At the same time, the company has pocketed around $45 million (after the investment bankers received their cut) in breakup fees and expenses. Those proceeds, combined with a recent $180 million stock offering and the sale of two card clubs in California (which netted $27.7 million in pre-tax gains), have left the company with nearly $380 million in cash on the balance sheet.
This strengthened financial position has given Pinnacle added flexibility to pursue other ambitious projects. In the meantime, recently announced second-quarter results suggest the company remains on track to deliver exceptional growth rates this year. For the period, adjusted EBITDA spiked 80% to $54.5 million, on revenues that climbed 51% to $228.8 million. While those numbers look good on the surface, they are also somewhat misleading.
Much of the gains can be traced back to Boomtown New Orleans, where revenues were up 82% and EBITDA jumped at twice that rate. Like Boyd Gaming's
Nevertheless, while the resort's production will certainly moderate from here, it continues to produce robust results, particularly considering Harrah's
Meanwhile, the L'Auberge Du Lac resort in Lake Charles, La. was responsible for the remainder of the gains. Since the casino only opened late last May, any year-over-year comparisons can basically be thrown out the window. Still, the property did post hefty profits of nearly $18 million, on more than $77 million in revenues.
The L'Auberge Du Lac -- which features a 26-story hotel (with more rooms on the way), a marina, a Tom-Fazio designed golf course, and one of the nation's largest single-deck riverboats -- has quickly overtaken Belterra to become Pinnacle's flagship property. The resort has also surpassed Harrah's Horseshoe in Bossier City as the top-grossing riverboat casino in the state. (The company hasn't broken out RevPAR for the property, but with packed crowds and daily room rates routinely above $200, I'm guessing it's impressive.)
Pinnacle is essentially doubling down in the Lake Charles market, agreeing to an asset swap with Harrah's that will give the firm control of a hotel and two operating licenses, one of which will be used for the new Sugarcane Bay resort. Management has recently unveiled preliminary plans for the $350 million Caribbean-themed property, which will sit adjacent to the L'Auberge Du Lac on scenic Contraband Bayou. Pinnacle is expecting both high-end properties to draw heavily from an affluent base of gamblers in nearby Houston.
As for the firm's other properties, yesterday's results were somewhat mixed. EBITDA margins expanded more than 500 basis points at Boomtown Bossier City, but earnings were flat at Belterra, and down sharply in Reno. However, the Reno resort could see traffic pick up when Cabela's
All things considered, Pinnacle's second-quarter growth may be misleading, but with two upscale properties under construction in St. Louis, a proposed gaming and entertainment facility in Pennsylvania, and several developments on the international front, they just might be indicative of what's ahead.