Golden Entertainment posts net profit hike to $42 million in Q1, reports decline in revenue

Gaming and hospitality company Golden Entertainment has reported a first-quarter net profit of $42 million, more than three times the $11.6 million posted in the year-ago quarter. This is despite a sharp decline in revenue at $174 million as against the $278.1 million posted in Q1 last year following a series of asset sales.  

Chairman and CEO Blake Sartini highlighted the strategic initiatives undertaken by Golden Entertainment, emphasizing the completion of asset sales and debt repayment, which he says streamlined the company's operations and enhanced financial flexibility.

"We started 2024 by completing the sale of our non-core assets and simplifying our capital structure," remarked Sartini. "With our debt reduced significantly, our low leverage provides us with the flexibility to invest in our own assets, return capital to shareholders, and pursue potential strategic opportunities."

The sale of non-core assets, including distributed gaming operations in Nevada and Montana, contributed to a 37.4% decline in revenue compared to the first quarter of the previous year. The company also reported adjusted EBITDA of $41 million in the quarter ending March 31, 2024, as compared to $62.2 million for Q1 of 2023.

The strategic divestments also included the sale of Rocky Gap Casino Resort to Vici Properties and Century Casinos for $260 million. Despite the revenue decline attributed to these asset sales, the company's net profit surged, which officials say underscores the positive impact of expense reductions and debt repayment.

Sartini addressed speculation regarding potential mergers and acquisitions (M&A), indicating that while Golden Entertainment monitors the market, there are no immediate plans for M&A activity. He emphasized the company's focus on leveraging its existing footprint and brand strength to sustain growth and navigate regulatory complexities effectively.

"We pretty much get a first look at anybody who wants to sell or we have had a first look," stated Sartini. “We’re in a good position there in terms of knowing what’s available and out in the market. We also get one of the first looks, if not the first greenfield opportunities, which we’re focused on our five-star locations, primarily at this point.”

Despite challenges posed by asset sales and revenue declines, Golden Entertainment remains optimistic about its long-term growth prospects. “We now have a Nevada portfolio of eight casinos with owned real estate and 71 gaming taverns with our operations focused in markets where we see long-term drivers of future growth,” Sartini said.