Q2 2025 Golden Entertainment Inc Earnings Call

Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to the golden entertainment, second quarter, 2025 earnings conference call.

At this time, all participants are in a listen-only mode. A question and answer session will follow the formal remarks. Please note that this call is being recorded today. Now, I'd like to turn the conference over to James Adams.

The company's vice president of corporate finance and Treasurer. Please go ahead, sir.

Thank you very much. Operator and good afternoon, everyone on the call today is Blake tartini. The company's founder, chairman and chief executive officer and Charles. Patel 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 states. Except as

Required by law. We undertake no obligation to update these statements as a result of new information, or otherwise.

During the call, we will also discuss non-gaap Financial measures and talking about our performance. You can find the reconciliation of gaap financial measures in our press release which is available on our website.

We will start the call with Charles reviewing the details of the second quarter results. And a business update following that Blake and Charles will take your questions with that. I'll turn the call over to Charles

Thanks James. In the second quarter, our operations generated revenue of 163.6 million and Ava, a 38.4 million.

Our Nevada locals casinos continue to demonstrate strong performance in Q2 posting their highest quarterly ibida for the past 2 years and growing Eva for the third consecutive quarter Revenue increased 3% to Prior year with Eva up 7%, largely driven by the performance of our 2, Las Vegas locals casinos which grew IBA Dhaba over 9%.

Margins improved as well up 170, basis points from last year to over 46% for this segment.

We are seeing a strong performance of our local properties continue. As we move into Q3 and anticipate, this segment will be the biggest beneficiary in 2026 from recent legislation. Providing tax relief on tips over time and additional tax deductions for seniors.

In our Casino Resort segment for Q2 Revenue was down, 3%, and ibida was down 5%. Mostly related to our low table game, Holden Locklin. We had a stronger event calendar in loss on this quarter. That featured a concert and a rodeo, which drove higher Revenue, but our tables Games held less than 10% which negatively impacted ibaa by 1.5 million.

Normalizing for our unusually low, hold would have resulted in increased ebaa Lachlan and stable year-over-year ebida for a Nevada Resort segment.

At the Strat eidon, increased over the first 2 months of the quarter. However, we experienced meaningful slowdown in June consistent with other strip properties.

Strat occupancy with a quarter with 69% down 4% from last year. But in June alone, occupancy fell to 60% down from 76% compared to Prior year.

Even though the Strat was down only 5% year-over-year despite the challenging environment, we are aggressively managing costs to mitigate the impact of lower revenue.

Weaker stripped demand continued into July but we are seeing stabilization of bookings in August and remain optimistic, about the Outlook and Q4 and q1 26, where we should benefit from increased attendees, at the Las Vegas Convention Center and overall Group business in the city.

For a Tavern business. We had mentioned on the q1 call that the promotional environment could negatively impact our performance in Q2 and it did

Revenue was down 7% year-over-year even with some of our own increased reinvestment in the quarter.

Our reinvestment rate remains at levels well below our peers and lower than our casinos. And we do not anticipate increasing our Tavern, reinvestment Beyond where we are currently.

We saw the largest declines in Revenue, in April, were in addition to declining volume, we experienced lower, hold than normal.

We're also experiencing lower volume during our late night shifts, which caters to strip workers in tip positions, but we expect this to improve with improved strip business in Q4, and in 2026.

In July, we've seen Tavern, but the stabilized compared to last year, as promotional activity in the market has been reduced.

We are confident that we will see improved Tavern performance in the back half of the year and we have 2, new builds scheduled to open over the next 6 months.

Moving on to our capital structure, we ended the quarter with $432 million of funded debt outstanding, $52 million in cash, and $200 million of remaining availability under a revolving credit facility.

A Q2, we opportunistically repurchased over 500,000 shares of our common stock for 14.6 million. Since the start of 2024, we have purchased 3.7 million shares representing 17% of our free flow, totaling nearly 115 million and paid out 41 million in dividends.

We currently have 77 million remaining on our current buyback authorization, which we will continue to utilize opportunistically throughout the year.

With low net, leverage of 2.6 times. We have plenty of capacity to continue to return Capital to shareholders. And we see no better use of our Capital at this time.

Strategically m&a has been a lower priority for us recently given the uncertain business environment and elevated interest rates, which we expect may continue for the near term.

We see the business volatility of the summer, invading in the fall. And we believe there will be meaningful Tailwind from increased strip, visitation as well as the recent tax legislation that will support near-term organic growth at all our properties.

Or strip property in addition to our Las Vegas locals and Nevada Regional casinos that will benefit from these Dynamics.

In the interim we're focused on managing the cost structure of our business, investing our own assets and returning Capital to shareholders, that concludes our prepared remarks Blake, and I are now available for questions.

Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. And if you would like to withdraw your question, again, press star 1 and we do ask that you limit yourself to 1 question and 1 follow-up. Your first question comes from the line of Barry Jonas with truist Securities. Please go ahead.

Hi. This is Jeremy on for Barry. Thanks for taking our questions. Do you guys expect any other impacts from the passing of the big beautiful Bill and any chance you could quantify or give more color on the no tax on tips benefits? Thank you.

I'm sorry, Jeremy. What was the? I didn't catch quite the first part of your question. Can you repeat that?

Just any other impacts on the big, beautiful bell besides for the ones that you mentioned.

Um, look, I think we're going to benefit a little bit from getting some of the accelerated depreciation. So,

Uh, for us, if you want to quantify, it's probably an extra 10 to 15 million of tax shield. So call it 2 to 3 million of of cash flow off of that. So that's 1 and then uh, starting in 2026. There's uh, an increase in the reportable limit of, um, of slot winnings, which will be some meaningful for the taverns, just in terms of the volume of those transactions that we get in terms of jackpots.

Got it. Thank you.

Your next question comes from the line of Chad benon with Matt Corey. Please go ahead.

Hi guys. This is uh, Sam on for Chad. Thank you for taking our questions. Um was hoping you guys could provide a little color on the growth outlook for the second half of the year.

I know last year, there was some moving Parts with some disruption, disruptions given the presidential election distraction, and then we have a new F1 season this year and then obviously some major volatility in the consumer, um, strength and locals, but uh, some weakness on the strips so any color you could help. Um, you could provide just for you know, how we should think about growth and 2 h.

Uh, yeah, Sam. So if you take the parts of our business, um,

Uh, sequential, I guess, answer that question. Charles mentioned in his prepared comments.

Uh, we see very positive outlook continuing for the local economy.

Which I think benefits both, obviously our local properties as well as.

Our taverns going forward.

Laughlin is continues to be a consistent Market. Uh, you mentioned, Charles mentioned the hickey. We sustained significant 1 in Q2 with the table game, hold, but the market is consistent and our Outlook is positive there.

Um,

The the the 1 that's hard to to, you know, give any detailed. Um

Forward-looking comments on a strat. You know, we are seeing

um, improvement post, Midsummer we're seeing

Some positive green shoots in August.

It's hard to look beyond that given the uncertainty in the macro environment in town from my perspective. I think if I could get a little more color on that.

I think you're going to see some recovery in demand. I think the demand dynamic in terms of occupancy is going to show some improvement. I think the question is would rates settle in on that additional demand and occupancy and that's, that's a tough. That's a tough 1 for us to try and gauge. Um, but again, I think our diverse portfolio. If you take in pieces, we're we're very positive on on, on the particular parts of it. And the Strat I think is the 1 that's hard to give

Kind of a of a concrete look forward.

Okay, great, thank you for that. And then as a follow-up, um,

hoping you guys could just maybe elaborate a bit, elaborate a bit on the, um,

the strategy to mitigate, I guess, the recent um, depressed prices and rates on the strip and

Just kind of how you're thinking about it heading into the second half.

Or baggage of those types of things during the times when we're not busy and we don't have the occupancy during the week, and we bring some of those services back during the weekends when we do have the occupancy.

I think if you step back and as Blake would say, just look at the business and components, 75% of our ibida is flat to Growing, which is effectively lawful in the locals and the taverns. As we look into the back half of the year and really the weakness that we're seeing at the strap is July and August, but then when we look past that, we see that stabilizing with others. If you look into Q4 and the q1 of next year, when you have conag in a better uh convention schedule. So yeah, I think a bit more color, just a bit more weekends continue to be.

Pretty solid. And I say that, you know, relatively speaking, I mean, we're in the 90 to 100% occupancy range. Pretty much every weekend. Not withstanding again rates sometimes, uh, you know, our challenge in, in a, on a sequential comparison year-over-year, uh, in this current environment. And then, as Charles mentioned midweek, I will just add on the fixed cost side of the business. Whereas efficient there is, we have been since our ownership, we've made significant strides on that end of the business and we are positioned well to force multiply on a uh, on a revenue growth side of it 1, it does occur. Um,

I think Charles comments uh speak to that in terms of you know, broader city-wide um conventions uh more sports and entertainment options coming in the fall and first quarter, we're well positioned from a cost standpoint.

Uh, to uh, to do well at the property.

Great. Thanks guys. I'll jump back in the queue

Your next question comes from the line of David Katz with Jeffrey's please go ahead.

Uh everybody, thanks for taking my question. Um it's been a while since we've

Oh, maybe it's only been 90 days, I don't know. Um, talked about kind of the m&a landscape and the opportunity Set, uh, for you to acquire

Uh I wonder if there's any, you know, notable change or difference. Um you know stocks are up a little bit. Um

Updated thoughts and boundaries would be really helpful.

Yeah, it's like as far as the landscape goes. I think there is a landscape of, you know, potential, uh, uh, uh, targets for us or combinations for us. That could make some sense. I think from an environment standpoint until you get to, like, the debt Capital markets are strong right now, is that many of you now. But I think, and

Valuations have improved, you know slightly although that seems to be, you know, fluctuating on a weekly weekly basis. I think we're

Going to get, uh, better Tailwind when we get some rate cuts from the broader Market. We anticipate like others that happens by the end of the year. And I think for us right now, you know, our focus is like, is I mentioned on my comments of Blake mentioned is stabilizing the operation of the business which again, we are seeing in all of our assets right now except of our strip property. We expect that to happen in the Q4. So from from our perspective, the m&a really doesn't come into Focus until you have the confidence of those 2 things. You know, we see where we've stabilized in terms of our our, our 1 strip asset, and we get some, um, better Tailwind in the market that we think come with with a lower interest rate environment.

Got it, understood. Thank you.

Join your.

Join your line is open.

Hi guys. Um

Thanks for taking my questions.

Yeah, I mean that's a good question 1. There's several bright spots.

Uh, within the within the challenging environment, there our casino is showing, um, good momentum and good progress. Click on the table Game Spot side, obviously, which makes it the majority of it.

Um, we are seeing improved metrics there.

Uh so that I think is a result of our our our focus on Direct bookings.

Through our, uh, Casino weapons and marketing efforts at the property versus the, you know, broad net otaa Direction. Uh, we've worked very hard on that and it's showing uh, good signs and good positive, uh, Trends in the casino. So we are seeing even with less people, I guess, uh, additional spend without quantifying it. I think that's, that's fair to say, additionally, our Top of the World restaurant remains 1 of the best attractions in town. You know, we do 6 to 700 covers up there on a good weekend, uh, and that remains consistent and strong and drives a lot of traffic through the building.

We are we are now receiving rent from uh, Atomic golf uh which which is uh has performed fairly well, they're not public, but suffice it to say. They've generated a pretty significant amount of Revenue through their first 6 months of or through the last excuse me. 6 months of operation. Um, and and uh,

So there, you know, there are pockets of of of of opportunity and, and good signs there. Again, as you mentioned midweek is Charles mentioned, uh, we have established a very good Baseline, best that we've ever had in terms of fixed costs during midweek and have just basically gone. The fixed cost route to mitigate, uh, the lack of Revenue, midweek, and then weekends. And some of the amenities, I mentioned are driving traffic. That we are seeing some positive signs.

Thanks Blake, that's helpful. Um, maybe, uh, 1 kind of broad question on on Lockland, which is Big asset for you and it sounds like it's, it's doing quite well. Uh, can you give us a little bit of oversight to kind of where the, where the growth is coming? Um, you know, I think it's a little bit of a of a snowbird destination and we've got the, you know, some tax breaks and and the 1 big beautiful bill that that might help. So kind of what's your your Alec on Lockland and kind of where you're seeing some some growth and at that property,

Yeah, I think we are the growth in the market there with our, with our locations and our and our amenities, we pretty much uh, have the the prime location and Prime market share, uh, in that market. We have established a new, um,

Uh, uh, marketing momentum going forward with smaller events but more frequent that seems to be paying off for us. And our Le Center, I think is 2000, or 2500, people versus the, uh, the the, in the event center versus the left, which was 11 or 12,000, we've been able to pursue a, a, a more, uh, quantity than quality strategy and that's working more player, events down there. Uh, are working. And, um, we we, we're, we're, we're very bullish on that market. We're very solid in that market with our position and, and with our revamped approach to marketing down there. And by the way, I think the overall, I think the overall attraction to that market is the value.

Versus whether you know, certainly in Las Vegas currently in terms of what the consumer is paying for rooms and food and beverage and things down there. I think it's a very attractive marketing and continues to be so. So through those more frequent events that value driven, uh, consumer and our our, our, uh, Market leading position down there from a amenity, and location standpoint. We're we're in a good spot and I I would just add to that John that, um, those properties down there have are

Highest level of rated play. So it's about 70% rated play for us within the portfolio down there. So we know, all these players, we know how to Market to them, and they actually should be those ones who are benefiting, certainly from the, um, the, the tax break to seniors. So, you know, you're going to find, uh, I think you're going to find some increased discretionary spending, uh, for our, a majority of our customers set down there, once we get to the April tax season.

Interesting. Yeah, I would agree. Thank you, Charles. Thanks, Blake.

And that concludes our question and answer session and with that, that does conclude today's conference call. Thank you for your participation and you may now disconnect