Golden Entertainment announced Wednesday that the renovations of 537 rooms and the pool at the Strat will be completed by the second quarter, as the company focuses on its Nevada casino and tavern business.
Revenues of $278.1 million for the first quarter increased 2% from $273.6 million year over year. Net income for the first quarter was $11.6 million, or $0.38 per fully diluted share, compared to net income of $36.1 million, or $1.12 per fully diluted share, last year. First-quarter adjusted EBITDA was $62.2 million, compared to adjusted EBITDA of $67.3 million in Q1 2022.
Golden executives said its ongoing room renovations at the Strat impacted the property’s earnings during the quarter. Revenue increased 9% and EBITDA rose 6% despite 15% less rooms available at the Strat. That cost about $2 million in EBITDA and the company expects similar disruptions in the second quarter before more room renovations are completed ahead of the July 4th holiday. The pool renovations will be finished by Memorial Day.
During the first quarter, Golden announced the sale of its Nevada and Montana distributive gaming businesses with transactions expected to close by the end of the year. It also opened one new gaming tavern in April and agreed to acquire six additional gaming taverns.
“In the first quarter, we grew revenue, but elevated costs relative to last year continued to impact our adjusted EBITDA,” said Blake Sartini, chairman and CEO of Golden Entertainment. “The sale of our distributed gaming businesses in both Nevada and Montana will allow us to focus on investing in our wholly owned casino assets and growing our tavern portfolio in Nevada.”
Sartini said they expect the previously announced sale of the Rocky Gap property in Maryland to Century Communities to close by the end of June.
“Most of the proceeds from these transactions will further reduce leverage, which will position us well to continue investing in our owned properties, accelerate capital returns to shareholders, and pursue future strategic initiatives,” Sartini said.
Chief Financial Officer Charles Protell said Golden will generate more than $500 million in proceeds and spoke about potential acquisitions.
“We will have significant room in our capital structure to pursue value-creating initiatives, whether investing in our own assets, pursuing acquisitions, or more aggressively returning capital to shareholders,” Protell said.
As of March 31, the company’s total principal amount of debt outstanding was $913 million, consisting primarily of $575 million in outstanding term loans and $335 million in senior unsecured notes. As of March 31, Golden had cash and cash equivalents of $156 million and short-term cash investments of $5 million that will convert into cash during the quarter ending June 30.
In Laughlin, revenue fell 1% and EBITDA fell 13% as labor and utilities increased 10% from 2022.
In Las Vegas, fewer of Golden’s higher-rated guests played during the first quarter, but they returned during the second quarter.
When looking at its assets in Nevada and adding up the contiguous and adjacent property available for development, Sartini said Golden has 95 acres to develop with more amenities, hotel rooms, or casino space.
By the end of June, the Strat will have renovated more than half of its rooms and Protell said they’re seeing a $20 average-daily-rate premium in those rooms.
“We’ll be in a position to see what the property can really do in the fall, when the town is full of F1 and Raiders fans as we head into the Super Bowl. Then we’ll be able to evaluate the trajectory of further investment in the property,” Protell said.
