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LAS VEGAS, Nov. 6, 2013 (GLOBE NEWSWIRE) -- Pinnacle Entertainment, Inc. (NYSE:PNK) today reported financial results for the third quarter ended September 30, 2013.
2013 Third Quarter Financial Highlights:
On August 13, 2013, Pinnacle completed the acquisition of Ameristar Casinos, Inc., a transaction valued at $2.8 billion including assumed debt. As a result of the transaction, the Company added eight gaming entertainment properties. The Company is divesting the Ameristar Casino Lake Charles development project and Lumiere Place Casino and Hotels pursuant to a Federal Trade Commission ("FTC") consent order, and following the completion of those transactions, the Company will operate a total of 16 properties in nine U.S. states, including 14 casinos and two racetracks.
Revenues increased by $162.8 million or 63.6% to $418.9 million, and Consolidated Adjusted EBITDA increased by $37.4 million or 57.5% to $102.6 million. These results include 49 days of contributions from Ameristar, but exclude Lumiere Place Casino and Hotels in all periods presented.
Combined Net Revenues and Combined Consolidated Adjusted EBITDA would have been $553.9 million and $140.5 million, respectively, had the results of Ameristar been incorporated for the entire 2013 third quarter instead of the 49 days included in the GAAP results.
Both Consolidated Adjusted EBITDA and Combined Consolidated Adjusted EBITDA were negatively affected by a $3.3 million non-recurring increase in legal reserves in the 2013 third quarter. The increase in legal reserves is reflected in Corporate expenses and Other.
Loss from continuing operations was $47.1 million versus income of $6.7 million in the prior year period. 2013 third quarter loss from continuing operations included $12.1 million of net write-downs, reserves and recoveries; $63.1 million of pre-opening and development expenses, principally associated with the acquisition, integration and financing of the Ameristar transaction; and a loss on early extinguishment of debt of $30.8 million.
GAAP net loss per share was $3.07 versus break-even earnings of $0.00 in the prior year period. 2013 third quarter GAAP net loss per share was additionally affected by a non-cash impairment charge of $144.6 million related to the divestiture of Lumiere Place Casino and Hotels and a benefit of $62.5 million related to a partial release of a valuation allowance applied to the Company's deferred tax asset position. Adjusted income per share, which removes the effect of non-comparable charges and items in both periods, was $0.11 versus $0.30 in the prior year period.
In August 2013, the Company completed a private offering of $850 million aggregate principal amount of its 6.375% senior unsecured notes due 2021 and closed a $2.6 billion amended and restated senior secured credit facility. The proceeds from these transactions were used to finance the cash consideration for the acquisition of Ameristar, refinance existing credit facilities, pay related transaction fees and expenses, redeem Pinnacle's existing 8.625% senior notes due 2017 and provide funds for general corporate purposes.
The Company completed the divestiture of its land holdings in Atlantic City in August 2013 for cash consideration of $29.5 million.
The Company recently announced the re-branding of its redevelopment project at River Downs in Cincinnati, Ohio to Belterra Park Gaming & Entertainment Center. The project budget remains $209 million, excluding license fees, original acquisition costs, and capitalized interest, and is scheduled to open in May 2014.
On August 28, 2013, the Company opened a new 200-room hotel at River City in St. Louis, Missouri, which completed an $82 million expansion of the facility that also added a 1,600-space covered parking structure and 14,000-sq. ft. multi-purpose event center.
Since the closing of the Ameristar transaction, the Company repaid $74 million of term loans with cash flow from operations and the net proceeds of the Atlantic City land sale.
In the 2013 third quarter, revenues increased by $162.8 million or 63.6% year over year to $418.9 million, while Consolidated Adjusted EBITDA was $102.6 million, an increase of $37.4 million or 57.5% year over year. 2013 third quarter results reflect contributions from the operations of Ameristar for 49 days, but exclude Lumiere Place Casino and Hotels in all periods presented. Lumiere Place Casino and Hotels is reported as a discontinued operation given its impending divestiture. 2013 third quarter Combined Net Revenues and Combined Consolidated Adjusted EBITDA would have been $553.9 million and $140.5 million, respectively, had the results incorporated Ameristar for the entire 2013 third quarter instead of the 49 days included in the GAAP results. Both Consolidated Adjusted EBITDA and Combined Consolidated Adjusted EBITDA were negatively affected by a $3.3 million non-recurring increase in legal reserves, which is reflected in Corporate expenses and Other.
Summary of Third Quarter Results
(in thousands, except per share data)
Three months ended September 30,
Consolidated Adjusted EBITDA (1)
Consolidated Adjusted EBITDA margin (1)
Operating (loss) income (2)
(Loss) income from continuing operations
(Loss) income from continuing operations margin
GAAP net loss
Diluted net loss per share
Adjusted income per share (1)
(1) For a further description of Consolidated Adjusted EBITDA, Consolidated Adjusted EBITDA margin, Combined Net Revenues, Combined Consolidated Adjusted EBITDA and Adjusted income per share, please see the section entitled "Non-GAAP Financial Measures" and the reconciliations to the GAAP equivalent financial measures below.
(2) Operating loss in the 2013 third quarter includes $63.1 million in pre-opening and development costs, principally comprised of legal and advisory expenses, severance charges, and other costs and expenses related to the financing and integration of the acquisition of Ameristar, versus $11.5 million in the prior year period, and a $12.1 million net negative impact related to write-downs, reserves and recoveries, principally comprised of a write-down of the gaming license for the Company's Boomtown Bossier City property, versus a net negative impact of $0.1 million in the prior year period.
Significant Items Recorded in the 2013 Third Quarter
In the 2013 third quarter, the Company recorded several items that impacted operating loss, loss from continuing operations, net loss, and applicable respective per share amounts, and affected comparability with the prior year period. These items principally represented the recognition of charges or expenses associated with, or driven by, the acquisition, financing and integration of Ameristar.
of item (1)
Increase in legal reserves
G&A/Corporate expenses and other
Total effect on Consolidated Adjusted EBITDA
Integration-related severance expense
Pre-opening and development
Ameristar acquisition closing costs and other
Pre-opening and development
Non-cash impairment of Boomtown Bossier City gaming license and other charges
Write-downs, reserves and recoveries, net
Total effect on Operating loss
PNK 8.625% Senior Note redemption costs and other write-offs from early retirement of debt
Loss on early extinguishment of debt
Total effect on Loss from continuing operations
Release of tax valuation allowance (2)
Income tax (expense) benefit
Impairment of Lumiere Place Casino and Hotels
Total effect on GAAP net loss
(1) The amount of the items in the table above are shown on a pre-tax basis, except for the tax valuation allowance release which is a discrete tax item.
(2) Through the acquisition of Ameristar, the Company established a deferred tax liability that allowed for the releasing of a portion of the valuation allowance applied to its deferred tax assets, with the offset being the income tax benefit recorded in the 2013 third quarter.
Operating loss was $15.2 million in the 2013 third quarter versus income of $32.7 million in the prior year period. Loss from continuing operations was $47.1 million in the 2013 third quarter versus income of $6.7 million in the prior year period. Relative to the prior year period, loss from continuing operations was negatively affected by $12.1 million of net write-downs, reserves and recoveries; $63.1 million of pre-opening and development expenses, principally associated with the financing and integration of the Ameristar acquisition; a loss on early extinguishment of debt of $30.8 million related to the refinancing of the Company's 8.625% Senior Notes due 2017; higher interest expense as a result of additional debt incurred to finance the Ameristar acquisition; the $3.3 million addition to legal reserves; and due to the Company no longer capitalizing interest on its investment in L'Auberge Baton Rouge effective with the property's opening in September 2012.