First Quarter and Recent
Highlights:
- Record quarterly net revenues and Adjusted EBITDA
- Completed Blvd Main, View Lounge, and Sportsbook at The
Strat
- Launched TrueRewards one card loyalty program
- Opened three new taverns in Q1, three more expected to open
in Q2
- Refinanced 2nd lien debt and repaid
outstanding revolver with unsecured notes offering in April
Golden Entertainment, Inc. (NASDAQ:GDEN) (“Golden Entertainment”
or the “Company”) today reported financial results for the first
quarter ended March 31, 2019.
Blake Sartini, Chairman and Chief Executive Officer of Golden
Entertainment, commented, “During the first quarter, we continued
our progress on a number of significant initiatives for the
Company. In March, we opened our new sportsbook, View Lounge and
Blvd & Main Taphouse in The Strat, which all have been very
well received by our guests. We are starting renovations of The
Strat casino floor in May to conform the casino environment to
these exciting new venues, and anticipate completing these
renovations by the end of the year. We are also well on our way
with the integration of our two new casino resorts in Laughlin and
expect to see improved contribution from our Laughlin assets as we
begin to realize synergies in future quarters. During the first
quarter we saw improvement in our distributed gaming business,
which is expected to accelerate as we continue to open new taverns
and improve chain store performance in Nevada. Importantly, we
started the rollout of our new TrueRewards players club which will
allow us to incentivize our players to earn and redeem points at
all our wholly-owned casino resorts and distributed gaming
locations. As we look at the healthy economic environment in Nevada
and the potential opportunities that this provides our business, we
believe Golden Entertainment is positioned to benefit from our
strategic efforts and create long-term value for our
shareholders.”
Consolidated Results
The Company reported first quarter revenues of $239.9 million,
up 11.7% from $214.8 million in the first quarter of 2018. Net loss
for the first quarter of 2019 was ($8.0) million or a loss of
($0.29) per share, compared to net income of $3.9 million or $0.13
per diluted share in the first quarter of 2018. Adjusted EBITDA
increased 5.5% to $48.4 million for the first quarter of 2019
compared to $45.9 million for the first quarter of 2018. Results
for the first quarter include the operations of the Edgewater and
Colorado Belle Casino Resorts acquired by the Company on January
14, 2019.
Casinos
Casino segment revenues grew 16% to $151.4 million in the first
quarter of 2019 compared to $130.5 million in the first quarter of
2018. Casino segment Adjusted EBITDA grew 6.8% to $46.6 million
compared to $43.7 million in the same quarter of 2018.
In the first quarter, growth in our casino segment was primarily
driven by our acquisition of two casinos in Laughlin, Nevada,
offset by the anticipated construction disruption at The Strat as
well as the installation of our new casino management system and
rewards program at The Strat, Arizona Charlie’s Decatur, Arizona
Charlie’s Boulder, and the Aquarius Casino Resort.
Distributed Gaming
Distributed Gaming segment revenues increased to $88.4 million,
up 5.0% from $84.2 million in the first quarter of 2018. Adjusted
EBITDA for the segment grew 4.1% to $13.5 million from $13.0
million in the same period of 2018.
The Company experienced growth in revenue and Adjusted EBITDA in
both its Nevada and Montana distributed gaming businesses. In
Nevada, continued growth from the Company’s wholly-owned tavern
portfolio as well as stabilization of the Company’s chain store
locations contributed to improved results. In Montana, the Company
continues to add new locations and benefit from our investment in
new game technology.
The STRAT Renovations
Update
The Strat renovations for 2019 remain on schedule and the budget
remains unchanged. In March of 2019, the Company opened its unique
new tap room concept, Blvd & Main, connected to a newly
renovated sports book and lounge. The major remaining renovations
for 2019 include remodeling the casino floor and renovating
approximately 150 rooms and suites. These upgrades are expected to
be completed by the end of the year.
As of March 31, 2019, the Company spent approximately $38
million on The Strat renovations, including capital spent in 2018.
The Company has budgeted an additional $39 million of renovation
costs for 2019 which will be funded with cash flow from operations.
Golden Entertainment’s total budget for The Strat renovations
remains approximately $140 million, with the project expected to be
completed in 2021.
Balance Sheet Highlights
As of March 31, 2019, the Company had cash and cash equivalents
of approximately $108 million and total outstanding debt of $1.14
billion, of which $145 million was borrowings outstanding under the
Company’s $200 million revolving credit facility.
In April, the Company closed on its $375 million, 7-year senior
unsecured notes offering which priced at 7.625%. Proceeds from the
notes offering were used to repay $145 million outstanding
borrowings under the Company’s revolving credit facility, repay the
Company’s $200 million 2nd lien term loan facility, repay $18
million of outstanding borrowings under the Company’s existing 1st
lien term loan facility and pay offering fees and expenses.
Currently, there are no outstanding borrowings under the Company’s
$200 million revolving credit facility and the Company has $772
million outstanding under its first lien term loan facility.
Share Repurchase
Authorization
In March, the Board of Directors approved a new $25 million
share repurchase program which replaced the share repurchase
program previously authorized in November 2018. The Company did not
repurchase any shares in the first quarter of 2019.
Investor Conference Call and Webcast
The Company will host a webcast and conference call today, May
9, 2019 at 5:00 p.m. Eastern Time, to discuss the first quarter
2019 results. The conference call may be accessed live by dialing
(844) 465-3054 or (480) 685-5227 for international callers and
entering the passcode 3874849. A replay will be available beginning
at 8:00 p.m. ET on May 9, 2019 and may be accessed by dialing (855)
859-2056 or (404) 537-3406 for international callers; the passcode
is 3874849. The replay will be available until May 12, 2019. 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.
Forward-Looking Statements
This press release contains 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, or they may use future
dates. Forward-looking statements in this press release include,
without limitation, statements regarding: the integration and
benefits of, and realization of cost synergies from, the Laughlin
acquisition; future financial and operating results; proposed
future capital expenditures, investments and property improvements,
including The Strat renovations and anticipated opening of new
tavern and distributed gaming locations, and their associated
timing, source of funding and cost; and the Company’s plans,
strategic priorities, objectives, expectations, intentions,
including with respect to its growth prospects and growth
opportunities and potential acquisitions. Forward-looking
statements are based on our 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
materially include: the Company’s ability to realize the
anticipated cost savings, synergies and other benefits of the
American and Laughlin transactions and its other acquisitions, and
integration risks relating to such transactions; changes in
national, regional and local economic, political 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 the Company’s 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 instruments;
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; factors affecting the gaming,
entertainment and hospitality industries generally; and other risks
and uncertainties discussed in the Company’s filings with the SEC,
including the “Risk Factors” sections of the Company’s Annual
Report on Form 10-K for the year ended December 31, 2018 and most
recent Quarterly Reports on Form 10-Q. The Company undertakes no
obligation to update any forward-looking statements as a result of
new information, future developments or otherwise. All
forward-looking statements in this press release are qualified in
their entirety by this cautionary statement.
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 provides useful
information to both management and investors by excluding specific
expenses and gains that the Company believes are not indicative of
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. Other companies in the gaming
industry may calculate Adjusted EBITDA differently than the Company
does.
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.
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, acquisition expenses, loss on
disposal of property and equipment, share-based compensation
expenses, preopening expenses, class action litigation expenses,
executive severance, gain on change in fair value of derivative,
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.
About Golden Entertainment, Inc.
Golden Entertainment owns and operates gaming properties across
two divisions – casino operations and distributed gaming. Golden
operates approximately 17,400 slots, 162 table games, and 7,318
hotel rooms, and provides jobs for approximately 8,200 team
members. Golden owns ten casino resorts – nine in Southern Nevada
and one in Maryland. Through its distributed gaming business in
Nevada and Montana, Golden operates video gaming devices at over
1,000 locations and owns over 60 traditional taverns in Nevada.
Golden is also licensed in Illinois and Pennsylvania to operate
video gaming terminals. 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, 2019 2018
Revenues Gaming $ 143,792 $ 133,863 Food and beverage 49,758
42,603 Rooms 31,287 26,127 Other 15,055 12,196
Total revenues 239,892 214,789
Expenses
Gaming 82,348 77,688 Food and beverage 38,214 33,592 Rooms 14,401
11,565 Other operating 6,434 3,996 Selling, general and
administrative 56,947 44,206 Depreciation and amortization 27,265
25,237 Acquisition and severance expenses 1,544 1,299 Preopening
expenses 778 448 Loss on disposal of assets 247 77
Total expenses 228,178 198,108
Operating
income 11,714 16,681
Non-operating income
(expense) Interest expense, net (18,135 ) (14,743 ) Change in
fair value of derivative (2,248 ) 3,211
Total
non-operating expense, net (20,383 ) (11,532 )
Income (loss) before income tax benefit (8,669 ) 5,149
Income tax benefit (provision) 651 (1,219 )
Net
income (loss) $ (8,018 ) $ 3,930
Weighted-average
common shares outstanding Basic 27,570 27,149 Dilutive impact
of stock options and restricted stock units — 2,379
Diluted 27,570 29,528
Net income (loss) per
share Basic $ (0.29 ) $ 0.14 Diluted $ (0.29 ) $ 0.13
Golden Entertainment, Inc.
Reconciliation of Net Income (Loss) to Adjusted EBITDA
(Unaudited, in thousands)
Three Months Ended March 31, 2019 Casino
Segment
Distributed Gaming
Segment
Nevada Casinos
Maryland Casino
Nevada Distributed
Gaming
Montana Distributed
Gaming
Corporate and
Other
Consolidated Total Revenues $ 135,629 $ 15,745 $
71,405 $ 16,952 $ 161 $ 239,892
Net income (loss) $
19,862 $ 2,827 $ 7,032 $ 574 $ (38,313 ) $ (8,018 ) Depreciation
and amortization 20,689 954 3,723 1,606 293 27,265 Preopening and
related expenses(1) 1,654 - 566 - 12 2,232 Acquisition and
severance expenses 286 - 13 13 1,232 1,544 Asset disposal and other
writedowns 256 - - (9 ) 390 637 Share-based compensation 11 - 5 -
4,168 4,184 Other, net 11 - - - 853 864 Interest expense, net 50 2
15 1 18,067 18,135 Change in fair value of derivative - - - - 2,248
2,248 Income tax benefit - - - -
(651 ) (651 )
Adjusted EBITDA $ 42,819 $ 3,783 $
11,354 $ 2,185 $ (11,701 ) $ 48,440
Three Months Ended
March 31, 2018 Casino Segment
Distributed Gaming
Segment
Nevada Casinos
Maryland Casino
Nevada Distributed
Gaming
Montana Distributed
Gaming
Corporate and
Other
Consolidated Total Revenues $ 115,667 $ 14,820 $
68,734 $ 15,427 $ 141 $ 214,789
Net income (loss) $
21,140 $ 2,701 $ 6,823 $ 625 $ (27,359 ) $ 3,930 Depreciation and
amortization 18,609 1,026 3,780 1,368 454 25,237 Preopening
expenses(1) - - 148 - 300 448 Acquisition and severance expenses 51
- 35 - 1,213 1,299 Asset disposal and other writedowns 62 - 5 10 -
77 Share-based compensation - - - - 1,844 1,844 Other, net 37 - 167
- 104 308 Interest expense, net 22 2 44 2 14,673 14,743 Change in
fair value of derivative - - - - (3,211 ) (3,211 ) Income tax
provision - - - - 1,219
1,219
Adjusted EBITDA $ 39,921 $ 3,729 $ 11,002 $ 2,005 $
(10,763 ) $ 45,894 (1)
Preopening expenses include rent, organizational costs, non-capital
costs associated with the opening of tavern and casino locations,
and expenses related to The Strat rebranding and the launch of the
TrueRewards players club.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190509005883/en/
Golden Entertainment, Inc.Charles H. ProtellChief Financial
Officer702/893-7777
Investor RelationsJoseph Jaffoni, Richard Land, James
LeahyJCIR212/835-8500 or gden@jcir.com
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