In its first earnings report since an announced merger with Eldorado Resorts in September, Isle of Capri Casinos reported rough results for the third quarter Thursday morning – missing Wall Street estimates on earnings per share, net revenue and EBITDA.
The St. Louis-based regional gaming operator posted a 0.9 percent year-over-year decline in net revenue to $198.6 million – 5 percent below the consensus estimate of $210 million, and a slight drop in adjusted EBITDA to $42.9 million for the quarter – 6 percent below the $45 million consensus. The company also reported earnings per share of $0.13, also shy of the $0.20 consensus.
On the positive side, Isle posted a year-over-year increase from $0.14 a share to $0.54 a share in diluted net income per share from continuing operations and a 1.8 percent increase in property adjusted EBITDA driven by strong performances from its properties in Missouri and Iowa.
“Property Adjusted EBITDA increased 1.8%, led by record quarterly Adjusted EBITDA results from our four Missouri properties and Waterloo, while Bettendorf generated strong initial results from its land-based facility, as Adjusted EBITDA increased 26.2% year over year,” chief executive Eric Hausler said in a statement.
Hausler emphasized that while August and September experienced softer trends than usual, October experienced a rebound that has thus far carried into the final quarter of 2016.
Isle’s new riverboat-turned-dry land casino in Bettendorf, Iowa also continued to post strong initial results since opening in June, reporting a 26 percent jump in adjusted EBITDA over the prior year quarter. After being inaugurated as one of the first riverboat casinos in the United States in the early 1990s, it relocated 200 feet to a new $60 million land-based facility.
“The second quarter was the first full operating quarter for our new land-based casino and entertainment facility in Bettendorf. We led the Quad Cities market in total gaming revenues in each of the months since the property opened,” said Hausler. “While still early, we are pleased with the initial returns on our investment. Customer reception to the land-based facility has been very positive.”
But strong showings in Iowa and Missouri were mitigated by depressed results at Isle’s casino in Pompano, Florida and its properties in Mississippi, all of which experienced reduced visitation for weather and competitive reasons.
“Although there were several puts and takes to ISLE’s F2Q17 results, the consolidated property-level performance generally fell in line with our expectations, as better than expected results at the recently-opened Bettendorf land-based facility and at all four MO properties combined to offset sluggish performance at Pompano (hurricane impact) and Lula (increased regional competition),” wrote Steven M. Wiecynski, an analyst with Stifel Nicolaus Capital Markets.
But the biggest news of the quarter was a September 19th deal to sell itself to Eldorado Resorts, the fellow regional gaming company, for $950 million.
“We believe this transaction, which will create a regional gaming company with significant scale, geographic diversity and free cash flow, provides our shareholders with both immediate value and the benefit from the potential upside expected from the significant operating synergies between these two companies,” said Hausler.
The transaction is still expected to close in the second quarter of 2017.
Because of the pending deal, Isle did not hold the typical conference call to discuss the quarterly earnings with investors, analysts and media
