Golden Entertainment Q3 2023 Earnings: Financial Highlights

Published on November 5, 2023
Source: Insider Monkey

💼 Executive Summary

Golden Entertainment reported Q3 2023 revenue of $258 million and EBITDA of $53.2 million, reflecting a strong quarter despite recent asset divestitures. Key highlights include:

  • $260M sale of Rocky Gap Casino (Maryland)

  • $109M sale of Montana distributed gaming business

  • STRAT property revenue up 8% and EBITDA up 16%

  • Launch of $75M Atomic Golf slated for January 2024

  • Stable performance across Nevada local and tavern operations

🏗️ Strategic Divestitures to Boost Liquidity

Golden successfully completed the sale of non-core assets:

  • Rocky Gap Casino Resort: Sold for $260M

  • Montana distributed gaming operations: Sold for $109M
    Proceeds enhanced liquidity by nearly $300M, enabling:

  • $175M in term loan repayment

  • $2/share special dividend (August)

  • $9M stock buyback (September)

Pending sale: Nevada distributed gaming business for $214M—expected to close by year-end.

🏨 STRAT Property Sees Major Renovations & Growth

  • STRAT revenue up 8% YoY; EBITDA up 16%

  • Occupancy increased to 75% (up from 68%)

  • Renovated 537 rooms in Q3; another 119 completed in October

  • Positioned to capitalize on major upcoming events like F1 and Super Bowl

🛠️ Note: Room renovations temporarily reduced EBITDA by ~$1M.

⛳ Atomic Golf to Debut in 2024

Golden’s much-anticipated Atomic Golf, a $75M golf entertainment complex behind the STRAT, is set to open in January 2024—expected to further boost visitation and revenue.

🎰 Performance by Region

Laughlin

  • Revenue up 6%, aided by a strong event calendar

  • EBITDA down 4% due to rising labor costs

  • New bingo room and third-party food partnerships enhancing guest experience

Nevada Locals & Pahrump

  • Stable revenue and EBITDA

  • Las Vegas properties outperformed

  • Pahrump impacted by monsoons and road closures

Tavern Operations

  • Revenue flat YoY; EBITDA down 9%

  • Impacted by July minimum wage hike

  • ROI remains strong (25%+) on recent tavern builds/acquisitions

Third-Party Distributed Operations

  • Revenue down 9%, EBITDA down 23%

  • Impacted by non-renewed contracts, but new location pipeline is strong

💵 Capital Management & Shareholder Returns

  • Pro forma net leverage reduced to 2.5x, potentially under 2x post-divestitures

  • Continued investment in growth and return of capital:

    • $58M special dividend

    • $9M share repurchase

    • $49M unsecured note buyback

🗣️ Analyst Q&A Highlights

On California Visitors:

  • STRAT not seeing material impact from California traffic, despite I-15 construction.

On Cyberattack Spillover:

  • Small, short-term benefit from a competitor’s cyber incident—“not material.”

On Locals Market:

  • Las Vegas locals gaming remains strong and growing, bolstered by population migration and healthy local employment.

On M&A Strategy:

  • Focused on Western U.S., especially Nevada and Las Vegas

  • Prefer real estate ownership and high strategic alignment with current portfolio

  • Will consider stock buybacks if valuation remains attractive

✅ Conclusion

Golden Entertainment’s Q3 2023 performance reflects a disciplined and strategic approach to portfolio optimization, capital allocation, and long-term growth. Despite divesting non-core assets, the company maintained solid revenue and EBITDA performance, particularly at flagship properties like the STRAT. The anticipated launch of Atomic Golf, continued reinvestment in core assets, and a robust capital position underscore Golden’s commitment to enhancing shareholder value. As Las Vegas continues to thrive, Golden is well-positioned to capitalize on market growth, expand its footprint, and deliver sustained financial performance.
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