Second Quarter and Recent
Highlights:
- Record quarterly net revenues and Adjusted EBITDA
- The Strat renovations on schedule and on budget; casino
floor renovations and additional room remodels underway
- Implementing operational synergies in Laughlin
- TrueRewards one card loyalty program now live at all ten
casino properties
- Opened two new taverns in Q2 and one in July bringing
current total to 66 Nevada locations
- Refinanced 2nd lien debt and repaid outstanding revolving
credit facility with unsecured notes offering
Golden Entertainment, Inc. (NASDAQ:GDEN) (“Golden
Entertainment”, “Golden” or the “Company”) today reported financial
results for the second quarter ended June 30, 2019.
Blake Sartini, Chairman and Chief Executive Officer of Golden
Entertainment, commented, “Record quarterly revenue and Adjusted
EBITDA in the second quarter reflects solid year-over-year
increases across both our Casinos and Distributed Gaming
operations.
“The improvements we have made at The Strat continue to be well
received by our guests despite the ongoing construction disruption
at the property. We have started renovations to The Strat casino
floor and remodels of additional hotel rooms, which we expect to
complete by the end of the year. We have also integrated the
operations of the Edgewater and Colorado Belle casinos in Laughlin
and we expect these properties to deliver improved results in the
second half of the year as we begin to realize our targeted
synergies. In addition, we have improved our ability to incentivize
guests across our casino platform with the completed rollout of our
new TrueRewards loyalty program at all ten of our casino
properties.
“During the second quarter our Distributed Gaming operations
benefited from six new taverns opened since the prior-year period
and from improved Nevada chain store performance following rent
adjustments to approximately half of our locations. Further, our
Montana business continues to grow organically with the addition of
new locations.
“During the second quarter we completed a $375 million unsecured
notes offering that refinanced our revolver borrowings and
outstanding 2nd lien term loan, reduced secured leverage, extended
maturities and added fixed cost capital to the balance sheet while
maintaining an attractive blended interest rate.
“We expect continued economic growth in southern Nevada will
support the financial performance for the majority of our portfolio
of gaming assets. In addition, we believe our strategic investment
in The Strat as well as our recent property acquisitions in
Laughlin position us favorably to build long-term shareholder
value.”
Consolidated Results
The Company reported record second quarter revenues of $248.1
million, up 14.6% from $216.5 million in the second quarter of
2018. Net loss for the second quarter of 2019 was $14.4 million or
a loss of $0.52 per share, compared to net income of $3.6 million
or $0.12 per diluted share in the second quarter of 2018. Adjusted
EBITDA increased 7.6% to a record $49.8 million for the second
quarter of 2019 compared to $46.3 million for the second quarter of
2018. Results for the second quarter include a full quarter of
operations of the Edgewater and Colorado Belle Casino Resorts
acquired by the Company on January 14, 2019.
Casinos
Casino revenues grew 21.2% to $158.7 million in the second
quarter of 2019 compared to $130.9 million in the second quarter of
2018. Casino Adjusted EBITDA grew 13.7% to $48.0 million compared
to $42.2 million in the same quarter of 2018.
In the second quarter, growth in the casino segment was
primarily driven by the acquisition of two casinos in Laughlin,
Nevada in January 2019, partially offset by the construction
disruption at The Strat and increased regional competition that
impacted Rocky Gap Casino Resort in Maryland.
Distributed Gaming
Distributed Gaming revenues increased 4.4% to $89.2 million from
$85.4 million in the second quarter of 2018. Adjusted EBITDA for
the segment grew 6.5% to $13.7 million from $12.8 million in the
same period of 2018.
The Company generated growth in revenue and Adjusted EBITDA in
both its Nevada and Montana distributed gaming businesses for the
second consecutive quarter. In Nevada, continued growth from the
Company’s wholly-owned tavern portfolio, which added six new
locations since the prior-year period, as well as stabilization of
the Company’s chain store locations contributed to improved
results. In Montana, the Company continued to add new locations and
also benefited from continued investment in new game
technology.
The Strat Renovations
Update
The Strat renovations for 2019 remain on schedule, with
renovations to the casino floor beginning in June and additional
room renovations beginning in July. The Strat’s new tap room,
lounge and sports book were open for the entire second quarter. In
addition, the Company completed renovations to the SkyPod on the
108th floor of the tower, which includes a remodeled gift shop and
food and beverage outlets as well as improvements to the Sky Jump
experience. Prior to the second quarter, Golden completed the
renovation of 317 hotel rooms, other food and beverage outlets
(including Top of the World, Strat Café and Starbucks), exterior
lighting and landscaping of the property.
The remaining projects for 2019 include completing the casino
remodel, renovating an additional 252 hotel rooms and completing
the design of potential group meeting space. Golden expects the
renovations of the casino floor to be ongoing throughout the
remainder of the year.
As of June 30, 2019, the Company has invested approximately $54
million on The Strat renovations, including approximately $24
million in 2018. The Company expects approximately $30 million of
additional renovation costs for 2019 which it intends to fund with
cash flow from operations. Golden Entertainment’s total budget for
The Strat renovations remains unchanged at approximately $140
million.
Balance Sheet Highlights
As of June 30, 2019, the Company had cash and cash equivalents
of approximately $117 million and total outstanding debt of $1.15
billion, with no borrowings outstanding under the Company’s $200
million revolving credit facility.
In April, the Company completed a $375 million, 7-year senior
unsecured notes offering which priced at 7.625%. Proceeds from the
notes offering were used to repay $145 million of 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, the Company has $772 million outstanding under its first
lien term loan facility with an interest cost of LIBOR plus 3%.
Investor Conference Call and Webcast
The Company will host a webcast and conference call today,
August 6, 2019 at 5:00 p.m. Eastern Time, to discuss the second
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 5152816. A replay will be available
beginning at 8:00 p.m. ET on August 6, 2019 and may be accessed by
dialing (855) 859-2056 or (404) 537-3406 for international callers;
the passcode is 5152816. The replay will be available until August
9, 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, anticipated opening of new tavern
and distributed gaming locations and investment in technology, 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 and related 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 17,300 slots, 160 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 June
30,
Six Months Ended June
30,
2019
2018
2019
2018
Revenues
Gaming
$
146,246
$
132,546
$
290,038
$
266,409
Food and beverage
52,104
43,422
101,862
86,025
Rooms
35,514
27,660
66,801
53,787
Other
14,206
12,915
29,261
25,111
Total revenues
248,070
216,543
487,962
431,332
Expenses
Gaming
84,007
78,510
166,355
156,198
Food and beverage
40,216
35,351
78,430
68,943
Rooms
16,008
12,291
30,409
23,856
Other operating
5,160
3,655
11,594
7,651
Selling, general and administrative
56,235
43,615
113,182
87,821
Depreciation and amortization
29,976
22,854
57,241
48,091
Acquisition and severance expenses
1,123
565
2,667
1,864
Preopening expenses
738
389
1,516
837
Loss on disposal of assets
585
218
832
295
Total expenses
234,048
197,448
462,226
395,556
Operating income
14,022
19,095
25,736
35,776
Non-operating income (expense)
Interest expense, net
(19,135
)
(16,066
)
(37,270
)
(30,809
)
Loss on extinguishment and modification of
debt
(9,150
)
—
(9,150
)
—
Change in fair value of derivative
(1,489
)
1,462
(3,737
)
4,673
Total non-operating expense,
net
(29,774
)
(14,604
)
(50,157
)
(26,136
)
Income (loss) before income tax
benefit
(15,752
)
4,491
(24,421
)
9,640
Income tax benefit (provision)
1,344
(897
)
1,995
(2,116
)
Net income (loss)
$
(14,408
)
$
3,594
$
(22,426
)
$
7,524
Weighted-average common shares
outstanding
Basic
27,762
27,406
27,667
27,278
Dilutive impact of stock options and
restricted stock units
—
2,258
—
2,250
Diluted
27,762
29,664
27,667
29,528
Net income (loss) per share
Basic
$
(0.52
)
$
0.13
$
(0.81
)
$
0.28
Diluted
$
(0.52
)
$
0.12
$
(0.81
)
$
0.25
Golden Entertainment,
Inc.
Reconciliation of Net Income
(Loss) to Adjusted EBITDA
(Unaudited, in thousands)
Three Months Ended June 30,
2019
Casino Segment
Distributed Gaming
Segment
Nevada Casinos
Maryland Casino
Nevada Distributed
Gaming
Montana Distributed
Gaming
Corporate
and Other
Consolidated
Total Revenues
$
140,260
$
18,456
$
71,445
$
17,708
$
201
$
248,070
Net income (loss)
$
18,194
$
4,277
$
6,687
$
660
$
(44,226
)
$
(14,408
)
Depreciation and amortization
23,092
960
3,894
1,675
355
29,976
Preopening and related expenses(1)
685
15
660
-
137
1,497
Acquisition and severance expenses
101
-
9
-
1,013
1,123
Asset disposal and other writedowns
412
99
78
(4
)
-
585
Share-based compensation
-
-
-
-
2,134
2,134
Other, net
81
-
-
-
406
487
Interest expense, net
63
1
21
2
19,048
19,135
Loss on extinguishment and modification of
debt
-
-
-
-
9,150
9,150
Change in fair value of derivative
-
-
-
-
1,489
1,489
Income tax benefit
-
-
-
-
(1,344
)
(1,344
)
Adjusted EBITDA
$
42,628
$
5,352
$
11,349
$
2,333
$
(11,838
)
$
49,824
Three Months Ended June 30,
2018
Casino Segment
Distributed Gaming
Segment
Nevada Casinos
Maryland Casino
Nevada Distributed
Gaming
Montana Distributed
Gaming
Corporate
and Other
Consolidated
Total Revenues
$
112,917
$
18,009
$
69,507
$
15,890
$
220
$
216,543
Net income (loss)
$
19,632
$
4,604
$
6,583
$
969
$
(28,194
)
$
3,594
Depreciation and amortization
16,364
1,048
3,745
1,234
463
22,854
Preopening expenses(1)
-
-
88
-
301
389
Acquisition and severance expenses
168
-
2
-
395
565
Asset disposal and other writedowns
214
4
-
-
-
218
Share-based compensation
-
-
-
-
2,758
2,758
Other, net
123
-
195
-
99
417
Interest expense, net
23
2
25
1
16,015
16,066
Change in fair value of derivative
-
-
-
-
(1,462
)
(1,462
)
Income tax provision
-
-
-
-
897
897
Adjusted EBITDA
$
36,524
$
5,658
$
10,638
$
2,204
$
(8,728
)
$
46,296
Six Months Ended June 30,
2019
Casino Segment
Distributed Gaming
Segment
Nevada Casinos
Maryland Casino
Nevada Distributed
Gaming
Montana Distributed
Gaming
Corporate
and Other
Consolidated
Total Revenues
$
275,889
$
34,201
$
142,850
$
34,660
$
362
$
487,962
Net income (loss)
$
38,056
$
7,104
$
13,719
$
1,234
$
(82,539
)
$
(22,426
)
Depreciation and amortization
43,781
1,914
7,617
3,281
648
57,241
Preopening and related expenses(1)
2,339
15
1,226
-
149
3,729
Acquisition and severance expenses
387
-
22
13
2,245
2,667
Asset disposal and other writedowns
668
99
78
(13
)
390
1,222
Share-based compensation
11
-
5
-
6,302
6,318
Other, net
92
-
-
-
1,259
1,351
Interest expense, net
113
3
36
3
37,115
37,270
Loss on extinguishment and modification of
debt
-
-
-
-
9,150
9,150
Change in fair value of derivative
-
-
-
-
3,737
3,737
Income tax benefit
-
-
-
-
(1,995
)
(1,995
)
Adjusted EBITDA
$
85,447
$
9,135
$
22,703
$
4,518
$
(23,539
)
$
98,264
Six Months Ended June 30,
2018
Casino Segment
Distributed Gaming
Segment
Nevada Casinos
Maryland Casino
Nevada Distributed
Gaming
Montana Distributed
Gaming
Corporate
and Other
Consolidated
Total Revenues
$
228,584
$
32,829
$
138,241
$
31,317
$
361
$
431,332
Net income (loss)
$
40,772
$
7,305
$
13,406
$
1,594
$
(55,553
)
$
7,524
Depreciation and amortization
34,973
2,074
7,525
2,602
917
48,091
Preopening expenses(1)
-
-
236
-
601
837
Acquisition and severance expenses
219
-
37
-
1,608
1,864
Asset disposal and other writedowns
276
4
5
10
-
295
Share-based compensation
-
-
-
-
4,602
4,602
Other, net
160
-
362
-
203
725
Interest expense, net
45
4
69
3
30,688
30,809
Change in fair value of derivative
-
-
-
-
(4,673
)
(4,673
)
Income tax provision
-
-
-
-
2,116
2,116
Adjusted EBITDA
$
76,445
$
9,387
$
21,640
$
4,209
$
(19,491
)
$
92,190
(1) Preopening and related 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 loyalty program.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190806005906/en/
Golden Entertainment, Inc. Charles H. Protell Chief Financial
Officer 702/893-7777
Investor Relations Joseph Jaffoni, Richard Land, James Leahy
JCIR 212/835-8500 or gden@jcir.com
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