Golden Entertainment(US:GDEN)2021-08-08 13:42Financial Data and Key Metrics Changes - The company reported record revenue of $292 million and record EBITDA of $91 million for Q2 2021, with EBITDA over 50% higher than the previous record in Q1 and over 80% higher than Q1 of 2019 [7] - EBITDA was up 64% compared to Q2 of 2019, with an EBITDA margin improvement of almost 1,600 basis points to 46% [13] Business Line Data and Key Metrics Changes - The STRAT generated its highest ever quarterly EBITDA, over double that of Q1 and up 45% compared to Q2 of 2019, with occupancy levels at 70% [8][9] - Local casinos in Las Vegas saw a 124% increase in EBITDA compared to Q2 of 2019, with an EBITDA margin improvement of over 2,300 basis points to 55% [10] - Laughlin's EBITDA improved by 47% compared to Q2 of 2019, with margins over 50% [11] - Pahrump casinos experienced over 100% EBITDA improvement compared to Q2 of 2019, maintaining an EBITDA margin over 50% [12] - Distributed gaming operations in Nevada saw an EBITDA increase of over 86% from Q2 of 2019, with margins up 650 basis points [14] Market Data and Key Metrics Changes - The company noted significant growth in out-of-state enrollments for its players club, indicating long-term population growth in Las Vegas as a driver for the locals market [10] - Weekend occupancy and rates are comparable to 2019 levels, while midweek business is improving [9] Company Strategy and Development Direction - The company is focused on improving performance at the STRAT and anticipates further growth with the return of citywide conventions and international visitors [9][30] - Management is evaluating options to return capital to shareholders, with a focus on maintaining a strong balance sheet [18][41] - The company is prioritizing internal growth opportunities over M&A, emphasizing the potential of its existing properties [45][60] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future performance of the STRAT, citing increased customer spending and occupancy improvements as key drivers [28][30] - The company expects to exceed $5 in free cash flow per share for the year, with a focus on deleveraging and potential capital returns to shareholders [40][71] Other Important Information - The company repaid over $50 million of debt in Q2 and ended the quarter with $153 million in cash [16] - The company received a $60 million cash payment from Caesars Entertainment, further improving liquidity [17] Q&A Session Summary Question: Migration visitation to Las Vegas and cross-promotion opportunities - Management noted that most new sign-ups are from California, indicating a potential for cross-promotion with Laughlin and the STRAT [22][23] Question: Earnings power for the STRAT - Management is bullish on the STRAT's future earnings potential, with expectations of reaching $80 million to $100 million in EBITDA over time [27][30] Question: Margin growth drivers - Management indicated that margin growth is driven by increased customer spending and cost eliminations, with expectations that much of the margin expansion will be sustainable [35][36] Question: Capital return and leverage parameters - Management expects leverage to be below 3.5 times by year-end, which would facilitate capital returns to shareholders [41] Question: Growth opportunities in bricks-and-mortar and distributed gaming - Management is focused on internal growth opportunities and is actively involved in jurisdictions considering distributed gaming legislation [45][48] Question: Weekday occupancy recovery expectations - Management anticipates that weekday occupancy will return to historical levels by the second half of 2022, supported by upcoming events [52] Question: Impact of new resorts on STRAT - Management noted that construction in the area has impacted foot traffic, but expects improvements once construction is completed [58] Question: M&A priorities - Management indicated that M&A is a low priority compared to deleveraging and returning capital to shareholders [60]