Golden Entertainment Thursday touted out-of-state migration to Las Vegas and an increase in home equity for boosting customer spending as it announced record first-quarter results.
Golden reported first-quarter revenue for casinos and distributive gaming at $273.6 million (a 14% increase over 2021), net income of $36.1 million, and adjusted earnings of $67.3 million (a 13% increase). The financial performance of all of its operating segments exceeded 2021’s first-quarter results.
Golden Entertainment President and CFO Charles Protell told analysts during a first-quarter earnings call Thursday that the record performance of 2021 continued into 2022 and hasn’t slowed into the second quarter; even older customers are returning in greater numbers.
“These results reflect increased visitation to our destination properties, continued strong level of spend at our local casinos and distributive gaming locations, and our ability to maintain margins well in excess of pre-COVID periods,” Protell said.
The Strat’s revenue and adjusted earnings were up from last year, despite the omicron wave in January and continued lack of midweek occupancy, Protell said. There was strong weekend demand from mid-February on after the state’s mask mandate was lifted. Occupancy was 70% for the quarter versus 45% in the first quarter of 2021.
“Although midweek business is recovering, we’re still missing almost 20 points of occupancy at The Strat, which we expect to return over the rest of the year,” Protell said.
As for properties that primarily serve Las Vegas locals, Protell said increased employment, the continuing influx of new residents from out of state, and appreciation of home equity have sustained demand at Golden’s locals properties. “In Nevada, the same macro-drivers for our local casinos are driving revenue and (adjusted earnings) growth for our distributive business, particularly for 65 taverns, most of which are located in Las Vegas.”
Chairman and CEO Blake Sartini said they’ve limited their investments into the lower end of the database, but they’re seeing “robust new signups in our rewards program. There’s significant new signups coming from new residents to the valley. That’s providing a lot of fuel for growth going forward, while we retool that low end of the marketing database.”
The continued recovery of the Strip has led to an increase in midweek and late-night business, which helped drive record unit-per-unit metrics in taverns during the quarter, Protell said. “This February, we opened a new tavern in the northwest part of Las Vegas and based on early results, this has quickly become one of our top performers.”
In Laughlin, live entertainment helped drive increased visitation with nearly 16,000 concert tickets sold for various events in the quarter, Protell said. Concerts for the second quarter in Laughlin have already sold more than 30,000 tickets. “We’ve also seen the core older demographic return to our properties,” Protell said.
During the first quarter, the company repaid $25 million of its outstanding term loan and repurchased $15.2 million of its common shares. On May 3, the company’s board of directors reauthorized a $50 million share-repurchase program.
“Our strong operational performance from the first quarter has continued into the second quarter,” Protell said. “And we see no signs of slowing down at any of our properties. Our cash flow is primarily from wholly owned gaming assets in southern Nevada, which we view as the most attractive and stable gaming market in the world today.”
Protell said the Golden portfolio is different from others, because it has exposure to Las Vegas locals casinos, taverns, the Strip, and Laughlin and Southern Nevada.
“Our destination properties are showing the most growth with the most upside as people get back to traveling, not only to the Strip, but to Laughlin and Rocky Gap (in Maryland), while local spending has been very strong, which has continued steadily since reopening seven quarters ago.”
