Golden Entertainment said its makeover of the downtown Strat resort is nearly finished — most renovations will be done by year’s end — and its slot business continues to grow.
Although quarterly revenue rose to top Wall Street forecasts, the company’s quarterly loss widened and missed projections.
In a statement Thursday, Golden Entertainment, which owns hotel-casinos in Southern Nevada and Maryland and slot routes in Nevada and Montana, said its net loss was $9.4 million or 34 cents per share, for the three months ended Sept. 30, compared with a net loss of $3.1 million, or 11 cents per share, a year earlier.
Analysts surveyed by Zacks Investment Research had forecast a loss of 16 cents per share. Zacks noted that Golden Entertainment has failed to top Wall Street forecasts for four straight quarters.
Adjusted earnings before interest, taxes, depreciation and amortization, a cash flow measure that excludes one-time costs, rose 12.9 percent to $43.1 million from $38.1 million.
Revenue rose 15.7 percent to $243.3 million from $210.3 million, topping the $241.7 million forecast of Zacks-polled analysts.
Golden Entertainment’s latest results include contributions from the Edgewater and Colorado Belle hotel-casinos in Laughlin, acquired in January. Third-quarter revenue for its Nevada casinos rose 23.1 percent from a year earlier to $305.5 million.
Wall Street seemed initially pleased with the results. Golden Entertainment shares rose 50 cents, or 3.21 percent, Friday to close at $16.06 on the Nasdaq.
During a conference call with analysts, Golden Entertainment President and CFO Charles Protell said the company spent $70 million renovating the Strat since June 2018 and expects to spend $20 million more in the fourth quarter.
Upgrades have included remodels of 130 rooms in the third quarter with remodels of another 126 rooms expected in the fourth quarter. By year’s end almost 900 out of 2,400 Strat hotel rooms will have been renovated, he said.
Third-quarter upgrades also included a new sportsbook and improvements for its SkyPod and SkyJump attractions. The makeover of the hotel-casino’s main floor is 80 percent complete.
When renovations are done in 2020, Golden Entertainment Chairman and CEO Blake Sartini said the company will have spent $100 million to $110 million to renovate the Strat, which had been called the Stratosphere and which the company acquired in 2017.
“While the renovation at the Strat has caused minor disruptions, management indicated feedback from customers has been positive,” Jefferies gaming analyst David Katz told investors. Visitation and spend per visitor should increase once the project concludes.”
Protell also expected success in 2020 and beyond. Construction disruption in the hotel-casino will be minimal and coming attractions, including the giant ConAg expo, the National Football League draft and the arrival of the Raiders from Oakland, California, will help boost hotel occupancy across Las Vegas.
Sartini added that recent mergers and acquisitions activity on the Strip — presumably including the recent sales of the Bellagio and Circus Circus — show long-term demand for Strip assets and the value of the land the Strat occupies. He suggested that realizing returns on investment from the Strat renovations might let his company consider “exploring alternatives to the real estate” related to the Strat but gave no specifics.
Golden Entertainment’s slot route revenue kept growing, climbing in Nevada, up 5.9 percent from a year earlier to $69.4 million, and Montana, up 18.7 percent to our $18.6 million.
#theFLASH – Golden Entertainment’s 3Q results mixed, but Strat makeover expected to bring dividends. -Matthew Crowley, @copyjockey, CDC Gaming Reports. https://t.co/k8eLHPAQhc @GDENOfficial @stratvegas #CDCgaming
— CDC Gaming Reports (@CDCNewswire) November 11, 2019
Also, Golden Entertainment said it will roll out its TrueRewards loyalty program by year’s end in its slot route network, which includes the company’s PT’s Tavern chain, will create a 130-location network in Nevada.
“This will establish the largest location network of any players’ club in the industry and be a clear differentiator for Golden,” Sartini said. “In addition, we are accelerating our activity in jurisdictions where we believe there is an increasing potential for new legislation and expansion of existing distributed gaming operations.”
Sartini didn’t say where or when this slot route expansion might come.
Follow Matthew Crowley on Twitter @copyjockey
