Golden Entertainment (GDEN) 7 Nov 24 2024 Q3 Earnings call transcript

In a recent earnings call, Golden Entertainment, Inc. shared insights into its third-quarter performance and strategic initiatives, offering a glimpse into the company's financial health and future outlook. The call, led by executives Blake Sartini, Founder, Chairman, and CEO, and Charles Protell, President and CFO, outlined a mixed bag of challenges and opportunities that the company is navigating.

Financial Performance and Challenges

The third quarter brought about a 5% decline in revenue and a 21% drop in consolidated EBITDA when compared to the previous year. The decline was attributed to a challenging casino and tavern segment, with the most significant year-over-year declines in July. The company was impacted by record heat in Las Vegas, which affected visitor numbers at casinos and local taverns. Additionally, continued weakness in the lower tiers of their database due to reduced discretionary spending was cited as a concern. Despite these challenges, Golden Entertainment remains optimistic, viewing Q3 as the lowest level of financial performance for the year.

Strategic Initiatives and Growth Opportunities

The company is focusing on strategic initiatives to drive growth and enhance its portfolio. In Nevada, the STRAT property is expected to see improved performance in Q4, with opportunities for growth in 2025. Laughlin properties have increased market share and reduced operating expenses, with the Riverfront bingo room driving increased local business. The Nevada Locals Casinos have shown resilience, with stable year-over-year performance expected for Q4.

M&A and Real Estate

Golden Entertainment is actively exploring strategic alternatives, including mergers and acquisitions. The company's strong balance sheet and wholly owned real estate assets position it well for potential growth opportunities. Charles Protell shared that the company is considering a sale-leaseback model to unlock the value of its real estate assets, which could potentially fund capital returns to shareholders.

Consumer Trends and Future Outlook

The call also touched upon consumer trends, with the impact of federal elections on consumer behavior noted. Historically, elections have resulted in consumers being cautious with their spending in the short term. Looking ahead, the company is optimistic about the stabilization of operations and the benefits of declining interest rates, which are expected to improve the M&A environment.

Conclusion

Golden Entertainment's third-quarter earnings call provided a comprehensive overview of the company's financial performance and strategic initiatives. Despite facing challenges in the casino and tavern segments, the company remains confident in its ability to navigate these difficulties and capitalize on growth opportunities. With a focus on strategic acquisitions and the potential unlocking of value through real estate transactions, Golden Entertainment is well-positioned to drive value for its shareholders and stakeholders.