Golden Entertainment President and CEO Blake Sartini said there was no talk of any immediate M&A activity for the group after recent asset sales led to a 37.4% drop in first-quarter revenue. Sealed.
Revenue for the three months to 31 March reached $174m (£139.3m/€161.9m). This is significantly lower than the $278.1 million Golden Entertainment recorded in the first quarter of last year following a series of asset sales.
In the first sale, Rocky Gap was sold to Vici Properties and Century Casinos for $260 million. Vici acquired the venue in his July and Century took over operations.
Golden Entertainment also sold its Montana decentralized gaming business to J&J Ventures Gaming in September. This is part of a broader deal, which also saw the group sell its Nevada decentralized gaming business to an affiliate of J&J Ventures Gaming for $213.5 million in January.
Inevitably, asset offloading impacts revenue performance, and this was evident both in full-year 2023 and in the fourth quarter of last year. However, on the flip side, Golden Entertainment had healthier net income, lower expenses, and fully redeemed $287 million worth of senior unsecured notes.
Chief Financial Officer Charles Protel also noted that when comparing continuing operations year-over-year, sales decreased by less than 1.0%.
“We have rebuilt our financial flexibility by reducing leverage and maintaining liquidity, allowing us to establish regular dividends at attractive yields and increasing our current share buybacks of $91 million. We can now make the most of our approvals,” Protel added.
Is M&A an option for Golden Entertainment now?
Could this added financial flexibility lead Golden Entertainment to make its own acquisitions? CEO Sartini said the group is monitoring the market but is not looking to make M&A He said there were no imminent changes to the environment.
“I almost always give first views to people who want to sell, or have had first views,” he says. “So we are in a good position there in terms of knowing what is available and on the market. We are also in a good position there in terms of knowing what is available and on the market. You get one of the first considerations, if not a greenfield opportunity.”
Sartini went on to say that the group's size is now “sufficiently large” and gives Golden Entertainment a “significant competitive advantage.”
“If you look at the regulatory complexity of each of these izakayas, to get a large number of izakayas in a portfolio where you can compete right away, you have to license them individually, but from a regulatory perspective it's pretty much I don't think it's possible,” Sartini said. He said.
“So I think our scale and our brand will be a huge competitive advantage for us. There's always going to be competition. We've focused on solving it well. We're… With our track record and brand, we believe we are well-positioned to not only grow in the izakaya business, but also continue to do well.”
Revenue from continuing operations is almost flat
Looking at our revenue sources for the first quarter, approximately $86.9 million of our total revenue came from our gaming business. This was a 53.8% decrease from last year due to asset sales.
However, this is based on both ongoing and divested gaming operations, with the latter including $6 million in revenue. Last year, before asset sales, that figure was $108.5 million.
Focusing on continuing operations, excluding the impact of assets currently sold, total revenue was down just 0.9% to $168 million.
Here, Nevada Casino Resort's revenue increased 0.8% to $101 million, while Nevada Locals Casino's revenue decreased 5.3% to $39 million. Elsewhere, Nevada Taverns' revenue increased 0.7% to $27.8 million, while corporate and other revenue decreased 57.7% to $218,000.
First quarter net income increased by 262.1%
Additionally, food and beverage revenue decreased 5.6% to $43.7 million, room revenue decreased 3.9% to $29.4 million, and other revenue decreased 6.9% to $14 million.
However, when comparing expenditures, the results of asset sales improved markedly. Total spending fell 61.7% to $93.9 million, as spending decreased in several key areas. Golden Entertainment also received a gain of $69.7 million from the sale of the business.
Even after accounting for non-operating expenses of $10.7 million, pre-tax income was $69.5 million, an increase of 382.6% year-over-year. Golden Entertainment paid his $27.5 million in taxes, and its first quarter net income rose 287.9% to $42 million.
However, adjusted EBITDA from continuing operations decreased 14.4% to $40.5 million. Including divested businesses, total adjusted EBITDA decreased 34.1% to $41 million.
“We currently have a Nevada portfolio of eight property-owned casinos and 71 gaming taverns, and our operations are focused on markets with long-term drivers of future growth.” said Sartini.
“Furthermore, with a significant reduction in debt, lower leverage gives us the flexibility to invest in our own assets, return capital to shareholders, and pursue potential strategic opportunities. .”