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Golden Entertainment Reports 2021 Third Quarter Results

– Record third quarter revenue of $282.4 million, net income of $29.1 million and Adjusted EBITDA of $73.4 million

– All casino and distributed gaming operations generated revenue growth and margin expansion

– Repaid over $50 million of debt in the quarter; increased revolver availability to $240 million and extended maturity

Golden Entertainment, Inc. (NASDAQ: GDEN) (“Golden Entertainment” or the “Company”) today reported financial results for the third quarter ended September 30, 2021.

Blake Sartini, Chairman and Chief Executive Officer of Golden Entertainment, commented, “Our third quarter results demonstrated sustained growth and margin expansion for our casinos and distributed gaming segments compared to the third quarter of 2020 as well as comparable pre-pandemic quarterly periods. The strong performance across all of our operations, despite occupancy at The STRAT and our Laughlin properties still not having fully recovered to 2019 levels, is an encouraging indicator for our future performance.

“We continued to focus on reducing leverage during the third quarter as we repaid over $50 million of our outstanding debt obligations, and we remain committed to further debt reductions over the coming quarters. Subsequent to the quarter end, we increased our revolver availability to $240 million and extended its maturity. Given our significant available liquidity and current valuation, we view using our existing $50 million share buyback authorization as an attractive means to begin returning capital to shareholders. In addition to using our buyback availability, we will also continue to evaluate potential dividends and other opportunities to create shareholder value in the future.”

Consolidated Results

The Company reported 2021 third quarter revenues of $282.4 million compared to $205.4 million for the third quarter of 2020. Net income for the third quarter of 2021 was $29.1 million, or $0.91 per fully diluted share, compared to a net loss of $7.0 million, or a loss of ($0.25) per share, for the third quarter of 2020. Adjusted EBITDA was $73.4 million for the third quarter of 2021 compared to Adjusted EBITDA of $45.9 million for the third quarter of 2020.

Casinos

Casino revenues were $164.1 million for the third quarter of 2021 compared to $135.3 million for the third quarter of 2020. Casino Adjusted EBITDA was $65.0 million compared to $50.8 million for the third quarter of 2020. Total Casino Adjusted EBITDA margin was 40% for the third quarter of 2021.

Distributed Gaming

Distributed Gaming revenues for the third quarter of 2021 were $117.9 million compared to $69.9 million in the third quarter of 2020. Distributed Gaming Adjusted EBITDA was $21.2 million compared to $4.9 million for the third quarter of 2020. Total Distributed Gaming Adjusted EBITDA margin was 18% for the third quarter of 2021.

Debt and Liquidity

Golden Entertainment paid down $50 million of its term loan in the third quarter and as of September 30, 2021, total principal amount of debt was approximately $1.0 billion, consisting primarily of $675 million in term loan borrowings outstanding under the Company’s existing credit facility and $375 million of senior unsecured notes. There are no outstanding borrowings under the Company’s recently increased $240 million revolving credit facility. The Company also extended the maturity date on the revolving credit facility from October 20, 2022 to April 20, 2024. As of September 30, 2021, the Company had cash and cash equivalents of $219.3 million.

Investor Conference Call and Webcast

The Company will host a webcast and conference call today, November 3, 2021, at 5:00 p.m. Eastern Time, to discuss the third quarter 2021 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. A replay will be available beginning at 8:00 p.m. Eastern Time today and may be accessed by dialing (855) 859-2056 or (404) 537-3406 for international callers; the passcode is 1722269. The replay will be available until November 6, 2021. 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 the Company’s 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. In addition, forward-looking statements in this press release include, without limitation: statements regarding: the Company’s strategies, objectives and business opportunities; anticipated future growth and trends in the Company’s business or key markets; projections of future financial condition, operating results, income, capital expenditures, costs or other financial items, including anticipated future cash generation and resulting ability to continue to reduce leverage and to return capital to shareholders; and other characterizations of future events or circumstances as well as other statements that are not statements of historical fact. Forward-looking statements are based on the Company’s current expectations and assumptions regarding its 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 the actual results to differ materially include: the uncertainty of the extent, duration and effects of the COVID-19 pandemic and the response of governments; 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; the Company’s ability to realize the anticipated cost savings, synergies and other benefits of its casino and other acquisitions; litigation; increased competition; the Company’s ability to renew its distributed gaming contracts; reliance on key personnel (including our Chief Executive Officer, President and Chief Financial Officer, and Chief Operating Officer); the level of the Company’s indebtedness and its ability to comply with covenants in its debt instruments; terrorist incidents; natural disasters; severe weather conditions (including weather or road conditions that limit access to the Company’s properties); 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 most recent Annual Report on Form 10-K and 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, severance expenses, preopening and related expenses, gain or loss on disposal of assets, share-based compensation expenses, change in non-cash lease expense, change in fair value of derivative, and other non-cash charges. 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 labor, food, utilities, training, initial licensing, rent and organizational costs incurred in connection with the opening of tavern and casino locations.

About Golden Entertainment, Inc.

Golden Entertainment owns and operates gaming properties across two divisions – casino operations and distributed gaming. Golden Entertainment operates over 16,900 slots, 120 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 nearly 1,100 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,

 

2021

 

2020

 

2021

 

2020

Revenues

 

 

 

 

 

 

 

Gaming

$

193,167

 

 

$

145,521

 

 

$

575,124

 

 

$

329,413

 

Food and beverage

44,271

 

 

28,685

 

 

123,013

 

 

80,400

 

Rooms

31,566

 

 

22,505

 

 

80,213

 

 

54,097

 

Other

13,418

 

 

8,685

 

 

36,235

 

 

24,617

 

Total revenues

282,422

 

 

205,396

 

 

814,585

 

 

488,527

 

Expenses

 

 

 

 

 

 

 

Gaming

106,301

 

 

76,128

 

 

309,478

 

 

189,471

 

Food and beverage

32,182

 

 

22,654

 

 

85,256

 

 

67,280

 

Rooms

13,220

 

 

11,111

 

 

35,213

 

 

29,652

 

Other operating

4,635

 

 

2,748

 

 

10,430

 

 

9,279

 

Selling, general and administrative

54,457

 

 

52,156

 

 

161,333

 

 

135,657

 

Depreciation and amortization

26,474

 

 

31,551

 

 

80,342

 

 

94,637

 

Loss on disposal of assets

(72

)

 

(474

)

 

747

 

 

817

 

Preopening expenses

3

 

 

73

 

 

232

 

 

187

 

Impairment of goodwill and intangible assets

 

 

 

 

 

 

27,872

 

Total expenses

237,200

 

 

195,947

 

 

683,031

 

 

554,852

 

Operating income (loss)

45,222

 

 

9,449

 

 

131,554

 

 

(66,325

)

Non-operating income (expense)

 

 

 

 

 

 

 

Other non-operating income

 

 

 

 

60,000

 

 

 

Interest expense, net

(15,535

)

 

(16,422

)

 

(47,752

)

 

(51,575

)

Loss on debt extinguishment and modification

(759

)

 

 

 

(759

)

 

 

Change in fair value of derivative

 

 

 

 

 

 

(1

)

Total non-operating income (expense), net

(16,294

)

 

(16,422

)

 

11,489

 

 

(51,576

)

Income (loss) before income tax benefit (provision)

28,928

 

 

(6,973

)

 

143,043

 

 

(117,901

)

Income tax benefit (provision)

123

 

 

17

 

 

(366

)

 

(241

)

Net income (loss)

$

29,051

 

 

$

(6,956

)

 

$

142,677

 

 

$

(118,142

)

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding

 

 

 

 

 

 

 

Basic

28,950

 

 

28,130

 

 

28,599

 

 

28,045

 

Dilutive impact of stock options and restricted stock units

2,904

 

 

 

 

2,938

 

 

 

Diluted

31,854

 

 

28,130

 

 

31,537

 

 

28,045

 

Net income (loss) per share

 

 

 

 

 

 

 

Basic

$

1.00

 

 

$

(0.25

)

 

$

4.99

 

 

$

(4.21

)

Diluted

$

0.91

 

 

$

(0.25

)

 

$

4.52

 

 

$

(4.21

)

 

Golden Entertainment, Inc.

Reconciliation of Adjusted EBITDA

(Unaudited, in thousands)

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

2021

 

2020

 

2021

 

2020

Revenues

 

 

 

 

 

 

 

 

Casinos

 

 

 

 

 

 

 

 

Nevada

 

$

142,485

 

 

$

114,842

 

 

$

405,369

 

 

$

266,046

 

Maryland

 

21,640

 

 

20,472

 

 

58,980

 

 

36,670

 

Casinos revenues

 

164,125

 

 

135,314

 

 

464,349

 

 

302,716

 

Distributed Gaming

 

 

 

 

 

 

 

 

Nevada

 

92,773

 

 

48,024

 

 

272,181

 

 

133,701

 

Montana

 

25,162

 

 

21,879

 

 

77,066

 

 

51,525

 

Distributed Gaming revenues

 

117,935

 

 

69,903

 

 

349,247

 

 

185,226

 

Corporate and Other

 

362

 

 

179

 

 

989

 

 

585

 

Total revenues

 

$

282,422

 

 

$

205,396

 

 

$

814,585

 

 

$

488,527

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

29,051

 

 

$

(6,956

)

 

$

142,677

 

 

$

(118,142

)

Adjustments

 

 

 

 

 

 

 

 

Other non-operating income

 

 

 

 

 

(60,000

)

 

 

Depreciation and amortization

 

26,474

 

 

31,551

 

 

80,342

 

 

94,637

 

Change in non-cash lease expense

 

(143

)

 

425

 

 

517

 

 

756

 

Share-based compensation

 

3,089

 

 

3,520

 

 

8,762

 

 

7,522

 

(Gain) loss on disposal of assets

 

(72

)

 

(474

)

 

747

 

 

817

 

Loss on debt extinguishment and modification

 

759

 

 

 

 

759

 

 

 

Preopening and related expenses

 

3

 

 

73

 

 

232

 

 

412

 

Severance expenses

 

193

 

 

24

 

 

193

 

 

3,367

 

Impairment of goodwill and intangible assets

 

 

 

 

 

 

 

27,872

 

Other, net

 

(1,338

)

 

1,286

 

 

1,591

 

 

1,760

 

Interest expense, net

 

15,535

 

 

16,422

 

 

47,752

 

 

51,575

 

Change in fair value of derivative

 

 

 

 

 

 

 

1

 

Income tax (benefit) provision

 

(123

)

 

(17

)

 

366

 

 

241

 

Total Adjusted EBITDA

 

$

73,428

 

 

$

45,854

 

 

$

223,938

 

 

$

70,818

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

 

 

 

 

 

 

 

Casinos

 

 

 

 

 

 

 

 

Nevada

 

$

57,299

 

 

$

42,645

 

 

$

173,717

 

 

$

73,916

 

Maryland

 

7,669

 

 

8,114

 

 

20,831

 

 

10,699

 

Casinos Adjusted EBITDA

 

64,968

 

 

50,759

 

 

194,548

 

 

84,615

 

Distributed Gaming

 

 

 

 

 

 

 

 

Nevada

 

17,872

 

 

2,276

 

 

56,494

 

 

7,079

 

Montana

 

3,286

 

 

2,591

 

 

10,457

 

 

5,838

 

Distributed Gaming Adjusted EBITDA

 

21,158

 

 

4,867

 

 

66,951

 

 

12,917

 

Corporate and Other

 

(12,698

)

 

(9,772

)

 

(37,561

)

 

(26,714

)

Total Adjusted EBITDA

 

$

73,428

 

 

$

45,854

 

 

$

223,938

 

 

$

70,818

 

 

Contacts

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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