Pinnacle reports fourth-quarter net loss

Regional casino operator Pinnacle Entertainment reported a fourth-quarter net loss today, but the figure had nothing to do with the company’s casino operations.

Despite the challenging economy, Pinnacle’s casinos in the south and Midwest increased revenues 18.1 percent in the fourth quarter that ended Dec. 31 and 13.3 percent for all of 2008.

“Pinnacle’s Louisiana properties posted year-over-year increases and were above our revenue and (cash flow) estimates,” Oppenheimer gaming analyst David Katz told investors. “Lumiere Place (in St. Louis) also performed better than expected. We believe the increases in Louisiana were driven by relative strength in the Houston economy.”

Las Vegas-based Pinnacle reported a $320 million non-cash impairment charges for real estate, goodwill and other assets in recognition of decreased values in the current economy for the company’s casinos and casino development sites.

The charge led to a fourth-quarter net loss of $297.7 million, or $4.97 a share, compared with a net loss of $19.2 million, or 30 cents a share in the same quarter a year ago.

The company said both quarters had significant pre-opening and development costs and non-cash charges related to share-based compensation.

From an operations standpoint, Pinnacle reported revenues of $259 million in the fourth quarter, compared with $219 million a year ago. For all of 2008, revenues were $1.04 billion, compared with $921.8 million in 2007.

Cash flow in the quarter rose 38.5 percent companywide.

“Our properties performed well in the fourth quarter, despite a difficult national economy,” Pinnacle Chairman and CEO Dan Lee said.

Revenues increased at all three of the company’s Louisiana casinos, but especially at L’Auberge du Lac in Lake Charles. In the fourth quarter revenues at L’Auberge were $89.3 million, a 15.6 percent increase from a year ago. Cash flow increased 53.7 percent at the casino.

In St. Louis, Pinnacle’s year-old Lumiere Place had revenues of $47.2 in the fourth quarter. Both Lee and gaming analysts said Lumiere Place will benefit from a recent change in Missouri gaming laws which removed several wagering restrictions.

“Good revenue and margin performance at L’Auberge, good cost control in Boomtown New Orleans, a nicely increasing ramp at Lumiere Place and lower than expected corporate expense provided for the operational beat,” JP Morgan gaming analyst Joe Greff said in a note to investors.

 

Contact reporter Howard Stutz at hstutz@reviewjournal.com or 702-477-3871.

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