Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to the Golden Entertainment Fourth Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal remarks. Please note that this call is being recorded today. Now I'd like to turn the conference over to James Adams, the company's Vice President of Corporate Finance and Treasurer. Please go ahead, sir.

Thank you very much, operator, and good afternoon, everyone. On the call today is Blake Sartini, the company's Founder, Chairman and Chief Executive Officer; and Charles Protell, the company's President and Chief Financial Officer. On this 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. Except as required by law, we undertake no obligation to update these statements as a result of new information or otherwise. During the 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 will start the call with Charles reviewing details of the fourth quarter results and a business update. Following that, Blake and Charles will take your questions. With that, I will turn the call over to Charles.

Thanks, James. The fourth quarter concluded a transformative year for Golden Entertainment. During 2024, we streamlined the portfolio by closing on the sale of our Nevada distributed business, the last of our non-core divestitures at attractive multiples, which collectively generated over $600 million of proceeds. We used these proceeds to optimize our capital structure, reducing our leverage as well as lowering our cost of capital by re-pricing our term loan. Also in 2024, we accelerated capital returns to our shareholders by instituting a regular quarterly dividend and repurchasing 2.9 million shares of our common stock, representing 14% of the free float outstanding. Turning to our financial results. In the fourth quarter, our operations generated revenue of $164 million and EBITDA of $39 million, bringing our full year revenue and EBITDA in 2024 to $667 million and $155 million respectively. When looking at Q4 for our continuing operations, compared to prior year, our results were lower year-over-year, but up meaningfully from Q3, which we noted on our last call would be the low point in our quarterly financial performance. In Q4, we saw material sequential EBITDA improvements at all of our properties, excluding Laughlin, which as a market is seasonally weaker in Q4 compared to Q3. As we start 2025, we saw broad strength in January offset in February given the tough comp related to Las Vegas hosting the Super Bowl last year. However, when we look at the monthly cadence of our rated gaming revenue compared to prior year, October was down 7%, November was down 4%, December was flat to prior year, and January was up 4% with January 2025 EBITDA up meaningfully over prior year. As mentioned, without the lift from Super Bowl, February will be down year-over-year, but our forecast for March currently shows better trends over…

Thank you. Ladies and gentlemen, we will now be conducting a question-and-answer session. [Operator Instructions]. Our first question comes from Barry Jonas with Truist Securities. Please go ahead.

Hey guys, it's Patrick Keough on for Barry. Thank you for taking my question. First one from me has your thinking or the general environment around M&A changed since the last time we spoke?

No, Patrick. This is Blake. As we outlined on our last call, we continue to be proactive in pursuing all options, really to grow shareholder value. As Charles, I think mentioned in his prepared remarks; we continue to believe we're well-positioned for various strategic alternatives. And between potential share repurchases with value dislocation and other strategic alternatives, we have plenty of capacity going forward to do both. So our situation is exactly the same as it was last quarter, and we are continuing to be proactive in pursuing opportunities.

Okay. That's great. Thank you for the color. As my follow-up, you'd previously stated that you ramped promos for F1 this time around. Could you give any color on how that weekend trended for you in year two? And either way, do you have any conviction you could benefit further as the event carries on in years to come? Thank you.

Yes, Patrick. Hey it's Charles. So I don't think anyone expected the dramatic fall off in F1. So where we saved, and it was -- I would say less bad for us was around our investment in tickets and direct expenses related to the event. Where we did suffer a little bit was just that we weren't able to compress our rate at all given the low occupancy in the town relative to the prior year.

Okay, appreciate the color, guys. Thank you, again.

Thanks.

Thank you. Our next question comes from Jordan Bender from Citizens. Please go ahead.

Good afternoon, everyone. A strip operator noted the expectation that an uplift in -- you'll see an uplift in group and convention business in 2025 and 2026. So can you just remind us where you stand in terms of the recovery or your positioning at The STRAT and what that means for the property as citywide continues to come back.

Yes. Hey Jordan, it's Charles. So if you look at 2019, we ran that property at almost 92% occupancy and we just noted for Q4, we're at 75%. So all of that is really mid-week that we -- that for us, we are the overflow of others convention business. So when the town is more full with that, that an urge disproportionately to our benefit. And when you look particularly into 2026, you will have the convention center finished off with the third phase of their expansion, which is about $600 million that they should finish off in Q4 of this year. So once the convention center gets more use and more full with their new amenities, we're very close to that and we see the STRAT benefiting from that increased traffic.

Thanks for that. And on my follow-up, switching the taverns, you noted expense growth in 2024 was fairly elevated. Without getting into any guidance, are you able to just help us with OpEx growth in that segment in 2025 and then maybe just more broadly the major buckets or swing factors that we should be thinking about for the total company? Thank you.

Yes. I would just say specifically without getting too much into it, you'll see sequential growth in the taverns as we move forward through 2025, other than Q3, which is seasonally lower. So you know that as we highlighted in the call, we basically had to revamp the entire operations of six taverns that we took over for various reasons. And so those operations now have trended positive from an EBITDA perspective and we expect them to continue to grow, but we've completely revamped how they've traditionally -- those locations are traditionally reinvesting in customers as well as the employee base. I think we've had to turn over every single employee. So that created some disruption. But now we're thinking we're back on a cadence that we expect those to be ramped in line with the rest of the portfolio into at the end of 2025. For the balance of the company, I think it continues to be labor is a headwind. So if you look at what we've been doing, we've been managing through a new culinary union contract at The STRAT, which this is the first year of that, or this will be the anniversarying of the first year of that where most of the cost increases occurred. So we expect those to moderate. But there will still be mid-single-digit labor inflation within the portfolio that we'll be working to mitigate as we go through the year.

Yes. Let me just add to that. I think that's exactly right. Our major initiatives, just to put it another way, going into 2025 for all of our ops are focused around our cost control efforts. And as Charles just mentioned, we're making significant progress already in those efforts. And our revenues were up, or -- excuse me, down modestly, quarter-over-quarter plus or minus 3%. So we are laser-focused on our cost opportunities with our broader portfolio, with the most of our upside being there this year, particularly at STRAT in regards to being tangible and us being able to manage that. So we're off to a great start in that regard.

Thank you very much.

Thank you. Our next question comes from Zachary Silverberg with Wells Fargo. Please go ahead.

Good evening. Thanks for taking my question. You touched upon it a bit in the prepared remarks, but you mentioned how you're seeing the consumer stabilizing or improving post-election. Can you maybe just double click on those trends and what you guys are kind of seeing on the ground that gives you confidence to make the statement?

Yes. I think we've seen more health in the database, so particularly within the locals market. So as we look at the database, the top tier of our database continues to be strong both in terms of visitation and spend. But the trend in Q3 that we really saw was the lower end of the database seem to be continuously declining almost to double-digit rates. That has moderated and we tried to give some cadence of within the quarter, within the fourth quarter how we've seen again those overall database declines that was mostly driven October by the low end in the database, a little less in November, again in the low end of the database to stable year-over-year to growing in January. So absent the Super Bowl comp, we're very confident in growth and the health of it in the database as we look into 2025.

An additional micro example to that, I think it's important to point out at The STRAT, given the cost challenges that we've had and are currently making great efforts to mitigate and having success with that. We're having The STRAT slots, for example, continue to show sequential year-over-year improvement even with the midweek challenges, our gaming situation at The STRAT is improving, particularly in the slots. We are approaching I think around 55% carded play at The STRAT, which when we took that property over was non-existent. That's a huge upside for us to be able to target and market to our gaming customers, which we're seeing benefits from. And the direct bookings at the property continue to improve. So all of that I think is maybe a bit in the weeds, but in particular for that property, we are seeing green shoots and we are making progress in the gaming side of that property, even given the occupancy challenges, which we believe is very positive going forward.

Thanks for the color. And just for a follow-up, no tax on tips and overtime seems to have some real momentum. Can you give any color on how this would benefit your assets or maybe not just your assets, but the Las Vegas in general?

It would obviously be huge for Las Vegas given the workforce. I think as it directly relates to us that's about our match in that is about $2 million from a tax perspective around those tips. So maybe not as meaningful, but certainly for our workforce it would be meaningful. And we see those as just direct discretionary spending dollars that end up back in the pool for allocation to gaming as their entertainment.

Thank you.

Thank you. Our next question comes from the line of Chad Beynon with Macquarie. Please go ahead.

Hi, good afternoon. Blake and Charles, thanks for taking my question. In the last couple of calls, I know you guys have addressed some of the promotional activity, particularly in the Las Vegas locals market. Does that seem to abate at this point? And Charles, given your comments around the rated play improving, are you willing to kind of let go more of some of that lower tier unrated play, maybe some that's more interested in those in the market? Thanks.

Yes, I think, Chad, we've seen stability. I think it was a little bit promotional over the summer months and now we've seen that level off and we view it as stable in the markets where we're competing here in the locals segment. I do think there is a reevaluation of how people look at reinvestment at the lower end of the database that should obviously be a constant. I think for us it's a balance of how much you're investing in the existing players at low end of the database as well as reactivation of players that we maybe haven't seen back. So a lot of our campaigns are focused on both of that, the reactivation of players and evaluation of what we have so that we're not over investing in those -- in any one segment.

Yes, Chad, promotional activity I think is remains in the category or is now in the category of rational. I think what we're seeing, if there is anything that we're seeing in the market, it's rational, it's food and beverage oriented. It's reasonable. We aren't seeing, at least from the major local operators, including ourselves, a lead to anything that we think is could be inflationary.

Okay. Thank you. And then on the back on the strategic question that you addressed earlier in the call, is there a particular size of a portfolio or maybe a leverage target if you do proceed down the M&A route, how should we think about maybe the regions of the country that you'd be interested in and then maybe more importantly the financial implications and kind of a target leverage goal that would obviously come down over time. Thanks.

Yes, Chad, I think it's easier to outline what we would not be doing. We would not be looking at any Greenfield developments. And I don't think we'd be looking at any single asset acquisitions that are sub $40 million to $50 million of EBITDA. I'd say outside of that, we are open to all types of avenues of M&A. And so I don't have to walk you through what those would be. But I think that when we look at how we think about leverage in a pro forma entity, we said our target long-term is 3x or less, which is obviously where we are now. I think we'd be comfortable going higher than that, but I wouldn't want to give you a number around that right now. But we want to have a quick deleveraging path, either if we're in a combination with another company or we're an actual acquirer of another company.

Chad, in the past I've mentioned on these calls and in other conversations that if we do -- if and when we do something as Charles put, we want to move the needle. We don't want to go regionally into small operations that are capital deferred or dispersed our management to a point that doesn't make sense. Given where we sit with our capital structure, with our current organic growth opportunities, we can continue to be pretty patient. What we're not patient with is our share price continuing to lag in these ranges. So that's motivation for us to, as I said, to be proactive. But it's going to be, I think, a transformational type of an activity that we would pursue. It's not going to be kind of a piecemeal approach.

Got it. Thank you both. Appreciate all the extra details.

Thanks, Chad.

Thank you. The next question comes from Max Marsh with CBRE Securities. Please go ahead.

Hey guys, thanks for taking my question. We're at 72 taverns now. I know some of those are still ramping, but do you have any idea of what the cadence of new acquisitions might look like in Las Vegas Valley and whether or not you guys have thought about expanding that business geographically outside of Las Vegas?

We definitely have thought about expanding it outside of Las Vegas. We obviously, we have a few that are up in Reno right now. I think that the gaming component to those taverns, as long as there's opportunities to continue to grow in Nevada, which we think that there are, that that will be the focus given that aspect of it. And within the context of acquisitions versus Greenfield, we're much more focused on Greenfield developments right now. We have two sites signed up for this year, and we'll look for others. But I don't think you'll see us in the acquisition mode for the near future, we're going to be much more focused on adding A plus sites towards our existing portfolio in Las Vegas.

Great, great. Thanks for that. And just quickly as a follow-up here, if you guys have any update of the ramping of the Atomic Golf facility at The STRAT, whether that might be helping drive mid-week demand and I believe you also have some additional excess land there, if you could just update us on your thoughts or plans for that.

Yes. So Atomic -- I think Atomic continues to move forward in terms of continuing to attract additional business. I was at the property yesterday and we are seeing some bookings that, that are -- is a package between our room product and Atomic. They are improving from what I understand greatly in their group business. We do see some crossover from that. We continue to believe that as they improve, we will refine our ability to drive cross traffic from that facility, which I mentioned before is a world class $80 million facility. So we are very continue to be bullish on that particular activity, moving business into our property as they continue to grow the excess property. Things are probably approximately an acre adjacent to that. But more importantly, there's 5.5 to 6 acres directly across the street on Las Vegas Boulevard. We continue to be very active and have in-depth conversations with a lot of different uses for that particular piece. We see that as a great opportunity for The STRAT going forward. With a Blank Canvas, we want to make the right decision, but there is a lot of optionality that we are discussing on that additional acreage.

Great. Thank you, guys.

Thank you. Our next question comes from David Katz with Jefferies. Please go ahead.

Hi, good evening. Thank you for letting me in. Look, it sounds like the geography of where your potential consideration markets may be expanding and I want to be clear that that's -- is that something outside the state of Nevada or should we still be thinking within it? And if we're going outside, talk about sort of what kinds of markets would be, I guess non-starters or inbounds or out of bounds, anything would help. Thanks.

Yes. Thanks, David. I think if we're looking out of state, it would be in the context of multiple properties. And as Blake was alluding to a more transformative type of deal for us, I think we would only look really for single assets within the state. So I don't really want to go into it much more beyond that. But we won't go buy a one off riverboat in Iowa that's doing $15 million to $20 million of EBITDA. But things that are part of a larger portfolio, we certainly look at that. And again, I think we'd be not interested in pure Greenfield development projects. But certainly if there's an aspect of future growth and development with existing cash flowing operations, we would look at those opportunities.

Understood. And should we be thinking as broadly as historical racing markets or other kinds of gaming machine facility markets that may be classified as adjacencies to the traditional commercial casino markets?

We would except for the distributed gaming business. So as part of our divestiture of that business, we do have a non-compete to reenter into that business. So we would not look at that. But to the extent that there's growing cash flow with any adjacencies, we would look at that. Obviously, we don't have an online presence, so we would not be looking on the digital landscape. We would be purely focused on brick-and-mortar opportunities where we could use our expertise and corporate infrastructure to help grow and improve those businesses.

Very helpful. Thank you.

Thanks, David.

Thank you. Ladies and gentlemen, as there are no further questions, that concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.