So how well are things going at M Resort since the hotel-casino was acquired by Penn National Gaming?
Executives from the Wyomissing, Pa.-based casino operator plan to travel to Las Vegas in October for the Global Gaming Expo and wanted to stay at the 390-room hotel-casino that officially became part of the company in June.
But it’s booked.
“Unfortunately we can’t get in, so we’ve had to go elsewhere,” Penn National Chairman and Chief Executive Officer Peter Carlino said Thursday during a conference call to discuss the company’s second-quarter earnings.
“(The property is) doing particularly well in the group segment,” Carlino said.
Penn executives discussed results at M Resort more extensively than they had in past earnings reports since the company now has full control of the hotel-casino. The company gained ownership of M Resort after buying the property’s debt at a 75 percent discount. M Resort developer Anthony Marnell III continues as the property’s president.
Penn National said M Resort generated $5.6 million in cash flow for the quarter — 24 percent higher than the same quarter a year ago.
Credit Suisse gaming analyst Joel Simkins told investors, “We remain bullish on the M acquisition. Long term, we think Penn could potentially ramp annual (cash flow) at M to $40 million to $50 million.”
Carlino said group business has helped offset declines in the locals gaming market.
“We continue to see good strength from our group of convention business there, but the primary driver of business is the Las Vegas locals and that continues to be somewhat of a struggle,” Carlino said.
He said M Resort is drawing business from Southern California because the property’s location off Interstate 15 at St. Rose Parkway.
“If we continue to show very strong hotel demand and continue to push the envelope at 390 rooms down the road, there is always the potential for looking at more hotel rooms at that resort,” Carlino said.
Companywide, Penn National Gaming grew its net income and revenue in the second quarter, based largely on increased spending at regional casinos and racetracks in the Midwest.
Penn National’s net income was $76 million, or 71 cents per share, for the quarter ended June 30, up from net income of $9.2 million, or 9 cents per share, a year earlier.
Analysts polled by Thomson Reuters had expected the company to post net income of 48 cents per share.
Companywide revenues increased
15 percent to $687.9 million from
“Despite concerns about a slowdown in U.S. economic growth, during the first half of 2011 we’ve seen gradual improvements in consumer trends, though there continues to be month-to-month revenue volatility in several of the markets where we operate.” Carlino said in a statement.
Analysts said Penn’s biggest revenue enhancements came from the table game additions at it racetrack casinos in West Virginia and Pennsylvania.
“Overall, Penn’s quarterly results were very strong and should bode well for other regional operators,” Well Fargo Securities gaming analyst Dennis Farrell Jr. told investors.
Penn National is moving forward with a casino project in Kansas and the company told investors it had settled issues with Ohio, where it expects to move forward on casinos in Columbus and Toledo. Also, Penn National has two racetracks in the state that could add slotlike video lottery terminals.
Analysts said Ohio could become Penn National’s largest market by 2015.
“With three major casino projects opening in the next 18 months and the recent addition of M Resorts in Las Vegas, Penn will obviously benefit from a healthy growth pipeline,” Macquarie gaming analyst Chad Beynon said.
Earlier this week, Penn National said it secured $2.15 billion in new credit. The company said it refinanced its core credit agreements, which were due in 2012, to have more flexibility and capital as it builds three new casinos.
Contact reporter Howard Stutz at email@example.com or 702-477-3871. Follow @howardstutz on Twitter.