Big year seen for Penn National Gaming

May 1, 2007 5:22 AM

Earnings edged upward for Penn National Gaming Inc. (PENN) signaling in the minds of the company’s management that this will be an exceptional year.

Penn National is now anticipating that a full-year profit of $165.5 million or $1.89 per share, up from its prior forecast of $162.6 million or $1.86 per share.

For the first quarter of fiscal 2007 that ended on March 31, the company said earnings rose to $42.9 million or $0.49 per share, versus $42 million or $0.49 per share during the same period a year ago. Excluding a seven cents per share charge for early extinguishment of debt, earnings for the prior year period were $0.56 per share.

Helping boost the quarter’s results, said Peter Carlino, chairman and CEO, were contributions from the racino in Bangor, Maine, and the two Gulf Coast facilities.

Prospects for the remainder of the year, he said, improved with the purchase of Zia Park Racetrack and its Black Gold casino in New Mexico and the potential of adding table games to the West Virginia racino.

"Penn National continues to benefit from the diversification afforded by our portfolio of regional gaming properties, and we are poised for growth as expansion projects at Argosy Casino Riverside and Charles Town, as well as the acquisition of Zia Park Racetrack and its Black Gold Casino, our fourth integrated racing and gaming facility, are now coming on line," Carlino said.

He added that "These developments will be followed in 2008 by the completion of three significant projects, including the grand opening early in the year of the Hollywood Casino racing and gaming facility at Penn National Race Course, followed shortly thereafter by the completion and opening of the permanent Hollywood Slots at Bangor."

Boyd Gaming

Analysts were disappointed with the quarterly results reported by Boyd Gaming Corp. (BYD), although net income nearly quadrupled to $$216.3 million or $$2.44 per share compared to net income of $63.2 million or $0.70 a year earlier.

However, that income figure included a pretax profit of $285 million from sale by Boyd Gaming of the Barbary Coast Hotel/Casino to Harrah’s Entertainment Inc. (HET).

Adjusted earnings from continuing operations for the first quarter of 2007 were $44 million or $0.50 per share compared to last year’s $72.2 million or $0.79 per share. Other pre-tax adjustments reduced income from continuing operations by $16.5 million or $0.12 per share, the company said.

Net revenues were $517 million, a decrease of 12.3% from the same quarter in 2006.

The company said its operations in the Las Vegas locals segment, in its Midwest and south region and in its downtown Las Vegas properties, revenues declined while in Atlantic City Borgata’s gaming revenue rose 7.5% and non-gaming revenue was up by 19%.

Respected analyst Harry Curtis of JP Morgan said in a client note that Boyd’s adjusted earnings missed Wall Street’s view due to "continued softness in Las Vegas."

"The continued weakness in this market will make upside to consensus estimates difficult and does not allow us to look to the company’s growth opportunities in 2009 through 2010," he wrote.

Dover Downs

Substantial improvements were noted in the three months that ended on March 31 said Dover Downs Gaming & Entertainment Inc. (DDE) whose net earnings per diluted share improved 16.7%.

Net earnings were $6.88 million or $0.21 per share compared to last year’s $6.16 million or $0.18 per share.

Revenues increased to $60,631,000 compared with the $59,272,000 the company reported in 2006. The improvement was due to increase use of the company’s video lottery machines and its hotel facilities. Occupancy levels for the Dover Downs Hotel exceeded 95%, the company reported.

Two capital improvements were announced, including doubling of the hotel capacity and Phase VI of the casino expansion that will add nearly 70,000 square feet to the gaming area.