Penn National Gaming Weathers Regional Storms, Posts Record Operating Income
Posted on: May 4, 2019, 02:00h.
Last updated on: May 3, 2019, 03:39h.
Regional casino operator Penn National Gaming enjoyed its best first quarter in company history, as operating income totaled $182.4 million – an increase of $10.3 million compared to the same period in 2018.
The oldest casino company in Pennsylvania said despite several difficult winter weather events that impacted multiple properties, the group experienced record operating income. Gross revenue came in at $1.28 billion, an increase of $466.5 million.
The surge comes as a result of Penn’s $2.8 billion acquisition of Pinnacle Entertainment, which was formally completed in October.
Harsh winter weather in January and February aside, we were very pleased with our first quarter performance across the portfolio,” Penn National President and COO Jay Snowden told investors.
Penn National’s roots date back to the 1960s when it became licensed to operate a thoroughbred racetrack 17 miles east of Harrisburg, Pennsylvania, in Grantville. Today, the company is one of the largest regional casino operators in the US, and a major player in the domestic gaming industry.
By comparison of Penn National’s $1.28 billion in revenue, in Q1 2019 Caesars Entertainment reported $2.12 billion, MGM Resorts $3.2 billion, and Las Vegas Sands $3.65 billion. Penn competitors Boyd Gaming posted $827.3 million, and Eldorado Resorts $627.8 million.
Penn National’s purchase of Pinnacle expanded its portfolio to 40 casinos. The company’s $300 million acquisition of the operational rights of the Greektown Casino-Hotel in Detroit took that number to 41 gaming properties in 19 states.
Once the Greektown deal is completed, Penn National will operate more than 50,000 slot machines, 1,200 table games, and 9,400 hotel rooms.
In order to avoid monopoly concerns with the US Federal Trade Commission (FTC), Penn National and Pinnacle arranged a deal to sell four casinos – Ameristar Kansas City and Ameristar St. Charles in Missouri, and the Belterra casinos in Indiana and Ohio – to Boyd Gaming for $575 million.
Penn CEO Tim Wilmott said the company hopes to have its loyalty rewards program implemented across all the former Pinnacle casinos by the end of July.
Wilmott said the company isn’t actively pursuing additional mergers and acquisitions, but conceded that “if the math makes sense for us … we’ll take a look” at potential deals.
Keyed on Keystone State
Though Penn National is expanding across the US, the company is also investing heavily at home with two so-called “mini-casinos” in York and Morgantown, Pennsylvania.
Wilmott said $120 million will be spent on Hollywood Casino York, and $110 million on Hollywood Casino Morgantown. Both are expected to open in the second half of 2020.
Penn bid heavily to secure the York area with a winning $50.1 million offer. Public Affairs VP Eric Schippers explained, “It was an investment we felt like we had to make to protect a major market area for our casino (Hollywood Casino Penn National). That cannibalization would have been, in our view, very significant.”
Despite the record operational income, Penn National shares on NASDAQ were down 9.5 percent last week.
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