Pinnacle Entertainment (PNK) Tops Q2 EPS by 1c, Revenues Miss

Pinnacle Entertainment (NASDAQ: PNK) reported Q2 EPS of $0.35, $0.01 better than the analyst estimate of $0.34. Revenue for the quarter came in at $647.6 million versus the consensus estimate of $655.45 million.

2018 Second Quarter Highlights:

• Net revenues decreased by $6.0 million or 0.9% year over year to $647.6 million. The adoption of ASC 606 resulted in a reduction of 2018 second quarter net revenues of approximately $3.6 million or 0.6%, relative to the Company's prior accounting methodology.
• Net income increased by $13.4 million to $21.8 million from $8.4 million in the prior year period, while the related margin increased to 3.4% from 1.3% in the prior year period. GAAP diluted net income per share was $0.35 versus $0.15 in the prior year period. Net income was positively impacted by $3.6 million, or $0.06 of GAAP diluted net income per share, relating to the release of an income tax reserve. The adoption of ASC 606 resulted in an increase of 2018 second quarter net income of approximately $0.2 million or 1.2%, relative to the Company's prior accounting methodology.
• Consolidated Adjusted EBITDAR increased by $1.2 million or 0.7% year over year to $181.9 million from $180.7 million in the prior year period. The adoption of ASC 606 resulted in an increase of 2018 second quarter Consolidated Adjusted EBITDAR of approximately $0.2 million or 0.1%, relative to the Company's prior accounting methodology.
• Consolidated Adjusted EBITDAR margin increased by 50 basis points year over year to 28.1%. The adoption of ASC 606 resulted in a 20 basis point positive impact to 2018 second quarter Consolidated Adjusted EBITDAR margin, relative to the Company's prior accounting methodology.
• Consolidated Adjusted EBITDAR growth and margin expansion were led by strong performance of Belterra Resort, The Meadows, Ameristar Black Hawk, Ameristar St. Charles, and Ameristar Vicksburg.

Anthony Sanfilippo, Chief Executive Officer of Pinnacle Entertainment, commented, "Our 2018 second quarter financial performance continued our trend of driving more efficient operations and improving our balance sheet, as we move toward completing our transaction with Penn National. Our Consolidated Adjusted EBITDAR and margins grew year over year, despite a modest decline in net revenue. We also repaid $46.5 million of debt, reducing our Conventional Debt balance to $757.6 million at the end of the 2018 second quarter. In what is historically our strongest free cash flow quarter of each year, we believe we will reduce our Conventional Debt balance to below $700 million by the end of the 2018 third quarter.

“We made significant progress on the renovation of the Ameristar East Chicago casino floors and expansion of this business. In the 2018 second quarter, we unveiled the new land-based high limit space. The new high limit gaming space contains approximately 95 slot machines and 14 table games, as well as other dedicated amenities, and has been very well received by the guests of Ameristar East Chicago.

“Significant milestones have been achieved in completing our transaction with Penn National, including the approval of the transaction by the shareholders of both companies and gaming regulatory approvals in several states. We continue to work closely with the Penn National team to obtain the remaining regulatory approvals and in coordinating a smooth transition and seamless integration upon the closing of the transaction. We expect to complete the transaction early in the 2018 fourth quarter,” concluded Mr. Sanfilippo.

For earnings history and earnings-related data on Pinnacle Entertainment (PNK) click here.

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