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US – Pinnacle Entertainment reports strong second quarter

By - 14 August 2017

Pinnacle Entertainment reported net revenues of $653.6m in its second quarter, an increase of $87.4m or 15.4 per cent year over year.

Unrated play has registered year over year growth in nine of the past 10 quarters, accelerating to growth of six per cent in the 2017 second quarter. Pinnacle believes this is a reflection of the quality of its businesses and the high level of service provided to its guests.

Rated Asian gaming volume increased by nine per cent in the 2017 second quarter. Ameristar East Chicago, Ameristar Kansas City, Ameristar St. Charles, Boomtown New Orleans, L’Auberge Baton Rouge, and River City all generated Asian gaming volume growth in excess of 20 per cent.

Cross-market gaming volumes increased by 22 per cent in the 2017 second quarter, demonstrating the attractiveness of the businesses that Pinnacle operates and the broad geographic distribution of its gaming entertainment platform.

Anthony Sanfilippo, Chief Executive Officer of Pinnacle Entertainment, commented: “We are pleased to report record 2017 second quarter financial results. The execution across our portfolio of businesses reflects the performance of our dedicated team members, who make it their daily mission to deliver magical and memorable experiences for our guests and strong financial outcomes for our shareholders. Our overall Consolidated Adjusted EBITDAR, which includes contributions from The Meadows, increased by $23.7m and represents a record quarterly performance. We are pleased with the strong same-store performance underlying these results, with our net revenues and Consolidated Adjusted EBITDAR increasing by $15.1m and $10.4m, respectively. The growth rates of our same-store net revenues and Consolidated Adjusted EBITDAR accelerated to 2.7 per cent and 6.6 per cent, respectively. Our same-store Consolidated Adjusted EBITDAR margin expanded by 110 basis points to 28.8 per cent, and we continue to strive to improve our operating efficiency.

“Looking at the early results of the 2017 third quarter, the performance of our Company is off to a terrific start. In July, our Consolidated Adjusted EBITDAR and Consolidated Adjusted EBITDAR margin significantly exceeded the prior year, and performance so far in August has been strong.”
He highlighted its mychoice loyalty program as being the engine of marketing effectiveness that delivers tailored premium offerings to its best guests. Overall same-store spend per trip again increased at a high single digit pace in the 2017 second quarter, with both spend and trips increasing in its highest worth guest segments. L’Auberge Baton Rouge led the company with an impressive double digit increase in spend per trip, with growth of both spend and trips.

Mr. Sanfilippo added: “Continued execution of the growth initiatives across our portfolio were key contributors to our same-store performance during the 2017 second quarter, which include increasing our marketing effectiveness, development of Asian gaming entertainment offerings in select markets, generating higher levels of cross-market visitation, and a relentless effort to streamline our cost structure across the enterprise.

“The Meadows, our newest business, continues to build significant positive momentum, and our focus on implementing synergies and driving profitable revenue streams are bearing fruit. The Meadows produced its best quarterly financial performance since we began operating this business in September 2016, with net revenues and Adjusted EBITDAR improving to $72.3m and $13.3m, respectively. The Adjusted EBITDAR margin of this business was 18.5% in the 2017 second quarter, an increase of approximately 240 basis points compared to the prior year period and 200 basis points compared to the 2017 first quarter. Further developing the table gaming business and cross-market visitation with other Pinnacle destinations are key areas of revenue opportunity at The Meadows. We have had early success with these initiatives, with table gaming volume increasing 36.9 per cent year over year at The Meadows in the 2017 second quarter and 34.3 per cent in the first half of 2017. We believe there is significant operational improvement still to come, and we are confident The Meadows will produce additional gains in cash flow as we progress through 2017.

“We are excited to highlight that the new gaming floor expansion at Ameristar Council Bluffs opened in June, which added 77 slot machines to the main floor of the casino. Initial feedback from our guests has been overwhelmingly positive given the compelling mix of slot machines and the convenient location of the gaming floor expansion. The revenue per unit of the slot machines in the expanded casino area is tracking at almost twice the overall average of the casino floor. As expected, the initial financial performance of the casino floor expansion indicates this will be a highly accretive investment for our Company.

“Given our constant focus on cost efficiency and continued progress on our operating initiatives, we expect to produce strong growth of Consolidated Adjusted EBITDAR and margin expansion again in the 2017 third quarter. We are confident in our ability to continue to improve our performance, and we are excited about the prospects of our Company in the second half of 2017 and beyond,” concluded Mr. Sanfilippo.

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