Penn National Gaming exceeded its own first-quarter expectations and remained on course to close on its merger with Las Vegas-based Pinnacle Entertainment that ultimately will save the company $100 million a year.
Wyomissing, Pennsylvania-based Penn National, operators of the Tropicana on the Strip and the M Resort, is lined up to appear before several state gaming regulators over the next few months to gain the approvals necessary to complete the $2.8 billion transaction first announced in December.
Penn officials said in a quarterly earnings call with investors Thursday that the company is on track to complete the deal that will secure its position as a major regional gaming powerhouse.
Pinnacle, which owns and operates 16 casinos in nine states and a racetrack in Texas, runs the Horseshu and Cactus Pete’s on the Nevada-Idaho border at Jackpot.
At the completion of the deal, Penn will operate 41 casinos in 20 states. The transaction will give Penn footholds in three states it previously hadn’t been in: Colorado, Louisiana and Iowa.
Shareholders for Pinnacle last month approved the transaction with 99.4 percent of the votes representing 45.1 million shares.
“Having visited all of the Pinnacle properties, as well as their Las Vegas Service Center on multiple occasions, we remain very impressed by their talented property and corporate teams and continue to make meaningful progress with our integration planning,” Penn National CEO Tim Wilmott said Thursday in a release outlining financial results for the quarter that ended March 31.
“As we’ve learned more about Pinnacle’s operations and processes, we are confident our $100 million of cost synergy objectives are well within reach,” he said.
Wilmott said more than half of Penn’s properties showed year-over-year cash flow growth in the quarter and 65 percent of its gaming operations delivered margin increases despite severe weather impacts in some regions.
Penn reported a 5.1 percent increase in net revenue to $816.1 million for the quarter.
In February, Penn revised its earnings guidance for investors as it determined the company was on track to exceed expectations.
Penn shares soared $3.39, 12.9 percent, Thursday to close at $29.65 a share on trading that was three times the average volume.
Penn National Revenue and Earnings
First-quarter revenue and earnings for Wyomissing, Pennsylvania-based Penn National Gaming Inc., operators of the Tropicana and M Resort in Las Vegas. (Nasdaq: PENN).
1Q 2018; 1Q 2017; Change
Revenue: $816.1 million; $776.2 million; +5.1%
Net income: $45.4 million; $5.1 million; +790.2%
Earnings per share: 48 cents; 6 cents; +700%