Pinnacle Entertainment reports 2015 4Q and record full year financial results

2015 Fourth Quarter Highlights:

Net revenues increased by $4.1 million or 0.7% year over year to $558.4 million. Excluding Lake Charles, which marked the first anniversary of the opening of a new competitor in December 2015, net revenues increased by $17.3 million or 3.8% year over year.

Consolidated Adjusted EBITDA decreased by $6.2 million or 4.1% year over year to $143.3 million, which was driven by increased compensation accruals and expenses related to health care. Excluding Lake Charles, property-level Segment Adjusted EBITDA increased 4% year over year.

2015 fourth quarter financial results benefited from the strong year over year Adjusted EBITDA performances of Baton Rouge, Belterra Park, River City and Kansas City.

Loss from continuing operations was $14.2 million versus income of $14.2 million in the prior year. GAAP net loss per share was $0.23 versus net income per share of $0.24 in the prior year. Loss from continuing operations and GAAP net loss per share were negatively affected by $28 million of non-cash impairment charges related to intangible assets. In the 2015 fourth quarter,

Adjusted income per share remained unchanged year over year at $0.40.

In the 2015 fourth quarter, the Company repaid $24 million of debt.

2015 Full Year and Additional Highlights:

The Company achieved all-time annual records in Consolidated Net Revenues, Consolidated Adjusted EBITDA, and Consolidated Adjusted EBITDA margin in 2015 of $2.29 billion, $617.0 million, and 26.9%, respectively. Embedded in this 2015 performance are all-time annual Adjusted EBITDA records at Baton Rouge, River City, Council Bluffs, Black Hawk and Belterra Park.

In 2015, the Company repaid $337 million of debt, bringing its year ending debt principal balance to $3.62 billion.
On July 21, 2015, the Company announced a definitive agreement under which Gaming & Leisure Properties, Inc. ("GLPI") will acquire substantially all of its real estate assets following the spin-off of the Company's operations into a separate public company ("Op Co"). As consideration for the Company's real estate, PNK shareholders will receive 0.85 shares of GLPI common stock per PNK share they own, as well as the assumption of $2.7 billion of debt and other transaction costs by GLPI. In addition, PNK shareholders will receive one share of the spun-off Op Co per share of PNK they own. The Company will continue to operate its gaming entertainment businesses in the facilities through a triple net master lease with GLPI following the completion of the transaction.

On October 15, 2015, the Company secured Mississippi Gaming Commission approval to complete its transaction with GLPI, and on January 14, 2016, the Company secured the approval of the agreements to complete its transaction with GLPI from the Iowa Racing and Gaming Commission, subject to the approval of GLPI and Pinnacle shareholders.

The Company has applications for approvals pending with the five remaining state gaming regulatory agencies for approval of its transaction with GLPI. We anticipate holding a special meeting of shareholders to seek approval for the transaction in March 2016, with completion of the transaction as soon as possible following the receipt of remaining gaming regulatory approvals.

Anthony Sanfilippo, Chief Executive Officer of Pinnacle Entertainment, commented, "We are proud of the progress that was made on key operating, capital allocation and strategic initiatives during 2015. These initiatives contributed to the positive financial outcomes we achieved during the year. Overall, it was a another year of significant progress for our Company and we are very well positioned for continued growth and further success as we continue to build broad-scaled capabilities in how we operate the company and service our guests.

"Operationally, our focus on growing profitable revenue streams, expense efficiency and leveraging the Ameristar integration work done over the past several years helped drive our strong financial performance, with Consolidated Net Revenues, Consolidated Adjusted EBITDA, and Consolidated Adjusted EBITDA margin all achieving records in 2015.

"We opened a new hotel in New Orleans a year ago, and made significant progress ramping up the financial performance of other newly opened assets in our Company, namely a new hotel and other non-gaming amenities at River City and Belterra Park. We made select investment in our existing asset portfolio in gaming and non-gaming amenities to enhance the guest experience, including the addition of a Stadium Sports Bar in East Chicago and dedicated high limit gaming areas in East Chicago and Council Bluffs. We also commenced gaming floor renovations at all of our Missouri properties to refresh the spaces and expand our high limit and Asian gaming offerings, which will be completed in 2016.

"L'Auberge Baton Rouge achieved record fourth quarter and annual net revenue, Adjusted EBITDA and Adjusted EBITDA margin results. We are pleased with the performance of this property and believe we have further opportunity to grow our revenue streams and profitability in Baton Rouge.

"River City had an outstanding year, as the property gained traction leveraging its full amenity set, which was recently expanded to include a hotel, event center and parking garage. In 2015, the property better utilized these assets to drive incremental table gaming revenue, yield the property to service higher worth guests, and to develop new and profitable revenue streams such as entertainment and hotel convention business. This revenue growth was accomplished while prudently managing its expense structure, with the property achieving record net revenues, Adjusted EBITDA and Adjusted EBITDA margin in 2015 as a result.

"L'Auberge Lake Charles performed very well in 2015. New competition entered the market in December 2014, and by all measures, we had a terrific year in maintaining profitability as well as retaining our talented team members. We are pleased with the net revenue, Adjusted EBITDA and profitability of the property, with the decline of full year 2015 net revenues and Adjusted EBITDA limited to 8% and 13%, respectively. We are proud of our dedicated team members in Lake Charles for successfully leading the property through this transitional year, while continually providing our guests with an exceptional resort experience and a high level of guest service. We are optimistic that we will leverage our high quality operations and outstanding service levels in Lake Charles to a strong financial performance in 2016.

"Belterra Park made significant progress ramping up its operations in the 2015 fourth quarter and is entering 2016 with significant momentum. In the 2015 fourth quarter, the property grew its net revenues by 22%. This stronger revenue performance, along with refinements to its marketing reinvestment and streamlining of its operating expense structure, drove a year over year improvement in cash flow. During the fourth quarter, the property had its best quarter since opening in 2014 in terms of Adjusted EBITDA and Adjusted EBITDA margin. Market awareness of this quality asset is building, with the first quarter of 2016 off to a solid start. We are confident Belterra Park will continue to register significant improvement in its financial performance in 2016.

"Strategically, we entered into agreements to monetize our real estate through our transaction with GLPI. Since announcement, we have worked diligently to achieve the necessary milestones to complete the transaction.

"We believe our company is well positioned to continue to benefit from our high-quality portfolio of properties and a very talented management team. We are optimistic that the many initiatives we have implemented will continue to drive improvement in our financial results," concluded Mr. Sanfilippo.