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Best of Howard Stutz

Gaming Guru

Howard Stutz
 

Pinnacle profits in first quarter

8 May 2008

LAS VEGAS, Nevada -- Las Vegas-based Pinnacle Entertainment bucked a gaming industry trend, reporting first-quarter increases in revenues and earnings on Wednesday because of its newly opened casino in St. Louis and an expansion at the company's flagship resort in western Louisiana.

Pinnacle said it earned $5.1 million, or 8 cents a share, in the quarter ended March 31, up from $2.9 million, or 5 cents a share, a year earlier. Gaming analysts polled by Thomson First Call predicted the company would lose 1 cent per share in the quarter.

Pinnacle's revenues rose 10.4 percent to $257.1 million from $232.8 million. Pinnacle's results stand in contrast to recent quarterly losses reported by Las Vegas Corp. and Boyd Gaming Corp., and earnings declines by MGM Mirage and Wynn Resorts Ltd.

"We think the first-quarter results were fair, especially in light of reduced recent investor expectations," Bear Stearns gaming analyst Joe Greff said in a note to investors.

Pinnacle's first quarter reflected the first full three months from Lumiere Place, a $507 million hotel-casino that opened in downtown St. Louis in December. Pinnacle is still finishing about 10 percent of its 494 hotel rooms and suites at the resort, which contributed revenues of $47.2 million during the quarter.

At L'Auberge du Lac in Lake Charles, La., Pinnacle opened a 252-room hotel tower, giving the resort nearly 1,000 rooms. Revenues at L'Auberge were $81.3 million, a 4.4 percent increase compared with $77.8 million a year ago.

"While costs associated with both the L'Auberge du Lac expansion and the opening of Lumiere Place held down earnings, early trends from both investments are very positive," Pinnacle Entertainment Chairman and Chief Executive Officer Dan Lee said in a statement.

Gaming analysts, although pleased with quarterly results, still have concerns about the company's development pipeline.

"Property level results were mixed as expected, given the economic environment and the initial period for Lumiere," Oppenheimer gaming analyst David Katz said in a note to investors. "Although the portfolio of properties bears incrementally fewer headwinds from competition and regulatory changes, the potential impact of the economy is real."

Pinnacle shares fell $1.14, or 7.03 percent, Wednesday to close at $15.07 on the New York Stock Exchange.