Golden Entertainment, Inc. (GDEN) (“Golden Entertainment” or the “Company”), a leading distributed gaming operator and owner of taverns and casinos, today announced financial results for the fourth quarter and year ended December 31, 2016 as summarized below. For comparative purposes, the 2015 results as presented include unaudited results of Sartini Gaming, Inc. (“Sartini Gaming”), which merged with a subsidiary of Lakes Entertainment (the “Merger”) on July 31, 2015 to form Golden Entertainment. Consolidated Results (2016) and Combined Results (2015) (Unaudited, in thousands) Three Months Ended Twelve Months Ended December 31,2016 December 31,2015 % Change December 31,2016 December 31,2015(1) % Change Net Revenues Distributed Gaming $ 81,190 $ 63,277 28.3 % $ 305,792 $ 249,287 22.7 % Casinos 24,101 23,108 4.3 % 97,132 95,777 1.4 % Corporate and other 95 50 90.0 % 280 373 -24.9 % $ 105,386 $ 86,435 21.9 % $ 403,204 $ 345,437 16.7 % Net Income (Loss) Distributed Gaming $ 5,243 $ 6,316 -17.0 % $ 22,323 $ 25,096 -11.0 % Casinos 3,723 3,021 23.2 % 16,117 9,304 73.2 % Corporate and other 993 14,069 -92.9 % (22,140 ) (15,242 ) 45.3 % $ 9,959 $ 23,406 -57.5 % $ 16,300 $ 19,158 -14.9 % Adjusted EBITDA(2) Distributed Gaming $ 11,490 $ 8,971 28.1 % $ 43,555 $ 36,710 18.6 % Casinos 5,453 4,787 13.9 % 23,571 20,044 17.6 % Corporate and other (4,780 ) (4,333 ) 10.3 % (18,531 ) (16,337 ) 13.4 % $ 12,163 $ 9,425 29.1 % $ 48,595 $ 40,417 20.2 % (1) The combined financial information for the twelve months ended December 31, 2015 includes the Company’s audited consolidated statement of operations for the 2015 full year period and Sartini Gaming’s unaudited consolidated statement of operations for the seven months ended July 31, 2015. Combined select operating results have been prepared for illustrative purposes only and do not purport to be indicative of the results had the Merger occurred on the first day of such period. The combined results do not conform to SEC rules for pro forma financial information; however, we believe they provide investors with a meaningful comparison for the periods presented. (2) Adjusted EBITDA is a non-GAAP financial measure and definitions and disclosures, including reconciliations, are included at the end of the press release. Blake L. Sartini, Chairman and Chief Executive Officer of Golden Entertainment, commented, “Golden Entertainment’s record fourth quarter, including 21.9% net revenue and 29.1% Adjusted EBITDA growth, marked the conclusion to another successful and active year. Full year 2016 net revenues and Adjusted EBITDA were also records, growing 16.7% and 20.2% year-over-year over combined net revenues and combined adjusted EBITDA, respectively. Our strong fourth quarter and full year results reflect the ongoing expansion of our distributed gaming business, including the successful integration during the year of two acquisitions in Montana, where we now have a strong market position. In 2016, we also further grew our portfolio of wholly-owned taverns with five new openings and meaningfully improved the operating performance at our casinos.“Today, Golden Entertainment is a distributed gaming leader, with more than 10,000 devices at nearly 1,000 locations, including the largest footprint in Nevada and the second largest in Montana. Fourth quarter 2016 distributed gaming Adjusted EBITDA rose 28.1% year-over-year and benefited from the addition of approximately 2,900 gaming devices in Montana and five newly branded taverns in Las Vegas which opened during 2016. Last year’s Montana acquisitions extend our long-term record of success in building our distributed gaming business, and we are well positioned for organic and transaction-related growth in this market in 2017. In Nevada, we continue to transition our recurring-revenue, distributed gaming portfolio towards a greater percentage of higher margin, wholly-owned taverns. This is expected to increase our operating margin and allow for the re-allocation of capital and human resources to higher return opportunities. To this point, our market-leading Nevada taverns delivered 6.6% same store sales growth for 2016.“Our casino operations also performed well in the fourth quarter, with year-to-date Adjusted EBITDA rising 13.9% year-over-year over combined adjusted EBITDA, as we began to benefit from capital upgrades in Nevada and Maryland during the year. Our three casinos in Pahrump grew combined Adjusted EBITDA in 2016 despite construction disruptions, and our focus on disciplined operations led to a healthy rise in Adjusted EBITDA margins. At Rocky Gap Casino, we added gaming devices, updated the interior and expanded parking while refining our branding and marketing programs, leading to double digit Adjusted EBITDA growth in 2016 and healthy Adjusted EBITDA margin expansion. Importantly, Rocky Gap continued to grow revenues year-over-year despite the opening of a new casino property in Maryland in December 2016.“Looking forward, Golden Entertainment is well positioned for continued growth in 2017 and beyond. We are on schedule to open seven new Las Vegas taverns in 2017 and are already establishing a strong pipeline of new openings for 2018. As the largest branded tavern and distributed gaming operator in Nevada, we are a beneficiary of the state’s ongoing positive macroeconomic trends, and we expect our casinos to build on their strong fourth quarter momentum throughout 2017. Overall, our team remains focused on expanding our operations across existing and potential new markets, and we are evaluating strategic opportunities to add further scale to both our distributed gaming and casino businesses to create additional long-term value for shareholders.”Results for the Three Months Ended December 31, 2016Net revenues for the quarter were $105.4 million, compared to $86.4 million in the prior-year quarter, with the increase due primarily to the Company’s recently acquired Montana distributed gaming businesses and the opening of five new branded taverns in the Las Vegas Valley during 2016. Net revenues for the 2016 fourth quarter increased 21.9% compared to the prior year quarter.For the quarter, net income was $10.0 million, or $0.44 per diluted share, compared to $23.4 million, or $1.06 per diluted share, in the prior year quarter. The 2016 fourth quarter included a $5.1 million income tax benefit related to the release of a portion of the valuation allowance against deferred tax assets, while the prior year quarter benefited from a $23.6 million gain on the recovery of impaired notes receivable. During the fourth quarter of 2016, the Company incurred $0.6 million in preopening expenses compared to $0.3 million in the prior-year period. The results for the prior year quarter also included $0.9 million in Merger-related expenses.Adjusted EBITDA for the quarter was $12.2 million, an increase of 29.1% compared to $9.4 million in the prior year quarter, with the increase due primarily to the growth in the Company’s net revenues and a reduction in corporate expenses as a percentage of net revenues.Balance Sheet and LiquidityAs of December 31, 2016, the Company had cash and cash equivalents of $46.9 million and total outstanding debt of $185.7 million. Outstanding debt under the Company’s senior credit facility included $150 million in senior secured term loans and $30 million in borrowings under the Company’s revolving credit facility. As of December 31, 2016, the Company had $20 million of additional availability under its revolving credit facility. The full year weighted average effective interest rate on outstanding borrowings under these facilities was approximately 3.3%. Both the Company’s term loans and revolving credit facilities mature in July 2020.Charles H. Protell, Chief Strategy and Financial Officer, commented, “Given our portfolio of leading distributed gaming and casino assets, strong balance sheet and attractive cost of capital, we are well positioned to execute on our organic growth plan for 2017. We expect to fund planned 2017 capital expenditures of approximately $26 million as well as scheduled debt amortization of $12 million from operating cash flow. In addition, the Company continues to actively review strategic opportunities that could accelerate its growth profile while meaningfully increasing the Company’s financial scale.”Investor Conference Call and WebcastThe Company will host a webcast and conference call today, March 13, 2017 at 5:00 p.m. Eastern Time, to discuss the fourth quarter and full year 2016 results. The conference call may be accessed live by dialing 844/465-3054 or 480/685-5227 for international callers and entering the passcode 50816227. A replay will be available beginning at 8:00 p.m. ET on March 13, 2017 and may be accessed by dialing 855/859-2056 or 404/537-3406 for international callers; the passcode is 50816227. The replay will be available until March 16, 2017. The call will also be webcast live through the “Investors” section of the Company’s website,
www.goldenent.com. A replay of the audio webcast will also be archived on the Company’s website,
www.goldenent.com.If you have questions about Golden Entertainment or are interested in conducting a conference call with Golden Entertainment management, please contact JCIR at 212/835-8500 or
gden@jcir.com.