Market Overview

Golden Entertainment Reports 2020 Third Quarter Results

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– 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.

 

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