Pinnacle Entertainment posted a first-quarter loss of million in EBITDAR, due to poor table-games hold at certain properties. However, year-over-year revenue grew by 10 percent to 0 million and adjusted EBITDAR was up 1.5 percent to 5 million. These figures included a
$69 million revenue contribution from the Meadows, which Pinnacle acquired in September 2016.
On a conference call with investors, Chief Executive Officer Anthony Sanfilippo said, “We don’t talk a lot about table games hold. We only talk about it when it’s significant enough to bring to your attention. The good news is we have a lot of table games volume, and that has continued to be a strategic focus of our company. But there are times that it may fall unlucky for a quarter and, that’s generally what happened at a couple of our properties.”
When controlling for the table game variance at L’Auberge Lake Charles and Ameristar East Chicago and an accounting adjustment that caused a singular drop in revenues and EBITDAR at Ameristar Kansas City, results for the quarter were sound.
Sanfilippo said factors at L’Auberge Lake Charles, Ameristar East Chicago and Ameristar Kansas City “reveals a growing company and encouraging momentum, with our portfolio of businesses producing its third consecutive quarter of same-store year over year net revenue growth.”
Second quarter is off to a promising start with 3 percent same-store revenue growth and 6 percent EBITDAR growth in April. Analyst Cameron McKnight of Wells Fargo Securities said, “Excluding these items, EBITDAR would have been 3 percent above consensus. We estimate controllable expenses were down 3 percent quarter-over-quarter. All in, it was a solid quarter on a hold adjusted basis and April is off to a good start.”
Analyst John DeCree of Union Gaming added, “The company cited low table hold at key properties that impacted EBITDA by a total of $9.2 million. Adjusting for this, underlying trends were actually better than expected.”
However, analyst Steven M. Wieczynski of Stifel said, “Given the heightened expectations for the stock, coupled with our generally bearish view on regional gaming operators who do not own their underlying real estate, lack exposure to one of the industry’s higher growth markets, and are not positioned to benefit from unique on balance sheet growth opportunities, we remain comfortable with our Hold rating on Pinnacle shares at this point.”
Pinnacle has successfully targeted Asian players, with six of the company’s 16 properties catering to that market. Rated Asian play was up by double digits at five of these locations and by 13 percent overall. DeCree stated, “Pinnacle’s recent success and upside potential in the fundamentals is coming from what we view as a slightly differentiated playbook. A strong focus on marketing to the higher-end customer is resulting in mid-single-digit growth in both spend and visitation across this segment.” Officials said Pinnacle plans to continue to grow its Asian gaming niche at existing locations and hope to further develop its Asian niche at its other properties.
Changes in Pinnacle’s mychoice loyalty program have resulted in an 18 percent increase in cross-business visitation across the company’s properties in 2016, and cross-market gaming volume grew 25 percent in the 2017 first quarter. Chief Administrative Officer Ginny Shanks said customers who visited other Pinnacle properties increased play at their home property by 9 percent for the quarter.
Also as of March 31, Pinnacle paid down $28 million of debt during the quarter, leaving a total outstanding balance of $925 million.
