Golden Entertainment, Inc.

Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to Golden Entertainment first quarter 2025 earnings conference call. At this time, all participants are in listen-only mode. A question and answer session will follow the formal remarks. Please note that this call is being recorded today. Now, I'd like to turn the conference over to James Adams, the company's vice president of corporate finance and treasurer. Please go ahead, sir.

Thank you very much, operator, and good afternoon, everyone. On the call today is Blake Sartini, the company's founder, chairman, and chief executive officer, and Charles Pertell, the company's president and chief financial officer. On this 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. Except as required by law, we undertake no obligation to update these statements as a result of new information or otherwise. During the 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. We will start the call with Charles reviewing the details of the first quarter results and a business update. Following that, Blake and Charles will take your questions. With that, I will turn the call over to Charles.

Thanks, James. Our first quarter year-over-year results were in line with our expectations. and primarily impacted by not having last year's Super Bowl in Las Vegas, which was mainly felt at the Strat. Outside of the Super Bowl impact on the Strat, our business in Q1 was healthy, with EBITDA from our other casinos up year over year and EBITDA from our taverns stabilizing. As we look forward, April continues to demonstrate stable operating trends, and May is off to a strong start. Currently, we are not seeing the dislocation in our business that seems to be reflected in our public valuation. Now for some context on our property performance in the first quarter. The Strat experienced declining occupancy and spend, primarily in February, resulting in a $3 million EBITDA headwind from last year's Super Bowl. Occupancy was down 5% for the quarter, but down 13% in February. which obviously led to lower gaming, F&B, and other revenues for the property. However, in April, our hotel revenue is up on both higher occupancy and rate, which is driving improved EBITDA heading into Q2. Looking forward through May, strata occupancy is pacing up 6% over last year at attractive rates, and June is showing strength as well. Currently, Q2 is looking better than last year for the property, but without direct convention bookings at the Strat, we have limited visibility beyond the next few months. In Laughlin, we increased EBITDA by reducing expenses and focusing on more profitable concerts at our smaller entertainment venue. We also targeted weekend promotional activities for driving customers, as well as continue to promote our midweek bingo for local guests which allowed us to maintain our leading market share in Laughlin. For Nevada locals casinos, our revenue was flat the prior year, with EBITDA up 2%, largely driven by operational efficiencies across payroll and other expenses. We see consistent performance out of our locals casinos, with EBITDA margins at 46% for the second straight quarter. We actually see increasing strength in our locals business in April, so this segment is off to a strong start in Q2. In our taverns, revenue and EBITDA were down slightly year over year, but on a sequential basis, EBITDA continued to increase over Q4 as we achieved improved performance from our newest taverns and lowered operating expenses. We have seen an uptick in promotional activity in the tavern market from smaller private operators, which we do not view as sustainable. but it may have some impact on Q2 performance for our taverns as we maintain a more disciplined reinvestment strategy. Moving on to our capital structure, we ended the quarter with just over $400 million of debt outstanding, $50 million of cash, and $225 million of remaining availability under a revolving credit facility. Our low net leverage at 2.4 times EBITDA and liquidity profile will enable us to withstand any potential impact to our business from the macro environment and allow us to continue to reinvest in our own assets, pay dividends, and opportunistically acquire more of our own stock. In Q1, we had a short open window to buy stock, but still used $7.6 million of our buyback authorization to repurchase 274,000 shares. Since the start of 2024, we have repurchased 3.2 million shares, totaling almost 100 million, and paid out 35 million in dividends. We have 92 million remaining on our current buyback authorization, which we will use opportunistically throughout the year. We have evaluated the limited M&A opportunities currently in the market, and given the dislocation in our share price, There is no better use for our capital than repurchasing our own equity at these levels. Our business has remained resilient and is improving despite an uncertain macroeconomic environment. Having a focused portfolio of branded taverns, casinos with owned real estate, and low leverage positions us well to withstand any potential short-term fluctuations in consumer demand and to benefit from the favorable long-term economic trends in Nevada. That concludes our prepared remarks. Blake and I are now available for questions.