Golden Entertainment, Inc. (GDEN) on Q1 2022 Results - Earnings Call Transcript
Operator: Good afternoon, ladies and gentlemen, thank you for standing by. Welcome to the Golden Entertainment First Quarter 2022 Earnings Conference Call. [Operator Instructions] Please note that this call is being recorded today, May 5, 2022. Now, I’d like to turn the conference over to Joe Jaffoni, Investor Relations. Please go ahead, sir. Joe Jaffoni: Thanks, Kevi, and Good afternoon, everyone. On today’s call is Blake Sartini, Golden Entertainment’s Founder, Chairman and Chief Executive Officer; and Charles Protell, the company’s President and Chief Financial Officer. On today’s call, we will make forward-looking statements under the Safe Harbor provisions of the Federal Securities Laws. Actual results may differ materially from those contemplated in these statements. Additional information concerning factors that could cause actual results to materially differ from these forward-looking statements is contained in today’s press release and in our filings with Securities and Exchange Commission. Except as required by law, we undertake no obligation to update these statements as a result of new information or otherwise. During today’s call, we will also discuss non-GAAP financial measures in talking about our performance. You can find the reconciliation of GAAP financial measures in our press release, which is available on our website. We’ll start today’s call with Charles, reviewing the details of the 2022 first quarter results and a business update. Following that, Blake and Charles will take your questions. With that, it’s my pleasure to turn the call over to Charles Protell. Charles, please go ahead. Charles Protell: Thanks, Joe. Our record performance in 2021 continued into the first quarter 2022, with Q1 revenue up $274 million and adjusted EBITDA at $67 million, up 14% and 13%, respectively, from last year. These results reflect increased visitation to our destination properties, continued strong levels of customer spend at our local casinos and distributed gaming locations and our ability to maintain margins well in excess of pre-COVID periods. Revenues for Nevada Casino Resorts rose 29% year-over-year to $96 million and EBITDA improved 26% to $34 million. Margins were down slightly, primarily due to increased volume at The STRAT, which has a higher cost structure, the return of concerts to our large-scale entertainment venue in Laughlin, as well as overall higher labor cost. The STRAT’s revenue and EBITDA were up meaningfully from last year, despite the impact of COVID in January and the continued lack of midweek occupancy. We saw very strong weekend demand from mid-February on, driving occupancy to over 70% of The STRAT for the quarter compared to 45% in Q1 last year. Although midweek business is recovering, we are still missing almost 20 points of occupancy at The STRAT, which we expect to return over the rest of the year. In Laughlin, the return of live entertainment helped drive increased visitation with nearly 16,000 concert tickets sold for various events in the quarter. And we’ve also seen our core older demographic return to our properties. We have a great entertainment lined up for the remainder of the year, with upcoming concerts in Q2 having already sold over 30,000 tickets. For Nevada Locals Casinos, revenue increased 4% to $40 million and EBITDA rose 3% to $20 million for the quarter. Increased employment in Las Vegas, the continued influx of new residents from out of state and appreciating home equity has created sustained demand at our local properties. We continue to see a rational promotional environment in the locals market, which has contributed to our success in maintaining margins despite increasing costs. Turning to Maryland. In our Rocky Gap Resort, revenue was up 11% to $18 million and EBITDA was up 14% to $5.6 million for the quarter, with margins up slightly on increased gaming volume. We recently renovated all our rooms at Rocky Gap, revamped the food offerings and added a sports lounge. So the property is ready for the summer season when EBITDA is typically 50% higher than the winter quarters of Q1 and Q4. For our Distributed Gaming operations, revenues were up 9% to $119 million and EBITDA rose 7% year-over-year to $22 million for the quarter. Similar to our casinos, margins were modestly impacted from increased labor costs relative to Q1 of last year. Our Montana Distributed Gaming operations were affected by weather in January and February, but rebounded nicely in March. In Nevada, the same macro drivers for our locals casinos are driving revenue and EBITDA growth for our distributed business, particularly for a 65-owned taverns, most of which are located in Las Vegas. The continued recovery of the Strip has led to increased midweek as well as late night business, which helped drive record win per unit metrics at our taverns this quarter. This February, we opened a new tavern in the northwest part of Las Vegas. And based on early results, this has quickly become one of our top performers. Moving to our balance sheet. In Q1, we continued to return capital to our stakeholders, repaying $25 million of our term loan in addition to repurchasing $15 million of our stock. Since the beginning of 2021, we have paid down approximately $160 million of our debt and since December, we’ve repurchased more than $25 million of our common stock. We ended the first quarter with plenty of liquidity with more than $200 million of cash, no outstanding borrowings on our $240 million revolver. Currently, our total debt outstanding is approximately $1 billion. Given our low net leverage at 2.7 times and the continued strength across all our properties, we expect to remain focused on returning capital to shareholders opportunistically over the course of this year. To support that, this week, our Board of Directors reauthorized a $50 million share repurchase program. Our strong operational performance in Q1 has continued into Q2 and we see no signs of slowdown at any of our properties. As we have said before, our cash flow is primarily generated from wholly-owned gaming assets in Southern Nevada, which we view as the most attractive and stable gaming market in the world today. We remain focused on optimizing our core business, capturing the upside from our destination resorts, while maintaining the performance of our local properties and Distributed Gaming locations. That concludes our prepared remarks. Blake and I are now available for questions. Operator: Thank you. [Operator Instructions] First question is from Omer Sander with JPMorgan. Please go ahead. Operator: Next question is from Carlo Santarelli with Deutsche Bank. Please go ahead. Operator: [Operator Instructions] Next question is from Cassandra Lee with Jefferies. And your line is open. Operator: Next question is from Chad Beynon with Macquarie. Please go ahead. Operator: Next question is from Edward Engel with Roth Capital. Please go ahead. Operator: There are no further questions. I’ll turn it back to Charles Protell for closing comments. Charles Protell: Okay. Thanks, everyone, for joining our call. And we look forward to updating you next quarter. Operator: And that does conclude our call for today. We thank everyone, for participating and you can now disconnect.
Golden Entertainment, Inc. (NASDAQ:GDEN) Q1 2024 Earnings Insights
Golden Entertainment, Inc. (NASDAQ:GDEN) recently held its Q1 2024 earnings conference call, drawing attention from investors and analysts alike. The call, detailed by Seeking Alpha, was a platform for the company's top executives, including Joe Jaffoni, Charles Protell, and Blake Sartini, to discuss the financial outcomes and strategic directions of GDEN during the initial quarter of the year. Analysts from prestigious firms like B. Riley, Truist, Deutsche Bank, and Macquarie participated, highlighting the significant interest in Golden Entertainment's performance and future prospects.
One of the key financial metrics discussed was GDEN's price-to-earnings (P/E) ratio, which stands at approximately 3.43. This figure indicates that the company's shares are trading at a relatively low price compared to its earnings, suggesting that the stock might be undervalued or that the company is performing well relative to its share price. This is a crucial piece of information for investors, as a low P/E ratio can often signal a good buying opportunity, assuming the company's fundamentals are strong.
Another important metric is the price-to-sales (P/S) ratio, which is about 0.83 for GDEN. This suggests that the stock is also reasonably valued based on its sales, providing another indicator that the company's stock might be a good investment. The enterprise value to sales (EV/Sales) ratio of roughly 1.40 further supports this, indicating that the company's valuation in relation to its sales is moderately priced, neither too high nor too low.
The enterprise value to operating cash flow (EV/OCF) ratio, at approximately 12.41, is particularly telling. It shows how the market values the company's operating cash flow, which is a critical measure of financial health and efficiency. A higher ratio could indicate that investors are willing to pay more for each dollar of cash flow generated by the company, suggesting optimism about its future growth prospects.
Lastly, Golden Entertainment's debt-to-equity (D/E) ratio of about 1.26 and a current ratio of approximately 2.35 provide insights into the company's financial stability. The D/E ratio shows a balanced approach between debt financing and equity in the company's capital structure, indicating a moderate level of risk. The current ratio, on the other hand, suggests that the company has a healthy ability to cover its short-term liabilities with its short-term assets, which is reassuring for investors concerned about liquidity and financial resilience.
Golden Entertainment Started With a Buy Rating at Truist Securities
Truist Securities analysts initiated coverage on Golden Entertainment (NASDAQ:GDEN) with a Buy rating and set a price target of $45 on the stock. The analysts outlined their investment thesis on the company, emphasizing a return to fundamental strengths in the Vegas market. They noted that following recent asset sales, Golden Entertainment has transformed into a Nevada-centric operation poised to benefit from the region's positive demographic trends and a favorable, low-tax regulatory landscape.
With the completion of recent construction and the easing of labor challenges, analysts anticipate robust growth in EBITDA and free cash flow. They also pointed out that the company's current market valuation does not fully account for the expected improvements in business performance, the significant reduction in financial leverage, or the security provided by real estate holdings. The analysts believe the management is strategically positioned to enhance shareholder value through both organic growth and potential acquisitions, along with increasing returns to shareholders.
