Golden Entertainment(GDEN) - 2021 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported a record revenue of $282 million and adjusted EBITDA of $73 million for Q3 2021, representing an increase of over 60% compared to Q3 2020 and 70% compared to Q3 2019 [7][8] - EBITDA margin improved by 210 basis points to nearly 40% compared to Q3 2020, and EBITDA was up 54% compared to 2019 [15][19] Business Line Data and Key Metrics Changes - Revenue from the STRAT increased by over 50% and EBITDA rose by over 150% compared to Q3 2020, with occupancy improving to about 73% [9][10] - Laughlin's revenue was up almost 20% and EBITDA up almost 24% compared to Q3 2020, with a return of core gaming customers [11] - Local casinos maintained high performance with EBITDA margins around 50%, despite slightly lower revenues compared to last year [12][13] - Distributed gaming operations in Nevada saw EBITDA double compared to 2019 levels, with significant revenue growth and margin expansion [16][17] Market Data and Key Metrics Changes - The company noted a significant increase in visitation and spend per visit in October compared to Q3, indicating a recovery in demand [60] - The local business experienced some impact from the delta variant and increased travel, but overall EBITDA for local properties remained over 100% higher than in Q3 2019 [13][60] Company Strategy and Development Direction - The company plans to utilize its buyback program and special dividends to return capital to shareholders, citing a valuation disconnect relative to peers [20][21] - The focus remains on enhancing the STRAT's appeal through new amenities and attractions, such as the Flite Golf deal, which is expected to drive additional visitation [38][40][71] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the recovery of occupancy rates and overall performance, anticipating significant improvements as citywide conventions return [36][70] - The company is committed to maintaining margin discipline while adjusting operational expenses in response to labor market conditions [62] Other Important Information - The company reduced its term loan borrowings by $50 million, totaling $100 million in debt reduction over six months, and ended the quarter with $290 million in cash [18][19] - Management highlighted the importance of owning real estate as a valuable asset, with no plans to change the current structure despite market valuations [44][46] Q&A Session Summary Question: Impact of bond refinancing on buyback timing - Management indicated that the special dividend is likely a 2022 event, while they plan to utilize some cash for buybacks in the near term [25][26] Question: Cash and debt changes in Q3 - The company confirmed receiving $60 million from the Caesars deal, contributing to cash increases and debt reduction [27][28] Question: Occupancy trends and EBITDA differential - Management noted that missing midweek room nights could equate to approximately $10 million in annual EBITDA once occupancy returns to pre-pandemic levels [36] Question: Impact of Resorts World - Management stated that it is too early to assess any impact from Resorts World, but they anticipate positive effects as conventions return [68][70] Question: Labor market impact on margins - Management acknowledged wage pressure affecting margins but emphasized that adjustments have been made to reflect operational changes [50][52]