Golden Entertainment, Inc.

Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to the Golden Entertainment Second Quarter 2025 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. 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 Fertel, 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 second quarter results and a business update. Following that, Blake and Charles will take your questions. With that, I'll turn the call over to Charles.

Thanks, James. In the second quarter, our operations generated revenue of $163.6 million and EBITDA of $38.4 million. Our results were impacted primarily by significantly lower table game hold in Laughlin and the widely reported summer slowdown on the Las Vegas Strip. Our Nevada local casinos continued to demonstrate strong performance in Q2, posting their highest quarterly EBITDA for the past two years, and growing EBITDA for the third consecutive quarter. Revenue increased 3% the prior year, with EBITDA up 7%, largely driven by the performance of our two Las Vegas local casinos, which grew EBITDA by over 9%. Margins improved as well, up 170 basis points from last year to over 46% for this segment. We are seeing a strong performance of our local properties continue as we move into Q3 and anticipate this segment will be the biggest beneficiary in 2026 from recent legislation providing tax relief on TIFs, overtime, and additional tax deductions for seniors. In our casino resort segment for Q2, revenue was down 3% and EBITDA was down 5%, mostly related to our low table game hold in Laughlin. We had a stronger event calendar in Laughlin this quarter that featured a concert and a rodeo, which drove higher revenue, but our tables games held less than 10%, which negatively impacted EBITDA by 1.5 million. Normalizing for unusually low hold would have resulted in increased EBITDA in Laughlin and stable year-over-year EBITDA for a Nevada resort segment. At the strat, EBITDA increased over the first two months of the quarter, However, we experienced meaningful slowdown in June, consistent with other strip properties. Strat occupancy for the quarter was 69%, down 4% from last year, but in June alone, occupancy fell to 60%, down from 76% compared to prior year. EBITDA for the strat was down only 5% year over year, despite the challenging environment, as we aggressively managed costs to mitigate the impact of lower revenue. Weaker strip demand continued into July, but we are seeing stabilization of bookings in August and remain optimistic about the outlook in Q4 and Q1 26, where we should benefit from increased attendees at the Las Vegas Convention Center and overall group business in the city. For our tavern business, we had mentioned on the Q1 call that the promotional environment could negatively impact our performance in Q2, and it did. Revenue was down 7% year over year, even with some of our own increased reinvestment in the quarter. Our reinvestment rate remains at levels well below our peers and lower than our casinos, and we do not anticipate increasing our tavern reinvestment beyond where we are currently. We saw the largest declines in revenue in April, where in addition to declining volume, we experienced lower hold than normal. We're also experiencing lower volume during our late night shifts, which caters to strip workers in tip positions, but we expect this to improve with improved strip business in Q4 and in 2026. In July, we've seen Tavern EBITDA stabilize compared to last year, as promotional activity in the market has been reduced. We are confident that we will see improved Tavern performance in the back half of the year, and we have two new builds scheduled to open over the next six months. Moving on to our capital structure, We ended the quarter with 432 million of funded debt outstanding, 52 million of cash, and 200 million of remaining availability under a revolving credit facility. In Q2, we opportunistically repurchased over 500,000 shares of our common stock for 14.6 million. Since the start of 2024, we have purchased 3.7 million shares, representing 17% of our free float, totaling nearly 115 million. and paid out $41 million in dividends. We currently have $77 million remaining on our current buyback authorization, which we will continue to utilize opportunistically throughout the year. With low net leverage of 2.6 times, we have plenty of capacity to continue to return capital to shareholders, and we see no better use of our capital at this time. Strategically, M&A has been a lower priority for us recently, given the uncertain business environment and elevated interest rates, which we expect may continue for the near term. We see the business volatility of the summer abating in the fall, and we believe there will be meaningful tailwinds from increased strip visitation, as well as the recent tax legislation that will support near-term organic growth at all our properties. We have a diverse portfolio of assets with exposure to various markets in Southern Nevada, including our hyperlocal taverns to our strip property, in addition to our Las Vegas locals and Nevada regional casinos that will benefit from these dynamics. In the interim, we're focused on managing the cost structure of our business, investing our own assets, and returning capital to shareholders. That concludes our prepared remarks. Blake and I are now available for questions.