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LAS VEGAS-Casino operator Pinnacle Entertainment Inc. said Monday its third-quarter profit was four times greater than last year. The strong year-over-year comparison is due to the negative effects hurricanes Katrina and Rita had on the third quarter of 2005 and start-up costs associated with its 16-month-old casino in Louisiana.
The company reported net income of $22.4 million, or $0.45 cents per share, in the third quarter versus $5.04 million, or $0.12 cents per share during the third quarter of 2005. Revenue rose to $236.7 million from $174.4 million in the same 2005 quarter. Analysts' average expectation was for net income of $0.32 per share on revenue of $234.4 million.
The third quarter profit was in large part the result of a gain on an asset sale and the performance of L'Auberge du Lac, a casino in Lake Charles, LA, that it opened in May 2005. With regard to the asset sale, Pinnacle booked a pre-tax gain of $16.5 million in the third quarter after completing the sale of its interests in the Hollywood Park Casino card club.
L'Auberge du Lac's, which produced negative EBITDA during the third quarter of 2005, this year produced third quarter EBITDA of $19.7 million. Year-to-date, the casino is at 90% of the goal Pinnacle set for the year. In a conference call Monday, officials said the performance caused them to break ground for a $45-million, 250-room expansion that will take the facility to 1,000 rooms.
Shares of Pinnacle Entertainment stood at $31.13 at close of trading Monday, up $1.03 on the day. The stock's 52-week high is $32.75.
In addition to breaking ground on the L'Auberge du Lac's expansion in September, Pinnacle signed an agreement to purchase the entities that own The Sands Hotel and Casino and Traymore sites in Atlantic City, New Jersey from entities affiliated with financier Carl Icahn for approximately $250 million, plus an additional $20 million for certain tax-related benefits and additional real estate. Pinnacle plans to design and build an entirely new casino hotel on the site. Design and construction of such casino resort is expected to require four to five years. As of October 18, the seller cannot terminate the offer due to a higher offer.
Also in October, Pinnacle reached a settlement agreement with President Casinos Inc. regarding its acquisition of the bankrupt President Casino in St. Louis. If approved by the bankruptcy court and the Missouri Gaming Commission, Pinnacle will pay $41.5 million for the property after all is said and done.
At Pinnacle's construction site in Downtown St. Louis, the sixth level of a new casino resort is under construction. The project is scheduled to open in the second half of 2007 with 2,000 slot machines, 40 table games, a spa, several restaurants and 12,000 sf of meeting and convention space.
Meantime, site work is underway for River City, Pinnacle's $375 million casino project in south St. Louis County, and approval of another Lake Charles project by Pinnacle, Sugarcane Bay, is on the ballot this week.
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