Penn National Gaming, the casino company that operates the M Resort in Henderson and is buying the Tropicana, reported its second-quarter earnings today.
Company: Penn National Gaming, Inc. (NASDAQ: PENN)
Revenue: $701 million, up 7.5 percent from the second quarter of 2014.
Earnings: $16.9 million, compared with $4.2 million the same time last year.
Earnings per share: 19 cents, compared with 5 cents last year.
What it means: In April, Penn National revealed plans to buy the Tropicana for $360 million. President and CEO Timothy Wilmott reiterated in a statement today that his company expects to complete its two-phase plan for the Tropicana in the next three to five years.
Wilmott said Penn National will invest about $20 million in the first phase, which will include facility improvements to the Tropicana and upgrading the technology infrastructure to incorporate the company’s loyalty program, Marquee Rewards. The next phase will encompass looking at other additions such as more retail offerings, restaurants, hotel rooms and “enhanced entertainment offerings,” according to Wilmott.
“The scope, budget and timing of any such expansion and improvements will be determined based upon Penn National’s early operation of the property and customer feedback for additional amenities,” he said in the statement.
The Tropicana transaction still needs approval from Nevada gaming regulators. It’s expected to close by the end of the year.
The Strip is not the only place where Penn National is expanding. The company is also involved with the construction of the Hollywood Casino Jamul-San Diego in Southern California, a planned Native American casino that will be operated by Penn National.
According to Wilmott, construction on that property topped out in late June, and the construction budget rose by $30 million to $390 million. Penn National expects that its seven-year contract will produce a management fee that equals 30 percent of the property’s pretax income, in addition to 1.5 percent of gross gaming revenues as a licensing fee for the Hollywood brand. Penn National also anticipates interest on funds it advanced to develop the casino, and it’s looking into “other financing options to provide more permanent, lower-cost terms for the tribe.”
Beyond those expansion projects, Penn National recently opened the Plainridge Park casino in Massachusetts. Wilmott said more than 10,000 customers visited Plainridge Park during its first 24 hours of operations, and guest response “remains overwhelmingly positive.”
Additionally, Wilmott cited “growing evidence of an improved operating environment” as one factor that should lead to strong financial performance in the second half of the year.