Pinnacle Entertainment reports dip in earnings
Pinnacle Entertainment suffered a drop in third-quarter earnings, but executives and gaming analysts wanted to look ahead rather than backward.
The Las Vegas-based casino operator used Tuesday’s earnings release to announce a Dec. 19 opening date for its $507 million Lumiere Place casino in downtown St. Louis, pending Missouri Gaming Commission approval. The project is the first of several developments Pinnacle has in the pipeline that will carry the company through 2012.
Meanwhile, Pinnacle said its third-quarter net income was $4.98 million, or 8 cents per share, in the quarter ended Sept. 30, down from $22.4 million, or 45 cents per share, a year earlier. Analysts polled by Thomson Financial expected earnings of 23 cents a share in the most recent quarter.
Pinnacle said the results reflected higher preopening and development costs, increased corporate costs and certain write-offs and other charges.
Quarterly revenue rose 0.7 percent to $238.4 million from $236.7 million.
"Our properties performed well," Pinnacle Chairman and Chief Executive Officer Dan Lee said. "We continue to make substantial progress on our other growth plans."
Bear Stearns gaming analyst Joe Greff said Pinnacle’s results were better than most investors expected.
"We believe today’s results will be a positive catalyst for shares," Greff said in a note. "The development pipeline, which we believe investors are getting largely for free at current levels, remains intact."
Pinnacle said it plans a soft opening for Lumiere Place, with two hotels to open in phases during January and February, including a 200-room Four Seasons. Lumiere Place is just north of the city’s Gateway Arch near the central downtown business district, the convention center and the Edward Jones Dome, which is home to the National Football League’s St. Louis Rams.
The company said a second St. Louis-area casino, in the county outside downtown, should open in the first half of 2009.
Other company projects include a 250-room expansion to the company’s L’Auberge du Lac resort in Lake Charles, La., a planned expansion to the Boomtown New Orleans and a $1.5 to $2 billion casino project on the Boardwalk site of the now-imploded Sands Atlantic City, that could open in 2011 or 2012.
During a conference call with analysts, Lee said the company might want to develop the former Bader Field airport property that Atlantic City is considering for resort and gaming expansion.
Bader Field, which is 150 acres and closed in 2006, has attracted the interest of casino operators, including MGM Mirage. Developers wouldn’t have to purchase separate land parcels or clear buildings from the site. Lee reportedly met with New Jersey Gov. Jon Corzine during at the time of the Sands implosion and the two discussed casino development.
"We’ll look at it (Bader Field). We might compete for it as well," Lee said. "We have two in St. Louis; we could have two in Atlantic City."
Atlantic City now has 11 casinos. In addition to Pinnacle’s planned casino on the Sands site, Revel Entertainment is developing a $2 billion casino on the Boardwalk next to the Showboat. MGM Mirage announced plans last month for the $5 billion MGM Grand Atlantic City.
Pinnacle said its revenues in the quarter were helped by L’Auberge. The company’s flagship casino generated $84.5 million in the third quarter, a 6.7 percent increase compared with $79.2 million for the same period in 2006.
Lee said Pinnacle expects to begin construction early next year on Sugarcane Bay, a second resort next to L’Auberge.
Shares of Pinnacle closed at $28.22 in trading on the New York Stock Exchange, up 80 cents or 2.92 percent.
Contact reporter Howard Stutz at hstutz@reviewjournal.com or (702) 477-3871.
