- All Reportable Segments Saw Continued
Improvement to Industry Leading Adjusted EBITDAR Margins on a
Same-Store Basis -
Penn National Gaming, Inc. (PENN: Nasdaq) (“Penn National” or
the “Company”) today announced financial results for the three
months and year ended December 31, 2018 and established 2019
first quarter and full year guidance. The financial results for the
three months and year ended December 31, 2018 reflect the
acquisition of Pinnacle Entertainment, Inc. (“Pinnacle”) on October
15, 2018 (and the divestiture of four Pinnacle properties
simultaneous with the completion of the transaction).
Timothy J. Wilmott, Chief Executive Officer, commented: “I am
pleased to report that Penn National beat guidance for the fourth
quarter, with improvements across the board in our principal
financial metrics. These results were driven by contributions from
the Pinnacle acquisition and continued growth in our same-store
portfolio of properties.”
2018 Fourth Quarter Financial Highlights:
- Net revenues of $1.155 billion,
an increase of $386.3 million, driven primarily by contributions
from the Pinnacle acquisition;
- Operating income of $124.4
million, an increase of $97.6 million, with a net loss of
$42.0 million, driven largely by one-time transaction costs
associated with the Pinnacle acquisition;
- Adjusted EBITDAR of $323.9
million, an increase of $124.8 million, driven by a $113.0 million
contribution from the Pinnacle acquisition and growth of $11.8
million, or 5.9%, in the Company’s same-store portfolio of
properties;
- Adjusted EBITDAR margins
increased by 210 basis points to 28.0%; the Company’s same-store
Adjusted EBITDAR margin increased by 150 basis points to 27.4%,
with 17 of 23 gaming operations delivering improved same-store
margins;
- Adjusted EBITDA, after Lease
Payments of $133.5 million; and
- Traditional debt increased by
$1.36 billion during the quarter, principally as a result of the
additional debt incurred to partially finance the Pinnacle
acquisition and a $100.0 million draw on our revolving credit
facility to finance our acquisition of Margaritaville Resort Casino
(“Margaritaville”) on January 1, 2019. As of December 31,
2018, on a pro forma basis for the acquisitions of Pinnacle and
Margaritaville, our traditional net debt ratio was 3.12x and gross
and net leverage inclusive of master lease obligations were 6.12x
and 5.87x, respectively.
“The fourth quarter marked the end of a transformational year
for Penn National,” continued Mr. Wilmott. “With the closing of our
acquisition of Pinnacle in October, we added over 10,000 new team
members and 12 gaming properties to what was already the industry’s
leading regional gaming portfolio. In addition, we obtained the
approvals for our acquisition of Margaritaville in Bossier City,
Louisiana in the fourth quarter, and we announced our acquisition
of Greektown Casino-Hotel (“Greektown”) in Detroit, Michigan, which
will expand our operating base to 42 facilities in 19 jurisdictions
following receipt of all remaining customary approvals. Both
transactions are expected to be immediately accretive to operating
results upon closing.
Pinnacle Integration Update
“As anticipated, we remain well on pace to achieve our two-year,
$100 million run rate cost synergy target, with a run rate of $50
million anticipated in 2019 and an additional $50 million expected
by the end of 2020,” continued Mr. Wilmott. “We have begun to focus
on revenue synergies and plan for initiatives to commence in
late-2019. We currently anticipate incremental Adjusted EBITDAR
associated with revenue synergies related to Pinnacle to be in the
range of $15-$20 million. The majority of those synergies should be
realized in 2020 and early 2021. As noted in the tables below, Penn
National incurred significant one-time transaction costs and
charges in the 2018 fourth quarter. We anticipate our
transition-related expenses to stabilize as we complete our
integration efforts later this year,” said Mr. Wilmott.
Strong M&A and Expansion Opportunities
“On January 1st, we completed the acquisition of the operations
of Margaritaville for total consideration of $115 million and
welcomed their nearly 1,000 team members to Penn National,”
continued Mr. Wilmott. “The transaction was financed with
incremental borrowings under our Company’s revolving credit
facility with the purchase price representing a multiple of
approximately 5.0x trailing twelve months adjusted earnings before
interest, taxes, depreciation, amortization, and management fees
for the period ended December 31, 2018. We expect the purchase
multiple will be reduced to below 4.5x based on projected operating
synergies and cost savings. Simultaneous with the closing of the
transaction, Penn National entered into a triple net lease
agreement with VICI Properties Inc. (VICI: NYSE) (“VICI”) for the
Margaritaville facility (the “Margaritaville Lease”).
“In November, we announced another accretive transaction in
combination with VICI for the acquisition of the operations of
Greektown for approximately $300 million,” continued Mr. Wilmott.
“We are excited to be entering the Detroit market, which is the
beneficiary of billions of dollars of new investments in the city’s
residential, commercial, entertainment and cultural center, all of
which are driving new residents, businesses, tourists and
employment to the downtown area. The transaction will be financed
with a combination of cash on hand and debt. The waiting period for
Hart Scott Rodino antitrust review has expired and we are targeting
a second quarter closing of this acquisition, subject to state
regulatory approvals.
“Meanwhile, in Pennsylvania, our development efforts continue on
our planned $120 million Hollywood Casino York and the $111 million
Hollywood Casino Morgantown developments,” continued Mr. Wilmott.
“The Pennsylvania Gaming Control Board (“PGCB”) has held the local
community impact hearing for the casino in York and has set March
4th for the community hearing on our Morgantown project. Meanwhile
we are working with local government officials on the necessary
local permits and approvals for the development of the projects.
The construction timetable for both facilities is anticipated to be
approximately 12-18 months following receipt of all requisite
approvals, including final licensing by the PGCB,” said Mr.
Wilmott.
Return of Capital
“Finally, in December, the Company repurchased approximately 2.3
million shares at an average price per share of $21.74 for a total
of $50 million,” said Mr. Wilmott. “This was conducted under the
Company’s $100 million share repurchase program that expired on
February 1, 2019. Our Board of Directors approved a new $200
million share repurchase program that is in effect until December
31, 2020. The new authorization reflects our confidence in the
Company’s growing free cash flow from operations and is consistent
with our historical practice of providing management the
flexibility to allocate capital to share repurchases, debt
reduction, and/or accretive transactions,” said Mr. Wilmott.
Near Term Focus
“As we head into 2019, we’ll be principally focused on
completing the integration of Pinnacle and our latest acquisitions,
with a goal of creating a new organization that capitalizes on the
talents and strengths of all of our team members, while continuing
to generate significant free cash flow for our shareholders,”
concluded Mr. Wilmott.
Summary of Fourth Quarter Results
For the three months ended December 31,
(in millions,
except per share data, unaudited)
2018 Actual 2018 Guidance (1)
2017 Actual Net revenues $ 1,155.3 $ 1,149.1 $ 769.0
Net loss $ (42.0 ) $ (48.8 ) $ (338.1 )
Adjusted
EBITDAR (2) $ 323.9 $ 318.4 $ 199.1 Less: Lease Payments
(2) (190.4 ) (189.7 ) (114.5 )
Adjusted EBITDA, after Lease
Payments (2) $ 133.5 $ 128.7 $ 84.6
Diluted loss per common share $ (0.37 ) $ (0.40 ) $
(3.72 ) (1) As provided by Penn National on
November 1, 2018. (2) In the fourth quarter 2018, in connection
with the Pinnacle acquisition, we began utilizing Adjusted EBITDAR
instead of Adjusted EBITDA. The difference between Adjusted EBITDAR
and Adjusted EBITDA is the exclusion of rent expense associated
with the triple net operating lease of our Meadows Racetrack and
Casino (the “Meadows Lease”) with Gaming and Leisure Properties,
Inc. (GLPI: Nasdaq) (“GLPI”), a real estate investment trust
(“REIT”). During the first quarter 2018, the Company changed its
definition of Adjusted EBITDA to exclude pre-opening and
acquisition costs and the variance between budget and actual
expense for cash-settled stock-based awards. In connection with
these changes, we have reclassified our prior period results, where
applicable, to conform to the current period presentation. See the
“Non-GAAP Financial Measures” section below for more information as
well as the definitions of Adjusted EBITDAR; Lease Payments; and
Adjusted EBITDA, after Lease Payments. Additionally, see below for
reconciliations of these Non-GAAP financial measures to their GAAP
equivalent financial measure.
Review of 2018 Fourth Quarter Results vs.
Guidance
For the three months ended December 31,
2018
(in millions,
unaudited)
Pre-tax Post-tax Loss, per guidance (1) $
(56.6 ) $ (48.8 ) Adjusted EBITDAR variances: Favorable
performance of properties 4.5 3.4 Other, mainly due to corporate
overhead 1.0 0.8
Total Adjusted EBITDAR
variances 5.5 4.2 Other
favorable (unfavorable) variances: Interest expense 8.5 6.6 Rent
expense associated with triple net operating lease (2) 1.7 1.3
Depreciation and amortization (26.6 ) (20.5 ) Cash-settled
stock-based awards 18.3 14.1 Impairment losses (34.3 ) (26.4 )
Pre-opening and acquisition costs (6.7 ) (5.1 ) Loss on early
extinguishment of debt 8.8 6.8 Other (4.2 ) (3.3 ) Income taxes —
29.1
Loss, as reported $ (85.6
) $ (42.0 ) (1) As
provided by Penn National on November 1, 2018 (2) During the three
months ended December 31, 2018, the Company’s only triple net
operating lease was the Meadows Lease.
Financial Guidance for the 2019 First Quarter and Full
Year
The Company’s first quarter and full year guidance targets
reflect the anticipated impacts of several items, including the
ongoing bridge work in Lake Charles, Louisiana and the hotel and
casino expansion at Monarch Casino in Black Hawk, Colorado. In
addition, the table below is inclusive of projected results from
Margaritaville, which was acquired on January 1, 2019, but does not
yet include the projected results of Greektown. Finally, the
guidance is based on the following assumptions:
- Corporate overhead expenses, which is
net of allocations to our properties, of $98.6 million, with $24.7
million to be incurred in the first quarter;
- Depreciation and amortization charges
of $398.8 million, with $102.8 million in the first quarter;
- Lease payments (which continue to be
fully tax deductible) to our REIT landlords under our triple net
leases of $839.4 million, with $209.8 million in the first quarter.
This includes projected full escalator payments of $0.9 million
under our existing triple net master lease with GLPI (the “Penn
Master Lease”), $0.7 million under the triple net master lease with
GLPI, which we assumed and amended as a part of the Pinnacle
acquisition (the “Pinnacle Master Lease” and collectively with the
Penn Master Lease, the “Master Leases”) and $0.2 million under the
Meadows Lease;
- Maintenance capital expenditures of
$188.4 million, with $27.8 million in the first quarter;
- Project capital expenditures for
Hollywood Casino York and Hollywood Casino Morgantown of $15.0
million and $21.5 million, respectively, with $0.7 million of spend
in the first quarter for each facility;
- Cash interest on traditional debt of
$126.0 million, with $38.5 million in the first quarter;
- Interest expense of $854.4 million,
with $212.3 million in the first quarter, inclusive of interest
expense related to the financing obligations associated with our
Master Leases;
- Cash taxes of $16.8 million, with $5.0
million in the first quarter;
- Our share of non-operating items (such
as depreciation and amortization expense) associated with our
Kansas JV of $3.7 million, with $1.1 million to be incurred in the
first quarter;
- Estimated non-cash stock compensation
expenses of $14.0 million, with $3.5 million to be incurred in the
first quarter;
- LIBOR is based on the forward yield
curve;
- A diluted share count of approximately
119.0 million; and
- There will be no material changes in
applicable legislation, regulatory environment, world events,
weather, recent consumer trends, economic conditions, oil prices,
competitive landscape (other than listed above) or other
circumstances beyond our control that may adversely affect the
Company’s results of operations.
The guidance table below includes comparative prior period
actual results.
For the three months ending/ended March
31, For the full year ending/ended December 31,
(in millions,
except per share data, unaudited)
2019 Guidance 2018 Actual 2019 Guidance
2018 Actual Net revenues $
1,301.4 $ 816.1 $ 5,207.7
$ 3,587.9 Net income (1)
$ 47.5 $ 45.4 $ 162.9
$ 93.5 Income tax expense (benefit) 17.1 15.7 58.1
(3.6 ) Loss on early extinguishment of debt — 0.9 — 21.0 Income
from unconsolidated affiliates (6.2 ) (5.4 ) (24.6 ) (22.3 )
Interest income (1) (0.3 ) (0.3 ) (1.0 ) (1.0 ) Interest expense
212.3 115.8 854.4 539.4 Other expense 1.0 — 12.0
7.1
Operating income (1) 271.4
172.1 1,061.8 634.1 Rent expense associated
with triple net operating leases (1)(2) 9.1 — 36.8 3.8 Charge for
stock compensation 3.5 2.9 14.0 12.0 Cash-settled stock award
variance (3) — (7.5 ) — (19.6 ) Loss on disposal of assets — 0.1 —
3.2 Contingent purchase price 0.4 1.1 1.4 0.5 Pre-opening and
acquisition costs — 6.1 — 95.0 Depreciation and amortization (1)
102.8 60.4 398.8 269.0 Provision for loan loss and unfunded loan
commitments to the JIVDC, net of recoveries, and impairment losses
— 0.6 — 17.9 Insurance recoveries, net of deductible charges — — —
(0.1 ) Income from unconsolidated affiliates 6.2 5.4 24.6 22.3
Non-operating items for Kansas JV (3) 1.1 1.3 3.7
5.1
Adjusted EBITDAR $ 394.5
$ 242.5 $ 1,541.1 $
1,043.2 Less: Lease Payments (4) (209.8 ) (115.9 ) (839.4 )
(537.4 )
Adjusted EBITDA, after Lease Payments $
184.7 $ 126.6 $ 701.7 $
505.8 Diluted earnings per common share $ 0.40
$ 0.48 $ 1.37 $ 0.93 (1) Amounts do not
include the impact of the adoption of the new accounting standard
related to leases, Accounting Standards Codification (“ASC”) Topic
842, Leases. (2) During the three months and year ended December
31, 2018, the Company’s only triple net operating lease was the
Meadows Lease. The three months and year ending December 31, 2019
also include the Margaritaville Lease, which is expected to be
accounted for as an operating lease. (3) For a description of these
items, see “Non-GAAP Financial Measures” section below. (4) The
three months and year ending December 31, 2019 includes amounts
paid to VICI under the Margaritaville Lease.
PENN NATIONAL GAMING, INC. AND
SUBSIDIARIES
Segment Information
During the fourth quarter 2018, the Company made revisions to
its reportable segments upon the consummation of the Pinnacle
acquisition in order to maintain alignment with its internal
organizational structure. Apart from the addition of the new
properties, the most significant change was dividing the South/West
segment into two separate reportable segments. The periods prior to
October 15, 2018 have been restated to provide comparability, but
do not reflect the pre-acquisition operating results of
Pinnacle.
Net Revenues Operating Income
(Loss) Adjusted EBITDAR For the three months ended
December 31, For the three months ended December 31,
For the three months ended December 31,
(in thousands,
unaudited)
2018 2017 2018 2017
2018 2017 Northeast segment (1) $ 526,145 $
425,762 $ 129,925 $ 100,974 $ 149,144 $ 128,045 South segment (2)
207,983 58,169 47,326 9,635 60,199 12,753 West segment (3) 146,602
93,373 34,752 (67,368 ) 42,422 16,134 Midwest segment (4) 264,661
180,231 75,275 43,278 93,212 57,269 Other (5) 9,878 11,501
(162,918 ) (59,744 ) (21,087 ) (15,120 )
Total $
1,155,269 $ 769,036 $ 124,360 $ 26,775
$ 323,890 $ 199,081
Net Revenues
Operating Income (Loss) Adjusted EBITDAR For the
year ended December 31, For the year ended December 31,
For the year ended December 31,
(in thousands,
unaudited)
2018 2017 2018 2017 2018
2017 Northeast segment (1) $ 1,891,514 $ 1,756,579 $ 514,290
$ 451,084 $ 583,791 $ 549,304 South segment (2) 394,351 224,247
97,862 51,501 118,962 62,580 West segment (3) 437,887 380,418
106,473 (57,282 ) 114,267 72,744 Midwest segment (4) 823,717
735,033 233,552 191,313 294,332 249,744 Other (5) 40,449
51,693 (318,085 ) (190,902 ) (68,111 ) (55,223 )
Total $ 3,587,918 $ 3,147,970 $ 634,092
$ 445,714 $ 1,043,241 $ 879,149
(1) The Northeast segment consists of the following
properties: Ameristar East Chicago, 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, Meadows
Racetrack and Casino, and Plainridge Park Casino. The financial
information for the year ended December 31, 2018 also includes the
Company’s Casino Rama management service contract, which terminated
in July 2018. During the year ended December 31, 2018, net revenues
were $46.8 million higher due to reimbursable costs associated with
our management service contract for Casino Rama following the
implementation of the new revenue standard (as defined below),
effective January 1, 2018. (2) The South segment consists of the
following properties: 1st Jackpot Casino (f/k/a Bally’s Casino
Tunica), 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
Resorts Casino Tunica. Beginning January 1, 2019, Margaritaville
will also be included in the South segment in connection with the
closing of the acquisition. (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. The
financial information for the year ended December 31, 2018 also
includes the Company’s investments in and the management contract
of Hollywood Casino Jamul-San Diego, which terminated in July 2018.
(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 standalone 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 Ventures, the
Company’s interactive division which represents Penn National’s
social gaming initiatives, our management contract for Retama Park
Racetrack, and our live and televised poker tournament series that
operates under the trade name, Heartland Poker Tour. 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 been allocated to a property.
For the three months and the year ended December 31, 2018,
corporate overhead costs were $23.8 million and $80.1 million,
respectively, compared to $17.9 million and $71.4 million for the
corresponding prior year periods.
PENN NATIONAL GAMING, INC. AND
SUBSIDIARIES
Reconciliation of Comparable GAAP Financial
Measureto Adjusted EBITDAR and Adjusted EBITDA, after Lease
Payments
For the three months ended For the
year ended
(in thousands,
unaudited)
December 31, 2018 December 31, 2017
December 31, 2018 December 31, 2017 Net
income (loss) $ (42,036 ) $
(338,060 ) $ 93,514 $
473,463 Income tax expense (benefit) (43,594 ) 252,134
(3,593 ) (498,507 ) Loss on early extinguishment of debt 17,192 573
20,964 23,963 Income from unconsolidated affiliates (5,535 ) (4,321
) (22,326 ) (18,671 ) Interest income (269 ) (367 ) (1,005 ) (3,552
) Interest expense 192,960 116,761 539,417 466,761 Other expense
5,642 55 7,121 2,257
Operating
income 124,360 26,775 634,092
445,714 Rent expense associated with triple net operating
lease 3,797 — 3,797 — Charge for stock compensation 3,187 1,953
12,034 7,780 Cash-settled stock award variance (18,257 ) 10,632
(19,611 ) 23,471 Loss (gain) on disposal of assets (55 ) 70 3,168
172 Contingent purchase price (1,289 ) 9,953 454 (6,840 )
Pre-opening and acquisition costs 77,861 5,138 95,020 9,732
Depreciation and amortization 93,189 61,374 268,990 267,062
Provision for loan loss and unfunded loan commitments to the JIVDC,
net of recoveries, and impairment losses (1) 34,288 77,858 17,921
107,810 Insurance recoveries, net of deductible charges — (289 )
(68 ) (289 ) Income from unconsolidated affiliates 5,535 4,321
22,326 18,671 Non-operating items for Kansas JV 1,274 1,296
5,118 5,866
Adjusted EBITDAR $
323,890 $ 199,081 $ 1,043,241
$ 879,149 Less: Lease Payments (190,417 ) (114,532 )
(537,447 ) (455,439 )
Adjusted EBITDA, after Lease Payments
$ 133,473 $ 84,549
$ 505,794 $ 423,710
(1) We recorded an impairment on certain of
our long-lived assets of $34.3 million during the three months
ended December 31, 2018, offset by a loan loss recovery of $17.0
million that was recorded during the year ended December 31, 2018
on the sale of our Jamul loan, as compared to provisions of $77.9
million and $89.8 million for the three months and year ended
December 31, 2017, respectively. The year ended December 31, 2017
also includes a goodwill impairment charge of $18.0 million.
PENN NATIONAL GAMING, INC. AND
SUBSIDIARIES
Consolidated Statements of
Operations
For the three months ended December 31,
For the year ended December 31,
(in thousands,
except per share data, unaudited)
2018 2017 2018 2017
Revenues: Gaming (1) $ 928,938 $ 658,758 $ 2,894,861 $
2,692,021 Food, beverage, hotel, and other (1) 226,331 148,009
629,733 601,731 Management service and licensing fees — 2,845 6,043
11,654 Reimbursable management costs (1) — 6,236
57,281 26,060 Revenues 1,155,269 815,848 3,587,918
3,331,466 Less: Promotional allowances (1) — (46,812 ) —
(183,496 ) Net revenues 1,155,269 769,036
3,587,918 3,147,970
Operating expenses Gaming
(1) 508,225 336,933 1,551,430 1,364,989 Food, beverage, hotel and
other (1) 155,194 108,485 439,253 421,848 General and
administrative 240,013 151,375 618,951 514,487 Depreciation and
amortization 93,189 61,374 268,990 267,062 Reimbursable management
costs (1) — 6,236 57,281 26,060 Provision for loan loss and
unfunded loan commitments to the JIVDC, net of recoveries, and
impairment losses 34,288 77,858 17,921 107,810
Total operating expenses 1,030,909 742,261
2,953,826 2,702,256 Operating income 124,360
26,775 634,092 445,714
Other income
(expenses) Interest expense (192,960 ) (116,761 ) (539,417 )
(466,761 ) Interest income 269 367 1,005 3,552 Income from
unconsolidated affiliates 5,535 4,321 22,326 18,671 Loss on early
extinguishment of debt (17,192 ) (573 ) (20,964 ) (23,963 ) Other
(5,642 ) (55 ) (7,121 ) (2,257 ) Total other expenses (209,990 )
(112,701 ) (544,171 ) (470,758 )
Income (loss) before income
taxes (85,630 ) (85,926 ) 89,921 (25,044 ) Income tax benefit
(expense) 43,594 (252,134 ) 3,593 498,507
Net income (loss) (42,036 ) (338,060 ) 93,514 473,463 Less:
Net loss attributable to non-controlling interest 5 —
5 —
Net income (loss) attributable to Penn
National Gaming, Inc. $ (42,031 ) $ (338,060 ) $ 93,519
$ 473,463
Earnings (loss) per common share:
Basic earnings (loss) per common share $ (0.37 ) $ (3.72 ) $ 0.96 $
5.21 Diluted earnings (loss) per common share $ (0.37 ) $ (3.72 ) $
0.93 $ 5.07 Weighted average basic shares outstanding
113,581 90,827 97,105 90,854 Weighted average diluted shares
outstanding 113,581 90,827 100,338 93,378 (1)
Penn National adopted ASC Topic 606, “Revenue from Contracts with
Customers” (“ASC 606” or the “new revenue standard”), on January 1,
2018 using the modified retrospective method which impacts the
comparability of these line items. See the following page of this
release for further details.
PENN NATIONAL GAMING, INC. AND
SUBSIDIARIES
Supplemental Information2018 Impact
of Adopting New Revenue Standard
(in thousands,
unaudited)
For the Three Months Ended December 31, 2018, as Reported
Balances Without Adoption of ASC 606 Effect of Change
Higher / (Lower) For the Year Ended December 31, 2018, as
Reported Balances Without Adoption of ASC 606 Effect
of Change Higher / (Lower) Revenues Gaming (1)(2) $
928,938 $ 1,025,305 $ (96,367 ) $ 2,894,861 $ 3,100,965 $ (206,104
) Food, beverage, hotel and other (2)(4) 226,331 240,800 (14,469 )
629,733 699,085 (69,352 ) Management service and licensing fees — —
— 6,043 6,043 — Reimbursable management costs (3) — —
— 57,281 10,459 46,822 Revenues
1,155,269 1,266,105 (110,836 ) 3,587,918 3,816,552 (228,634 ) Less:
Promotional allowances (2) — (97,075 ) 97,075 —
(236,766 ) 236,766 Net revenues 1,155,269 1,169,030
(13,761 ) 3,587,918 3,579,786 8,132
Operating
expenses Gaming (1) 508,225 512,572 (4,347 ) 1,551,430
1,554,245 (2,815 ) Food, beverage, hotel and other (4) 155,194
165,337 (10,143 ) 439,253 476,545 (37,292 ) General and
administrative 240,013 240,013 — 618,951 618,951 — Depreciation and
amortization 93,189 93,189 — 268,990 268,990 — Reimbursable
management costs (3) — — — 57,281 10,459 46,822 Provision for loan
loss and unfunded loan commitments to the JIVDC, net of recoveries,
and impairment losses 34,288 34,288 — 17,921
17,921 —
Total operating expenses
1,030,909 1,045,399 (14,490 ) 2,953,826
2,947,111 6,715
Operating income $ 124,360
$ 123,631 $ 729 $ 634,092 $ 632,675
$ 1,417 (1) The new revenue
standard changed the accounting for loyalty rewards earned by our
customers. The Company is now required to defer revenue at the
estimated standalone selling price of the loyalty rewards as they
are earned by our customers and recognize revenue when the rewards
are redeemed. Prior to the adoption of ASC 606, the estimated
liability for unredeemed rewards was accrued based on the estimated
costs of the service or merchandise to be provided. (2) The new
revenue standard changed the accounting for promotional allowances.
The Company is no longer permitted to report revenue for goods and
services provided to customers for free as an inducement to gamble
as gross revenue with a corresponding reduction in promotional
allowances to arrive at net revenues (discretionary comps). The new
revenue standard requires complimentaries related to an inducement
to gamble to be recorded as a reduction to gaming revenues, and as
such promotional allowances are no longer netted on our
consolidated statements of operations. In addition, ASC 606 changed
the accounting for promotional allowances with respect to
non-discretionary complimentaries (i.e., a customer’s redemption of
loyalty points). Under ASC 606, the Company is no longer permitted
to report revenue for goods and services provided to a customer
resulting from loyalty reward redemptions with a corresponding
reduction in promotional allowances to arrive at net revenue. As
such, promotional allowances related to a customer’s redemption of
loyalty rewards is no longer netted on our consolidated statements
of operations. Lastly, ASC 606 required that goods and services
provided to customers for free, whether through discretionary or
non-discretionary comps, be recorded at their estimated standalone
selling prices. (3) The new revenue standard changed the accounting
for reimbursable costs associated with our former management
service contract for Casino Rama (terminated in July 2018). Under
ASC 606, reimbursable costs, which primarily consisted of payroll
costs, must be recognized as revenue on a gross basis, with an
offsetting amount charged to reimbursable management costs within
operating expenses. Prior to the adoption of ASC 606, we recorded
these reimbursable amounts on a net basis, and as such they were
not recorded in revenues or operating expenses. (4) The new revenue
standard changed the accounting for racing revenues. Under ASC 606,
we are not the controlling entity to the arrangement(s), but rather
function as an agent to the pari-mutuel pool. As such, fees and
obligations related to the Company’s share of purse funding
requirements, simulcasting fees, tote fees, certain pari-mutuel
taxes and other fees directly related to our racing operations must
be reported on a net basis and included as a deduction to food,
beverage, hotel and other revenue. Prior to the adoption of ASC
606, we recorded these fees and obligations in food, beverage,
hotel and other expense.
Selected Financial Information
Balance Sheet Data
(in
thousands)
December 31, 2018 December 31, 2017
Cash and cash equivalents (1) $ 479,598 $ 277,953 Bank debt
(1) $ 1,907,932 $ 730,788 Notes 399,332 399,249 Other long-term
obligations (2) 104,964 120,200 Total traditional debt (3) $
2,412,228 $ 1,250,237 Traditional net debt $ 1,932,630 $
972,284 (1) Includes a $100.0 million draw on
our revolving credit facility in December 2018 in order to close
the Margaritaville acquisition on January 1, 2019. (2) Other
long-term obligations as of December 31, 2018 include $91.3 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 $13.2 million related to our repayment obligation
on a hotel and event center located near Hollywood Casino
Lawrenceburg. (3) Amounts are inclusive of debt discount and debt
issuance costs of $41.2 million and $30.0 million, respectively.
Kansas Entertainment Distributions
The Company’s definition of Adjusted EBITDAR adds back our share
of the impact of non-operating items (such as depreciation and
amortization) at our joint ventures that have gaming operations. At
this time, Kansas Entertainment, the operator of Hollywood Casino
at Kansas Speedway, is Penn National’s only joint venture that
meets this definition. Kansas Entertainment does not currently
have, nor has it ever had, any indebtedness. The table below
presents cash flow distributions we have received from this
investment.
For the three months ended December
31, For the year ended December 31,
(in
thousands)
2018 2017 2018 2017 Cash
flow distributions $ 5,400 $ 4,750 $ 26,950 $ 25,950
Cash Flow Data
The table below summarizes certain cash expenditures incurred by
the Company.
For the three months ended December
31, For the year ended December 31,
(in
thousands)
2018 2017 2018 2017 Lease
Payments (1) $ 190,417 $ 114,532 $ 537,447 $ 455,439 Cash payments
(refunds) related to income taxes, net $ 630 $ (21,615 ) $ 24,418 $
(43,067 ) Cash paid for interest on traditional debt $ 15,364 $
7,356 $ 66,257 $ 54,785 Maintenance capital expenditures $ 34,872 $
27,597 $ 89,685 $ 74,228 (1) Includes payments
made to GLPI for the Master Leases, which are accounted for as
financing obligations, and the Meadows Lease, which is a triple net
operating lease. The three months and year ended December 31, 2018
include $70.3 million relating to the Pinnacle Master Lease and
$5.6 million relating to the Meadows Lease.
Share Repurchase Activity
During the fourth quarter 2018, the Company repurchased a total
of 2,299,498 shares of its common stock at an average price of
$21.74 for $50.0 million pursuant to its share repurchase program
that expired on February 1, 2019. In total, under this program, the
Company repurchased 3,563,647 shares of its common stock for $74.8
million. All repurchased shares were retired.
On January 9, 2019, our Board of Directors approved a new $200
million share repurchase program, which is in effect until December
31, 2020.
PENN NATIONAL GAMING, INC. AND
SUBSIDIARIES
Supplemental Segment Information - Combined
for Pinnacle Acquisition
Although Penn National did not own Pinnacle for the entirety of
the periods and year presented below, the Company believes the
following financial information is useful to investors to assess
the value this transaction brings to the Company and its
stakeholders.
The following financial information shows the Company’s reported
results for the periods or year presented, the results of the
acquired Pinnacle properties for the applicable pre-acquisition
period or year presented, and the combined Company results as if
the Pinnacle acquisition was completed at the beginning of the
period or year presented. Combined Net Revenues and Combined
Adjusted EBITDAR are non-GAAP financial measures. Further, the
financial information below depicts the historical results of both
Penn National and Pinnacle and 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 transaction. See the “Non-GAAP
Financial Measures” section below for more information as well as
the definitions of Adjusted EBITDAR; Lease Payments; Adjusted
EBITDA, after Lease Payments; Combined Net Revenues; and Combined
Adjusted EBITDAR. Additionally, see below for reconciliations of
these Non-GAAP financial measures to their GAAP equivalent
financial measure.
Net Revenues Penn National, as Reported
Pinnacle, Pre-
Acquisition (1)
Combined Penn National, as Reported
Pinnacle, Pre-
Acquisition (1)
Combined
(in thousands,
unaudited)
For the three monthsended
December 31, 2018
For the period from October
1through October 14, 2018
For the three months
endedDecember 31, 2018
For the three months ended December 31, 2017 (2)
Northeast $ 526,145 $ 18,185 $ 544,330 $ 425,762 $ 115,463 $
541,225 South 207,983 25,211 233,194 58,169 184,083 242,252 West
146,602 9,173 155,775 93,373 60,132 153,505 Midwest 264,661 14,517
279,178 180,231 95,637 275,868 Other 9,878 258 10,136
11,501 1,403 12,904
Total $
1,155,269 $ 67,344 $ 1,222,613 $ 769,036
$ 456,718 $ 1,225,754
Adjusted
EBITDAR Penn National, as Reported Pinnacle, Pre-
Acquisition (1)
Combined Penn National, as Reported Pinnacle,
Pre-
Acquisition (1)
Combined
(in thousands,
unaudited)
For the three monthsended
December 31, 2018
For the period from October
1through October 14, 2018
For the three months
endedDecember 31, 2018
For the three months ended December 31, 2017 (2)
Northeast $ 149,144 $ 3,266 $ 152,410 $ 128,045 $ 21,016 $ 149,061
South 60,199 6,800 66,999 12,753 58,629 71,382 West 42,422 3,378
45,800 16,134 21,657 37,791 Midwest 93,212 5,107 98,319 57,269
36,475 93,744 Other (21,087 ) (3,290 ) (24,377 ) (15,120 ) (15,349
) (30,469 )
Total $ 323,890 $ 15,261 $ 339,151
$ 199,081 $ 122,428 $ 321,509
Net Revenues Penn National, as Reported Pinnacle,
Pre-
Acquisition (1)
Combined Penn National, as Reported Pinnacle,
Pre-
Acquisition (1)
Combined
(in thousands,
unaudited)
For the year endedDecember 31,
2018
For the period from January
1through October 14, 2018
For the year endedDecember 31,
2018
For the year ended December 31, 2017 (2) Northeast $
1,891,514 $ 382,174 $ 2,273,688 $ 1,756,579 $ 483,276 $ 2,239,855
South 394,351 591,085 985,436 224,247 767,073 991,320 West 437,887
198,764 636,651 380,418 242,205 622,623 Midwest 823,717 304,901
1,128,618 735,033 390,422 1,125,455 Other 40,449 4,582
45,031 51,693 5,614 57,307
Total $ 3,587,918 $ 1,481,506 $ 5,069,424
$ 3,147,970 $ 1,888,590 $ 5,036,560
Adjusted EBITDAR Penn National, as Reported
Pinnacle, Pre-
Acquisition (1)
Combined Penn National, as Reported Pinnacle,
Pre-
Acquisition (1)
Combined
(in thousands,
unaudited)
For the year endedDecember 31,
2018
For the period from January
1through October 14, 2018
For the year endedDecember 31,
2018
For the year ended December 31, 2017 (2) Northeast $
583,791 $ 73,274 $ 657,065 $ 549,304 $ 92,494 $ 641,798 South
118,962 181,731 300,693 62,580 242,346 304,926 West 114,267 76,883
191,150 72,744 90,602 163,346 Midwest 294,332 113,039 407,371
249,744 146,977 396,721 Other (68,111 ) (42,784 ) (110,895 )
(55,223 ) (61,760 ) (116,983 )
Total $ 1,043,241 $
402,143 $ 1,445,384 $ 879,149 $ 510,659
$ 1,389,808
Net Revenues
Adjusted EBITDAR Penn National, as Reported
Pinnacle, Pre-
Acquisition (1)
Combined Penn National, as Reported
Pinnacle, Pre-
Acquisition (1)
Combined
(in thousands,
unaudited)
For the three months ended March 31, 2018 Northeast $
458,719 $ 119,726 $ 578,445 $ 144,977 $ 23,925 $ 168,902 South
63,330 190,093 253,423 21,118 61,707 82,825 West 97,966 59,646
157,612 23,931 22,565 46,496 Midwest 185,534 97,479 283,013 68,185
37,163 105,348 Other 10,536 1,110
11,646 (15,665 ) (14,298 ) (29,963 )
Total $ 816,085 $ 468,054 $ 1,284,139 $
242,546 $ 131,062 $ 373,608
Net
Revenues Adjusted EBITDAR Penn National, as
Reported Pinnacle, Pre-
Acquisition (1)
Combined Penn National, as Reported Pinnacle,
Pre-
Acquisition (1)
Combined
(in thousands,
unaudited)
For the three months ended June 30, 2018 Northeast $ 465,285
$ 124,709 $ 589,994 $ 148,394 $ 26,228 $ 174,622 South 62,618
190,869 253,487 20,545 59,454 79,999 West 100,751 62,554 163,305
26,103 24,231 50,334 Midwest 188,162 95,938 284,100 67,543 35,592
103,135 Other 10,097 1,308 11,405
(15,479 ) (14,055 ) (29,534 )
Total $ 826,913 $ 475,378 $ 1,302,291 $
247,106 $ 131,450 $ 378,556
Net
Revenues Adjusted EBITDAR Penn National, as
Reported Pinnacle, Pre-
Acquisition (1)
Combined Penn National, as Reported Pinnacle,
Pre-
Acquisition (1)
Combined
(in thousands,
unaudited)
For the three months ended September 30, 2018 Northeast $
441,365 $ 119,554 $ 560,919 $ 141,276 $ 20,686 $ 161,962 South
60,420 184,913 245,333 17,100 55,203 72,303 West 92,568 67,391
159,959 21,811 27,056 48,867 Midwest 185,360 96,967 282,327 65,392
35,860 101,252 Other 9,938 1,906 11,844
(15,880 ) (14,435 ) (30,315 )
Total $ 789,651 $ 470,731 $ 1,260,382 $
229,699 $ 124,370 $ 354,069
(1) The operating results of Pinnacle were derived from
historical financial information of Pinnacle, adjusted to exclude
the operating results of the four divested properties. In addition,
the operating results of Pinnacle were adjusted to conform to Penn
National’s methodology of allocating certain corporate expenses to
the properties. (2) Both Penn National and Pinnacle adopted ASC 606
using a modified retrospective transition approach, which did not
require that the prior periods be recast.
PENN NATIONAL GAMING, INC. AND
SUBSIDIARIES
Reconciliation of Comparable GAAP Financial
Measureto Combined Adjusted EBITDAR
For the three months ended For the
year ended
(in thousands,
unaudited)
December 31, 2018 September 30, 2018
June 30, 2018 March 31, 2018
December 31, 2017 December 31, 2018
December 31, 2017 Net income (loss) $
(42,036 ) $ 36,125 $
53,988 $ 45,437 $ (338,060
) $ 93,514 $ 473,463 Income tax
expense (benefit) (43,594 ) 9,070 15,242 15,689 252,134 (3,593 )
(498,507 ) Loss on early extinguishment of debt 17,192 311 2,579
882 573 20,964 23,963 Income from unconsolidated affiliates (5,535
) (5,696 ) (5,734 ) (5,361 ) (4,321 ) (22,326 ) (18,671 ) Interest
income (269 ) (246 ) (241 ) (249 ) (367 ) (1,005 ) (3,552 )
Interest expense 192,960 114,844 115,873 115,740 116,761 539,417
466,761 Other expense (income) 5,642 1,435 48
(4 ) 55 7,121 2,257
Operating income
124,360 155,843 181,755 172,134
26,775 634,092 445,714 Pinnacle Adjusted
EBITDAR, pre-acquisition (1) 15,261 124,370 131,450 131,062 122,428
402,143 510,659 Rent expense associated with triple net operating
lease 3,797 — — — — 3,797 — Charge for stock compensation 3,187
2,915 3,003 2,929 1,953 12,034 7,780 Cash-settled stock award
variance (18,257 ) (1,692 ) 7,800 (7,462 ) 10,632 (19,611 ) 23,471
Loss (gain) on disposal of assets (55 ) 3,220 (52 ) 55 70 3,168 172
Contingent purchase price (1,289 ) 407 202 1,134 9,953 454 (6,840 )
Pre-opening and acquisition costs 77,861 5,187 5,879 6,093 5,138
95,020 9,732 Depreciation and amortization 93,189 56,852 58,559
60,390 61,374 268,990 267,062 Provision (recovery) for loan loss
and unfunded loan commitments to the JIVDC and impairment losses
34,288 — (16,985 ) 618 77,858 17,921 107,810 Insurance recoveries,
net of deductible charges — — (68 ) — (289 ) (68 ) (289 ) Income
from unconsolidated affiliates 5,535 5,696 5,734 5,361 4,321 22,326
18,671 Non-operating items for Kansas JV 1,274 1,271
1,279 1,294 1,296 5,118 5,866
Combined Adjusted EBITDAR (2) $ 339,151
$ 354,069 $ 378,556
$ 373,608 $ 321,509
$ 1,445,384 $ 1,389,808
(1) For the three months and year ended
December 31, 2018, the Pinnacle Adjusted EBITDAR is for the periods
from October 1, 2018 through October 14, 2018 and January 1, 2018
through October 14, 2018, respectively. (2) See the “Non-GAAP
Financial Measures” section below for more information, including
the definition of Combined Adjusted EBITDAR.
Non-GAAP Financial Measures
In addition to GAAP financial measures, Adjusted EBITDAR;
Adjusted EBITDA, after Lease Payments; Combined Net Revenues; and
Combined Adjusted EBITDAR are used by management as important
measures of the Company’s operating performance and to compare
operating results between accounting periods.
We define Adjusted EBITDAR as earnings before interest income
and expense, income taxes, depreciation and amortization, rent
expense associated with triple net operating leases, stock
compensation, debt extinguishment and financing charges, impairment
charges, 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 EBITDAR is also inclusive of income or loss from
unconsolidated affiliates, with our share of non-operating items
(such as depreciation and amortization) added back for our joint
venture in Kansas Entertainment. Adjusted EBITDAR excludes payments
associated with our Master Leases with GLPI as these leases are
accounted for as financing obligations. As of December 31, 2018,
the Company’s only triple net operating lease, for purposes of this
definition, was the Meadows Lease. However, beginning with the
first quarter 2019, we expect that the Margaritaville Lease with
VICI will be included in this definition.
In the fourth quarter 2018, in connection with the Pinnacle
acquisition, we began utilizing Adjusted EBITDAR instead of
Adjusted EBITDA. The difference between Adjusted EBITDAR and
Adjusted EBITDA is the exclusion of rent expense associated with
the Meadows Lease.
In the first quarter 2018, we changed the definition of Adjusted
EBITDA to exclude pre-opening and acquisition costs and the
variance between budget and actual expense for cash-settled
stock-based awards, which are required to be re-measured at fair
market value at the end of each reporting period. We decided
to exclude pre-opening and acquisition costs to more closely align
the Company’s calculation of Adjusted EBITDA with our competitors.
We decided to exclude both the favorable and unfavorable difference
between the budgeted expense and actual expense for our
cash-settled stock-based awards due to its non-operational nature.
In connection with these changes, we have reclassified our prior
period results, where applicable, to conform to the current period
presentation.
Adjusted EBITDAR 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 also present Adjusted EBITDAR 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 addition, other gaming companies also
utilize Adjusted EBITDAR as a supplement to financial measures in
accordance with GAAP. 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 EBITDAR
calculations certain corporate expenses that do not relate to the
management of specific casino properties. However, Adjusted EBITDAR
is not a measure of performance or liquidity calculated in
accordance with GAAP. Adjusted EBITDAR information is presented as
a supplemental disclosure, as management believes that it is a
commonly-used measure of performance in the gaming industry, is
used in the valuation of gaming companies, and that it is
considered by many to be a key indicator of the Company’s operating
results. Management uses Adjusted EBITDAR as an important measure
of the operating performance of its segments, including the
evaluation of operating personnel.
Adjusted EBITDA, after Lease Payments is defined as Adjusted
EBITDAR less Lease Payments, which is defined as lease payments
made to our REIT landlords under our triple net leases. Adjusted
EBITDA, after Lease Payments is a measure we believe provides
useful information to investors because it is an indicator of the
performance of ongoing business operations after incorporating the
cash flow impact of the Lease Payments to our REIT landlords. In
addition, Adjusted EBITDA, after Lease Payments is the metric that
our management team is measured against for incentive-based
compensation purposes. As of December 31, 2018, the Company’s only
REIT landlord under our triple net leases, for purposes of this
definition, was GLPI as it pertains to both the Master Leases and
the Meadows Lease. However, beginning with the first quarter 2019,
we expect that the Margaritaville Lease with VICI will be included
in this definition.
The Company defines Combined Net Revenues as net revenues of
Penn National and Pinnacle assuming that Pinnacle was a part of
Penn National during the historical periods beginning on January 1,
2017. The Company defines Combined Adjusted EBITDAR as Adjusted
EBITDAR (as defined above) of Penn National and Pinnacle assuming
that Pinnacle was a part of Penn National during the previous
historical periods beginning on January 1, 2017.
Combined Net Revenues and Combined Adjusted EBITDAR are being
presently solely as supplemental disclosure, as these are methods
that management reviews and uses to analyze the performance of its
business and to compare operating results between accounting
periods. Management believes that Combined Net Revenues and
Combined Adjusted EBITDAR are useful to investors because they are
indicators of the strength and performance of the ongoing business
and for evaluating the historical results of Penn National and
Pinnacle on a combined basis assuming Pinnacle was a part of the
Company for the historical periods beginning on January 1, 2017.
Further, the combined company results depict the historical results
of both Penn National and Pinnacle and do not reflect any cost
savings from potential operating efficiencies or associated costs
to achieve such savings or synergies that are expected to result
from the transaction.
Each of these 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
attached “supplemental information” tables for reconciliations of
these measures to the GAAP equivalent financial measures.
Conference Call, Webcast and Replay Details
Penn National Gaming 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 212/231-2936.
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
Penn National Gaming owns, operates or has ownership interests
in gaming and racing facilities and video gaming terminal
operations with a focus on slot machine entertainment. Reflecting
the recent acquisitions of Pinnacle and Margaritaville, the Company
operates 41 facilities in 18 jurisdictions. In total, Penn National
Gaming’s facilities feature approximately 50,000 gaming machines,
1,200 table games and 8,400 hotel rooms. The Company also offers
social online gaming through its Penn Interactive Ventures division
and has leading customer loyalty programs with over five million
active customers.
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,” “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 may include, among others, statements
concerning: our expectations of future results of operations and
financial condition; expectations for our properties or our
development projects; 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 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
businesses; our expectations relative to margin improvement
initiatives; our expectations regarding economic and consumer
conditions; and our expectations for the continued availability and
cost of capital. As a result, actual results may vary materially
from expectations. Although the Company believes that its
expectations are based on reasonable assumptions within the bounds
of its knowledge of its business, there can be no assurance that
actual results will not differ materially from our expectations.
Meaningful factors that could cause actual results to differ from
expectations include, but are not limited to, risks related to the
following: the assumptions included in our financial guidance; the
ability of our operating teams to drive revenue and margins; the
impact of significant competition from other gaming and
entertainment operations; our ability to obtain timely regulatory
approvals required to own, develop and/or operate our facilities,
or other delays, approvals or impediments to completing our planned
acquisitions or projects, construction factors, including delays,
and increased costs; 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 facilities or the award of additional
gaming licenses proximate to our facilities); 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; 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); increases in the effective rate of taxation for
any of our operations or at the corporate level; 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/municipalities for such
transactions; 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; our ability to maintain market share in established
markets and to continue to ramp up operations at our recently
opened facilities; our expectations for the continued availability
and cost of capital; the impact of weather; changes in accounting
standards; the risk of failing to maintain the integrity of our
information technology infrastructure and safeguard our business,
employee and customer data; factors which may cause the Company to
curtail or suspend the share repurchase program; with respect to
our Plainridge Park Casino in Massachusetts, the ultimate location
and timing of the other gaming facilities in the state and the
region; with respect to our interactive gaming endeavors, risks
related to the commencement of real money online gaming in the
state of Pennsylvania, significant competition in the social gaming
industry, employee retention, cyber-security, data privacy,
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; with respect to Illinois Gaming
Investors, LLC, d/b/a Prairie State Gaming, risks relating to
potential changes in the VGT laws, our ability to successfully
compete in the VGT market, our ability to retain existing customers
and secure new customers, risks relating to municipal authorization
of VGT operations and the implementation and the ultimate success
of the products and services being offered; with respect to our
proposed Pennsylvania casinos in York and Berks Counties, risks
relating to construction, including the receipt of all requisite
approvals, and our ability to achieve our expected budget, timeline
and investment returns, including the ultimate location of other
gaming facilities in the state; risks related to the integration of
Pinnacle and the Margaritaville operations and the ability to
realize the synergies as a result of the transactions, potential
adverse reactions or changes to business or employee relationships,
including those resulting from the transaction; the possibility
that the anticipated benefits of the transaction are not realized
when expected or at all, including as a result of the impact of, or
issues arising from, the integration of the two companies; and
risks associated with increased leverage from the Pinnacle and
Margaritaville transactions; with respect to our recently completed
acquisition of the Margaritaville operations, the possibility that
the anticipated benefits of the transaction are not realized when
expected or at all, including as a result of the impact of, or
issues arising from, the integration of the companies and our
ability to realize potential synergies or projected financial
results; with respect to the pending acquisition of the Greektown
operations, the possibility that the proposed transaction does not
close when expected or at all because all required regulatory or
other approvals are not received or other conditions are not
satisfied on a timeline basis or at all; potential adverse
reactions or changes to business or employee relationships,
including those resulting from the announcement or completion of
the transaction; the possibility that the anticipated benefits of
the transaction are not realized when expected or at all, including
as a result of the impact of, or issues arising from, the
integration of the companies and our ability to realize potential
synergies or projected financial results; with respect to our
sports betting operations, risks relating to entering into a new
line of business, including our ability to establish relationships
with key partners or vendors and generate sufficient returns on
investment, as well as risks relating to potential legislation in
various jurisdictions; and other factors as discussed in the
Company’s Annual Report on Form 10-K for the year ended December
31, 2017, subsequent Quarterly Reports on Form 10-Q and Current
Reports on Form 8-K, each as filed with the United States
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/20190207005224/en/
William J. FairChief Financial Officer610/373-2400Joseph N.
Jaffoni, Richard LandJCIR212/835-8500 or penn@jcir.com
PENN Entertainment (NASDAQ:PENN)
Historical Stock Chart
From Jun 2024 to Jul 2024
PENN Entertainment (NASDAQ:PENN)
Historical Stock Chart
From Jul 2023 to Jul 2024