– Local and regional casino resorts exceed 2019 third quarter
financial performance
– The STRAT continues to improve since reopening
– Nevada bar-areas closed for most of Q3, reopened at end of
September
– Sustained margin expansion and record Q3 Adjusted
EBITDA
– Revolving credit facility fully repaid, $100 million cash
on hand
Golden Entertainment, Inc. (NASDAQ: GDEN) (“Golden
Entertainment” or the “Company”) today reported financial results
for the third quarter ended September 30, 2020.
Blake Sartini, Chairman and Chief Executive Officer of Golden
Entertainment, commented, “Our financial performance quickly
recovered from the impact of the mandated shutdowns in March
reflecting the benefit of our diversified portfolio of local and
regional gaming operations as well as adjustments we made to
managing the business. Our third quarter results demonstrate the
continued strong operating trends at most of our properties since
reopening as we generated the highest third quarter Adjusted EBITDA
in the Company’s history.
“Third quarter financial performance was led by our Las Vegas
locals casinos which achieved double-digit revenue growth and
collectively doubled their Adjusted EBITDA contribution compared to
the same period last year. Strong performance also continued at our
Laughlin and Pahrump casinos, which increased Adjusted EBITDA by 8%
and 40%, respectively, for the third quarter compared to the prior
year. Our Maryland property also demonstrated meaningful
improvement with third quarter Adjusted EBITDA increasing 27%
compared to the prior year. For our total casino operations
including The STRAT, our focus on continued expense management
drove an Adjusted EBITDA margin improvement of approximately 1,000
basis points year over year to over 37% in the third quarter.
“Our Montana distributed gaming business also continued to grow
revenue and Adjusted EBITDA for the quarter, while our distributed
gaming business in Nevada was challenged from the mandated
reclosure of bar-areas from July 10th to September 20th. We have
since reopened bar-areas at all of our tavern locations and have
seen more normalized operating trends across our portfolio.
“Even as The STRAT continues to improve and our Nevada bar-areas
were closed for most of the quarter, consolidated Adjusted EBITDA
increased 5.5% over the prior year to $45.4 million. In addition,
third quarter total Company Adjusted EBITDA margin expanded 440
basis points on lower revenues reflecting reduced labor and
marketing expenses at our properties.
“Also, during the third quarter we repaid the remaining $10
million drawn on the Company’s $200 million revolving credit
facility which remains available to us for future liquidity needs.
Looking forward, we are focused on sustaining financial
performance, cash generation and reducing leverage to position us
for future opportunities.”
Consolidated Results
The Company reported 2020 third quarter revenues of $205.4
million compared to $243.3 million in the third quarter of 2019.
Net loss for the third quarter of 2020 was $7.0 million, or a loss
of $0.25 per share, compared to a net loss of $9.4 million, or
$0.34 per share, in the third quarter of 2019. Adjusted EBITDA was
$45.4 million for the third quarter of 2020 compared to Adjusted
EBITDA of $43.1 million for the third quarter of 2019.
Casinos
Casino revenues were $135.3 million in the third quarter of 2020
compared to $155.1 million in the third quarter of 2019. Casino
Adjusted EBITDA was $50.5 million compared to $42.2 million in the
third quarter of 2019.
Distributed Gaming
Distributed Gaming revenues for the third quarter of 2020 were
$69.9 million compared to $88.0 million in the third quarter of
2019. Distributed Gaming Adjusted EBITDA was $4.7 million compared
to $11.4 million in the third quarter of 2019.
Debt and Liquidity
As of September 30, 2020, the Company had cash and cash
equivalents of $100.4 million. Total debt was approximately $1.2
billion, consisting primarily of $772 million outstanding under the
Company’s existing credit facilities and $375 million of senior
unsecured notes. There are no outstanding borrowings 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 5, 2020 at 12:00 p.m. Eastern Time, to discuss the third
quarter 2020 results. The conference call may be accessed live over
the phone by dialing (844) 465-3054 or for international callers by
dialing (480) 685-5227; the passcode is 1753649. A replay will be
available beginning at 3:00 p.m. ET today and may be accessed by
dialing (855) 859-2056 or (404) 537-3406 for international callers;
the passcode is 1753649. The replay will be available until
November 8, 2020. 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 impact of the
COVID-19 pandemic on our business and expectations regarding
recovery of our business following mandated shutdowns; future
financial and operating results; and the Company’s plans, strategic
priorities, objectives, expectations, intentions. 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 uncertainty of the extent, duration and
effects of the COVID-19 pandemic and the response of governments,
including government-mandated closures or travel restrictions; 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, 2019 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.
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, impairment of goodwill and
intangible assets, acquisition and severance expenses, preopening
and related expenses, asset disposal and other writedowns,
share-based compensation expenses, 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. The
Company defines “Preopening and related expenses” as inclusive of
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 True Rewards loyalty
program.
About Golden Entertainment, Inc.
Golden Entertainment owns and operates gaming properties across
two divisions – casino operations and distributed gaming. Golden
Entertainment operates approximately 15,700 slots, 130 table games,
and 6,200 hotel rooms. Golden Entertainment owns ten casino resorts
– nine in Southern Nevada and one in Maryland. Through its
distributed gaming business in Nevada and Montana, Golden
Entertainment operates video gaming devices at approximately 1,000
locations and owns over 60 traditional taverns in Nevada. Golden
Entertainment 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,
2020
2019
2020
2019
Revenues
Gaming
$
145,521
$
142,568
$
329,413
$
432,606
Food and beverage
28,685
51,109
80,400
152,971
Rooms
22,505
35,347
54,097
102,148
Other
8,685
14,290
24,617
43,551
Total revenues
205,396
243,314
488,527
731,276
Expenses
Gaming
76,128
83,799
189,471
250,154
Food and beverage
22,654
41,020
67,280
119,450
Rooms
11,111
16,644
29,652
47,053
Other operating
2,748
4,815
9,279
16,409
Selling, general and administrative
52,132
57,106
132,290
170,288
Depreciation and amortization
31,551
29,611
94,637
86,852
Impairment of goodwill and intangible
assets
—
—
27,872
—
Acquisition and severance expenses
24
428
3,367
3,095
(Gain) loss on disposal of assets
(474
)
(233
)
817
599
Preopening expenses
73
243
187
1,759
Total expenses
195,947
233,433
554,852
695,659
Operating income (loss)
9,449
9,881
(66,325
)
35,617
Non-operating expense
Interest expense, net
(16,422
)
(18,776
)
(51,575
)
(56,046
)
Loss on extinguishment and modification of
debt
—
—
—
(9,150
)
Change in fair value of derivative
—
(352
)
(1
)
(4,089
)
Total non-operating expense,
net
(16,422
)
(19,128
)
(51,576
)
(69,285
)
Loss before income tax benefit
(provision)
(6,973
)
(9,247
)
(117,901
)
(33,668
)
Income tax benefit (provision)
17
(200
)
(241
)
1,795
Net loss
$
(6,956
)
$
(9,447
)
$
(118,142
)
$
(31,873
)
Weighted-average common shares
outstanding
Basic
28,130
27,806
28,045
27,714
Dilutive impact of stock options and
restricted stock units
—
—
—
—
Diluted
28,130
27,806
28,045
27,714
Net loss per share
Basic
$
(0.25
)
$
(0.34
)
$
(4.21
)
$
(1.15
)
Diluted
$
(0.25
)
$
(0.34
)
$
(4.21
)
$
(1.15
)
Golden Entertainment,
Inc.
Reconciliation of Net (Loss)
Income to Adjusted EBITDA
(Unaudited, in thousands)
Three Months September 30,
2020
Casinos Segment
Distributed Gaming
Segment
Corporate
and Other
Consolidated
Nevada
Casinos
Maryland
Casino
Nevada
Distributed
Gaming
Montana
Distributed
Gaming
Total Revenues
$
114,842
$
20,472
$
48,024
$
21,879
$
179
$
205,396
Net income (loss)
$
18,156
$
6,912
$
(1,930
)
$
769
$
(30,863
)
$
(6,956
)
Depreciation and amortization
24,147
1,018
3,933
1,790
663
31,551
Acquisition and severance expenses
1
(1
)
—
—
24
24
Preopening and related expenses (1)
—
—
—
—
73
73
(Gain) loss on disposal of assets
(3
)
(17
)
(374
)
28
(108
)
(474
)
Share-based compensation
—
—
—
—
3,520
3,520
Other, net
91
1
467
—
727
1,286
Interest expense, net
222
4
14
1
16,181
16,422
Income tax benefit
—
—
—
—
(17
)
(17
)
Adjusted EBITDA
$
42,614
$
7,917
$
2,110
$
2,588
$
(9,800
)
$
45,429
Three Months September 30,
2019
Casinos Segment
Distributed Gaming
Segment
Corporate
and Other
Consolidated
Nevada
Casinos
Maryland
Casino
Nevada
Distributed
Gaming
Montana
Distributed
Gaming
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
Acquisition and severance expenses
91
46
—
—
291
428
Preopening and related expenses (1)
308
—
189
—
59
556
Gain on disposal of assets
(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
(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.
Nine Months Ended September
30, 2020
Casinos Segment
Distributed Gaming
Segment
Corporate
and Other
Consolidated
Nevada
Casinos
Maryland
Casino
Nevada
Distributed
Gaming
Montana
Distributed
Gaming
Total Revenues
$
266,046
$
36,670
$
133,701
$
51,525
$
585
$
488,527
Net (loss) income
$
(30,762
)
$
6,913
$
(6,016
)
$
265
$
(88,542
)
$
(118,142
)
Depreciation and amortization
72,094
3,128
12,015
5,475
1,925
94,637
Impairment of goodwill and intangible
assets
27,872
—
—
—
—
27,872
Acquisition and severance expenses
2,452
154
571
41
149
3,367
Preopening and related expenses (1)
225
—
(1
)
—
188
412
Loss (gain) on disposal of assets
1,260
30
(405
)
45
(113
)
817
Share-based compensation
—
—
—
—
7,522
7,522
Other, net
138
49
705
—
868
1,760
Interest expense, net
556
6
37
3
50,973
51,575
Change in fair value of derivative
—
—
—
—
1
1
Income tax provision
—
—
—
—
241
241
Adjusted EBITDA
$
73,835
$
10,280
$
6,906
$
5,829
$
(26,788
)
$
70,062
Nine Months Ended September
30, 2019
Casinos Segment
Distributed Gaming
Segment
Corporate
and Other
Consolidated
Nevada
Casinos
Maryland
Casino
Nevada
Distributed
Gaming
Montana
Distributed
Gaming
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
Acquisition and severance expenses
478
46
22
13
2,536
3,095
Preopening and related expenses (1)
2,647
15
1,415
—
208
4,285
Loss (gain) on disposal of assets
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
(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/20201105005224/en/
Golden Entertainment, Inc. Charles H. Protell President and
Chief Financial Officer (702) 893-7777 Investor Relations Richard
Land JCIR (212) 835-8500 or gden@jcir.com
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