot the June indicates next June you of strong up July of one in that throughout the Thanks. the that just any rise got how other on in Las I as and quarter, there environment came in kind side of you improved said that And on April the a about couple Vegas could in you thinking did anyone change that then the kind bit little promotions certainly quarters believe the softness the next. terms

Blake Sartini

no. Yes answer Chad is the

I than I I marketing consistent to we've into out as balance look the continuing going changing. as maybe we don't an I promote see there half they always that of have and as think that the so the that independent as a pretty of other local see approaches the who's back portfolios seen year, sustainable forward, see

activities seasonality the appear I consistency regularly more now. regards caused. see think, of COVID of through But promotional of a the to this of hopefully the kind to and normalcy all right begins lot and I we water whiplash white that get as specifically, in that

Chad Benyon

Charles. Thanks, the on debt on reduction. Blake. Congrats Thanks, deal the closing

Blake Sartini

Thanks Chad.

Operator

is question from Capital. Engel ahead. next with ROTH Please go Edward The

Edward Engel

XQ? to just Hi, expect I want at taking you the would STRAT thanks XQ, less my than the for to confirm be the in disruptions question.

Charles Protell

that mean, the rebates Yes. of renovating. less I than X% we're it's

Blake Sartini

That's fairly isolated.

Charles Protell

It's tower the the oldest in at actually tower. a separate It's property.

Edward Engel

to want confirm. just I Perfect.

Blake Sartini

XXth. done that's I think on the

go to to Just September XXth. end of September. The back

Edward Engel

just guess anything renovations it's quarter then should kind mind? then, keep the should whether And the maybe we even into relatively arrangements looking Okay. some in for XQ, Atomic associated startup clean with STRAT or a I or costs of this be

Blake Sartini

Yes.

to fair yes. say it's think I

quarter I and we normal the fourth of believe kind is beyond, course. I would is, think think

times. of lack up fill on tend meeting at Strip and that do right? banquet guys South the volatile We don't the is the space space, have Now, its property given to

there's given volatility. a to going little that, So be

be a at forward we normal think investment will kind it'd from our be going to QX of able and course look STRAT. there, what However, do at

Edward Engel

Perfect. Thank you.

Operator

Please go ahead. CBRE is from question The John Securities. DeCree with next

John DeCree

Hi, Hi, Blake. Charles.

Blake Sartini

John. Hey,

John DeCree

circle you've dealing back been cost that some I to with. the of increases to wanted

will labor I that forward. variable the larger of is mentioned maybe question those bit going a back in anniversarying OpEx a cost increases that is you've half? potential larger are some or normal in through and think Or little you bit costs? to So still little absorbed, there growth an some XQ of absorbed? component start you've be those But see earlier more increases a other the costs still

Charles Protell

And that only at I I watch the labor mean, STRAT be related covers like But at property. than half culinary the No. one less union. mentioned, would to to potential the of there that the workforce

all consistent think go think, the I quarters, good you to have of pretty a remaining And casinos. look relative been year. if margins at anniversary last the and Nevada they've other entire of portfolio costs QX last relatively again, I across four our the back over

why feel good being about the year back a So pretty that's that, cost. half I better again, we think the of

Blake Sartini

to I three is two think really in seeing not a or combined helpful labor It's some descriptions. of necessarily increases color maybe significant cost job the that portion is widespread. we're friction

those we those see that into think two to a And rate more or market we much forward, I So going Charles' as point, positions scenario. brought into of specific more manageable. three

John DeCree

That helpful. question, into my dovetails That's follow-up Blake. Understood. probably

the Is Is the driving guess Laughlin less have increases? locals and in perhaps costs have the experienced just the you've that of it type where there's is fair? labor-intensive cost that that same the kind mentioned. of been those some on probably of been Or costs? side labor side why the that's I why STRAT, labor not have of descriptions locals job operations? you've mostly the resort that the So the seen

Blake Sartini

those again, That's the stable. again, and to the or two, major pretty two amount to exactly major is resort the Laughlin three STRAT two -- or to It's were Laughlin And classifications. right. three properties. and confined primarily Everything confined properties, STRAT job else was confined

John DeCree

That's Thanks, Understood. Charles. helpful. Blake. Thanks,

Operator

question-and-answer our also the And now concludes concluded. conference is session. This

Golden Entertainment (GDEN) 31 Jul 232023 Q2 Earnings call transcript