Golden Entertainment played up progress during its first-quarter earnings statement Thursday, saying renovations at the Strat in Las Vegas and integration of two Laughlin casinos acquired in 2018 are both progressing. But the company posted a loss and missed Wall Street expectations although revenue rose and beat them.
In a statement issued after stock markets closed Thursday, Las Vegas-based Golden Entertainment, which owns hotel-casinos in Southern Nevada and Maryland and slot routes in Nevada and Montana, said its net loss was $8 million, or 29 cents per share, for the three months ended March 31, reversing net income of $3.9 million, or 13 cents per share, a year earlier.
When adjusted for one-time costs and mergers-and-acquisitions costs, the loss was 15 cents per share, falling short of the 9 cents-per-share loss forecast by analysts surveyed by Zacks Investment Research.
Zacks noted that Golden Entertainment hasn’t topped earnings per share forecasts in four straight quarters.
Adjusted earnings before interest, taxes, depreciation and amortization, a cash flow measure that excludes nonrecurring costs, rose 5.5 percent to $48.4 million from $45.9 million. The results include contributions from the Edgewater and Colorado Belle hotel-casinos in Laughlin, acquired in January.
Revenue rose 11.7 percent to $239.9 million from $214.8 million. The latest result topped the $235.1 million forecast of Zacks-polled analysts.
Golden Entertainment said casino segment revenues increased 16 percent to $151.4 million from $130.5 million, driven partly by the Laughlin casino additions.
Golden Entertainment’s casino segment revenue grew 16 percent to $151.4 million in the first from $130.5 million; distributed gaming segment revenues rose 3 percent to $88.4 million from $84.2 million.
The company said The Strat renovations for 2019 remain on schedule and the budget remains unchanged. In March, the hotel-casino’s new Blvd & Main tap room opened. The location is connected to a newly renovated sports book and lounge. The company said it expects a casino floor remodeling and upgrades of 150 rooms and suites, part of a $140 million property makeover, to finish by year’s end.
Golden Entertainment said it spent about $38 million on The Strat renovations in 2019 and had $39 million more budgeted for this year. The company said it expects to finish all the renovations by 2021.
“It’s clear that the changes we have made at the Strat to date are improving the guest environment and providing new opportunities for customers to increase spending at the property,” CEO Blake Sartini said during a conference call with analysts and journalists. “Our thesis is simple. We have a captive audience between our hotel guests and tower visitation of over 2 million people each year. To generate our targeted returns, we are trying to capture an additional $20 spend per person with an approximate 50 percent flow-through.”
Sartini said north Strip projects, including the expansion of the Las Vegas Convention Center, Resorts World and the Drew – the project emerging at the site of the former Fontainebleau development – will likely drive more visitors to the Strat in coming years.
The Drew’s opening is expected in the second quarter of 2022; the Las Vegas Convention Center’s $935.1 million expansion is slated to open in January 2021. The $4 billion Resorts World project is expected to open in late 2020.
Furthermore, Sartini said, the Colorado Belle and Edgewater combined with the Aquarius to boost his company’s market strength in Laughlin. The three hotel-casinos give Golden 40 percent of the market’s room base and a third of the gambling positions.
Overall, Golden Entertainment collects 85 percent of its revenue from Nevada. Sartini said he expects the state to continue to add population and develop economically, benefiting the company.
“In the last five months, Golden has closed two major acquisitions that position the company well to benefit from strong Southern Nevada trends,” Macquarie Securities gaming analyst Chad Beynon told investors. “We believe Golden can return to ‘darling’ status should they continue to execute.”
Golden Entertainment shares rose 11 cents, or 0.76 percent, Thursday to close at $14.49 on the New York Stock Exchange. The stock price has fallen 50 percent in the past 12 months
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