Third Quarter and Recent
Highlights:
- Record third quarter net revenues and Adjusted
EBITDA
- Strat renovations remain on budget; majority of
construction to be completed by year end
- Achieving targeted synergies from Edgewater and Colorado
Belle acquisitions in Laughlin
- Continued to expand leading branded tavern franchise with
64 locations now in Las Vegas; 66 in Nevada
- True Rewards, the Company’s new one-card loyalty program,
to be available in over 130 of Golden’s casino resort and
distributed gaming locations
Golden Entertainment, Inc. (NASDAQ:GDEN) (“Golden
Entertainment”, “Golden” or the “Company”) today reported financial
results for the third quarter ended September 30, 2019.
Blake Sartini, Chairman and Chief Executive Officer of Golden
Entertainment, commented, “Golden generated its highest third
quarter revenue and Adjusted EBITDA in our history reflecting
growth across both our Casinos and Distributed Gaming operations.
In the third quarter, total revenue rose approximately 16% and
Adjusted EBITDA increased almost 13% driven by contributions from
the acquired Edgewater and Colorado Belle casinos in Laughlin as
well as the improved performance from our distributed gaming
business.
“We continue to make significant progress on our renovations at
The Strat and anticipate completing most of our renovations by year
end. We are currently working to complete the casino floor
renovations by the end of December, which will dramatically enhance
the gaming experience for our guests. In addition to our casino
floor renovations, by the end of the year we will have remodeled
almost 600 hotel rooms, created new food and beverage outlets,
refreshed our Top of the World Restaurant and Skypod, updated the
property’s exterior lighting and landscaping, and added new
entertainment venues and other amenities. We believe these
renovations will position The Strat for success in 2020 and for
many years to come.
“We are pleased to see the continued organic expansion of our
leading distributed gaming businesses in Nevada and Montana where
we have a long history of operations. We intend to continue to
invest in our current distributed gaming markets and to pursue
potential opportunities in new jurisdictions where we expect to
leverage our scale and expertise to establish a meaningful
presence.
“Now that our True Rewards loyalty program has been successfully
implemented in all of our casino properties, we will further
rollout this integrated players club to all of our 66 tavern
locations and certain chain store locations in Nevada. We expect
that our ability to incentivize customers across more than 130
Nevada casinos and distributed gaming locations will be a
significant point of differentiation that drives customer loyalty
and incremental revenue.
“The majority of our revenues are generated in Southern Nevada
where we expect economic growth to continue for the foreseeable
future. Economic growth in Las Vegas, combined with our recent
investments across our portfolio, will support Golden’s ability to
generate significant free cash flow and enhance shareholder
value.”
Consolidated Results
The Company reported record third quarter revenues of $243.3
million, up 15.7% from $210.3 million in the third quarter of 2018.
Net loss for the third quarter of 2019 was $9.4 million or a loss
of $0.34 per share, compared to a net loss of $3.1 million, or
$0.11 per share, in the third quarter of 2018. Adjusted EBITDA
increased 12.9% to $43.1 million for the third quarter of 2019
compared to $38.1 million for the third quarter of 2018. Results
for the third quarter of 2019 include the operations of the
Edgewater and Colorado Belle Casino Resorts acquired by the Company
on January 14, 2019.
Casinos
Casino revenues grew 20.4% to $155.1 million in the third
quarter of 2019 compared to $128.8 million in the third quarter of
2018. Casino Adjusted EBITDA grew 12.1% to $42.2 million compared
to $37.7 million in the same quarter of 2018.
In the third quarter, year-over-year 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.
Distributed Gaming
Distributed Gaming revenues increased 8.4% to $88.0 million from
$81.2 million in the third quarter of 2018. Adjusted EBITDA for the
segment grew 9.4% to $11.4 million from $10.4 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
third consecutive quarter. In Nevada, continued growth from the
Company’s wholly-owned tavern portfolio, which added 6 new
locations since the prior-year period, as well as stabilized
performance from the Company’s chain store locations, contributed
to improved results. In Montana, the Company continued to add new
locations and benefited from ongoing investment in new
technology.
The Strat Renovations
Update
The majority of renovations at The Strat are scheduled to be
completed by the end of 2019. In addition to the ongoing casino
renovations, 130 hotel rooms were renovated in the third quarter.
Golden expects to renovate an additional 126 rooms by year end
bringing the total number of renovated rooms to 573 since June
2018. Earlier this year, the Company opened a new tap house, lounge
and sports book and 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 SkyJump
experience, and renovations to other food and beverage outlets
(including Top of the World, Strat Café and Starbucks), and to the
exterior lighting and landscaping of the property.
As of September 30, 2019, the Company had invested a total of
approximately $70 million on The Strat renovations since June 2018,
including approximately $16.6 million in the third quarter of 2019.
The Company expects approximately $20 million of additional capital
expenditures for The Strat in 2019, which will complete the
majority of Golden’s planned renovations at The Strat. For 2020,
the Company has no major capital investments planned for The Strat
at this time.
Balance Sheet Highlights
As of September 30, 2019, the Company had cash and cash
equivalents of approximately $124 million and total outstanding
debt of $1.15 billion, with no borrowings outstanding under the
Company’s $200 million revolving credit facility.
Investor Conference Call and Webcast
The Company will host a webcast and conference call today,
November 7, 2019 at 5:00 p.m. Eastern Time, to discuss the third
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 9166175. A replay will be available
beginning at 8:00 p.m. ET on November 7, 2019 and may be accessed
by dialing (855) 859-2056 or (404) 537-3406 for international
callers; the passcode is 9166175. The replay will be available
until November 10, 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 timing, completion,
remaining costs, source of funding and anticipated benefits of the
renovations at The Strat; the expected further rollout and benefits
of the Company’s TrueRewards one-card loyalty program; future
financial and operating results; proposed future capital
expenditures, investments and property improvements, including
anticipated growth and expansion in distributed gaming locations;
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, President and Chief Financial Officer, and Chief
Operating 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, executive severance,
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 17,500 slots, 150 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 September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
Revenues
Gaming
$
142,568
$
127,764
$
432,606
$
394,173
Food and beverage
51,109
41,999
152,971
128,024
Rooms
35,347
28,227
102,148
82,014
Other
14,290
12,347
43,551
37,458
Total revenues
243,314
210,337
731,276
641,669
Expenses
Gaming
83,799
76,465
250,154
232,663
Food and beverage
41,020
34,508
119,450
103,451
Rooms
16,644
13,109
47,053
36,965
Other operating
4,815
3,805
16,409
11,456
Selling, general and administrative
57,106
47,359
170,288
135,180
Depreciation and amortization
29,611
23,330
86,852
71,421
Acquisition and severance expenses
428
1,243
3,095
3,107
Preopening expenses
243
21
1,759
858
(Gain) loss on disposal of assets
(233
)
774
599
1,069
Total expenses
233,433
200,614
695,659
596,170
Operating income
9,881
9,723
35,617
45,499
Non-operating income (expense)
Interest expense, net
(18,776
)
(16,291
)
(56,046
)
(47,100
)
Loss on extinguishment and modification of
debt
—
—
(9,150
)
—
Change in fair value of derivative
(352
)
1,222
(4,089
)
5,895
Total non-operating expense,
net
(19,128
)
(15,069
)
(69,285
)
(41,205
)
Income (loss) before income tax
benefit
(9,247
)
(5,346
)
(33,668
)
4,294
Income tax benefit (provision)
(200
)
2,222
1,795
106
Net income (loss)
$
(9,447
)
$
(3,124
)
$
(31,873
)
$
4,400
Weighted-average common shares
outstanding
Basic
27,806
27,655
27,714
27,405
Dilutive impact of stock options and
restricted stock units
—
—
—
1,787
Diluted
27,806
27,655
27,714
29,192
Net income (loss) per share
Basic
$
(0.34
)
$
(0.11
)
$
(1.15
)
$
0.16
Diluted
$
(0.34
)
$
(0.11
)
$
(1.15
)
$
0.15
Golden Entertainment,
Inc.
Reconciliation of Net Income
(Loss) to Adjusted EBITDA
(Unaudited, in thousands)
Three Months Ended September
30, 2019
Casino Segment
Distributed Gaming
Segment
Nevada Casinos
Maryland Casino
Nevada Distributed
Gaming
Montana Distributed
Gaming
Corporate and Other
Consolidated
Total Revenues
$
135,490
$
19,623
$
69,386
$
18,612
$
203
$
243,314
Net income (loss)
$
12,690
$
5,168
$
4,812
$
974
$
(33,091
)
$
(9,447
)
Depreciation and amortization
22,501
999
3,941
1,675
495
29,611
Preopening and related expenses(1)
308
-
189
-
59
556
Acquisition and severance expenses
91
46
-
-
291
428
Asset disposal and other writedowns
(4
)
-
(1
)
(222
)
(6
)
(233
)
Share-based compensation
-
-
-
-
2,583
2,583
Other, net
218
-
-
-
25
243
Interest expense, net
199
1
17
1
18,558
18,776
Change in fair value of derivative
-
-
-
-
352
352
Income tax provision
-
-
-
-
200
200
Adjusted EBITDA
$
36,003
$
6,214
$
8,958
$
2,428
$
(10,534
)
$
43,069
Three Months Ended September
30, 2018
Casino Segment
Distributed Gaming
Segment
Nevada Casinos
Maryland Casino
Nevada Distributed
Gaming
Montana Distributed
Gaming
Corporate and Other
Consolidated
Total Revenues
$
110,071
$
18,766
$
65,508
$
15,680
$
312
$
210,337
Net income (loss)
$
13,929
$
5,184
$
4,614
$
400
$
(27,251
)
$
(3,124
)
Depreciation and amortization
16,713
954
3,664
1,628
371
23,330
Preopening expenses(1)
-
-
73
-
(52
)
21
Acquisition and severance expenses
54
-
1
-
1,188
1,243
Asset disposal and other writedowns
770
-
-
4
-
774
Share-based compensation
12
25
3
-
2,743
2,783
Other, net
-
-
-
-
269
269
Interest expense, net
23
2
20
1
16,245
16,291
Change in fair value of derivative
-
-
-
-
(1,222
)
(1,222
)
Income tax benefit
-
-
-
-
(2,222
)
(2,222
)
Adjusted EBITDA
$
31,501
$
6,165
$
8,375
$
2,033
$
(9,931
)
$
38,143
Nine Months Ended September
30, 2019
Casino Segment
Distributed Gaming
Segment
Nevada Casinos
Maryland Casino
Nevada Distributed
Gaming
Montana Distributed
Gaming
Corporate and Other
Consolidated
Total Revenues
$
411,379
$
53,824
$
212,236
$
53,272
$
565
$
731,276
Net income (loss)
$
50,746
$
12,272
$
18,531
$
2,208
$
(115,630
)
$
(31,873
)
Depreciation and amortization
66,282
2,913
11,558
4,956
1,143
86,852
Preopening and related expenses(1)
2,647
15
1,415
-
208
4,285
Acquisition and severance expenses
478
46
22
13
2,536
3,095
Asset disposal and other writedowns
664
99
77
(235
)
384
989
Share-based compensation
11
-
5
-
8,885
8,901
Other, net
310
-
-
-
1,284
1,594
Interest expense, net
312
4
53
4
55,673
56,046
Loss on extinguishment and modification of
debt
-
-
-
-
9,150
9,150
Change in fair value of derivative
-
-
-
-
4,089
4,089
Income tax benefit
-
-
-
-
(1,795
)
(1,795
)
Adjusted EBITDA
$
121,450
$
15,349
$
31,661
$
6,946
$
(34,073
)
$
141,333
Nine Months Ended September
30, 2018
Casino Segment
Distributed Gaming
Segment
Nevada Casinos
Maryland Casino
Nevada Distributed
Gaming
Montana Distributed
Gaming
Corporate and Other
Consolidated
Total Revenues
$
338,655
$
51,595
$
203,749
$
46,997
$
673
$
641,669
Net income (loss)
$
54,701
$
12,489
$
18,020
$
1,994
$
(82,804
)
$
4,400
Depreciation and amortization
51,686
3,028
11,189
4,230
1,288
71,421
Preopening expenses(1)
-
-
309
-
549
858
Acquisition and severance expenses
273
-
38
-
2,796
3,107
Asset disposal and other writedowns
1,046
4
5
14
-
1,069
Share-based compensation
12
25
3
-
7,345
7,385
Other, net
160
-
362
-
472
994
Interest expense, net
68
6
89
4
46,933
47,100
Change in fair value of derivative
-
-
-
-
(5,895
)
(5,895
)
Income tax benefit
-
-
-
-
(106
)
(106
)
Adjusted EBITDA
$
107,946
$
15,552
$
30,015
$
6,242
$
(29,422
)
$
130,333
(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/20191107005959/en/
Golden Entertainment, Inc. Charles H. Protell President and
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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