Golden Entertainment, Inc. (NASDAQ:GDEN) (“Golden Entertainment”
or the “Company”), today announced financial results for the second
quarter ended June 30, 2017, as summarized below.
Three Months Ended Six Months
Ended June 30, 2017 June 30,
2016 % Change June 30, 2017
June 30, 2016 % Change
(Unaudited, in thousands) Net revenues
Nevada Distributed Gaming $ 68,741 $ 64,859 6.0 % $ 135,819
$ 129,411 5.0 % Montana Distributed Gaming (1) 15,446
12,906 19.7 % 30,627
16,938 80.8 %
Total Distributed Gaming
84,187 77,765 8.3 % 166,446
146,349 13.7 % Nevada Casinos 8,833 8,669 1.9
% 17,926 17,399 3.0 % Maryland Casino 17,377
16,040 8.3 % 32,592 29,723
9.7 %
Total Casinos 26,210
24,709 6.1 % 50,518 47,122
7.2 % Corporate and other 96
84 14.3 %
175 121 44.6
% Net revenues $ 110,493
$ 102,558 7.7 % $
217,139 $ 193,592
12.2 % Net income (loss) Nevada
Distributed Gaming $ 6,978 $ 5,525 26.3 % $ 14,507 $ 11,185 29.7 %
Montana Distributed Gaming (1) 880 770
14.3 % 1,572 1,038 51.4 %
Total Distributed Gaming 7,858 6,295
24.8 % 16,079 12,223 31.5
% Nevada Casinos 1,143 1,946 -41.3 % 3,189 3,350 -4.8 %
Maryland Casino 3,809 2,980 27.8
% 6,490 4,570 42.0 %
Total
Casinos 4,952 4,926 0.5 %
9,679 7,920 22.2 % Corporate and
other (11,097 ) (8,421
) 31.8 % (18,703 )
(15,104 ) 23.8 % Net
income $ 1,713 $ 2,800
-38.8 % $ 7,055
$ 5,039 40.0 %
Adjusted EBITDA (2) Nevada Distributed Gaming $
11,277 $ 9,574 17.8 % $ 22,277 $ 19,014 17.2 % Montana Distributed
Gaming (1) 2,201 1,787 23.2 %
4,307 2,568 67.7 %
Total
Distributed Gaming 13,478 11,361 18.6
% 26,584 21,582 23.2 % Nevada
Casinos 2,379 3,016 -21.1 % 5,270 5,337 -1.3 % Maryland Casino
4,555 3,827 19.0 % 7,966
6,270 27.0 %
Total Casinos
6,934 6,843 1.3 % 13,236
11,607 14.0 % Corporate and other
(5,409 ) (4,903 )
10.3 % (11,248 )
(9,340 ) 20.4 % Adjusted
EBITDA $ 15,003 $ 13,301
12.8 % $ 28,572
$ 23,849 19.8 %
___________________
(1)
Represents the results from the Montana
distributed gaming businesses acquired in January and April 2016
from their respective acquisition dates.
(2)
Adjusted EBITDA is a non-GAAP financial
measure and definitions and disclosures, including reconciliations,
are included at the end of the press release.
Blake L. Sartini, Chairman and Chief Executive Officer of Golden
Entertainment, commented, “Our record 2017 second quarter financial
results benefited from double-digit Adjusted EBITDA growth in our
Nevada and Montana distributed gaming businesses as well as at our
Rocky Gap Casino in Maryland. Golden Entertainment generated second
quarter 2017 consolidated net revenue growth of 7.7% and grew
Adjusted EBITDA by a healthy 12.8%.
“In June, we announced our $850 million acquisition of American
Casino & Entertainment Properties which will bring four
exciting Southern Nevada properties – the Stratosphere Casino,
Hotel & Tower, Arizona Charlie’s Decatur and Arizona Charlie’s
Boulder in the Las Vegas Valley and Aquarius Casino Resort in
Laughlin – into the Golden Entertainment family. Upon completion of
the transaction, these four properties are expected to complement
our existing portfolio and allow us to pursue a strategy of
cross-regional promotion to our mid-market customers in Nevada,
Montana and Maryland. In addition, the transaction will
significantly expand our presence in Nevada, which we see as the
country’s strongest, most stable regional gaming market.
“Late in the second quarter we were granted a terminal operator
license by the Illinois Gaming Board, representing Golden
Entertainment’s fourth licensed jurisdiction. We believe Illinois
is an attractive and growing distributed gaming market where we
intend to establish a presence through both organic and inorganic
means. Given our leading distributed gaming operations in Nevada
and Montana, we believe we are well suited to emerge as a partner
of choice for existing and new distributed gaming locations
throughout the state of Illinois.
“As we look to the second half of 2017, our Company remains well
positioned to benefit from ongoing investment in our existing
businesses as we continue to evaluate further opportunities to
expand our footprint. To date in 2017 we have opened three of our
planned seven new Las Vegas tavern locations and, more recently,
completed the acquisition of the state-owned slot machines on our
Rocky Gap slot floor. This investment has reduced our Maryland slot
tax rate by 10% and we expect to realize an approximately $3
million increase in Rocky Gap’s property Adjusted EBITDA on an
annualized basis. This is an exciting period of growth for Golden
Entertainment and we believe our diverse business expansion
efforts, combined with our pending acquisition of American Casino
& Entertainment Properties, will significantly enhance
long-term value for our shareholders.”
Results for the Three Months Ended June 30, 2017
Consolidated net revenues for the 2017 second quarter were
$110.5 million, compared to $102.6 million in the prior-year
quarter. The increase in net revenues was driven primarily by an
increase in gaming revenues, reflecting the opening of new taverns
and the addition of one of the Company’s Montana distributed gaming
operations which was acquired in April 2016, as well as by
continued growth at Rocky Gap Casino. The Company’s Distributed
Gaming business grew net revenue 8.3% year over year to $84.2
million. Net revenues for the Company’s Casino operations grew 6.1%
over the prior-year period to $26.2 million.
For the second quarter of 2017, net income was $1.7 million, or
$0.07 per diluted share, compared to $2.8 million, or $0.12 per
diluted share, in the prior-year quarter. Our Distributed Gaming
business grew net income 24.8% year over year, and net income for
the Company’s Casino operations grew 0.5% year over year.
Adjusted EBITDA for the 2017 second quarter was $15.0 million,
compared to $13.3 million for the prior-year period. The increase
in Adjusted EBITDA was driven primarily by the growth in
consolidated net revenues, reflecting the opening of new taverns,
the addition of one of the Company’s distributed gaming operations
in Montana and growth at Rocky Gap, partially offset by weaker
performance in Pahrump. Our Distributed Gaming business grew
Adjusted EBITDA 18.6% year over year, and Adjusted EBITDA for the
Company’s Casino operations grew 1.3% year over year.
Balance Sheet and Liquidity
As of June 30, 2017, the Company had cash and cash equivalents
of $49.8 million and total outstanding debt of $178.7 million.
Outstanding debt under the Company’s senior credit facility
included $144 million in senior secured term loans and $27 million
in borrowings under the Company’s revolving credit facility. The
weighted-average effective interest rate on outstanding borrowings
under these facilities for the first six months of 2017 was
approximately 3.4%.
Charles H. Protell, Chief Strategy Officer and Chief Financial
Officer, commented, “Golden Entertainment’s continued strong
financial performance enabled us to further invest across our
business while reducing overall leverage in the second quarter of
2017. Total borrowings on our credit facility declined $3 million
while we completed $5.4 million of capital expenditures at our
properties. We expect to maintain the strong operating performance
of our existing businesses in the second half of 2017 and, as we
look forward to the closing of our acquisition of American Casino
& Entertainment Properties, we will continue to evaluate new
strategic opportunities to enhance our portfolio of leading casino
resorts and distributed gaming operations.”
Investor Conference Call and Webcast
The Company will host a webcast and conference call today,
August 4, 2017 at 1:30 p.m. Eastern Time, to discuss the second
quarter 2017 results. The conference call may be accessed live by
dialing (844) 465-3054 or (480) 685-5227 for international callers
and entering the passcode 61529965. A replay will be available
beginning at 4:30 p.m. ET on August 4, 2017 and may be accessed by
dialing (855) 859-2056 or (404) 537-3406 for international callers;
the passcode is 61529965. The replay will be available until August
7, 2017. 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.
If you have questions about Golden Entertainment or are
interested in conducting a conference call with Golden
Entertainment management, please contact JCIR at (212) 835-8500 or
gden@jcir.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. In addition,
forward-looking statements include statements regarding the
Company’s strategies, objectives, business opportunities and plans
for future expansion, developments or acquisitions, anticipated
future growth and trends in the Company’s business or key markets,
projections of future financial condition, operating results,
capital expenditures, or other financial items, anticipated
regulatory and legislative changes, as well as other statements
that are not statements of historical fact. Forward-looking
statements regarding our pending acquisition of the outstanding
membership interests of American Casino & Entertainment
Properties, LLC (the “Transaction”) include statements regarding
the planned completion of the Transaction, the benefits of the
Transaction, our plans, objectives, expectations and intentions
regarding the Transaction, and the expected timing of completion of
the Transaction. Forward-looking statements are based on the
Company’s 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
relating to the Transaction that could cause our actual results to
differ materially include, among other things: the ability to
obtain required regulatory approvals for the Transaction (including
the approval of gaming and antitrust authorities necessary to
complete the Transaction), the timing of obtaining such approvals
and the risk that such approvals may result in the imposition of
conditions that could materially adversely affect us, American and
the expected benefits of the Transaction; the risk that a condition
to closing of the Transaction may not be satisfied on a timely
basis or at all, the failure of the Transaction to close for any
other reason and the risk of liability to us in connection
therewith; access to available financing (including financing for
the acquisition) on a timely basis and on reasonable terms; the
effects of disruption caused by the Transaction making it more
difficult for us to execute our operating plan effectively or to
maintain relationships with employees, vendors and other business
partners; failure to realize the anticipated cost savings,
synergies and other benefits of the Transaction; litigation in
connection with the Transaction; and our ability to successfully
integrate American’s businesses. Other 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 merger with Sartini Gaming, Inc. and the
acquisitions of distributed gaming assets in Montana, and
integration risks relating to such transactions, changes in
national, regional and local economic 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 our 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 facilities, 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, an unexpected occurrence of an
“ownership change” as defined in Section 382 of the Internal
Revenue Code, and factors affecting the gaming, entertainment and
hospitality industries generally. In addition, please refer to the
risk factors contained in the Company’s SEC filings available at
www.sec.gov, including the Company’s most recent Annual Report on
Form 10-K and Quarterly Report on Form 10-Q. Readers are cautioned
not to place undue reliance on any forward-looking statements,
which speak only as of the date of this press release. The Company
undertakes no obligation to revise or update any forward-looking
statements for any reason.
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 (and associated margin
calculations) provide useful information to both management and
investors by excluding specific expenses and gains that the Company
believes are not indicative of its 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. 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. In
addition, other companies in the gaming industry may calculate
Adjusted EBITDA differently than the Company does. 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, preopening expenses, acquisition and
merger expenses, class action litigation expense, share-based
compensation expenses, executive severance and sign-on bonuses,
impairments 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 “Adjusted EBITDA margins” for the Company or a
particular segment or operation as Adjusted EBITDA divided by net
revenues for the Company or such segment or operation, as
applicable.
About Golden Entertainment, Inc.
Golden Entertainment, Inc. owns and operates gaming properties
across two divisions – distributed gaming and resort and casino
operations. Golden Entertainment operates approximately 12,000
gaming devices and nearly 30 table games in Nevada, Maryland and
Montana. The Company owns four casino properties, more than 50
taverns and operates approximately 1,000 distributed gaming
locations in multiple jurisdictions. Golden Entertainment is
focused on maximizing the value of its portfolio by leveraging its
scale, leadership position and proven management capabilities
across its two divisions. For more information, visit
www.goldenent.com.
Golden Entertainment, Inc.
Consolidated Statements of
Operations
(Unaudited, in thousands, except per share
data)
Three Months Ended Six Months Ended
June 30, 2017 June 30, 2016 June 30,
2017 June 30, 2016 Revenues Gaming $
94,649 $ 88,337 $ 186,171 $ 166,809 Food and beverage 15,808 14,101
31,458 27,442 Rooms 2,012 1,945 3,590 3,500 Other operating
3,693 3,079 7,078 5,291
Gross revenues
116,162 107,462 228,297 203,042 Less: Promotional allowances
(5,669 ) (4,904 ) (11,158 ) (9,450 )
Net
revenues 110,493 102,558 217,139
193,592
Expenses Gaming 64,946 63,541 127,833 119,032
Food and beverage 9,697 8,472 19,303 16,599 Rooms 311 305 620 565
Other operating 3,484 1,167 6,684 1,946 Selling, general and
administrative 19,429 16,222 37,931 32,456 Acquisition and merger
expenses 2,066 434 2,066 475 Preopening expenses 574 519 846 1,092
Depreciation and amortization 7,408 6,847
13,960 12,639
Total expenses 107,915
97,507 209,243 184,804
Income from operations
2,578 5,051 7,896 8,788
Non-operating income (expense) Interest expense, net (2,000
) (1,640 ) (3,683 ) (3,097 ) Other, net — — —
18
Total non-operating expense, net (2,000 )
(1,640 ) (3,683 ) (3,079 )
Income before
income tax benefit (provision) 578 3,411 4,213 5,709 Income tax
benefit (provision) 1,135 (611 ) 2,842
(670 )
Net income $ 1,713 $ 2,800 $ 7,055 $ 5,039
Weighted-average common shares outstanding Basic 22,265
22,136 22,258 22,044 Dilutive impact of stock options and
restricted stock units 1,023 299 799
299 Diluted 23,288 22,435 23,057 22,343
Net income per share Basic $ 0.08 $ 0.13 $ 0.32 $ 0.23
Diluted $ 0.07 $ 0.12 $ 0.31 $ 0.23
Golden Entertainment, Inc.
Consolidated Balance Sheets
(Unaudited, in thousands)
June 30, 2017 December 31, 2016
ASSETS Current assets Cash and cash equivalents $
49,809 $ 46,898 Accounts receivable, net 6,428 6,697 Income taxes
receivable 193 2,340 Prepaid expenses 4,981 9,761 Inventories 3,036
2,605 Other 1,600 1,346 Total current assets
66,047 69,647
Property and equipment, net
142,028 137,581
Other assets Goodwill 105,655 105,655
Intangible assets, net 94,917 98,603 Deferred income taxes 2,813 —
Other 11,058 7,592 Total other assets 214,443
211,850
Total assets $ 422,518 $ 419,078
LIABILITIES AND SHAREHOLDERS' EQUITY Current
liabilities Current portion of long-term debt $ 15,401 $ 15,752
Accounts payable 10,343 11,739 Accrued taxes, other than income
taxes 1,147 3,024 Accrued payroll and related 4,725 3,478 Other
accrued expenses 5,366 3,846 Total current
liabilities 36,982 37,839
Long-term debt,
net 161,393 167,690
Deferred income taxes — 38
Other
long-term obligations 3,759 4,085
Total
liabilities 202,134 209,652
Commitments and
contingencies Shareholders' equity Common stock,
$.01 par value; authorized 100,000 shares; 22,322 and 22,232 common
shares issued and outstanding, respectively 223 223 Additional
paid-in capital 294,059 290,157 Accumulated deficit (73,898
) (80,954 ) Total shareholders' equity 220,384
209,426
Total liabilities and shareholders' equity $ 422,518
$ 419,078
Golden Entertainment, Inc.
Reconciliation of Adjusted EBITDA to
Net Income (Loss)
(Unaudited)
Three Months Ended June 30, 2017 (In
thousands) Adjusted EBITDA Depreciation/
amortization Other operating expenses (1)
Non-
operating expenses (2)
Income tax benefit Net
income (loss)
Nevada Distributed Gaming $ 11,277 $ (3,700 ) $ (311 ) $ (288 ) $ -
$ 6,978 Montana Distributed Gaming 2,201 (1,242 )
(89 ) 10 - 880 Total Distributed Gaming
13,478 (4,942 ) (400 ) (278 ) -
7,858 Nevada Casinos 2,379 (1,281 ) - 45 - 1,143 Maryland
Casino 4,555 (744 ) - (2 ) -
3,809 Total Casinos 6,934 (2,025 ) -
43 - 4,952 Corporate and other (5,409 )
(441 ) (4,617 ) (1,765 ) 1,135
(11,097 ) Consolidated total $ 15,003 $ (7,408 ) $ (5,017 ) $
(2,000 ) $ 1,135 $ 1,713
Three Months Ended June 30,
2016 (In thousands) Adjusted EBITDA
Depreciation/ amortization Other operating
expenses (1) Non-
operating expenses (2)
Income tax provision Net
income (loss)
Nevada Distributed Gaming $ 9,574 $ (3,618 ) $ (391 ) $ (40 ) $ - $
5,525 Montana Distributed Gaming 1,787 (979 )
(38 ) - - 770 Total Distributed Gaming
11,361 (4,597 ) (429 ) (40 ) -
6,295 Nevada Casinos 3,016 (1,069 ) - (1 ) - 1,946 Maryland Casino
3,827 (847 ) - - - 2,980
Total Casinos 6,843 (1,916 ) - (1 )
- 4,926 Corporate and other (4,903 )
(334 ) (974 ) (1,599 ) (611 ) (8,421 )
Consolidated total $ 13,301 $ (6,847 ) $ (1,403 ) $ (1,640 ) $ (611
) $ 2,800
Six Months Ended June 30, 2017 (In
thousands) Adjusted EBITDA Depreciation/
amortization Other operating expenses (3)
Non-
operating expenses (4)
Income tax benefit Net
income (loss)
Nevada Distributed Gaming $ 22,277 $ (7,045 ) $ (396 ) $ (329 ) $ -
$ 14,507 Montana Distributed Gaming 4,307 (2,531 )
(213 ) 9 - 1,572 Total Distributed
Gaming 26,584 (9,576 ) (609 ) (320 )
- 16,079 Nevada Casinos 5,270 (2,125 ) - 44 - 3,189
Maryland Casino 7,966 (1,471 ) - (5 )
- 6,490 Total Casinos 13,236 (3,596 )
- 39 - 9,679 Corporate and other
(11,248 ) (788 ) (6,107 ) (3,402 )
2,842 (18,703 ) Consolidated Total $ 28,572 $ (13,960 ) $
(6,716 ) $ (3,683 ) $ 2,842 $ 7,055
Six Months Ended June
30, 2016 (In thousands) Adjusted EBITDA
Depreciation/ amortization Other operating
expenses (3) Non-
operating expenses (4)
Income tax provision Net
income (loss)
Nevada Distributed Gaming $ 19,014 $ (6,987 ) $ (767 ) $ (75 ) $ -
$ 11,185 Montana Distributed Gaming 2,568 (1,308 )
(222 ) - - 1,038 Total Distributed
Gaming 21,582 (8,295 ) (989 ) (75 )
- 12,223 Nevada Casinos 5,337 (1,986 ) - (1 ) - 3,350
Maryland Casino 6,270 (1,700 ) - -
- 4,570 Total Casinos 11,607 (3,686 )
- (1 ) - 7,920 Corporate and other
(9,340 ) (658 ) (1,433 ) (3,003 )
(670 ) (15,104 ) Consolidated Total $ 23,849 $
(12,639 ) $ (2,422 ) $ (3,079 ) $ (670 ) $ 5,039
______________
(1)
Other operating expenses primarily include
preopening expenses, share-based compensation and acquisition and
merger costs. For the three months ended June 30, 2017, Corporate
and Other included share-based compensation expenses, acquisition
costs and preopening costs of $2.3 million, $2.1 million and $0.2
million, respectively. For the three months ended June 30, 2016,
Corporate and Other included share-based compensation expenses of
$0.5 million and merger expenses of $0.4 million. For the three
months ended June 30, 2017 and 2016, Total Distributed Gaming
included preopening expenses of $0.4 million.
(2)
Non-operating expenses include interest
expense, net and other income (expense), net. Corporate and Other
included interest expense, net of $1.8 million and $1.6 million for
the three months ended June 30, 2017 and 2016, respectively.
(3)
For the six months ended June 30, 2017,
Corporate and Other included share-based compensation expenses,
acquisition costs and preopening costs of $3.7 million, $2.1
million and $0.2 million, respectively. For the six months ended
June 30, 2016, Corporate and Other included share-based
compensation expenses of $0.9 million and merger expenses of $0.5
million. For the six months ended June 30, 2017 and 2016, Total
Distributed Gaming included preopening expenses of $0.6 million and
$1.0 million, respectively.
(4)
Non-operating expenses include interest
expense, net and other income (expense), net. Corporate and Other
included interest expense, net of $3.4 million and $3.0 million for
the six months ended June 30, 2017 and 2016, respectively.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170804005137/en/
Investor RelationsJCIRJoseph Jaffoni, Richard Land, James Leahy,
212/835-8500gden@jcir.comorMedia RelationsGolden Entertainment,
Inc.Howard Stutz, Director Corporate Communications,
702/495-4490hstutz@goldenent.com
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