- Launch of Barstool Sportsbook App Remains
on Track for Third Quarter -
Penn National Gaming, Inc. (NASDAQ: PENN) (“Penn National” or
the “Company”) today reported financial results for the three and
six months ended June 30, 2020.
Jay Snowden, President and Chief Executive Officer, commented:
“While the last several months have presented unprecedented
challenges for our Company, I am extremely proud of the way our
corporate and property leaders and valued team members have risen
to the occasion and, working tirelessly alongside our regulators
and public health officials, have successfully reopened all but two
of our casino properties as of today (Zia Park and Tropicana Las
Vegas). The tremendous resilience of our team, along with the steps
we’ve taken to strengthen our financial position and achieve
ongoing operational efficiencies, have helped ensure that Penn
National remains well-positioned for near- and long-term
success.
“Our team members are the life blood of our Company and, while
some remain furloughed given the ongoing capacity restrictions and
limited amenities at our properties, I am pleased to announce that
we will extend medical and pharmacy benefits to all impacted team
members through August 31. In addition, our COVID-19 Emergency
Relief Fund, for which we’ve raised more than $1.7 million, has
already provided needed financial assistance to approximately 1,000
team members and remains available to help others in need. I would
like to thank all of our team members and valued stakeholders for
their continued support, dedication and patience during this
difficult time.
“Despite starting the second quarter with our entire property
portfolio closed due to the COVID-19 pandemic, we ended the quarter
in a significantly improved financial position as a result of
continued mitigation efforts that contributed to significant margin
improvement, a successful capital raise, and very strong financial
performance at our properties since reopening. The outstanding
results to date at our reopened properties highlight our unique
strategic position as a best in class operator of market leading
regional properties, which have rebounded more quickly than casinos
in destination markets. In addition, our geographic diversification
across 19 states -- with no more than 15% of our revenues being
derived from any single state -- has proven to be a significant
benefit as states have reopened casinos on a staggered basis.
Although visitation has yet to return to pre-COVID levels, in large
part due to state mandated capacity restrictions and limited
amenities, spend per visit has been notably strong, resulting in
better than expected revenues.”
Q2 Financial Results Summary
For the second quarter ended June 30, 2020, Penn National
generated revenues of $305.5 million and Adjusted EBITDAR of $24.5
million. Revenues for reopened properties from the applicable date
of reopening through June 30th decreased 6% compared to the prior
year period, while adjusted property EBITDAR at reopened properties
increased 33% and adjusted property EBITDAR margins expanded by
over 1,300 basis points from the comparable prior year period.
Reflecting this strong performance and our recent capital raise, we
ended the quarter with over $1.2 billion of cash.
Encouraging Q3 Trends
“While May and June results may have benefited in part from
pent-up demand, we continue to be highly encouraged by revenue and
EBITDAR trends in July and early August, despite the continuation
of safety protocols, including capacity restrictions and social
distancing mandates,” added Mr. Snowden. “We anticipate that a
meaningful portion of the margin improvements realized since our
properties reopened will be recurring as we continue to make
fundamental changes to improve our offerings and efficiencies
across our organization. For example, we are working closely with
regulators in several jurisdictions to introduce cashless,
cardless, and contactless technology to our casinos, which we
believe will increase safety and provide improved service while
delivering additional efficiencies and accountability. Our cashless
and contactless initiatives will also bring our property technology
in line with other industries, while helping to attract a younger
customer to our properties. We look forward to reopening the
remainder of our properties and to the easing of restrictions at
our reopened properties when it is safe to do so. We also
anticipate resuming construction later this year on both of our
Category 4 projects in Pennsylvania, which we expect will open in
the second half of 2021.”
Penn Interactive Represents Transformational
Opportunity
Mr. Snowden continued, “Over the last few months we have made
significant progress on the development of the Barstool Sportsbook
mobile app and remain on schedule to launch what we believe will be
a best-in-class sports betting product in September. We currently
anticipate launching the app in Pennsylvania with additional states
to follow throughout Q4-20 and Q1-21. We have already seen very
high levels of interest in the Barstool Sportsbook app from the
Barstool audience as well as on a wide range of social media
platforms, and we are extremely excited about Barstool’s plans to
introduce the app to their growing and loyal audience. Underscoring
the strength of its brand and following, Barstool has continued its
positive momentum through the second quarter, recording the highest
number of podcast downloads in the company’s history in June,
making Barstool one of the top 4 largest podcast networks in the
country, despite the lack of live sports. In addition, we are very
pleased to report that we now have official data access agreements
in place with the NFL, MLB and the NBA, which will allow us to
provide an exciting variety of in-game betting opportunities for
our sports betting customers.
“Our Hollywood Casino branded real-money iCasino product in
Pennsylvania continues to grow rapidly, with quarterly sequential
revenue growth of 108% in the second quarter. By leveraging our
deep, proprietary casino database, our iCasino product has achieved
over 10% share of the highly competitive Pennsylvania market while
delivering strong EBITDA margins. Our demonstrated ability to
convert our casino database, together with our powerful partnership
with Barstool Sports, should provide significant organic customer
acquisition and cross-sell opportunities. As a result, we believe
the Company is poised to capture an outsized share of the high
growth U.S. sports betting and online casino markets and achieve
market-leading profitability.
“Finally, we are excited about the third-quarter launch of our
all new mychoice social casino product, which we believe
will serve as an exciting interactive gaming experience for our
guests, as well as an important customer acquisition tool in states
where we have not yet launched iCasino.”
Commitment to Inclusion and Diversity
Penn National has a strong long-term record of supporting local
nonprofits and organizations in its communities, which provide
assistance to underrepresented and disadvantaged individuals
through property level charitable donations and the Penn National
Gaming Foundation. Consistent with that philosophy, this year, in
celebration of Juneteenth, the Company committed to spend at least
$1 million annually to support the following diversity and
inclusion initiatives:
- Creation of a scholarship fund to help underrepresented team
members and their children pursue higher education, as well as
increasing recruitment efforts at, and support of, Historically
Black Colleges and Universities;
- Support for organizations in our communities promoting equality
and justice and by encouraging team members to donate their time
and energy to help support the change needed in their communities;
and
- Increasing the number of minority business networking events
hosted each year in order to support MBE, WBE, and Veteran Owned
business partners.
The Company also announced the formation of a Diversity
Committee, which will be chaired by Justin Carter, General Manager
of Hollywood Casino Toledo. This committee will be comprised of
underrepresented team members from around the country and at
varying levels in the organization to help implement these new
initiatives and to ensure Penn National has mechanisms in place to
listen to team members about important ongoing social justice
issues.
Mr. Snowden concluded, “While we recognize that it may be
several months or longer before we’re able to resume full
operations at our properties, we are confident that our team of
best-in-class operators will continue to find creative ways to
maximize property performance. Our goal is to come out of this
pandemic as a stronger company, and we believe the operational
changes we have implemented, together with our strengthened balance
sheet and unique omni-channel strategy supercharged by Barstool
Sports, position us to achieve this goal and drive enhanced
shareholder returns.”
Summary of Second Quarter
Results
For the three months ended
June 30,
(in millions,
except per share data, unaudited)
2020
2019
Revenues
$
305.5
$
1,323.1
Net income (loss)
$
(214.4)
$
51.4
Adjusted EBITDA (1)
$
(79.3)
$
316.5
Rent expense associated with triple net
operating leases (2)
103.8
90.0
Adjusted EBITDAR (1)
$
24.5
$
406.5
Payments to our REIT Landlords under
Triple Net Leases, inclusive of rent credits utilized (3)
$
216.6
$
214.9
Diluted earnings (loss) per common
share
$
(1.69)
$
0.44
(1) See the “Non-GAAP Financial Measures”
section below for more information as well as the definitions of
Adjusted EBITDA and Adjusted EBITDAR. Additionally, see below for
reconciliations of these Non-GAAP financial measures to their GAAP
equivalent financial measure. (2) Consists of the operating lease
components contained within the Penn Master Lease and the Pinnacle
Master Lease (referred to collectively as our “Master Leases”)
(primarily land), the Meadows Lease, the Margaritaville Lease, the
Greektown Lease, and beginning on April 16, 2020, the Tropicana
Lease (referred to collectively as our “triple net operating
leases”). During the three months ended June 30, 2020, we recorded
rent expense associated with the Tropicana Lease of $6.4 million,
all of which was noncash. The finance lease components contained
within our Master Leases (primarily buildings) are recorded to
interest expense (as opposed to rent expense) in accordance with
Accounting Standards Codification Topic 842, “Leases.” (3) Consists
of payments made to Gaming and Leisure Properties, Inc. (NASDAQ:
GLPI) and VICI Properties Inc. (NYSE: VICI) (referred to
collectively as our “REIT Landlords”) under the Master Leases, the
Meadows Lease, the Margaritaville Lease, and the Greektown Lease,
inclusive of rent credits utilized, which were generated from the
sale of the real estate assets associated with Tropicana Las Vegas
to GLPI on April 16, 2020. Although we collectively refer to the
Master Leases, the Meadows Lease, the Margaritaville Lease, the
Greektown Lease, and the Tropicana Lease, as our “Triple Net
Leases,” the rent under the Tropicana Lease is nominal. During the
three months ended June 30, 2020, we utilized rent credits totaling
$130.8 million to pay rent under the Penn Master Lease, Pinnacle
Master Lease and Meadows Lease.
PENN NATIONAL GAMING, INC. AND
SUBSIDIARIES Segment Information
The Company aggregates its properties into
four reportable segments: Northeast, South, West and Midwest.
For the three months ended
June 30,
For the six months ended June
30,
(in millions, unaudited)
2020
2019
2020
2019
Revenues:
Northeast segment (1)
$
102.7
$
599.1
$
623.4
$
1,149.7
South segment (2)
121.5
282.2
344.8
574.1
West segment (3)
17.7
164.2
144.3
322.9
Midwest segment (4)
36.0
268.2
264.1
539.5
Other (5)
27.6
9.4
47.9
19.5
Intersegment eliminations (6)
—
—
(2.9)
—
Total revenues
$
305.5
$
1,323.1
$
1,421.6
$
2,605.7
Adjusted EBITDAR:
Northeast segment (1)
$
(3.6)
$
186.2
$
120.9
$
351.0
South segment (2)
44.4
92.8
97.0
190.6
West segment (3)
(3.0)
50.5
21.6
100.4
Midwest segment (4)
(4.6)
97.8
64.9
197.0
Other (5)
(8.7)
(20.8)
(27.6)
(41.1)
Total Adjusted EBITDAR (7)
$
24.5
$
406.5
$
276.8
$
797.9
(1) The Northeast segment consists of the
following properties: Ameristar East Chicago, Greektown
Casino-Hotel (acquired May 23, 2019), Hollywood Casino Bangor,
Hollywood Casino at Charles Town Races, Hollywood Casino Columbus,
Hollywood Casino Lawrenceburg, Hollywood Casino at Penn National
Race Course, Hollywood Casino Toledo, Hollywood Gaming at Dayton
Raceway, Hollywood Gaming at Mahoning Valley Race Course, Marquee
by Penn, Meadows Racetrack and Casino, and Plainridge Park Casino.
(2) The South segment consists of the following properties: 1st
Jackpot Casino, Ameristar Vicksburg, Boomtown Biloxi, Boomtown
Bossier City, Boomtown New Orleans, Hollywood Casino Gulf Coast,
Hollywood Casino Tunica, L’Auberge Baton Rouge, L’Auberge Lake
Charles, and Margaritaville Resort Casino. Prior to its closure on
June 30, 2019, Resorts Casino Tunica was also included in the South
segment. (3) The West segment consists of the following properties:
Ameristar Black Hawk, Cactus Petes and Horseshu, M Resort,
Tropicana Las Vegas, and Zia Park Casino. (4) The Midwest segment
consists of the following properties: Ameristar Council Bluffs;
Argosy Casino Alton; Argosy Casino Riverside; Hollywood Casino
Aurora; Hollywood Casino Joliet; our 50% investment in Kansas
Entertainment, which owns Hollywood Casino at Kansas Speedway;
Hollywood Casino St. Louis; Prairie State Gaming; and River City
Casino. (5) The Other category consists of the Company’s
stand-alone racing operations, namely Sanford-Orlando Kennel Club,
and the Company’s joint venture interests in Sam Houston Race Park,
Valley Race Park, and Freehold Raceway. The Other category also
includes Penn Interactive, which operates our social gaming,
internally-branded retail sportsbooks, and iGaming; our management
contract for Retama Park Racetrack; and our live and televised
poker tournament series that operates under the trade name,
Heartland Poker Tour (“HPT”). Expenses incurred for corporate and
shared services activities that are directly attributable to a
property or are otherwise incurred to support a property are
allocated to each property. The Other category also includes
corporate overhead costs, which consists of certain expenses, such
as: payroll, professional fees, travel expenses and other general
and administrative expenses that do not directly relate to or have
otherwise not been allocated to a property. For the three and six
months ended June 30, 2020, corporate overhead costs were $16.7
million and $40.9 million, respectively, compared to $23.6 million
and $46.7 million, respectively, for the three and six months ended
June 30, 2019. In addition, Adjusted EBITDAR of the Other category
includes our proportionate share of the net income or loss of
Barstool Sports after adding back our share of non-operating items
(such as interest expense, net; income taxes; depreciation and
amortization; and stock-based compensation expense). (6) Represents
the elimination of intersegment revenues, associated with Penn
Interactive and HPT. (7) As noted within the “Non-GAAP Financial
Measures” section below, Adjusted EBITDAR is presented on a
consolidated basis outside the financial statements solely as a
valuation metric or for reconciliation purposes.
PENN NATIONAL GAMING, INC. AND
SUBSIDIARIES Reconciliation of Comparable GAAP Financial Measure to
Adjusted EBITDA, Adjusted EBITDAR, and Adjusted EBITDAR
Margin
For the three months ended
June 30,
For the six months ended June
30,
(in millions,
unaudited)
2020
2019
2020
2019
Net income (loss)
$
(214.4)
$
51.4
$
(823.0)
$
92.3
Income tax expense (benefit)
(58.4)
18.5
(157.9)
33.4
Loss (income) from unconsolidated
affiliates
1.7
(6.2)
(2.4)
(11.9)
Interest expense, net
135.0
134.7
264.8
267.0
Other income
(29.3)
—
(7.5)
—
Operating income (loss)
(165.4)
198.4
(726.0)
380.8
Stock-based compensation
2.9
3.3
8.9
6.7
Cash-settled stock-based awards
variance
16.1
(3.4)
7.2
(3.0)
Loss (gain) on disposal of assets
(28.5)
0.4
(27.9)
0.9
Contingent purchase price
0.8
1.0
(1.4)
5.8
Pre-opening and acquisition costs
3.5
3.7
6.7
8.1
Depreciation and amortization
91.9
106.0
187.6
210.1
Impairment losses
—
—
616.1
—
Insurance recoveries, net of deductible
charges
—
—
(0.1)
—
Income (loss) from unconsolidated
affiliates
(1.7)
6.2
2.4
11.9
Non-operating items of equity method
investments (1)
1.1
0.9
2.0
1.9
Adjusted EBITDA
(79.3)
316.5
75.5
623.2
Rent expense associated with triple net
operating leases
103.8
90.0
201.3
174.7
Adjusted EBITDAR
$
24.5
$
406.5
$
276.8
$
797.9
Net income (loss) margin
(70.2)
%
3.9
%
(57.9)
%
3.5
%
Adjusted EBITDAR margin
8.0
%
30.7
%
19.5
%
30.6
%
(1) Consists principally of interest expense,
net; income taxes; depreciation and amortization; and stock-based
compensation expense associated with Barstool Sports and our Kansas
Entertainment joint venture. We record our portion of Barstool
Sports’ net income or loss, including adjustments to arrive at
Adjusted EBITDAR, one quarter in arrears.
PENN NATIONAL GAMING, INC. AND
SUBSIDIARIES Condensed Consolidated Statements of
Operations
For the three months ended
June 30,
For the six months ended June
30,
(in millions, except per share data,
unaudited)
2020
2019
2020
2019
Revenues
Gaming
$
259.2
$
1,062.1
$
1,162.1
$
2,096.7
Food, beverage, hotel and other
46.3
261.0
259.5
509.0
Total revenues
305.5
1,323.1
1,421.6
2,605.7
Operating expenses
Gaming
142.0
564.1
642.9
1,111.6
Food, beverage, hotel and other
32.9
167.6
189.9
329.3
General and administrative
204.1
287.0
511.1
573.9
Depreciation and amortization
91.9
106.0
187.6
210.1
Impairment losses
—
—
616.1
—
Total operating expenses
470.9
1,124.7
2,147.6
2,224.9
Operating income (loss)
(165.4)
198.4
(726.0)
380.8
Other income (expenses)
Interest expense, net
(135.0)
(134.7)
(264.8)
(267.0)
Income (loss) from unconsolidated
affiliates
(1.7)
6.2
2.4
11.9
Other
29.3
—
7.5
—
Total other expenses
(107.4)
(128.5)
(254.9)
(255.1)
Income (loss) before income
taxes
(272.8)
69.9
(980.9)
125.7
Income tax benefit (expense)
58.4
(18.5)
157.9
(33.4)
Net income (loss)
(214.4)
51.4
(823.0)
92.3
Less: Net loss attributable to
non-controlling interest
0.5
0.2
0.5
0.2
Net income (loss) attributable to Penn
National
$
(213.9)
$
51.6
$
(822.5)
$
92.5
Earnings (loss) per share:
Basic earnings (loss) per share
$
(1.69)
$
0.44
$
(6.78)
$
0.80
Diluted earnings (loss) per share
$
(1.69)
$
0.44
$
(6.78)
$
0.78
Weighted-average common shares outstanding
- basic
126.8
116.0
121.3
116.1
Weighted-average common shares outstanding
- diluted
126.8
117.7
121.3
118.2
Selected Financial Information Balance
Sheet Data
(in millions, unaudited)
June 30, 2020
December 31,
2019
Cash and cash equivalents
$
1,244.3
$
437.4
Bank debt
$
2,403.1
$
1,896.5
Notes (1)
633.0
399.4
Other long-term obligations (2)
80.8
89.2
Total traditional debt (3)
$
3,116.9
$
2,385.1
Traditional net debt
$
1,872.6
$
1,947.7
(1) Inclusive of our 5.625% Notes due 2027
and our 2.75% Convertible Notes due 2026, issued in May 2020. (2)
Other long-term obligations as of June 30, 2020 primarily include
$68.8 million for the present value of the relocation fees due for
both Hollywood Gaming at Dayton Raceway and Hollywood Gaming at
Mahoning Valley Race Course, and $12.0 million related to our
repayment obligation on a hotel and event center located near
Hollywood Casino Lawrenceburg. (3) Amounts are inclusive of debt
discounts and debt issuance costs totaling $130.8 million and $33.9
million as of June 30, 2020 and December 31, 2019,
respectively.
Kansas Entertainment Distributions
The Company’s definitions of Adjusted EBITDA and Adjusted
EBITDAR add back our share of the impact of non-operating items
(such as depreciation and amortization) at our Kansas Entertainment
joint venture. Kansas Entertainment does not currently have, nor
has it ever had, any indebtedness. The table below presents cash
flow distributions we have received from our Kansas Entertainment
investment.
For the three months ended
June 30,
For the six months ended June
30,
(in millions,
unaudited)
2020
2019
2020
2019
Cash flow distributions
$
—
$
7.0
$
8.7
$
13.5
Cash Flow Data
The table below summarizes certain cash expenditures incurred by
the Company.
For the three months ended
June 30,
For the six months ended June
30,
(in millions,
unaudited)
2020
2019
2020
2019
Cash payments to our REIT Landlords under
Triple Net Leases (1)
$
85.8
$
214.9
$
309.6
$
422.8
Cash payments (refunds) related to income
taxes, net
$
(0.1)
$
6.2
$
(1.2)
$
4.5
Cash paid for interest on traditional
debt
$
20.5
$
24.0
$
54.3
$
62.5
Maintenance capital expenditures
$
14.5
$
46.8
$
44.2
$
83.0
(1) Consists of payments made under the
Master Leases, the Meadows Lease, the Margaritaville Lease, and the
Greektown Lease, in cash. As previously noted, the rent under the
Tropicana Lease is nominal. Amounts for the three and six months
ended June 30, 2020 exclude the utilization of rent credits for May
and June 2020, which totaled $130.8 million.
Non-GAAP Financial Measures
The Non-GAAP Financial Measures used in this press release
include Adjusted EBITDA, Adjusted EBITDAR, and Adjusted EBITDAR
margin. These non-GAAP financial measures should not be considered
a substitute for, nor superior to, financial results and measures
determined or calculated in accordance with GAAP.
We define Adjusted EBITDA as earnings before interest expense,
net; income taxes; depreciation and amortization; stock-based
compensation; debt extinguishment and financing charges; impairment
losses; insurance recoveries and deductible charges; changes in the
estimated fair value of our contingent purchase price obligations;
gain or loss on disposal of assets; the difference between budget
and actual expense for cash-settled stock-based awards; pre-opening
and acquisition costs; and other income or expenses. Adjusted
EBITDA is inclusive of income or loss from unconsolidated
affiliates, with our share of non-operating items (such as interest
expense, net; income taxes; depreciation and amortization; and
stock-based compensation expense) added back for Barstool Sports
and our Kansas Entertainment joint venture. Adjusted EBITDA is
inclusive of rent expense associated with our triple net operating
leases (the operating lease components contained within the Penn
Master Lease and Pinnacle Master Lease (primarily land), the
Meadows Lease, the Margaritaville Lease, the Greektown Lease, and
the Tropicana Lease). Although Adjusted EBITDA includes rent
expense associated with our triple net operating leases, we believe
Adjusted EBITDA is useful as a supplemental measure in evaluating
the performance of our consolidated results of operations.
Adjusted EBITDA has economic substance because it is used by
management as a performance measure to analyze the performance of
our business, and is especially relevant in evaluating large,
long-lived casino-hotel projects because it provides a perspective
on the current effects of operating decisions separated from the
substantial non-operational depreciation charges and financing
costs of such projects. We present Adjusted EBITDA because it is
used by some investors and creditors as an indicator of the
strength and performance of ongoing business operations, including
our ability to service debt, and to fund capital expenditures,
acquisitions and operations. These calculations are commonly used
as a basis for investors, analysts and credit rating agencies to
evaluate and compare operating performance and value companies
within our industry. In order to view the operations of their
casinos on a more stand-alone basis, gaming companies, including
us, have historically excluded from their Adjusted EBITDA
calculations certain corporate expenses that do not relate to the
management of specific casino properties. However, Adjusted EBITDA
is not a measure of performance or liquidity calculated in
accordance with GAAP. Adjusted EBITDA information is presented as a
supplemental disclosure, as management believes that it is a
commonly-used measure of performance in the gaming industry and
that it is considered by many to be a key indicator of the
Company’s operating results.
We define Adjusted EBITDAR as Adjusted EBITDA (as defined above)
plus rent expense associated with triple net operating leases
(which is a normal, recurring cash operating expense necessary to
operate our business). Adjusted EBITDAR is presented on a
consolidated basis outside the financial statements solely as a
valuation metric. Management believes that Adjusted EBITDAR is an
additional metric traditionally used by analysts in valuing gaming
companies subject to triple net leases since it eliminates the
effects of variability in leasing methods and capital structures.
This metric is included as supplemental disclosure because (i) we
believe Adjusted EBITDAR is traditionally used by gaming operator
analysts and investors to determine the equity value of gaming
operators and (ii) Adjusted EBITDAR is one of the metrics used by
other financial analysts in valuing our business. We believe
Adjusted EBITDAR is useful for equity valuation purposes because
(i) its calculation isolates the effects of financing real estate;
and (ii) using a multiple of Adjusted EBITDAR to calculate
enterprise value allows for an adjustment to the balance sheet to
recognize estimated liabilities arising from operating leases
related to real estate. However, Adjusted EBITDAR when presented on
a consolidated basis is not a financial measure in accordance with
GAAP, and should not be viewed as a measure of overall operating
performance or considered in isolation or as an alternative to net
income because it excludes the rent expense associated with our
triple net operating leases and is provided for the limited
purposes referenced herein. Adjusted EBITDAR margin is defined as
Adjusted EBITDAR on a consolidated basis (as defined above) divided
by revenues on a consolidated basis. Adjusted EBITDAR margin is
presented on a consolidated basis outside the financial statements
solely as a valuation metric.
Each of these non-GAAP financial measures is not calculated in
the same manner by all companies and, accordingly, may not be an
appropriate measure of comparing performance among different
companies. See the table above, which presents reconciliations of
these measures to the GAAP equivalent financial measures.
Conference Call, Webcast and Replay Details
Penn National is hosting a conference call and simultaneous
webcast at 9:00 am ET today, both of which are open to the general
public. The conference call number is 212-231-2925. Please call
five minutes in advance to ensure that you are connected prior to
the presentation. Questions will be reserved for call-in analysts
and investors. Interested parties may also access the live call on
the Internet at www.pngaming.com. Please allow 15 minutes to
register and download and install any necessary software. A replay
of the call can be accessed for thirty days on the Internet at
www.pngaming.com.
This press release, which includes financial information to be
discussed by management during the conference call and disclosure
and reconciliation of non-GAAP financial measures, is available on
the Company’s web site, www.pngaming.com, in the “Investors”
section (select link for “Press Releases”).
About Penn National Gaming
With the nation's largest and most diversified regional gaming
footprint, including 41 properties across 19 states, Penn National
continues to evolve into a highly innovative omni-channel provider
of retail and online gaming, live racing and sports betting
entertainment. The Company's properties feature approximately
50,000 gaming machines, 1,300 table games and 8,800 hotel rooms,
and operate under various well-known brands, including Hollywood,
Ameristar, and L'Auberge. Our wholly-owned interactive division,
Penn Interactive, operates retail sports betting across the
Company's portfolio, as well online social casino, bingo, and
iCasino products. In February 2020, Penn National entered into a
strategic partnership with Barstool Sports, whereby Barstool will
exclusively promote the Company's land-based and online casinos and
sports betting products, including the Barstool Sportsbook mobile
app, to its national audience of over 66 million. The Company's
omni-channel approach is bolstered by the mychoice loyalty
program, which rewards and recognizes its over 20 million members
for their loyalty to both retail and online gaming and sports
betting products with the most dynamic set of offers, experiences,
and service levels in the industry.
Forward Looking Statements
This press release contains “forward-looking statements” within
the meaning of the Private Securities Litigation Reform Act of
1995. These statements can be identified by the use of
forward-looking terminology such as “expects,” “believes,”
“estimates,” “projects,” “intends,” “plans,” “goal,” “seeks,”
“may,” “will,” “should,” or “anticipates” or the negative or other
variations of these or similar words, or by discussions of future
events, strategies or risks and uncertainties. Specifically,
forward looking statements include, but are not limited to,
statements regarding: COVID-19; the length of time certain of the
Company’s gaming properties (Zia Park and Tropicana) will remain
closed, expected opening dates, and the impact of these closures on
the Company and its stakeholders; demand for gaming once these
gaming properties reopen as well as the impact of post-opening
restrictions; continued demand for the gaming properties that have
opened and the possibility that our gaming properties may be
required to close again in the future due to COVID-19; the impact
of COVID-19 on general economic conditions, capital markets,
unemployment and the Company’s liquidity, operations, supply chain
and personnel; the Company’s estimated cash burn and future
liquidity, future revenue and Adjusted EBITDAR, including from our
iCasino business in Pennsylvania; the expected benefits and
potential challenges of the investment in Barstool Sports,
including the benefits for the Company’s online and retail sports
betting, iCasino and social casino products; the expected financial
returns from the transaction with Barstool Sports; the expected
launch of the Barstool-branded mobile sports betting product and
its future revenue and profit contributions; the impact of
shortened or cancelled sports seasons on our results; our
expectations of future results of operations and financial
condition, including margins; our expectations for our properties,
our development projects or our iGaming initiatives; the timing,
cost and expected impact of planned capital expenditures on our
results of operations; our expectations with regard to the impact
of competition; our expectations with regard to acquisitions,
potential divestitures and development opportunities, as well as
the integration of and synergies related to any companies we have
acquired or may acquire; the outcome and financial impact of the
litigation in which we are or will be periodically involved; the
actions of regulatory, legislative, executive or judicial decisions
at the federal, state or local level with regard to our business
and the impact of any such actions; our ability to maintain
regulatory approvals for our existing businesses and to receive
regulatory approvals for our new business partners; our
expectations with regard to the impact of competition in online
sports betting, iGaming and retail/mobile sportsbooks as well as
the potential impact of this business line on our existing
businesses; the performance of our partners in online sports
betting, iGaming and retail/mobile sportsbooks, including the risks
associated with any new business, the actions of regulatory,
legislative, executive or judicial decisions at the federal, state
or local level with regard to online sports betting, iGaming and
retail/mobile sportsbooks and the impact of any such actions; and
our expectations regarding economic and consumer conditions. Such
statements are all subject to risks, uncertainties and changes in
circumstances that could significantly affect the Company’s future
financial results and business.
Accordingly, the Company cautions that the forward-looking
statements contained herein are qualified by important factors that
could cause actual results to differ materially from those
reflected by such statements. Such factors include, but are not
limited to: (a) the magnitude and duration of the impact of
COVID-19 on general economic conditions, capital markets,
unemployment and the Company’s liquidity, operations, supply chain
and personnel; (b) industry, market, economic, political,
regulatory and health conditions; (c) disruptions in operations
from data protection breaches, cyberattacks, extreme weather
conditions, medical epidemics or pandemics such as the COVID-19
(and reoccurrences), and other natural or man-made disasters or
catastrophic events; (d) the reopening of the Company’s gaming
properties (Zia Park and Tropicana) are subject to various
conditions, including numerous regulatory approvals and potential
delays and operational restrictions; (e) our ability to access
additional capital on favorable terms or at all; (f) our ability to
remain in compliance with the financial covenants of our debt
obligations; (g) actions to reduce costs and improve efficiencies
to mitigate losses as a result of the COVID-19 pandemic that could
negatively impact guest loyalty and our ability to attract and
retain employees; (h) the outcome of any legal proceedings that may
be instituted against the Company or its directors, officers or
employees; (i) the impact of new or changes in current laws,
regulations, rules or other industry standards; (j) the ability of
our operating teams to drive revenue and margins; (k) the impact of
significant competition from other gaming and entertainment
operations (including from Native American casinos, historic racing
machines, state sponsored i-lottery products and VGTs in or
adjacent to states in which we operate); (l) our ability to obtain
timely regulatory approvals required to own, develop and/or operate
our properties, or other delays, approvals or impediments to
completing our planned acquisitions or projects, construction
factors, including delays, and increased costs; (m) the passage of
state, federal or local legislation (including referenda) that
would expand, restrict, further tax, prevent or negatively impact
operations in or adjacent to the jurisdictions in which we do or
seek to do business (such as a smoking ban at any of our properties
or the award of additional gaming licenses proximate to our
properties, as recently occurred with legislation in Illinois and
Pennsylvania); (n) the effects of local and national economic,
credit, capital market, housing, and energy conditions on the
economy in general and on the gaming and lodging industries in
particular; (o) the activities of our competitors (commercial and
tribal) and the rapid emergence of new competitors (traditional,
internet, social, sweepstakes based and VGTs in bars and truck
stops); (p) increases in the effective rate of taxation for any of
our operations or at the corporate level; (q) our ability to
identify attractive acquisition and development opportunities
(especially in new business lines) and to agree to terms with, and
maintain good relationships with partners and municipalities for
such transactions; (r) the costs and risks involved in the pursuit
of such opportunities and our ability to complete the acquisition
or development of, and achieve the expected returns from, such
opportunities; (s) the impact of weather, including flooding,
hurricanes and tornadoes; (t) changes in accounting standards; (u)
the risk of failing to maintain the integrity of our information
technology infrastructure and safeguard our business, employee and
customer data (particularly as our iGaming division grows); (v)
with respect to our iGaming and sports betting endeavors, the
impact of significant competition from other companies for online
sports betting, iGaming and sportsbooks, our ability to achieve the
expected financial returns related to our investment in Barstool
Sports, our ability to obtain timely regulatory approvals required
to own, develop and/or operate sportsbooks may be delayed and there
may be impediments and increased costs to launching the online
betting, iGaming and sportsbooks, including delays, and increased
costs, intellectual property and legal and regulatory challenges,
as well as our ability to successfully develop innovative products
that attract and retain a significant number of players in order to
grow our revenues and earnings, our ability to establish key
partnerships, our ability to generate meaningful returns and the
risks inherent in any new business; and (w) other factors as
discussed in the Company’s Annual Report on Form 10-K for the year
ended December 31, 2019, subsequent Quarterly Reports on Form 10-Q
and Current Reports on Form 8-K, each as filed with the U.S.
Securities and Exchange Commission. The Company does not intend to
update publicly any forward-looking statements except as required
by law. In light of these risks, uncertainties and assumptions, the
forward-looking events discussed in this press release may not
occur.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200806005126/en/
David Williams Chief Financial Officer 610-373-2400
Joseph N. Jaffoni, Richard Land JCIR 212-835-8500 or
penn@jcir.com
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