PCI Gaming Authority

Overview Key strengths Key risks Strong market position in the Alabama gaming market. Macroeconomic headwinds could lower gaming demand. Relatively low leverage and strong EBITDA margins compared with regional gaming peers. New development in the competitive Chicago market could increase marketing spending and reduce profitability. Strong cash flow conversion due to low taxes and interest expense. Legislation risk in Alabama could increase competition and reduce profitability. Under our forecast, we expect PCI's S&P Global Ratings-adjusted net leverage to be about 2.3x in fiscal 2024 (ending Sept. 30), unchanged from leverage on Dec. 30, 2023. This is because the net debt increase due to a ramp up in capital spending for its Illinois project that began at the start of this

...We expect PCI Gaming Authority (PCI) to maintain adequate cushion in its credit measures despite its development capital spending over the next two years. Under our forecast, we expect PCI's S&P Global Ratings-adjusted net leverage to be about 2.3x in fiscal 2024 (ending Sept. 30), unchanged from leverage on Dec. 30, 2023. This is because the net debt increase due to a ramp up in capital spending for its Illinois project that began at the start of this fiscal year will be offset by EBITDA growth. We expect revenue and EBITDA to increase 7% and 5%, respectively, in fiscal 2024 because of the additional contribution of Magic City (acquired February 2023) and continued low-single-digit percent growth in its existing markets. In fiscal 2025, we expect low to mid-teen percent revenue and EBITDA growth driven by the opening of Wind Creek Chicago in the first quarter. We forecast PCI's development spending for fiscal 2024 will be higher than fiscal 2023. The largest capital expenditure (capex)...

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