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Best of Howard Stutz

Gaming Guru

Howard Stutz

Pinnacle reports higher revenues, profits up; investors see expanded company

13 February 2014

LAS VEGAS -- Regional casino operator Pinnacle Entertainment, Inc. grew revenues and profits in the fourth quarter and gave investors a fresh look at the newly expanded company.

Pinnacle, which is based in Las Vegas, said its net income for the period that ended Dec. 31 reversed a net loss from a year ago. It reported net income of $15 million, or 30 cents per share. In the same quarter of 2012, Pinnacle lost $42.4 million, or a loss of 72 cents per share.

Meanwhile, overall revenues increased 77.4 percent to $535 million.

Pinnacle doubled its size after completing a $2.8 billion buyout of regional gaming rival Ameristar Casinos last August. The quarter was the first that Pinnacle’s results included a full three months of Ameristar’s eight casinos. Pinnacle now operates 14 casinos in nine states.

Pinnacle CEO Anthony Sanfilippo said the company’s results were affected by “the same challenges that others in our industry and other consumer businesses experienced during the 2013 fourth quarter.”

On a conference call, Sanfilippo said Pinnacle would watch for additional expansion opportunities but was more focused on merging the Ameristar casinos into the company and paying down debt. The buyout left Pinnacle with $4.38 billion in debt.

Analysts said Pinnacle’s quarterly earnings came in strong despite declines in the regional gaming market.

“Net-net, we think today’s results, especially given low expectations across the regional space in light of regional gross gaming revenue trends, Penn National’s earnings per share miss, and Boyd Gaming’s negative pre-announcement, should be well-received,” Deutsche Bank gaming analyst Carlo Santarelli told investors.

Pinnacle completed the sale of the Ameristar Lake Charles development in November to Golden Nugget and received $180 million, which excluded $35 million of previous costs to the project. Pinnacle expects to close the sale of its Lumiere casino in St. Louis for $260 million to Tropicana Entertainment this spring.

Both transactions were required by the Federal Trade Commission in order to avoid any antitrust issues in the Ameristar purchase.

While the deal with Golden Nugget will give Pinnacle’s L’Auberge Lake Charles new competition in western Louisiana, Sanfilippo said the market is under-served. The new casino could help attract additional visitors from the Houston area.

“There is some pent-up demand in Lake Charles,” Sanfilippo said.