Despite lower visitation compared to before the pandemic, Golden Entertainment reported Thursday that it generated $1 billion in revenue in 2021 for the first time in its history, plus record adjusted earnings.
Golden also reported record revenues and adjusted earnings during the fourth quarter and singled out its STRAT on the Las Vegas Strip for its potential to drive those numbers even higher when COVID-19 recedes. The performance could have been higher, but the omicron wave reduced visitation in late November and December, continuing into the first quarter of 2022, executives said.
Visitation was strong during Super Bowl weekend, with Presidents’ Day weekend looking to be packed as well.
“We’re encouraged about the balance of the year, but there’s no doubt there was an impact at the beginning of January,” said Golden Entertainment President and CFO Charles Protell.
Protell told Wall Street analysts in a fourth-quarter earnings call that the company had $282 million in revenue and $68 million in adjusted earnings, the latter more than 70% higher than 2020 and almost 60% higher than 2019.
“All of our properties had increased visitation and customer spend, particularly at The STRAT,” Protell said.
Besides the record revenue of $1 billion companywide, Golden reported record of adjusted earnings of $292 million.
“Our record performance could have been even better, as our operations and customers were impacted by COVID restrictions, supply and labor shortages, and reduced visitations that our team successfully navigated in 2021,” Protell said.
For the first time, Golden broke down earnings and revenue by property segments, lumping together The STRAT and two properties in Laughlin. During the fourth quarter, the revenue at those properties rose 62% year over year to $105 million, while adjusted earnings rose 145% to $37 million.
“We saw a dramatic improvement of performance on the Strip, with STRAT revenue up 90% and adjusted earnings up more than five times,” Protell said of the fourth quarter.
Occupancy at The STRAT improved to 77% during the fourth quarter, up from 43% in 2020. Overall, the property averaged 90% occupancy during 2019, falling to 67% in 2021.
“That translates into 180,000 missing room nights, which is 30% more room nights than we sold in all of 2021,” Protell said. “Even missing these room nights, we achieved record revenue and adjusted earnings at The STRAT. Despite the lower visitation, we continue to set record numbers at The STRAT’s venues, particularly our Top of the World Restaurant.”
Casino marketing has been a “huge success” by attracting new players and a 62% increase in gaming revenue at the property, Protell said.
Protell said they continue to make incremental investment by refurbishing the feeder lobby to support revamped entertainment and new residencies. They freshened the pool area and are renovating older suites to attract higher-worth players, he said.
“We believe the return of citywide conventions, plus entertainment and sporting events, will further a recovery of room nights at the property as we move through 2022 and 2023 and drive adjusted earnings at The STRAT much higher than they are today,” Protell said.
In Laughlin, revenue rose 40% and adjusted earnings improved more than 54% in the fourth quarter compared to 2020. Six concerts drove 42,000 guests to venues and increased occupancy and spending at properties. Golden anticipates returning to a full concert schedule in the spring, with six concerts booked from March through June.
“While we’ve seen some of our older players return to Laughlin, we’re still missing a meaningful portion of this demographic in the market, which we view as an opportunity going forward,” Protell said.
For locals casinos comprising Arizona Charlie’s Boulder, Arizona Charlie’s Decatur, Gold Town Casino, Lakeside Casino & RV Park, and Pahrump Nugget Hotel Casino, revenue increased 20% to $40 million and adjusted earnings rose 32% to $19 million during the fourth quarter.
“We’re not concerned with the current competitive environment impacting margins in any meaningful way as we move through 2022,” Protell said. “The promotional market in the Las Vegas locals market remains rational. While labor is tight, we’ve been able to maintain our standards of guest experience.”
In Maryland, Rocky Gap Casino revenue rose 28% to $19 million and adjusted earnings rose 34% to $6 million for the fourth quarter. Golden recently renovated all 200 rooms at the property, revamped the food offerings, and added a sports lounge, Protell said.
Revenues for distributed gaming were up 27% to $118.3 million for the 2021 fourth quarter compared to $93 million for the 2020 fourth quarter. Adjusted earnings of $20.3 million compared to $14 million for the 2020 fourth quarter.
“The rapid recovery of Las Vegas has fueled revenue growth for our third-party and wholly owned tavern operations in Nevada, while Montana has benefitted from adding new third-party locations to the portfolio and relatively mild weather in the fourth quarter,” Protell said.
Golden is looking at adding two to three taverns a year going forward if they can find premium locations like their most recent openings.
Analyst Carlo Santarelli of Deutsche Bank was positive about the company in 2023, but added that 2022 will be impacted by the first quarter. Its closing stock price Thursday was $56.85 and Santarelli has a target price of $66.
“Looking ahead, while comparisons stiffen, we believe pockets of growth exist at the destination resorts in the portfolio (in Las Vegas and Laughlin), though given the headwinds in the first quarter as previously identified by peers, we have revised our first-quarter adjusted-earnings forecast lower,” Santarelli said. “As such, our 2022 adjusted-earnings forecast is modestly lower. Our 2023 adjusted-earnings forecast is up, given further conviction in the stability of the distributed performance, steady margin performance in Nevada, and incremental destination resort visitation.”
