Provides Select Expected Preliminary Second
Quarter Operating Results
Penn National Gaming, Inc. (NASDAQ: PENN) (“Penn National,”
“we,” or the “Company”) today announced that it plans to offer,
subject to market and other conditions, $400 million aggregate
principal amount of eight-year senior unsecured notes in a private
offering that is exempt from the registration requirements of the
Securities Act of 1933, as amended (the “Securities Act”). Penn
National intends to use proceeds of the proposed offering for
general corporate purposes.
The Company currently expects that our consolidated revenues for
the three months ended June 30, 2021 will range from $1,450 million
to $1,555 million and our consolidated Adjusted EBITDAR for the
three months ended June 30, 2021 will range from $540 million to
$580 million. We expect Adjusted EBITDA for the three months ended
June 30, 2021 to range from $420 million to $460 million. The
midpoint of our expected revenue and Adjusted EBITDAR ranges
reflect a quarterly sequential improvement of 18% and 25%,
respectively, and Adjusted EBITDAR margin improvement of 220 basis
points. When compared to the three months ended June 30, 2019, we
expect revenue, Adjusted EBITDAR and Adjusted EBITDAR margin to
increase by 10%, 32%, and 625 basis points, respectively. We
believe this year-over-year and sequential improvement not only
highlights continued strong demand trends, but also underscores our
ability to drive sustainable margin improvement.
The notes will not be registered under the Securities Act, and
they may not be offered or sold within the United States or to, or
for the account or benefit of, U.S. persons except pursuant to an
exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act. Accordingly, the
notes are being offered and sold only (A) to persons reasonably
believed to be qualified institutional buyers in compliance with
Rule 144A under the Securities Act and (B) outside the United
States to persons other than U.S. persons in compliance with
Regulation S under the Securities Act. This press release does not
constitute an offer to sell or the solicitation of an offer to buy
any securities, nor shall there be any sale of the notes in any
jurisdiction in which such an offer, solicitation or sale would be
unlawful prior to registration or qualification under the
securities laws of any such jurisdiction.
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 and acquisition costs; and other income or
expenses. Adjusted EBITDA is inclusive of income or loss from
unconsolidated affiliates, with our share of non-operating items
(such as interest expense, net; income taxes; depreciation and
amortization; and stock-based compensation expense) added back for
Barstool Sports, 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 Gaming and Leisure Properties,
Inc. (“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 operations of Tropicana Las Vegas and
Meadows Racetrack and Casino, and our individual triple net leases
with VICI Properties Inc. 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. The Company does not provide reconciliations of Adjusted
EBITDA and Adjusted EBITDAR to net income (loss) on a
forward-looking basis because the Company is unable to forecast the
amount or significance of certain items required to develop
meaningful comparable GAAP financial measures without unreasonable
efforts. These items include gains or losses on sale or
consolidation transactions, accelerated depreciation, impairment
charges, gains or losses on retirement of debt, income taxes, which
are difficult to predict and estimate and are primarily dependent
on future events, but which are excluded from the Company’s
calculations of Adjusted EBITDA and Adjusted EBITDAR.
About Penn National Gaming
With the nation's largest and most diversified regional gaming
footprint, including 41 properties across 19 states, Penn National
continues to evolve into a highly innovative omni-channel provider
of retail and online gaming, live racing and sports betting
entertainment. The Company's properties feature approximately
50,000 gaming machines, 1,300 table games and 8,800 hotel rooms,
and operate under various well-known brands, including Hollywood,
Ameristar, and L'Auberge. Our wholly-owned interactive division,
Penn Interactive, operates retail sports betting across the
Company's portfolio, as well as online social casino, bingo, and
iCasino products. In February 2020, Penn National entered into a
strategic partnership with Barstool Sports, whereby Barstool will
exclusively promote the Company's land-based and online casinos and
sports betting products, including the Barstool Sportsbook mobile
app, to its national audience. The Company's omni-channel approach
is bolstered by the mychoice loyalty program, which rewards and
recognizes its over 20 million members for their loyalty to both
retail and online gaming and sports betting products with the most
dynamic set of offerings, 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 the offering of the notes and the Company’s
expected results of operations for the three months ended June 30,
2021. Such statements are all subject to risks, uncertainties and
changes in circumstances that could significantly affect the
Company’s future financial results and business.
Without limiting the foregoing, it should be noted that our
expected estimated unaudited financial results as of and for the
three months ended June 30, 2021 presented above are preliminary
and are subject to the close of the quarter, completion of our
quarter-end closing procedures and further financial review. These
estimates are not a comprehensive statement of our financial
results for this period and should not be viewed as a substitute
for interim financial statements prepared in accordance with
generally accepted accounting principles. Our actual results may
differ from these estimates as a result of the completion of our
quarter-end closing procedures, review adjustments and other
developments that may arise between now and the time our financial
results for the period are finalized. As a result, investors should
exercise caution in relying on this information and should not draw
any inferences from this information regarding financial or
operating data not provided. There can be no assurance that these
estimates will be realized, and estimates are subject to risks and
uncertainties, many of which are not within our control. In
addition, the Company cautions that the forward-looking statements
contained herein, including statements with respect to our expected
estimated unaudited financial results as of and for the three
months ended June 30, 2021, 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 those 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 and investors
are cautioned not to place undue reliance on such preliminary
estimates.
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version on businesswire.com: https://www.businesswire.com/news/home/20210624005522/en/
Justin Sebastiano Senior VP, Finance & Treasurer Penn
National Gaming 610-373-2400
Joseph N. Jaffoni, Richard Land JCIR 212/835-8500 or
penn@jcir.com
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