Golden Entertainment Reports 2019 First Quarter Results

First Quarter and Recent Highlights:

– Record quarterly net revenues and Adjusted EBITDA

– Completed Blvd Main, View Lounge, and Sportsbook at The Strat

– Launched TrueRewards one card loyalty program

– Opened three new taverns in Q1, three more expected to open in Q2

– Refinanced 2nd lien debt and repaid
outstanding revolver with unsecured notes offering in April

LAS VEGAS–(BUSINESS WIRE)–Golden Entertainment, Inc. (NASDAQ:GDEN) (“Golden Entertainment” or the
“Company”) today reported financial results for the first quarter ended
March 31, 2019.

Blake Sartini, Chairman and Chief Executive Officer of Golden
Entertainment, commented, “During the first quarter, we continued our
progress on a number of significant initiatives for the Company. In
March, we opened our new sportsbook, View Lounge and Blvd & Main
Taphouse in The Strat, which all have been very well received by our
guests. We are starting renovations of The Strat casino floor in May to
conform the casino environment to these exciting new venues, and
anticipate completing these renovations by the end of the year. We are
also well on our way with the integration of our two new casino resorts
in Laughlin and expect to see improved contribution from our Laughlin
assets as we begin to realize synergies in future quarters. During the
first quarter we saw improvement in our distributed gaming business,
which is expected to accelerate as we continue to open new taverns and
improve chain store performance in Nevada. Importantly, we started the
rollout of our new TrueRewards players club which will allow us to
incentivize our players to earn and redeem points at all our
wholly-owned casino resorts and distributed gaming locations. As we look
at the healthy economic environment in Nevada and the potential
opportunities that this provides our business, we believe Golden
Entertainment is positioned to benefit from our strategic efforts and
create long-term value for our shareholders.”

Consolidated Results

The Company reported first quarter revenues of $239.9 million, up 11.7%
from $214.8 million in the first quarter of 2018. Net loss for the first
quarter of 2019 was ($8.0) million or a loss of ($0.29) per share,
compared to net income of $3.9 million or $0.13 per diluted share in the
first quarter of 2018. Adjusted EBITDA increased 5.5% to $48.4 million
for the first quarter of 2019 compared to $45.9 million for the first
quarter of 2018. Results for the first quarter include the operations of
the Edgewater and Colorado Belle Casino Resorts acquired by the Company
on January 14, 2019.


Casino segment revenues grew 16% to $151.4 million in the first quarter
of 2019 compared to $130.5 million in the first quarter of 2018. Casino
segment Adjusted EBITDA grew 6.8% to $46.6 million compared to $43.7
million in the same quarter of 2018.

In the first quarter, growth in our casino segment was primarily driven
by our acquisition of two casinos in Laughlin, Nevada, offset by the
anticipated construction disruption at The Strat as well as the
installation of our new casino management system and rewards program at
The Strat, Arizona Charlie’s Decatur, Arizona Charlie’s Boulder, and the
Aquarius Casino Resort.

Distributed Gaming

Distributed Gaming segment revenues increased to $88.4 million, up 5.0%
from $84.2 million in the first quarter of 2018. Adjusted EBITDA for the
segment grew 4.1% to $13.5 million from $13.0 million in the same period
of 2018.

The Company experienced growth in revenue and Adjusted EBITDA in both
its Nevada and Montana distributed gaming businesses. In Nevada,
continued growth from the Company’s wholly-owned tavern portfolio as
well as stabilization of the Company’s chain store locations contributed
to improved results. In Montana, the Company continues to add new
locations and benefit from our investment in new game technology.

The STRAT Renovations Update

The Strat renovations for 2019 remain on schedule and the budget remains
unchanged. In March of 2019, the Company opened its unique new tap room
concept, Blvd & Main, connected to a newly renovated sports book and
lounge. The major remaining renovations for 2019 include remodeling the
casino floor and renovating approximately 150 rooms and suites. These
upgrades are expected to be completed by the end of the year.

As of March 31, 2019, the Company spent approximately $38 million on The
Strat renovations, including capital spent in 2018. The Company has
budgeted an additional $39 million of renovation costs for 2019 which
will be funded with cash flow from operations. Golden Entertainment’s
total budget for The Strat renovations remains approximately $140
million, with the project expected to be completed in 2021.

Balance Sheet Highlights

As of March 31, 2019, the Company had cash and cash equivalents of
approximately $108 million and total outstanding debt of $1.14 billion,
of which $145 million was borrowings outstanding under the Company’s
$200 million revolving credit facility.

In April, the Company closed on its $375 million, 7-year senior
unsecured notes offering which priced at 7.625%. Proceeds from the notes
offering were used to repay $145 million outstanding borrowings under
the Company’s revolving credit facility, repay the Company’s $200
million 2nd lien term loan facility, repay $18 million of
outstanding borrowings under the Company’s existing 1st lien
term loan facility and pay offering fees and expenses. Currently, there
are no outstanding borrowings under the Company’s $200 million revolving
credit facility and the Company has $772 million outstanding under its
first lien term loan facility.

Share Repurchase Authorization

In March, the Board of Directors approved a new $25 million share
repurchase program which replaced the share repurchase program
previously authorized in November 2018. The Company did not repurchase
any shares in the first quarter of 2019.

Investor Conference Call and Webcast

The Company will host a webcast and conference call today, May 9, 2019
at 5:00 p.m. Eastern Time, to discuss the first quarter 2019 results.
The conference call may be accessed live by dialing (844) 465-3054 or
(480) 685-5227 for international callers and entering the passcode
3874849. A replay will be available beginning at 8:00 p.m. ET on May 9,
2019 and may be accessed by dialing (855) 859-2056 or (404) 537-3406 for
international callers; the passcode is 3874849. The replay will be
available until May 12, 2019. The call will also be webcast live through
the “Investors” section of the Company’s website,
A replay of the audio webcast will also be archived on the Company’s

Forward-Looking Statements

This press release contains forward-looking statements regarding future
events and our future results that are subject to the safe harbors
created under the Securities Act of 1933 and the Securities Exchange Act
of 1934. Forward-looking statements can generally be identified by the
use of words such as “anticipate,” “believe,” “continue,” “could,”
“estimate,” “expect,” “forecast,” “intend,” “may,” “plan,” “project,”
“potential,” “seek,” “should,” “think,” “will,” “would” and similar
expressions, or they may use future dates. Forward-looking statements in
this press release include, without limitation, statements regarding:
the integration and benefits of, and realization of cost synergies from,
the Laughlin acquisition; future financial and operating results;
proposed future capital expenditures, investments and property
improvements, including The Strat renovations and anticipated opening of
new tavern and distributed gaming locations, and their associated
timing, source of funding and cost; and the Company’s plans, strategic
priorities, objectives, expectations, intentions, including with respect
to its growth prospects and growth opportunities and potential
acquisitions. Forward-looking statements are based on our current
expectations and assumptions regarding the Company’s business, the
economy and other future conditions. These forward-looking statements
are subject to assumptions, risks and uncertainties that may change at
any time, and readers are therefore cautioned that actual results could
differ materially from those expressed in any forward-looking
statements. Factors that could cause actual results to differ materially
include: the Company’s ability to realize the anticipated cost savings,
synergies and other benefits of the American and Laughlin transactions
and its other acquisitions, and integration risks relating to such
transactions; changes in national, regional and local economic,
political and market conditions; legislative and regulatory matters
(including the cost of compliance or failure to comply with applicable
laws and regulations); increases in gaming taxes and fees in the
jurisdictions in which the Company operates; litigation; increased
competition; the Company’s ability to renew its distributed gaming
contracts; reliance on key personnel (including the Company’s Chief
Executive Officer, Chief Operating Officer and Chief Strategy and
Financial Officer); the level of the Company’s indebtedness and the
Company’s ability to comply with covenants in its debt instruments;
terrorist incidents; natural disasters; severe weather conditions; the
effects of environmental and structural building conditions; the effects
of disruptions to the Company’s information technology and other systems
and infrastructure; factors affecting the gaming, entertainment and
hospitality industries generally; and other risks and uncertainties
discussed in the Company’s filings with the SEC, including the “Risk
Factors” sections of the Company’s Annual Report on Form 10-K for the
year ended December 31, 2018 and most recent Quarterly Reports on Form
10-Q. The Company undertakes no obligation to update any forward-looking
statements as a result of new information, future developments or
otherwise. All forward-looking statements in this press release are
qualified in their entirety by this cautionary statement.

Non-GAAP Financial Measures

To supplement the Company’s consolidated financial statements presented
in accordance with United States generally accepted accounting
principles (“GAAP”), the Company uses Adjusted EBITDA, which measure the
Company believes is appropriate to provide meaningful comparison with,
and to enhance an overall understanding of, the Company’s past financial
performance and prospects for the future. The Company believes Adjusted
EBITDA provides useful information to both management and investors by
excluding specific expenses and gains that the Company believes are not
indicative of core operating results. Further, Adjusted EBITDA is a
measure of operating performance used by management, as well as industry
analysts, to evaluate operations and operating performance and is widely
used in the gaming industry. Other companies in the gaming industry may
calculate Adjusted EBITDA differently than the Company does.

The presentation of this additional information is not meant to be
considered in isolation or as a substitute for measures of financial
performance prepared in accordance with GAAP. Reconciliations of
Adjusted EBITDA to net income (loss) are provided in the financial
information tables below.

The Company defines “Adjusted EBITDA” as earnings before interest and
other non-operating income (expense), income taxes, depreciation and
amortization, acquisition expenses, loss on disposal of property and
equipment, share-based compensation expenses, preopening expenses, class
action litigation expenses, executive severance, gain on change in fair
value of derivative, and other gains and losses. Adjusted EBITDA for a
particular segment or operation is Adjusted EBITDA before corporate
overhead, which is not allocated to each segment or operation.

About Golden Entertainment, Inc.

Golden Entertainment owns and operates gaming properties across two
divisions – casino operations and distributed gaming. Golden operates
approximately 17,400 slots, 162 table games, and 7,318 hotel rooms, and
provides jobs for approximately 8,200 team members. Golden owns ten
casino resorts – nine in Southern Nevada and one in Maryland. Through
its distributed gaming business in Nevada and Montana, Golden operates
video gaming devices at over 1,000 locations and owns over 60
traditional taverns in Nevada. Golden is also licensed in Illinois and
Pennsylvania to operate video gaming terminals. For more information,


Golden Entertainment, Inc.

Consolidated Statements of Operations

(Unaudited, in thousands, except per share data)
Three Months Ended March 31,
2019   2018
Gaming $ 143,792 $ 133,863
Food and beverage 49,758 42,603
Rooms 31,287 26,127
Other   15,055   12,196
Total revenues   239,892   214,789
Gaming 82,348 77,688
Food and beverage 38,214 33,592
Rooms 14,401 11,565
Other operating 6,434 3,996
Selling, general and administrative 56,947 44,206
Depreciation and amortization 27,265 25,237
Acquisition and severance expenses 1,544 1,299
Preopening expenses 778 448
Loss on disposal of assets   247   77
Total expenses   228,178   198,108
Operating income   11,714   16,681
Non-operating income (expense)
Interest expense, net (18,135 ) (14,743 )
Change in fair value of derivative   (2,248 )   3,211
Total non-operating expense, net   (20,383 )   (11,532 )
Income (loss) before income tax benefit (8,669 ) 5,149
Income tax benefit (provision)   651   (1,219 )
Net income (loss) $ (8,018 ) $ 3,930
Weighted-average common shares outstanding
Basic 27,570 27,149
Dilutive impact of stock options and restricted stock units     2,379
Diluted   27,570   29,528
Net income (loss) per share
Basic $ (0.29 ) $ 0.14
Diluted $ (0.29 ) $ 0.13
Golden Entertainment, Inc.
Reconciliation of Net Income (Loss) to Adjusted EBITDA

(Unaudited, in thousands)

Three Months Ended March 31, 2019
Casino Segment    

Distributed Gaming









Total Revenues $ 135,629 $ 15,745 $ 71,405 $ 16,952 $ 161 $ 239,892
Net income (loss) $ 19,862 $ 2,827 $ 7,032 $ 574 $ (38,313 ) $ (8,018 )
Depreciation and amortization 20,689 954 3,723 1,606 293 27,265
Preopening and related expenses(1) 1,654 566 12 2,232
Acquisition and severance expenses 286 13 13 1,232 1,544
Asset disposal and other writedowns 256 (9 ) 390 637
Share-based compensation 11 5 4,168 4,184
Other, net 11 853 864
Interest expense, net 50 2 15 1 18,067 18,135
Change in fair value of derivative 2,248 2,248
Income tax benefit           (651 )   (651 )
Adjusted EBITDA $ 42,819 $ 3,783 $ 11,354 $ 2,185 $ (11,701 ) $ 48,440
Three Months Ended March 31, 2018
Casino Segment

Distributed Gaming






Total Revenues $ 115,667 $ 14,820 $ 68,734 $ 15,427 $ 141 $ 214,789
Net income (loss) $ 21,140 $ 2,701 $ 6,823 $ 625 $ (27,359 ) $ 3,930
Depreciation and amortization 18,609 1,026 3,780 1,368 454 25,237
Preopening expenses(1) 148 300 448
Acquisition and severance expenses 51 35 1,213 1,299
Asset disposal and other writedowns 62 5 10 77
Share-based compensation 1,844 1,844
Other, net 37 167 104 308
Interest expense, net 22 2 44 2 14,673 14,743
Change in fair value of derivative (3,211 ) (3,211 )
Income tax provision           1,219   1,219
Adjusted EBITDA $ 39,921 $ 3,729 $ 11,002 $ 2,005 $ (10,763 ) $ 45,894
        (1)   Preopening expenses include rent, organizational costs, non-capital
costs associated with the opening of tavern and casino locations,
and expenses related to The Strat rebranding and the launch of the
TrueRewards players club.


Golden Entertainment, Inc.
Charles H. Protell
Chief Financial

Investor Relations
Joseph Jaffoni, Richard Land, James Leahy

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