Business Wire | Aug 5, 2021 04:05PM EDT

Golden Entertainment Reports 2021 Second Quarter Results

Aug. 05, 2021

LAS VEGAS--(BUSINESS WIRE)--Aug. 05, 2021--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 44,938 10,168 78,742 51,715 beverage

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 29,533 9,739 53,074 44,626 beverage

Rooms 12,383 4,586 21,993 18,541

Other operating 3,099 1,404 5,795 6,531

Selling, generaland 53,285 32,548 106,876 80,158 administrative

Depreciation and 26,682 31,930 53,868 63,086 amortization

Loss on disposal 610 702 819 1,291 of assets

Preopening 109 9 229 114 expenses

Impairment ofgoodwill and - 21,411 - 27,872 intangibleassets

Severance - 367 - 3,343 expenses

Total expenses 232,506 137,927 445,831 358,905

Operating income 59,961 (61,953 ) 86,332 (75,774 ) (loss)

Non-operating income (expense)

Othernon-operating 60,000 - 60,000 - income

Interest (16,169 ) (16,407 ) (32,217 ) (35,153 ) expense, net

Change in fairvalue of - - - (1 ) derivative

Totalnon-operating 43,831 (16,407 ) 27,783 (35,154 ) income (expense)

Income (loss)before income 103,792 (78,360 ) 114,115 (110,928 ) tax provision

Income tax (786 ) (206 ) (489 ) (258 ) provision

Net income $ 103,006 $ (78,566 ) $ 113,626 $ (111,186 ) (loss)



Weighted-averagecommon shares outstanding

Basic 28,621 28,072 28,421 28,001

Dilutive impactof stock options 2,990 - 2,864 - and restrictedstock units

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

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 Nevada Maryland Nevada Montana and Other Consolidated Casinos Casino Distributed Distributed Gaming Gaming

Total $ 149,534 $ 21,240 $ 94,536 $ 26,867 $ 290 $ 292,467 Revenues



Net income $ 49,661 $ 7,186 $ 17,202 $ 2,226 $ 26,731 $ 103,006

Othernon-operating - - - - (60,000 ) (60,000 ) income

Depreciationand 20,159 992 3,361 1,536 634 26,682 amortization

Change innon-cash 17 106 75 2 21 221 lease expense

Share-based - - - - 2,668 2,668 compensation

Loss (gain)on disposal 179 - 433 (2 ) - 610 of assets

Preopeningand related 4 - 16 - 89 109 expenses ^(1)

Other, net 65 - - - 696 761

Interest 126 5 64 - 15,974 16,169 expense, net

Income tax - - - - 786 786 provision

Adjusted $ 70,211 $ 8,289 $ 21,151 $ 3,762 $ (12,401 ) $ 91,012 EBITDA

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

)

Three Months Ended June 30, 2020

Casinos Segment Distributed Gaming Segment Corporate Nevada Maryland Nevada Montana and Other Consolidated Casinos Casino Distributed Distributed Gaming Gaming

Total $ 36,305 $ 3,127 $ 23,554 $ 12,785 $ 203 $ 75,974 Revenues



Net loss $ (44,487 ) $ (1,492 ) $ (4,960 ) $ (234 ) $ (27,393 ) $ (78,566 )

Depreciationand 24,273 1,071 4,097 1,805 684 31,930 amortization

Change innon-cash 18 112 16 4 20 170 leaseexpense

Impairmentof goodwilland 21,411 - - - - 21,411 intangibleassets

Share-based - - - - 1,756 1,756 compensation

Loss (gain)on disposal 641 42 (11 ) 35 (5 ) 702 of assets

Preopeningand related - - (1 ) - 10 9 expenses^(1)

Severance 189 - 109 25 44 367 expenses

Other, net - 48 41 - 28 117

Interest 90 1 9 1 16,306 16,407 expense, net

Income tax - - - - 206 206 provision

Adjusted $ 2,135 $ (218 ) $ (700 ) $ 1,636 $ (8,344 ) $ (5,491 ) EBITDA

(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.

Preopening and related expenses consist of labor, food, utilities,(1) 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, 2021

Casinos Segment Distributed Gaming Segment Corporate Nevada Maryland Nevada Montana and Other Consolidated Casinos Casino Distributed Distributed Gaming Gaming

Total $ 262,884 $ 37,340 $ 179,408 $ 51,904 $ 627 $ 532,163 Revenues



Net income $ 74,902 $ 10,949 $ 30,341 $ 4,097 $ (6,663 ) $ 113,626 (loss)

Othernon-operating - - - - (60,000 ) (60,000 ) income

Depreciationand 40,506 1,991 6,858 3,253 1,260 53,868 amortization

Change innon-cash 48 212 351 5 44 660 lease expense

Share-based - - - - 5,673 5,673 compensation

Loss (gain)on disposal 159 - 844 (184 ) - 819 of assets

Preopeningand related 4 - 16 - 209 229 expenses ^(1)

Other, net 521 - 74 - 2,334 2,929

Interest 278 10 138 - 31,791 32,217 expense, net

Income tax - - - - 489 489 provision

Adjusted $ 116,418 $ 13,162 $ 38,622 $ 7,171 $ (24,863 ) $ 150,510 EBITDA

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

Six Months Ended June 30, 2020

Casinos Segment Distributed Gaming Segment Corporate Nevada Maryland Nevada Montana and Other Consolidated Casinos Casino Distributed Distributed Gaming Gaming

Total $ 151,204 $ 16,198 $ 85,677 $ 29,646 $ 406 $ 283,131 Revenues



Net (loss) $ (48,918 ) $ 1 $ (4,086 ) $ (504 ) $ (57,679 ) $ (111,186 ) income

Depreciationand 47,947 2,110 8,082 3,685 1,262 63,086 amortization

Change innon-cash 50 223 8 5 45 331 leaseexpense

Impairmentof goodwilland 27,872 - - - - 27,872 intangibleassets

Share-based - - - - 4,002 4,002 compensation

Loss (gain)on disposal 1,263 47 (31 ) 17 (5 ) 1,291 of assets

Preopeningand related 225 - (1 ) - 115 339 expenses^(1)

Severance 2,451 155 571 41 125 3,343 expenses

Other, net 47 48 238 - 141 474

Interest 334 2 23 2 34,792 35,153 expense, net

Change infair value - - - - 1 1 ofderivative

Income tax - - - - 258 258 provision

Adjusted $ 31,271 $ 2,586 $ 4,804 $ 3,246 $ (16,943 ) $ 24,964 EBITDA

(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.

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

CONTACT: Golden Entertainment, Inc. Charles H. Protell President and Chief Financial Officer (702) 893-7777

CONTACT: Investor Relations Richard Land JCIR (212) 835-8500 or gden@jcir.com