Golden Entertainment‘s strategic decision to streamline its Business operations by selling off various assets proved fruitful, leading to a remarkable 210.8% increase in net profit during the 2023 financial year. However, this move also resulted in a significant decline in gaming revenue in Q4 of 2023.
The company reported a net profit of $255.8 million in 2023, a substantial increase from $82.3 million, thanks to the asset sales. Some notable sales included the divestment of the Rocky Gap venue to Vici Properties and Century Casinos for $260.0 million. Additionally, Golden Entertainment sold its Montana distributed gaming business to J&J Ventures Gaming in a separate deal.
These strategic sales generated proceeds of over $600.0 million, resulting in more than $500.0 million in liquidity after taxes and transaction expenses. President and CFO Charles Protell emphasized that the divestment of non-core businesses has allowed Golden Entertainment to focus on wholly-owned casinos and taverns in Southern Nevada, where promising macro trends are observed.
Despite the positive impact on net profit, the company experienced a 6.2% decrease in revenue, primarily attributed to an 11.4% drop in gaming revenue. However, there were increases in other revenue streams such as food and beverage, rooms, and other revenue.
In terms of segmental performance, the Nevada Casino Resorts business saw a 1.5% increase in revenue, while Nevada Locals Casinos and Nevada Taverns revenue remained steady. The full-year revenue included contributions from now-sold assets, further impacting the overall revenue figures.
While total expenses decreased by 32.9% due to gains from asset sales, adjusted EBITDA declined by 19.4% for the year. Golden Entertainment’s Q4 performance, however, saw a net loss as revenue fell by 17.5%, driven by a 25.0% drop in gaming revenue.
The impact of asset sales was evident in the fourth quarter, with some operations already divested by the company. Despite certain segments maintaining stable revenue, the overall financial picture for Q4 showed a pre-tax loss and decreased adjusted EBITDA.
The future momentum of Golden Entertainment in 2024 raises questions, especially with the notable shifts in revenue and profitability during the previous year. It remains to be seen how the company will navigate these changes and capitalize on its streamlined operations moving forward.
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