Golden Entertainment has highlighted recent renovations at The STRAT in helping its Nevada Casino Resorts segment perform well in the third quarter of 2023.
CEO and Chair Blake Sartini also noted that the recent divestments and property sales have also provided the operator with “financial flexibility” heading into Q4 and 2024.
STRAT renovations
Publishing its Q3 financials, Golden Entertainment declared a total revenue of $257.7m, down in comparison to the previous year’s $279m during the same period.
Gaming revenue came in at $165.2m, a decline on the previous year’s $188.4m, food and beverage revenue improved to $44.5m (Q3 2022: $43m), rooms revenue improved to $31.4m (2022: $30.7m) and other revenue dropped slightly to $16.6m (2022: $16.8m).
Per segment, Nevada Casino Resorts led the way with $105.5m, up on the previous year’s $98.9m, boosted by the recent completion of renovations at The STRAT which increased its occupancy.
Elsewhere, Nevada Locals Casinos revenue grew slightly to $16.9m (2022: $16.8m), while Nevada Taverns dropped narrowly to $7.5m (2022: $8.3m).
Sartini commented: “For our third quarter, we saw improved performance in our Nevada Casino Resorts segment which was primarily driven by increased occupancy and our recent completion of room and pool renovations at The STRAT.
“Our Nevada Locals Casinos segment maintained the strong performance we have seen throughout the year, while our taverns experienced typical seasonality with lower summer volumes.”
Financial flexibility
Revenue from Maryland Casino Resort and distributed gaming segments were impacted during the quarter as the results “only include 24 days of operations for the Rocky Gap Casino Resort and do not include 18 days of operations for distributed gaming operations in Montana when compared to the prior year”.
The quarter’s earnings also include a $305.8m gain on the sales of the Rocky Gap Casino Resort and the Montana distributed gaming business, as well as transaction costs of $8.6m.
As a result, Maryland Casino Resort segment revenue came in at $1.6m (2022: $7.4m) while distributed gaming revenue stood at $8.4m (2022: $10.5m).
Sartini continued: “Following our divestiture of Rocky Gap Casino Resort in July, we completed the sale of our Montana distributed gaming business in September and we remain on track to complete the sale of our Nevada distributed gaming business at the end of the year.
“The completion of these transactions significantly strengthens our balance sheet, enables return of capital to shareholders and provides financial flexibility to enhance shareholder value.”
Golden Entertainment’s net income in Q3 was $241.2m ($7.83 per fully diluted share) compared to a net income of $14m ($0.45 per fully diluted share) the previous year.
Adjusted EBITDA was $53.2m, down from the Q3 2022’s $61.1m “primarily due to the exclusion of full quarter results for the company’s Rocky Gap Casino Resort and the Montana distributed gaming business that were sold during the third quarter”.
The company allocated $175m of the cash proceeds from the sale of Rocky Gap Casino Resort to repay its remaining borrowings outstanding under the original term loan, in addition to paying a one-time cash dividend of $2 per share of its outstanding common stock and repurchased 252,395 shares of common stock for total consideration of $9.1m.
As of September 30, Golden Entertainment had approximately $91m of availability remaining under its share repurchase authorisation, and a total principal amount of debt outstanding at $738.7m, consisting primarily of $399m in outstanding borrowings under the new term loan and $335.5m of senior unsecured notes.
The company also has cash and cash equivalents of $295.9m, and there continue to be no outstanding borrowings under its $240m revolving credit facility.
