Golden Entertainment said its business initiatives, including renovation of the Stratosphere and Rocky Gap casinos, continued on schedule and revenue and adjusted earnings before interest, taxes, depreciation and amortization surged from a year earlier. However, net income fell.
In a statement, the company said its net income was $3.9 million, or 13 cents per diluted share, for the three months ended March 31, compared with net income of $5.3 million, or 23 cents per diluted share, a year earlier.
The latest earnings per share missed the 26 cents-per-share average forecast of analysts polled by Yahoo Finance.
Adjusted EBITDA rose to $45.9 million from $13.6 million, boosted by the properties acquired from American Casinos and Entertainment in October — the Stratosphere and two Arizona Charlie’s hotel-casinos in Las Vegas and the Aquarius in Laughlin, Nevada.
“Our strong first-quarter results clearly illustrate the success our team is achieving in integrating and operating the American Casino and Entertainment portfolio, as well as the power of adding these diverse Nevada assets to our Southern Nevada-centric platform,” Golden Entertainment CEO Blake Sartini said in during a conference call to announce the results.
Sartini added that the company has realized $15 million of the initial $18 million in targeted operating synergies related to the acquisition.
Golden Entertainment opened of two of the six planned taverns and finished renovating 110 of 200 rooms at its Rocky Gap Casino Resort in Cumberland, Maryland, Sartini said.
Also, he said, renovation of the Stratosphere is underway, and by year’s end, the company expects to have remade 317 of the hotel-casino’s rooms and installed digital signs outside. Golden Entertainment plans to remake 452 rooms in the Stratosphere in 2019 and 364 rooms there in 2020.
Also at the Stratosphere this year, Golden Entertainment will add a gastropub linked to a new race and sports book at the property, Sartini said.
Given the strength of Las Vegas’ economy, development on the Strip and expansion of Las Vegas Convention Center, the company’s future looks bright, he said.
Golden Entertainment’s quarterly revenue more than doubled to $214.8 million (up 1.9 percent at properties open at least a year) from $105.9 million. Growth at the company’s Nevada casinos, where revenue rose to $115.7 million from $9.1 million, boosted overall revenue.
The overall revenue figure fell short of the $217.2 million forecast of Yahoo Finance-polled analysts.
Revenue at Rocky Gap fell 2.5 percent to $14.8 million for the quarter, hurt by the effect of inclement weather. Nevertheless, EBITDA grew 9.3 percent, boosted by a slot tax rate reduction and cost efficiencies.
Sartini said Golden Entertainment will replace the casino management systems at the casinos acquired in October with Konami’s Synkros system to complete the integration of the companywide player rewards program.
The company didn’t disclose financial terms of the Konami deal, announced in late March.
Golden Entertainment said it had $134 million in cash and of about $1 billion in outstanding debt as of March 31. In a statement accompanying the results, Chief Financial Officer Charles Protell said the company is evaluating opportunities to expand its casino and gaming businesses “in an accretive manner.”
“We will continue to manage our capital structure to provide the right balance of leverage and liquidity to maintain flexibility to act on opportunities that can create value for shareholders,” he said.
Golden Entertainment shares rose 1 cent, or 0.04 percent, Wednesday to close at $27.61 on the Nasdaq. The shares have fallen 14.3 percent since opening 2018 trading at $32.21.
