Quarterly report

Golden Entertainment posts slight revenue drop to $289M in Q2; problem with linen providers hits The Strat earnings

The Strat in Las Vegas.
Reading time 2:41 min

Nevada-based gaming company Golden Entertainment announced Thursday its results for the second quarter of 2022. For the period ended June 30, the business delivered $289.4 million in revenue, a slight 1% decrease from the same period in 2021.

The business further posted an Adjusted EBITDA of $75 million, an 18% decline from the $91 million the prior year, with an Adjusted EBITDA margin of 26% down against an Adjusted EBITDA of 31% in Q2, 2021. Additionally, Golden Entertainment’s net income during the period was $21.2 million, down from $103 million.

Blake Sartini, Chairman and Chief Executive Officer of Golden Entertainment, commented: "Our operating discipline supported strong second quarter results and offset challenges in the current economic environment. We have maintained our Adjusted EBITDA margin over the last four quarters as we continue to exceed 2019 performance levels."

Golden Entertainment's Blake Sartini.

The company also broke down its numbers for its Nevada Casino resorts, which saw revenue of $39.8 million, compared to $43.5 million for the second quarter of 2021. Adjusted EBITDA was $19.8 million, compared to $23.6 million year-over-year. The Adjusted EBITDA margin was slightly down this year to 50%, contrasting with Q2 2021's 54% margin.

"Our strong cash flow generation has allowed us to allocate capital to debt reduction while also returning capital to shareholders through share repurchases. Since the beginning of 2021, we have reduced indebtedness by nearly $200 million and since December 2021 we have repurchased almost $50 million of our common stock. For the rest of the year, we expect to remain focused on maintaining the strength of our balance sheet and opportunistically returning capital to shareholders," added Sartini.

Golden Entertainment's Arizona Charlie’s

The company's Maryland casino resort -Rocky Gap Resort Casino- revenues were $20.5 millioncompared to $21.2 million in 2021. Adjusted EBITDA was $7.2 million, compared to $8.3 million last year, and the Adjusted EBITDA margin was 35%. 

Revenues for Distributed Gaming -including gaming in the company’s branded taverns- were $121.4 million for the second quarter of both 2021 and 2022. Adjusted EBITDA was $22.2 million, with an Adjusted EBITDA margin of 18%.

As per the announcement, Golden Entertainment is satisfied with its position as the largest tavern and slot route operator in Nevada, taking advantage of stock prices to buy back shares and pay down debt. 

Golden Entertainment's The Strat in Las Vegas

As the company continues to produce solid earnings with their PT’s Taverns, slot routes, and casino operations -including The STRAT, Arizona Charlie’s casinos along with properties in Laughlin, Pahrump, and its Maryland resort- Golden reported a problem with linen-service providers which affected The STRAT's earning.

"We estimate this cost us over 15,000 room nights and $2 to $3 million of (earnings) at The STRAT during the second quarter," Charles Protell, president and chief financial officer at Golden Entertainment told investors on Thursday according to KLAS-TV. "We have since transitioned to alternative linen suppliers and do not anticipate similar issues going forward."

Protell also said that the company’s Las Vegas properties “draft” off the returning convention business, providing rooms to conventioneers even though conventions aren’t a big part of its own business offerings.

Golden owns three properties in Laughlin: Aquarius Casino Resort, the Edgewater Hotel and Casino, and the shuttered Colorado Belle resort. Sartini said Golden is continuing to maintain the Colorado Belle’s gaming license and he thinks the property is a unique opportunity when "the time is right."

Golden Entertainment owns and operates an entertainment portfolio consisting of gaming assets that focus on casino and distributed gaming operations. In total, it operates over 16,900 slots, 120 table games, and 6,200 hotel rooms in ten casinos: nine in Southern Nevada, and one in Maryland.

Through its distributed gaming business in Nevada and Montana, Golden Entertainment operates video gaming devices at nearly 1,100 locations and owns 65 traditional taverns in Nevada. Golden Entertainment is also licensed in Illinois and Pennsylvania to operate video gaming terminals. 

See Golden Entertainment's investor presentation with Q2 results here.

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