Expenses from Penn National Gaming’s planned $2.8 billion acquisition of Las Vegas-based Pinnacle Entertainment dented the company’s fourth-quarter earnings, Penn officials reported Thursday.
Wyomissing, Pennsylvania-based Penn also said the Las Vegas shooting had a negative impact on the company’s Tropicana property, less than a half mile from the site of the largest mass shooting in modern history.
In addition to the Tropicana, Penn operates the M Resort in Henderson.
In the company’s conference call, executives said the Tropicana continues to be challenged by the aftermath of the shooting, mostly through lower-than-expected hotel room rates.
When Penn closes on the deal with Pinnacle in the second half of 2018, the company will expand its geographical reach to 41 properties in 20 locations, including 15 within the top 30 metropolitan statistical areas in the country.
Penn said it spent $5.1 million on transaction expenses as well as a $9.2 million cash-settled stock compensation charge from the appreciation of the company’s share price.
But the company had record revenue for the quarter exceeding company guidance to investors by $12.4 million as well as analysts’ expectations.
Penn reported a loss of $308.7 million, $3.40 a share, on revenue of $769 million for the quarter that ended Dec. 31. In the same quarter a year ago, the company reported earnings of $5 million, 5 cents a share, on revenue of $742.9 million.
The company is expecting greater revenue generation through the Pinnacle acquisition, announced Dec. 18. Shareholder votes for both companies will be scheduled in the spring. In addition to acquiring the Pinnacle assets — most of them riverboat properties in the South and Midwest — Penn will divest four properties to Las Vegas-based Boyd Gaming Corp.
“Financially, we expect the transaction to be immediately accretive to free cash flow per share and that it will increase our annual revenue and adjusted cash flow by over 60 percent, following the planned divestitures of four casinos to Boyd Gaming and the realization of approximately $100 million in synergies,” said Penn CEO Tim Wilmott.
“Following our initial integration discussions and recent visits to Pinnacle’s properties and their Las Vegas Service Center, we came away very impressed by their talented team members and are excited about combining the companies,” he said. “The visits also reinforced our confidence in achieving our revenue and cost synergy objectives.”
Shares of Penn lost $2.34, or 7.95 percent, to close at $27.11 amid a broad market sell-off on Wall Street.
Penn National revenue and earnings
Fourth-quarter revenue and earnings for Wyomissing, Pennsylvania-based Penn National Gaming Inc., operators of the Tropicana and M Resort in Las Vegas. (Nasdaq: PENN).
4Q 2017; 4Q 2016; Change
Revenue: $769 million; $742.9 million; +3.5%
Earnings/(Loss): ($308.7 million); $5 million; —
Earnings/(Loss): per share ($3.40); 5 cents; —