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 the 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 the 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 the Super Bowl, February will be down year-over-year, but our forecast for March currently shows better trends over 2024, which reinforces our anticipation of improving performance for our properties throughout 2025. Now for some additional color on our specific properties. At The STRAT, for Q4, our weekend occupancy was flat to prior year at 95%, but our mid-week occupancy was down 6%, bringing overall occupancy to 75% for the quarter, which contributed to declines in our Nevada Casino Resorts segment. Las Vegas citywide occupancy and ADR were weaker in October and November, particularly for mid to lower tier properties impacted by the election and a softer second year of F1. However, both December and January were strong and we see opportunity for growth in 2025 from returning mid-week occupancy and increased spend from our core consumer. In Laughlin, we increased market share in Q4 and reduced operating expenses. Our Riverfront bingo room continues to help drive increased local business. We have programmed our smaller entertainment venue with more frequent acts on weekends to offset lower visitation from reduced large scale entertainment. For our Nevada Locals Casinos, we saw increased revenue and EBITDA over last year as well as sequentially from Q3. We also saw the same trend in margins with our Locals Casino EBITDA margin improving to 46%. Our biggest improvement within the local segment came from our smaller Arizona Charlie's Boulder property, which caters to our most value-oriented guests and has been the most pressured over the last few quarters. This property's recent performance is a positive sign for continued stability and growth in the locals market in 2025. For the fourth quarter, Nevada Tavern performance continued to be negatively impacted by our seven most recent tavern additions, six of which were acquisitions, where we are revamping prior ownership operations and reinvestment strategy. Although a slower start than anticipated, these new taverns continue to improve performance month-over-month and should stabilize at expected levels by the end of the year. On a same-store basis, we have seen sequential improvement in the taverns with revenue up 6% from Q3 to Q4. Moving on to our capital structure, we continue to maintain one of the best balance sheets in the gaming industry with total funded debt of approximately $400 million, net leverage of 2.3x EBITDA and $220 million of remaining availability under our revolving credit facility. Since selling our non-core assets over the last two years, we have repaid over $500 million of debt and returned nearly $190 million to shareholders through a combination of share repurchases and dividends, including $113 million in 2024. In Q4, we repurchased approximately 1.1 million shares at an average price of $32.65 totaling $36 million. We have $99 million of capacity on our current buyback authorization and we will continue to pursue opportunistic share repurchases, which can be funded from our free cash flow and availability on a revolving credit facility given our low leverage profile. Our wholly-owned casino and branded tavern portfolio is well-positioned to benefit from the favorable long-term economic trends in Nevada, which remains some of the most favorable in the country. Nevada continues to be one of the fastest growing states in terms of population, employment, and discretionary income, which is anticipated to continue well into the future. Last year also marked the fourth straight year of Las Vegas visitation growth, reaching nearly 42 million people. This is still below 2019's visitor volume, highlighting room for continued recovery to pre-pandemic visitation and beyond, supported by billions of dollars of future development projects to drive growth in Las Vegas. We are confident in our business prospects for 2025 with expected organic growth to come from improved performance at The STRAT, stabilized revenues in our new taverns and the rest of our portfolio benefiting from the continued strength of Nevada's economy. We remain committed to exploring all options to maximize value for our shareholders, including traditional M&A as well as monetization of our real estate holdings. In the meantime, we will continue to focus on operational efficiency, investing our own assets, and returning capital to shareholders. That concludes our prepared remarks. Blake and I are now available for questions.

Thank you all for joining us. We will now open the floor for a question-and-answer session. Our first question comes from Barry Jonas with Truist Securities. Please proceed.

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. It's Charles. I don't think anyone anticipated the significant drop in F1. We managed to save some costs, particularly in our investment in tickets and direct expenses related to the event. However, we did face challenges because we couldn't adjust our rates at all due to low occupancy in the town compared to the previous 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 mentioned the expectation of an increase in group and convention business in 2025 and 2026. Could you please remind us of your current recovery status and positioning at The STRAT and what that signifies for the property as citywide activities continue to rebound?

Yes. Hey Jordan, it's Charles. In 2019, we operated the property at nearly 92% occupancy, and as we noted for Q4, we are currently at 75%. This is primarily due to mid-week occupancy, as we often serve as overflow for other convention-related business. When the town sees increased activity from conventions, it tends to benefit us significantly. Looking ahead to 2026, the convention center will complete its third phase of expansion, a project totaling about $600 million, which should wrap up in Q4 of this year. As the convention center becomes busier and introduces new amenities, we expect The STRAT to benefit from the resulting increase in 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 want to emphasize that we anticipate sequential growth in the taverns as we progress through 2025, except for Q3, which typically experiences a seasonal dip. As mentioned earlier, we had to completely overhaul the operations of six taverns for various reasons, and those operations have shown positive trends in EBITDA. We expect this growth to continue, as we have significantly changed how we reinvest in both customers and the workforce at these locations. We have essentially had to replace every employee, which caused some disruption, but we believe we are now returning to a steady pace that aligns with the rest of our portfolio by the end of 2025. For the rest of the company, labor remains a challenge. We have been managing through a new culinary union contract at The STRAT, which marks its first anniversary and where most cost increases took place. We expect these costs to stabilize, but we still anticipate mid-single-digit labor inflation across the portfolio that we will address as we progress throughout the year.

Yes. Let me just add to that. I think that's exactly right. Our major initiatives for all of our operations going into 2025 are focused on our cost control efforts. As Charles mentioned, we're already making significant progress in those areas. Our revenues were down modestly, about 3%, quarter-over-quarter. We are highly focused on our cost opportunities across our broader portfolio, with most of our potential for improvement this year at STRAT, where we can manage things more effectively. So we're off to a great start in that respect.

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 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 we've observed stability. There was a bit of promotional activity during the summer months, but that has now leveled off, and we consider the markets where we're competing in the locals segment to be stable. I do believe there is a reassessment of how people approach reinvestment at the lower end of the database, which should definitely remain a constant. For us, it's about balancing how much we invest in the existing players at the lower end of the database versus reactivating players we may not have seen recently. Many of our campaigns are centered on both reactivating players and evaluating our current strategies to ensure we're not over-investing in any single 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.

In the past, I have mentioned on these calls and in other conversations that if we choose to take action, we want it to make a significant impact. We don’t intend to engage in small regional operations or spread our management too thin. Given our current capital structure and organic growth opportunities, we can afford to be patient. However, we are not satisfied with our share price remaining stagnant in these ranges. This serves as motivation for us to take proactive steps. The activity we pursue will be transformational, rather than a piece-by-piece 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. Atomic continues to advance in attracting more business. I visited the property yesterday and noticed some bookings that are a package deal between our room product and Atomic. They are reportedly seeing significant improvements in their group business, and we anticipate some crossover from that. We believe as they progress, we will enhance our ability to drive traffic from that facility, which is an $80 million world-class venue. We remain optimistic about the impact on our property as they continue to expand their operations. Additionally, there are approximately an acre adjacent to that venue, but more importantly, there are 5.5 to 6 acres directly across the street on Las Vegas Boulevard. We are actively engaging in discussions about various uses for that land, as we see it as a promising opportunity for The STRAT moving forward. With a Blank Canvas, we aim to make the right choices, and there are numerous options we are exploring for 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 having me. It seems like the areas you are considering for potential expansion might be broadening. I want to clarify whether this includes markets outside of Nevada or if we should still focus solely within the state. If you are considering areas beyond that, could you discuss which types of markets may be viable or off-limits? Any information would be appreciated. Thank you.

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.

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.