Barstool Sportsbook Mobile App Continues to
Expand Through Disciplined Growth While Driving Sustainable Market
Share
Ongoing Growth in Core Businesses Driven by
High-End Guests, Continued Engagement with Younger Demographics and
Enhanced by New Technology
Penn National Gaming, Inc. (NASDAQ: PENN) (“Penn National” or
the “Company”) today reported financial results for the three and
nine months ended September 30, 2021.
2021 Third Quarter Financial Highlights:
- Revenues of $1.5 billion, an increase of $382.1 million
year over year and $157.3 million versus 2019;
- Net income of $86.1 million and net income margin of
5.7%, as compared to $141.2 million and 12.5%, respectively, in the
prior year and net income of $43.7 million and net margin of 3.2%
in 2019;
- Adjusted EBITDA of $364.3 million, an increase of $20.7
million year over year and $52.7 million versus 2019;
- Adjusted EBITDAR of $480.3 million, an increase of $27.7
million year over year and $72.4 million versus 2019; and
- Adjusted EBITDAR margins of 31.8%, as compared to 40.1%
in the prior year and 30.1% in 2019.
For further information, we have posted a presentation to our
website regarding the third quarter highlights and accomplishments,
which can be found here.
Jay Snowden, President and Chief Executive Officer, commented:
“We achieved many significant milestones in the third quarter. We
successfully launched the Barstool Sportsbook mobile app in five
states (Colorado, New Jersey, Tennessee, Virginia, and Arizona),
which more than doubled our footprint. In addition, we opened
Hollywood Casino York to strong initial results, began to roll out
our market leading cashless, cardless, and contactless (“3Cs”)
technology across the portfolio and continued to derive multiple
tangible benefits from our highly differentiated omni-channel
strategy. We also continued to generate revenues and EBITDAR
significantly above 2019 levels, despite exogenous events that had
a one-time impact on our quarter. While July was a record month,
the second half of August and September was impacted by Hurricane
Ida and regional flare-ups of the Delta variant, which reduced
property Adjusted EBITDAR and Adjusted EBITDAR margins by an
estimated $30 million and 85 basis points, respectively. As the
operating environment has normalized, we have seen improved results
in October. Further, Other Segment results included a $12.5 million
lobbying expense to support the California sports betting
initiative and $7.5 million in expenses related to new state
launches of our Barstool Sportsbook app.
“In addition to the five new launches of our Barstool mobile
sportsbook betting app, all of which occurred before the start of
the football season, earlier this week, we launched our mobile
sports betting app in Iowa, which expands our footprint to 10
states. Overall, we are benefiting from our increased scale and are
driving higher handle and revenue market share across the board
while remaining disciplined with our marketing and promotional
spend. These results underscore our commitment to our business
model, which remains focused on near term profitability rather than
aggressive marketing aimed at generating short term increases in
handle.
“We achieved an important milestone with the closing of our
acquisition of Score Media and Gaming, Inc. (“theScore”) on October
19. Combined with the power of Barstool Sports, we are now well
positioned to be North America’s leading digital, entertainment,
sports content, gaming, and technology company. Barstool’s wide,
top-of-funnel audience reach is highly complementary to the news,
scores and stats available on theScore’s best in class media app,
which will create a one-stop destination for the sports fan that
does not exist today. Further, we are excited to bring theScore’s
cutting-edge technology in house, which will provide us with a
fully integrated media and betting solution as well as full
ownership of our product roadmap.
“As the most popular sports media app in Canada, theScore is
uniquely positioned to capitalize on the legalization of single
event sports wagering in Ontario when the province is ready for
launch. Consistent with our previously disclosed strategy, we
anticipate theScore Bet will be our leading brand in Canada while
we will continue to lead with Barstool Sportsbook in the U.S. Most
importantly, we expect that both brands will benefit from the
marketing support of Barstool Sports and integration with
theScore’s media app. We are excited to welcome theScore’s rapidly
growing team into the Penn National Gaming family and are looking
forward to leveraging Canada’s world class talent pool of
engineering and technology expertise.
Core Business Expansion
“The results from our core businesses continue to impress,”
continued Mr. Snowden. “As stated above, excluding the impact of
Hurricane Ida and the Delta variant in the quarter, we saw a
continuation of the trends from prior quarters including growth in
our VIP segments and our younger demographics. Our VIP segment grew
by 33% compared to Q3 2019, fueled by increases in both the number
of guests playing at higher levels and the frequency of their
visitation. Additionally, we are experiencing continued engagement
with our younger customers, who are generating new growth, and more
than offset any declines in Q3 of our older core gaming customers
due to the Delta variant. Importantly, October reflects more of
what we saw in the first half of the third quarter with strong
property level performance across our segments somewhat offset by
new competition in Colorado and Indiana as well as the residual
impact of gaming expansion in Pennsylvania. Meanwhile, our retail
Barstool Sportsbook concepts have stimulated database growth and
increased frequency of visitation in the younger segments, while
boosting gaming and food and beverage spend. Following the recent
passage of legalized sports betting in Louisiana, we opened retail
sportsbooks at L’Auberge Casino Baton Rouge and Boomtown New
Orleans, and we are looking forward to expanding into our remaining
Louisiana properties pending regulatory approval.
“New technology is also driving demand. Downloads of our
mychoice app, which enhances the customer experience,
increases engagement, and improves marketing capabilities,
increased 22% in the quarter while utilization is also higher.
Additionally, our 3Cs technology provides a digitally integrated
experience by offering a touchless, engaging, efficient, and
convenient experience for our guests. This new technology removes
friction from transactions and reduces wait times and lines. It
also positions our properties for the future by fulfilling the
expectations of younger consumers who expect cashless options at
hospitality and entertainment venues. The 3Cs are now live at three
properties in Pennsylvania and four in Ohio, and we plan to roll
out the 3Cs to additional properties throughout this year and into
next, pending regulatory approvals.
“On August 12th, we celebrated the opening of Hollywood Casino
York, which is our third casino in the Commonwealth of
Pennsylvania. This casino is built for the future, with new
technologies and customer conveniences, including the 3Cs and a
Barstool Sportsbook. While still early, we have been encouraged by
the combined performance of Hollywood York and Hollywood Casino at
Penn National Race Course. We are confident in our ability to grow
the overall market due to the positioning of our properties in the
region, particularly with the anticipated opening of Hollywood
Casino Morgantown later this year, pending regulatory approvals. We
recently opened a career center and are accepting applications for
approximately 375 new positions at Hollywood Casino Morgantown,
which will feature approximately 750 slot machines and 30 table
games, a Barstool Sportsbook and multiple food and beverage
outlets.
Barstool Sportsbook Gaining Momentum Through Our Highly
Differentiated Strategy
Mr. Snowden continued, “With the return of football season, we
have seen strong momentum with the Barstool Sportsbook in the
states in which we operate, while maintaining our disciplined
approach to marketing. Our results reinforce our confidence that
the long-term winners in the space will be defined by broad market
access, relevant sports brands, organic customer acquisition
strategies and best-in-class products – all of which we are
uniquely positioned to deliver.
“As evidenced by the September results in our most mature
states, Pennsylvania and Michigan, the Barstool Sportsbook has
gained meaningful handle market share through creative marketing
and exclusive offerings, without relying on heavy promotional
spending or paid media. In addition, we are beginning to see very
encouraging retention numbers from our initial cohort of customers,
reflecting the strong loyalty and brand affinity of the Barstool
audience. We believe these trends will lead to sustainable revenue
growth as we continue to leverage the structural advantages of our
fully integrated media and omni-channel strategy. The benefits of
this strategy were recently on full display in Illinois, where
state regulations currently require in-person registration for
mobile sports betting. In late-August, Dave Portnoy, Dan Katz and
other Barstool personalities attended an on-premises event at
Hollywood Casino Aurora in connection with a special promotion,
leading to nearly 10,000 first-time depositors over a five-day
period, with minimal paid media.
“We have also made significant improvements to our sports
betting product, including the introduction of Parlay+ (same-game
parlay) and shareable bet slips. Nearly 50% of our customers bet
with Barstool exclusives and participate in merchandise promotions,
odds boosts and opportunities to bet with or against popular
Barstool talent. As a result, the Barstool Sportsbook is currently
tied for the highest-rated sports betting app in North America in
the Apple app store with a 4.8 user rating out of 5.0. We believe
we will make even more meaningful improvements as we move to
integrate our sportsbook with theScore’s best-in-class sports media
app and betting technology which will provide us with a highly
customizable and fully integrated technology solution. Meanwhile,
we are continuing to bolster our iCasino offerings, including the
recent launch of our Barstool-branded live dealer studio in New
Jersey. We now operate iCasino across three states (Pennsylvania,
Michigan, and New Jersey) and are positioned to gain additional
market share with the launch last week of our first in-house
developed, Barstool-branded digital iCasino game in New Jersey,
’Barstool Blackjack.’
“Meanwhile, Barstool Sports has continued its rapid ascent into
one of the premier entertainment and lifestyle brands for
Millennials and Generation Z. With a highly diversified revenue mix
of advertising, brand licenses and commerce, Barstool is on track
to once again meaningfully grow revenues year over year. Equally
important, Barstool continues to aggressively pursue opportunities
to unlock new channels for future growth. For example, Barstool
recently announced its intent to support collegiate athletes in
pursuing NIL (name, image, and likeness) sponsorship arrangements.
In just a few months, Barstool has signed 135,000 collegiate
athletes to serve as Barstool Athletes, demonstrating the
incredible power of the brand across the younger demographic. In
addition, One Bite frozen pizza was recently introduced exclusively
at Walmart stores across the country, with initial sales exceeding
expectations. Finally, we anticipate launching the first two
stand-alone Barstool-branded sports bars in the coming months in
Philadelphia and Chicago, which will represent an extension of our
omni-channel strategy to more targeted, flexible, and highly valued
locations.
Continuing to Care for our People, our Communities, and the
Planet
“On August 29, Hurricane Ida hit Louisiana as one of the most
devastating storms to strike the United States. The response from
our team members across the country in the aftermath once again
demonstrated the compassion and dedication our Penn family has for
one another and the communities we serve. With limited supplies
available in New Orleans, and basic utilities completely disabled,
our sister properties helped to provide temporary housing and much
needed provisions. In addition, our Penn National Gaming Foundation
established the ‘Hurricane Ida Emergency Relief Fund’ for team
members to apply for financial assistance for immediate needs.
“Additionally, with female members comprising 44% of our
Corporate Board of Directors, we are proud to be both an honoree at
the Women’s Forum of New York’s Annual Breakfast of Champions for
‘Leading the Way to Gender Balance on Corporate Boards’ as well as
a ‘Champion of Board Diversity’ by The Forum of Executive Women,
the Greater Philadelphia Region’s premier women’s organization,
which annually honors the top public companies in the Philadelphia
region with 30% or more women on their respective boards.
“Further we continue our strong support for our nation’s heroes,
through new partnerships with the Concussion Legacy Foundation,
which launched a special project focused on CTE & PTSD research
on veterans. We are also offering financial support to the ‘No One
Left Behind,’ organization, which provides funds to help Afghan
special immigration visa recipients (SIVs) with food, housing,
clothing and a no-interest loan program which helps immigrant
families become self-sufficient.
“Finally, we are continuing our sustainability efforts. We are
reducing carbon emissions by adding electric vehicle (EV) charging
stations at our properties. We have installed EV charging stations
at 24% of our properties, with an additional 32% on schedule for
roll-out over the next 12 months. We remain focused on reducing
plastic waste as 75% of our hotel properties are now utilizing bulk
amenity dispensers for shampoo, conditioner, and body wash. We also
prioritize sustainable food production and supply chains through
fair trade, hormone-free and reduced-antibiotic F&B
procurement.”
Strong Balance Sheet and Liquidity
On July 1, 2021, we closed on our private offering of $400
million aggregate principal amount of 4.125% senior notes due 2029.
Traditional net debt as of September 30, 2021 was $45 million, a
decrease of $71 million during the quarter, principally due to
repayments under our senior secured credit facilities. Our
lease-adjusted net leverage was 3.9x based on Adjusted EBITDAR
through the trailing 12 months ended September 30, 2021. Our
balance sheet cash as of September 30, 2021 was $2.7 billion and
our total liquidity inclusive of our undrawn revolver was $3.4
billion, providing us with ample capacity to pursue additional
growth initiatives. Subsequent to quarter end, on October 19, we
completed the acquisition of Score Media and Gaming Inc. for total
consideration of approximately $1.9 billion, of which approximately
$923 million was paid in cash.
Summary of Third Quarter Results
For the three months ended
September 30,
(in millions,
except per share data, unaudited)
2021
2020
2019
Revenues
$
1,511.8
$
1,129.7
$
1,354.5
Net income
86.1
141.2
43.7
Adjusted EBITDA (1)
$
364.3
$
343.6
$
311.6
Rent expense associated with triple net
operating leases (2)
116.0
109.0
96.3
Adjusted EBITDAR (1)
$
480.3
$
452.6
$
407.9
Payments to our REIT Landlords under
Triple Net Leases, inclusive of rent credits utilized (3)
$
228.5
$
228.1
$
222.6
Diluted earnings per common
share
$
0.52
$
0.93
$
0.38
(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 our triple net master lease dated
November 1, 2013 with Gaming and Leisure Properties, Inc. (NASDAQ:
GLPI) ("GLPI") and the triple net master lease assumed in
connection with our acquisition of Pinnacle Entertainment,
Inc.(individually referred to as the Penn Master Lease and Pinnacle
Master Lease, respectively, and are collectively referred to as our
“Master Leases”), which is primarily land, our individual triple
net leases with GLPI for the real estate assets used in the
operation of Tropicana Las Vegas Hotel and Casino, Inc. and
Hollywood Casino at Meadows Racetrack, and our individual triple
net leases with VICI Properties Inc. (NYSE: VICI) ("VICI") for the
real estate assets used in the operations of Margaritaville Casino
Resort and Greektown Casino-Hotel (referred to collectively as our
“triple net operating leases”). During the three months ended
September 30, 2021 and 2020, we recorded noncash rent expense
associated with the Tropicana Lease of $10.7 million and $7.7
million, respectively. The finance lease components contained
within our Master Leases (primarily buildings), the Perryville
Lease determined to be a finance lease, and the financing
obligation associated with the Morgantown Lease result in interest
expense or interest expense and depreciation expense (as opposed to
rent expense) in accordance with Accounting Standards Codification
Topic 842, “Leases.”
(3) Consists of payments made to GLPI and
VICI (referred to collectively as our “REIT Landlords”) under the
Master Leases, the Perryville Lease (effective July 1, 2021), the
Meadows Lease, the Margaritaville Lease, the Greektown Lease and
the Morgantown Lease. Although we collectively refer to the Master
Leases, the Perryville Lease, the Meadows Lease, the Margaritaville
Lease, the Greektown Lease, the Morgantown Lease and the Tropicana
Lease as our “Triple Net Leases,” the rent under the Tropicana
Lease is nominal. During three months ended September 30, 2020, we
utilized rent credits totaling $141.7 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
September 30,
For the nine months ended
September 30,
(in millions, unaudited)
2021
2020
2019
2021
2020
2019
Revenues:
Northeast segment (1)
$
672.4
$
545.1
$
628.9
$
1,895.8
$
1,168.5
$
1,778.6
South segment (2)
318.2
255.6
276.6
982.3
600.4
850.7
West segment (3)
145.7
78.7
161.5
382.7
223.0
484.4
Midwest segment (4)
285.7
229.1
275.8
815.2
493.2
815.3
Other (5)
96.5
23.7
12.4
282.1
71.6
31.9
Intersegment eliminations (6)
(6.7)
(2.5)
(0.7)
(25.6)
(5.4)
(0.7)
Total revenues
$
1,511.8
$
1,129.7
$
1,354.5
$
4,332.5
$
2,551.3
$
3,960.2
Adjusted EBITDAR:
Northeast segment (1)
$
221.1
$
204.8
$
189.1
$
645.9
$
325.7
$
540.1
South segment (2)
137.0
120.3
89.0
448.0
217.3
279.6
West segment (3)
54.5
33.6
50.6
151.1
55.2
151.0
Midwest segment (4)
125.8
108.5
104.3
374.0
173.4
301.3
Other (5)
(58.1)
(14.6)
(25.0)
(105.1)
(42.2)
(66.1)
Intersegment eliminations (6)
—
—
(0.1)
—
—
(0.1)
Total Adjusted EBITDAR (7)
$
480.3
$
452.6
$
407.9
$
1,513.9
$
729.4
$
1,205.8
(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 Perryville (acquired July 1, 2021),
Hollywood Casino Toledo, Hollywood Casino York (opened August 12,
2021), Hollywood Gaming at Dayton Raceway, Hollywood Gaming at
Mahoning Valley Race Course, Marquee by Penn, Hollywood Casino at
Meadows Racetrack, 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 Hotel and Casino, 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 Sam Houston and Valley Race Parks (the remaining
50% was acquired by Penn National on August 1, 2021), and the
Company’s JV interests in Freehold Raceway; 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"). The Other category also includes Penn
Interactive, which operates social gaming, our internally-branded
retail sportsbooks, iGaming and our Barstool Sportsbook mobile app.
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 consist of
certain expenses, such as: payroll, professional fees, travel
expenses and other general and administrative expenses that do not
directly relate to or have not otherwise been allocated to a
property. For the three and nine months ended September 30, 2021,
2020 and 2019 corporate overhead costs were $27.8 million, $20.1
million, and $27.5 million, and $77.9 million, $61.0 million, $74.2
million, respectively. 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) Primarily represents the elimination
of intersegment revenues associated with our internally-branded
retail sportsbooks, which are operated by Penn Interactive.
(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
Supplemental Information
Given the COVID-19 pandemic and the resulting temporary closure
of all of the Company’s gaming and racing properties in 2020, the
Company believes presenting information regarding the Company’s
financial results for the three and nine months ended September 30,
2019 is useful to investors to evaluate the Company’s performance
for the three and nine months ended September 30, 2021.
The Company acquired Perryville on July 1, 2021, the remaining
50% ownership of our joint venture, Sam Houston, on August 1, 2021
and Greektown on May 23, 2019. Although the Company did not own
Perryville and 100% of Sam Houston for the entire year of 2021,
2020 or 2019, nor did it own Greektown from January 1, 2019 through
May 22, 2019, the Company believes the following supplemental
information is useful to investors to assess the value these
transactions bring to the Company and its shareholders.
The table below shows operating results of (i) the acquired
Perryville, Sam Houston and Greektown properties for the
pre-acquisition periods (ii) the ceased operations of Resorts
Casino Tunica.
For the three months ended
September 30,
For the nine months ended
September 30,
(in millions,
unaudited)
2021
2020
2019
2021
2020
2019
Revenues:
Perryville (1)
$
20.8
$
19.5
$
47.4
$
40.5
$
58.6
Sam Houston (1)
$
1.1
$
8.5
$
4.8
$
9.8
$
14.2
$
21.0
Greektown (1)
$
133.5
Resorts Casino Tunica (2)
$
(9.8)
Adjusted EBITDAR:
Perryville (1)
$
5.4
$
4.5
$
11.8
$
8.1
$
13.3
Sam Houston (1)(3)
$
—
$
—
$
—
$
0.8
$
0.7
$
0.3
Greektown (1)(4)
$
43.0
Resorts Casino Tunica (2)
$
1.4
(1) The operating results of Perryville,
Sam Houston and Greektown were derived from historical financial
information. Revenues and Adjusted EBITDAR earned by the
aforementioned entities do not reflect any cost savings or revenue
synergies from potential operating efficiencies or associated costs
to achieve such savings or synergies that are expected to result
from the transactions.
(2) The Company ceased operations of
Resorts Casino Tunica on June 30, 2019.
(3) The Adjusted EBITDAR for Sam Houston
is adjusted for 50% of operating results included in the Company's
income from unconsolidated affiliates prior to the acquisition.
(4) The operating results of Greektown
were adjusted to conform to the Company’s methodology of allocating
certain corporate expenses to properties.
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
September 30,
For the nine months ended
September 30,
(in millions,
unaudited)
2021
2020
2019
2021
2020
2019
Net income (loss)
$
86.1
$
141.2
$
43.7
$
375.7
$
(681.8)
$
136.0
Income tax expense (benefit)
36.4
(14.3)
19.6
110.1
(172.2)
53.0
Income from unconsolidated affiliates
(9.1)
(5.0)
(9.8)
(27.8)
(7.4)
(21.7)
Interest expense, net
144.9
142.3
133.5
418.6
407.1
400.5
Other income
(19.2)
(68.0)
(7.2)
(43.1)
(75.5)
(7.2)
Operating income (loss)
239.1
196.2
179.8
833.5
(529.8)
560.6
Stock-based compensation
8.5
2.8
3.7
21.9
11.7
10.4
Cash-settled stock-based awards
variance
5.2
39.5
(3.4)
14.3
46.7
(6.4)
Loss (gain) on disposal of assets
0.3
(6.0)
7.4
0.1
(33.9)
8.3
Contingent purchase price
0.6
—
1.2
1.9
(1.4)
7.0
Pre-opening expenses (1)
1.6
4.8
7.4
2.8
11.5
15.5
Depreciation and amortization
83.7
87.7
106.3
246.9
275.3
316.4
Impairment losses
—
—
—
—
616.1
—
Insurance recoveries, net of deductible
charges
—
—
(1.5)
—
(0.1)
(1.5)
Income from unconsolidated affiliates
9.1
5.0
9.8
27.8
7.4
21.7
Non-operating items of equity method
investments (2)
3.0
1.2
0.9
6.0
3.2
2.8
Other expenses (1) (3)
13.2
12.4
—
15.8
12.4
—
Adjusted EBITDA
364.3
343.6
311.6
1,171.0
419.1
934.8
Rent expense associated with triple net
operating leases
116.0
109.0
96.3
342.9
310.3
271.0
Adjusted EBITDAR
$
480.3
$
452.6
$
407.9
$
1,513.9
$
729.4
$
1,205.8
Net income (loss) margin
5.7 %
12.5 %
3.2 %
8.7 %
(26.7) %
3.4 %
Adjusted EBITDAR margin
31.8 %
40.1 %
30.1 %
34.9 %
28.6 %
30.4 %
(1) During 2019, 2020 and during the first
quarter of 2021, acquisition costs were included within pre-opening
and acquisition costs. Beginning with the quarter ended June 30,
2021, acquisition costs are presented as part of other
expenses.
(2) Consists principally of interest
expense, net; income taxes; depreciation and amortization; and
stock-based compensation expense associated with Barstool Sports,
Inc. and our Kansas Entertainment, LLC joint venture. We record our
portion of Barstool Sports, Inc.'s net income or loss, including
adjustments to arrive at Adjusted EBITDAR, one quarter in
arrears.
(3) Consists of non-recurring acquisition
and transaction costs, finance transformation costs associated with
the implementation of our new Enterprise Resource Management system
and non-recurring restructuring charges (primarily severance)
associated with a company-wide initiative, triggered by the
COVID-19 pandemic, designed to (i) improve the operational
effectiveness across our property portfolio; (ii) improve the
effectiveness and efficiency of our Corporate functional support
area.
PENN NATIONAL GAMING, INC. AND
SUBSIDIARIES
Consolidated Statements of
Operations and Comprehensive Income (Loss)
For the three months ended
September 30,
For the nine months ended
September 30,
(in millions, except per share
data)
2021
2020
2019
2021
2020
2019
Revenues
Gaming
$
1,256.2
$
993.6
$
1,088.5
$
3,643.7
$
2,155.7
$
3,185.2
Food, beverage, hotel and other
255.6
136.1
266.0
688.8
395.6
775.0
Total revenues
1,511.8
1,129.7
1,354.5
4,332.5
2,551.3
3,960.2
Operating expenses
Gaming
652.4
458.1
587.5
1,801.1
1,101.0
1,699.1
Food, beverage, hotel and other
160.1
70.1
171.2
431.8
260.0
500.5
General and administrative
376.5
317.6
309.7
1,019.2
828.7
883.6
Depreciation and amortization
83.7
87.7
106.3
246.9
275.3
316.4
Impairment losses
—
—
—
—
616.1
—
Total operating expenses
1,272.7
933.5
1,174.7
3,499.0
3,081.1
3,399.6
Operating income (loss)
239.1
196.2
179.8
833.5
(529.8)
560.6
Other income (expenses)
Interest expense, net
(144.9)
(142.3)
(133.5)
(418.6)
(407.1)
(400.5)
Income from unconsolidated affiliates
9.1
5.0
9.8
27.8
7.4
21.7
Other
19.2
68.0
7.2
43.1
75.5
7.2
Total other expenses
(116.6)
(69.3)
(116.5)
(347.7)
(324.2)
(371.6)
Income (loss) before income
taxes
122.5
126.9
63.3
485.8
(854.0)
189.0
Income tax benefit (expense)
(36.4)
14.3
(19.6)
(110.1)
172.2
(53.0)
Net income (loss)
86.1
141.2
43.7
375.7
(681.8)
136.0
Less: Net loss attributable to
non-controlling interest
—
0.7
0.2
0.1
1.2
0.4
Net income (loss) attributable to Penn
National
$
86.1
$
141.9
$
43.9
$
375.8
$
(680.6)
$
136.4
Earnings (loss) per share:
Basic earnings (loss) per share
$
0.55
$
1.02
$
0.38
$
2.40
$
(5.36)
$
1.18
Diluted earnings (loss) per share
$
0.52
$
0.93
$
0.38
$
2.24
$
(5.36)
$
1.16
Weighted-average common shares
outstanding—basic
156.1
138.2
115.2
155.9
126.9
115.8
Weighted-average common shares
outstanding—diluted
172.7
155.5
116.7
172.7
126.9
117.7
Selected Financial Information
Balance Sheet Data
(in millions,
unaudited)
September 30, 2021
December 31, 2020
Cash and cash equivalents
$
2,729.3
$
1,853.8
Bank debt
$
1,579.8
$
1,628.1
Notes (1)
1,130.5
730.5
Other long-term obligations (2)
64.2
73.0
Total traditional debt
2,774.5
2,431.6
Financing obligation (3)
84.6
—
Less: Debt discounts and debt issuance
costs
(109.6)
(119.0)
$
2,749.5
$
2,312.6
Traditional net debt (4)
$
45.2
$
577.8
(1) Inclusive of our 5.625% Notes due
2027, 4.125% Notes due 2029 and our 2.75% Convertible Notes due
2026.
(2) Other long-term obligations as of
September 30, 2021 primarily includes $52.8 million related to
relocation fees due for both Hollywood Gaming at Dayton Raceway and
Hollywood Gaming at Mahoning Valley Race Course, and $11.4 million
related to our repayment obligation on a hotel and event center
located near Hollywood Casino Lawrenceburg.
(3) Represents cash proceeds received on
certain claims of which the principal repayment is contingent and
classified as a financing obligation under Accounting Standards
Codification Topic 470, “Debt.”
(4) Traditional net debt in the table
above is calculated as “Total traditional debt,” which is the
principal amount of debt outstanding (excludes the financing
obligation associated with cash proceeds received on certain claims
of which the principal repayment is contingent) less “Cash and cash
equivalents.”
Cash Flow Data
The table below summarizes certain cash expenditures incurred by
the Company.
For the three months ended
September 30,
For the nine months ended
September 30,
(in millions,
unaudited)
2021
2020
2019
2021
2020
2019
Cash payments to our REIT Landlords under
Triple Net Leases (1)
$
228.5
$
86.4
$
222.6
$
683.6
$
396.0
$
645.4
Cash payments (refunds) related to income
taxes, net
$
47.9
$
(4.8)
$
16.4
$
75.6
$
(6.0)
$
20.9
Cash paid for interest on traditional
debt
$
21.7
$
33.0
$
38.0
$
65.0
$
87.3
$
100.5
Maintenance capital expenditures
$
52.3
$
21.5
$
35.5
$
91.3
$
65.7
$
118.5
(1) Consists of payments made under the Master Leases, the
Perryville Lease (effective July 1, 2021), the Meadows Lease, the
Margaritaville Lease, the Greektown Lease, and the Morgantown
Leases, in cash. As previously noted, the cash rent under the
Tropicana Lease is nominal. During the three and nine months ended
September 30, 2020, we utilized rent credits totaling $141.7
million and $272.5 million to pay rent under the Penn Master Lease,
Pinnacle Master Lease and Meadows Lease.
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, net of 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 expenses; and other. 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, Inc.
("Barstool Sports") and our Kansas Entertainment, LLC joint
venture. Adjusted EBITDA is inclusive of rent expense associated
with our triple net operating leases (the operating lease
components contained within our triple net master lease dated
November 1, 2013 with GLPI and the triple net master lease assumed
in connection with our acquisition of Pinnacle Entertainment, Inc.
(primarily land), our individual triple net leases with GLPI for
the real estate assets used in the operation of Tropicana Las Vegas
Hotel and Casino, Inc. and Hollywood Casino at Meadows Racetrack,
and our individual triple net leases with VICI for the real estate
assets used in the operations of Margaritaville Casino Resort and
Greektown Casino-Hotel). 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 of 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.
Management Presentation, 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. During the call, management will review an earnings
presentation that can be accessed here.
The conference call number is 212-231-2938. 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 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 43 properties across 20 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 is
exclusively promoting the Company's land-based and online casinos
and sports betting products, including the Barstool Sportsbook
mobile app, to its national audience. In addition, in October 2021,
Penn National acquired Score Media and Gaming, Inc. (“theScore”).
Combined with the power of Barstool Sports, Penn National is now
well positioned to be North America’s leading digital,
entertainment, sports content, gaming and technology company.
Barstool’s wide top of funnel audience reach is highly
complementary to the news, scores and stats available on theScore’s
best in class media app, which will create a one-stop destination
for the sports fan that does not exist today. The Company's
omni-channel approach is further bolstered by the mychoice
loyalty program, which rewards and recognizes its over 24 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; continued demand for the gaming
properties that have reopened and the possibility that the
Company’s 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 potential
benefits of the Company’s Score Media & Gaming, Inc.
(“theScore”) acquisition; the Company’s estimated cash burn and
future liquidity, future revenue and Adjusted EBITDAR, including
from the Company’s investment in Barstool sports and its ongoing
launch of its iGaming products and online sports betting products,
including the Barstool Sportsbook mobile app; the Company’s
expectations of future results of operations and financial
condition, including margins; the Company’s expectations for its
properties and the potential benefits of the cashless, cardless and
contactless (“3Cs”) technology; the Company’s development projects;
the timing, cost and expected impact of planned capital
expenditures on the Company’s results of operations; the
anticipated opening dates of the Company’s retail sportsbooks in
future states; the Company’s expectations with regard to
acquisitions, potential divestitures and development opportunities,
as well as the integration of and synergies related to any
companies the Company have acquired or may acquire; the outcome and
financial impact of the litigation in which the Company is 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; the Company’s ability to maintain regulatory approvals for
its existing businesses and to receive regulatory approvals for its
new business partners; the Company’s 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 the Company’s existing businesses; and the
performance of the Company’s 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 with regard to online
sports betting, iGaming and retail/mobile sportsbooks and the
impact of any such actions. 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 the
COVID-19 pandemic on general economic conditions, capital markets,
unemployment, consumer spending and the Company’s liquidity,
financial condition, supply chain, operations 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 other natural or
man-made disasters or catastrophic events; (d) the Company’s
ability to access additional capital on favorable terms or at all;
(e) the Company’s ability to remain in compliance with the
financial covenants of its debt obligations; (f) 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 the Company’s ability to attract and retain employees; (g) the
outcome of any legal proceedings that may be instituted against the
Company or its directors, officers or employees; (h) the impact of
new or changes in current laws, regulations, rules or other
industry standards; (i) the ability of the Company’s operating
teams to drive revenue and margins; (j) the impact of significant
competition from other gaming and entertainment operations; (k) the
Company’s ability to obtain timely regulatory approvals required to
own, develop and/or operate its properties, or other delays,
approvals or impediments to completing its planned acquisitions or
projects, construction factors, including delays, and increased
costs; (l) the passage of state, federal or local legislation that
would expand, restrict, further tax, prevent or negatively impact
operations in or adjacent to the jurisdictions in which the Company
does or seek to do business; (m) 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; (n) 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; (o) 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; (p) 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); (q) with respect
to new casinos, risks relating to construction, and its ability to
achieve its expected budgets, timelines and investment returns; (r)
the Company may not be able to achieve the anticipated financial
returns from the acquisition of “theScore”, including due to fees,
costs and taxes in connection with the integration of theScore and
expansion of its betting and content platform; (s) there is
significant competition in the interactive gaming market; (t)
potential adverse reactions or changes to business or regulatory
relationships resulting from the acquisition of theScore; (u) the
ability of the Company to retain and hire key personnel; and (v)
other factors as discussed in the Company’s Annual Report on Form
10-K for the year ended December 31, 2020, 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/20211104005599/en/
Felicia Hendrix Executive VP & Chief Financial Officer
610-373-2400
Joseph N. Jaffoni, Richard Land JCIR 212-835-8500 or
penn@jcir.com
PENN Entertainment (NASDAQ:PENN)
Historical Stock Chart
From Mar 2024 to Apr 2024
PENN Entertainment (NASDAQ:PENN)
Historical Stock Chart
From Apr 2023 to Apr 2024