Peering around the corner, Golden Entertainment saw positives Thursday.
The Las Vegas-based company’s slot machine routes in two states opened incrementally since May and have performed strongly, the company said. Performance at taverns and at locals casinos, led by properties in Pahrump and Laughlin, surpassed expectations.
But the coronavirus blow was heavy in the second quarter.
The company, which owns hotel-casinos in Southern Nevada and Maryland and slot routes in Nevada and Montana, posted a loss and per-share results that missed Wall Street forecasts. Revenue fell but topped predictions.
In a statement issued after stock markets closed Thursday, Golden Entertainment said its net loss was $78.6 million, or $2.80 per share, for the three months ended June 30, compared with a net loss of $14.4 million, or 52 cents per share, a year earlier. The latest result fell short of the average $2.03-per-share loss forecast by analysts surveyed by Seeking Alpha.
Adjusted earnings before interest, taxes, depreciation, and amortization, a cash flow measure that excludes one-time costs, was a negative $5.7 million compared with positive $49.8 million a year earlier.
Revenue fell 69.4% to $76 million from $248.1 million. The latest result topped the $57.1 million forecast of Seeking Alpha-polled analysts.
“Our diversified gaming platform, with nearly 80% of our historical property adjusted EBITDA derived from locals-oriented or regional gaming operations, is positioned to recover quickly from the impact of the mandated shutdowns,” Golden Entertainment CEO Blake Sartini said in the statement.
Sartini said the company stabilized liquidity by drawing down $200 million on its revolving credit line, obviating the need to raise additional capital during the government-mandated gaming shutdowns, implemented to slow the coronavirus pandemic.
He added that, in June, repaid $190 million of the $200 million drawn from the credit line.
“Our strong recent financial performance, significant and sustainable margin improvement, as well as our diverse local and regional operations, gives us confidence that we will recover from the current challenges and remain well-positioned for future opportunities,” Sartini said.
Macquarie Securities gaming analyst Chad Beynon told investors the repayment “sends a signal to the market that the company is looking past liquidity issues and toward the recovery ahead.”
June’s adjusted EBITDA was up 14% over the same month in 2019, even with fewer operating days, he said.
Las Vegas locals casinos and taverns achieved double-digit-percentage revenue growth and collectively doubled their adjusted EBITDA contribution from the parallel year-earlier period. The company’s reopened Laughlin and Pahrump casinos increased revenue as they adjusted EBITDA by more than 50%, the company said.
In May, Golden said the Colorado Belle would remain closed indefinitely. The casino is one of three properties the company operates in the Colorado River community, roughly 90 miles south of Las Vegas. The company said it would lay off 400 workers, but transfer others to its casinos in Las Vegas and Pahrump, including its flagship The Strat in downtown Las Vegas.
On a conference call with analysts, Sartini said The Strat has averaged between 40% and 50% occupancy since it reopened on June 4 following the state’s 78-day gaming shut down. Sartini said weekend occupancy has neared 70% while the hotel’s available rooms were 90% occupied over the July 4th holiday.
Golden’s overall casino revenue fell to $39.4 million in the quarter from $158.7 million a year earlier; casino adjusted EBITDA fell to $1.8 million from $48 million. Slot route revenue for the second quarter fell to $36.3 million from $89.2 million; slot route adjusted EBITDA fell to $900,000 from $13.7 million.
Golden Entertainment shares zoomed up 9.21% in regular trading, climbing 89 cents to close at $10.49 on the Nasdaq. The shares inched higher after hours, gaining 3 cents to reach $10.52 at 5 p.m. PDT. The shares are down 44.8% for 2020.
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