Penn National Gaming Inc. reported net income of $78.6 million for the first quarter of 2012, up 52% from $51.5 million for the first three months of 2011.
The racing and gaming company released its earnings report April 19.
Net revenue for the first quarter was $736.1 million, an increase of 10.3% from $667 million for the first quarter of last year. The company’s “East/West segment” fueled the growth with revenue of $370.6 million compared with $288.3 million last year.
The segment includes PNGI’s most successful property, Hollywood Casino at Charles Town Races in West Virginia, along with Hollywood Casino Perryville in Maryland; Hollywood Casino Bangor in Maine; Hollywood Casino at Penn National Race Course in Pennsylvania; Zia Park Casino in New Mexico; and M Resort in Nevada.
PNGI chairman and chief executive officer Peter Carlino noted consolidated first-quarter earnings before interest, taxes, depreciation, and amortization marked the company’s fifth consecutive quarter of year-over-year adjusted EBITDA margin improvements. He cited a “mild East Coast winter, healthier consumer spending, and excellent operating performance by our property teams” for the improvement.
“While the most significant year-over-year growth was driven by the company’s East/West segment, adjusted EBITDA improvements were achieved at 11 of the 16 gaming properties we operated during the first quarter of both 2012 and 2011, and 12 of these properties improved their adjusted EBITDA margins year over year,” Carlino said. “Notably, despite new competition from the operations of the 10th (casino) license in Illinois, adjusted EBITDA margins in the Midwest segment rose on a year-over-year basis after excluding the impact of pre-opening costs.”
PNGI is nearing completion on two full-scale casinos in Columbus and Toledo, Ohio, and has an agreement with the state to relocate two Ohio racetracks so video lottery terminals can be added. The 2011 VLT law has been challenged in court.
The two new racetrack casinos would each cost about $275 million, which includes $75 million in license fees and relocation costs. The state, through the Ohio Lottery Commission, would get 33.5% of racetrack and non-track casino revenue.
“We remain in negotiations with the Thoroughbred and harness horsemen’s organizations to determine the level of their participation in the revenue streams from our significant investments in these two new first-class racing and gaming facilities, and are optimistic we will reach a resolution equitable to both parties,” Carlino said.
The Ohio VLT law contains no revenue split for purses, breed development, and other racing programs. Republican Gov. John Kasich ordered tracks and horsemen to hammer out a deal.
PNGI also owns Rosecroft Raceway in Maryland. Carlino said a special session of the Maryland legislature could be called for later this year, and that PNGI would continue to lobby for gaming at the harness track located just south of Washington, D.C., and minutes from northern Virginia.