The operator of Southern Nevada’s Tropicana and M resorts is starting to reap the benefits of the $2.8 billion merger it engineered last year.
Penn National Gaming narrowed losses and reported record fourth-quarter revenue Thursday thanks to its acquisition of Las Vegas-based Pinnacle Entertainment, announced in March and completed in mid-October.
In a conference call to discuss earnings for the quarter that ended Dec. 31, Penn President and CEO Tim Wilmott told investors the company is continuing to capitalize on the 12 Pinnacle properties added to the Penn portfolio, which brought the company’s total to 40 operations in 18 jurisdictions with 49,000 slot machines, 1,200 table games and nearly 9,000 hotel rooms.
Penn the largest regional operator in the country, narrowed losses to $42 million, 37 cents a share, from $338.1 million, $3.72 a share, for the same quarter in 2017. Revenue exploded 50.2 percent to $1.155 billion from $769 million a year ago.
One of the strongest regions for Penn was its West division, which includes Tropicana and M Resort and saw revenue rise 57 percent, from $93.4 million in the fourth quarter of 2017 to $146.6 million in 2018. Wilmott noted the increase includes the addition of two former Pinnacle properties in Jackpot on the Idaho border and a strong rebound for Tropicana, which was one of the resorts closest to the Oct. 1, 2018, shootings at Mandalay Bay.
Wilmott said properties in the company’s Northeast and Midwest divisions had higher-than-normal slow days due to inclement weather in 2018 with one Chicago-area casino having 15 snow-related days compared with the usual four.
Analysts asked Wilmott how the company has leveraged the Pinnacle deal.
“There have been so many learnings over the last several months,” he said. “We had a good idea pre-close what the opportunities would be, but the number of ideas and initiatives that we’re now pursuing in earnest has expanded probably twofold from what it was pre-close. Some of the things Pinnacle legacy properties have done better than the Penn properties have done is a real focus on the high-end table game customer. They did a much better job of moving their customers around the network. Obviously, they didn’t have a Vegas location, but they had some real destination properties in Colorado, Louisiana and the like, so there’s a lot of opportunity on the revenue synergy side.”
Executives also said they’ll continue to take advantage of the legalization of sports wagering in states where they have properties that have adopted sports betting. The company already competes in that space in Nevada, Pennsylvania, Mississippi and West Virginia.
The company also is looking toward entering the Detroit market after its $300 million acquisition of the Greektown casino and hotel announced in November.
Penn National Gaming
Fourth-quarter revenue and earnings for Wyomissing, Pennsylvania-based Penn National Gaming, operators of the Tropicana and M properties in Las Vegas. (Nasdaq: PENN)
4Q 2018: $1.155 billion
4Q 2017: $769 million
4Q 2018: ($42 million)
4Q 2017: ($338.1 million)
Loss per share
4Q 2018: (37 cents)
4Q 2017: ($3.72)