Pinnacle narrows quarterly net loss

Regional casino operator Pinnacle Entertainment narrowed its net loss in the second quarter, the Las Vegas-based company reported Wednesday.

Pinnacle, which operates casinos primarily in the South and Midwest, said it lost $17.96 million in the quarter that ended June 30, or 29 cents per share. In the same quarter a year ago, Pinnacle lost $49.3 million, or 81 cents per share.

The company, which saw second-quarter revenue increase 9.3 percent to $299.1 million from $273.6 million, said costs, including the sale of assets plus donation of land to Lake Charles, La., contributed to the net loss.

On an adjusted basis, the company posted net income of 17 cents per share for the quarter. Analysts polled by Thomson Reuters expected the company to earn 7 cents per share. Analysts' estimates typically exclude special items.

Pinnacle's primary casino operations are in Louisiana, St. Louis, Mo., and Indiana. The company owns the Boomtown Casino near Reno.

Pinnacle Chief Executive Officer Anthony Sanfilippo said the company's second-quarter results were "healthy" and reflected a strong increase in cash-flow margins.

Analysts agreed.

Jefferies & Co. gaming analyst David Katz said Pinnacle continued to benefit from operating improvements.

"The solid quarter results support our bullish stance on the shares and suggest that there remains more significant margin growth opportunity than the Street expects despite the tepid consumer environment," Katz told investors.

Pinnacle operates seven casinos along with a racetrack in Ohio. The company plans to open the L'Auberge Casino & Hotel Baton Rouge next year in Louisiana.

The company also is investing in Asian Coast Development (Canada) Ltd., which will give it access to the Southeast Asian gaming market. Asian Coast is the owner and developer of the Ho Tram Strip beachfront complex in Vietnam.

Credit Suisse gaming analyst Joel Simkins did say investors were not giving Pinnacle enough credit for the Vietnam project. The company, he said, is one of the few casino operators with expansion possibilities.

"With a strengthened balance sheet, significant borrowing capacity, and $116 million to $131 million of annual free cash-flow generation, Pinnacle has the capacity to pursue further growth opportunities," Simkins said.

Contact reporter Howard Stutz at hstutz@reviewjournal.com or 702-477-3871. Follow @howardstutz on Twitter.