Golden Entertainment Inc (GDEN) Q4 2024 Earnings Call Highlights: Strategic Moves and Financial ...

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Thu, Feb 27, 2025, 11:40 PM 4 min read

Revenue: Q4 revenue of $164 million; full year 2024 revenue of $667 million.
EBITDA: Q4 EBITDA of $39 million; full year 2024 EBITDA of $155 million.
Share Repurchases: Repurchased $2.9 million shares in 2024, representing 14% of the free float outstanding.
Occupancy Rates: The Strat's weekend occupancy flat at 95%; midweek occupancy down 6%, overall occupancy at 75% for Q4.
Local Casino EBITDA Margin: Improved to 46% in Q4.
Net Leverage: 2.3 times EBITDA.
Total Funded Debt: Approximately $400 million.
Share Repurchase in Q4: Approximately $1.1 million shares at an average price of $32.65, totaling $36 million.
Revolving Credit Facility Availability: $220 million remaining.

Warning! GuruFocus has detected 4 Warning Signs with TMCI.

Release Date: February 27, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Golden Entertainment Inc (NASDAQ:GDEN) successfully streamlined its portfolio by selling non-core assets, generating over $600 million in proceeds.
The company reduced its leverage and lowered its cost of capital by repricing its term loan.
Instituted a regular quarterly dividend and repurchased $2.9 million shares, representing 14% of the free float outstanding.
Operations generated revenue of $164 million and EBITDA of $39 million in Q4, with full-year revenue and EBITDA reaching $667 million and $155 million, respectively.
The company maintains a strong balance sheet with total funded debt of approximately $400 million and $220 million of remaining availability under its revolving credit facility.

Negative Points

Q4 results were lower year-over-year compared to the prior year, despite improvements from Q3.
Midweek occupancy at The Strat was down 6%, contributing to declines in the Nevada casino resort segment.
Las Vegas citywide occupancy and ADR were weaker in October and November, impacting mid to lower-tier properties.
Nevada tavern performance was negatively impacted by recent tavern additions, which are still in the process of revamping operations.
Labor costs remain a headwind, with mid-single-digit labor inflation expected to continue impacting the portfolio.

Q & A Highlights

Q: Has your thinking or the general environment around M&A changed since the last time we spoke? A: Blake Sartini, CEO, stated that their approach remains the same as last quarter. They continue to proactively explore options to grow shareholder value, including share repurchases and strategic alternatives, maintaining capacity for both.

Q: Could you give any color on how the F1 weekend trended for you in year two and your expectations for future events? A: Charles Protell, CFO, noted that the falloff in F1 was unexpected. They managed to save on ticket investments and direct expenses, but couldn't compress rates due to low occupancy. They remain optimistic about future benefits as the event continues.

Q: Can you discuss the recovery or position at the Strat in terms of group and convention business? A: Charles Protell explained that the Strat's occupancy was 75% in Q4, down from 92% in 2019, mainly due to midweek declines. They expect improvements as the convention center expands and usage increases, benefiting the Strat.

Q: What are your expectations for OpEx growth in the tavern segment in 2025? A: Charles Protell mentioned that they expect sequential growth in taverns throughout 2025, except for Q3. They have revamped operations in six taverns, leading to positive EBITDA trends. Labor remains a headwind, but they are managing through a new culinary union contract.

Q: Can you elaborate on the consumer trends post-election and your confidence in stabilization? A: Charles Protell highlighted improvements in the database, particularly among top-tier consumers. The lower end of the database, which was declining, has stabilized, showing growth in January. They are confident in consumer health moving into 2025.

Q: How would the potential no tax on tips and overtime impact your assets and Las Vegas in general? A: Charles Protell stated it would be significant for Las Vegas, with a $2 million tax impact for them. It would increase discretionary spending, benefiting gaming and entertainment sectors.

Q: Has promotional activity in the Las Vegas locals market stabilized, and how are you managing rated and unrated play? A: Charles Protell noted that promotional activity has stabilized and is rational. They focus on balancing investment in existing and reactivating players, avoiding overinvestment in any segment.

Q: What is your approach to M&A, particularly regarding portfolio size and leverage targets? A: Charles Protell stated they avoid greenfield developments and small acquisitions. They aim for transformational deals with a target leverage of 3 times or less, allowing for quick deleveraging.

Q: What is the strategy for expanding the tavern business geographically? A: Charles Protell mentioned they are considering expansion outside Las Vegas, focusing on greenfield developments rather than acquisitions. They have two sites planned for this year and prioritize A-plus sites in Las Vegas.

Q: Can you update on the Atomic Golf facility at the Strat and plans for excess land? A: Blake Sartini reported that Atomic Golf is attracting more business, with improved group bookings. They are exploring options for the 5.5 to 6 acres of land across the street, seeing it as a significant opportunity for the Strat.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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