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Penn National posts record cash flow for 1st quarter

Penn National Gaming Inc., operators of the Tropicana on the Strip and Henderson’s M Resort, posted a record first quarter for cash flow Thursday with revenue levels climbing toward pre-pandemic times.

But Penn is taking a slow approach toward making deals focused on the Strip with the sale of the Tropicana being finalized for early next year.

Asked in Thursday’s earnings call about Penn’s desire to seek a new Las Vegas property, CEO Jay Snowden said there’s no rush to find a new property.

“I think the Vegas Strip is a great market and I think when you look at the Penn story could you envision down the road there being a sort of a hub-and-spoke as it relates to our longtime retail strategy, absolutely,” Snowden said. “It has to be the right asset, the right location and it has to be an asset that we feel is representative of a destination that we want to send people to.”

Snowden acknowledged some of the struggles Penn has had with the Tropicana over the years.

“I think we actually executed quite well, but at the end of the day you need to have a property that’s in a great location and it’s competitive from an amenity standpoint,” he said. “Based on everything we have going on as a company, it’s not imperative, it’s not something that has to be done and we have a timeline associated with that.”

Still, he said the company will “absolutely be taking a look at those quality assets for sale in Vegas and with our balance sheet and with our database, I think we feel very comfortable making an investment if it is the right opportunity for us.”

The Wyomissing, Pennsylvania-based company attributed its first-quarter success to its core business “hitting on all cylinders” and the expansion of its Barstool Sports iGaming and sports wagering partner expanding to two more states.

“Despite COVID-related restrictions and closures in January and harsh winter weather in the South segment in February, visitation and length of play continue to improve across all age segments of our player database,” Snowden said. “Moreover, we saw volumes in the month of March that we have not seen since 2019.”

Penn reported net income of $90.9 million, 55 cents a share, on revenue of $1.275 billion for the quarter that ended March 31. That compared with a net loss of $608.6 million, $5.26 a share, on revenue of $1.116 billion for the same quarter in 2020.

Last month, Penn National-affiliated real estate investment trust Gaming & Leisure Properties Inc. announced that it had sold the Tropicana to Providence, Rhode Island-based Bally’s Corp. for $308 million.

The deal is expected to close early next year.

Joe Greff, a gaming analyst with New York-based J.P. Morgan, said Penn is trending upward like its regional gaming peers, despite partial or full casino closures occurring in Pennsylvania, Illinois and New Mexico during the quarter.

“Also, similar to peers, Penn indicated that strength has continued into April and May, with strong spend-per-visit continuing but now experiencing improved visitation relative to earlier in the pandemic, with a return of the important 55-year-old-plus demographic,” he said in a report to investors.

Penn National, traded on the Nasdaq exchange, closed down $7.48, 8.2 percent, Thursday to $83.93 a share on volume about twice the daily average. After hours, shares climbed 94 cents, 1.1 percent, to end at $84.85 a share.

Contact Richard N. Velotta at rvelotta@reviewjournal.com or 702-477-3893. Follow @RickVelotta on Twitter.

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