Q1 2024 Golden Entertainment Inc Earnings Call

Okay.

Operator: Good afternoon, ladies and gentlemen. Thank you for standing by.

Good afternoon, ladies and gentlemen, thank you for standing by welcome to the Golden Entertainment first quarter 2024 earnings Conference call. At this time, all participants are in a listen only mode.

Operator: Welcome to the Golden Entertainment first quarter 2024 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 Joe Jaffoni, Investor Relations. Please go ahead, sir.

Joseph N. Jaffoni: <unk> 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 Joe <unk> Investor Relations. Please go ahead Sir.

Joseph N. Jaffoni: 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 Protell, 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. However, 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.

Joseph N. Jaffoni: Thank you very much operator, and good afternoon, everyone on the call today is Blake <unk>, the company's founder Chairman and Chief Executive Officer, and Charles per tell the company's President and Chief Financial Officer.

Joseph N. Jaffoni: 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 talk about our performance. You can find the reconciliation of GAAP financial measures in our press release, which is available on our website.

Joseph N. Jaffoni: On this call we will make forward looking statements under the safe Harbor provisions of the federal Securities laws.

Joseph N. Jaffoni: Actual results may differ materially from those contemplated in these statements.

Joseph N. Jaffoni: 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.

Joseph N. Jaffoni: Except as required by law, we undertake no obligation to update these statements as a result of new information or otherwise.

Joseph N. Jaffoni: During today's call. We will also discuss non-GAAP financial measures in talking about our performance.

Joseph N. Jaffoni: You can find the reconciliation of GAAP financial measures in our press release, which is available on our website we.

Joseph N. Jaffoni: We'll start the call with Charles Protell reviewing the details of the first quarter results and 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 Protell. Charles, please go ahead.

Joseph N. Jaffoni: We will start the call with Charles portal reviewing the details of the first quarter results and 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 for Charles Charles. Please go ahead.

Charles H. Protell: Thanks Joe. We started the quarter by completing the sale of our Nevada distribution business, the last of three non-core businesses that we have divested over the past nine months. The proceeds from these transactions were used primarily to repay over half a billion dollars of debt, including the redemption of our bonds in April that were outstanding at the end of the quarter. The financial flexibility we created by reducing leverage and maintaining liquidity has allowed us to establish a recurring dividend at an attractive yield and positions us to fully utilize our current 91 million share repurchase authorization.

Charles H. Protell: Thanks, Joe we started the quarter by completing the sale of our Nevada distributed business.

Charles H. Protell: Cost of three noncore businesses that we divested over the past nine months the.

Charles H. Protell: The proceeds from these transactions were used primarily to repay over half a billion dollars of debt, including the redemption of our bonds in April that were outstanding at the end of the quarter.

Charles H. Protell: The financial flexibility, we created by reducing leverage and maintaining liquidity has allowed us to establish a recurring dividend at an attractive yield and positions us to fully utilize our current $91 million share repurchase authorization.

Charles H. Protell: Turning to our financial results, we generated revenue of $174 million and EBITDA of $41 million in the first quarter, which excludes the prior year operations from our divested Maryland casino and distributed gaming businesses in Nevada and Montana. Comparing the results of continuing operations in the first quarter, total revenue was down less than 1%, but EBITDA was down over 15%, primarily due to increased labor costs in our Nevada casino resorts, as well as weaker revenues from our higher-margin Nevada Locals casinos.

Charles H. Protell: Turning to our financial results, we generated revenue of $174 million and EBITDA of $41 million in the first quarter.

Charles H. Protell: Which excludes the prior year operations from our divested, Maryland Casino and distributed gaming businesses in Nevada and Montana.

Charles H. Protell: Comparing the results of the continuing operations in the first quarter total revenue was down less than 1%, but EBITDA was down over 15% primarily due to increased labor costs in our Nevada casino resorts as well as weaker revenues from our higher margin, Nevada locals casinos.

Charles H. Protell: At the Strat, total occupancy improved almost 8%, to 78% for the quarter, with over 6% of improvement in midweek occupancy. Unfortunately, in March, Las Vegas missed several large drivers of visitation compared to last year, including ConExpo, which is one of the city's largest conventions, the hosting of NCAA Tournament basketball games, as well as a few sold-out concerts at Allegiant Stadium. Despite a successful Super Bowl weekend in February, our ADR was down about 8% for the quarter.

Charles H. Protell: At the Strat total occupancy improved almost 8% to 78% for the quarter with over 6% of improvement in midweek occupancy.

Charles H. Protell: Unfortunately in March Las Vegas missed several large drivers of visitation compared to last year, including Connex BOE, which is one of the city's largest conventions the hosting of NCQA tournament basketball games as well as a few sold out concerts at Allegiant Stadium.

Charles H. Protell: Despite our successful Super Bowl weekend in February our ADR was down about 8% for the quarter.

Charles H. Protell: Weekend occupancy at STRAT was 96% for the quarter, but we were still missing over 12% of occupancy during the week compared to 2019, although that gap is narrowing with each passing quarter. We view improving midweek occupancy as a key component to growing EBITDA at the Strat, and we continue to believe that our recent capital investments and the growth in Las Vegas visitation will improve our business throughout the year. In addition, Atomic Golf opened at the end of March, which is expected to drive additional visitors and locals to the Strat for this new entertainment experience. On the expense front, the Strat experienced higher labor costs, primarily driven by our new union contract that increased wages by about 11% year over year. This will be the anniversary after Q2.

Charles H. Protell: Weekend occupancy at Strat was 96% for the quarter, but we were still missing over 12% of occupancy during the week compared to 2019, although that gap is narrowing with each passing quarter.

Charles H. Protell: We view improving midweek occupancy as a key component to growing EBITDA at the Strat and we continue to believe that our recent capital investments and the growth in Las Vegas visitation will increasingly improve our business throughout the year.

Charles H. Protell: In addition, atomic call opened at the end of March which is expected to drive additional visitors and locals to the strat for this new entertainment experience.

Charles H. Protell: On the expense front, the strat experienced higher labor costs, primarily driven by our new Union contract that increased weight by about 11% year over year. This will anniversary after Q2.

Charles H. Protell: We also had about $500,000 of additional advertising expenses in the quarter to enhance our media campaigns for the Strat in order to build consumer awareness and drive future visitation. In Laughlin, we grew revenue slightly in the quarter, supported by our new bingo room in Edgewater that is driving more local customers, as well as having 8,000 seats filled for a concert at our Laughlin Event Center. Our rated gaming revenue and database activity in Laughlin remains healthy, with improved visitation and spend across all tiers of players in the market.

Charles H. Protell: We also had about 500000 of additional advertising expenses in the quarter to enhance our media campaigns for the strat in order to build consumer awareness and drive future visitation.

Charles H. Protell: In Laughlin, we grew revenue slightly in the quarter supported by our new Bingo room and Edgewater. It is driving more local customers as well as having 8000 seats filled for a concert at our Laughlin event Center.

Charles H. Protell: Our rated gaming revenue and database activity in smartphone remains healthy with improved visitation spend across all tiers of players in the market.

Charles H. Protell: Margins in Laughlin were impacted by higher labor costs as we compete for employees out of the limited pool of labor primarily residing in Arizona. We also experienced higher entertainment expenses related to the concert that increased comp activity as well as advertising expenses.

Charles H. Protell: Margins in Laughlin were impacted by higher labor costs as we compete for employees out of a limited pool of labor primarily residing in Arizona.

Charles H. Protell: We also experienced higher entertainment expenses related to the concert that increased comp activity as well as advertising expense.

Charles H. Protell: For our Nevada Locals casinos, revenue declined 5% and EBITDA declined 13%, primarily due to decreased visitation spend by our low- and mid-tier rated players. Our largest revenue and EBITDA declines were at our Arizona Charlie's Boulder property, which we view as the most value-oriented casino in the portfolio. In addition, we have been impacted by road construction affecting the entry to our Arizona Charlie's Decatur property, as well as seeing some increased promotional activity in the market. These trends have continued in April, but we should see improvement in May.

Charles H. Protell: For our Nevada locals casinos revenue declined 5% and EBITDA declined 13%, primarily due to decreased visitation spend.

Charles H. Protell: And our low and mid tier radio players.

Charles H. Protell: Our largest revenue and EBITDA declines were at our Arizona, Charlie's folder property, which we view as the most value oriented casino in the portfolio.

Charles H. Protell: In addition, we have been impacted by road construction affecting the entry to our Arizona Charlie's to cater property as well as seeing some increased promotional activity in the market. These trends have continued in April but we see improvement in may.

Charles H. Protell: First quarter Nevada tavern revenue was up 1% over last year, supported by the purchase of four new taverns in November, bringing our total locations to 69 at the end of March. However, on a same-store basis, total revenue declined 4%, driven by declines in food and beverage revenue, partially offset by a slight increase in same-store gaming revenue. We attribute lower same-store revenue to declining retail demand, as well as less frequent visitation from our lower-tiered rated players. As a result, EBITDA for the Nevada Taverns declined 11%.

Charles H. Protell: First quarter, Nevada Tavern revenue was up 1% over last year supported by the purchase of four new taverns in November bringing our total locations to 69 at the end of March on a same store basis total revenue declined 4% driven by declines in food and beverage revenue, partially offset by a slight increase in same.

Charles H. Protell: Stuart gaming revenue.

Charles H. Protell: We attribute lower same store revenue declining retail demand as well as less frequent visitation from our lower tiered rated players as a result, EBITDA for the Nevada taverns declined 11%.

Charles H. Protell: In April, we purchased two additional taverns, growing our tavern portfolio to 71 locations, with 68 of them in the Las Vegas Valley. We anticipate opening our 72nd tavern by the end of Q2, and we still target growing the portfolio to over 90 locations within the next few years. Now, let me provide an update on our balance sheet. Outstanding debt at the end of the quarter consisted primarily of a $397 million term loan and $276 million of unsecured notes, with cash on hand of approximately $400 million due to proceeds received from the sale of our distributed gaming business.

Charles H. Protell: In April we purchased two additional taverns growing our tavern portfolio to 71 locations with 68 of them in the Las Vegas Valley.

Charles H. Protell: We anticipate opening our 70 <unk> tavern by the end of Q2, and we still target growing the portfolio to over 90 locations within the next few years.

Charles H. Protell: In April, we used $287 million of cash to repay the outstanding notes and accrued interest, as well as another $15 million for our initial dividend and the purchase of two taverns. This leaves us with about $100 million of cash and access to $240 million of additional liquidity from our unfunded revolver. Our current net leverage of less than two times and strong liquidity profile provide us with the flexibility to continue to invest in our own assets, return capital to shareholders, and evaluate potential strategic opportunities.

Charles H. Protell: Now, let me provide an update on our balance sheet outstanding debt at the end of the quarter consisted primarily of a $397 million term loan and $276 million of unsecured notes with cash on hand of approximately $400 million due to proceeds received from the sale of our distributed gaming business.

Charles H. Protell: In April we used $287 million of cash to repay the outstanding notes and accrued interest as well as another $15 million for initial dividend and the purchase of two taverns. This leaves us with about $100 million of cash and access to $240 million of additional liquidity from our unfunded revolver.

Charles H. Protell: Our current net leverage of less than two times and strong liquidity profile provides us with the flexibility to continue to invest in our own assets returned capital to shareholders and evaluate potential strategic opportunities.

Charles H. Protell: While we continue to review actionable strategic opportunities, the current market environment and macro backdrop has made it less conducive to M&A for us. At this time, it's difficult to find an opportunity to acquire Nevada-based casinos with their own real estate, which would be more accretive than acquiring our own stock, which we intend to do over the remainder of the year with our current repurchase authorization. That concludes our prepared remarks. Blake and I are now available for questions.

Charles H. Protell: While we continue to review actionable strategic opportunities the current market environment and macro backdrop has made it less conducive to M&A for us at this time, it's difficult to find an opportunity to acquire Nevada based casinos with owned real estate, which would be more accretive than acquiring our own stock, which we.

Charles H. Protell: Intend to do over the remainder of the year with our current repurchase authorization.

Charles H. Protell: That concludes our prepared remarks, Blake and I are now available for questions.

Speaker Change: Thank you ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press star followed by one on your Touchtone phone you will hear a three told prompt acknowledging your request and your questions will be pulled in the order. They are received should you wish to decline from the polling process. Please press star followed by two one.

Operator: Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by one on your touch-tone phone. You will hear a three-tone prompt acknowledging your request, and your questions will be pulled in the order they are received. Should you wish to decline from the polling process, please press star followed by 2.

Operator: One moment, please, for your first question. Your first question comes from David Katz, Jeffries. David, please go ahead. David, your line is open. Moving on, your next question comes from David Bain, Mr. B Riley. David, please go ahead. Great.

Operator: Please for your first question.

Operator: Your first question comes from David Katz Jefferies. David. Please go ahead.

David Brian Bain: David Your line is open.

Operator: Moving on your next question comes from David Bain B Riley David. Please go ahead.

David Brian Bain: Great, thank you. Very helpful commentary up front, but so past CONAG and the other events in one cue of last year seems like 2Q Through the rest of the year should be the best convention attendance since 2019, obviously not at that level yet, but that'll obviously help strat occupancy post remodel. Are you looking at doing something different strategically promotionally, you know directed at groups or or FIT? I did hear you saying something about a new advertising campaign. Just any more depth on catalysts or strat midweek occupancy would be great given, you know, it's such a significant driver.

David Brian Bain: Thank you very helpful commentary upfront, but so it seems like.

David Brian Bain: <unk> Con AG and the other <unk> of last year. It seems like <unk> through the rest of the year should be the best convention attendance since 2019, obviously not at that level, yet, but that will obviously help strat occupancy post remodel are you looking at doing something different strategically promotional Lee directed at.

David Brian Bain: Groups or <unk>.

David Brian Bain: I didn't hear you, saying something about our new advertising campaign, just any more depth on catalysts for strat midweek occupancy would be great given.

David Brian Bain: Such a significant lever.

Blake L. Sartini: Yeah, I think, as Charles said in his prepared remarks. We're seeing, we're seeing midweek occupancy grow, as well as overall occupancy grow. You referenced an ad campaign. We did a regional ad campaign that rolled out towards the end of last year and the first quarter of this year to reintroduce the property and the new amenities that we provided there with our capital investment. We will continue to advertise on a retail basis, if you will, the new amenities and the new capital improvements at the property.

Speaker Change: Yes, I think.

David Brian Bain: As Charles said in his prepared remarks.

Blake L. Sartini: We're seeing we're seeing midweek occupancy grow as well as overall occupancy grow you referenced an AD campaign, we did a regional AD campaign.

Blake L. Sartini: That rolled out towards the end of last year in the first quarter of this year, we reintroduced the property and the new amenities that we provided them with our capital investment.

Blake L. Sartini: We will continue to.

Blake L. Sartini: <unk> on a retail basis, if you will the new amenities.

Blake L. Sartini: New capital improvements at the property in terms of above.

Blake L. Sartini: In terms of FIT and OTA in particular, we are attacking that by moving up in the search. If you scroll on these OTA sites, it's an endless kind of scroll for room rates and value in Vegas. By improving our guest scores, we have moved up significantly on those OTA sites in terms of the scroll. We moved to the top of the pages, which allows us to produce, I think, more I could say, better rates over time.

Blake L. Sartini: And.

Blake L. Sartini: <unk> in particular, we are attacking that by.

Blake L. Sartini: Moving up on the search if you scroll a meso ta sites, it's an endless kind of a squirrel for.

Blake L. Sartini: Room rates and value in Vegas by improving our guest scores we have moved up significantly.

Blake L. Sartini: In that.

Blake L. Sartini: And that.

Blake L. Sartini: When those otas sites in terms of.

Blake L. Sartini: The scroll, we move to the top of the pages, which allows us.

Blake L. Sartini: To produce I think more occupancy better rates over time, so we will continue internally doing Matt.

Blake L. Sartini: And then as you mentioned more conventions coming to town.

Blake L. Sartini: This rise in the high tide of that when Las Vegas is full.

Blake L. Sartini: The challenge there has been the rate as Charles mentioned in his opening comments, but we are seeing forward movement in the strat and we believe we will continue to see improvement throughout the remainder of the year.

Blake L. Sartini: So we will continue internally doing that, and then, as you mentioned, more conventions coming to town. We always rise in the high tide of that when Las Vegas is full. The challenge there has been the rate, as Charles mentioned in his opening comments, but we are seeing forward movement in the strat, and we believe we will continue to see improvement throughout the remainder of the year.

Charles H. Protell: Okay. Great. That's helpful. And then if you can give us just a little bit more color also around Atomic Golf, that launch, maybe insight if you have it on how it intends to, you know, further drive traffic or augment from here their awareness, and if you're going to be making any moves to sort of add to strat traffic now that you've seen the flow and audience in real time.

Speaker Change: Okay, Great that's helpful and then.

Charles H. Protell: If you can give us just a little bit more color also around our atomic Golfed out launch maybe inside if you have it on how it intends to.

Charles H. Protell: Further drive traffic or augment from here.

Charles H. Protell: Fair enough and if you're going to be making any moves to sort of add to strat traffic now that you've seen the flow and audience in real time.

Blake L. Sartini: Yeah, look, we're pretty excited about it. I mean, it's an $80 million project that's not off of our balance sheet. It opened at the end of the quarter, so it's kind of in its ramping up phase, but we expect that to contribute $4 to $5 million of EBITDA to us through a combination of a revenue share agreement we have with them, plus additional traffic that we think will be driven to the property.

Speaker Change: Yes look we're pretty excited about it I mean, it's an 80 million dollar projects, that's not off of our balance balance sheet.

Blake L. Sartini: It opened at the end of the quarter. So it's kind of in its ramping up phase, but we expect that to contribute $4 million to $5 million of EBITDA to us.

Blake L. Sartini: Through a combination of.

Blake L. Sartini: Our revenue share agreement, we have with them plus additional traffic that we think will be driven on the property.

Blake L. Sartini: And we're seeing some of that now so youll see on our website, we will have certain promotions in terms.

Blake L. Sartini: And we're seeing some of that now. So you'll see on our website, we'll have certain promotions in terms of stay and play type packages. And again, we view it as just another amenity for our guests and a way that we could get some of the local population here in Las Vegas to come down and experience this new entertainment offering as well as the Strip.

Blake L. Sartini: And play type packages and again, we viewed as just another amenity for our guests.

Blake L. Sartini: In a way that we seek at some of the local population here in Las Vegas to come down and experience. This new.

Blake L. Sartini: Entertainment offering as well as the scrap specifically.

Blake L. Sartini: Specifically, I would just add, uh, Beep Beep, The parking in our facility, or valet parking through our valet, both front and back at the Strat, is a way to drive traffic through there, which we are promoting internally and externally, as well as providing Atomic in, let's say, combined with a room package at the Strat that we're in the process of rolling out now. So to answer your question, we are using Atomic specifically to drive foot traffic through the casino as well as to drive room inventory going forward. And as Charles mentioned, these are kind of green shoots right now that we're going to mature through.

Speaker Change: Specifically I would just add.

Blake L. Sartini: B B.

Blake L. Sartini: The parking in our facility or valet parking through or.

Blake L. Sartini: Both front and back at the Strat.

Blake L. Sartini: As a way to drive traffic through there, which we are promoting internally and externally as well as provide.

Blake L. Sartini: Providing atomic and let's say combined with the room package.

Blake L. Sartini: At the Strat that we're beginning to roll out now so to answer your question, we are using atomic specifically to.

Blake L. Sartini: To drive foot traffic through the casino as well as to drive room inventory.

Blake L. Sartini: Going forward and as Charles mentioned these are kind of green shoots right now that we're going to mature through the year.

Operator: Awesome. Thanks, Blake. Thanks, Charles.

Speaker Change: Awesome. Thanks, Blake Thanks Charles.

Barry Jonas: Thank you. Your next question comes from Barry Jonas, Truist. Barry, please go ahead.

Speaker Change: Thank you. Your next question comes from Barry Jonas Truest Berry. Please go ahead.

Barry Jonas: Hey guys, thanks for taking my questions. Maybe talk about how you're preparing for the next minimum wage hike increase in July. Do you still think this will have a smaller impact than last year? And I guess you think you'll be able to offset it. Thanks.

Barry Jonathan Jonas: Hey, guys. Thanks for taking my questions.

Barry Jonas: Maybe talk about how you are preparing for the next minimum wage hike increase in July you still think this will have a smaller impact than.

Barry Jonas: Then last year.

Barry Jonas: And I guess getting out where you think you'll be able to offset it.

Blake L. Sartini: Yeah, so that primarily is going to impact our Tavern portfolio. We are preparing for that. Obviously, we budgeted for that. We are in the process of implementing expense mitigation programs within the organization, much of which includes labor. We should reap the full benefit, the full go-forward benefit of that, towards the middle, right now, actually, the middle of this quarter going forward. And then, as Charles mentioned in his opening comment, company-wide, we will lap the year-over-year cost comps, I think, in early Q3. So, to answer your question, we're employing mitigation efforts right now, and then those cost comps last in Q3. Both of those, I think, will begin to mitigate that headwind.

Barry Jonathan Jonas: Yes, so that primarily is going to impact our tavern portfolio. We are preparing for that obviously, we budgeted for that we are in the process of.

Blake L. Sartini: Of expense mitigation programs within the organization much of it includes the labor we should reap the full benefit the full go forward benefit of that.

Blake L. Sartini: Towards the middle right now actually the middle of this quarter going forward and then as Charles mentioned in his opening comments.

Blake L. Sartini: Companywide, we lap.

Blake L. Sartini: The year over year cost comps I think in early Q3.

Blake L. Sartini: So we.

Blake L. Sartini: We are we are to answer your question, we're employing mitigation efforts right now and then those cost cost comps last in Q3, both of those I think we will.

Blake L. Sartini: We believe we will begin to mitigate that headwind.

Barry Jonas: Great, great. And then just as a follow-up, you know, speaking of the taverns business, I continue to hear other players in the market express some interest here. You know, wondering how you're viewing potential increased competition and if you're seeing anything, maybe, in an M&A environment there. Thanks.

Speaker Change: Great Great and then just as a follow up.

Barry Jonas: Speaking of the taverns business continued to hear other players in the market expressed some interest here.

Barry Jonas: Wondering how you're viewing potential increased competition and if youre seeing anything maybe in an M&A.

Barry Jonas: Environment there thanks.

Blake L. Sartini: We're not seeing anything in the M&A environment. We pretty much get first look at anybody that wants to sell, or we have had first look. So we're in a good position there in terms of knowing what's available now in the market. We also get one of the first looks, if not the first, at greenfield opportunities, which we're focused on our five-star locations, primarily at this point.

Barry Jonas: We're not seeing anything in the M&A environment, we pretty much get first look at anybody that wants to sell or we have at first look so we're in a good position there in terms of knowing whats available now in the market.

Blake L. Sartini: Also get.

Blake L. Sartini: One of the first one if not the first greenfield opportunities, which we're focused on our five star locations primarily at this point.

Blake L. Sartini: And our footprint at this point, I think it is large enough that if you look at the regulatory complexities, each of these taverns happens to be licensed individually. To get a large number, a significant number, in a portfolio that would compete quickly, I think it would be nearly impossible from a regulatory standpoint. So our size and our brand, I think, are a significant competitive advantage out there for us. Competition has always been there.

Blake L. Sartini: And the look.

Blake L. Sartini: Our footprint at this point.

Blake L. Sartini: I think is large enough that if you look at the regulatory complexities of.

Blake L. Sartini: Each of these taverns, having to be licensed individually to get a large number a significant number in our portfolio that would compete quickly I think would be nearly impossible from a regulatory standpoint, so our size and our brand I think is a significant competitive advantage out there for us competition has always been.

Blake L. Sartini: They're in.

Blake L. Sartini: You know, we, we've, we've, we've, we've, we did our way through that very successfully. So we believe with our footprint and our brand, we're in a good position to not only grow but continue to stay strong in the Tavern business.

Blake L. Sartini: We.

Blake L. Sartini: Weighted our way through that very successfully so we believe with our footprint and our brand. We are in a good position too so not only grow but continues to be strong in the tower business going forward.

Operator: Great, thank you for taking my questions.

Speaker Change: Great. Thank you for taking my questions.

Carlo Santarelli: Thank you. Ladies and gentlemen, as a reminder, should you have a question, please press star 1 on your touchtone phone. Your next question comes from Carlo Santarelli of Deutsche Bank. Carlo, please go ahead.

Speaker Change: Thank you, ladies and gentlemen, as a reminder, should you have a question. Please press star one on your Touchtone phone.

Carlo Santarelli: Your next question comes from Carlo Santarelli Deutsche Bank Carlo. Please go ahead.

Carlo Santarelli: Hey guys, I have two. The first one is a little bit bigger picture, and the second one's probably a little bit bigger picture than the first one, but obviously, Charles, in your comments, you know, and we see it in the data, and we hear it from peers, but you know, the trend seems to be down in most of the local businesses in and around Nevada. Given kind of the macro backdrop, and acknowledging things don't grow to the sky, what do you think has perhaps changed? That's driving kind of some of the top line headwinds, some of the incentives for, you know, competitors to go out and be a little bit more promotional, et cetera.

Carlo Santarelli: Hey, guys I have two first one is a little bit bigger picture in the second one probably a little bit more bigger picture first one but.

Carlo Santarelli: Obviously Charles in your comments.

Carlo Santarelli: And we see it in the data and we heard it from peers.

Carlo Santarelli: The trend seems to be down in most of the locals businesses in and around Nevada.

Carlo Santarelli: Given kind of the macro backdrop.

Carlo Santarelli: And acknowledging things don't grow to the Sky what do you think has perhaps changed.

Carlo Santarelli: That's driving kind of some of the topline headwinds some of the incentives for competitors to go out and be a little bit more promotional et cetera.

Carlo Santarelli: Yes.

Charles H. Protell: Yeah, I mean, look, we've got 600,000 active players in our database. So I think we have a pretty decent view, at least within our population, of what's going on with our consumer. And I think when you have persistent inflation and higher interest rates, some of that consumer is certainly feeling it at this point. And so, you know, that's what we see.

Carlo Santarelli: Yes.

Carlo Santarelli: We guide.

Charles H. Protell: 600000 active players in our database I think we have a pretty.

Charles H. Protell: Decent view at least in our population is what's going on with our consumer and I think it.

Charles H. Protell: When you have persistent inflation and higher interest rates at some of that consumer is certainly feeling it at this point and so that's what we see and I.

Charles H. Protell: And I think that in terms of whether that levels off, you know, like I said in my remarks, we saw some of that trend continue through April. But as we look into May, we've seen some stabilization. Now, some of that has to do with the local market. Our largest contributor to our local casinos is Arizona Charlie's Decatur property, which had the entryway blocked due to road construction. So when that's freeing up, that's obviously helpful. But on the macro side, I think it's tougher to say that for the prolonged period of an inflationary environment and higher rates, that that has no impact on the consumer, including

Charles H. Protell: Think that in terms of does that level off yes, let's say like I said in my remarks, we saw some of that trend continued through April but as we look into may we've seen some stabilization now some of that has to do within the local market and our largest contributor to our local casinos as Arizona Charlie's Decatur property.

Charles H. Protell: Which had the entry way blocked road construction, so when that screen App. That's obviously helpful. But I think on the macro side I think it's.

Charles H. Protell: Hartford to say that for the prolonged period.

Charles H. Protell: An inflationary environment and higher rate that has no impact on the consumer including ours.

Carlo Santarelli: Got it. And the second one, it's probably going to be a little bit tougher to answer, but when you look at, you know, let's just arbitrarily take one Q run rate, property level business is running at, call it $210 million or so. There's, you know, give or take $50 million in corporate expenses. You talked a little bit about the M&A environment on the buy side being tough. You certainly have a portfolio of assets that I think are attractive.

Charles H. Protell: Got it and the second one.

Carlo Santarelli: It's probably going to be a little bit tougher to answer but when you look at let's just arbitrarily take <unk> run rate property level business is running at call it $210 million or so there.

Carlo Santarelli: Give or take $50 million of corporate expense, you talked a little bit about the M&A environment on the buy side being tough.

Carlo Santarelli: I'm assuming, you know, potential suitors see many of the same headwinds that you see in that market. But when you think about scope and size, and you think about kind of the options, strategic options, you know, that perhaps are, or could be available to you guys, what are some comments you could share as to how you view some of those things?

Carlo Santarelli: You certainly have a portfolio of assets that I think are attractive.

Carlo Santarelli: I am assuming potential suitors see many of the same headwinds that you see in that market, but when you think about scope and size and you think about kind of the.

Carlo Santarelli: <unk> strategic options that perhaps are could be available to you guys.

Carlo Santarelli: What are some comments you could share as to as to how you view some of those things.

Charles H. Protell: Yeah, I think that, look, we look at everything, like I said in my comments, and we've looked at, you know, several things over the past several months as we've had these discussions with you guys in a public setting and then many others privately. I think that the things that we see on the M&A front from the buy side are, quite frankly, not very appealing, either in terms of size or the market there is, or in the structure, in terms of being an opco asset. I'd also say that, you know, again, from a rate environment perspective, that obviously impacts the cost of financing. And so it makes some of that math a little harder.

Speaker Change: Yes, I think look.

Carlo Santarelli: We look at everything like I said in my comments and we've looked at several things over the past.

Charles H. Protell: Several months as we've had these.

Charles H. Protell: Discussions with you guys in a public setting and then many others privately and I think that the things that we see on the M&A front from the buy side are quite frankly, not very appealing either in terms of size of the market there are or in the structure in terms of being an opco opco asset I'd also say.

Charles H. Protell: That again from the <unk>.

Charles H. Protell: Rate environment perspective, yes that obviously impacts cost of financing and to make some of that math, a little a little harder and also given where we're trading at it makes it tougher to do deals that are accretive we are the bid ask is between buyer and seller.

Charles H. Protell: And also given, you know, where we're trading at, it makes it tougher to do deals that are accretive where the bid ask is between buyer and seller. So for us, what that leads to is what we said we were going to do, which is invest in our own assets and utilize our buyback authorization, which we think is the most accretive use of capital. But I'd also say that if you look at us as a company that owns its own real estate, even given where we're trading at today, at any, you know, market multiple for rent, and you could, you know, pick a range that's in a lot of your research reports or where even the REITs are trading at right now, which is depressed prices, you know, that value is in excess of our current enterprise.

Charles H. Protell: For us with that leads to is what we said we're going to do which is invest in our own assets utilize our buyback authorization, we think thats. The most accretive use of capital, but I'd also say that if you look at us as a company that owns its own real estate, even given where we're trading at today at a market multiple.

Charles H. Protell: All four rent and you could pick a range. That's in a lot of your research reports are where even the Reits are trading at right now which is depressed prices.

Charles H. Protell: That value is in excess of our current enterprise value.

Charles H. Protell: So, to me, I'm not sure there's any action to be had until we are, quite frankly, valued appropriately for both the real estate and the operations of the business. But again, we're looking at all ways to unlock that value. But for now, we think that value is in buying our own.

Speaker Change: To me I'm not sure.

Charles H. Protell: If there is any.

Charles H. Protell: Action to be had until we can until we are quite frankly valued appropriately for both the real estate and the operations yeah the business.

Charles H. Protell: But again, we're looking at all at all ways to unlock that value, but for now we think that value is in buying our own shares.

Operator: Thank you, Charles. I appreciate it.

Speaker Change: Thank you Charles I appreciate it.

Chad C. Beynon: Thank you. Your next question comes from Chad Beynon, from Macquarie. Chad, please go ahead.

Charles: Thank you. Your next question comes from Chad Beynon Macquarie Chad. Please go ahead.

Chad C. Beynon: Thanks for taking my question. Charles Blake, you guys just kind of hit on what you're seeing in the database. Charles, in your prepared remarks, you talked about that lower end probably being the weakest part of it. Are you seeing any of that in the mid to kind of core higher end players? Like, is it spread across the board, or is it mainly in the lower segments of your database?

Chad C. Beynon: Afternoon, Thanks for taking my question.

Chad C. Beynon: Yes.

Chad C. Beynon: Charles Blake you you guys just kind of hit on what Youre seeing in the database.

Chad C. Beynon: Charles in your prepared remarks, you talked about that lower end.

Chad C. Beynon: <unk>, probably being the weakest part of it.

Chad C. Beynon: Are you seeing any of that in the mid to kind of core higher end players like is it broad across the board or is it mainly in the lower segments of your database.

Blake L. Sartini: Chad, I think the word mainly, if you use the word mainly, it's in the lower tier of the database. The upper tier visitation is consistent. The mid-tier visitation is consistent. But the mid-tier... Maybe the mid-tier spend may be a bit modest in some cases, with visitation being consistent. So we think, to answer your question, the main part of it is in the lower tier of the database, while the upper tier remains consistent. Mid-tier is consistent visitation with, in some cases, less.

Charles H. Protell: Joe I think I think the word mainly if you use the word mainly it's in the lower tier, but the database the upper tier visitation is consistent the mid tier visitation is consistent with the mid tier.

Blake L. Sartini: Sure.

Blake L. Sartini: Maybe.

Blake L. Sartini: The mid tier spend may be a bit modest in some cases visitation being consistent so we think that.

Blake L. Sartini: To your question. The main part of it is in the lower tier of the database or procure remains consistent mid tiers consistent visitation with.

Blake L. Sartini: Some cases website.

Speaker Change: Okay. Thank you and then as we think about.

Blake L. Sartini: Maybe the next 12 months on the strip you potentially have some supply.

Blake L. Sartini: Coming off the strip with trough just closed.

Blake L. Sartini: Potentially hard rock under under renovation and taking some rooms out of inventory you have fonteyn Blue, which just opened you have REO, new new ownership, but when you put all these things in a blender should that be a net positive for you guys. As we're kind of thinking about some of the big convention weeks in.

Chad C. Beynon: You have Fontainebleau, which just opened. You have Rio, under new ownership. When you put all these things in a blender, should that be a net positive for you guys as we're kind of thinking about, you know, some of the big convention weeks and F1? How do you see that?

Chad C. Beynon: F. One.

Chad C. Beynon: How do you see that.

Blake L. Sartini: Yes, we think it's a net positive given the level of convention activity that we're seeing throughout the remainder of the year, and the entertainment calendar throughout the remainder of the year. And, as you mentioned, some inventory coming off the market, pretty sizably actually. We do see it as a net positive going forward.

Chad C. Beynon: Yes.

Chad C. Beynon: Think it's a net positive given the the level of convention activity that.

Blake L. Sartini: We're seeing throughout the remainder of the year the entertainment calendar throughout the remainder of the year and as you mentioned.

Blake L. Sartini: Some inventory coming off the market pretty sizable actually.

Blake L. Sartini: We do see it as a net positive going forward.

Chad C. Beynon: And should we start to see that benefit? Like, do you think you'll start to see that in maybe the fourth quarter in a meaningful way?

Blake L. Sartini: And should we start to see that benefit.

Chad C. Beynon: Do you think youll start to see that and maybe the fourth quarter in a meaningful way.

Blake L. Sartini: Yeah, I mean, Q3 and into Q4 is when we think we're going to start to see...

Chad C. Beynon: Yes, I mean Q3 and into Q4 is when we think we're going to start to see that.

Chad C. Beynon: Okay, thank you guys. I appreciate it.

Speaker Change: Okay. Thank you guys I appreciate it.

Operator: Thank you. There are no further questions at this time. I will now turn it back to management for closing remarks.

Speaker Change: Thank you there are no further questions at this time I will now turn it back to management for closing remarks.

Joseph N. Jaffoni: Thank you all for joining us. We'll talk to you in the next quarter.

Speaker Change: Thank you all for joining and we'll talk to you at the next quarter.

Operator: Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.

Speaker Change: Ladies and gentlemen, this concludes your conference call for today, we thank you for participating and ask that you. Please disconnect your lines.