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Golden Entertainment Reports 2021 Second Quarter Results

Golden Entertainment Reports 2021 Second Quarter Results

Record quarterly revenue of $292 million, net income of $103 million and Adjusted EBITDA of $91 million

All casino properties and distributed gaming operations achieved the highest quarterly Adjusted EBITDA in our history

Received $60 million cash payment from Caesars Entertainment in July; may receive up to an additional $15 million based on the potential sale value of William Hill’s UK business

Repaid over $50 million of debt in the quarter; cash balance of $213 million including the payment from Caesars Entertainment

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

Blake Sartini, Chairman and Chief Executive Officer of Golden Entertainment, commented, “Our second quarter operating results demonstrated improvement over our first quarter, as we generated record quarterly levels of revenue, net income and Adjusted EBITDA. These results highlight strong levels of visitation and spend at all of our properties, including The STRAT, combined with the margin improvement we have sustained over the last twelve months.

“During the quarter, we deployed cash generated from operations to repay over $50 million of outstanding debt obligations including $47 million of our term loan. After the quarter ended, we received a $60 million cash payment from Caesars Entertainment, Inc. (“Caesars”) related to their acquisition of William Hill and have the potential to receive up to an additional $15 million payment from Caesars depending on the sale value for William Hill’s UK business. We appreciate our longstanding relationship with William Hill and look forward to their continued operation of the sportsbooks in our Nevada casinos. After receiving the payment from Caesars, our pro forma LTM net leverage ratio is 3.8x and we expect to continue to reduce our leverage through the end of the year which will provide additional strategic flexibility and position us to return capital to our shareholders.”

Consolidated Results

The Company reported 2021 second quarter revenues of $292.5 million compared to $76.0 million for the second quarter of 2020. Net income for the second quarter of 2021 was $103.0 million, or $3.26 per fully diluted share, compared to a net loss of $78.6 million, or a loss of $2.80 per share, for the second quarter of 2020. Net income for the second quarter of 2021 includes $60.0 million, or $0.53 per fully diluted share, in other non-operating income recognized from the Caesars payment received after quarter end. Adjusted EBITDA was $91.0 million for the second quarter of 2021 compared to Adjusted EBITDA of ($5.5) million for the second quarter of 2020.

Casinos

Casino revenues were $170.8 million for the second quarter of 2021 compared to $39.4 million for the second quarter of 2020. Casino Adjusted EBITDA was $78.5 million compared to $1.9 million for the second quarter of 2020. Total Casino Adjusted EBITDA margin was 46% for the second quarter of 2021.

Distributed Gaming

Distributed Gaming revenues for the second quarter of 2021 were $121.4 million compared to $36.3 million in the second quarter of 2020. Distributed Gaming Adjusted EBITDA was $24.9 million compared to $0.9 million for the second quarter of 2020. Total Distributed Gaming Adjusted EBITDA margin was 21% for the second quarter of 2021.

Debt and Liquidity

Golden Entertainment paid down $53.4 million of debt obligations in the second quarter and as of June 30, 2021, total debt was approximately $1.1 billion, consisting primarily of $725 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 $200 million revolving credit facility. As of June 30, 2021, the Company had cash and cash equivalents of $152.5 million and on July 14, 2021, the Company received a $60 million payment from Caesars in connection with their acquisition of William Hill plc, which is not included in the quarter end cash balance.

Investor Conference Call and Webcast

The Company will host a webcast and conference call today, August 5, 2021, at 4:30 p.m. Eastern Time, to discuss the second 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 7:30 p.m. Eastern Time today and may be accessed by dialing (855) 859-2056 or (404) 537-3406 for international callers; the passcode is 8559794. The replay will be available until August 8, 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 include statements regarding potential additional payments from Caesars relating to William Hill, 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 reduce leverage and 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 16,700 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 over 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 June 30,

 

Six Months Ended June 30,

 

2021

 

2020

 

2021

 

2020

Revenues

 

 

 

 

 

 

 

Gaming

$

204,957

 

 

 

$

56,677

 

 

 

$

381,957

 

 

 

$

183,892

 

 

Food and beverage

44,938

 

 

 

10,168

 

 

 

78,742

 

 

 

51,715

 

 

Rooms

30,249

 

 

 

5,987

 

 

 

48,647

 

 

 

31,592

 

 

Other

12,323

 

 

 

3,142

 

 

 

22,817

 

 

 

15,932

 

 

Total revenues

292,467

 

 

 

75,974

 

 

 

532,163

 

 

 

283,131

 

 

Expenses

 

 

 

 

 

 

 

Gaming

106,805

 

 

 

35,231

 

 

 

203,177

 

 

 

113,343

 

 

Food and beverage

29,533

 

 

 

9,739

 

 

 

53,074

 

 

 

44,626

 

 

Rooms

12,383

 

 

 

4,586

 

 

 

21,993

 

 

 

18,541

 

 

Other operating

3,099

 

 

 

1,404

 

 

 

5,795

 

 

 

6,531

 

 

Selling, general and administrative

53,285

 

 

 

32,548

 

 

 

106,876

 

 

 

80,158

 

 

Depreciation and amortization

26,682

 

 

 

31,930

 

 

 

53,868

 

 

 

63,086

 

 

Loss on disposal of assets

610

 

 

 

702

 

 

 

819

 

 

 

1,291

 

 

Preopening expenses

109

 

 

 

9

 

 

 

229

 

 

 

114

 

 

Impairment of goodwill and intangible assets

 

 

 

21,411

 

 

 

 

 

 

27,872

 

 

Severance expenses

 

 

 

367

 

 

 

 

 

 

3,343

 

 

Total expenses

232,506

 

 

 

137,927

 

 

 

445,831

 

 

 

358,905

 

 

Operating income (loss)

59,961

 

 

 

(61,953

)

 

 

86,332

 

 

 

(75,774

)

 

Non-operating income (expense)

 

 

 

 

 

 

 

Other non-operating income

60,000

 

 

 

 

 

 

60,000

 

 

 

 

 

Interest expense, net

(16,169

)

 

 

(16,407

)

 

 

(32,217

)

 

 

(35,153

)

 

Change in fair value of derivative

 

 

 

 

 

 

 

 

 

(1

)

 

Total non-operating income (expense)

43,831

 

 

 

(16,407

)

 

 

27,783

 

 

 

(35,154

)

 

Income (loss) before income tax provision

103,792

 

 

 

(78,360

)

 

 

114,115

 

 

 

(110,928

)

 

Income tax provision

(786

)

 

 

(206

)

 

 

(489

)

 

 

(258

)

 

Net income (loss)

$

103,006

 

 

 

$

(78,566

)

 

 

$

113,626

 

 

 

$

(111,186

)

 

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding

 

 

 

 

 

 

 

Basic

28,621

 

 

 

28,072

 

 

 

28,421

 

 

 

28,001

 

 

Dilutive impact of stock options and restricted stock units

2,990

 

 

 

 

 

 

2,864

 

 

 

 

 

Diluted

31,611

 

 

 

28,072

 

 

 

31,285

 

 

 

28,001

 

 

Net income (loss) per share

 

 

 

 

 

 

 

Basic

$

3.60

 

 

 

$

(2.80

)

 

 

$

4.00

 

 

 

$

(3.97

)

 

Diluted

$

3.26

 

 

 

$

(2.80

)

 

 

$

3.63

 

 

 

$

(3.97

)

 

Golden Entertainment, Inc.

Reconciliation of Net Income (Loss) to Adjusted EBITDA

(Unaudited, in thousands)

 

 

Three Months Ended June 30, 2021

 

Casinos Segment

 

Distributed Gaming Segment

 

Corporate
and Other

 

Consolidated

 

Nevada
Casinos

 

Maryland
Casino

 

Nevada
Distributed
Gaming

 

Montana
Distributed
Gaming

 

 

Total Revenues

$

149,534

 

 

$

21,240

 

 

$

94,536

 

 

$

26,867

 

 

 

$

290

 

 

 

$

292,467

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

$

49,661

 

 

$

7,186

 

 

$

17,202

 

 

$

2,226

 

 

 

$

26,731

 

 

 

$

103,006

 

 

Other non-operating income

 

 

 

 

 

 

 

 

 

(60,000

)

 

 

(60,000

)

 

Depreciation and amortization

20,159

 

 

992

 

 

3,361

 

 

1,536

 

 

 

634

 

 

 

26,682

 

 

Change in non-cash lease expense

17

 

 

106

 

 

75

 

 

2

 

 

 

21

 

 

 

221

 

 

Share-based compensation

 

 

 

 

 

 

 

 

 

2,668

 

 

 

2,668

 

 

Loss (gain) on disposal of assets

179

 

 

 

 

433

 

 

(2

)

 

 

 

 

 

610

 

 

Preopening and related expenses (1)

4

 

 

 

 

16

 

 

 

 

 

89

 

 

 

109

 

 

Other, net

65

 

 

 

 

 

 

 

 

 

696

 

 

 

761

 

 

Interest expense, net

126

 

 

5

 

 

64

 

 

 

 

 

15,974

 

 

 

16,169

 

 

Income tax provision

 

 

 

 

 

 

 

 

 

786

 

 

 

786

 

 

Adjusted EBITDA

$

70,211

 

 

$

8,289

 

 

$

21,151

 

 

$

3,762

 

 

 

$

(12,401

)

 

 

$

91,012

 

 

 

Three Months Ended June 30, 2020

 

Casinos Segment

 

Distributed Gaming Segment

 

Corporate
and Other

 

Consolidated

 

Nevada
Casinos

 

Maryland
Casino

 

Nevada
Distributed
Gaming

 

Montana
Distributed
Gaming

 

 

Total Revenues

$

36,305

 

 

 

$

3,127

 

 

 

$

23,554

 

 

 

$

12,785

 

 

 

$

203

 

 

 

$

75,974

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

$

(44,487

)

 

 

$

(1,492

)

 

 

$

(4,960

)

 

 

$

(234

)

 

 

$

(27,393

)

 

 

$

(78,566

)

 

Depreciation and amortization

24,273

 

 

 

1,071

 

 

 

4,097

 

 

 

1,805

 

 

 

684

 

 

 

31,930

 

 

Change in non-cash lease expense

18

 

 

 

112

 

 

 

16

 

 

 

4

 

 

 

20

 

 

 

170

 

 

Impairment of goodwill and intangible assets

21,411

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

21,411

 

 

Share-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

1,756

 

 

 

1,756

 

 

Loss (gain) on disposal of assets

641

 

 

 

42

 

 

 

(11

)

 

 

35

 

 

 

(5

)

 

 

702

 

 

Preopening and related expenses (1)

 

 

 

 

 

 

(1

)

 

 

 

 

 

10

 

 

 

9

 

 

Severance expenses

189

 

 

 

 

 

 

109

 

 

 

25

 

 

 

44

 

 

 

367

 

 

Other, net

 

 

 

48

 

 

 

41

 

 

 

 

 

 

28

 

 

 

117

 

 

Interest expense, net

90

 

 

 

1

 

 

 

9

 

 

 

1

 

 

 

16,306

 

 

 

16,407

 

 

Income tax provision

 

 

 

 

 

 

 

 

 

 

 

 

206

 

 

 

206

 

 

Adjusted EBITDA

$

2,135

 

 

 

$

(218

)

 

 

$

(700

)

 

 

$

1,636

 

 

 

$

(8,344

)

 

 

$

(5,491

)

 

(1)   

Preopening and related expenses consist of labor, food, utilities, training, initial licensing, rent and organizational costs incurred in connection with the opening of tavern and casino locations.

 

Six Months Ended June 30, 2021

 

Casinos Segment

 

Distributed Gaming Segment

 

Corporate
and Other

 

Consolidated

 

Nevada
Casinos

 

Maryland
Casino

 

Nevada
Distributed
Gaming

 

Montana
Distributed
Gaming

 

 

Total Revenues

$

262,884

 

 

$

37,340

 

 

$

179,408

 

 

$

51,904

 

 

 

$

627

 

 

 

$

532,163

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

$

74,902

 

 

$

10,949

 

 

$

30,341

 

 

$

4,097

 

 

 

$

(6,663

)

 

 

$

113,626

 

 

Other non-operating income

 

 

 

 

 

 

 

 

 

(60,000

)

 

 

(60,000

)

 

Depreciation and amortization

40,506

 

 

1,991

 

 

6,858

 

 

3,253

 

 

 

1,260

 

 

 

53,868

 

 

Change in non-cash lease expense

48

 

 

212

 

 

351

 

 

5

 

 

 

44

 

 

 

660

 

 

Share-based compensation

 

 

 

 

 

 

 

 

 

5,673

 

 

 

5,673

 

 

Loss (gain) on disposal of assets

159

 

 

 

 

844

 

 

(184

)

 

 

 

 

 

819

 

 

Preopening and related expenses (1)

4

 

 

 

 

16

 

 

 

 

 

209

 

 

 

229

 

 

Other, net

521

 

 

 

 

74

 

 

 

 

 

2,334

 

 

 

2,929

 

 

Interest expense, net

278

 

 

10

 

 

138

 

 

 

 

 

31,791

 

 

 

32,217

 

 

Income tax provision

 

 

 

 

 

 

 

 

 

489

 

 

 

489

 

 

Adjusted EBITDA

$

116,418

 

 

$

13,162

 

 

$

38,622

 

 

$

7,171

 

 

 

$

(24,863

)

 

 

$

150,510

 

 

 

Six Months Ended June 30, 2020

 

Casinos Segment

 

Distributed Gaming Segment

 

Corporate
and Other

 

Consolidated

 

Nevada
Casinos

 

Maryland
Casino

 

Nevada
Distributed
Gaming

 

Montana
Distributed
Gaming

 

 

Total Revenues

$

151,204

 

 

 

$

16,198

 

 

$

85,677

 

 

 

$

29,646

 

 

 

$

406

 

 

 

$

283,131

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net (loss) income

$

(48,918

)

 

 

$

1

 

 

$

(4,086

)

 

 

$

(504

)

 

 

$

(57,679

)

 

 

$

(111,186

)

 

Depreciation and amortization

47,947

 

 

 

2,110

 

 

8,082

 

 

 

3,685

 

 

 

1,262

 

 

 

63,086

 

 

Change in non-cash lease expense

50

 

 

 

223

 

 

8

 

 

 

5

 

 

 

45

 

 

 

331

 

 

Impairment of goodwill and intangible assets

27,872

 

 

 

 

 

 

 

 

 

 

 

 

 

 

27,872

 

 

Share-based compensation

 

 

 

 

 

 

 

 

 

 

 

4,002

 

 

 

4,002

 

 

Loss (gain) on disposal of assets

1,263

 

 

 

47

 

 

(31

)

 

 

17

 

 

 

(5

)

 

 

1,291

 

 

Preopening and related expenses (1)

225

 

 

 

 

 

(1

)

 

 

 

 

 

115

 

 

 

339

 

 

Severance expenses

2,451

 

 

 

155

 

 

571

 

 

 

41

 

 

 

125

 

 

 

3,343

 

 

Other, net

47

 

 

 

48

 

 

238

 

 

 

 

 

 

141

 

 

 

474

 

 

Interest expense, net

334

 

 

 

2

 

 

23

 

 

 

2

 

 

 

34,792

 

 

 

35,153

 

 

Change in fair value of derivative

 

 

 

 

 

 

 

 

 

 

 

1

 

 

 

1

 

 

Income tax provision

 

 

 

 

 

 

 

 

 

 

 

258

 

 

 

258

 

 

Adjusted EBITDA

$

31,271

 

 

 

$

2,586

 

 

$

4,804

 

 

 

$

3,246

 

 

 

$

(16,943

)

 

 

$

24,964

 

 

(1)   

Preopening and related expenses consist of labor, food, utilities, training, initial licensing, rent and organizational costs incurred in connection with the opening of tavern and casino locations.

 

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

View source version on businesswire.com: https://www.businesswire.com/news/home/20210805005954/en/