Penn National Gaming (PNG) has reported a 60.0% year-on-year increase in revenue for the second quarter of 2019, outperforming its projections for the period.
Group revenue for the three months to 30 June, 2019 grew to $1.32bn, of which $1.06bn game from gaming, with hospitality, such as food, beverage and hotel rooms, bringing in a further $261.0m.
The operator has significantly expanded its casino estate over the past year, through the $2.8bn acquisition of Pinnacle Entertainment, and the $300m deal for the Detroit-based Greektown Casino Hotel, which closed in Q2.
The integration of the Pinnacle properties is continuing apace, with outgoing chief executive Timothy Wilmott revealing that PNG now expects to achieve at least $120m of cost synergies through the deal, up from the previous projection of $115m.
At least $60m in synergies are expected to be achieved in 2019 alone, while the Penn National and Pinnacle player loyalty systems have also been migrated to a single platform.
With the business growing significantly, operating expenses rose sharply in Q2, almost doubling to $1.12bn. Gaming expenses were up 60.9% year-on-year to $564.2m, with general and administrative expenses up to $287.0m and depreciation and amortisation-related costs rising to $106.0m.
Hospitality-related expenses also climbed to $167.6m, leaving an operating profit of $198.4m, up 9.1% from Q2 2018.
Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) for the quarter came in at $191.6m.
After other expenses, mainly relating to interest-related expenses ($128.5m) pre-tax profit was up marginally to $69.9m. Once income tax-related expenses of $18.5m, and a $190,000 benefit from non-controlling interests held by PNG, the operator’s net profit was down 4.5% at $51.5m.
For the six months to 30 June, revenue was up 58.6% at $2.61bn, of which $2.10bn came from gaming, and $509.1m from hospitality. Operating expenses for H1 were up significantly, to $2.22bn, leaving an operating profit of $380.8m.
Once finance-related costs such as income expenses were stripped out, pre-tax profit was down 3.6% at $125.7m. After income taxes, net profit was down 6.9% at $92.5m.
Following the Q2 performance, PNG has revised its third quarter and full-year guidance targets upwards. Revenue for Q3 is now expected to come in at $1.37bn with adjusted EBITDA to reach $186.1m.
For the 12 months to 31 December 2019, revenue projected to hit $5.34bn, with EBITDA expected to rise to $732.1m.