Golden Entertainment, Inc.

Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to the Golden Entertainment First Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-answer session will follow the formal remarks. Please note, this call is being recorded today, May 6, 2021. Now I'd like to turn the conference over to Joe Giovanni, Investor Relations. Please go ahead, sir.

Thank you very much, Adrienne, and good afternoon, everyone. On the call today is Blake Sartini, Golden Entertainment's founder, chairman, and chief executive officer, and Charles Portel, the company's president and chief financial officer. On today's call, we will make forward-looking statements under the Safe Harbor provisions of the federal securities laws. Actual results may differ materially from those contemplated in these statements. Additional information concerning factors that could cause actual results to materially differ from these forward-looking statements is contained in today's press release and our filings with the SEC. Except as required by law, we undertake no obligation to update these statements as a result of new information or otherwise. During today's call, we will also discuss non-GAAP financial measures and talking about our performance. You can find the reconciliation of GAAP financial measures in our press release, which is available on our website. On this afternoon's call, Charles will first review details of recent results and provide a business update. Following that, Blake and Charles will take your questions. With that, it's my pleasure to turn the call over to Charles Portel. Charles, please go ahead.

Thanks, Joe. We're starting the year strong as we generated nearly $240 million of revenue and quarterly adjusted EBITDA of $59.5 million. This is the highest quarterly EBITDA in the company's history. Q1 of 2020 is not a relevant comparison to this quarter given property shutdown started last March. That said, it is worth noting that our record EBITDA for Q1 is 23% higher than than our Q1 2019 EBITDA, and 50% higher than our EBITDA we just reported for Q4, demonstrating the continued momentum across all our businesses. Q1 showed continued strength in our local and regional properties, even with the strat underperforming to Q1 2019, with only one million of EBITDA per month for January and February. As more people return to Las Vegas, our strip asset is getting its fair share, and we are now seeing the flow through to EBITDA. Occupancy improved throughout the quarter from 30% in January to over 60% in March, and we saw occupancy reach over 90% for March weekends, with sellouts every weekend in April. Our two Las Vegas locals casinos are outperforming historical results, with Q1 EBITDA increasing almost 80% compared to Q1 of 19, and up over 40% to Q4. In Laughlin, EBITDA improved by 9% to Q1 of 19, and almost 60% to Q4. For our Pahrump casinos, EBITDA improved more than 50% compared to Q1 of 19 and 25% to Q4. Looking at all our Nevada casino operations, EBITDA was up 8% compared to Q1 of 19 and over 58% from Q4, even without the Strat operating their historical levels. Our Rocky Gap operations in Maryland generated nearly 5 million EBITDA for the quarter, up 29% Q1 of 19 and 11% from Q4. When looking at our combined casino operations, even with the strat underperforming, casino property level EBITDA grew 10% compared to Q1 of 19 and over 50% compared to Q4. Combined casino EBITDA margin was approximately 40%, up 870 basis points from Q1 of 19 and up almost 1,000 basis points from Q4. Turning to our distributed business, in Nevada, first quarter EBITDA improved to 17.5 million, up over 50% from Q1 of 19 and Q4. EBITDA margin improved almost 500 basis points, mostly driven by increased gaming revenues and lower operating costs within our wholly-owned Tavern portfolio. Our Montana distributed operations showed similar improvement, growing EBITDA to 3.4 million, up 56% from Q1, and up over 40% from Q4. We see the current performance being sustained for both our Nevada and Montana distributed businesses in Q2, with our Nevada taverns benefiting the most from expanded capacity that started May 1st. We also remain focused on expansion of distributed gaming in new jurisdictions, and almost as important, educating state legislators on the dangers of unregulated illegal gaming that is currently happening in many states. Moving to our balance sheet, we generated approximately 42 million of cash in the first quarter based on the strength of our operating performance, increasing our cash on hand to over 145 million. We continue to have no outstanding borrowings on our 200 million revolving credit facility, and given our current liquidity position, we anticipate meaningful debt repayment over the remainder of the year. The limited CapEx requirements Our primary capital allocation for the balance of the year will be to reduce leverage and then evaluate returning capital to shareholders. Looking forward, the trends we saw across our businesses in the first quarter are continuing, which reinforces our confidence that 2021 EBITDA is on track to exceed 2019 levels. We only see sustainability and upside from our current performance as we progress through 2021 and our operating momentum continues. We are still missing over 35% of our 55 and older database across all our properties, which is starting to return. We're excited for our fall concert lineup at the Lawson Event Center, the biggest driver of weekend visitation in that market, and the Strip is rapidly recovering with convention and events being booked for the fall. That concludes our prepared remarks. Blake and I are available for questions. Operator, please open the line.