Golden Entertainment (GDEN) 6 Nov 222022 Q3 Earnings call transcript

Good afternoon, and welcome to the Golden Entertainment Inc. 2022 Third Quarter Results Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded. to conference like Jaffoni. to now would turn over the Joe I go Please ahead.

those much differ afternoon, will of and laws. and call you On Harbor Company's operator, Thank very provisions Financial Chief good materially statements and Protell, statements. Sartini, results contemplated Officer. Actual under Company's President Safe and Officer; call, in is the securities everyone. forward-looking Founder, these the Executive Chairman we from federal Chief today's Charles may the make Blake today's On the

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

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

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

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

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

quarter below quarter, and For XX% – still revenue year, last EBITDA XXXX by before of we million but third delivered than of the $XXX million XX% $XX and higher respectively. the

in continued stimulus as third strong the was from excess which summer at demand last unusually Our seasonality our properties, the reflects declines the as well quarter performance of return given market. and July,

in points Nevada we to trends that than its STRAT than with XX% compared October. costs sold had more XXXX. start property October, the month to portfolio, last The at history, revenue labor but one other on than across fourth over continued hotel with EBITDA XXX margins operate Laughlin, year concert including posted the where saw last To Our highest operating at every on weekends. our above to strong we other basis and out average in our October, being are completely up higher that are contracted this quarter in year, higher occupancy in expenses, October last due pleased Casinos we margins Also business

of STRAT. the $XX a to be elevated from having bays STRAT ground broke with on history Casino well over performance Laughlin, and July, We last the we costs was million calendar STRAT not year outdoor two EBITDA partner July. golf Nevada driver other The lower property's the our occupancy as highest occupancy segment, our facility, event to Getting fourth did margins down large the October heat Reduced was In due for expect the year Last expect period in XXX compared outdoor not events concerts our results continues land our compared at development last the to those month as year. grow. with the unusual in to year-over-year, of million, same any $XX.X segment improve margins the the impact was in was excess than Also, while utility QX have in Laughlin. both The generating Resorts last last summer $XX.X metrics in but second revenues into to on QX, to we adjacent to as have EBITDA for in quarter reflecting in Resorts within entertainment did concerts higher August, as we located primary quarter. typically million, labor

locals, of completed and significant by our it traffic driver project be will for XXXX excited the to for to a and are be the property, We end visitors believe alike.

$XX.X seen of year million other increases, revenue of we've Locals million, Nevada addition cost areas to higher in compared of and last the the reported $XX.X in August to EBITDA Our impact of seasonality reflecting Casinos business. our

Our EBITDA from in but ahead year, down local points Nevada last To up October, X,XXX XXXX. start basis margin QX few a last revenue from for our tracked still Locals percentage was points year all XX.X%, and of Casinos.

August revenue revenue September, million branded third-party see operations, at to to gaming Taverns, Nevada, summer for our distributed our tourism what similar managed For well visitation we trend get last in locations. was tavern increased This when million. by of wholly Montana, increased EBITDA affected year. labor locations, impacted increases were to saw also over by flat compared and year-over-year Back-to-School. offset decreased rent while Nevada and added travel, benefited by annual as owned modestly In $XX.X we locations as declined and $XXX.X costs, in early typically in properties people year, both our Margins store last to our where ready new was but or increased from chain were

start to QX, as continued sports performance from strong wholly-owned Nevada tavern off newest the in for got calendar, opened benefiting as March. taverns our Our the strong well a from

was definitive Rocky and $XXX will for million, team, Gap Nevada. sale was any operations to August, properties, on $X.X focus is Coast but us reflecting a great Casino agreements property, revenue EBITDA Rocky this In $XX.X in times sell further Maryland to Turning Gap XX million. a a other Resort million, we without with allow multiple. to core management our strong East announced

next expect We second quarter transaction the to the year. in close

our million of outstanding taking ended quarter the repaid million repayments with loan, nearly borrowings total on last debt revolver. third cash $XXX to QX, the sheet. In term million balance approximately Moving $XX our $XXX our $XXX debt We months. million is million. over outstanding and no we of to our $XXX total our XX Currently,

to less at going current Our is net X.X and or leverage net we intend leverage times three times forward. maintain our

for Board stock profile, since a while blackout accretive we portfolio Given strong the the pending There Rocky unable economic $XX any economic to generate, evaluate leverage capital return public our opportunistic, the shares week visitation XXXX. other operations is flow QX, to million, believe us We from is proceeds sale sale authorization being healthy increased are common of flexible in the Gap, and expected are and any positions gaming QX the cash free opportunities given than related valuation. and our more Nevada Gap, well-positioned our structure our to environment. our We Southern country. where drivers maintain continued to Rocky share of million XX our nearly were This in market we we shareholders. there repurchased dislocation repurchase capital in although anticipate in and restrictions focused to activity our repurchase of

generating with real value, and underlying we unprofitable stable, assets, development are properties or uncertain platforms. estate not have Our technology pursued cash projects,

plenty have value shareholders. ratios our concludes of These We our us creating for one excited and questions. the about now prepared That industry available ability liquidity. I in leverage and the and factors make remarks. are our continue confident Blake long-term in future of lowest to our for

Thank you.

the Instructions] We will Chad ahead [Operator from Please question-and-answer begin comes Beynon go Macquarie. first question now sir. with The session.

if terms bit is I said, occupancies. periods, the everyone Good just you afternoon, reported helpful -- consumer. acquired thanks other to for like of past I occupancy, it. couple months have lot kind what talk with for of that's peak strong questions taking of of levels the the commentary best you're the time really on can one weekend since the my compression of some question. you're everyone, back think had in of think to more you Wanted you've STRAT through about these has that operators October appreciate think given Charles really and a Wondering a the performance talk little seeing of I the The the

if as Thanks. the originally able Just you're drive intended to starting you you when wondering acquired to be property. ADRs

Yeah, think that's Yeah, accurate. I Chad, thanks.

early weekends, fourth have a lot the like out seeing are on out Certainly, does it sold on like the going quarter picked significantly in we're look we're compression well. sold the weekends, and forward. up We mid-weeks as looks of

the ever hotel of for had. we've historically highest at occupancy over month occupancy highest we the at XX% For a hotel, the October, revenue rate was rate month had ran that that we've which the an

the seeing compression So market. we broader are in

benefiting call of been that only booking our from during the the that weekends, kind kind has weekdays. and in been on mid-September are from into through October We we've windows but of And build future. slow now that seeing it not the a

we're bullish we're very We and a seeing on we're that So we're as hotel mentioned, that for the targeting forward. seeing property. you strength results demand going achieve regarding to still the of EBITDA expect lot

can the Thanks. look the the proceeds Rocky Gap balance sheet cash thinking how but at the know is after your that you're asset just you're you've do kind ability haven't with you remind talked about a of to what lot about on sale of of out are given found and market? past just things in buy priorities the your willing down to capital? -- in that there you something seeing us completed, And I kind then with capital what and to you your and

Yeah, Chad. hey,

us for think maintaining on we're flexible I a balance focused sheet.

balance the but where capital in shareholders. look juncture. low about at pursue can our opportunities. given flexibility the the we fact now, assets return is this and critical we've to sits opportunities, think think can to as being those We for is other the at fortunate in at have rate we like leverage hurdle sheet talked where we own right invest past, to look So that we The high us we're

it. Appreciate guys. Thanks

Chad. Thanks,

Thanks, Chad.

The you. from comes next Jefferies. Cassandra question with Thank Lee

you afternoon. Thank my taking good Hi, for question.

of think expense, your did used operation? wondering extraordinary. they how the it high mentioned word I competitors Some much your was utility unusually impact I

to maintenance I with half fixed mean had going our so in to other compared the up look well that as costs types utilities plus labor costs quarter-over-quarter about that saw our year. were do if last of of and and costs see XX% up business. We you utilities you'd declines at

see did that. we yes, So

at down, cool summer You'd in where the versus winter into some get as Vegas. expect times see energy when cost you they off to Las you big try are trend to of season peak price in the buildings utilities

how may Great. Thank and should if Casino longer-term think margins Resorts I the we versus Casinos? about And you. follow-up Locals

will margin you that. at higher a in resorts think that the the are wide costs Look, just see the That and with the footprint said, there. margin that performance terms swings Casinos its occupancy fixed resulting the I than Local improve amount given of the STRAT, as operate associated of being always

will reporting perspective you'll quarter margin this QX, right expect in the low as point margins that a now. that from see and through improvement a be we we move So we're

Great. Thank my for question. you taking much so

Cassandra. Thanks,

you. Thank

Sander with You next Omer question from JPMorgan. comes

Hey, question, from the Blake me. and for Charles. Thanks taking just one

pro-forma comes the $XXX somebody how facility cash right Rocky looking to you you sheet if cash about million anything on or balance non-core XQ balance you do for the the the like in said, at Gap so balance the sale ending portfolio of So strong on is obviously think asset for additional sales, there is that the else for? at sheet price your and asset

trading mean, I selling now. right times at EBITDA, look we're we're at assets Yeah, seven XX

at is there in and misallocation assets we're valuation then a in between markets an private we not make our if public transact. our would a a of marketing is terms someone at we to what of clearly offer of reflects so feel this were has mind in any attractive active everything time. asset company, this the this of valuation that stage. point public price So But We're an

six than maybe said Awesome, the ago environment of thanks. the maybe given is so for has today And to ability that one, instead asset impairment was maybe billions? I maybe tougher do know a I in million an think to you for it financing but guess XX change months do a the somebody months I follow-up

to I it think depends of last on the size the it your point asset. depends that

the you're in that our I sheet. that think do have there is when talking there to ample to But is difficult talking do companies in in hundreds commitments, liquidity environment. of like much their large several financings when billions those of the require more balance you're about own millions own this

companies happen, excess now. so those at I think at are multiples in right where of still And are public get announced be still trading transactions that no still

Thanks, Charles.

Riley. comes Thank David B. next question The Bain you. from with

to The the I growth XXXX of capture much. the in STRAT going upcoming and additional with be if to given can flow, but Atomic And so [ph], take guess, investments or Thanks Gulf or STRAT? take? return Vegas an trying in love Las additional on strategically hear to get adjacent a that first, using lot conventions, the to are see Anything Great. I new of all events land? then repositioning there with the we your update news, I'd from share The

Yes, Dave, is, the answer yes.

for see brand outlet gate of is year, as calendar next to hotel getting and XXX weeks going new strong. to out what Asian first that to we put a position of then continuing to in the will rooms opened We will are over take a bring more the up half next which competitive the the invest room do of of forward in a inventory them program hotel, market, to that the broader anticipate city. year very advantage probably be pretty well before configuration The half a properties just that with the in We a of food in competitive couple our prior will strip, configuration robust outlet an of STRAT other be investment approximately ago, ownership, before new along right we ownership. took XX% it given is We

to those go seeing along, We which improvement is terms people of in are program revamping as driving events. significant our entertainment we

regards year, is be the they're up getting prior front in open that. target to trying in of to they're Atomic FX, next do mentioned what You projecting to that opening QX would to a Gulf,

pool think which making investments next are We in be received. will product well our year, we

All think that is, I mode to capital of more at continue target forward Strip. bring on to stickiness competitive a in on we property, to which to this, was thesis and that the into smart our your beginning the plan we're the property seeing going self those with highly point

business, have And today moves Blake, in to is guess you seeing date. that last any in generally I kind of days there in even not casino clearly within segments? that type or history hedge? off? business follow-up, maybe, something you of for because a the impact you the mean, as tip Casino the of if you're macro. back as I capital the would staged economic planned for that of there would any case are to And your -- markets guys Awesome. of sort then couple Hey, something any look Charles or indicators just to given a environment, the or that you Charles, changes make and already are of

busy Yes, changes, been we're as we've of making I in mean, terms said, we ever now. like right

So haven't back and -- of of and from level business perspective, will back the seasonality we that we and visitation right then saw that come summer seen and up. pick some spend pick

still -- XXXX competitive, perspective, is I Labor from our now, our is we levels. competitive keep headcount mean, but market. can bodies staffed. XX% we in So labor the portfolio mind appropriately down can from still it's find a it's

operating for the like that's back are things at where level added think are certain amenities back. at the valet not I we us coming we've that to, we'd like properties coming phase back, the not

and and now we're what's visitation, regional in so harvest calendar is forth. in the year, on those drivers whether get so it's on you have excited the as outlook, sporting order we really right the ConAg, place. into that stacked on So to the here, right be happening we city, going a increased see the hosting very in for predicated track QX have the about, structure events feel you like and of pretty think to the citywide as and that we to about terms businesses tournament March Madness when We're next

seized the -- in on or the and environment. in the of significant be still than continues inflation? be my whatever high do either they tipped in driving Do Vegas homes. It's growing drumbeats your over and be, resiliency commodity their have massive the cities my world. you to career Yes, pocket be residential have to with around kind tells, I I with may there that what's anything. in consumer here. gas tears environment? income -- think, our off the very no. gaming has may prices accelerating three industry, consumer is will, the over experience on the an I've wears is is in rapidly spendable on of about the term Las vibrant over about if local consumer amounts take coming market. to course a the And get amazed is it's one population to commercial and particularly that two or the high answer the in or or the what answer what most more see of community, construction. is they wealth of my these dynamic in on in question macro we regards as in they - of talent will, never or My their growth, in end will and to My we is, if And just any that been, from equity effect the career, recession still of at -- of broader prices personality, that you last macro decades the of things after Do going only time the effect, short

to what So, answer strong really be to about Charles it seeing to on his of way to extent a for macro this a that macroeconomy not goes in that pick and and of prepared comments, to right thing any particular as they're your our out balance really level. our a able is to mentioned talking the now all being is, is that I think, tell right point tail-off we're focus either now uncertainty not sheet have

if in does, position. it However, good we're a

Fantastic. Thank you both.

Thank you.

with question Bender next Securities. Your Jordan JMP comes from

question. Thanks Great. taking my for

kind now about as you couple the of was quarter about what of the you've talk So last quarters over fourth of how issues seeing if caps I about talked you well? occupancy of and the that and wondering, some some into the translated just quarter also third supply well. could chain as talking been over quarter the you're into last

-- Yeah, Jordan. hi, so

for getting talked items, terms food a still now abated chain increases, in is we large from has getting a perspective to certain pricing about high. cost obviously, certain supplies, the supply extent, is that us, So,

happened an the the highest So you which compare disruption us strategy really of there. we've seen standpoint, is October. occupancy is on the highest that's second it that to price inflation about was to the last when this actually and for From record really going be July,

going when just, I we're meaningful So July that issues but at really now think to tough that comp we forward. said look show supply chain we property, again having right don't see any year-over-year, just that don't goes again, it and you

item, guess, in revenue Great. And to just out housekeeping on then, I pretty was quarter, that? anything the corporate call the up significantly other line your and on

We sold a actually Entertainment where to actually did years equipment Lakes mean, is -- ago -- did smaller we we related old deal an several dating had royalty some rights that some which IT, to Galaxy I back manufacturer. a Lakes

is on that little there number. a that of bit gain into embedded So is

you. Thank Great.

Thank ROTH Capital. from question you. Engel Edward The with next comes

Hi. the maybe taking Las Thanks We've of my Have Vegas in from competitors inflation? to of you any seen to that, tightness for a question. hiring wage ease. the heard labor even either loosening or some your couple market starting related

Yeah.

So loosened. has it

it at basis restaurant are additional on staff, think STRAT The find our finding which new we for example, we some relative some I needed to to easier areas of the people a fill up in labor.

run we think level pretty from seeing much I a going anticipate basis. forward standard you're now kind consistent right at a of However, running that a us

kind We a high-profile that and everyone in position is, in seeing is are high-level though securities security particular are now of seeking wage however, out. particular a one, classifications inflation

that's to our certain inflation we it higher perform willing easier with we that have find, are news to the are properties. pockets bad and The do good So within work news. positions, people of seeing is

just nights XX,XXX pre-COVID. was Perfect. last at of at to level kind of in to bookings? given you're pre-COVID relative talked in October safe year something The Then Is you that's it the right STRAT strength about STRAT I recall back room assume terms where missing

a Yeah. missing We're -- I think little we're still mid-week.

We up, look have fill roughly concerts still low capital we we talking of at book on ways where draw will radars continue And as so when to upside. continue of nice city citywide as still that to in you we the see as continue again, the add were to bit we're average, think as property so little close as and that that continues to QX If October to perspective, occupancy, events, go from in XX%. people, XXXX operated next that year. XX%

Perfect. Thank you.

next The question comes John Thank Securities. you. with CBRE from DeCree

Hi Hi for Blake. questions. Thanks Charles. my taking

Hi John.

on is international We've last your Charles, Two regaining point little that business piece of if seeing heard Vegas. STRAT. that of peers bit Las last you occupancy Are occupancy that And of meaningful at maybe terms a that? in little that you to of look in year? of can follow-up your to from The additional us that's next some remind coming recover gap bit a you back

it's look occupancy is STRAT. Meaningful, about at something the word, XXXX The of but wrong probably at Yeah. the if you X% international

So be that adds definitely addictive. that will

think hurts I strong here. over coming obviously dollar traveler that a

that about have got season. close big, that from So it not but hope to to the from was that not how we'll us, Asia gap. was and half that's that bid just summer goes where a and back very during meaningful additive it's of something to to Europe see strong that X% We half its is comes other that we the for

for that, would potentially are XX say XX potential stay the go parameters you of a the closer then, impacts economic to lot we on the leverage ahead, that what two want the out kind times of net you be differently, kind next this to so as said, can to when of to opportunity? one for accretive looking we've it or the up little or the or less. a think over you'd get little and Rocky talking we Maybe flex a right months reverse bit closer above a And Gap just months? helpful. you about ask look stand your down, balance you all your already to views your keep on given sheet, about? would I sheet side talked but balance know two And close three while, I And the you and mean times cash balance three, at That's I

out, Gap perspective. two from forma less pointed I think you be as Look, or for the sale of will times pro Rocky a leverage

its I close if found mind, a to less keep stretch right that it we I Again, think the would using if in company you estate capacity you'd owns we or real own the is very, have very healthy. above mean, three acquisition? level. being very that, leverage of that that times Would target, be a be target. for

cash have sheet on We excess balance the well. as

you're So this think to be it four company going see five … I times, that not times levered That's again.

Yeah.

not … our lexicon now. in right

Yeah.

good think, three. would try I above lead John, into, I it's sub-two to stand go mean, to question a us we we or

that do One maybe there would an of to that find asset we the or potential is that the think when M&A one, terms opportunity we leverage. where in of where point look the of our does for prerequisites estate sheet think up real if for like because that estate in But available. end in will to hurdle the we it's high a those and I two, owning Charles us number although, drive you terms portion real and at we opportunity, interest balance do of price it number case the

again. or all do we it. we the is think Charles I point, right to not you're at going comes and together, to four us five times see think lever opportunity if But that

That's helpful.

Appreciate that. You guys guys. balance how the additional great color, good great you're such done the the getting have flexibility. Thanks a thinking to sheet about all in on place. job a see It's

John. you, Thank

back time. would closing at turn for further There over like I Protell, this any you. are no Charles remarks. the Thank to questions to conference

we'll Okay. on talk Thank next to you participating. all you quarterly for And call. our

The you presentation. today's conference has attending for Thank now concluded.

disconnect. now may You