Penn casinos post 63 percent decline in fourth quarter
Penn National Gaming Inc., operator of casinos in Aurora, Joliet and Alton, posted a 63 percent decline in fourth-quarter profits compared with last year's fourth-quarter results, which were boosted by settlement gains from Hurricane Katrina.
The Wyomissing, Pa., company earned $32.2 million, or 36 cents per diluted share, in the quarter ended Dec. 31, compared with last year's $87.3 million, or $1 per diluted share.
The nation's fourth-largest casino operator missed analysts' estimate of 41 cents per share.
Revenues were up 2.25 percent to $585.8 million from $572.9 million, but the company missed its own target revenues of $595.4 million.
The company is in the midst of a proposed buyout by Fortress Investment Group LLC and Centerbridge Partners LP for $67 per share. However, Penn's stock has been trading at pre-buyout offer levels, and current credit conditions pose considerable risks to the offer's feasibility, Morningstar Inc. analyst Sumit Desai said.
"The market is implying the buyout won't go through," Desai said.
Penn National Gaming took in $225 million in the fourth quarter of 2006 from a settlement agreement with its insurers over Hurricane Katrina-related losses.
The company, whose Illinois holdings are Hollywood Casino Aurora, Empress Casino Joliet and Argosy Alton Casino, said earnings were impacted by bad weather at its five largest properties.
"In total, these facilities had 29 property days impacted by snow in the 2007 fourth quarter, versus three in the same period in 2006," said Penn CEO Peter Carlino in a statement.
The company said overall revenue growth was affected by continuing competitive pressure at Joliet and a drop at its Biloxi, Miss., facility that was related to post-hurricane market declines.
Earnings were also hit by an unanticipated $2.5 million opening charge for Pennsylvania Gaming Control Board start-up fees at its Penn National facility. That was partially offset by reductions in property insurance costs and Illinois tax rollbacks.
The company is upbeat about near- and long-term earnings and expects expansion prospects to begin paying off in 2008.
The 2007 quarter was the second consecutive period in which the company fell short of its own guidance.