Q1 2021 Golden Entertainment Inc Earnings Call
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Yeah.
Good afternoon, ladies and gentlemen, thank you for standing by and welcome to the Golden Entertainment first quarter 2021 earnings Conference call. At this time, all participants are in a listen only mode.
<unk> and answer session will follow the formal remarks. Please note. This call is being recorded today may six 2020, one now I'd like to turn the conference over to Joe Giovanni Investor Relations. Please go ahead Sir.
Thank you very much Adrian and good afternoon, everyone.
On the call today is Blake SAR, two Golden Entertainment's, founder Chairman and Chief Executive Officer, and Charles per tell 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 and these statements.
Additional information concerning factors that could cause actual results to materially differ from those from these forward looking statements is contained in today's press release in 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 a reconciliation of GAAP financial measures and our press release, which is available on our website.
This afternoon's call trials will first review details of our 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 per tell Charles. Please go ahead.
Thanks, Jim we're starting the year strong as we generated nearly $240 million and revenue and quarterly adjusted EBITDA of $59 5 million.
This is the highest quarterly EBITDA and the company's history.
Q1, and 2020 is not a relevant comparison this quarter given property shutdown started last March.
That said it is worth noting that our record EBITDA for Q1 is 23% higher and our Q1, 2019, EBITDA and 50% higher and our EBITDA. We just reported for Q4, demonstrating continued momentum across all our businesses.
Q1 showed continued strength and our local and regional properties, even with the scrap underperforming to Q1 19 with only $1 million of EBITDA per month for January and February.
As more people return to Las Vegas, our strip assets is getting its fair share and we are now seeing the flow through to EBITDA.
Occupancy improved throughout the quarter from 30% and January to over 60% in March and we saw occupancy reach over 90% from March weekends with sell out every weekend in April.
Our two Las Vegas locals casinos are outperforming historical results with Q1, EBITDA, increasing almost 80% compared to Q1, and 19 and up over 40% to Q4 and.
And last one EBITDA improved by 9% to Q1, and 19 and almost 60% in Q4.
For our Pahrump casinos, EBITDA improved more than 50% compared to Q1, and 19 and 25% in Q4.
Looking at all our Nevada Casino operations, EBITDA was up 8% compared to Q1, and 19 and over 58% from Q4, even without the strat operating their historical levels.
Our Rocky gap operations, and Maryland generated nearly $5 million EBITDA for the quarter up 29% Q1, and 19 and 11% from Q4.
And looking at our combined casino operations, even with the Strat underperforming casino property level EBITDA grew 10% compared to Q1, and 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.
A 1000 basis points from Q4.
Turning to our distributed business and Nevada first quarter EBITDA improved to $17 5 million up over 50% from Q1, and 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. So it's similar improvement growing EBITDA at $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 and Q2 with our Nevada taverns benefiting the most from expanded capacity that started may one.
We also remain focused on expansion distributed gaming and 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 and the first quarter based on the strength of our operating performance and 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.
And limited Capex requirements, our primary capital allocation for the balance of the year will be to reduce leverage and and evaluate returning capital to shareholders.
Looking forward the trends, we saw across our businesses and the first quarter, our 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're 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 and the loss and event center, the biggest driver and weekend visitation and that market and the strip is rapidly recovering with convention and events mean book for the fall that concludes our prepared remarks, Blake and I are available for questions. Operator. Please open the line.
Thank you, we'll now begin the question and answer session.
A question. Please press Star then one on your Touchtone phone and it.
Our first question comes from David Bain from B Riley Your line is open.
Thank you.
Phenomenal results.
My first question would be outside of potential high return and kind of lower capex opportunities like the new route or around expansion. Charles you spoke to and prepared remarks is there a focus on acquisitions or new projects or are we laser focus on cash flow harvesting paying down debt looking to return.
Capital to shareholders over the next several quarters net.
Definitely and the latter David so for this year, we are solely focused on deleveraging our balance sheet.
Generating cash on hand, and looking at ways to return that capital to shareholders I think that deleveraging gives us more flexibility for the future and we can look at some of those opportunities and we get into 2022 and beyond.
Okay Fantastic and then we read a lot about.
The new demographic coming from California to Las Vegas are migrating.
Have you identified.
The demographic in terms of like do they have higher spend and frequency of visitation versus the historical core is there an opportunity for even greater crossover promotion with a new demographic for either the strider Laughlin visitation and could we get any.
Kind of color or is it a little early.
And out of the gate to sort of bifurcate, the California and.
Nevada day.
This is Blake.
And frankly, there is a little bit early for us to have that kind of granular data I can tell you that we are seeing particularly.
Particularly on a heartburn local businesses, our distributor business, a lot of new faces and R and R and R.
66 locations around town and the third parties and which we deal.
And there are a lot of brand new faces that have not been seen.
We believe a lot of those people are the new residents moving in and Nevada, we are.
Also seeing a lot of that and the local casinos, but in terms of that intrinsic data and think there's a little bit too early in terms of how we can benefit.
From your crossover standpoint.
And regards to marketing or attracting those customers on a long term basis.
Okay, great well congratulations again.
Thanks, David.
And our next question comes from Carlo Santarelli from Deutsche Bank. Your line is open.
Hey, guys. Thank you.
Charles or Blake whoever kind of wants to take this one I was just kind of curious as you guys.
Yes.
March obviously March Charles just based on your comments drove the bulk of the EBITDA and the quarter something Thats been obviously and we've seen through the GTR results and clearly I've heard from others. When do you think about kind of the cost extracted from the business and.
Think about your ability to leverage that as revenue.
Heated up in March.
It's a sustainable run rate of cost extraction, and perhaps relative to 2019.
But you guys are kind of benchmarking right now across that and Nevada casino business.
And just kind of a casino business in aggregate that you'd be comfortable sharing.
Yes, Colin this is Blake.
The sustainability question is obviously the.
The topic of the day and.
And regards to answering your question.
I'll give it to you and maybe in two parts Charles can give you some color too as well but.
Regarding the current margin trajectory.
Is that sustainable, but short answer for us is yes.
I believe we will continue to run our business with higher margin expectations and.
Margin expectations going forward.
We're going to be significantly higher than our historical averages are they a 1000 basis points as we add net.
Unnecessary costs back as revenues grow that some of that cost may be dilutive to margin to some extent.
I think I think that's reasonable to assume.
Our expectation internally is we fundamentally changed how we're operating this business and.
And our higher margin expectations are going to stick going forward.
Over historical levels, and secondly, as far as revenue.
Is that sustainable.
One other things and our portfolio of things a bit different because we were running even with the numbers we posted we ran.
On a half or three quarters of a tank for the first quarter given the fact that the strat was significantly underperforming versus the rest of our portfolio and Laughlin was.
Diluted or the business was.
It was not as robust as it could have been given the fact that we couldnt have live events or concerts, which was a large driver to that market. So in terms of revenue even with that we have embedded growth within our current portfolio and those two areas and also.
Going forward there are.
Conventions concerts and sporting events coming along later this year that we are pretty confident we will continue our strong revenue trajectory for our businesses and just said.
I just would add to that that the two biggest costs as you know and the business or on the marketing side and the labor side and so we are not seeing any increase and the promotional environment and we've right sized that spanned across our entire portfolio at this point and even we still see that coming down on the labor side, we'd probably expect.
A little uptick and labor at the Strat, which would be a good thing because we'd have more dra's hopefully a board with the increased occupancy as we as we sell more room and you are presuming that you are doing that on an accretive basis to the property for our regional and local assets that staffing and pretty much set so we've been on.
Operating at the same levels, we have for the last two quarters within those assets. So again I just think if you see any uptick from a labor perspective, it would be at the strat, but again that would be and in the and the revenue generating categories from route and sales and restaurants et cetera.
Great. Thank you both and if I could just ask one follow up and.
And again kind of trials you spoke to.
And your prepared remarks.
If we think about it.
The first quarter run rate from an EBITDA perspective of close to $60 million.
And then.
And you are right.
Yes.
Okay.
And think about cash right.
And and maintenance capital something along those lines, you're probably looking at another $80 to $85 million, which leaves you guys like $150 million.
Our free cash flow of almost $5 a share on an annualized basis, certainly very powerful and puts you in a pretty good position to do whatever you want acknowledging you did say the rest of the share will focus on debt pay down as we start thinking about ways to deploy that next year.
With the flow kind of where it is and relatively small from a trading flow perspective.
How do you think about dividend special dividend.
Our buybacks kind of in those three buckets, how do you prioritize don't or bigger picture just how do you think about it conceptually.
Yes, I mean look conceptually as we sit here right now I mean, there's obviously significant shareholders in this room, we like the concept of returning capital to all shareholders equally which leads towards the construct and special dividends and I would say we'd have to take a look at that at the time, depending on where we're trading where the prices.
And liquidity of the company.
If you had to pick a path now that's probably the more optimal one.
As we as we sit here today and we look at the future.
Great. Thanks, very much guys.
Thank you.
And our next question comes from Chad Beynon from Macquarie. Your line is open.
Hi, good afternoon, and thanks for taking my question.
And wanted.
And just wanted to.
Ask about.
Strat again kind of a two parter on that one just just wanted to focus on on some of your non gaming like top of the World are you starting to see covers come back and.
And just broadly what's the rough split between locals and visitors will it really take convention and events to kind of get back to those levels and then the second part of that is on the room side.
Charles You mentioned that you have had some.
Weekends, where you are at 90% can you get compression ADR rates during that time period or are you and some of your competitors still being a little conservative just in terms of pushing price.
Hey, Chad.
The first part of your question specific to the property and top of the world.
We are seeing.
Significant business at that restaurant, we believe right now the highest grossing restaurants.
And Las Vegas were doing.
6% to 700 covers a night.
And that restaurant, our average checks are up 20%.
It has become.
Retooled the room entirely from the menu to the to the look and feel.
And the entire venue.
And it is producing significant results I mean, we're basically full up there.
Good evening as far as the local traffic and there is between 10 and 20%.
We believe at this point so the majority of that business.
And as either staying or significant amount of that business is making a trip from sales trip or else were to go up to the to that venue.
So we are we're very excited about the continuing growth of that venue and.
And we continue to improve the offerings up there.
As far as the compression and the room rates from a weekend I think the short answer is yes. As we go forward, we're seeing more and more ability to drive those rates as the rest of the high watermark rises and the rest of the community, but the rest of the Las Vegas strip, if you will but as I think it's important a couple of things.
As you recall, we completed our approximate $100 million capital investment into the property around February of 2020, which was right before the lights went out and we were forced to close so.
Last year has been pretty choppy for that property as it has been for every other operator and town.
So we had talked about the targeted return on $100 million prior to the unforeseen event of COVID-19 and.
And and and now beginning this past March.
We're hitting the high watermark in terms of EBITDA at that property and that is while running only $6 or 7% up 60% to 70% occupancy at that property. We're achieving these high water EBITDA EBITDA marks.
And the customer spend people are staying longer and they're spending more and we're seeing more direct bookings, we're seeing more casino bookings through our casino marketing program. Both of those are displacing otas reservations guests are staying longer and they're spending more so with all of these metrics that we're seeing right now we believe are material.
Our return on our $100 million investment is underway.
And again, we were running anemic occupancies here in March and April while achieving these these good EBITDA numbers.
And lastly.
Just a reminder, the city is well underway with its roadways and pedestrian walkways improve.
Improvements to make that south to north strip, a seamless experience for guests.
And the resorts World opens June 24th the Dru is just sold two very strong investors, which we believe at some point will be built and all of that inertia coming north will benefit that property.
It was a bit of a long winded answer to your question, but we are seeing compression and rates and we're seeing that sequentially grow month to month actually week to week and month to month as we get into May and June and the other elements of that property that I just described.
We're pretty bullish on what we think that property can do going forward.
Thanks, Blake I appreciate it.
And then secondly, just on the tavern side and Nevada can you just remind us on the restrictions that occurred during the quarter, where that sits right now and if that has been a slight impediment to to the results that you've put up. Thank you yeah and it has probably more than any other type of gaming.
And certainly within our portfolio. So there are occupancy restrictions within Clark County, which had been at 50% and now as of May 1st and then moved up to 80%.
And so you can imagine and with a smaller restaurant venues and it's actually a.
A lot more material than when you were talking about a.
Large casino floor.
And we're pretty excited about that and.
And we're hopeful that.
And the Governor has said that we'd be prepared to get to 100% June 1st which would be another another another lift for us.
Thanks, Charles Thanks, Blake and a nice quarter. Thanks Chuck.
And our next question comes from David Katz from Jefferies. Your line is open.
Afternoon, everyone.
Hey, Dave and.
Hi, Luke.
Wanted to go back to the stratosphere, which is sort of fairly prominent within the portfolio at one time, there's certainly wasn't formal guidance about it but notionally, we were thinking about getting that property to call. It the $60 million neighborhood of EBITDA and I just wonder.
Sure.
Last time, we discussed those kinds of numbers was pre COVID-19.
And pre where we sit today.
How do we think about.
We're in the neighborhood of where the ceiling on that could ultimately be either qualitatively or as much details you can offer.
Well I would say David we're at that run rate right now so we're not.
We're not focus that there is this feeling with that property.
Given the dynamics that Blake mentioned relative the inertia, that's coming down to the north side of the strip and the things that we're doing with the property.
Okay.
We're very bullish on it we think that this trajectory continues.
Certainly for the balance of this year and and into next year. So we're excited to see.
And how high we can push it without a tailwind.
Yeah, I think David I think as I've mentioned in my earlier comments.
Think that ceiling gets raised as we continue to realize.
More of our people direct booking to the property, which means they're choosing that property versus a particular rate on our on our website.
We're seeing more casino bookings given.
A very robust casino program, we've instituted at that property, which prior to our ownership didn't exist there really wasn't.
And any casino program so.
As Charles mentioned, we're we're achieving those targeted results that we had talked about earlier right now running 60% to 70% occupancy at the property given some of the.
Fixed cost fundamental changes, we've made that we believe will stick going forward and.
And adding the necessary cost associated with more revenue coming into the property.
We believe we.
We don't want to put a ceiling on it and we think the property is well positioned given the development coming north that we've already talked about the circa downtown development and the city's Arts district improvement coming south towards us.
The properties and a great and a great.
Area and a great zone right now to capitalize on.
Not only our investment, but the growth thats coming and the city, both north and South.
Understood.
And natural follow up.
Since there is so much discussion about capital allocation.
What would it take for you to consider putting more into it right because some of the plans earlier on I think did have a broader scope and what ultimately got done.
Yes, I think the piece that was broader was really about putting convention space, but we're fortunate that the convention center is very close to the property and the expense.
And $1 four and that should be opening shortly.
And we we think we've got it right now I mean, we will continue to do room renovations and ordinary course.
Thank you could see us looking at ways to use the excess real estate on the property and a capital light type of fashion, where we can partner with people to add onto amenity to the property where were not contributing capital other than land and we will talk about some of those things with.
Folks who approach us and.
But in terms of doing more and.
And large scale, Capex, which a 100 million for us as large that that's not on the radar for us at this point between our investment I think we did ship some.
<unk> six and 650 rooms, we've renovated prior to our ownership there was another.
Five or 600, so roughly half the property.
And the room product has been renovated within a reasonable amount of time, certainly ours is lifted and the last year and as Charles mentioned I think the rooms are probably any focus that we would have going forward, but the catalyst to answer your question on what would be the catalyst for us investing more money for me would be getting the balance sheet, where we want it.
Sounds good to me thank you.
And this concludes the question and answer session I will now turn the call back over to Mr. <unk> for final remarks.
Thanks, everyone for joining and we'll talk to you on our next quarterly call.
Thank you ladies and gentlemen. This concludes today's conference call. Thank you for participating and you may now disconnect.
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Okay.
And.
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Good afternoon, ladies and gentlemen, thank you for standing by.
Welcome to the Golden and Entertainment first quarter, 2021, or and he's conference call. At this time, all participants are and it listed on the mode. A question and answer session will follow the formal remarks. Please note just call is me a chord of today May 620, and 21 now I'd like to turn the conference average Joe Giovanni Investor Relations. Please.
Go ahead Sir.
Thank you very much Adrian and good afternoon, everyone and.
Oh and the call today is Blake sore total Golden entertaining standard Chairman and Chief Executive Officer, and Charles per tell the company's President and Chief Financial Officer.
Oh and today's call, we will make forward looking statements under the safe Harbor provisions of the federal Securities laws and.
Actual results may differ materially from those contemplated and and these statements and.
You should all information concerning factors that could cause actual results to materially different from the police forward looking statements is contained and today's press release and our filings with the S. C C.
Except as required by law, we undertake no obligation to update these statements as a result of new information or otherwise.
And today's called will also discuss non-GAAP financial measures and talking about our performance.
Could find the reconciliation of that financial measures or a press release, which is available on our website and.
From the fact and it was called trials will force review details of recent results and provide a business update our and that Blake and trials, we'll take your questions with that it's my pleasure to try to call over Charles per tell Charles Please go ahead.
Thanks, Joe.
We're starting to your strong because we generated nearly $240 million of revenue and quarterly adjusted EBITDA, a 59 and a half million and.
This is the highest quarterly EBITDA and the company's history.
Do you want a 2020 is not irrelevant comparison and this quarter give any property shut down and started last March.
That said it is worth noting that our record EBITDA for Q1 is 23% higher than our queue 120, 19, EBITDA and 50% higher than our EBITDA, We just reported for queue for demonstrating and continued momentum across all our businesses.
Q1 should continued strength and our local and regional properties, even with the scratch underperforming. The Q1 19 with only 1 million of EBITDA per month for January and February.
As more people returned to Las Vegas are stripped assets is getting his fair share and we are now seeing the flow through to EBITDA.
Occupancy improved throughout the quarter from 30 per cent in January to over 60 per cent in March and we felt occupancy reach over 90% from March weekends with sell out every weekend and April.
Or to Las Vegas locals casinos are outperforming historical results with Q1, EBITDA, increasing almost 80% compared to Q1, and 19 and up over 40 per cent to queue for.
And Loftland EBITDA approved by 9% of Q1, and 19 and almost 60 per cent of Q4.
For our per I'm casinos, EBITDA and fruit more than 50 per cent compared to Q1, and 19 and 25 per cent Q4.
Looking at all our and Nevada Casino operations EBITDA was up eight per cent compared to cue and and 18 and over 58% from Q4, even without the threat operating their historical levels.
Ah Rocky gap operations, and Maryland generated and nearly 5 million EBITDA for the quarter up 29 per cent coupon and 19 and 11% from Q4.
And looking at our combined casino operations, even with a strat underperforming casino property level of EBITDA grew 10% compared to Q1, and 19 and over 50% compared to queue for.
Combined casino EBITDA margin was approximately 40 per cent of 870 basis points from Q1 of 19 and up almost a thousand basis points from two four.
Turning to our distributed business and Nevada first quarter, EBITDA and prove to 17 and a half million up over 50% from two one and 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, so similar improvement growing EBITDA that $3.4 million up 56% from Q1 and up over 40 per cent from Q4.
And we see the current performance being sustained for both are Nevada, and Montana distributed businesses and Q2 with our Nevada to average benefiting the most from expanded capacity that started may 1st.
And we also remained focused on expansion of distributed gaming and new jurisdictions and almost as important educating and state legislators from the dangers of unregulated illegal gaming that is currently happening and many states move.
Moving to our balance sheet, we generated approximately 42 million of cash and 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 and.
And limited Capex requirements are primary capital allocation for the balance of the year will be to reduce leverage and and evaluate returning capital of shareholders.
Looking forward the trends, we saw across our businesses and the first quarter are continuing which reinforces our confidence that 2021 EBITDA is on track to exceed 2019 levels.
We only see and sustainability and upside from our current performance as we progress through 2021 and are operating momentum and continues we're still missing over 35% of our 55 and older database across all our property, which is starting to return.
We're excited for our fall concert line up at the loss and events that are the biggest driver and we can visitation that market and the strip is rapidly recovering with convention and vents me book for the fall and that concludes our prepared remarks, Blake and I are available for questions. Operator. Please open the line.
Thank you you and now begin the question answer session. Yeah. A question. Please first start and one and your Touchtone phone and at first class. She got some day that ancient B Riley Your line is nothing.
Oh, thank you.
Phenomenal results I guess my first question would be outside of potential high return and kind of lower capex opportunities like the new route or erotic fashion, Charles how you spoke to and prepared remarks as it is there a focus on acquisitions or new projects are we laser focus on kind of cash flow harvest thing.
Paying down debt looking to retire and capital to shareholders over the next several quarters.
Definitely and the latter David so for this year weird solely focus on line deleveraging a balance sheet and.
Generating cash on hand, and looking at ways to return that capital of shareholders think that deleveraging gives us more flexibility for the future and we can look at some of those opportunities and we get into 2022 and beyond.
Okay Fantastic and then we read a lot about the the the new demographic coming from California to Las Vegas are migrating have you.
Satisfied you know the demographic in terms of like do they have higher spend frequency of visitation versus the historical car is there and opportunity for even greater crossover promotion with a new demographic for either the strat or loftland visitation and if we get any kind of color or is it a little early out of the gates for and so.
Or by forgetting the the Californian and soon to Nevada day.
This is like I mean, frankly, there's a little bit early for us to to have that kind of granular data I can tell you that we are we are seeing.
Regular and a heart for local businesses are distributed business, a lot of new faces and our in our and our.
66 locations around town and the third parties and which we deal.
There are a lot of brand new faces that have not been seen you know the.
We believe a lot of those people are the new residents moving and and Nevada.
We also seeing a lot of that and the local casinos, but in terms of the intrinsic data and think it was a little bit too early in terms of how we can benefit.
From your crossover standpoint.
In regards to marketing or attracting those those customers on a long term basis.
Okay, great well congratulations again.
And thanks, David.
And your next question comes from Carlos Tantara Alley from.
Thank you line or something.
Hey, guys. Thank you Charles or Blake whoever kinda wants to take this one I I was just kind of curious and she dies exit March obviously, you know March Charles just based on your comments drove the bulk of the EBITDA and quarter something that and then I'd be sad if you received.
And we see through the jaw results and and clearly I've heard from others. When you think about kind of the the cost extracted from the business and you know think about your ability to leverage that as as revenue heated up in March.
There is a sustainable run right out of cost extraction, and perhaps relative to 2019.
And you guys are kind of benchmarking right now across the and Nevada casino business or or even just kind of a casino business aggregate that that you'd be comfortable Sarah.
Oh, Yeah of course is Blake I mean, you know.
And the sustainability question is obviously the the topic of the day you know in regards to answering your question.
I'll give it to you and maybe in two parts Charles and give you some color too as well but.
Regarding the current margin trajectory.
Is that sustainable the short and for US was yes.
I believe we will continue to run our business with higher margin expectations and those margin expectations going forward.
Are you going to be significantly higher than our historical averages are they a thousand basis points as we add unnecessary.
Necessary costs back as revenues grow that some of that cost may be dilutive to margin to some extent, yeah. I think I think that's reasonable to assume but our expectation internal as we fundamentally changed how we're operating this business and and our higher margin expectations are going to stick going forward.
Over historical levels, and secondly, as far as revenue.
That's sustainable.
One of the things and our portfolio and things a bit different because we were running even with the numbers we posted we ran.
And a half or three quarters of the tank for the first quarter given the fact that the strat was was significantly underperforming versus the rest of our portfolio and Laughlin was was it was diluted or the business was was not as robust as it could have been given the fact that we could not belive events.
Our concerts, which is a large driver to that market. So in terms of revenue even with that we haven't bedded growth within our current portfolio and those two areas and also you know going forward and there are.
Conventions concerts and sporting events coming along later this year that we are pretty confident will continue a strong revenue trajectory per our businesses and.
I just would add to that that the two biggest causes you know and the business are on the marketing side and the labor side and so we are not seen and any increase and the promotional environment and we right size that spanned across our entire portfolio at this point and eat and we still see that coming down on the labor side, we'd probably.
Expect a little uptick and labor it distract which would be a good thing because we'd have more dra's hopefully on board we'd be increased occupancy as we as we feel more room and you're presuming that you're doing that on accretive basis to the property for our regional and local assets that staffing pretty much that so.
We've been operating at the same levels, we have for the last two quarters within those assets say again I just think if you see any uptick from a labour perspective, it would be at this track, but again that would be in the in the and the revenue generating categories from rude and sales and restaurants et cetera.
Great. Thank you both of us and if I could just ask one follow up.
And again kind of Charles you spoke to this and and your prepared remarks, but if we think about you know and the.
First quarter run rages from EBITDA perspective of close to $60 million.
[noise] and you're right.
But.
[noise] about cats and.
And capital something along those lines and probably looking at another $80 million to $85 million, which leaves you guys like $150 million of a free cash flow almost $5 a share on and annualized basis, certainly very powerful and put you in a pretty good position and do whatever you want to acknowledge it.
Say the rest of this year will focus on that pay down as we start thinking about ways to deploy that next year.
With the flow kind of where it is and and relatively small from a trading flow perspective, how do you think about giving it and special dividend Ah Ah buybacks, you know kind of it and those three buckets, how do you prioritize zone or or a bigger picture just how do you think about it conceptually.
Yeah, I mean look conceptually as we sit here right now I mean, there's obviously you know significant shareholders and this room, we liked the concept of returning capital to all shareholders equally which leads towards the construct and special dividends and you know I would say we'd have to take a look at that at the time, depending on where we're trading where the price is.
And liquidity and the company.
But if you had to pick a path now that's probably the more optimal one as we sit as we sit here today and we look at the future.
Great. Thanks, very much guys.
Thank you.
And the next question constant chat Daniel from the quarry and your line or something.
Hi, good afternoon, and thanks for taking my question.
And wanted How're you doing just wanted to ask about strat again kind of a two part or on that one just just wanted to focus on on Samir non gaming like top of the World are you starting to see covers come back and I guess, just broadly what's the rough split between locals and and visit.
Or will it really take you know conventions and events to kind of get back to those levels and then the second part of that is on the room side. Charles you mentioned that you've had some some weekends, where you're at 90 per cent can you get compression edr rates during that time period or are you and.
And some of your competitors still being a little conservative just in terms of pushing price. Thanks.
[noise] picture on the first part of your question specific to the property and top of the world.
We are seeing.
Significant business at that restaurant, and we believe right now, it's the highest grossing restaurant and Las Vegas, we're doing.
Six to 700 covers a night.
And that restaurant or average checks are up 20%.
It has become we've retooled the room entirely from the menu to the to the look and feel.
And the entire venue.
And it is producing significant results I mean, we're basically full up there.
Evening as far as the local traffic and there is between 10 and 20 per cent.
We believe at this point so the majority of the business and.
Is either staying or a significant amount of that business is making a trip from sales trip or elsewhere to go up to the to the venue.
So we are very excited about the continuing growth of that venue and we continued to improve the offerings up there.
As far as the the compression and the room right from the weekends I think the short answer is yes. As we go forward, we're seeing more and more ability to drive those rates as the rest of the high watermark rises and the rest of of a community, but Ah and the rest of the Las Vegas strip, if you will but as I think it's important a couple of things.
As you recall, we've completed our approximate $100 million capital investment and to the property around February of 2020, which was right before the lights went out and we were force the clothes. So the last few years been pretty choppy for that property is it has been for every other operator and town.
So we had talked about the targeted return on 100 million prior to the unforeseen event of COVID-19 and and and now beginning this past March.
We're hitting the high watermark in terms of EBITDA property and that is while running only 67% up 60% to 70% occupancy at that property. We're achieving these high water EBITDAR EBITDA marks.
And the customer spend people are staying longer they're spending more we're seeing more direct bookings, we're seeing more casino bookings through our casino marketing program. Both of those are displacing OGA reservations guests were staying longer and they're spending more so with all of these metrics that we're seeing right now we believe of material.
Turn on our 100 million dollar investment is underway.
And again, we were running anemic occupancies here and March and April while achieving these these good EBITDA numbers.
And lastly, just the reminder, the city is well underway with this roadways and pedestrian walkways.
Improvements to make us south to north strip, a seamless experience for guests.
The resorts World opens June 24th the drew has just sold two very strong investors, which we believe at some point will be built and all of that a nursery are coming north will benefit that property. So it was a bit of a long winded and.
Answer to your question, but we are seeing compression and race and we're seeing that sequentially grow month to month actually week to week and a month to month as we get into May and June and the other elements of the property value just subscribed.
We're pretty bullish on what we think that property can do going forward.
Thanks, Blake I appreciate it.
And then secondly, just on the the tavern side and Nevada can you just remind us on the restrictions that occurred during the quarter, where that fits right now and if that has been a slight impediment to to the results that that you've put up. Thank you yeah and it has probably more than any other type of gaming operations.
And certainly with our portfolio that day.
There are occupancy restrictions within Clarke County, which had been at 50 per cent and now as of May 1st have been moved up to 80%.
And so you can imagine and with a smaller restaurant venue that it's actually a lot more materials and when you are talking about a and.
Large casino floor.
Like we're pretty excited about that and we're hopeful that.
And the Governor here and said that we'd be prepared to get to 100 per cent June 1st which would be another another another lift for us.
Thanks, Charles thinks like a nice corner.
And the next question constantly and the cats and check for you Tonight and nothing.
Afternoon, everyone.
Today ma'am.
Look I wanted to go back to the stratosphere, which.
It was sort of fairly prominent within the portfolio at one time you know, there's certainly wasn't formal guidance about it but you know notionally, we were thinking about getting that property to call up to 60 million dollar neighborhood of EBITA and I just wonder you know the last time and we discuss those.
<unk> and numbers was pre COVID-19.
And you know pre where we sit today.
You know how do we think about.
Where the neighborhood or where the ceiling on that.
Ultimately be either qualitatively or as much details you can offer.
Well I would say, David where at that run right right now.
So we're not.
We're not focused that there is it feeling with that property.
Given the dynamics that Blake mentioned relative the nurse share that's coming down to the north side of the strip and the things that we're doing with the property and.
But we're we're very bullish on it and we think that this trajectory continues.
Certainly for the balance of this year and and and to next year. So we're excited to see.
And how high we can push it without and ceiling.
Yeah, I think that day, but I think that's as I mentioned and my earlier comments.
Think that feeling gets raised as we continue to realize.
More of our people direct booking to the property, which means they're choosing that property versus and particular right on a on a website.
We're seeing more casino bookings given a very robust casino program, we've instituted at that property, which prior to our ownership didn't exist there really wasn't.
Any any casino program.
So.
Charles mentioned, we're we're achieving those targeted results that we had talked about earlier right now.
Running 60% to 70% occupancy at the property given some of the fixed.
Fixed costs fundamental changes, we've made that we believe will stick going forward.
And adding the necessary cost associated with with more revenue come near the property.
We believe.
We don't want to put a ceiling on and we thank the property is well positioned.
Given the development coming north that we've already talked about the circle.
Downtown development, and the and the city's Arts district improvement coming south towards us.
And the properties and and a great and a great.
Area and a great zone right now to capitalize on on not only our investment, but the growth that's coming and the city book North themselves.
Understood. So the natural follow up is since there's so much discussion about capital allocation and what would it take for you to consider putting more into it right because some of the plans earlier on and I think did have a broader scope and what ultimately got done.
Yes, I think the piece that was broader was really about putting convention space, but we're fortunate that the convention center is very close to the property and they spent.
1 billion for and that should be opening shortly and.
And we we think we've got it right now I mean, we will continue to do room renovations and ordinary court.
I think you could see us looking at ways to use the excess real estate on the property and a capitalized type of fashion, where we could partner with people to add onto amenities. The property, while we're not contributing capital other than land and we'll talk about some of those things with and.
And if folks who are protest and.
But in terms of doing more and.
A large scale capex, which 100 million for us as large that that's not on the radar for us at this point yeah between our our investment and I think we did six.
Six and 650 rooms, we've renovated prior to our ownership there was another.
Five or 600, so roughly half the property.
And the room product has been renovated within a reasonable amount of constantly ours was looked and the last year and is Charles mentioned I think the rooms are probably any focus that we would have going forward, but the catalyst to answer your question of what would be a catalyst for us and invest more money for me would be getting the balance sheet, where we want to.
Sounds good to me thank you.
And this concludes the question answer session and now turn the call back over to Mister <unk> and finally Max.
Thanks, everyone for joining and we'll talk to you and our next quarterly call.
Thank you ladies and gentlemen. This concludes today's conference call. Thank you for participating and you may now disconnect.