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Penn National sees revenue, profits decline

24 October 2014

Casino operator Penn National Gaming, Inc., which owns M Resort, said Thursday revenue and profits declined in the third quarter as regional gaming markets across the U.S. continued to under-perform.

Penn said its net income for the quarter that ended Sept. 30 was $8.5 million, or 10 cents per share, down from $35.3 million or 34 cents per share a year ago.

Overall revenue fell 9.6 percent to $645.9 million.

Analysts said Penn’s results were better than anticipated.

“The stronger than expected quarter appears, to us, to be more a function of managing very well in a tough environment versus the regional environment getting marginally better,” J.P. Morgan gaming analyst Joe Greff told investors.

Penn operates 26 casinos and racetrack casinos in 17 states and provinces.

Results from M Resort are mixed into the company’s West Division, which was the only reporting segment to show an increase in revenue, up 2 percent to $58.6 million.

Penn National CEO Tim Wilmott said the company was “performing relatively well in the current operating environment.”

On a conference call with analysts, Penn National COO Jay Snowden said customer trends at many of the company’s regional properties improved during the third quarter. However, he was reluctant to say that gaming revenue in the regional markets had “bottomed out.”

Snowden said the positive customer spending trends had continued into October.

Despite the challenged the regional gaming markets, the company is continuing to expand its presence.

Penn National opened new racetrack casinos in Ohio this summer and is moving forward on projects in Massachusetts and near San Diego, where the company is building a $360 million casino for the Jamul Indian Tribe.

Wilmott said the San Diego casino is expected to open in 2016.

The company also opened a 154-room hotel expansion at its racetrack in New Mexico.

“Penn has the strongest growth pipeline in the industry,” Macquarie Securities gaming analyst Chad Beynon told investors.

Shares of Penn closed at $12.20 on the Nasdaq, up 30 cents or 2.52 percent.
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