Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to the Golden Entertainment Second Quarter 2025 Earnings Conference Call. 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 the details of the second quarter results and a business update. Following that, Blake and Charles will take your questions. With that, I'll turn the call over to Charles.

Thanks, James. In the second quarter, our operations generated revenue of $163.6 million and EBITDA of $38.4 million. Our results were impacted primarily by significantly lower table game hold in Laughlin and the widely reported summer slowdown on the Las Vegas Strip. Our Nevada locals casinos continued to demonstrate strong performance in Q2, posting their highest quarterly EBITDA for the past 2 years and growing EBITDA for the third consecutive quarter. Revenue increased 3% to prior year, with EBITDA up 7%, largely driven by the performance of our two Las Vegas Locals Casinos, which grew EBITDA by over 9%. Margins improved as well, up 170 basis points from last year to over 46% for this segment. We are seeing the strong performance of our local properties continue as we move into Q3 and anticipate this segment will be the biggest beneficiary in 2026 from recent legislation providing tax relief on tips, overtime and additional tax deductions for seniors. In our Casino Resorts segment for Q2, revenue was down 3% and EBITDA was down 5%, mostly related to our low table game hold in Laughlin. We had a stronger event calendar in Laughlin this quarter that featured a concert and a rodeo, which drove higher revenue, but our table games held less than 10%, which negatively impacted EBITDA by $1.5 million. Normalizing for unusually low hold would have resulted in increased EBITDA in Laughlin and stable year-over-year EBITDA for our Nevada Resorts segment. At the STRAT, EBITDA increased over the first 2 months of the quarter. However, we experienced a meaningful slowdown in June, consistent with other strip properties. STRAT occupancy for the quarter was 69%, down 4% from last year, but in June alone, occupancy fell to 60%, down from 76% compared to the prior year. EBITDA for the STRAT was down only 5% year-over-year despite the challenging environment as we aggressively managed costs to mitigate the impact of lower revenue. Weaker strip demand continued into July, but we are seeing stabilization of bookings in August and remain optimistic about the outlook in Q4 and Q1 '26, where we should benefit from increased attendees at the Las Vegas Convention Center and overall group business in the city. For our tavern business, we mentioned on the Q1 call that the promotional environment could negatively impact our performance in Q2, and it did. Revenue was down 7% year-over-year, even with some of our own increased reinvestment in the quarter. Our reinvestment rate remains at levels well below our peers and is lower than our casinos, and we do not anticipate increasing our tavern reinvestment beyond where we are currently. We saw the largest declines in revenue in April, where, in addition to declining volume, we experienced lower hold than normal. We're also experiencing lower volume during our late-night shifts, which cater to strip workers and tip positions, but we expect this to improve with improved strip business in Q4 investing our own assets and returning capital to shareholders. That concludes our prepared remarks. Blake and I are now available for questions.

Your first question comes from the line of Barry Jonas with Truist Securities.

This is Jeremy on for Barry. Do you guys expect any other impacts from the passing of the Big Beautiful Bill? And any chance you could quantify or give more color on the no tax on tips benefit?

Sorry, Jeremy, I didn't catch the first part of your question. Could you please repeat that?

Just any other impact on the Big Beautiful Bill besides the ones that you mentioned.

Look, I think we're going to benefit a little bit from getting some of the accelerated depreciation. So for us, if you were to quantify, it's probably an extra $10 million to $15 million of tax shield, so call it, $2 million to $3 million of cash flow off of that. So that's one. And then starting in 2026, there's an increase in the reportable limit of slot winnings, which will be somewhat meaningful for the taverns just in terms of the volume of those transactions that we get in terms of jackpots.

Your next question comes from the line of Chad Beynon with Macquarie.

This is Sam on for Chad. I was hoping you guys could provide a little color on the growth outlook for the second half of the year. I know last year, there were some moving parts with some disruptions given the presidential election distraction, and then we have a new F1 season this year. And then obviously, some major volatility in the consumer strength in locals, but some weakness in the strip. So any color you could provide on how we should think about growth in 2H?

Yes, Sam. To address your question, I'll go through the various aspects of our business step by step. Charles mentioned in his comments that we have a very positive outlook for the local economy, which benefits both our local properties and taverns in the future. Laughlin remains a stable market. Charles referred to a setback we experienced in Q2 with the table game hold, but the market remains steady, and our outlook there is optimistic. The area that's more challenging to predict is STRAT. However, we've noticed improvement since mid-summer, with some encouraging signs in August. It's difficult to forecast beyond that due to the uncertainties in the overall market conditions. From my perspective, if I could elaborate, I believe we're going to start seeing some recovery in demand. Occupancy rates are expected to improve, but the key question is how rates will adjust in response to this increased demand and occupancy. That is the most difficult factor for us to assess. However, I maintain a positive outlook on the different segments of our diverse portfolio, although STRAT remains the area where it’s hard to provide a clear forecast.

Okay, great. And then as a follow-up, hoping you guys could just elaborate a bit on the strategy to mitigate the recent depressed prices and rates on the strip and just kind of how you're thinking about it heading into the second half?

Yes. I mean I think like most other operators, we're really focused on the cost structure of the business given the lower volume. So you'll see that in terms of restaurant hours being curtailed during the midweeks, certain services, whether it's valet or baggage or those types of things. During the times when we're not busy, we don't have the occupancy during the week, and we bring some of those services back during the weekends when we do have the occupancy. I think if you step back and as Blake was saying, just look at the business in components, 75% of our EBITDA is flat to growing, which is effectively Laughlins and Locals and the taverns as we look into the back half of the year. And really, the weakness that we're seeing at the STRAT is July and August. But then when we look past that, we see that stabilizing with others if you look into Q4 and Q1 of next year when you have CON/AGG and a better convention schedule.

Yes. I think a bit more color, just a bit more. Weekends continue to be pretty solid. And I say that relatively speaking, I mean we're in the 90% to 100% occupancy range pretty much every weekend, notwithstanding, again, rates sometimes are challenged on a sequential comparison year-over-year in this current environment. And then as Charles mentioned, midweek, I will just add on the fixed cost side of the business, we're as efficient there as we have been since our ownership. We've made significant strides on that end of the business, and we are positioned well to force multiply on a revenue growth side of it when it does occur. I think Charles' comments speak to that in terms of broader citywide conventions, more sports and entertainment options coming in the fall and first quarter, we're well positioned from a cost standpoint to do well at the property.

Your next question comes from the line of David Katz with Jefferies.

It's been a while since we discussed the M&A landscape and the opportunities available for acquisitions. I wonder if there have been any significant changes or differences. Stocks are up slightly, and updated thoughts on this matter would be very helpful.

Yes. From my perspective, there are potential targets or combinations that could be beneficial for us. Currently, the debt capital markets are performing well, and valuations have seen slight improvement, although they fluctuate weekly. We expect to see better conditions when interest rates are lowered, which we anticipate will happen by the end of the year. Our primary focus now is stabilizing our business operations, which we are currently achieving with all our assets, except for our strip property. We expect that to stabilize in the fourth quarter. Therefore, we believe that M&A opportunities will become relevant only when we see both stabilization in our strip asset and a more favorable market environment accompanied by lower interest rates.

John, your line is open.

Charles, Blake, maybe to ask another question about the consumer at the STRAT. And so we've talked about kind of occupancy midweek and where rate might settle in. But for the customers that are coming and staying, how would you characterize their spend on property? Is it similar to prior year period? Are they still spending? So spend per trip is the same, we're just seeing less people in the door. Any color you could give there would be helpful.

Yes. I mean that's a good question. There are several bright spots within the challenging environment there. Our casino is showing good momentum and good progress, particularly on the table game slot side, obviously, which makes up the majority of it. We are seeing improved metrics there. So that, I think, is a result of our focus on direct bookings through our casino efforts and marketing efforts at the property versus the broad net OTA direction. We work very hard on that, and it's showing good signs and positive trends in the casino. So we are seeing, even with less people, additional spend without quantifying it. I think that's fair to say. Additionally, our Top of the World restaurant remains one of the best attractions in town. We do 600 to 700 covers up there on a good weekend, and that remains consistent and strong and drives a lot of traffic through the building. We are now receiving rent from Atomic Golf, which has performed fairly well. They're not public, but suffice it to say, they've generated a pretty significant amount of revenue through their first six months of operation. And so there are pockets of opportunity and good signs there. Again, as you mentioned, midweek, as Charles mentioned, we have established a very good baseline, best that we've ever had in terms of fixed costs during midweek and have just basically gone the fixed cost route to mitigate the lack of revenue midweek. And then weekends and some of the amenities I mentioned are driving traffic that we are seeing some positive signs.

Blake, that's helpful. Maybe one kind of broad question on Laughlin, which is a big asset for you, and it sounds like it's doing quite well. Can you give us a little bit of insight into where the growth is coming? I think it's a little bit of a snowbird destination, and we've got some tax breaks in One Big Beautiful Bill that might help. So kind of what's your outlook on Laughlin and kind of where you're seeing some growth at that property?

Yes. I think we are the growth in the market there. With our locations and our amenities, we pretty much have the prime location and prime market share in that market. We have established a new marketing momentum going forward with smaller events, but more frequent that seems to be paying off for us. And our LEC Center, I think, is 2,000 or 2,500 people versus the event center, which was 11,000 or 12,000. We've been able to pursue a more quantity than quality strategy, and that's working. More player events down there are working. And we're very bullish on that market. We're very solid in that market with our position and with our revamped approach to marketing down there. And by the way, I think the overall attraction to that market is the value versus Las Vegas currently in terms of what the consumer is paying for rooms and food and beverage. I think it's a very attractive market and continues to be so. So through those more frequent events, that value-driven consumer, and our market-leading position down there from an amenity and location standpoint, we're in a good spot.

And I would just add to that, John, that those properties down there have our highest level of rated play. So it's about 70% rated play for us within the portfolio down there. So we know all these players. We know how to market to them, and they actually should be those who are benefiting certainly from the tax break to seniors. So you're going to find increased discretionary spending for a majority of our customer set down there once we get to the April tax season.

And that concludes our question-and-answer session. And with that, that does conclude today's conference call. Thank you for your participation, and you may now disconnect.