The Las Vegas-based gaming company whose business includes multiple Nevada casinos and the PT’s tavern chain, as well as a huge route of slot machines inside grocery stores and similar spots, reported its third quarter earnings today.
Company: Golden Entertainment Inc. (NASDAQ: GDEN)
Revenue: $62.5 million, compared with $15.9 million in the third quarter one year ago.
The much smaller number from last year only includes the financial results from what was then Lakes Entertainment Inc., a small public company that owned the Rocky Gap casino in Maryland. Golden Gaming bought that company this year, bringing with it three Pahrump casinos, dozens of Southern Nevada taverns and hundreds of slot route locations. The merger closed July 31, while the third quarter was already well under way.
The company also reported certain financial figures pretending as if the merger occurred at the beginning of the quarter in both years. Using that metric, net revenue for the was $86.2 million in the third quarter, up 3.5 percent from last year.
Earnings: $3 million, compared to a loss of $23.1 million last year. Again, the latter figure only includes the former Lakes Entertainment business — nothing from the Nevada casinos, taverns and slot route.
A big piece of the loss last year came from impairments and other losses of $21 million that the company said was related to an investment in Rock Ohio Ventures. Lakes Entertainment sold its interest in Rock Ohio Ventures before the merger.
Golden Entertainment did not report a combined net income as if the merger happened at the beginning of the quarter in 2015 and 2014. But the company did do that for its earnings before interest, taxes, depreciation and amortization. That figure was $9.9 million this year, up 13.1 percent from last year.
Earnings per share: 16 cents, compared with Lakes Entertainment’s loss of $1.72 per share during the third quarter last year.
What it means: Because the merger closed in the third quarter this year, today was the first time the company reported its results as Golden Entertainment.
The company’s business is divided in two categories: Distributed gaming — which includes the tavern chain and the slot machine route — and casinos, which includes three in Pahrump and the one in Maryland.
Using the figures that pretend the merger was in effect for the full third quarter in both years, revenue from distributed gaming was $61.2 million this year compared to $57.7 million in 2014. That’s an increase of 6.1 percent. Casino revenue, meanwhile, would be about $25 million this year and $25.6 million last year. That’s a decline of 2.5 percent.
Golden Entertainment incurred $9.3 million in expenses related to the merger during the third quarter, as well as a $12.9 million income tax benefit.
CEO Blake Sartini said in a statement that the quarter was “transformational.”
“Everyone is excited by the opportunities arising out of this transaction,” he said. “Going forward, in addition to the current portfolio that is generating strong free cash flow, we are focused on executing on a broad slate of long-term growth opportunities, both organic as well as strategic, while continuing to deliver a quality experience to customers and generating returns for shareholders.”
The company had total outstanding debt of $146.4 million at the end of the quarter.