Q1 2025 Golden Entertainment Inc Earnings Call
Listen only mode.
Speaker Change: Question and answer session will follow the formal remarks. Please note that this call is being recorded today now I would like to turn the conference over to James Adams, The company's Vice President of corporate Finance and Treasurer. Please go ahead Sir.
Speaker Change: 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 <unk>, The company's President and Chief Financial Officer.
Speaker Change: On this call we will make forward looking statements under the safe Harbor provisions of the federal Securities laws actual results may differ materially from those contemplated in these statements.
Good afternoon, ladies and gentlemen, thank you for standing by welcome to the Golden Entertainment first quarter 'twenty to 'twenty five earnings conference call.
Speaker Change: This time all participants are in listen only mode. A question and answer session will follow the formal remarks. Please note that this call is being recorded today now I'd like to turn the conference over to James Adams, The company's Vice President of corporate Finance and Treasurer. Please go ahead Sir.
Speaker Change: As required by law, we undertake no obligation to update these statements as a result of new information or otherwise.
Speaker Change: During the call. We will also discuss non-GAAP financial measures when talking about our performance you can find a reconciliation of GAAP financial measures in our press release, which is available on our website. We will start the call with Charles reviewing the details of the first quarter results and a business update following that Blake and Charles will take your questions.
Blake: 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 <unk>, The company's President and Chief Financial Officer.
Blake: That I will turn the call over to Charles.
Charles: Thanks, James our first quarter year over year results were in line with our expectations and primarily impacted by not having last year's Super Bowl in Las Vegas, which was mainly felt at the strat.
Speaker Change: On this call we will make forward looking statements under the safe Harbor provisions of the federal Securities laws actual results may differ materially from those contemplated in these statements except as required by law. We undertake no obligation to update these statements as a result of new information or otherwise.
Charles: Outside of the Super Bowl impact on the Strat our business in Q1 was healthy with EBITDA from our other casinos up year over year and EBITDA from our taverns stabilizing.
Speaker Change: During the call. We will also discuss non-GAAP financial measures in talking about our performance you can find the reconciliation of GAAP financial measures in our press release, which is available on our website.
Charles: As we look forward April continues to demonstrate stable operating trends and may is off to a strong start.
Speaker Change: We will start the call with Charles reviewing the details of the first quarter results and a business update following that Lake Charles will take your questions with that I'll turn the call over to Charles.
Charles: Currently we are not seeing that dislocation in our business that seems to be reflected in our public valuation.
Charles: Now for some context on our property performance in the first quarter.
Charles: Thanks, James our first quarter year over year results were in line with our expectations and primarily impacted by not having last year's Super Bowl in Las Vegas, which was mainly felt at the strat.
Charles: The <unk> experienced declining occupancy in spend primarily in February resulting in a $3 million EBITDA headwind from last year's Super Bowl.
Charles: Inside of the Super Bowl impact on the Strat our business in Q1 was healthy with EBITDA from our other casinos up year over year and EBITDA from our taverns stabilizing.
Charles: Occupancy was down 5% for the quarter, but down 13% in February, which obviously led to lower gaming F&B and other revenues for the property.
Charles: As we look forward April continues to demonstrate stable operating trends and may is off to a strong start.
Charles: However in April our hotel revenue is up on both higher occupancy and rate, which is driving improved EBITDA heading into Q2.
Charles: Currently we are not seeing the dislocation in our business that seems to be reflected in our public valuation.
Charles: Looking forward through May straddle occupancy is pacing up 6% over last year at attractive rates and June is showing strength as well.
Charles: Now for some context on our property performance in the first quarter.
Charles: Currently Q2 looking better than last year for the property, but without direct convention bookings at the Strat, we have limited visibility beyond the next few months.
Charles: Clining Occupancy and Spend, primarily in February , resulting in a $3 million EBITDA headwind from last year's Super Bowl. Occupancy was down 5% for the quarter, but down 13% in February , which obviously led to lower gaming, F&B and other revenues for the property.
Charles: In Laughlin, we increased EBITDA by reducing expenses and focusing on more profitable concerts at our smaller entertainment venue.
Charles: We also targeted weekend promotional activities for driving customers as well as continue to promote our midweek bingoed for local guests, which allowed us to maintain our leading market share in Moscow.
Charles: However, in April , our hotel revenue is up on both higher occupancy and rate, which is driving improved EBITDA, heading into Q2.
Charles: Looking forward through May, Strat occupancy is pacing up 6% over last year at Attractive
Charles: For Nevada locals casinos are revenue was flat to prior year with EBITDA of 2% largely driven by operational efficiencies across payroll and other expenses.
Charles: Currently, Q2 is looking better than last year for the property, but without direct convention bookings at the Stratt, we have limited visibility beyond the next few months.
Charles: We see consistent performance out of our locals casinos with EBITDA margins at 46% for the second straight quarter, we actually seeing increasing strength in our locals business in April. So this segment is off to a strong start in Q2.
Charles: In Laughlin, we increase deep adop by reducing expenses and focusing on more profitable concerts at our smaller entertainment venue.
Charles: And our taverns revenue and EBITDA were down slightly year over year, but on a sequential basis EBITDA continued to increase over Q4, as we achieved improved performance from our newest taverns and lowered operating expenses.
Charles: We also targeted weekend promotional activities for driving customers as well as continue to promote our midweek bingo for local guests which allowed us to maintain our leading market sharing model.
Charles: For Nevada Locals, casinos are revenues flat for prior year, with EBADOP 2%, largely driven by operational efficiencies across payroll and other expenses.
Charles: We have seen an uptick in promotional activity in the tavern market from smaller private operators, which we do not view as sustainable but it may have some impact on Q2 performance for our taverns as we maintain a more disciplined reinvestment strategy.
Charles: We see consistent performance out of our local casinos, with EBITDA margins at 46% for the second straight quarter. We actually see an increasing strength in our local's business in April , so this segment is also a strong start in Q2.
Charles: Moving onto our capital structure, we ended the quarter with just over $400 million of debt outstanding $50 million of cash and $225 million of remaining availability under our revolving credit facility.
Charles: In our taverns, revenue and EBITDA were down slightly year-over-year, but on a sequential basis, EBITDA continued to increase over Q4, as we achieved improved performance from our newest taverns and lowered operating expenses.
Charles: Our low net leverage at two four times EBITDA and liquidity profile will enable us to withstand any potential impact to our business from the macro environment.
Charles: We have seen an uptick in promotional activity in the tavern market from smaller private operators which we do not view as sustainable but it may have some impact on Q2 performance for our taverns as we maintain a more disciplined reinvestment strategy.
Charles: Now us to continue to reinvest in our own assets pay dividends and opportunistically acquire more of our own stock.
Charles: In Q1, we had a short open window to buy stock it still used $7 6 million of our buyback authorization to repurchase 274000 shares.
Charles: Moving on to our capital structure, we ended the quarter with just over 400 million of dead-out standing 50 million attached and 225 million of remaining availability under a revolving credit facility.
Charles: Since the start of 2024, we have repurchased three 2 million shares totaling almost $100 million and paid out $35 million in dividends, we have $92 million remaining on our current buyback authorization, which we will use opportunistically throughout the year.
Charles: Our low net leverage is 2.4 times EBITDA and liquidity profile will enable us to withstand any potential impact to our business from the macro environment and allow us to continue to reinvest in our own assets.
Charles: We have evaluated the limited M&A opportunities currently in the market given the dislocation in our share price. There is no better use for our capital than repurchasing our own equity at these levels.
Pay dividends and opportunistically acquire more of our own stock.
Charles: In Q1, we had a short open-winded advice doc that still used 7.6 million of our buy-back authorization to repurchase 274,000 shares.
Charles: Our business has remained resilient and is improving despite an uncertain macroeconomic environment.
Charles: Having a focused portfolio of branded taverns casinos with owned real estate and low leverage positions us well to withstand any potential short term fluctuations in consumer demand and to benefit from the favorable long term economic trends in Nevada.
Charles: Since the start of 2024, we have repurchased 3.2 million shares, totaling almost 100 million and paid out 35 million in dividends.
Charles: We have 92 million remaining on our current by-back authorization which will use opportunistically throughout the year.
Charles: That concludes our prepared remarks, Blake and I are now available for questions.
Charles: We will now begin the question and answer session. If you would.
Charles: Like to ask the question since the press Star followed by the number one on your telephone keypad.
Charles: I would like to withdraw your question press firewall and again.
Speaker Change: And your first question comes from the line of Barry Jonas with <unk> Securities. Please go ahead.
Barry Jonas: Wanted to start with one.
Barry Jonas: I'll start with the stride I appreciate some of the comments in the opening remarks.
Barry Jonas: Can you maybe just give a little color now about what's the booking window is how it's been trending as of late and also maybe.
Barry Jonas: Talk about what your OTA mix is now and how you're sort of moving towards that targeted 50% mix. Thanks.
Charles: Yes, so as Charles mentioned in his.
Barry Jonas: Prepared comments we.
Barry Jonas: We don't have much.
Charles: And your first question comes from the line of Barry Jonas Victoria's Securities Bari. Please go ahead.
Barry Jonas: Our.
Barry Jonas: Traditional banquet space, our windows, probably much shorter than others for April may looks very very good looks very strong.
Barry Jonas: Hey, guys.
Barry Jonas: Wanted to start with.
Barry Jonas: Well I want to start with the stride I appreciate some of the comments in the opening remarks can.
Barry Jonas: Pacing on a <unk>.
Barry Jonas: Trending basis better than Q1.
Barry Jonas: Hard for us to predict.
Barry Jonas: Really outside of June I think Charles mentioned, Jim was looking strong also but we are seeing I think in addition, I think it's important to point out we're seeing.
Barry Jonas: Can you maybe just give a little color now about what the booking window is how it's been trending as of late and also maybe.
Barry Jonas: Talk about what your OTA mix is now and how you're sort of moving towards that targeted 50% mix. Thanks.
Barry Jonas: Casino revenues and operational margins also trend in the right direction with the stroke. So overall the property is.
Barry Jonas: Yes, so as Charles mentioned in his.
Barry Jonas: Is trending well and outside of the next 90 days, it's hard for us really to provide any solid guidance, yes, and I'd also just add to that I mean different than others, because like I said, we don't have that space. Our booking window has always been relatively short compared to some of our peers. So we will typically see 25%.
Barry Jonas: Prepared comments.
Barry Jonas: We don't have much business without.
Barry Jonas: Traditional banquet space, our windows, probably much shorter than others for April may looks very very good looks very strong.
Barry Jonas: Pacing on a <unk>.
Barry Jonas: Trending basis better than Q1.
Barry Jonas: To 30% of the occupancy that materialize within a seven day period and Thats been fairly consistent for us.
Barry Jonas: Hard for us to predict.
Speaker Change: Really outside of June I think Charles mentioned, Jim was looking strong also but we are seeing I think in addition, I think it's important to point out we're seeing.
Barry Jonas: So we haven't seen a lot of change in terms of the shortening booking window from our perspective, but again, we've always been shorter than others.
Speaker Change: Casino revenues and operational margins also trend in the right direction of distress. So overall the property is with.
Barry Jonas: On your second part of your question on the Iot a percentage I think we are running approximately 65% now.
Speaker Change: Is trending well and outside of the next 90 days, it's hard for US really does provide any solid guidance, yes, and I'd also just add to that I mean different than others, because as Les said, we don't have that space. Our booking window has always been relatively short compared to some of our peers. So we will typically see 25 to 30.
Barry Jonas: And it's trending downward as well where we are.
Barry Jonas: We're doing a much better job through our casino marketing programs on direct bookings and producing a lot more personal information of people checking in putting systems in place that will allow us.
Barry Jonas: To speak with them directly which had been a bit spotty in the past. So we are we are turning 65% give or take right now trending in the right direction, we're very bullish on us being able to get to that 50% level.
Speaker Change: 80% of the occupancy materialize within a seven day period, and that's been fairly consistent for us.
Speaker Change: And so we haven't seen a lot of change in terms of the shortening.
Speaker Change: Got it and then if I could sneak one more in I think as well the comments about share repurchases.
Speaker Change: Taking priority in the current environment makes a lot of sense, but can you maybe expand more on the M&A environment, both on the buy side as well as sell side of what you discussed before just curious how much the macro is.
Operator: At this time, all participants are in listen-only mode. A question-and-answer session will follow the formal remarks. Please note that this call is being recorded today.
And we've always been shorter than others on the <unk> on your second part of your question on the Ot eight percentage I think we are running approximately 65% now it's trending downward as well.
Speaker Change: As impacting those discussions or opportunities. Thanks.
James Adams: Now, I'd like to turn the conference over to James Adams, the company's Vice President of Corporate Finance and Treasurer. Please go ahead, sir. Thank you very much, operator, and good afternoon, everyone.
Speaker Change: Yes, I think the short answer is quite a bit I mean, when you have this much value dislocation in a short period of time.
We are doing.
Much better job through our casino marketing programs under our bookings and producing a lot more personal information for people checking in.
Speaker Change: Resetting expectations and you're uncertain about what the future looks like so that obviously puts a damper.
James Adams: 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. Actual results may differ materially from those contemplated in these statements.
Speaker Change: <unk> on your strategic M&A discussion and from a financing perspective, I think certainly us and others headed into this year.
<unk> systems in place that will allow us to to.
To speak with them directly which had been a bit spotty in the past. So we are we are trending at 65% give or take right now trending in the right direction.
Speaker Change: Anticipating.
Speaker Change: Interest rates to be lower than where they are at this point in time. So we'll see how that how that plays out over the course of the year, but that obviously has a direct impact on.
Bullish on us being able to get to that 50% level.
James Adams: Accept as required by law, we undertake no obligation to update these statements as a result of new information or otherwise. During the call, we will also discuss non-GAAP financial measures and talking about our performance.
Got it and then if I can sneak one more in I think as well the comments about share repurchases.
Speaker Change: The ability to pack and ability to finance transactions.
Taking priority in the current environment makes a lot of sense, but can you maybe expand more on the M&A environment, both on the buy side as well as sell side of what you discussed before just curious how much the macro is.
Speaker Change: Makes sense all right. Thank you so much.
James Adams: You can find the reconciliation of GAAP financial measures in our press release, which is available on our website.
Speaker Change: Thanks.
Speaker Change: And your next question comes from the line of David Katz with Jefferies.
James Adams: We will start the call with Charles reviewing the details of the first quarter results and a business update. Following that, Blake and Charles will take your questions.
Speaker Change: Please go ahead.
David Katz: Thank you good evening everybody.
Charles Protell: With that, I'll turn the call over to Charles. Thanks, James. Our first quarter year-over-year results were in line with our expectations and primarily impacted by not having last year's Super Bowl in Las Vegas, which was mainly felt at the stretch. Outside of the Super Bowl impact on the stride, our business in Q1 was healthy, with EBITDA from our other casinos up year over year, and EBITDA from our taverns stabilized. As we look forward, April continues to demonstrate stable operating trends, and May is off to a strong start. Currently, we are not seeing the dislocation in our business that seems to be reflected in our public valuation.
As impacting those discussions or opportunities. Thanks.
Speaker Change: Charles I wanted to go back to your commentary about the tavern business.
Yes, I think the short answer is quite a bit I mean, when you have this much value dislocation in a short period of time.
Speaker Change: Smaller operators by definition.
Speaker Change: A smaller operator or two.
Resetting expectations and you're uncertain about what the future looks like so that obviously puts a damper.
Speaker Change: Shouldnt makes that much of a difference so there must be.
Speaker Change: But I'm guessing.
And on your strategic M&A discussions and from a financing perspective, I think certainly us and others headed into this year.
Speaker Change: More of a trend among the smaller guys.
Speaker Change: True.
Speaker Change: That other larger operators are not participating in the competition.
Anticipating.
Interest rates to be lower than where they are at this point in time. So we'll see how that how that plays out over the course of the year, but that obviously has a direct impact on.
Speaker Change: A little more.
Speaker Change: Meet on that would be helpful.
Speaker Change: Yes, I mean keep it we're the largest operator of pattern in Nevada, most of that is in southern Nevada and Las Vegas.
The ability to pack and ability to finance transactions.
Charles Protell: Now for some context on our property performance in the first quarter. The Strat experience declining occupancy and spend primarily in February, resulting in a $3 million EBITDA headwind from last year's Super Bowl. Occupancy was down 5% for the quarter, but down 13% in February, which obviously led to lower gaming, F&B, and other revenues for the property. However, in April, our hotel revenue is up on both higher occupancy and rate, which is driving improved EBITDA heading into Q2. Looking forward through May, Strata occupancy is pacing up 6% over last year at attractive rates, and June is showing strength as well.
It makes sense alright, thank you so much.
Speaker Change: If you think about restricted licenses, we operate there's probably around 400 or so in southern Nevada and again, we're the largest but we are a smaller portion of that so what we see and we've lost some visibility on this once we divested the route that service.
Thanks.
And your next question comes from the line of David Katz with Jefferies.
Please go ahead.
Thank you good evening everybody.
Charles I wanted to go back to your commentary about the tavern business.
The smaller operators.
Speaker Change: Okay.
Speaker Change: And we see an increased promotional activity.
The definition.
A smaller operator or two shouldnt.
Speaker Change: Not so much necessarily at chain store locations, but on competing bar type locations from private operators and what we've seen in the past over many years is in that mode. You are really just chasing more dollars over the same customer wallet.
It shouldn't be that much of a difference so there must be.
I'm guessing.
More of a trend among the smaller guys and is it true.
And that other larger operators are not participating in the competition.
Speaker Change: And so I think that we haven't seen that behavior in the casino and in the local casinos I think there is probably a little bit more sophistication, there and a little bit more experience.
Charles Protell: Currently, Q2 is looking better than last year for the property, but without direct convention bookings at the Strat, we have limited visibility beyond the next few weeks.
A little more.
Meet on that would be helpful.
Yes, I mean keep it we're the largest operator.
Speaker Change: The turnover in ownership with smaller private.
Charles Protell: In Laughlin, we increase EBITDA by reducing expenses and focusing on more profitable concerts at our smaller entertainment venues. We also targeted weekend promotional activities for driving customers, as well as continue to promote our midweek bingo for local guests, which allowed us to maintain our leading market share in malls. For Nevada locals' casinos, our revenue was flat the prior year, with EBITDA up 2%, largely driven by operational efficiencies across payroll and other expenses. We see consistent performance out of our local casinos, with EBITDA margins at 46% for the second straight quarter. We actually see increasing strength in our locals business in April.
Pattern in Nevada, most of that is in southern Nevada, and Las Vegas.
Speaker Change: Tavern operators.
Speaker Change: Lot more frequent that what are you seeing casinos and it's a lot less institutionalized in terms of ownership and sophistication.
You think about restricted licenses, we operate there's probably around 400 or so in southern Nevada.
Speaker Change: Those are people chasing business.
We're the largest but we are a smaller portion of that.
Speaker Change: <unk> seen it before in the past, we think we're going to stick with our strategy and we've already by the way we've seen that mitigate a bit as we get into April and may but.
What we see and we've lost some visibility on this once we divested the route that service these locations.
Feed increased promotional activity.
Speaker Change: There is really.
Not so much necessarily at chain store locations, but on competing bar type locations from private operators and what we've seen in the past over many years is in that mode. You are really just chasing more dollars over the same customer wallet.
Speaker Change: No way for us to govern when other people aren't doing in the market as we were somewhat able to at least provide some guidance when we own the route to others on best practices for camera marketing.
Speaker Change: Yes.
Charles Protell: So this segment is off to a strong start in Q2.
Doug: Thanks, Doug.
And so I think that we haven't seen that behavior in the casino and the local casino I think there's probably a little bit more sophistication, there and a little bit more experience.
Speaker Change: Good question, you're right typically be smaller operators, one or two would not impact.
Charles Protell: In our taverns, revenue and EBITDA were down slightly year over year, but on a sequential basis, EBITDA continued to increase over Q4 as we achieved improved performance from our newest taverns and lowered operating expenses. We have seen an uptick in promotional activity in the tavern market from smaller private operators, which we do not view as sustainable, but it may have some impact on Q2 performance for our taverns as we maintain a more disciplined reinvestment strategy.
Doug: <unk> 72 or 73 chain.
Speaker Change: Franchise.
Speaker Change: Yeah.
I think the turnover in ownership with smaller private.
Speaker Change: In the past I have seen that these marketing trends are.
Speaker Change: We are not sustainable even for the smaller guys to Charles' point to the short term.
Tavern operators.
Lot more frequent that when you think casinos and it's a lot less institutionalized in terms of the ownership and sophistication. So those are people chasing business.
Speaker Change: But back to Charles' prepared comments with our disciplined approach for now three quarters in a row of trimmed of EBITDA trend upward.
We've seen it before in the past, we think we're going to stick with our strategy and we've already by the way we've seen that mitigated a bit as we get into April and may but.
Speaker Change: Gotten our arms around that I think we can get a little more detail if you're interested on our newer taverns better now.
Charles Protell: Moving on to our capital structure, we ended the quarter with just over $400 million of debt outstanding, $50 million of cash, and $225 million of remaining availability under a revolving credit facility. Our low net leverage of 2.4 times EBITDA and liquidity profile will enable us to withstand any potential impact to our business from the macro environment and allow us to continue to reinvest in our own assets, pay dividends, and opportunistically acquire more of our own stock. In Q1, we had a short open window to buy stock, but still used $7.6 million of our buyback authorization to repurchase 274,000 shares.
Speaker Change: I don't know performing significantly better than our prior call. So.
There is really.
Speaker Change: We are.
No way for us to govern when other people aren't doing in the market as we were somewhat able to at least provide some guidance when we on the route to others on best practices for camera marketing.
Speaker Change: We are confident our size and our disciplined approach will overcome these short term.
Speaker Change: Trends that some of these independent operators, maybe maybe trying but we know are not sustainable.
Yes.
Scott.
It's a good question, you're right typically be smaller operators, one or two would not impact.
Speaker Change: Understood and if I.
Speaker Change: I can just go a little further from your unique purview.
Our 72 or 73 chain.
Speaker Change: Given that you have that <unk> business is there anything we can point to or discuss with respect to how.
Franchise.
In the past I have seen that these marketing trends are typically not sustainable even for the smaller guys to Charles' point be the short term trees.
Speaker Change: Tumors are behaving.
Speaker Change: Across the valley over the last call it.
Charles Protell: Since the start of 2024, we have repurchased 3.2 million shares, totaling almost $100 million, and paid out $35 million in dividends. We have $92 million remaining on our current buyback authorization, which we will use opportunistically throughout the year. We have evaluated the limited M&A opportunities currently in the market and given the dislocation in our share price, there is no better use for our capital than repurchasing our own equity at these levels. Our business has remained resilient and is improving despite an uncertain macroeconomic environment. Having a focused portfolio of branded taverns, casinos with owned real estate, and low leverage positions us well to withstand any potential short-term fluctuations in consumer demand and to benefit from the favorable long-term economic trends in Nevada.
But back to Charles' prepared comments with our disciplined approach for now three quarters in a row of trend of EBITDA trend upward.
Speaker Change: 65 days or so.
Speaker Change: Yes, I think I think as we as we define our taverns as hyper local if you will.
We've gotten our arms around that I think we can get a little more detail if you're interested on our newer taverns better now.
Speaker Change: Our other than 401K exposure.
Are performing significantly better than our prior call.
Speaker Change: Our demographic and the caverns really has not invested in the market so to speak from a broader perspective, they are more in tune with commodity prices more.
No.
We are.
We are confident our size and our disciplined approach will overcome these short term.
Speaker Change: Mortgage rates wealth effect of.
Trends that some of these independent operators.
Speaker Change: Of equity in their homes.
Maybe maybe trying but we know are not sustainable.
Speaker Change: So.
Speaker Change: It's been as I mentioned in the past the most resilient part of our business in the last 65 days and particularly since liberation day or when the turmoil we got on the market.
Understood and if I can.
Just go a little further from your unique purview.
Speaker Change: Our most for the most part our customers have seen right through that is there they are not really exposed to the broader market.
Given that you have that <unk> business is there anything we can point to or discuss with respect to how consumers are behaving and across the valley over the last call. It.
Speaker Change: We are seeing trends as we mentioned.
Speaker Change: Protocols of similar amounts of gaming days, but less gaming.
James Adams: That concludes our prepared remarks. Blake and I are now available for questions. We will now begin the question-and-answer session.
Speaker Change: Investment so to speak so there has been a pullback a little bit in terms of.
65 days or so.
Yeah, I think I think as we as we define our taverns as hyper local if you will.
Operator: If you would like to ask a question, simply press star followed by the number 1 on your telephone keypad. And if you would like to withdraw your question, press star 1 again.
Speaker Change: People coming at us frequently, but maybe not spending as much.
Speaker Change: But generally speaking to your question.
Our other than 401K exposure.
Speaker Change: I don't I don't believe the broader market as a long term impact on our tavern customer.
Barry Jonas: And your first question comes from the line of Barry Jonas with Curry Securities. Barry, please go ahead. Hey guys, wanted to start with, hey, want to start with the strat, appreciate some of the comments in the opening remarks.
Our demographics taverns really has not invested in the market so to speak from a broader perspective.
Speaker Change: Okay. Thank you very much.
We are more in tune with commodity prices.
Speaker Change: And your next question comes from the line of Chad Beynon with Macquarie Group Chad. Please go ahead.
Mortgage rates well perfect.
Speaker Change: Afternoon, Blake Charles Thanks for taking my question.
Of equity in their homes.
Blake Sartini: Can you maybe just give a little color now about what the booking window is, how it's been trending as of late, and also maybe talk about what your OTA mix is now and how you're sort of moving towards that targeted 50% mix. Thanks. Yeah, so as Charles mentioned in his... prepared comments. We don't have much business without our traditional banquet space. Our window is probably much shorter than others. For April, May, it looks very, very good. Looks very strong, pacing on a trending basis better than Q1. It's hard for us to predict really outside of June.
So.
Speaker Change: Wanted to revisit the point Charles you were making about.
No.
As I mentioned in the past the most resilient part of our business in the last 65 years, and particularly since liberation day or when the turmoil we got on the market.
Speaker Change: The M&A search and the decision to buy back stock. So just just on that I know you talked a lot about this last quarter, maybe even the quarter prior.
Our most for the most part our customers have seen breakthrough that is there they're not really exposed to the broader market.
Speaker Change: But since you did a comprehensive search is this something that you would maybe revisit throughout the year or are you just kind of keeping the lines open.
We are seeing trends as we mentioned in our prior calls.
Similar amounts of gaming days, but less gaming.
Speaker Change: What would what do you think would bring more portfolios or assets.
Investment so to speak so there has been a pullback a little bit in terms of.
Speaker Change: To the market do you think it's fairly steady.
People coming at us frequently, but maybe not spending as much.
Speaker Change: Static right now or this is something that could change as we progress through the year. Thank you.
But generally speaking to your question.
I don't I don't believe the broader market as a long term impact on our tavern customer.
Blake Sartini: I think Charles mentioned June was looking strong also. But we are seeing, I think in addition, I think it's important to point out, we're seeing casino revenues and operational margins also trend in the right direction at the Strat. So overall, the property is trending well. And outside of the next 90 days, it's hard for us really to provide any solid guidance.
Speaker Change: Yeah. Thanks, Kevin look I think we are in a wait and see.
A moment for the market, particularly around M&A I think if you look at asset <unk>.
Okay. Thank you very much.
And your next question comes from the line of Chad Beynon with Macquarie Group.
Speaker Change: Have been marketed recently.
Speaker Change: The last asset.
Please go ahead.
Speaker Change: Op codes.
Afternoon, Blake Charles Thanks for taking my question wanted.
Speaker Change: Subscale single assets are larger type of op codes does have been and the opportunities that had.
I wanted to revisit the point Charles you were making about.
Charles Protell: Yeah, and I'd also just add to that. I mean, different than others, because as Blake said, we don't have that group space, our booking window has always been relatively short compared to some of our peers. So we'll typically see 25% to 30% of the occupancy materialized within a seven-day period. And that's been fairly consistent for us. So we haven't seen a lot of change in terms of the shortening booking window from our perspective. But again, we've always been shorter than others. On your second part of the question on the OTA percentage, I think we're running approximately 65% now.
The M&A search and the decision to buy back stock. So just just on that I know you talked a lot about this last quarter, maybe even the quarter prior.
Speaker Change: <unk> been presented in one way shape or form I think.
Speaker Change: And with relatively high price expectations.
Speaker Change: In relation to the quality of those assets.
But since you did a comprehensive.
Speaker Change: The opportunities that they present.
Search is this something that you would maybe revisit throughout the year or are you just kind of keeping the lines open.
Speaker Change: So when you put that as a backdrop again.
Speaker Change: Buying EBITDA for wholly owned gaming asset that we know in markets that we like at seven times EBITDA or less that obviously leads to that we should just be buying our own business with excess capital.
What would what do you think would bring more portfolios or assets.
To the market do you think it's fairly.
Static right now or this is something that could change as we progress through the year. Thank you.
Speaker Change: Does that change over time.
Barry Jonas: And it's trending downward as well. We are doing a much better job through our casino marketing programs on direct bookings and producing a lot more personal information for people checking in, putting systems in place that allow us to speak with them directly, which had been a bit spotty in the past. So we are trending at 65% give or take right now, trending in the right direction. We're very bullish on us being able to get to that 50% line. Got it.
Yeah. Thanks, Kevin look I think we are in a wait and see type.
Speaker Change: Maybe but I don't see that in the near term I think there is still going to be potential dislocation and so.
The moment for the market, particularly around M&A I think.
Speaker Change: We are we've been a big buyer of our stock at prices that are higher than where we're trading at right now we're going to be a buyer of our stock at these levels for more larger scale M&A I mean, again, I think youre going to have to wait and see how.
If you look at asset.
Have been marketed recently.
Single asset.
<unk>.
Our subscale single assets are larger type of op codes does have been and the opportunities you have.
Speaker Change: See how things play out on the macro side and within the sector I still believe this sector should be consolidating.
<unk> been presented in one way shape or form I think yes.
And with relatively high price expectations.
Barry Jonas: And then if I could sneak one more in, you know, I think as well, the comments about share of purchases taking priority in the current environment makes a lot of sense.
Speaker Change: I think that.
In relation to the quality of those assets.
Speaker Change: Opportunities may present themselves in the future that are attracted to us are good fits for us, but there's nothing out there thats worth in our mind changing strategy from repurchasing our own stock is to focus on investing in our own assets showing up the operations and paint.
And the opportunities that they present.
So when you put that in the backdrop again.
Blake Sartini: But can you maybe expand more on the M&A environment, both on the buy side as well as, you know, sell side of what you've discussed before? Just curious how much the macro is impacting those discussions or opportunities. Thanks. Yeah, I think the short answer is quite a bit. I mean, when you have this much value dislocation in a short period of time, you are resetting expectations and you're uncertain about what the future looks like. So that obviously puts a damper on on just strategic M&A discussions. And from a financing perspective, I think certainly us and others headed into this year anticipating interest rates to be lower than where they are at this point in time.
Buying EBITDA or wholly owned gaming assets.
In markets that we like at seven times EBITDA or less.
That obviously leads to that we should just be buying our own business with excess capital.
Speaker Change: And distributing capital to shareholders in the form of dividends.
Does that change over time.
Speaker Change: Okay. Thank you that makes a lot of sense and then.
Maybe but I don't see that in the near term I think there is still going to be potential dislocation and so.
Speaker Change: Back on the Strat I guess, a two parter here one.
Speaker Change: Can you talk about exposure to Canada or any other market, where we're seeing weakness in terms of inbound.
We are we've been a big buyer of our stock at prices that are higher than where we're trading that right now we're going to be a buyer of our stock at these levels for more larger scale M&A I mean, again, I think youre going to have to wait and see how she.
Speaker Change: Claimants and then secondly, any update just in terms of how city wides and events at the sphere Allegiant et cetera.
Speaker Change: Look beyond.
Barry Jonas: So we'll see how that how that plays out over the course of the year. But that obviously has a direct impact on the ability to pay and ability to finance transactions. makes sense. All right. Thank you so much. Thanks.
How things play out on the macro side.
Speaker Change: The period that you talked about.
Yes.
Within the sector I still believe the sector should be consolidating.
Speaker Change: In your in your near term window. Thank you.
Speaker Change: Yes, Chad in regards to Canada, we thought it was really not exposed to.
I think that.
Opportunities may present themselves.
In the future that are attracted to us a good fit for us, but there's nothing out there thats worth in our mind changing strategy from repurchasing our own stock is to focus on investing in our own assets showing up the operation.
Speaker Change: A material amount of international business, primarily fly in and driving.
David Katz: And your next question comes from the line of David Katz, whichever is David, please go ahead. Thank you. Good evening, everybody. Charles, I wanted to go back to your commentary about the tavern business and smaller operators, you know, by definition, you know, a smaller operator or two, you know, shouldn't make that much of a difference. So there must be, I'm guessing, Right. Right. you know, more of a trend among the smaller guys. And is it true, you know, then, you know, that other larger operators are not participating in the competition?
Speaker Change: In California, Arizona, and so on so.
Speaker Change: I would say, it's immaterial to discuss what we would maybe feeling a distract from that perspective.
Speaker Change: Wides.
Paint and distributing capital to shareholders in the form of dividends.
Speaker Change: <unk>.
Speaker Change: Citywide seem to be.
Okay. Thank you that.
Speaker Change: Booking pretty well, obviously as you know when the city fills up we do better but.
That makes a lot of sense and then.
Back on the Strat I guess, a two parter here one can.
Speaker Change: Charles do you have.
Can you talk about exposure to Canada or any other market, where we're seeing weakness in terms of inbound.
Speaker Change: It just goes back to the same visibility question, so anything thats coming in if you look at things like ADP in May that is big for us given our location relative to where that is held there.
<unk> and then secondly, any update just in terms of how citywide events.
Speaker Change: Things were looking great.
Events at the sphere, Allegiant et cetera.
Speaker Change: We just don't have that visibility to get past June we may well have less than.
Charles Protell: Um, a little more, you know, meat on that would be helpful. Yeah, I mean keep it, we're the largest operator of caverns in Nevada. Most of that is in southern Nevada in Las Vegas. If you think about restricted licenses that we operate, there's probably around 400 or so in southern Nevada. And again, we're the largest, but we're a smaller portion of that. So what we see, and we've lost some visibility on this once we divested the route that serviced these locations, and we've seen increased promotional activity, not so much necessarily at chain store locations, but on competing bar type locations from private operators.
Look beyond.
The period that you talked about.
Hum.
Speaker Change: 10% on the books for the property as we get into July So again tougher for us to tell but if you look in the near term and we're looking at May and we're looking at like I said, we're up six points in occupancy in may year over year June looks strong for us as well on a relative basis to last year.
In your near term window. Thank you.
Yes, Chad in regards to Canada, we.
That was really not exposed to.
Two.
A material amount of international business, primarily climate and driving.
Southern California, Arizona, and so on so.
Speaker Change: But we'll see I mean, obviously things are changing pretty quickly into the market, but for right now our business feels very solid to improving as we head into the into Q2, a couple of other quick data points. This may not be a great segway, but at the Strat. We just we just signed a nationally recognized food and beverage concept that should own.
I would say immaterial to discuss what we would maybe feeling a distress from that perspective.
The wides.
<unk>.
Citywide seem to be.
Booking pretty well, obviously as you know when the city goes up we do better.
Charles do you have.
Speaker Change: And the scrap sometime during the fourth quarter or first of next year.
It just goes back to the same visibility question, so anything thats coming in if you look at things like EDC in May like that is big for us given our location relative to where that would help those things were looking great.
Charles Protell: And what we've seen in the past over many years is in that mode, you are really just chasing more dollars over the same customer wallet. And so I think that we haven't seen that behavior in the casinos and in the local casinos. I think there's probably a little bit more sophistication there and a little bit more experience. I think the turnover in ownership with smaller private tavern operators is a lot more frequent than what you see in casinos, and it's a lot less institutionalized in terms of ownership and sophistication. So those are people chasing business.
Speaker Change: Which is a positive given in the context of controlling our own destiny, there and we are beginning to receive.
Speaker Change: Rev share from atomic golf that continues to ramp next to us.
We just don't have that visibility to get past June we may we will have less than.
Speaker Change: We began receiving quarterly checks on a Rev share, which is pretty significant this year. So the property in the context of what we can control.
10% on the books for the property if you get into July so again tougher for us to tell but if you look in the near term. We're looking at May and we're looking at June and like I said, we're up six points in occupancy it may year over year June looks strong for us as well on a relative basis to last year.
Speaker Change: Feel very good about going forward.
Speaker Change: That's great. Thank you both appreciate it.
Jeff: Thanks, Jeff.
Speaker Change: And your next question comes from the line of Zachary Silverberg with Wells Fargo. Zachary. Please go ahead.
But we'll see I mean, obviously things are changing pretty quickly into the market, but for right now our business feels very solid to improving as we head into the into Q2, a couple of other quick data points. Ken This may not be a great segue, but at the Strat. We just we just signed a nationally recognized food and beverage concept that should <unk>.
Charles Protell: We've seen it before in the past. We think we're going to with our strategy. And we've already, by the way, we've seen that mitigate a bit as we get into April and May, but there's really no way for us to govern what other people aren't doing in the market as we were somewhat able to at least provide some guidance when we own the route to others on best practices for tavern.
Jeff: Yes.
Jeff: Hey, good evening, thanks for taking my questions.
Jeff: Just one on the local segment.
Jeff: Sure.
Jeff: <unk> margin of.
Jeff: 46% for the second straight quarter, increasing strength in April can you talk about the operational efficiencies there and are there any other levers to pull moving forward, where we could potentially see margin stable or potentially growing moving forward.
And in the scrap sometime during the fourth quarter or first of next year.
Which is a positive given in the context of controlling our own destiny there.
Jeff: Yes, I think from a local perspective, we really did a great job right sizing labor. We didn't is within those properties, particularly on the food and beverage outlet streamlining streamlining menus.
We are beginning to receive.
Blake Sartini: Yeah, I might I might just add, it's a it's a it's a good question. You're right. Typically, the smaller operators, one or two would not impact our 72 or 73 chain franchise. In the past, I have seen that these marketing trends are typically not sustainable, even for the smaller guys. To Charles' point, they short-term chase dollars.
<unk> share from atomic golf It continues to ramp next to us.
We began receiving quarterly checks on a Rev share, which was pretty significant this year. So the property in the context of what we can control.
Jeff: And getting some efficiencies in the in the hotel quite frankly, we've made some capital investments there.
Feel very good about going forward.
Jeff: I'd say also we've experienced declining cost on the utility side as being contributing to margins.
That's great. Thank you both I appreciate it.
Thanks, Chad.
Jeff: So we feel pretty good about where that is and look the spend from our guests has remained strong and our assets are local assets. We only have two local casinos, but they are fairly significant within the portfolio.
Blake Sartini: But back to Charles' prepared comments, with our discipline approach, we're now three quarters in a row of EBITDA trend upward. We've gotten our arms around, and I think we can get a little more detail if you're interested, on our newer taverns that are now performing significantly better than our prior call. So we are confident our size and our discipline approach will overcome these short-term trends that some of these independent operators may be trying, but we know are not sustainable. Understood.
And your next question comes from the line of Zachary Silverberg with Wells Fargo that Carey. Please go ahead.
Hey, good evening, thanks for taking my questions.
Just one on the local segment.
His thoughts.
Jeff: And they have a very loyal local following.
<unk> margin of 40.
<unk> 46, a census, I can say.
<unk>.
<unk> strength in April can you talk about the operational efficiencies there and are there any other levers to pull moving forward, where we can potentially see margin stable or potentially growing moving forward.
Jeff: And that plays there frequently than we've seen.
Jeff: Little very little impact from the macro conditions on that customer.
Jeff: Gotcha.
Yeah, I think from a local perspective, we really did a great job right sizing labor. We didn't is within those properties, particularly on the food and beverage outlet streamlining streamlining menu.
Speaker Change: Maybe back to capital allocation how.
Speaker Change: How are you guys thinking about capex spend maybe either maintenance or potentially more growth and given the uncertain economic.
David Katz: And if I can just go a little further from your unique purview, you know, given that you have that tavern business, is there anything we can point to or discuss with respect to how, you know, consumers are behaving and, you know, across the valley over the last, call it, you know, 65 days or so? Yeah, I think I think as we as we define our taverns as hyper local, if you will, are other than 401k exposure. Our demographic in the Taverns really is not invested in the market, so to speak, from a broader perspective. They are more in tune with commodity prices, mortgage rates, wealth effect of equity in their homes.
Speaker Change: Outlook and or a potential increase in input costs.
And getting some efficiencies in the hotel quite.
Frankly, we've made some.
Speaker Change: Yes, I'd say for us.
Capital investments there.
I'd say also we've experienced declining costs on the utility side.
Speaker Change: Pretty well insulated from any type of tariff exposure from a procurement perspective, if you look at linens and those types of things, we've already kind of source that away from.
Contributing to margin.
So we feel pretty good about where that is and look the spend from our guests has remained strong.
So our assets are local assets, we only have.
Speaker Change: From Asia and into <unk>.
Speaker Change: And Pakistan in terms of that sourcing. So we don't have a lot of exposure.
Local casinos there.
Fairly significant within the portfolio.
Speaker Change: From a tariff perspective on the Capex side of things maintenance Capex the portfolio runs around 33% to $35 million as it sits right now today, we do have two taverns that we intend to open this year.
And they have a very loyal local following.
And that plays there frequently than we've seen.
Very little very little impact from the macro conditions on that customer.
Gotcha.
Maybe back to capital allocation how.
Speaker Change: Previously designed and so we obviously intend to do that we think they are in great locations will be additive to the portfolio.
Blake Sartini: And so... You know, it's been, as I mentioned in the past, the most resilient part of our business. In the last 65 days, and particularly since Liberation Day, or when the turmoil began in the market, for the most part, our customers have seen right through that, as they're not really exposed to the broader market. We are seeing trends, as we mentioned in our prior calls, of similar amounts of gaming days, but less gaming investment, so to speak. So there has been a pullback a little bit, in terms of people coming in as frequently, but maybe not spending as much.
How are you guys thinking about capex spend maybe either maintenance or potentially more growth and given the uncertain economic.
Speaker Change: And those are about $3 million each.
Speaker Change: Beyond that we have no major investments that are planned and again that goes back to we think the best capital allocation at this point is in buying our own stock, yes, I would just add in terms of growth.
Outlook and or a potential increase in input costs.
Yes, I would say for us.
Pretty well insulated from any type of tariff exposure from a procurement perspective, if you look at linens and those types of things, we've already kind of sorts that away from.
Speaker Change: I mentioned the.
Speaker Change: Yeah.
Speaker Change: Nationally recognized food and beverage concepts.
Speaker Change: We are negotiating a lot of third party investment in our facilities.
In Asia and into.
Speaker Change: Which allows us for.
In Pakistan in terms of that sourcing. So we don't have a lot of exposure.
Blake Sartini: But generally speaking to your question, I don't believe the broader market has a long-term impact on our tavern.
Speaker Change: Growth type amenities without using our capital.
From a tariff perspective on the Capex side of things you know maintenance capex that portfolio runs around 33% to $35 million as it sits right now today, we do have two taverns that we intend to open this year. It is previously designed and so.
Speaker Change: Well as we have as you know a lot of excess real estate surrounding all of our casinos.
Blake Sartini: We're good.
Blake Sartini: Thank you very much.
Speaker Change: And we continue to dial in on potential synergistic uses with third parties for those pieces for those parcels as well.
Chad Beynon: And your next question comes from the line of Chad Beynon with Macquarie Group. Chad, please go ahead. Afternoon, Blake, Charles. Thanks for taking my question.
Speaker Change: Thank you.
Chad Beynon: I wanted to revisit the point, Charles, you were making about the M&A search and the decision to buy back stock. So just on that, I know you talked a lot about this last quarter and maybe even the quarter prior. But since you did a comprehensive search, is this something that you would maybe revisit throughout the year or are you just kind of keeping the lines open? What do you think would bring more portfolios or assets to the market? Do you think it's fairly static right now or this is something that could change as we progress through the year?
We obviously intend to do that we think they are in great locations will be additive to the portfolio.
Speaker Change: And your next question comes from the line of Jordan Bender with Defense JMP Chardan. Please go ahead.
Those are about $3 million, each but beyond that we have no major investments that are planned and again that goes back to we think the best capital allocation at this point is in my mind.
Speaker Change: Hey, everyone. Good afternoon, I know, we're talking about some pretty short term impact but in recent weeks have you seen the driving traffic into laughlin or.
I would just add in terms of growth.
Speaker Change: Improve.
I mentioned the.
Speaker Change: Just given the gas prices have moved lower or or historically does that potentially point to.
Yeah.
Absolutely recognize food and beverage concepts, we are negotiating a lot of third party investment in our facilities.
Speaker Change: Forward looking tailwind.
Speaker Change: Yes, I think it does I mean, what it does it really helps discretionary spending right. So it's offsetting some of those other inflationary pressures, particularly in the local market. The big driver when you see gas prices come down a little bit it's a little bit of that spend in the taverns as well from a lachlan perspective, what's driving business.
Which allows us for.
Growth type amenities without using our capital.
Blake Sartini: Yeah, yeah. Thanks, Chad. Look, I think we're in a wait and see type of moment for the market, particularly around M&A. I think if you look at assets that have been marketed recently, single assets, opcos or subscale single assets or larger type of opcos, those have been the opportunities that have been presented in one way, in a shape or form, I think with relatively high price expectations in relation to the quality of those assets and the opportunities that they've been presented. So when you put that at a backdrop against, you know, buying EBITDA or wholly owned gaming assets that we know in markets that we like at seven times EBITDA or less, that obviously leads to we should just be buying our own business with excess cash.
As well as we have as you know a lot of excess real estate surrounding all of our casinos.
And we continue to dial in on potential synergistic uses with third parties for those pieces for those parcels as well.
Speaker Change: Theyre more as the events that we put on on the weekend, so us being able to have more frequent smaller events has been a more profitable exercise for us and having a lot of large scale concerts in the in the Laughlin.
Thank you.
And your next question comes from the line of Jordan Bender with CB Defense JMP Jordan. Please go ahead.
Speaker Change: Event centers, so we're leading market share down there right now it's viewed as a more cost effective entertainment destination than Vegas for a lot of people driving it for the inland Empire.
Hey, everyone. Good afternoon, I know, we're talking about some pretty short term impact but in recent weeks have you seen the driving traffic into laughlin or improve.
Speaker Change: That tank of gas for <unk> was 35% or 45 Bucks theres still going to come and see Jason I'll, Dean or Alabama, or whatever is going on down there in the market at that time.
Improve.
Just given the gas prices have moved lower or or historically did that potentially point to a forward looking tailwind.
Yes, I think it does I mean, what it does it really helps discretionary spending right. So it's offsetting some of those other inflationary pressures, particularly in the local market. The big driver when you see gas prices come down a little bit and you can get a little bit of that spend.
Speaker Change: Great.
Speaker Change: And following up on the M&A discussion it's been a few years have you guys just being a smaller size company. After the divestitures are distributed gaming in Maryland.
Blake Sartini: Does that change over time? You know, maybe, but I don't see that in the near term. I think there's still going to be potential dislocation. And so, you know, we're, we are a, we've been a big buyer of our stock at prices that are higher than we're trading at right now. We're going to be a buyer of our stock at these levels. For more larger scale M&A, I mean, again, I think you're going to have to wait and see how see how things play out on the macro side. And, you know, within the sector, I still believe the sector should be consolidating.
Speaker Change: You have settled in and run that business do you feel that if you continue as an independent company.
And in the taverns as well from a Lachlan perspective, what's driving that.
Business there more as the events that we put on on the weekend, so us being able to have more frequent smaller events.
Speaker Change: You would look to add more scale back to the business.
Speaker Change: I think it all depends right it depends on value quite frankly in either direction of the M&A discussion.
It's been a more profitable exercise for us and having a lot of large scale concert in the in the Laughlin.
Speaker Change: I think for US we feel like we definitely have built a platform here over a long period of time that we could add assets to accretively.
Event centers, so we're leading market share down there right now it's viewed as a more cost effective entertainment destination than Vegas for a lot of people driving it for the inland Empire.
Blake Sartini: I think that, you know, opportunities may present themselves in the future that are attractive to us and good fits for us. But, you know, there's nothing out there that's worth, in our mind, changing strategy from repurchasing our own stock as the focus, investing in our own assets, showing off the operations, and, you know, paying and distributing capital to shareholders in the form of debt.
Speaker Change: From an operational perspective, we just need to find assets in the right values that you could add accretively to do that and like I said, we've done we've done a lot of work we've talked a few quarters about looking at opportunities and I think at this point in time those are not out there that are attractive to us. So we are no longer looking at that.
That tank of gas.
<unk> was 35 or 45 Bucks youre still going to come and see Jason our dean or Alabama, or whatever is going on down there in the market at that time.
Great.
Speaker Change: We are looking at buying our own stock and investing in the business as we move throughout this year.
And following up on the M&A discussion.
Been a few years you guys just being a smaller sized company. After the divestitures are distributed gaming in Maryland.
Chad Beynon: Okay, thank you, that makes a lot of sense.
Chad Beynon: And then back on the strat, I guess a two-parter here. One, can you talk about exposure to Canada or any other market where we're seeing weakness in terms of inbound employment?
Speaker Change: Great. Thank you very much.
Speaker Change: Thanks.
You have settled in and run that business do you feel that if you continue as an independent company.
Speaker Change: And your next question comes from the line of John Bakery with CBRE. John. Please go ahead.
You would look to add more scale back to the business.
John Bakery: Hey, Charles Blake.
Blake Sartini: And then secondly, any update just in terms of how city-wide and events at the Sphere, Legion, et cetera, look beyond the period that you talked about in your near-term window? Thank you. Yeah, Chad, in regards to Canada, you know, we that is really not exposed to a material amount of international business, primarily flying and driving, Southern California, Arizona, and so on. So, we, I would say it's immaterial to discuss what we would maybe feeling a distraught from that perspective. Citywide, you know, citywide seem to be booking pretty well. Obviously, as you know, when the city fills up, we do better.
John Bakery: Maybe to ask the capital allocation question a little differently.
I think the pen right it depends on value quite frankly in either direction of the M&A discussion so I think for us.
John Bakery: Given where your stock is how cheap it is.
John Bakery: To buying back stock and where the balance sheet is have you considered.
We feel like we definitely have built a platform here over a long period of time that we could add assets to accretively.
John Bakery: Perhaps leaning into the repurchase a little bit more given your balance sheet capacity I guess I E.
From an operational perspective, we just need to find assets in the right values that you could add accretively to do that and like I said, we've done we've done a lot of work we've talked a few quarters about looking at opportunities and I think at this point in time those are not out there that are attractive to us. So we are no longer looking at that.
John Bakery: A bit of leverage.
John Bakery: You would probably use for M&A anyway, but given how attractive your stock is so your thoughts on maybe being more aggressive there a tender or something to that effect and then I'll follow up on that the scrap operations.
John Bakery: Yes, I mean look I think we will be aggressive in buying the stock we use liquidity to do that we obviously have a lot of capacity on our revolver you could see.
We're looking at buying our own stock and investing in the business as we move throughout this year.
$200 million availability.
John Bakery: I do think tenders.
Great. Thank you very much.
Blake Sartini: But Charles, you know, it just goes back Chad to the same visibility question. So anything that's coming in, you know, if you look at things like EDC in May, like, that is big for us, given our location relative to where that is held, those things we're looking great. We just don't have that visibility to get past June. We may only, we'll have less than, you know, maybe 10% on the books for the property as you get into July. So again, tougher for us to tell, but if you look in the near term, and we're looking at May, and we're looking at June, like I said, we're up six points in occupancy in May year over year.
Thanks.
John Bakery: Anecdotal.
And your next question comes from the line of John Bakery with CBRE. John. Please go ahead.
John Bakery: Bit personal opinion I have not seen that has worked so well within the gaming space.
John Bakery: <unk> U K a.
Hey, Charles Blake.
John Bakery: A better <unk>.
Maybe asking a capital allocation question a little differently.
John Bakery: <unk> not only support for the stock but value for shareholders to the extent that you are buying back shares over time that those could be meaningful buybacks per quarter. I mean, you could see we bought back if we look over last year were buying that the clip of a million shares a quarter that in.
Given where your stock is how cheap it is an annual commitment to buying back stock and when the balance sheet and so if you can.
Consider.
Perhaps leaning into the repurchase a little bit more given your balance sheet capacity I guess I E.
John Bakery: And we see that would make us effectively and largest shareholder of our own stock as a company within those nine months, so I think that.
A bit of leverage.
You would probably use for M&A anyway, but given how attractive your stock is so your thoughts on maybe being more aggressive there tender or something to that effect and then I'll follow up on that the strap operation.
Blake Sartini: June looks strong for us as well on a relative basis to last year. So, but we'll see. I mean, obviously, things are changing pretty quickly in the market. But for right now, our business feels very solid to improving as we head into Q2. We've begun receiving quarterly checks on our REV share, which is pretty significant this year. So the property in the context of what we can control, we feel very good about going forward.
Speaker Change: Institutional of course.
John Bakery: Got it.
But I think that is.
Yeah, I mean look I think we will be aggressive in buying the stock we use liquidity to do that we obviously have a lot of capacity on our revolver you can see.
John Bakery: That's how I see that rolling out I would not expect immediate fee of some tender now.
John Bakery: Said that given kind of where we're sitting right now, but there's some massive market dislocation.
200 million of availability.
I do think tenders and this is.
John Bakery: Our business.
John Bakery: Mean quite stable and again in our mind.
Anecdotal.
Personal opinion I have not seen that has worked so well within the gaming space.
John Bakery: Trends in our business are not reflective of our valuation of the recent gyrations in our stock.
You've got a.
John Bakery: If.
A better <unk>.
John Bakery: I can't see how it happened, but if we're moving hello, or maybe we change our tune on that.
<unk> not only support for the stock that value for shareholders to the extent that you were buying back the shares over time that those could be meaningful buyback per quarter. I mean, you could see we bought back if you look over last year, we were buying at a clip of a million shares a quarter.
John Bakery: Okay Fair enough I appreciate that I would agree with the valuation as well so fundamentally I wanted to ask about the strat.
John Bakery: Your ability to yield up.
John Bakery: Hotel room rate there.
Which would make us.
John Bakery: Pretty good occupancy and a <unk> outside of February which was a tough comp and then I think you set up in April at attractive rates and so when you look forward.
Secondly.
Blake Sartini: Thank you both. Appreciate it. Thanks, Chad.
Shareholder of our own stock.
As a company within those nine months.
Zachary Silverberg: And your next question comes from the line of Zachary Silverberg with Wells Fargo. Zachary, please go ahead. Hey, good evening. Thanks for taking my questions. And just one on the local segment, you guys saw some strong margins, 46% for the second straight quarter, increasing strength in April. Can you talk about the operational efficiencies there? And are there any other levers to pull moving forward where we could potentially see margins stable or potentially growing moving forward?
Yeah.
Institutional of course.
John Bakery: What's the key to driving higher room rate off the strives that just getting occupancy back or do you need to price off of the strip. So continue to see your peers further south on the strip drive rate and kind of what are your levers to pull to kind of get right back up.
Great.
But I think that is.
That's how I see that rolling out that we're not back.
Media.
Some tender now that said, that's given kind of where we're sitting right now, but there's some massive market dislocation.
Our business.
John Bakery: Oh.
John Bakery: I think it's a combination.
Remained quite stable and again in our mind.
John Bakery: Couple of things I think obviously, we have to have some tailwind from the city.
Trends in our business are not reflective of our valuation of the recent gyrations in our stock.
Charles: As Charles mentioned, EDC and citywide promotions that we do tremendous with.
Charles Protell: For more information visit www.FEMA.gov Yeah, I think from a local's perspective, we really did a great job right sizing labor within those within those properties, particularly on the food and beverage outlets, streamlining, streamlining menus, and getting some efficiencies in the in the hotel. Quite frankly, we've made some capital investments there. And I'd say also, we've experienced declining cost on the utility side has been contributing to margins. So we feel pretty good about where that is. And look, the spend from our guests has remained strong. So our assets, our local assets, we only have two local casinos, but they're fairly significant within the portfolio.
If I.
I can't see how it happened, but if we're moving lower maybe we change our tune on that.
John Bakery: Helps.
John Bakery: Significantly as I mentioned in my earlier comments.
John Bakery: We are internally doing a much better job of being able to gather information from our guests that allow us a more direct line for direct bookings and things like that so we see our OTT trends going down that in.
Okay Fair enough I appreciate that I would agree with the valuation as well.
Fundamentally I wanted to ask about the strat.
Your ability to yield up.
Hotel room rate there.
Pretty good occupancy and a <unk> outside of February which was a tough comp and then I think you said up in April at attractive rates and so when you look forward.
John Bakery: In two ways is going to increase revenue one potentially in ready to certainly in casino revenue.
John Bakery: The benefits of the property.
The key to driving higher room rate off the strives that just getting occupancy back or do you need to price off of the <unk>.
John Bakery: Wei.
John Bakery: It really boils down to compression midweek I mean mid week is really where weekends. We are we're solid we're great. We.
Strips. So continue to see your peers you know further south on the script drive rate kind of what are your levers to pull to kind of get right back up.
John Bakery: Yield rate.
John Bakery: Significantly.
Zachary Silverberg: And they have a very loyal local following that plays there frequently. And we've seen, you know, very little, very little impact from the macro conditions on that. Gotcha.
John Bakery: Effectively on the weekends.
John Bakery: But mid week.
John Bakery: A lot of citywide driven traffic.
I think it's a combination.
Couple of things I think obviously, we have to have some tailwind from the city.
John Bakery: We to your point, we take our lead off with kind of the south strip, guys and where they're going with their rate and we with our newer casino newer rooms newer F&B atomic golf all things. We are building their service wise I think we're surpassing a lot of our peers on the on the server.
The city as Charles mentioned, EDC, and citywide promotions that we do tremendous lift.
Charles Protell: And, you know, maybe back to capital allocation. How are you guys thinking about, you know, CapEx spend, maybe either maintenance or potentially more growthy spend given the uncertain economic outlook and or a potential increase in input . Yeah, I'd say for us, you know, we're pretty well insulated from any type of tariff exposure, you know, from a procurement perspective. If you look at linens and those types of things, we've already kind of sourced that away from Asia and into India and Pakistan in terms of that sourcing. So we don't have a lot of exposure from a tariff perspective.
Helps.
Significantly as I mentioned in my earlier comments.
We are internally doing a much better job of being able to gather information from our guests that allow us a more direct line for direct bookings and things like that so we see our OTT trends going down that.
Score side.
John Bakery: We the midweek is where we focus and we need a little.
John Bakery: We need a little help from the city on that side.
In two ways is going to increase revenue one potentially in ready to certainly in casino revenue.
Speaker Change: Understood. Thanks Blake.
So that benefits the property.
Speaker Change: Ladies and gentlemen, as there are no further questions that concludes today's teleconference. You may disconnect. Your lines at this time. Thank you for your participation.
Wei.
It really boils down to compression midweek I mean mid week is really where weekends. We are we're solid we're great we yield rate.
Difficultly.
Charles Protell: On the CapEx side of maintenance, CapEx, the portfolio runs around 30 to 35 million as it sits right now today. We do have two taverns that we intend to open this year that have previously been signed. And so we obviously intend to do that. We think they're in great locations. They'll be added into the portfolio. And those are about 3 million each. But beyond that, we have no major investments that are planned.
Effectively on the weekends.
But mid week.
A lot of citywide driven traffic.
We to your point, we take our bleed off of kind of the south strip, guys and where they're going with their rate and we with our newer casino newer room newer F&B atomic all all things were building their service wise I think we're surpassing a lot of our peers on the on the server.
Score side.
We.
Charles Protell: And again, that goes back to we think the best capital allocation at this point is in buying our own stock.
Midweek is where we focus and we need a little.
Charles Protell: Yeah, I would just add in terms of growth, I mentioned the nationally recognized food beverage concept. We are negotiating a lot of third party investment in our facilities, which allows us for growth type amenities without using our capital, as well as we have, as you know, a lot of excess real estate surrounding all of our casinos. And we continue to dial in on potential synergistic uses with third parties for those parcels as well.
We need a little help from the city on that front.
Understood. Thanks, Mike.
Okay.
Ladies and gentlemen, as there are no further questions that concludes today's teleconference. You may disconnect. Your lines at this time. Thank you for your participation.
Yeah.
Jordan Bender: Thank you. And your next question comes from the line of Jordan Bender with Citizens JMP. Jordan, please go ahead. Hey, everyone. Good afternoon. You know, I know we're talking about some pretty short term impacts. But in recent weeks, have you seen the drive in traffic into Laughlin or Stratt improve? You know, just given the gas prices have moved lower or historically, does that potentially point to, you know, a forward looking tailwind? Yeah, I think it does. I mean, what it does, it really helps discretionary spending, right? So it's offsetting some of those other inflationary pressures, particularly in the local market.
Blake Sartini: It's a big driver, when you see gas prices come down a little bit, you'd see a little bit of that spend in in the taverns as well.
Blake Sartini: From a Laughlin perspective, what's driving business there more is the events that we put on on the weekends. So us being able to have more frequent, smaller events has been a more profitable exercise for us, than having a lot of large scale concerts in the in the Laughlin event center. So we're leading market share down there right now. It's viewed as a more cost effective entertainment destination than Vegas for a lot of people driving in for the Inland Empire. And so whether that tank of gas for for them was, you know, 35 or 45 bucks, they're still going to come and see Jason Albine or Alabama or whatever's going on down there in the market.
Jordan Bender: Great.
Blake Sartini: And following up on the M&A discussion, it's been a few years of you guys just being a smaller size company after the divestitures of Distributed Gaming in Maryland. Now that you've settled in and run that business, do you feel that if you continue as an independent company, you would love to add more scale back to the business? I think it all depends, right? It depends on value, quite frankly, and either direction of the M&A decision. So, you know, I think for us, we feel like we definitely have built a platform here over a long period of time that we could add assets to accretedly from an operational perspective.
Blake Sartini: We just need to find assets in the right value zone that you could add accretedly to do that. And like I said, we've done we've done a lot of work. We've talked a few quarters about looking at opportunities. And I think at this point in time, those are not out there that are attractive. So we are no longer looking at that.
Blake Sartini: We are looking at buying our own stock and investing in the business as we move throughout.
Jordan Bender: Great, thank you very much.
John Decree: And your next question comes from the line of John DeCree with CBRE.
John Decree: John, please go ahead. Hey, Charles, Blake. Maybe to ask the capital allocation question a little differently, given where your stock is, how cheap it is and your commitment to buying back stock and where the balance sheet is, have you considered perhaps leaning into the repurchase a little bit more, given your balance sheet capacity, i.e. use a little bit of leverage that you'd probably use for M&A anyway, but given how attractive your stock is, so your thoughts on maybe being more aggressive there, a tender, something to that effect, and then a follow-up on the STRAT operation.
Blake Sartini: Yeah, I mean, look, I think we will be aggressive in buying the stock. We'll use liquidity to do that. We obviously have a lot of capacity on a revolver. You can see there's, you know, over 200 million of availability. I do think, you know, tenders, and this is anecdotal and a bit personal opinion. I have not seen those work so well within the gaming space. I think that, you know, you get a a better sustained, not only support for the stock, but value for shareholders, the extent that you are buying back the shares over time.
Blake Sartini: Now, those could be meaningful buybacks per quarter. I mean, you could see we've bought back, you know, if we look over last year, we're buying at the clip of a million shares a quarter, which, you know, would make us, you know, effectively, you know, largest shareholder of our own stock, right, as a company within. So I think that, um, institution. But I think that, you know, that is, that's how I see that rolling out. I would not expect immediacy of some tender. Now, that said, that's given kind of where we're sitting right now. If there's some massive market dislocation, you know, our business remains quite stable.
John Decree: And again, in our mind, you know, the trends in our business are not reflective of our valuation and the recent gyrations in our stock. So, you know, if I can't see how it happened, but if we're moving lower, maybe we change our tune. Fair enough, guys. I appreciate that. I'd agree with the valuation as well.
John Decree: So fundamentally, I wanted to ask about the strat and your ability to yield up hotel room rate there. It's pretty good occupancy in the 1Q outside of February, which is a tough comp, and then I think you said up in April at attractive rates. And so when you look forward, what's the key to driving higher room rate at the strat? Is that just getting occupancy back, do you need to price off of the strip, so continue to see your peers further south on the strip drive rate? What are your levers to pull to get room rate back up?
Blake Sartini: I think there's a combination of a couple of things. I think, obviously, we have to have some tailwinds from the city, as the city, as Charles mentioned, EDC and citywide promotions that we do tremendous with helps significantly. As I mentioned in my earlier comments, We are internally doing a much better job of being able to gather information from our guests that allow us a more direct line for direct bookings and things like that. So we see our OTA trends going down. That in two ways is going to increase revenue. One, potentially in rate. Two, certainly in casino revenue.
Blake Sartini: So that benefits the property either way. It really boils down to compression midweek. I mean, midweek is really where weekends we are, we're solid, we're great. We yield rate significantly effectively on the weekends. But midweek, without a lot of citywide driven traffic, we, to your point, we take our lead off of kind of the South Strip guys and where they're going with their rate. And we, with our newer casino, newer rooms, newer F&B, Atomic Golf, all the things we're building there service-wise, I think we're surpassing a lot of our peers on the service floor side.
Blake Sartini: The midweek is where we focus and we need a little help from the city on that. Understood.
Operator: Thanks, Blake. Ladies and gentlemen, as there are no further questions, that concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.