Pinnacle third quarter revenues rise 7.2%

Income from continuing operations was us$ 11.8 million compared to us$ 1 million in the prior year period and operating income inc reased us$ 14 million year over year to us$ 37.5 million. 

In addition, the company is restating its 2011 second quarter results due to an accounting adjustment related to player loyalty program expenses. Total net revenues and Consolidated Adjusted EBITDA in the 2011 third quarter were affected by the following charges and items:

Net revenue and Adjusted EBITDA) for Boomtown New Orleans was impacted by the property's closure for several days over Labor Day weekend due to Tropical Storm Lee and subsequent flooding disruption in the region. Based upon the property's performance over comparable days in the year-ago period, management estimates Boomtown New Orleans Adjusted EBITDA was negatively impacted by approximately us$ 0.9 million due to this closure and disruption.

Adjusted EBITDA for Belterra Casino Resort and River Downs were impacted by unusually high medical claim expenses of us$ 0.5 million and us$ 0.3 million, respectively.  Belterra's Adjusted EBITDA in the 2010 third quarter included a one-time benefit of us$ 0.8 million from the resolution of a tax matter, affecting comparability with the 2011 third quarter.

During the quarter, Boomtown Reno was classified as a discontinued operation.  The company recorded a non-cash charge of approximately us$ 11.9 million to write-down the assets.  The property generated us$ 12.0 million in revenue and us$ 1 million in Adjusted EBITDA in the 2011 third quarter and us$ 11.9 million in revenue and us$ 1.2 million in Adjusted EBITDA in the 2010 third quarter. The company is currently in negotiations to sell Boomtown Reno and the majority of its adjoining acreage.

Anthony Sanfilippo, president and CEO of Pinnacle Entertainment, commented, "On an operating basis, Pinnacle had another very strong quarter led by record performances at our L'Auberge Lake Charles and St. Louis properties.  While several charges and other items affected year over year comparability, our third quarter results again highlight the effectiveness of our revenue growth and operational improvement initiatives”.

"Adjusting for the Boomtown New Orleans closure and a one-time tax benefit at Belterra in the year-ago quarter, Pinnacle's overall property level Adjusted EBITDA improved 15.7% year over year, or us$ 10.3 million, to us$ 75.7 million.  Corporate expense declined 14.2%, or us$ 1 million, compared to the year ago period and operating profitability continues to improve”, he added.

"This performance continues to demonstrate that our strategies to elevate the guest experience at our properties, leverage the industry-unique benefits of our mychoice guest loyalty program, and a team-wide commitment to implementing operational best practices are driving profitable revenue growth.  At the same time, Pinnacle's strong operating results provide a solid foundation and financial flexibility for the company to build shareholder value from our diversified, return-focused growth pipeline," he concluded.
Third quarter revenue and Consolidated Adjusted EBITDA growth was primarily driven by the continued solid performance of the company's St. Louis segment, which consists of Lumiere Place and River City Casino, and at L'Auberge Lake Charles. 
The firm's St. Louis segment continues to ramp-up. Net revenues for the St. Louis segment increased 6.6% and Adjusted EBITDA rose 30.2%, or us$ 5.2 million, to us$ 22.3 million. Adjusted EBITDA margin of 22.7% for the St. Louis segment compares to 18.6% in the prior year period.
Revenues for L'Auberge Lake Charles rose 12.8%, or us$ 11.1 million, to a quarterly property record us$ 98.2 million.  Adjusted EBITDA rose 24.3% to us$ 29.7 million.  L'Auberge Lake Charles Adjusted EBITDA margin of 30.2% compares to 27.4% in the year-ago period, an increase of 279 basis points year over year.
Revenues for Belterra Casino Resort rose 3.6% to us$ 42.1 million, while Adjusted EBITDA for the property declined 8.7% to us$ 8.7 million from us$ 9.5 million in the year ago period.  Belterra's Adjusted EBITDA margin declined 276 basis points year over year to 20.6%. Boomtown New Orleans Adjusted EBITDA declined 3.6% on a 6.1% decrease in revenues.  During the 2011 third quarter, Boomtown New Orleans was closed for several days over the Labor Day weekend due to Tropical Storm Lee and subsequent flooding disruption in the region.  Boomtown Bossier City's Adjusted EBITDA and revenue declined 8.5% and 2.8%, respectively.   

River Downs Racetrack in Cincinnati, which was acquired in the first quarter of 2011, with the intention to renovate it as a video lottery terminal (VLT) facility, contributed us$ 3.9 million in revenues and an Adjusted EBITDA loss of us$ 0.7 million in the 2011 third quarter. River Downs recognized a us$ 0.3 million charge during the 2011 third quarter related to abnormally high medical claim expenses.
Mr. Sanfilippo commented, "Our commitment to offer best-in-market entertainment and hospitality experiences for our guests combined with the industry's most innovative casino loyalty program is improving our competitive position across our property portfolio.  Our St. Louis segment and L'Auberge Lake Charles are consistently achieving record or near their highest-ever levels of monthly market share as guests increasingly choose these properties as their preferred gaming entertainment destinations”. 

"With the appointment of new general managers at each of our properties over the last 18 months, we are taking fresh company-wide approaches to what drives higher levels of guest satisfaction and consistently refining offerings to meet consumers' specific needs in each market.  These changes include prudent re-investment in property enhancements, a fine-tuning of property amenities and our commitment to keep our gaming floors fresh and exciting.  Taken collectively, this focus has been successful in distinguishing Pinnacle's properties from the competition”, he concluded.  

"Pinnacle's improving operating results, solid balance sheet, significant free cash flow and capital structure, which has no near term maturities, provides the company with the flexibility to address our development pipeline of return-focused opportunities within our portfolio and other expansion projects," said Carlos Ruisanchez, executive vice president and chief financial officer of Pinnacle Entertainment.

"Pinnacle is successfully executing on revenue and operating cash flow growth strategies that are benefiting our current operations.  Our portfolio of development projects will diversify our operations and provide favorable returns on invested capital.  We remain focused on operational excellence and the pursuit of potential new opportunities to create additional value for shareholders”, he affirmed, and then added: "L'Auberge Casino & Hotel Baton Rouge remains on track to open in summer 2012. We believe our facility will be best-in-class in the regional market and will contribute meaningfully to our operating results."

The company also completed its previously announced transaction with Asian Coast Development (Canada) during the third quarter, where for total consideration of us$ 95 million it acquired a 26% ownership stake in ACDL and secured a long-term management contract for a second gaming integrated resort on the Ho Tram Strip in Southern Vietnam. 

The first phase of the development, which will be the first fully integrated resort project in the country and will be managed by MGM International, is expected to open by the end of the first quarter of 2013.