Q3 2024 Golden Entertainment Inc Earnings Call

In This Article:

Participants

James Adams; Vice President of Corporate Finance, Treasurer; Golden Entertainment Inc.

Charles Protell; President, Chief Financial Officer; Golden Entertainment Inc.

Blake Sartini; Chairman of the Board, Chief Executive Officer; Golden Entertainment Inc.

Barry Jonas; Analyst; Truist Securities

David Bain; Managing Director; B. Riley Securities

Jordan Bender; Analyst; Citizens JMP

David Katz; Analyst; Jefferies LLC

Chad Beynon; Analyst; Macquarie Asset Management

John DeCree; Analyst; CBRE

Carlo Santarelli; Analyst; Deutsche Bank

Presentation

Operator

Good afternoon, ladies and gentlemen, thank you for standing by. Welcome to the Golden Entertainment Third quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode, a question-and-answer session will follow the formal remarks. Please note that this call is being recorded today.
Now, I'd like to turn over to James Adams, Vice President of Corporate Finance and Treasurer, Golden Entertainment Inc.

James Adams

Thank you very much operator, and good afternoon, everyone. On the call today is Blake L. Sartini, Founder, Chairman and Chief Executive Officer; and Charles Protell, President and Chief Financial Officer.
On this call, we will make forward-looking statements under the safe harbor provisions of the federal securities laws. Actual results may differ materially from those contemplated in these statements except as required by law. We undertake no obligation to update these statements as a result of new information or otherwise. During the call. We'll 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.
We will start the call with Charles reviewing details of the third quarter results and the business update following that Blake and Charles will take your questions. With that. I'll turn the call over to Charles.

Charles Protell

Thanks James. Starting with our financial results, we generated revenue of $161 million and EBITDA $34 million in the third quarter. Our reported prior year numbers include the results from our divested Maryland casino and distributed gaming operations. But comparing the results to our continuing operations, total revenue declined 5% and consolidated EBITDA declined 21% in the third quarter.
Our third quarter was challenging for both our casino and tavern segments. With the most significant year over year declines in July. As others have noted Las Vegas experienced record heat this summer which contributed to lower visitation at our casino properties and local taverns.
In addition, we saw continued weakness at the lower tiers of our database as those consumers have reduced their discretionary spending in the current economic environment.
Despite these challenges, we see Q3 as the lowest level of financial performance for our portfolio given October trends and our outlook for the remainder of the year. Reflecting that view, we have increased our share repurchase authorization by $100 million. So we now have over $130 million of buyback capacity to add to the $60 million we repurchased over the last two quarters.
Now for some color on our operating segments for Nevada casino resorts revenue declined 6% and EBITDA declined 20% with most of the decline coming out of the Strat. At the Strat, our weekend occupancy was slightly up year over year. However, our midweek occupancy was down almost 6% to prior year and spend per guest also trended lower for the quarter.
Las Vegas city wide occupancy and ADR were weaker in July, particularly from mid to lower tier properties. In addition, without direct meeting space, the Strat was unable to benefit from recovering convention business in September to the same extent as other strip properties.
For the Strat, our Q4 looks stronger than Q3 and we anticipate stable year over year performance with opportunity for growth in 2025 from returning midweek occupancy and increased spend from our core customer.
In Laughlin, despite lower visitation and revenue, our properties increased their market share in the quarter and reduced their operating expenses. Our riverfront bingo room continued to help drive increased local business to offset lower visitation due to having one less major concert at our Laughlin Event Center.
For Nevada local casinos, revenue declined 7% and EBIDA declined 15% where we saw increased seasonality compared to recent years and decreased spend from our lower tier customers. Our Arizona Charlie's Decatur property was further impacted by disruption from room renovations which were completed mid-September, the largest revenue and EBIDA percentage declines in our Nevada local casinos continue to come from our smaller Arizona Charlie's Boulder property which caters to our most value-oriented guests.
While our par casinos remain stable year over year, we expect stable year over year performance in Q4 for all our local properties which will be helped by the Las Vegas promotional environment moderating. For the third quarter, Nevada tavern revenue declined 2% and EBIDA declined 29% with margins negatively impacted mostly as a result of the elevated initial operating expenses associated with our seven new taverns and the last mandated Nevada minimum wage hike in July.
Our tavern customers were also impacted by extreme summer heat and less discretionary spending. We typically see our new tavern stabilizing within 9 months to 18 months of opening or acquisition and we expect these last seven to follow the same pattern.
With regards to our capital structure, we continue to maintain one of the best balance sheets in the gaming industry with our net leverage at approximately two times EBIDA and $240 million of availability under our revolving credit facility.
Since selling our non core assets at premium multiples last year, we have repaid over $500 million of debt and returned nearly $150 million to shareholders, through a combination of share repurchases and dividends including over $80 million since the end of Q1. Between August and October, we have repurchased approximately 950,000 shares combined with the almost 1 million shares we purchased in Q2. We have repurchased nearly 2 million shares over the last six months representing 7% of our outstanding shares and 9% of the free flow.
After increasing our buyback authorization, we have $131 million of availability for share repurchases which can be funded by cash from operations as well as our undrawn revolving credit facility. We continue to believe that our portfolio of wholly owned casinos and local taverns will benefit from the favorable long term demographic and economic trends in Southern Nevada. And we see significant value in continuing to acquire our own equity at this time.
While we do evaluate strategic opportunities as they arise, it will be a high bar for acquisitions given our current valuation and we anticipate continuing to meaningfully buy back stock absent more compelling alternatives that concludes our prepared remarks. I are now available for questions.

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