Penn National Gaming overshadowed its second quarter earnings Thursday when it announced that CEO Tim Wilmott will retire at the end of the year. Current Penn chief operating officer Jay Snowden will become CEO of the regional gaming giant on Jan. 1.
The Wyomissing, Pennsylvania-based company said Snowden, 43, was also appointed to the board, effective immediately. Snowden joined Penn in 2011 and had been COO since 2014 and president since 2017.
Wilmott, who joined Penn in 2008 and became CEO in 2013, led the casino company through an expansion period which included a combination of acquisitions and casino openings. The moves created a regional gaming giant with 41 properties in 19 markets. In October, Penn completed a $2.8 billion buyout of Pinnacle Entertainment that cemented the company’s regional and operational diversity.
During Wilmott’s tenure, Penn National has more than doubled its annual revenue from approximately $2.4 billion in 2008 to more than $5 billion expected in 2019.
Wilmott, at the outset of the company’s second quarter earnings call, said the timing was right for the transition. In addition to the Pinnacle deal, Penn acquired the operations of the Margaritaville in Louisiana and Greektown in Detroit in the last eight months. Also, the company is moving forward on two smaller casino projects in Pennsylvania.
It was important for me to leave Penn when it was well-positioned to continue to grow and create shareholder value for the foreseeable future,” Wilmott said. “We now have a geographic footprint that in the long-term will create value for our shareholders. I’m also leaving at a time where we have a very strong management team that continues to run the businesses more efficiently and more effectively than anyone else in the regional gaming space, as evidenced by our results today. And finally, it was important to me to be able to turn over the keys to someone I can trust, who can take Penn to higher levels of excellence and value creation for shareholders.”
In a statement, Penn National Chairman David Handler said, “Tim and Jay have partnered closely over the last eight years, laying a strong foundation for sustained long-term value creation at Penn National, making Jay ideally suited to serve as our next chief executive officer.”
Wilmott has also served as chairman of the American Gaming Association since 2018.
Snowden has overseen Penn’s corporate operations, marketing, interactive, IT and human resources and led the company’s integration with Pinnacle. Snowden spent 12 years in management with Caesars Entertainment in the company’s regional and destination markets before joining Penn.
“Along with our board, senior management, corporate and property teams, we will continue to build on the foundation laid by (former Penn Chairman and CEO) Peter Carlino and Tim Wilmott,” Snowden said. “We are entering a very dynamic time for our company and I couldn’t be more excited, honored and humbled to lead this amazing company into the future.”
Stifel gaming analyst Steven Wieczynski told investors the CEO transition “should be a smooth one” and shouldn’t have caught anyone by surprise.
“Mr. Wilmott has left Penn in great shape and we believe Mr. Snowden is a widely-respected leader with a great understanding of Penn’s operations,” Wieczynski said. He added that Snowden has “thorough experience with capital deployment/M&A and established relationships with the investment community.”
Quarterly results
In the quarter that ended June 30, Penn National said the company’s revenues grew 1.6 percent to $1.3 billion. The results included roughly five weeks of operations from the Greektown Casino, which was acquired at the end of May in a $1 billion deal with real estate investment trust VICI Properties.
Penn’s net income declined slightly to $51.5 million, which the company blamed on flooding impact that disrupted business at three of its Midwest properties and costs associated with the migration of customers to the company’s new player loyalty program. Earnings per share was 44 cents, compared to 57 cents a year ago.
Penn National grew cash flow 7.4 percent to $406.5 million in the quarter.
On Wednesday, Penn National announced multi-year agreements with DraftKings, PointsBet, theScore and The Stars Group that divided up the casino company’s potential online sports betting and online gaming operations.
In exchange for access to the Penn National’s online partnerships – often referred to as skins – and the companies will pay Penn a combination of upfront cash and equity, one-time market access fees and ongoing revenue sharing.
“We believe by retaining control of that primary license, we control our future, today for sports betting, tomorrow for iCasino,” Snowden said on the conference call. “In most if not all states, they will be inextricably linked to one another.”
Las Vegas expansion
Penn executives said the company has no immediate plans to acquire another casino in Las Vegas, where it operates the Tropicana on the Las Vegas Strip and the M Resort in Henderson.
Wilmott said any expansion plans at the Tropicana are pending until the company has a better understanding of how former Pinnacle customers view the south Strip resort.
“We have not at all changed our thoughts about long-term Tropicana, it is still on hold,” Wilmott said. “We still want to see the impact of always new customers on Tropicana before we make any long-term decisions on capital.”
Snowden added that it wasn’t important at this time for the company to have two Las Vegas Strip resorts.
“It’s not imperative that we have a Las Vegas strip asset or two strip assets,” Snowden said. “Would it be nice to have a center strip asset? Sure. Are we going to overpay for one? Absolutely not, not today, not ever. If the price is right, we consider it down the road.”
Howard Stutz is the executive editor of CDC Gaming. He can be reached at hstutz@cdcgamingreports.com. Follow @howardstutz on Twitter.
