Golden Entertainment, Inc. (NASDAQ:GDEN) (“Golden Entertainment”
or the “Company”), today announced financial results for the first
quarter ended March 31, 2017, as summarized below.
Three Months Ended March 31, 2017
March 31, 2016 % Change (Unaudited,
in thousands) Net revenues Nevada Distributed
Gaming $ 67,078 $ 64,552 3.9 % Montana Distributed Gaming (1)
15,181 4,032 276.5 %
Total Distributed
Gaming 82,259 68,584 19.9 % Nevada
Casinos 9,093 8,730 4.2 % Maryland Casino 15,215
13,683 11.2 %
Total Casinos 24,308
22,413 8.5 % Corporate and other
79 37 113.5 % Net
revenues $ 106,646 $ 91,034
17.1 % Net income (loss) Nevada
Distributed Gaming $ 7,529 $ 5,660 33.0 % Montana Distributed
Gaming (1) 692 267 159.2 %
Total
Distributed Gaming 8,221 5,927 38.7
% Nevada Casinos 2,046 1,404 45.7 % Maryland Casino
2,681 1,591 68.5 %
Total Casinos 4,727
2,995 57.8 % Corporate and other
(7,606 ) (6,683 )
13.8 % Net income $ 5,342
$ 2,239 138.6 %
Adjusted EBITDA (2) Nevada Distributed Gaming $
11,000 $ 9,440 16.5 % Montana Distributed Gaming (1) 2,106
781 169.7 %
Total Distributed Gaming
13,106 10,221 28.2 % Nevada Casinos
2,891 2,321 24.6 % Maryland Casino 3,411 2,443
39.6 %
Total Casinos 6,302 4,764 32.3
% Corporate and other (5,839 )
(4,437 ) 31.6 %
Adjusted EBITDA $ 13,569 $
10,548 28.6 %
___________________
(1) Represents the results from the Montana distributed
gaming businesses acquired in January and April 2016 from their
respective acquisition dates. (2) Adjusted EBITDA is a non-GAAP
financial measure and definitions and disclosures, including
reconciliations, are included at the end of the press release.
Blake L. Sartini, Chairman and Chief Executive Officer of Golden
Entertainment, commented, “Golden Entertainment’s record 2017 first
quarter financial results were driven by significant year-over-year
growth across our distributed gaming and casino businesses. We
generated first quarter consolidated net revenue and net income
growth of 17.1% and 138.6%, respectively, and reflecting the strong
operating leverage in our model, Adjusted EBITDA rose 28.6%. The
first quarter 2017 financial performance of our distributed gaming
segment benefited from last year’s Montana acquisitions as well as
contributions from our new tavern openings. In March, we opened the
first of our seven planned taverns for this year and our three
casinos in Pahrump and Rocky Gap continued to benefit from our
recent investments.
“Looking ahead to the balance of 2017, Golden Entertainment
remains fully focused on scaling our business and positioning the
Company for continued growth. We remain on schedule to open a total
of seven new Las Vegas taverns in 2017 and believe these taverns
are one of the most attractive ways we can invest our capital given
the positive macroeconomic trends seen in Nevada. In addition, the
Governor of Maryland recently signed a bill into law that will
provide us with a 10% reduction in the slot tax conditioned on our
purchase of the currently State-owned slot machines at our Rocky
Gap casino resort. Once the games are purchased, we expect property
Adjusted EBITDA to increase approximately $3 million on an
annualized basis. We intend to complete the purchase of these
machines by July 1, 2017.
“With the strong start to 2017 and prospects for continued
growth, our team continues to evaluate strategic opportunities to
further expand our distributed gaming and casino businesses to
support our goal of further enhancing shareholder value.”
Results for the Three Months Ended March 31, 2017
Beginning with the first quarter of 2017, the Company is now
disclosing net revenue, net income and Adjusted EBITDA for both of
its Nevada and Montana distributed gaming businesses as well as for
its Nevada and Maryland casino operations.
Consolidated net revenues for the 2017 first quarter were $106.6
million, compared to $91.0 million in the prior-year quarter. The
increase in net revenues was driven primarily by the inclusion of a
full quarter of revenue from the Company’s Montana distributed
gaming business versus the prior-year period, which included a
partial quarter of revenue from only one of the acquired Montana
operations. The Company’s Nevada distributed gaming business grew
net revenue 3.9% year-over-year to $67.1 million. Net revenues for
the Company’s Nevada and Maryland casino operations grew 4.2% and
11.2%, respectively, over the prior-year period to $9.1 million and
$15.2 million, respectively.
For the first quarter of 2017, net income was $5.3 million, or
$0.23 per diluted share, compared to $2.2 million, or $0.10 per
diluted share, in the prior-year quarter. During the first quarter
of 2017, the Company incurred $0.3 million in preopening expenses
compared to $0.6 million in the prior-year period. Golden’s Nevada
distributed gaming business grew net income 33.0% year-over-year
while net income for the Company’s Nevada and Maryland casino
operations grew 45.7% and 68.5%, respectively, year-over-year.
Adjusted EBITDA for the 2017 first quarter was $13.6 million,
compared to $10.5 million for the prior-year period. The increase
in Adjusted EBITDA was driven primarily by the growth in
consolidated net revenue, continued operating enhancements at the
Company’s casino businesses, a full quarter of results from the
Montana distributed gaming operations and operating leverage.
Golden’s Nevada distributed gaming business grew Adjusted EBITDA
16.5% year-over-year while Adjusted EBITDA for the Company’s Nevada
and Maryland casino operations grew 24.6% and 39.6%, respectively,
year-over-year.
Balance Sheet and Liquidity
As of March 31, 2017, the Company had cash and cash equivalents
of $45.2 million and total outstanding debt of approximately $181
million. Outstanding debt under the Company’s senior credit
facility included $147 million in senior secured term loans and $27
million in borrowings under the Company’s revolving credit
facility. As of March 31, 2017, the Company had $23 million of
additional availability under its revolving credit facility. The
weighted average effective interest rate on outstanding borrowings
under these facilities for the quarter was approximately 3.3%. Both
the Company’s term loans and revolving credit facilities mature in
July 2020.
Charles H. Protell, Chief Strategy Officer and Chief Financial
Officer, commented, “Our record first quarter of 2017 financial
performance allowed us to further reinvest in our business and
reduce leverage. We reduced total borrowings on our credit facility
by $6.0 million while completing $5.7 million of capital
expenditures across our businesses. In addition to our organic
reinvestment plan, we continue to evaluate strategic opportunities
to grow both our casino and distributed gaming businesses in 2017
and beyond.”
Investor Conference Call and Webcast
The Company will host a webcast and conference call today, May
9, 2017 at 5:00 p.m. Eastern Time, to discuss the first quarter
2017 results. The conference call may be accessed live by dialing
844/465-3054 or 480/685-5227 for international callers and entering
the passcode 6829188. A replay will be available beginning at 8:00
p.m. ET on May 9, 2017 and may be accessed by dialing 855/859-2056
or 404/537-3406 for international callers; the passcode is 6829188.
The replay will be available until May 12, 2017. The call will also
be webcast live through the “Investors” section of the Company’s
website, www.goldenent.com. A replay of the audio webcast will
also be archived on the Company’s website, www.goldenent.com.
If you have questions about Golden Entertainment or are
interested in conducting a conference call with Golden
Entertainment management, please contact JCIR at 212/835-8500 or
gden@jcir.com.
Forward-Looking Statements
This press release may be deemed to contain forward-looking
statements regarding future events and our future results that are
subject to the safe harbors created under the Securities Act of
1933 and the Securities Exchange Act of 1934. Forward-looking
statements can generally be identified by the use of words such as
“anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,”
“forecast,” “intend,” “may,” “plan,” “project,” “potential,”
“seek,” “should,” “think,” “will,” “would” and similar expressions.
In addition, forward-looking statements include statements
regarding the Company’s strategies, objectives, business
opportunities and plans for future expansion, developments, slot
machine purchases or acquisitions, anticipated future growth and
trends in the Company’s business or key markets, projections of
future financial condition, operating results, capital
expenditures, or other financial items, anticipated regulatory and
legislative changes, as well as other statements that are not
statements of historical fact. Forward-looking statements are based
on the Company’s current expectations and assumptions regarding the
Company’s business, the economy and other future conditions. These
forward-looking statements are subject to assumptions, risks and
uncertainties that may change at any time, and readers are
therefore cautioned that actual results could differ materially
from those expressed in any forward-looking statements. Factors
that could cause actual results to differ include: the Company’s
ability to realize the anticipated cost savings, synergies and
other benefits of the merger with Sartini Gaming, Inc. and the
acquisitions of distributed gaming assets in Montana, and
integration risks relating to such transactions, changes in
national, regional and local economic and market conditions,
legislative and regulatory matters (including the cost of
compliance or failure to comply with applicable laws and
regulations), increases in gaming taxes and fees in the
jurisdictions in which the Company operates, litigation, increased
competition, the Company’s ability to renew its distributed gaming
contracts, reliance on key personnel (including our Chief Executive
Officer, Chief Operating Officer and Chief Strategy and Financial
Officer), the level of the Company’s indebtedness and the Company’s
ability to comply with covenants in its debt facilities, terrorist
incidents, natural disasters, severe weather conditions, the
effects of environmental and structural building conditions, the
effects of disruptions to the Company’s information technology and
other systems and infrastructure, the occurrence of an “ownership
change” as defined in Section 382 of the Internal Revenue Code, and
factors affecting the gaming, entertainment and hospitality
industries generally. In addition, please refer to the risk factors
contained in the Company’s SEC filings available at www.sec.gov,
including the Company’s most recent Annual Report on Form 10-K.
Readers are cautioned not to place undue reliance on any
forward-looking statements, which speak only as of the date of this
press release. The Company undertakes no obligation to revise or
update any forward-looking statements for any reason.
Non-GAAP Financial Measures
To supplement the Company’s consolidated financial statements
presented in accordance with United States generally accepted
accounting principles (“GAAP”), the Company uses Adjusted EBITDA,
which measure the Company believes is appropriate to provide
meaningful comparison with, and to enhance an overall understanding
of, the Company’s past financial performance and prospects for the
future. The Company believes Adjusted EBITDA (and associated margin
calculations) provide useful information to both management and
investors by excluding specific expenses and gains that the Company
believes are not indicative of its core operating results. Further,
Adjusted EBITDA is a measure of operating performance used by
management, as well as industry analysts, to evaluate operations
and operating performance and is widely used in the gaming
industry. The presentation of this additional information is not
meant to be considered in isolation or as a substitute for measures
of financial performance prepared in accordance with GAAP. In
addition, other companies in the gaming industry may calculate
Adjusted EBITDA differently than the Company does. Reconciliations
of Adjusted EBITDA to net income (loss) are provided in the
financial information tables below.
The Company defines “Adjusted EBITDA” as earnings before
interest and other non-operating income (expense), income taxes,
depreciation and amortization, preopening expenses, Merger
expenses, share-based compensation expenses, executive severance
and sign-on bonuses, impairments and other gains and losses.
Adjusted EBITDA for a particular segment or operation is Adjusted
EBITDA before corporate overhead, which is not allocated to each
segment or operation. The Company defines “Adjusted EBITDA margins”
for the Company or a particular segment or operation as Adjusted
EBITDA divided by net revenues for the Company or such segment or
operation, as applicable.
About Golden Entertainment, Inc.
Golden Entertainment, Inc. owns and operates gaming properties
across two divisions – distributed gaming and resort and casino
operations. Golden Entertainment operates approximately 12,000
gaming devices and nearly 30 table games in Nevada, Maryland and
Montana. The Company owns four casino properties, more than 50
taverns and operates approximately 960 distributed gaming locations
in multiple jurisdictions. Golden Entertainment is focused on
maximizing the value of its portfolio by leveraging its scale,
leadership position and proven management capabilities across its
two divisions. For more information, visit www.goldenent.com.
Golden Entertainment, Inc.
Consolidated Statements of
Operations
(Unaudited, in thousands, except per share
data)
Three Months Ended March 31, 2017
March 31, 2016 Revenues Gaming $ 91,522 $
78,472 Food and beverage 15,650 13,341 Rooms 1,578 1,555 Other
operating 3,385 2,212
Gross revenues 112,135
95,580 Less: Promotional allowances (5,489 ) (4,546 )
Net revenues 106,646 91,034
Expenses Gaming 62,887 55,491 Food and beverage 9,606 8,127
Rooms 309 260 Other operating 3,200 779 Selling, general and
administrative 18,502 16,234 Merger expenses — 41 Preopening
expenses 272 573 Depreciation and amortization 6,552
5,792
Total expenses 101,328 87,297
Income
from operations 5,318 3,737
Non-operating income (expense) Interest expense, net (1,683
) (1,457 ) Other, net — 18
Total non-operating
expense, net (1,683 ) (1,439 )
Income before
income tax benefit (provision) 3,635 2,298 Income tax benefit
(provision) 1,707 (59 )
Net income $ 5,342 $
2,239
Weighted-average common shares outstanding
Basic 22,238 21,960 Dilutive impact of stock options and restricted
stock units 529 296 Diluted 22,767
22,256
Net income per share Basic $ 0.24 $ 0.10 Diluted $
0.23 $ 0.10
Golden Entertainment, Inc.
Consolidated Balance Sheets
(Unaudited, in thousands)
March 31, 2017 December 31, 2016
ASSETS Current assets Cash and cash equivalents $
45,170 $ 46,898 Accounts receivable, net 5,939 6,697 Income taxes
receivable 193 2,340 Prepaid expenses 9,567 9,761 Inventories 3,151
2,605 Other 1,517 1,346 Total current assets
65,537 69,647
Property and equipment, net
140,643 137,581
Other assets Goodwill 105,655 105,655
Customer relationships, net 69,807 71,168 Other intangible assets,
net 26,931 27,435 Deferred income taxes 1,678 — Other 8,595
7,592 Total other assets 212,666 211,850
Total assets $ 418,846 $ 419,078
LIABILITIES AND
SHAREHOLDERS' EQUITY Current liabilities Current portion
of long-term debt $ 15,055 $ 15,752 Accounts payable 8,985 11,739
Accrued taxes, other than income taxes 2,744 3,024 Accrued payroll
and related 3,647 3,478 Other accrued expenses 4,021
3,846 Total current liabilities 34,452 37,839
Long-term debt, net 163,724 167,690
Deferred income
taxes — 38
Other long-term obligations 4,318
4,085
Total liabilities 202,494 209,652
Commitments and contingencies Shareholders'
equity Common stock, $.01 par value; authorized 100,000 shares;
22,251 and 22,232 common shares issued and outstanding,
respectively 223 223 Additional paid-in capital 291,741 290,157
Accumulated deficit (75,612 ) (80,954 ) Total
shareholders' equity 216,352 209,426
Total
liabilities and shareholders' equity $ 418,846 $ 419,078
Golden Entertainment, Inc.
Reconciliation of Adjusted EBITDA to
Net Income (Loss)
(Unaudited)
Three Months Ended March 31, 2017 (In
thousands) Adjusted EBITDA Depreciation/
amortization Other operating expenses (1)
Non-
operating expenses (2)
Income tax benefit Net
income (loss)
Nevada Distributed Gaming $ 11,000 $ (3,345 ) $ (85 ) $ (41 ) $ - $
7,529 Montana Distributed Gaming 2,106 (1,289 )
(124 ) (1 ) - 692 Total Distributed
Gaming 13,106 (4,634 ) (209 ) (42 )
- 8,221 Nevada Casinos 2,891 (844 ) - (1 ) - 2,046
Maryland Casino 3,411 (727 ) - (3 )
- 2,681 Total Casinos 6,302 (1,571 )
- (4 ) - 4,727 Corporate and other
(5,839 ) (347 ) (1,490 ) (1,637 )
1,707 (7,606 ) Consolidated total $ 13,569 $ (6,552 )
$ (1,699 ) $ (1,683 ) $ 1,707 $ 5,342
Three Months Ended
March 31, 2016 (In thousands) Adjusted EBITDA
Depreciation/ amortization Other operating expenses
(1) Non-
operating expenses (2)
Income tax provision Net
income (loss)
Nevada Distributed Gaming $ 9,440 $ (3,369 ) $ (376 ) $ (35 ) $ - $
5,660 Montana Distributed Gaming 781 (330 )
(184 ) - - 267 Total Distributed Gaming
10,221 (3,699 ) (560 ) (35 ) -
5,927 Nevada Casinos 2,321 (917 ) - - - 1,404 Maryland Casino
2,443 (852 ) - - - 1,591
Total Casinos 4,764 (1,769 ) - -
- 2,995 Corporate and other (4,437 ) (324 )
(459 ) (1,404 ) (59 ) (6,683 )
Consolidated total $ 10,548 $ (5,792 ) $ (1,019 ) $ (1,439 ) $ (59
) $ 2,239
_________________
(1) Other operating expenses includes gain on disposal of
property and equipment, preopening expenses, share-based
compensation and merger expenses. Corporate and Other included
share-based compensation expenses of $1.4 million and $0.4 million
for the three months ended March 31, 2017 and 2016, respectively.
(2) Non-operating expenses includes interest expense, net and other
income (expense), net. Corporate and Other included interest
expense, net of $1.6 million and $1.4 million for the three months
ended March 31, 2017 and 2016, respectively.
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version on businesswire.com: http://www.businesswire.com/news/home/20170509006440/en/
Investor RelationsJCIRJoseph Jaffoni, Richard Land, James
Leahy212/835-8500gden@jcir.comorMedia RelationsGolden
Entertainment, Inc.Howard Stutz, 702/495-4490Vice President
Corporate Communicationshstutz@goldenent.com
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