Business Wire | Aug 6, 2020 04:06PM EDT

Golden Entertainment Reports 2020 Second Quarter Results

Aug. 06, 2020

LAS VEGAS--(BUSINESS WIRE)--Aug. 06, 2020--Golden Entertainment, Inc. (NASDAQ:GDEN) ("Golden Entertainment" or the "Company") today reported financial results for the second quarter ended June 30, 2020.

Blake Sartini, Chairman and Chief Executive Officer of Golden Entertainment, commented, "Our reopenings began in May with our Montana distributed operations, followed by our Nevada operations on June 4th and our Maryland casino on June 19th. I want to thank our team members for their dedication to our Company and their efforts to reopen our properties safely and efficiently. Our diversified gaming platform, with nearly 80% of our historical property Adjusted EBITDA derived from locals-oriented or regional gaming operations, is positioned to recover quickly from the impact of the mandated shutdowns.

"Our results since reopening have exceeded our expectations, with June Adjusted EBITDA up 14% over last June even with fewer days of operations. Performance in June was led by our Las Vegas Locals casinos and taverns which achieved double-digit revenue growth and collectively doubled their Adjusted EBITDA contribution compared to the same period last year. We generated a similar strong performance in June from our reopened Laughlin and Pahrump casinos, which increased revenue and grew Adjusted EBITDA by over 50%. In addition to strong gaming revenues across most of our businesses, we focused on significantly lowering operating and marketing expenses. For our Nevada casino operations, excluding The STRAT, our expense management initiatives drove an Adjusted EBITDA margin improvement of 2,000 basis points to almost 50% in June. Our distributed gaming businesses also performed well in June across Nevada and Montana with revenue growth of 6% and an Adjusted EBITDA increase of more than 18%.

"Given our quick actions in March to reduce expenses and increase our liquidity by drawing down $200 million on our existing revolving credit facility, we had no need to raise additional capital during the shutdown. In June, we repaid $190 million of the $200 million drawn on the Company's revolving credit facility, which remains available to us for potential future liquidity needs.

"Our strong recent financial performance, significant and sustainable margin improvement, as well as our diverse local and regional operations, gives us confidence that we will recover from the current challenges and remain well-positioned for future opportunities."

Consolidated Results

The Company reported 2020 second quarter revenues of $76.0 million compared to $248.1 million in the second quarter of 2019. Net loss for the second quarter of 2020 was $78.6 million, or a loss of $2.80 per share, compared to a net loss of $14.4 million, or $0.52 per share, in the second quarter of 2019. Adjusted EBITDA was $(5.7) million for the second quarter of 2020 compared to Adjusted EBITDA of $49.8 million for the second quarter of 2019.

Casinos

Casino revenues were $39.4 million in the second quarter of 2020 compared to $158.7 million in the second quarter of 2019. Casino Adjusted EBITDA was $1.8 million compared to $48.0 million in the second quarter of 2019.

Distributed Gaming

Distributed Gaming revenues for the second quarter of 2020 were $36.3 million compared to $89.2 million in the second quarter of 2019. Distributed Gaming Adjusted EBITDA was $0.9 million compared to $13.7 million in the second quarter of 2019.

Debt and Liquidity

As of June 30, 2020, the Company had cash and cash equivalents of approximately $86.2 million. Total debt was approximately $1.2 billion, consisting primarily of $782 million drawn under the Company's existing credit facilities (including $10 million under its revolving credit facility) and $375 million of senior unsecured notes. $190 million is currently available under the Company's existing $200 million revolving credit facility.

Investor Conference Call and Webcast

The Company will host a webcast and conference call today August 6, 2020 at 4:30 p.m. Eastern Time, to discuss the second quarter 2020 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; the passcode is 7685643. A replay will be available beginning at 8:00 p.m. ET today and may be accessed by dialing (855) 859-2056 or (404) 537-3406 for international callers; the passcode is 7685643. The replay will be available until August 9, 2020. 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 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, or they may use future dates. Forward-looking statements in this press release include, without limitation, statements regarding: the impact of the COVID-19 pandemic on our business and expectations regarding recovery of our business following mandated shutdowns; future financial and operating results; and the Company's plans, strategic priorities, objectives, expectations, intentions. Forward-looking statements are based on our 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 that could cause actual results to differ materially include: the uncertainty of the extent, duration and effects of the COVID-19 pandemic and the response of governments, including government-mandated closures or travel restrictions; the Company's ability to realize the anticipated cost savings, synergies and other benefits of the American and Laughlin transactions and its other acquisitions, and integration risks relating to such transactions; changes in national, regional and local economic, political 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 the Company's Chief Executive Officer, President and Chief Financial Officer, and Chief Operating Officer); the level of the Company's indebtedness and the Company's ability to comply with covenants in its debt instruments; 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; 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 Annual Report on Form 10-K for the year ended December 31, 2019 and most recent 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, acquisition and severance expenses, preopening and related expenses, asset disposal and other writedowns, share-based compensation expenses, change in fair value of derivative, 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 "Preopening and related expenses" as inclusive of rent, organizational costs, non-capital costs associated with the opening of tavern and casino locations, and expenses related to The STRAT rebranding and the launch of the True Rewards loyalty program.

About Golden Entertainment, Inc.

Golden Entertainment owns and operates gaming properties across two divisions - casino operations and distributed gaming. Golden Entertainment operates approximately 16,400 slots, 130 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 approximately 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 Six Months Ended June 30, 30,

2020 2019 2020 2019

Revenues

Gaming $ 56,677 $ 146,246 $ 183,892 $ 290,038

Food and beverage 10,168 52,104 51,715 101,862

Rooms 5,987 35,514 31,592 66,801

Other 3,142 14,206 15,932 29,261

Total revenues 75,974 248,070 283,131 487,962

Expenses

Gaming 35,231 84,007 113,343 166,355

Food and beverage 9,739 40,216 44,626 78,430

Rooms 4,586 16,008 18,541 30,409

Other operating 1,404 5,160 6,531 11,594

Selling, general and 32,548 56,235 80,158 113,182 administrative

Depreciation and 31,930 29,976 63,086 57,241 amortization

Impairment of goodwill 21,411 - 27,872 - and intangible assets

Acquisition and 367 1,123 3,343 2,667 severance expenses

Loss on disposal of 702 585 1,291 832 assets

Preopening expenses 9 738 114 1,516

Total expenses 137,927 234,048 358,905 462,226

Operating (loss) (61,953 ) 14,022 (75,774 ) 25,736 income

Non-operating expense

Interest expense, net (16,407 ) (19,135 ) (35,153 ) (37,270 )

Loss on extinguishmentand modification of - (9,150 ) - (9,150 )debt

Change in fair value - (1,489 ) (1 ) (3,737 )of derivative

Total non-operating (16,407 ) (29,774 ) (35,154 ) (50,157 )expense, net

Loss before income tax (78,360 ) (15,752 ) (110,928 ) (24,421 )(provision) benefit

Income tax (provision) (206 ) 1,344 (258 ) 1,995 benefit

Net loss $ (78,566 ) $ (14,408 ) $ (111,186 ) $ (22,426 )



Weighted-averagecommon shares outstanding

Basic 28,072 27,762 28,001 27,667

Dilutive impact ofstock options and - - - - restricted stock units

Diluted 28,072 27,762 28,001 27,667

Net loss per share

Basic $ (2.80 ) $ (0.52 ) $ (3.97 ) $ (0.81 )

Diluted $ (2.80 ) $ (0.52 ) $ (3.97 ) $ (0.81 )

Golden Entertainment, Inc.

Reconciliation of Net (Loss) Income to Adjusted EBITDA

(Unaudited, in thousands)

Three Months Ended June 30, 2020

Casino Segment Distributed Gaming Segment

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

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

Acquisitionand 189 - 109 25 44 367 severanceexpenses

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

Assetdisposal and 641 41 (11 ) 36 (5 ) 702 otherwritedowns

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

Other, net - 48 41 - 28 117

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

Change infair value - - - - - - ofderivative

Income tax - - - - 206 206 provision

Adjusted $ 2,117 $ (331 ) $ (716 ) $ 1,633 $ (8,364 ) $ (5,661 )EBITDA

Three Months Ended June 30, 2019

Casino Segment Distributed Gaming Segment

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

Total Revenues $ 140,260 $ 18,456 $ 71,445 $ 17,708 $ 201 $ 248,070



Net income $ 18,194 $ 4,277 $ 6,687 $ 660 $ (44,226 ) $ (14,408 )(loss)

Depreciationand 23,092 960 3,894 1,675 355 29,976 amortization

Acquisitionand severance 101 - 9 - 1,013 1,123 expenses

Preopening andrelated 685 15 660 - 137 1,497 expenses ^(1)

Asset disposaland other 412 99 78 (4 ) - 585 writedowns

Share-based - - - - 2,134 2,134 compensation

Other, net 81 - - - 406 487

Interest 63 1 21 2 19,048 19,135 expense, net

Loss onextinguishmentand - - - - 9,150 9,150 modificationof debt

Change in fairvalue of - - - - 1,489 1,489 derivative

Income tax - - - - (1,344 ) (1,344 )benefit

Adjusted $ 42,628 $ 5,352 $ 11,349 $ 2,333 $ (11,838 ) $ 49,824 EBITDA

Six Months Ended June 30, 2020

Casino Segment Distributed Gaming Segment

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

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

Acquisitionand 2,451 155 571 41 125 3,343 severanceexpenses

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

Assetdisposal and 1,262 47 (30 ) 17 (5 ) 1,291 otherwritedowns

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

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 $ 31,220 $ 2,363 $ 4,797 $ 3,241 $ (16,988 ) $ 24,633 EBITDA

Six Months Ended June 30, 2019

Casino Segment Distributed Gaming Segment

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

Total Revenues $ 275,889 $ 34,201 $ 142,850 $ 34,660 $ 362 $ 487,962



Net income $ 38,056 $ 7,104 $ 13,719 $ 1,234 $ (82,539 ) $ (22,426 )(loss)

Depreciationand 43,781 1,914 7,617 3,281 648 57,241 amortization

Acquisitionand severance 387 - 22 13 2,245 2,667 expenses

Preopening andrelated 2,339 15 1,226 - 149 3,729 expenses^ (1)

Asset disposaland other 668 99 78 (13 ) 390 1,222 writedowns

Share-based 11 - 5 - 6,302 6,318 compensation

Other, net 92 - - - 1,259 1,351

Interest 113 3 36 3 37,115 37,270 expense, net

Loss onextinguishmentand - - - - 9,150 9,150 modificationof debt

Change in fairvalue of - - - - 3,737 3,737 derivative

Income tax - - - - (1,995 ) (1,995 )benefit

Adjusted $ 85,447 $ 9,135 $ 22,703 $ 4,518 $ (23,539 ) $ 98,264 EBITDA

* Preopening and related expenses include rent, organizational costs, non-capital costs associated with the opening of tavern and casino locations, and expenses related to The Strat rebranding and the launch of the TrueRewards loyalty program. View source version on businesswire.com: https://www.businesswire.com/news/home/20200806005858/en/

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

CONTACT: Investor Relations Joseph Jaffoni, Richard Land, James Leahy JCIR (212) 835-8500 or gden@jcir.com