Golden Entertainment - Q2 2023

Transcript

Operator (participant)

Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to the Golden Entertainment second quarter 2023 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. I'd now like to turn the conference over to Joe Jaffoni, Investor Relations. Please go ahead, sir.

Joe Jaffoni (Founder and President)

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 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 differ materially from those in the forward-looking statements is contained in today's press release and our filings with the SEC. 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 second 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 (President and CFO)

Thanks, Joe. For the second quarter, we generated revenue of $287 million and EBITDA of $58 million, with revenue essentially flat to last year, EBITDA impacted by cost pressures as well as disruption at The STRAT from ongoing renovations we wanted to complete before the strong Las Vegas calendar this fall. Before getting into the operations, we have a few updates on our previously announced M&A activity. Last week, we closed on the sale of Rocky Gap Casino Resort for aggregate consideration of approximately $260 million, representing an 11x multiple based on the property's trailing twelve-month EBITDA. Immediately after closing, we used $175 million of the proceeds to repay the balance of our original term loan that remained outstanding after our refinancing in May.

In March, we announced the sale of our Nevada and Montana distributed businesses to J&J Gaming for approximately $360 million, including cash. We remain confident that both transactions will close by year-end, and we look forward to having J&J as our gaming partner in our Nevada taverns. These transactions will accomplish our goal of divesting non-core businesses at attractive valuations, leaving us with a Nevada portfolio of owned casino assets and the largest gaming tavern footprint in the state. Within our segment results, revenue at our Nevada casino resorts declined 4.6%, while EBITDA declined 28%. Revenue for The STRAT was down 10%, with EBITDA down 44%, in part due to having 15% less rooms available for the majority of the quarter due to room renovations.

Those 537 new rooms were completed in mid-June. We estimate that we lost $3 million in revenue and about $2 million in EBITDA in Q2 from this disruption. The STRAT's Q2 results were also impacted by higher labor expenses, weaker spend per guest, and reduced table game volumes. Upon completion of our 537-room renovation in June, we commenced renovations on another 118 rooms in our oldest tower at the property. The budget for these rooms is $8 million and will be funded with proceeds from the Rocky Gap sale. We expect to complete these room renovations prior to the fourth quarter so we can further capitalize on F1, the opening of Atomic Golf, and increased citywide conference attendance in the fall.

Atomic Golf construction remains on schedule; we expect it to open by the end of the year, which we expect to drive meaningful new visitation to the STRAT. In Laughlin, revenue was up slightly compared to last year, supported by a more robust event calendar, while EBITDA declined 18%, reflecting the impact of higher costs for the added events, as well as higher labor and utilities expenses compared to last year. In June, we initiated a local marketing campaign in Laughlin, highlighted by our new bingo offering at the Edgewater. Since opening our riverfront bingo room, we have seen strong initial results in driving additional traffic from Bullhead City; we anticipate this accelerating throughout the end of the year. Revenue and EBITDA for our Nevada local casinos were both in line with Q2 2022, continuing their strong performance relative to 2019.

We are investing modestly in new restaurant offerings and slot capital at these properties to refresh the experience for our loyal customer base. For our Nevada tavern operation, second quarter revenue and EBITDA was down from last year, with declines in gaming revenue partially offset by increased food and beverage sales. Margins at our taverns also continue to be impacted by increased labor and other operating expenses versus the prior year. We continue to expect the favorable Las Vegas demand drivers to support our tavern business. We opened our 65th tavern this quarter and have committed to acquire six additional taverns by year-end or in Q1. In addition, we have three development sites for future locations. Total third-party distributed revenue is down 4% compared to last year, while EBITDA decreased 14%.

We saw some weakness in Nevada across our third-party tavern partners, which is similar to our own Nevada tavern performance for the quarter. In Montana, revenue was up slightly, while EBITDA declined slightly, reflecting higher payroll expense. Both Montana and Nevada have strong pipelines of new locations, which will start to come online in the second half of this year. Moving to our balance sheet, in May, we successfully refinanced our first lien term loan and revolver, lowering the interest rate on our credit facility by 25 basis points and extending maturities. After using $175 million of the Rocky Gap sale proceeds to repay the remaining portion of our original term loan, our current outstanding debt consists primarily of our new $400 million first lien term loan and our existing $335 million of senior unsecured notes.

At the end of the quarter, we had full availability on our $240 million revolver and $166 million in cash on the balance sheet. Pro forma for the sale of Rocky Gap, our current net leverage is 2.5x, and we intend to maintain our net leverage below 3x going forward. Given the strength of our balance sheet and confidence in our future cash generation, we are accelerating our return of capital initiatives. To that end, we announced a $2 per share special dividend and an increase in our share repurchase authorization to $100 million. Looking forward, pro forma for the sale of our distributed businesses and this special dividend, our net leverage declines to 1.7x.

Our company remains uniquely positioned to benefit from the growth drivers of Nevada's resort and local markets, and we believe our properties will demonstrate better performance in the back half of the year. In addition, our strengthened capital structure will allow for maximum flexibility to invest in our core assets, return capital to shareholders on a regular basis, and evaluate future strategic alternatives. That concludes our prepared remarks. Blake and I are now available for questions.

Operator (participant)

We will now begin the question-and-answer session. To ask a question, you may press star one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star two. At this time, we will pause momentarily to assemble our roster. The first question comes from David Bain with B. Riley. Please go ahead.

David Bain (Managing Director)

Great! Thanks. Hi, Blake and Charles. I was hoping I could start with, Hi, return of capital, and maybe if you could speak to some of the considerations made with regard first to special versus recurring, and I know some specials end up being recurring. I think Wynn Resorts was known for that, but, you know, is that kind of the potential mentality here, or is this more of just like a one-time thing, and you'll look at recurring dividends at a later date? Then similarly on the buybacks, with the, you know, move upward there, are we looking to be more opportunistic versus a set average every quarter, or is it a mix? How do you think about those things?

Charles Protell (President and CFO)

Yeah, I think on, on, on the dividend, on the dividend question first, I mean, keep in mind, we did just monetize an asset at 11x EBITDA that for $260 million, that at the time when we acquired that asset, we valued it at approximately $60 million. In our mind, it seems like, and given the leverage point of the company on a pro forma basis, it seems like the right time to accelerate return of capital to shareholders.

David Bain (Managing Director)

Mm-hmm.

Charles Protell (President and CFO)

We do that both in the form of dividends and buybacks. As far as regular, I think that's something that we'll evaluate going forward. We clearly are focused on closing the distributed transactions that have been announced this year, and we'll continue to evaluate regular dividends as we move forward through the year. In terms of the buyback, we just see that as another tool. I don't think we're ready for a programmed, signaled amount of buyback in any one particular quarter or over the year, but we view it as opportunistic dry powder to, quite frankly, invest in what we think is the most compelling M&A opportunity out there, which is our own company.

David Bain (Managing Director)

Okay. Great. Then, you know, I know you'll get questions on operations, so maybe I can ask one more on. You know, we had that small discussion about tavern expansion strategy last, last quarter outside of Nevada, and, you know, potentially using your brands, your processes. Is there some thought towards expanding in new markets? I'm sorry, existing markets as well, outside of Nevada? Because we had talked about new, you know, as new markets open up, looking at that. But is there an opportunity in any of the existing distributed markets for that, either, you know, branding, M&A, or is that something not to think about at this point?

Charles Protell (President and CFO)

Yeah, I mean, look, we obviously have a decent pipeline here in our home state of Nevada, but we're pretty excited about the partnership with J&J. They're obviously operating in other states, Illinois, the largest. They're looking at new jurisdictions. We think that this partnership will lead us to some of those opportunities. Our immediate focus is here in Nevada.

Blake Sartini (Chairman and CEO)

Yeah, I think, David, that's true.

David Bain (Managing Director)

Mm-hmm.

Blake Sartini (Chairman and CEO)

I think, as I think I mentioned on our last call, that, you know, we, we significantly outperform our third-party partners by when we own the, the brick-and-mortar asset on the, on the tavern side.

David Bain (Managing Director)

Right.

Blake Sartini (Chairman and CEO)

Along with Charles' comments, I think we're uniquely positioned, particularly with the J&J acquisition, to potentially capitalize on that.

David Bain (Managing Director)

Got it. Very good. Thank you, guys.

Carlo Santarelli (Analyst)

Thank you.

Operator (participant)

Excuse me, the next question is from Carlo Santarelli with Deutsche Bank. Please go ahead.

Carlo Santarelli (Analyst)

Hey, guys. Good afternoon. Charles, just before I ask my question, I did just want to clarify: the $3 million and the $2 million disruption at the STRAT, I'm assuming that's just what you're, you're, you're marking for the hotel rooms being out of service, or is that inclusive?

Charles Protell (President and CFO)

That's right. That's right.

Carlo Santarelli (Analyst)

Okay. Okay, if, if I could ask this question, obviously, the, the impact presumably a little bit more than that if you're not capturing the ancillary spend of those guests. But if you think about, you know, your, your margin profile in that Nevada casino segment, how much of the, the year-over-year decline would you allocate to that specific impact at the STRAT versus, you know, the, the cost pressures you spoke about?

Charles Protell (President and CFO)

I think the other way to look at it is I'd say most of the impact within that segment is related to The STRAT. You think in terms of saying, did we have, you know, extra costs to deal with this disruption in terms of servicing our other guests? Or were we missing out in, you know, other revenue, whether pool or otherwise, because we had those under renovation, or we just had people who said, "You know what? I, I'm not gonna be spending as much time here at the property, even though I'm staying here because of the construction disruption." That's a bit tough to unpack.

You know, I would say, if you look at, you know, the last four quarters of margins for the, you know, entire company, it's been, you know, fairly consistent across the whole casino side, particularly on the local side. You know, if you eliminate that downdraft from the STRAT, then we're kind of back in line with where we've been. I think Q2 last year versus Q2 this year, that's just a bit of a tougher comp. We had not yet had a lot of the labor cost increases from minimum wage, just competitive increases in the workforce. We haven't had the continuous rise in utilities and other costs. Again, if, if you look at just the trends over the last four quarters, I think those numbers have been fairly consistent from a margin perspective.

So that's why we feel confident that going forward, you know, our margins, we think, are gonna be, you know, relatively stable. We think the STRAT improves, which should improve the margins within the resort segment, and we feel good that the back half of the year will be a better comp to, you know, last year.

Carlo Santarelli (Analyst)

Charles, I mean, would you say, just based on what you know now, getting back, obviously, a bunch of the rooms that were out in the 3Q, not the full complement, as you mentioned, kind of a little bit more or less, coupled with Atomic Golf, coupled with Formula 1, that the back half of this year could kind of show resumption of, of margin expansion, given, you know, the easing situation in the back half of last year relative to what you faced in the first half? Or, or would that kind of be the stretch goal?

Charles Protell (President and CFO)

Yeah, I mean, look, I think that that is achievable. I think within that segment, you know, labor is a big piece of that puzzle. There's obviously a Culinary Union contract being negotiated right now by larger folks in this, on the Strip. I think if those come in line with our expectations and what we're thinking about right now, then, yes, that is the achievable goal. Labor will be a bit of the wild card within that forecast.

Blake Sartini (Chairman and CEO)

Carl, let me add real quick that towards your question towards the back end of the year about margin coming back into line. You mentioned Atomic Golf. There are also additional catalysts that we see going forward. We've operated this property as best we can in the normal course through this construction process. That all should be done by the end of September, even with our existing 100-room renovation.

Charles Protell (President and CFO)

Yeah, that's the only piece that's not.

Blake Sartini (Chairman and CEO)

That's the only piece that's not. You mentioned Atomic Golf, which will open in November, December. You know, we think that's worth 100,000-plus additional patrons annually through the property. The Fontainebleau, I think, will open at the end of this year, which we believe brings more inertia to the north end of the Strip. We have many options for looking at traffic-driving assets on our undeveloped real estate around the STRAT. The master plan there is yet to be realized, I think. In the long run, we, our position hasn't changed. Our rate of return and EBITDA goals, we believe, are more than achievable at that property.

Carlo Santarelli (Analyst)

Understood. Thank you, guys. And if you don't mind, if, if I could just ask one other. You know, Charles, you, you kind of talked about some weakness at, at some of the, the third-party taverns. You know, historically, and I, I'm not gonna sit here and tell you that I, I, I know this to be true, but historically, those assets perhaps have kind of been a little bit of a leading indicator for what's going on with the locals customer in general. Do you guys get that sense? Is it a prolonged kind of trend that you're seeing that, that kind of has your antenna up, or was it more of a blip, and you've seen this before, and it's kind of popped back?

Blake Sartini (Chairman and CEO)

I would say the latter, Carlo. I would say clearly the latter in, in the, in, in the context, A, Las Vegas is still one of the fastest growing communities in the country in terms of population. Tavern, the tavern, we're seeing a little bit of kind of normalized seasonality come back as, as the plates have shifted from COVID and so on in the last two or three years. There's a bit of that in June, but the taverns are, are as consistent as they've ever been, and my anticipation is, it's, it's a bit of an, an anomaly as we look forward.

Carlo Santarelli (Analyst)

Great. Guys, thank you very much.

Charles Protell (President and CFO)

Thanks, Carlo.

Operator (participant)

The next question is from David Katz with Jefferies. Please go ahead.

David Katz (Managing Director)

Good afternoon, everyone. Thanks for taking my questions. I wanted to sort of look forward a little bit and, you know, think about potential M&A opportunities. If you could give us some updated, you know, boundaries around whether you think it's more corporate or individual assets and, you know, what, what your tolerance for, you know, dilution might be or leverage might be, just so we prepare ourselves in case a great opportunity comes along.

Charles Protell (President and CFO)

Yeah, I, as I said in the comments, our pro forma leverage will be less than 2x, even with a $2 a share dividend. We obviously have the capacity to go out and look for deals. I think those opportunities for us would need to be in the West. Casinos of, or portfolios of a more meaningful size, to us—that's $50 million plus, $50 million-$100 million—are the things that we would target to look at. Importantly, where we think we can create value through synergies in the operations with our existing portfolio. I think that, you know, that is a, a fairly narrow lens to look at, you know, acquisitions, but we will do that.

I think the other thing that we're, you know, trying to highlight as we think about, you know, our future going forward, is that will be weighed against simply buying our own stock, you know, given the capacity that we have on the balance sheet and the buyback authorization from the board.

David Katz (Managing Director)

If I can sort of follow that up, right. Sometimes there's, you know, value to add walking in the door. Sometimes it takes until year three to start to realize that value. How patient, what's your patience level for stuff like that?

Charles Protell (President and CFO)

Look, I think we've been pretty patient in the past, but from a synergy perspective, you know, we tend. We built the company through acquisitions. We tend to not underwrite revenue synergies. We look at cost synergies, and those are more, you know, day one through 120 in terms of achieving this.

Blake Sartini (Chairman and CEO)

My patience level, David, is I'm very patient. I'm very patient, but I'm, I'm, I'm opportunistic as well.

David Katz (Managing Director)

Right.

Blake Sartini (Chairman and CEO)

I think that, that narrow lens that Charles talked about is something we're focused on. As he said, you know, as we look through the landscape right now in the M&A, kind of on the M&A board, you know, we see a lot of value in our own, in our own shares. We see a lot of value in our own company, but the capacity is there for us to look at. I think Charles mentioned $50 million plus; we're looking at things that move the needle and that, and, and we can use synergies within our current organization. Patient, but opportunistic.

David Katz (Managing Director)

Understood. Thanks very much.

Operator (participant)

The next question is from Jordan Bender, with JMP Securities. Please go ahead.

Jordan Bender (Senior Equity Research Analyst)

Great, thanks for taking my question. Can you maybe update us on the ADR uplift you're seeing from the hotel renovations out at The STRAT? I think you had previously said about $4 million-$5 million of EBITDA would come from that. Is that still kind of the right way to think about those returns? Then the next slate of rooms as well—is that kind of a similar return?

Charles Protell (President and CFO)

Yeah. We're currently seeing about a $20-$25 ADR premium on the renovated rooms. The issue is when midweek is still, you know, weaker than it's been, you know, in the past, you're making up a lot of that during the weekends. Again, we're still underwriting that same pace, and we're seeing that in terms of the incremental improvement. Keep in mind, we are still, you know, missing, even if you look just in Q2 alone, almost 50,000 room nights relative to 2019, and almost all of those are midweek room nights. That has to do with lack of meaningful group business back, a lack of international travel, in some part due to the renovations that we're doing throughout the quarter.

Still, that's fairly substantial, and we think about that on an annualized basis through the first half of the year. You know, that opportunity for the property at the current average spend in the property is about $40 million in revenue and $20 million in EBITDA. To us, that's what's out there on the table. That's really what we're playing for in terms of these renovations at the property: to be able to capture that demand at a premium when it comes back. We're underwriting that the traffic drivers to the town in the fall, both on, you know, the business side through the conventions, as well as the retail side, through F1, NBA, rodeo, and then rolling into the Super Bowl, that those will drive the pickup in room nights that we'll be able to capitalize on.

Jordan Bender (Senior Equity Research Analyst)

Great. Then for my follow-up, you know, the message seems to be, you know, deleverage the balance sheet. You still have some land, whether it's Colorado Belle or just land around the STRAT. Has the thinking changed in terms of monetization of land to, I guess, further deleverage the balance sheet and drive shareholder value?

Blake Sartini (Chairman and CEO)

No. No, we, I like, we like the, the flexibility that owning the real estate gives us, and I think given the opportunities that Charles has just described, along with, with, synergistic amenities that we may add or put on next to our facilities with some of this excess property, we think in the long run, the value remains in our ownership. At this point in time, that attitude has not changed.

Charles Protell (President and CFO)

Got it. Appreciate the questions.

Operator (participant)

The next question is from Chad Beynon with Macquarie. Please go ahead.

Chad Beynon (Managing Director and Analyst)

Afternoon, thanks for taking my question. I wanted to ask another one about The STRAT and, and, just kind of the outlook in the back half of the year. I guess two-parter on that. One, it seemed like Las Vegas in general got some additional attention when the Sphere opened, and a lot of people who weren't familiar with what that was and kind of what it was going to bring, you know, certainly were, were exposed to that. wanted to ask if, if you saw any change in, in booking windows. Obviously, F1, we've known about that for some time. As we kind of got through the quarter, whether it was macro-related or new programming, content related, did you see any change in, in just the booking patterns generally versus, you know, what you would have expected? Thanks.

Charles Protell (President and CFO)

Yeah. Thanks, Chad. I mean, look, I think given that we had such a significant amount of our room base offline, you know, we were definitely playing a bit of catch up and tough to tell. I will say, as we look forward, you know, obviously we're through July now. We've got a pretty good handle on what August looks like from an occupancy perspective. You know, those are up meaningfully from, from last year. We ran the properties last year around 65% or ran, ran the STRAT about 65% occupancy. That's pushing, you know, closer to 80 in terms of what's on the books for us. So that's a meaningful improvement. Rate has been, you know, fairly, fairly stable. Again, I think we, we, we like where the property is heading.

As Blake said, we like our investment in the property, which has been relatively modest to other Strip or large property operators. We're playing again for the fall and getting back those room nights and getting them at a premium to where they've been in the past.

Chad Beynon (Managing Director and Analyst)

Thanks, Charles. Then, just on, on the, the performance throughout the quarter, Blake, I believe you said that the, the seasonality kind of came back in June, which indicates that the consumer is strong. One of the other Las Vegas locals operators reported that there was a little bit of softness in April, and June and July have certainly improved. As you kind of went throughout the quarter, did you see any change in the promotional environment? Did anyone, you know, rise up the terms of, of, of promotions on, on the slot side that could impact how you're thinking about the next couple quarters? Thanks.

Blake Sartini (Chairman and CEO)

Yeah, Chad, the answer is, is no. I think other than maybe an independent out there who's, you know, continuing to promote as they always have, the balance of the, of the local portfolios, we've seen pretty consistent marketing approaches. I see that as sustainable going forward. As we look into the back half of the year, I don't see that changing. I think, I think, you know, hopefully this kind of normalcy in the seasonality begins to appear more regularly as we get through the light water of COVID and all of the whiplash that that caused. In regards to promotional activity specifically, I see a lot of consistency right now.

Chad Beynon (Managing Director and Analyst)

Thanks, Blake. Thanks, Charles. Congrats on closing the deal on the debt reduction.

Charles Protell (President and CFO)

Thanks, Chad.

Operator (participant)

The next question is from Edward Engel with Roth Capital. Please go ahead.

Edward Engel (Senior Research Analyst)

Hi, thanks for taking my question. I just wanted to confirm in, in the 3Q, would you expect disruptions at the STRAT to be less than in the 2Q?

Charles Protell (President and CFO)

Yeah.

Blake Sartini (Chairman and CEO)

Yes.

Charles Protell (President and CFO)

I mean, it's less than 5% of the room base.

Blake Sartini (Chairman and CEO)

Yes.

Charles Protell (President and CFO)

that we're renovating.

Blake Sartini (Chairman and CEO)

It's fairly isolated.

Charles Protell (President and CFO)

It's in a separate tower. It's actually the oldest tower at the property.

Edward Engel (Senior Research Analyst)

Perfect.

Blake Sartini (Chairman and CEO)

[crosstalk]

Edward Engel (Senior Research Analyst)

I just wanted to confirm that. Yep.

Blake Sartini (Chairman and CEO)

I think that's done on the 29th. Just to go back to the September, the end of September.

Edward Engel (Senior Research Analyst)

Okay. I guess, looking into the 4Q, should this be a relatively clean quarter for The STRAT, then? Just whether it's renovations or even maybe the start-up costs associated with Atomic or anything we should kind of keep in mind?

Blake Sartini (Chairman and CEO)

Yeah, I think, I think, I think it's fair to say yes. I think the fourth quarter and beyond, we believe, is, I would think, is kind of normal course. Now, you know, the property is volatile given its lack of banquet space, right? We don't have the meeting space that guys on the South Strip do and tend to fill up at times with. Given that, there's going to be a little volatility. However, we think Q4 and going forward from there, it'll be kind of a normal course look at what, what our investment will be able to do at the STRAT.

Edward Engel (Senior Research Analyst)

perfect. Thank you.

Operator (participant)

The next question is from John DeCree with CBRE Securities. Please go ahead.

John DeCree (Head of Institutional Investor Research)

Hi, Blake. Hi, Charles.

Blake Sartini (Chairman and CEO)

Hey, John.

John DeCree (Head of Institutional Investor Research)

I wanted to circle back to the, some of the cost increases that you've, you've been dealing with. I think on an earlier question, you've, you've mentioned that maybe labor is still a little bit of a variable component going forward, but some of the other costs that you've absorbed, are those larger increases absorbed? We'd be anniversarying those through 2Q and start to see a little bit more normal costs or OpEx growth in the back half? Is there still some potential larger increases in costs?

Charles Protell (President and CFO)

No, like I mentioned, I mean, the, the only one, you know, to watch would be potential, you know, labor at The STRAT related to the Culinary Workers Union, but that's, you know, covers, you know, less than half of the workforce there at that property. I think all the other costs. We have a pretty good anniversary relative to, you know, two, three of last year. I think, again, if you go back and look at our margins over the last four quarters, they've been relatively consistent across the entire remaining portfolio of Nevada casinos. I think that, again, that's why we feel pretty good about, you know, the back half of the year being a being a better comp.

Blake Sartini (Chairman and CEO)

I think maybe some helpful color is a significant portion of the friction that we're seeing in labor cost increases is really combined to two or three job descriptions. It's not necessarily widespread. To Charles' point, you know, I think we've brought those into those two or three specific positions into more of a market rate scenario. Going forward, we see that as much more manageable.

John DeCree (Head of Institutional Investor Research)

Understood. That, that's helpful. That probably dovetails into, into my follow-up question, Blake. You know, the, the cost you've seen on the labor side have, have been, you know, most-mostly in Laughlin and, and the STRAT, where there's probably some of those job descriptions that you've mentioned. Is that, is that fair? Is that why the locals, you know, just less labor-intensive operations or, is it kind of the resort side of, of the labor that's been driving the costs? I guess, you know, why, why have the locals perhaps not experienced the same type of, cost increases?

Blake Sartini (Chairman and CEO)

That's, that's exactly right. It's confined to primarily those two, the Laughlin and STRAT resort properties. Everything else is pretty stable. Again, those two Laughlin and STRAT properties, again, were confined to, you know, two or three major, the major amount was confined to two or three job classifications.

John DeCree (Head of Institutional Investor Research)

Understood. That's helpful. Thanks, Blake. Thanks, Charles.

Blake Sartini (Chairman and CEO)

Thank you.

Operator (participant)

This concludes our question and answer session, and the conference has also now concluded. Thank you for attending today's presentation. You may now disconnect.