Casino and racetrack operator Penn National Gaming has emerged from a stuttering first quarter of 2019, with inclement weather disrupting performance of a selection of properties, as the company entered its 19th US jurisdiction via the joint $1bn purchase of Greektown Casino Hotel alongside Vici Properties.
Recording a 57.1 per cent revenue increase to $1.28bn (2018: $816.1m), operating income reached $182.4m, a 5.9 per cent jump from $172.1m, but net income tumbled 9.6 per cent as it finished at $41m, down from 2018’s $45.4m.
Adjusted EBITDAR for the period rose 61.3 per cent to $391.4m (2018: $242.6m), with that figure reducing to $183.5m when accounting for lease payments, representing a 44.8 per cent boost from the previous year’s $126.7m.
Timothy Wilmott, CEO of Penn National, said of the firm’s quarterly performance: “Despite weather-related impacts to several properties during the first quarter, we’re pleased to have met our adjusted EBITDAR guidance after a one-time adjustment of $3.1m for expenses related to a customer loyalty point liability true-up related to prior periods.
“This accomplishment highlights our property-level management team’s consistent ability to maintain or increase margins, even in a challenging revenue environment.
“In addition, we closed our accretive acquisition of Margaritaville in Bossier City, Louisiana in early January, and we now expect to close our accretive acquisition of Greektown Casino-Hotel in Detroit, Michigan, by the end of May.”
Before providing a further update regarding ongoing development and merger and acquisition activity: “Our $300m acquisition of the operations of Greektown provides us entry into an industry-leading 19th jurisdiction, and adds another stable regional gaming market to Penn National’s already diverse property portfolio. Notably, Greektown will have the largest single property database in our loyalty program.
“The transaction will be funded with a combination of cash on hand and debt and we expect to close the transaction before the end of this month.
“Our development projects in Pennsylvania, including the $120m Hollywood Casino York and the $111m Hollywood Casino Morgantown, remain on track.
“The construction timetable for both facilities is anticipated to be 12-18 months following all requisite approvals, including final licensing by the Pennsylvania Gaming Control Board.”
Concluding, Wilmott looked into the ongoing synergies of Penn’s $2.8bn Pinnacle Entertainment purchase: “We continue to make great strides with the integration of the Pinnacle properties, having achieved $40m of run rate cost synergies as of March 31, 2019, which contributed to our ability to meet adjusted EBITDAR guidance.
“As we continue to apply best practices across the enterprise we now anticipate at least $115m of cost synergies, with a run rate of $55m in 2019 and an additional $60m expected by the end of 2020.
“In addition, we remain highly focused on driving revenue synergies, which will start with our combined player loyalty program, mychoice. We expect to have all of our properties on the single platform by the end of July, and are well-positioned to achieve incremental adjusted EBITDAR associated with revenue synergies related to Pinnacle in the range of $15-$20m. The majority of these revenue synergies should be realised in 2020 and 2021.”