Penn National profits down 11 percent

LAS VEGAS, Nevada -- Regional casino and racetrack operator Penn National Gaming said Thursday its first-quarter profit declined 11 percent from a year ago because of reduced consumer spending on gambling.

The company reported net income of $36.2 million, or 34 cents per share, for the quarter ended March 31. A year ago, Penn National reported net income of $40.7 million, or 38 cents per share.

Revenue fell 3.3 percent, to $592.3 million from $612.2 million.

"First-quarter revenue trends continue to reflect the current macroeconomic environment as well as a greater-than-anticipated impact of weather at several of our properties," Penn National Chief Executive Officer Peter Carlino said in a statement.

Carlino added that cost-cutting will continue at several of the company's properties.

"However, it will take some time to return margins to previous levels generally, and our historically high margins will not be attainable until revenues return to prior levels," Carlino said.

Wall Street wasn't disappointed by Penn's quarterly results.

"Despite revenue falling short of our estimate, we think due primarily to inclement first-quarter weather, Penn showed significant property level margin improvement in the period," JP Morgan gaming analyst Joe Greff told investors.

Penn National operates racetracks and casinos in U.S. cities other than Las Vegas and Atlantic City. However, the company has shown an interest in acquiring a hotel-casino on Las Vegas.

For now, the company told investors its expects to benefit from the addition of table games at two of its casinos in formerly slot machine-only markets, West Virginia and Pennsylvania.

An analyst pointed out the company has other regional casino growth initiatives.

"We believe investors will remain focused on timing and execution of new casino projects in Maryland, Kansas and Ohio over the next couple years" Macquarie Securities gaming analyst Joel Simkins said.

"As well, while Penn has been quiet on the mergers and acquisition front, we believe more assets are likely to come on the market and the company will continue to look at selected opportunities," he added.

Penn National Gaming shares rose 81 cents, or 2.75 percent, Thursday to close at $30.24 on the Nasdaq National Market.