Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to the Golden Entertainment Second Quarter 2025 Earnings Conference Call. [Operator Instructions] 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. James Ad

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 2 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 tables 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 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 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 have 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 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 caters 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.

[Operator Instructions] 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, what was -- I didn't catch quite the first part of your question. Can you repeat that?

Just any other impact on the Big Beautiful Bill besides for 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 help -- you could provide just for how we should think about growth in 2H?

Yes, Sam. So if you take the parts of our business, sequential, I guess, to answer that question. Charles mentioned in his prepared comments, we see very positive outlook continuing for the local economy, which I think benefits both, obviously, our local properties as well as our taverns going forward. Laughlin is -- continues to be a consistent market. You mentioned -- Charles mentioned the Hickey, we sustained a significant one in Q2 with the table game hold. But the market is consistent and our outlook is positive there. The one that's hard to give any detailed forward-looking comments on is STRAT. We are seeing improvement post mid-summer. We're seeing some positive green shoots in August. It's hard to look beyond that given the uncertainty in the macro environment in town. From my perspective, I think if I could get a little more color on that, I think you're going to see some recovery in demand. I think the demand dynamic in terms of occupancy is going to show some improvement. I think the question is where do rates settle in on that additional demand and occupancy. And that's the toughest one for us to try and gauge. But again, I think our diverse portfolio, if you take in pieces, we're very positive on the particular parts of it and the STRAT, I think, is the one that's hard to give kind of a concrete look forward.

Okay. Great. And then as a follow-up, hoping you guys could just maybe elaborate a bit on the strategy to mitigate, I guess, 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've -- maybe it's only been 90 days, I don't know, talked about kind of the M&A landscape and the opportunity set for you to acquire. I wonder if there's any notable change or difference. Stocks are up a little bit. Updated thoughts and boundaries would be really helpful.

Yes. Look, as far as the landscape goes, I think there is a landscape of potential targets for us or combinations for us that could make some sense. I think from an environment standpoint, until you get -- like the debt capital markets are strong right now, as many of you know. But I think -- and valuations have improved slightly, although that seems to be fluctuating on a weekly basis. I think we are going to get better tailwinds when we get some rate cuts from the broader market. We anticipate like others, that happens by the end of the year. And I think for us right now, our focus is, as I mentioned in my comments, as Blake mentioned, is stabilizing the operation of the business, which, again, we are seeing in all of our assets right now, except of our strip property. We expect that to happen in Q4. So from our perspective, M&A really doesn't come into focus until you have the confluence of those 2 things. We see where we've stabilized in terms of our one strip asset, and we get some better tailwinds in the market that we think come with a lower interest rate environment. [Audio Gap]

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 good positive trends in the casino. So we are seeing even with less people, I guess, 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 is -- 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 6 months of -- or through the last, excuse me, 6 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 oversight as to kind of 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 -- in the event center versus the LEC, 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 whether -- certainly Las Vegas currently in terms of what the consumer is paying for rooms and food and beverage and things down there, 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 ones who are benefiting certainly from the tax break to seniors. So you're going to find -- I think you're going to find some increased discretionary spending for our -- 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.