Golden Entertainment(GDEN) - 2020 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company's June total EBITDA exceeded expectations, increasing by 14% compared to the same period last year, despite having 3 fewer days in Nevada and 18 fewer days in Maryland [8][10] - The annualized run rate of current cost reductions is over $130 million, with significant reductions in labor and marketing expenses contributing to improved margins [11][12] Business Line Data and Key Metrics Changes - Las Vegas Locals casinos and taverns achieved double-digit revenue growth and doubled their EBITDA contribution compared to last year [10] - The distributed gaming business saw collective revenue growth of 6% and an EBITDA increase of more than 18% across Nevada and Montana operations [11] Market Data and Key Metrics Changes - The STRAT hotel improved occupancy from about 40% in June to over 50% in July, with weekend occupancy reaching 90% during the 4th of July weekend [9][20] - The company's diversified business model, with nearly 80% of 2019 property EBITDA derived from local and regional properties, has positioned it well for recovery [7][16] Company Strategy and Development Direction - The company plans to focus on expansion opportunities in distributed gaming and new jurisdictions, as well as pursue targeted tuck-in acquisitions without increasing leverage [14][22] - Management emphasized the importance of maintaining a sustainable marketing environment and reducing corporate overhead, which has been cut by approximately 25% [11][30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to recover and capitalize on future opportunities despite the challenging operating environment due to the pandemic [16] - The company anticipates continued strong performance from local and regional gaming, even as destination properties take longer to recover [35] Other Important Information - The company has no near-term debt maturities and has repaid $190 million on its revolver, maintaining liquidity without needing to access capital markets [12][14] - Significant reductions in corporate expenses are expected to result in a run rate down approximately $10 million annually [30] Q&A Session Summary Question: How is the STRAT adapting to the current operating model? - Management noted that the STRAT is not reliant on group business or international travel, focusing on its core customer demographic, which has led to improved occupancy rates [20] Question: What types of acquisitions is the company considering? - The company is looking for smaller bite-size assets, particularly in Northern Nevada and the eastern seaboard, while being cautious about increasing leverage [22] Question: How sustainable are the current margins in the Nevada Casino market? - Management indicated that reduced corporate overhead and marketing costs are sustainable, with significant labor expenses from buffets being eliminated [25][26] Question: What is the cash flow positivity outlook for the rest of the year? - Management expects to maintain positive cash flow, with June's performance indicating a run rate at or exceeding last year [32] Question: What trends are being observed in July and August? - The company reported a continuation of positive trends seen in June, with strong performance from local and regional gaming [35] Question: What are the prospects for VGT expansion in Pennsylvania? - Management remains cautiously optimistic about VGT expansion in Pennsylvania, believing that economic needs may drive legislative changes [42]