Release Date: November 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Golden Entertainment Inc (GDEN, Financial) increased its share repurchase authorization by $100 million, providing over $130 million of buyback capacity.
- The company maintains a strong balance sheet with net leverage at approximately two times EBITDA and $240 million available under its revolving credit facility.
- Golden Entertainment Inc (GDEN) has repurchased nearly 2 million shares over the last six months, representing 7% of its outstanding shares.
- The company anticipates stable year-over-year performance in Q4 for its local properties, aided by a moderating Las Vegas promotional environment.
- Golden Entertainment Inc (GDEN) is actively considering strategic alternatives, including potential mergers, to enhance shareholder value.
Negative Points
- Total revenue declined 5% and consolidated EBITDA declined 21% in the third quarter compared to the prior year.
- The Nevada casino resorts segment saw a 6% revenue decline and a 20% EBITDA decline, with significant challenges at The Strat.
- Extreme summer heat and reduced discretionary spending negatively impacted visitation and revenue at casino properties and local taverns.
- The Nevada tavern segment experienced a 2% revenue decline and a 29% EBITDA decline, with margins affected by elevated initial operating expenses.
- The company faces challenges in the M&A landscape due to a disconnect between buyers and sellers, impacting potential acquisition opportunities.
Q & A Highlights
Q: Can you discuss the current M&A environment and your thoughts on the sale leaseback model?
A: Charles Protell, President and CFO, mentioned that the M&A landscape currently shows a disconnect between buyers and sellers, with a big ask spread. They expect more visibility next year with stabilization of operations and potential benefits from declining interest rates. Blake Sartini, CEO, added that they are actively exploring strategic alternatives, including the value of their real estate, to drive value in their share price.
Q: Did the recent election impact any of your business segments, and do you expect improvements now that it's over?
A: Blake Sartini, CEO, noted that historically, major federal elections cause consumers to pull back on spending before and shortly after the elections. This pattern was observed again, but they expect spending to stabilize post-election.
Q: Can you elaborate on the margin stability or opportunity for improvement in Q4?
A: Charles Protell, President and CFO, explained that the only asset with margin challenges is the Strat due to a new culinary union contract. Other assets are stabilizing in terms of revenue and cost structures. They expect Q3 to be the low point for the portfolio, with improvements in Q4.
Q: How do you view the impact of F-ONE and the Super Bowl on your Las Vegas portfolio?
A: Blake Sartini, CEO, stated that they have adjusted their approach for F-ONE, focusing on cost management and partnering with downtown entities for events. They acknowledge that Q1 will be a tough comp due to the previous year's Super Bowl success, but they are confident in overcoming this with other drivers.
Q: With Atomic Golf operational, are there plans for additional developments to drive foot traffic?
A: Blake Sartini, CEO, expressed long-term optimism for Atomic Golf despite a slow ramp-up. They are exploring development opportunities on adjacent land to enhance traffic to the Strat, including potential attractions and amenities within the property.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
