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“Streamlined” Golden Entertainment sees net profit in 2023, despite worrying Q4

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Golden Entertainment says the decision to “streamline” its business by selling various assets pushed net profit up 210.8% during its 2023 financial year. However, it has led to a sharp drop in gaming revenue in Q4 2023.

Net profit for 2023 amounted to $255.8m (£202.6m/€236.6m), up from $82.3m on the back of the sales. Golden Entertainment said, understandably, this resulted in a decline in revenue as its property network shrunk.

Among the 2023 sales was Rocky Gap to Vici Properties and Century Casinos in a deal worth $260.0m. Vici acquired the venue from Golden Entertainment in July while Century took on the operations.

golden entertainment generated more than $500.0m in liquidity over 2023

Golden Entertainment also sold its Montana distributed gaming business to J&J Ventures Gaming in September. 

Incidentally, the Montana sales was part of a wider deal. This saw the group also offload its distributed gaming operations in Nevada to an affiliate of J&J Ventures Gaming. The deal, valued at $213.5m, completed just after the year-end in January.

The sales resulted in proceeds of over $600.0m, generating more than $500.0m of liquidity after taxes and transaction expenses. 

Reflecting on this activity, president and chief financial officer Charles Protell said the sales have helped streamline operations at Golden Entertainment. This also allowed the group to return capital to shareholders through a special dividend of $0.25 per share.

“These proceeds have significantly improved our leverage profile and enhanced our strategic flexibility,” he said. “Divesting our non-core businesses has concentrated our portfolio to wholly owned casinos and branded taverns in Southern Nevada, where we see some of the most favourable macro trends in the country.”

Gaming revenue dips on back of sales in 2023

Looking at the impact of sales on Golden Entertainment in 2023, it is no surprise revenue fell. For the 12 months to 31 December 2023, revenue was down 6.2% to $1.05bn.

Gaming revenue slipped 11.4% to $674.3m as the group’s operating portfolio shrank in 2023

A fall in gaming revenue was the main reason for the overall drop. Gaming revenue slipped 11.4% to $674.3m as the group’s operating portfolio shrank. However, food and beverage revenue was up 4.0% to $182.4m, rooms revenue 1.6% to $124.6m and other revenue 13.8% to $71.8m.

In terms of segmental performance, the Nevada Casino Resorts business led the way. Here, revenue was 1.5% higher at $413.1m. Nevada Locals Casinos revenue was level at $157.4m, as was Nevada Taverns revenue at $109.2m. 

Full-year revenue features some contribution frow now-sold assets. This includes $43.5m from Rocky Gap and $320.7m from distributed gaming operations in Nevada and Montana.

Asset sales push net profit up

Costs-wise, net total expenses were down 32.9% to $653.9m. This was primarily due to the $303.2m gain on the sale of businesses in 2023. Golden Entertainment said these sales also led to an 11.5% drop in gaming costs for the year.

The group also noted $67.2m in non-operating costs, leaving a pre-tax profit of $332.0m, up 300.5%. Golden Entertainment paid $76.2m in tax, resulting in a total net profit of $255.8m, compared to $82.3m in 2022.

However, adjusted EBITDA for the year declined 19.4% to $222.5m when taking into account asset sale impact.

Golden Entertainment slips to net loss in Q4

Turning to Q4 and this did not make for as nice reading for the operator. Revenue reached $230.7m, down 17.5% to $230.7m. Again, this was due to a drop in gaming revenue, which fell 25.0% to $138.7m.

The impact of asset sales was clear to see in the quarter. Golden Entertainment was without any revenue from Rocky Gap, with the sale having completed in July, while some of the distributed gaming operations had also been sold by this point.

With gaming revenue down 25.0% in q4 there will be questions about momentum in 2024

However, revenue was level within the Nevada Casino Resorts segment at $104.8m, while Nevada Locals Casino was only slightly lower at $38.5m. Nevada Taverns revenue also edged up to $27.7m.

As for costs, operating expenses in Q4 were 8.5% lower at $223.6m, while a further $14.5m was noted in non-operating costs. This left a pre-tax loss of $7.4m, in contrast to a $17.3m profit in 2022.

Golden Entertainment paid $2.0m in tax, meaning it ended the quarter with a net loss of $9.4m, compared to the previous year’s $11.1m profit. In addition, adjusted EBITDA was 23.4% lower at $48.8m.

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