Golden Entertainment said its fiscal 2023 net profit increased by 210.8% due to the decision to sell various assets and “streamline” its business. However, this resulted in a significant decline in gaming revenue in Q4 2023.
Net profit for 2023 was $255.8m (£202.6m/€236.6m), up from $82.3m on sales. Golden Entertainment said that, not surprisingly, its revenue declined as its real estate network contracted.
The 2023 sale also included Rocky Gap's deals with Vici Properties and Century Casinos worth $260 million. Vici acquired the venue from Golden Entertainment in July, and Century took over operations.
Golden Entertainment also sold its Montana decentralized gaming business to J&J Ventures Gaming in September.
Incidentally, the Montana sale was part of a broader transaction. This led to the group transferring its decentralized gaming operations in Nevada to his J&J Ventures Gaming affiliate. The deal was valued at $213.5 million and was completed in January, just after the end of the year.
The sale generated proceeds of more than $600 million and liquidity of more than $500 million after tax and transaction costs.
Reflecting on this activity, President and Chief Financial Officer Charles Protell said the sale helped Golden Entertainment streamline its operations. This also allowed the group to return capital to shareholders through his special dividend of $0.25 per share.
“These gains have significantly improved our leverage profile and enhanced our strategic flexibility,” he said. “The divestment of non-core businesses has focused our portfolio on wholly owned casinos and branded taverns in Southern Nevada, where we are seeing some of the most favorable macro trends in the country.”
Game revenue will decrease in 2023 due to sales decline
Looking at the impact of Golden Entertainment's sales in 2023, it's no wonder that sales decreased. Revenue for the 12 months ended December 31, 2023 was $1.05 billion, a decrease of 6.2%.
Declining gaming revenue was the main reason for the overall decline. Gaming revenue decreased by 11.4% to $674.3 million as the group's operating portfolio contracted. However, food and beverage revenue increased 4.0% to $182.4 million, room revenue increased 1.6% to $124.6 million, and other revenue increased 13.8% to $71.8 million.
In terms of business results by segment, the Nevada casino resort business took the lead. Revenue here increased 1.5% to $413.1 million. Nevada Locals Casino's revenue was flat at his $157.4 million, while Nevada Tavern's revenue was at his $109.2 million.
Full-year earnings were partially contributed by assets currently being sold. This includes $43.5 million from Rocky Gap and his $320.7 million from distributed gaming operations in Nevada and Montana.
Asset sales boost net income
On the cost side, total net spending decreased 32.9% to $653.9 million. This is primarily due to his $303.2 million gain from the sale of the business in 2023. Golden Entertainment says these sales have reduced annual gaming costs by 11.5%.
The group also recorded non-operating expenses of $67.2 million, and pre-tax profit was $332 million, an increase of 300.5%. Golden Entertainment paid $76.2 million in taxes, resulting in total net income of $255.8 million ($82.3 million in 2022).
However, after accounting for the impact of asset sales, adjusted EBITDA for the year decreased by 19.4% to $222.5 million.
Golden Entertainment falls to a net loss in the fourth quarter
Turning to Q4, it didn't make for such good reading for operators. Sales decreased 17.5% to $230.7 million. This was also due to a decline in gaming revenue, which decreased by 25.0% to $138.7 million.
The impact of asset sales was evident in this quarter. Golden Entertainment received no revenue from Rocky Gap, and the sale was completed in July, by which time some of its decentralized gaming business had also been sold.
However, revenue was flat within the Nevada Casino Resorts segment at $104.8 million, with Nevada Locals Casino slightly lower at $38.5 million. Nevada Taverns' revenue also increased slightly to $27.7 million.
In terms of costs, operating expenses decreased 8.5% to $223.6 million in the fourth quarter, while non-operating expenses increased by an additional $14.5 million. This resulted in a pre-tax loss of $7.4 million, compared to a profit of $17.3 million in 2022.
Golden Entertainment paid $2 million in taxes, meaning it ended the quarter with a net loss of $9.4 million, compared to a profit of $11.1 million in the year-ago period. Additionally, adjusted EBITDA decreased 23.4% to $48.8 million.