Penn National looking for LV opportunity
For the second straight quarter, Penn National Gaming executives hinted they are casino shopping in Las Vegas but no deals are pending.
The casino and race track operator has been flush with cash since terminating its private equity buyout deal in July, securing $1.48 billion in a breakup fee.
Chairman and Chief Executive Officer Peter Carlino said Monday the company has targeted expansion opportunities, but the current economy has slowed potential acquisitions.
"We're continuing to poke around the market," Carlino said during the company's third-quarter earnings conference call. "Las Vegas is doing a whole lot less well than we had envisioned. We'll cherry pick the right opportunity if it appears. But for now, we'll take a deep breath. That's the best answer I can give for Las Vegas."
Penn National spokesman Joe Jaffoni disputed a published report last week that Carlino had called MGM Mirage Chairman Terry Lanni to inquire about the availability of Bellagio. The call, he said, never took place. Carlino did not address any specific Strip resorts during Monday's conference call with analysts.
Wyomissing, Pa.-based Penn National is also looking at Atlantic City. The company plans on bidding on a potential development at Bader Field, site of the city's former airport. During the quarter, Penn National lost out on a bid to manage a casino in Kansas and withdrew from bidding on another potential gambling site in the state.
Penn National said third-quarter earnings were $147 million, or $1.69 a share, compared with $47 million, or 52 cents a share, a year earlier.
Revenue fell 1.5 percent to $652 million from $662 million.
Penn National's 2008 third-quarter results benefited from the opening earlier this year of Hollywood Casino at Penn National Race Course in Pennsylvania. Carlino called the current business climate as "terrible to less than wonderful." Penn National President and Chief Operating Officer Tim Wilmott said September was the worst operating month for the casino business than he has "seen in 20 years in the industry."
Next week's election results in several states could impact Penn National's bottom line. The company is spending money to defeat casino measures in Ohio and Maine, which would be in direct competition to the company's existing properties. Meanwhile, Penn National is financially supporting the effort to legalize slot machines in Maryland, where the company could find operating opportunities.
"Penn's development pipeline remains intact," JPMorgan gaming analyst Joe Greff said.
Contact reporter Howard Stutz at hstutz@reviewjournal.com or 702-477-3871.
WMS' PROFITS INCREASE
Slot machine maker WMS Industries bucked the gaming industry's current economic climate by increasing profits and revenue in the third quarter.
The Waukegan, Ill.-based company said Monday its net income was $18.8 million, or 32 cents a share, in the quarter ended Sept. 30, up from $12.9 million, or 23 cents a share, a year earlier.
Analysts polled by Thomson Reuters thought the company would earn 30 cents a share.
Revenue rose 26.5 percent to $172.8 million from $136.6 million.
WMS Chairman and Chief Executive Officer Brian Gamache said an 8 percent increase in slot machine sales during the quarter "demonstrate the high player appeal and casino operator appreciation for the value of our products, which is especially important in the face of a slow economy and the challenges in the financial markets."
HOWARD STUTZ / REVIEW-JOURNAL
