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Penn National Gaming Inc. Reports Operating Results (10-Q)

November 05, 2012 | About:
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10qk

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Penn National Gaming Inc. (PENN) filed Quarterly Report for the period ended 2012-09-30.

Penn National Gaming has a market cap of $3.07 billion; its shares were traded at around $39.57 with a P/E ratio of 16.6 and P/S ratio of 1.1.

Highlight of Business Operations:

We reported net revenues and income from operations of $707.0 million and $98.7 million, respectively, for the three months ended September 30, 2012 compared to $710.9 million and $130.3 million, respectively, for the corresponding period in the prior year and net revenues and income from operations of $2,155.7 million and $369.3 million, respectively, for the nine months ended September 30, 2012 compared to $2,065.8 million and $393.7 million, respectively, for the corresponding period in the prior year. The major factors affecting our results for the three and nine months ended September 30, 2012, as compared to the three and nine months ended September 30, 2011, were:

profit partner and opening up the gaming license to bidding for a land based casino, its failure to approve the 2015 extension agreement and any extension, and announcing a process would be instituted to revoke the Belles license. In addition, the Belle filed suit against MRHD for a breach of contract and seeking to enjoin MRHD from disavowing the 2015 extension agreement it signed and the exclusivity obligations in the agreement. The injunction request was denied on October 29, 2012. Further, the Belles ability to continue its operations may also be impacted by its ability to renew or extend its existing docking lease, which expires in January 2013, or to locate a suitable site to construct a land-based facility and the results of the request for proposal process initiated by the IRGC (with submissions due November 5, 2012). Subsequent to September 30, 2012, MRHD submitted a proposal with another gaming operator to develop a land based facility in Sioux City. Without prejudice to its legal claims, the Belle is participating in this request for proposals. Argosy Casino Sioux City has goodwill and other intangible assets of $92.8 million at September 30, 2012. Additionally, this facility had net revenues and income from operations of $43.4 million and $13.4 million, respectively, for the nine months ended September 30, 2012, which represented 2.0% and 3.6% of the Companys consolidated results. Any disruptions in Argosy Casino Sioux Citys operations related to the items described above could result in a significant non-cash impairment charge in future periods as well as the loss of future earnings associated from this property.

Gaming revenue for our Midwest segment increased by $37.1 million, or 19.4%, and $29.7 million, or 5.0%, for the three and nine months ended September 30, 2012, respectively, as compared to the three and nine months ended September 30, 2011, primarily due to the opening of Hollywood Casino Toledo on May 29, 2012, which generated $52.4 million and $75.1 million of gaming revenue for the three and nine months ended September 30, 2012, respectively. Our other properties in our Midwest segment had revenue declines primarily due to the impact of new competition, namely a new casino opening in July 2011 near Hollywood Casino Aurora and Hollywood Casino Joliet, as well as a recent opening on June 1, 2012 of a new racino in Columbus, Ohio, which has negatively impacted Hollywood Casino Lawrenceburg. However, in the third quarter of 2012, Hollywood Casino Joliet showed an increase in gaming revenue primarily due to higher than anticipated table hold which led to an increase of $2.2 million in table game revenues for the three months ended September 30, 2012.

Gaming revenue for our Southern Plains segment decreased by $19.6 million, or 14.1%, and $34.6 million, or 8.2%, for the three and nine months ended September 30, 2012, respectively, as compared to the three and nine months ended September 30, 2011, primarily due to a decrease in gaming revenue at Argosy Casino Riverside of $9.3 million and $23.9 million for the three and nine months ended September 30, 2012, respectively, primarily due to the opening of our Hollywood Casino at Kansas Speedway joint venture in February 2012, as well as a decrease in gaming revenue at Boomtown Biloxi and Hollywood Casino Baton Rouge primarily due to new competition, namely the opening a new casino in Biloxi in late May 2012 and the opening of a new riverboat casino and hotel in Baton Rouge, Louisiana on September 1, 2012.

Food, beverage and other revenue for our Midwest segment increased by $3.5 million, or 16.2%, and $3.5 million, or 5.3%, for the three and nine months ended September 30, 2012, respectively, as compared to the three and nine months ended September 30, 2011, primarily due to the opening of Hollywood Casino Toledo on May 29, 2012, which contributed $5.4 million and $8.3 million for the three and nine months ended September 30, 2012, respectively, partially offset by the recent opening on June 1, 2012 of a new racino in Columbus, Ohio which has negatively impacted Hollywood Casino Lawrenceburg.

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