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Pinnacle Entertainment’s capital expenditures strategy

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Capital expenditures

Pinnacle Entertainment (PNK) uses its existing cash resources, expected cash flows from operations, and the funds available under its Credit Facility to pay for operations, property maintenance, necessary debt services, and project development.

PNK’s long-term capital expenditures strategy includes the following activities:

  • improving and maintaining existing properties
  • increasing the number and quality of facilities by pursuing gaming entertainment opportunities

In May 2014, Pinnacle Entertainment opened its Belterra Park property. As of September 30, 2014, PNK had spent about $199.4 million of this project’s $209-million budget.

PNK has incurred capital expenditures of $188.7 million in 2014 YTD (year-to-date). The chart above shows that Wall Street analysts are expecting PNK’s capital expenditures to decline in 2015 and 2016.

Capital expenditures for peers Penn National Gaming (PENN) and Boyd Gaming (BYD) have totaled $161.3 million and $94.6 million, respectively, in 2014 YTD.

ETFs like the Consumer Discretionary Select Sector SPDR Fund (XLY) and VanEck Vectors Gaming (BJK) help investors hold diversified portfolios in the hotel and leisure industries.

Pipeline

PNK is currently constructing a 150-guest room hotel tower at its Boomtown Casino New Orleans property. As of September 30, 2014, PNK has spent roughly $16.7 million of the $20-million budget for the project. The tower’s opening has been delayed due to certain construction-related issues. PNK now expects the hotel tower to open before the end of 2014.

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