Strong Montana slot route demand encourages Golden in Nevada

The company that operates The Strat, Arizona Charlie’s and 60 neighborhood pubs and taverns under the PT’s brand in Nevada is encouraged by strong demand at its Montana slot machine route, which reopened Monday.

Golden Entertainment Inc., which has drawn from its $200 million credit facility and deferred capital expenses to endure the COVID-19 pandemic, on Thursday reported a 13.6 percent decline in revenue and saw net losses quadruple compared with last year in the first quarter that ended March 31.

In a conference call with investors, Golden Chairman and CEO Blake Sartini said the company is gearing up to reopen the state’s properties by the end of May. Pent-up demand to pre-closure levels on the Montana slot route the company operates has encouraged the company to be optimistic about openings in Nevada, he said.

“We have not missed a beat in Montana,” Chief Financial Officer Charles Protell added.

“The COVID-19 pandemic forced the mandated closure of all our operations beginning in mid-March and continues to have an unprecedented impact on our business and the gaming and entertainment industry in general,” Sartini said. “This is reflected in our first-quarter financial results, notwithstanding our significant year-over-year growth through February prior to the suspension of our operations.”

Sartini said that over the past several years, the company has executed a strategic plan to put Golden on a long-term growth path.

“This plan included capital investment to renovate and reposition The Strat, accretive acquisitions that have grown our market share in Laughlin, pursuing new distributed gaming markets, and the introduction of our True Rewards one-card loyalty program,” Sartini said.

“Our current cash position, capital structure with no near-term debt maturities and diverse operations of wholly owned casinos and distributed gaming operations across multiple jurisdictions will position Golden Entertainment favorably to achieve long-term success as we are allowed to reopen our properties,” he said.

Sartini told investors he expects Golden to fare better than some of the company’s peers on Las Vegas Boulevard because most of its customers are local or are from drive markets such as California.

He said the conventional industry wisdom is that fly-in markets may take longer to come back than the local and drive markets. That favors properties such as The Strat, which has only about 7 percent of guests from international markets.

Bookings, Sartini said, indicate small levels of visitation in June, but over the summer, the number of reservations grows.

Protell confirmed with investors that the company expects to have no capital expenditures through the rest of the year, and he noted the company was fortunate to complete its improvement program at The Strat last year.

Protell also said the slot floor at The Strat was designed to hold up to 2,000 machines, but since Golden acquired the property, it has had around 750.

The less-dense slot floor should provide better social distancing options, Protell said.

The Nevada Gaming Commission earlier Thursday approved recommended reopening guidelines that suggest that casinos limit capacity to 50 percent of numbers authorized in fire codes.

Golden Entertainment shares traded on the Nasdaq closed up 52 cents, 7.1 percent, to $7.86 a share on volume nearly twice the daily average. In after-hours trading, shares fell 31 cents, 3.9 percent, to end at $7.55 a share.

Contact Richard N. Velotta at rvelotta@reviewjournal.com or 702-477-3893. Follow @RickVelotta on Twitter.