Penn National reports 14.5 percent revenue growth, will restate financials

A view of the M Resort in Henderson.

Penn National Gaming, the casino company that runs the Tropicana and the M Resort in Henderson, reported its third-quarter earnings today.

Company: Penn National Gaming Inc. (NASDAQ: PENN)

Revenue: $739.3 million, up 14.5 percent from the third quarter of 2014.

What it means: Penn National announced that it will restate its quarterly financial results dating back to the company’s November 2013 spinoff of real estate assets to Gaming and Leisure Properties Inc. Since that time, Penn National has leased properties back from Gaming and Leisure, but the company has now determined that it needs to change the way it was accounting for those payments.

Specifically, Penn National is changing its classification of Gaming and Leisure rent payments from an operating lease to a financing obligation, the company said in a statement. The change was prompted by outside auditors, the company said, and should not affect important financial figures such as cash flows and revenues.

“This change has no impact on key indicators of the company’s performance and the third quarter was very active and productive for Penn National,” Chief Executive Timothy Wilmott said in a statement.

Penn National said its adjusted earnings before certain costs rose to $210.1 million from $170.3 million last year. The company did not report net income or earnings per share.

At the Tropicana, which Penn National has owned for nearly two months, the company has already started to implement “numerous initial operational improvements” and remains confident in its two-phase plan for the property, Wilmott said in the statement.

Phase one includes updating the casino’s slot machine offerings and expanding its table game options, as well as enhancing the “breadth and quality” of food and beverage offerings and integrating the company’s player loyalty program, according to Wilmott. In the longer term, Penn National plans to consider other changes to the Tropicana based on its operation of the property and customer demand.

Penn National also recently opened its Plainridge Park casino in Massachusetts. The company expects revenue trends there to “taper down” over the casino’s first months in operation, then return to a higher level once marketing is in full swing, according to Wilmott.

The company’s $390 million casino in development near San Diego is on schedule to open in mid-2016.

Gaming

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