NEW ROYAL HOLDCO I INC. Q1 FY2025 earnings call

• Segment Performance Context: The Strat's Q1 was impacted by the absence of the Super Bowl, but April and May show improving trends. Laughlin focused on cost-cutting and targeted promotions. Nevada locals' casinos benefited from operational efficiencies. Taverns saw sequential EBITDA growth but were affected by competitor promotions. - Capital Structure: Ended Q1 with over $400M debt, $50M cash, and $225M remaining on revolving credit facility. Repurchased $7.6M of stock in Q1, $100M YTD. Focus on repurchasing stock due to share price dislocation. - Business Resilience: Business remains resilient despite macroeconomic uncertainty, with a focused portfolio, low leverage, and positioned to withstand short-term fluctuations.

The Strat: In Q1, The Strat faced a $3 million EBITDA headwind due to no Super Bowl in Las Vegas in 2024, with occupancy down 5% for the quarter (13% in February) leading to lower gaming, F&B, and other revenues. However, April hotel revenue was up on higher occupancy and rate, and May is pacing up 6% in occupancy over last year. OTA mix is currently ~65% and trending downward towards the targeted 50%. Laughlin: EBITDA increased by reducing expenses, focusing on more profitable concerts and weekend promotional activities, maintaining leading market share in Laughlin. Nevada locals' casinos: Revenue was flat Y/Y, but EBITDA was up 2% due to operational efficiencies across payroll and other expenses. EBITDA margins were 46% for the second straight quarter, and the segment started Q2 strong with increasing strength in April. Taverns: Revenue and EBITDA were slightly down Y/Y, but sequentially EBITDA continued to increase from newest taverns with lowered operating expenses. There was an uptick in promotional activity from smaller private operators, potentially impacting Q2 performance.

• The Strat: Q2 looks better than last year, April/May showing stable/trending up, but limited visibility beyond a few months. - Nevada locals' casinos: Strong start to Q2 with increasing strength in April. - Taverns: Q2 performance may be impacted by promotional activity from smaller operators, but sequential EBITDA improvement continues.

• Macro environment could impact business performance. - Dislocation in business not reflected in public valuation. - Short-term fluctuations in consumer demand affecting taverns. - Uncertainty in M&A market due to macroeconomic conditions and valuation dislocations.

Q: Barry Jonas asked about The Strat's booking window, OTA mix.

A: Charles and Blake responded that The Strat's booking window is short, April/May look strong, June is strong; OTA mix is ~65% trending downward.

Q: David Katz asked about tavern business and consumer behavior.

A: Charles and Blake said smaller operators' promotional activity is short-term and not sustainable, tavern customers are less exposed to broader market, with trends of similar gaming days but less investment.

Q: Chad Beynon asked about M&A and The Strat's exposure.

A: Charles said M&A activity is impacted by macro and valuation, The Strat is not materially exposed to Canada; Blake mentioned citywide events and new food and beverage concept at The Strat.

Q: Zachary Silverberg asked about local segment margins and capital allocation.

A: Charles talked about operational efficiencies in locals' casinos and capital allocation focus on share repurchases.

Q: Jordan Bender asked about M&A and local segment.

A: Charles said M&A focus is on share repurchases, local segment is strong with loyal customer base.

Q: John DeCree asked about capital allocation and The Strat's room rate.

A: Charles said focus on share repurchases, Blake talked about a combination of city tailwinds, direct booking improvements, and service enhancements to drive room rate at The Strat.