Golden Entertainment posted a decline in adjusted profit in the third quarter despite an increase in net income following the sale of its Rocky Gap casino resort in Maryland.
The operator sold Rocky Gap to Vici Properties and Century Casinos in a deal worth $260.0m (£213.2m/€244.6m). Vici acquired the venue from Golden Entertainment in July while Century took over operations.
Additionally, Golden Entertainment sold its Montana distributed gaming business toward the end of the quarter.
These sales had a significant impact on Golden Entertainment’s third quarter performance. Although the operator experienced a decline in revenue, this was more than offset by proceeds from the sale of assets, meaning net profit shot up.
“Following our divestment of Rocky Gap Casino Resort in July, we completed the sale of our gaming distribution business in Montana in September,” said Blake Sartini, Chairman and CEO of Golden Entertainment.
“We remain on track to complete the sale of our gaming distribution business in Nevada by the end of the year. The completion of these transactions significantly strengthens our balance sheet, enables the return of capital to shareholders and provides financial flexibility to increase shareholder value.”
Golden Entertainment’s revenue falls by 7.6%
Golden Entertainment’s group revenue for the three months ended September 30 was $257.7 million. That was down 7.6% from $257.7 million in the third quarter of last year.
Gaming activities brought in revenue of $165.2 million, food and beverage of $44.5 million, rooms of $31.4 million and other activities of 16.6 million US dollars.
The operator says its Nevada Casino Resorts business generated the most revenue. Activities in the state generated $105.5 million, up 6.7% from the previous year. The Nevada Locals Casinos arm’s revenue was $37.9 million, as was Nevada Taverns’ revenue of $26.5 million.
Elsewhere, the distributed gaming business reported a 10.2% decline in revenue to $81.9 million. This was partly due to the sale of the Montana operations, which were divested in mid-September. As Sartini indicates, the Nevada deal will follow in the coming weeks.
Golden Entertainment also recorded an additional $166,000 in revenue from corporate and other business activities.
Asset sales offset Golden Entertainment’s expenses in the third quarter
Looking at expenses, Golden Entertainment says sales completed in the third quarter resulted in the company more than offsetting all expenses. Total income in addition to revenue was $66.0 million, compared to last year’s expense account of $243.9 million.
Total gain on asset sales was $305.8 million and operating expenses were $239.8 million. Gaming was the top spender at $94.8 million, although this was 12.2% less than in Q3 2022.
Non-operating expenses were $15.3 million, resulting in pre-tax profit of $308.4 million, an increase of 1,506.3% year over year. Golden Entertainment paid $67.2 million in taxes and ended the third quarter with net income of $241.2 million, compared to $14.0 million a year ago.
However, Golden Entertainment saw its adjusted EBITDA decline 12.6% to $53.2 million.
Year-to-date revenue fell to $822 million
Looking at the nine months ended September 30, revenue fell 2.3% to $822.5 million. This was primarily due to a decline in gaming revenue to $535.6 million. All other revenue increased, with food and beverage revenue at $137.3 million, room revenue at $92.9 million and other revenue at $56.6 million.
Nevada Casinos Resorts revenue was $308.3 million, Nevada Locals Casinos revenue was $119.0 million and Nevada Taverns revenue was $81.5 million. Maryland Casino Resort revenue was $43.5 million, with distributed gaming revenue of $261.4 million and corporate and other revenue of $9.0 million.
Operating expenses decreased 41.0% to $430.4 million due to asset sales. Non-operating costs were $52.8 million, resulting in pre-tax profit of $339.3 million, an increase of 417.2%.
After paying $74.2 million in taxes, Golden Entertainment posted a net profit of $265.1 million, an increase of 271.8%. However, as in the third quarter, adjusted EBITDA fell by 14.6% to $173.8 million.