- PENN Generated Second Quarter Net Income
Margin of 13% and Second Quarter Adjusted EBITDAR Margin of 38%,
Driven by Strong Demand from Core Gaming Business and More
Efficient Cost Structure -
- Focus Remains on Sustaining Core Gaming
Business Margin Improvement and Driving Profitable Online Gaming
Revenue -
- Penn National to Acquire Score Media and
Gaming, Creating North America's Leading Digital Sports Content,
Gaming and Technology Company -
Penn National Gaming, Inc. (NASDAQ: PENN) (“Penn National” or
the “Company”) today reported financial results for the three and
six months ended June 30, 2021.
2021 Second Quarter Financial Highlights:
- Revenues of $1,545.8 million, an increase of $1,240
million year over year and $223 million versus 2019;
- Net income of $198.7 million and net income margin of
12.9%, as compared to a net loss of $214.4 million and (70.2)%,
respectively, in the prior year and net income of $51.4 million and
net margin of 3.9% in 2019;
- Adjusted EBITDA of $470.1 million, an increase of $549.4
million year over year and $153.6 million versus 2019;
- Adjusted EBITDAR of $586.6 million, an increase of
$562.1 million year over year and $180.1 million versus 2019;
and
- Adjusted EBITDAR margins of 37.9%, up 2,993 basis points
year over year and 722 basis points versus 2019.
For further information, we have posted a presentation to our
website regarding the second quarter highlights and
accomplishments, which can be found here.
Jay Snowden, President and Chief Executive Officer, commented:
“Penn National delivered a strong second quarter that exceeded our
pre-announced results from June 24, 2021. For the second quarter
ended June 30, 2021, Penn National generated revenues of $1.55
billion, at the high end of our pre-announced range of $1.45
billion to $1.56 billion while Adjusted EBITDAR of $586.6 million
exceeded the high end of our $540 million to $580 million range.
Compared to Q2 2019 pro forma results, revenues increased 13%,
Adjusted EBITDAR grew 38% and Adjusted EBITDAR margins increased
694 basis points. The strong results were driven by exceptional
performance across our portfolio of core gaming business
properties. Contributions from Barstool Sports, the media company,
were also positive. Further, we saw strong revenue growth across
our Penn Interactive segment, which operated near breakeven for the
quarter despite being live in only four states.
“Separately, this morning Penn National announced that we have
entered into a definitive agreement to acquire Score Media and
Gaming, which is the number one sports app in Canada and the third
most popular sports app in North America. When we add theScore’s
unique integrated media and betting platform and modern,
state-of-the art technology, to the massive audience of Barstool
Sports and its wildly popular personalities and content, we’ll be
creating North America’s leading digital sports content, gaming and
technology company. We anticipate that the acquisition of theScore
will provide adjusted EBITDA accretion by Year 2, an incremental
$200 million medium term adjusted EBITDA, and $500 million of
incremental long term adjusted EBITDA upside.”
More details regarding the transaction may be found in a
separate press release issued today. To access the release, please
visit here.
Robust Recovery in our Core Gaming Business Continues
Mr. Snowden stated: “Sequentially improved visitation and length
of play across all age segments of our player database led to our
record results in the second quarter. Spend-per-visit has remained
high since reopening last year, and our overall visitation numbers
are encouraging as restrictions continue to be lifted. The
traditional core gaming customer has reengaged with our properties
as vaccines continue to roll out across the country, while the
younger demographic’s engagement continued throughout Q2 and into
Q3 despite the increased availability of alternative entertainment
options. Overall, our unrated play continues to perform well, and
we have been pleased with our ability to convert these customers
into our mychoice loyalty program. These noteworthy drivers
of our revenue growth combined with the changes we have made to our
offerings and our expense structure has led to tremendous
flow-through and margin improvement. We have seen this strength
across all geographic regions, with the South Region leading the
way as demonstrated by the segment’s outsized performance in both
revenues and EBITDAR.”
Sportsbook Launch Schedule on Track
Mr. Snowden continued, “We are making great strides in the
planned rollout of our Barstool Sportsbook. Following our Indiana
launch in May, we anticipate more than doubling our footprint by
the start of the 2021 NFL season in early September with upcoming
launches in Colorado, New Jersey, Tennessee, Virginia, and Arizona.
By the end of the year, we plan to be operating in at least 10
states. Additionally, as we gain scale across the country, we will
increase our marketing efforts to further widen the funnel into our
omnichannel ecosystem while we remain focused on our measured and
profit-driven approach. For example, we recently announced an
expansion of our NASCAR relationship with a comprehensive
sponsorship and marketing partnership with the Phoenix Raceway.
Further, we have agreed to act as the official sports betting
partner for the upcoming August 29 boxing event between Tyron
Woodley and Jake Paul, which will include Barstool Sportsbook
branded segments featuring key personalities.
“We anticipate Penn Interactive will generate meaningful EBITDA
contributions beginning in 2023, inclusive of significant planned
investments in marketing, product and additional state launches.
Not only does Barstool Sports’ creative content, exclusive bets,
and social media reach provide a competitive advantage for our
mobile sportsbook via low-cost customer acquisition, but it also
provides us with the brand leverage to drive our omnichannel
strategy as the Barstool audience converts to our core gaming
businesses.
“With this in mind, we plan to open/rebrand five more Barstool
Sports retail sportsbooks by the end of the year. In addition, we
are making progress on the build out of stand-alone
Barstool-branded sports bars, with the initial locations in
Philadelphia and Chicago scheduled to open later this year. We are
also continuing to bolster our iCasino offerings, including the
addition of more third-party content, the introduction of a
Barstool-branded live dealer studio in New Jersey and the launch of
our first in-house developed, Barstool-branded online table and
slot games by year-end.
Growth on the Horizon
“We launched our cashless, cardless, and contactless (“3Cs”)
technology at Hollywood Casino at Penn National Race Course in late
June followed by another successful implementation at the Meadows
Casino in mid-July. The 3Cs technology will increase safety and
provide improved service while delivering additional efficiencies
and accountability. This initiative will also bring our property
technology in line with other industries which should resonate with
our guests of all ages. We will introduce the 3Cs technology across
the Penn enterprise over the next 12 to 18 months, pending
regulatory approvals.
“We are very excited to open our Hollywood Casino York facility
on August 12, which will be our third casino in the Commonwealth of
Pennsylvania, pending final regulatory approval. This casino will
feature 500 of the most popular slot machines and 24 table games
and include a Barstool Sportsbook. The facility will also be the
third casino to feature our 3Cs technology. Our second Category 4
Pennsylvania casino project, Hollywood Casino Morgantown, is on
track to open before the end of the year.
“We closed the Hollywood Casino Perryville acquisition on July
1, 2021. We are very excited to be operating again in Maryland,
which adds a 20th state to our leading nationwide footprint. We
expect to add a branded Barstool Sportsbook to the property and
introduce our Barstool Sportsbook mobile app to sports bettors
across the state, which will continue to expand our omnichannel
presence.
“Finally, Barstool Sports, the media company, has continued to
show tremendous growth this year both financially and in terms of
audience metrics, as it has continued to evolve into a highly
diversified media, entertainment and lifestyle brand. Just
recently, Barstool was announced as the title sponsor and exclusive
broadcast partner for the Barstool Sports Arizona Bowl, a watershed
moment for the industry, as Barstool is redefining the way sports
programming is produced and delivered in today’s media landscape.
The continued growth and diversification of the company’s revenue
streams, including advertising, licensing and merchandise, has
meaningfully enhanced the value of the media asset, which we
believe is still underappreciated and extends well beyond the
benefits to our sports betting business.”
Continuing to Care for our People, our Communities and the
Planet
Last month, in conjunction with our celebration of Juneteenth,
we marked the one-year anniversary of the launch of our Penn
Diversity Committee. Comprised of a diverse group of team members
at varying levels in our organization from around the country, the
goal of our Diversity Committee is to help put our company’s
longstanding stance on Diversity, Equity, and Inclusion into
action. Earlier this quarter, we awarded the first scholarships
from our Penn Diversity Scholarship Program to 58 children of our
team members, totaling $1.05 million. More than half of these
diverse awardees represent the first generation of their families
to pursue higher education, which is significantly above the
national average. In addition, we increased our recruitment efforts
and support of Historic Black Colleges and Universities, as well as
our support for organizations in our communities promoting equality
and justice. We also continue to be committed to the growth of
minority-owned businesses and are proud to have recently launched
the Penn Minority Business Incubator.
Further, in honor of Armed Forces Day, we launched the
“myheroes” program on May 15, which provides veterans,
active-duty military and first responders access to exclusive
discounts and offers at Penn Properties. In less than a month we
had more than 25,000 new member sign ups from around the country.
On Memorial Day, we announced the Harold Cramer Memorial
Scholarship Fund, which will help veterans pursue a law degree at
the University of Pennsylvania Law School. And in June, we
celebrated Pride Month and shared stories throughout the month with
our team members of LGBTQ champions who have helped change our
world.
Finally, on the environmental front, we're proud to have
incorporated all the latest energy efficient enhancements into our
two new casinos set to open in York and Morgantown, Pennsylvania.
In addition, we're continuing to focus on reducing our energy
footprint at our properties, as well as the amount of water and
plastics used across our enterprise.
Enviable Balance Sheet and Liquidity Position
Traditional net debt as of June 30, 2021 was $116 million, a
decrease of $237 million during the quarter, principally due an
increase in operating cash flows and repayments under our senior
secured credit facilities. Our lease-adjusted net leverage was 4.0x
based on Adjusted EBITDAR through the trailing 12 months ended June
30, 2021. On July 1, 2021, we closed on an eight-year $400 million
unsecured notes offering priced at 4.125%. Pro forma for this
transaction, cash on the balance sheet stands at $2.7 billion,
which combined with our fully undrawn revolver, drives our
liquidity to nearly $3.4 billion positioning us well to execute on
our long-term growth strategy.
Summary of Second Quarter Results
For the three months ended
June 30,
(in millions,
except per share data, unaudited)
2021
2020
2019
Revenues
$
1,545.8
$
305.5
$
1,323.1
Net income (loss)
198.7
(214.4
)
51.4
Adjusted EBITDA (1)
$
470.1
$
(79.3
)
$
316.5
Rent expense associated with triple net
operating leases (2)
116.5
103.8
90.0
Adjusted EBITDAR (1)
$
586.6
$
24.5
$
406.5
Payments to our REIT Landlords under
Triple Net Leases, inclusive of rent credits utilized (3)
$
229.1
$
216.6
$
214.9
Diluted earnings (loss) per common
share
$
1.17
$
(1.69
)
$
0.44
(1)
See the “Non-GAAP Financial
Measures” section below for more information as well as the
definitions of Adjusted EBITDA and Adjusted EBITDAR. Additionally,
see below for reconciliations of these Non-GAAP financial measures
to their GAAP equivalent financial measure.
(2)
Consists of the operating lease
components contained within 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 Meadows
Racetrack and Casino, and our individual triple net leases with
VICI Properties Inc. (NYSE: 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 June 30, 2021, we recorded
noncash rent expense associated with the Tropicana Lease of $10.7
million. The finance lease components contained within our Master
Leases (primarily buildings) are recorded to interest expense (as
opposed to rent expense) in accordance with Accounting Standards
Codification Topic 842, “Leases.”
(3)
Consists of payments made to GLPI
and VICI Properties Inc. (referred to collectively as our “REIT
Landlords”) under the Master Leases, the Meadows Lease, the
Margaritaville Lease, the Greektown Lease and the Morgantown Lease.
Although we collectively refer to the Master Leases, 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 the
three and six months ended June 30, 2020, we utilized rent credits
totaling $130.8 million to pay rent under the Penn Master Lease,
Pinnacle Master Lease and Meadows Lease.
PENN NATIONAL GAMING, INC. AND
SUBSIDIARIES
Segment Information
The Company aggregates its
properties into four reportable segments: Northeast, South, West
and Midwest.
For the three months
ended
June 30,
For the six months
ended
June 30,
(in millions,
unaudited)
2021
2020
2019
2021
2020
2019
Revenues:
Northeast segment (1)
$
652.5
$
102.7
$
599.1
$
1,223.4
$
623.4
$
1,149.7
South segment (2)
368.2
121.5
282.2
664.1
344.8
574.1
West segment (3)
140.4
17.7
164.2
237.0
144.3
322.9
Midwest segment (4)
294.8
36.0
268.2
529.5
264.1
539.5
Other (5)
97.7
27.6
9.4
185.6
47.9
19.5
Intersegment eliminations (6)
(7.8
)
—
—
(18.9
)
(2.9
)
—
Total revenues
$
1,545.8
$
305.5
$
1,323.1
$
2,820.7
$
1,421.6
$
2,605.7
Adjusted EBITDAR:
Northeast segment (1)
$
231.6
$
(3.6
)
$
186.2
$
424.8
$
120.9
$
351.0
South segment (2)
177.1
44.4
92.8
311.0
97.0
190.6
West segment (3)
61.4
(3.0
)
50.5
96.6
21.6
100.4
Midwest segment (4)
142.2
(4.6
)
97.8
248.2
64.9
197.0
Other (5)
(25.7
)
(8.7
)
(20.8
)
(47.0
)
(27.6
)
(41.1
)
Total Adjusted EBITDAR (7)
$
586.6
$
24.5
$
406.5
$
1,033.6
$
276.8
$
797.9
(1)
The Northeast segment consists of
the following properties: Ameristar East Chicago, Greektown
Casino-Hotel (acquired May 23, 2019), Hollywood Casino Bangor,
Hollywood Casino at Charles Town Races, Hollywood Casino Columbus,
Hollywood Casino Lawrenceburg, Hollywood Casino at Penn National
Race Course, Hollywood Casino Toledo, Hollywood Gaming at Dayton
Raceway, Hollywood Gaming at Mahoning Valley Race Course, Marquee
by Penn, Meadows Racetrack and Casino, and Plainridge Park
Casino.
(2)
The South segment consists of the
following properties: 1st Jackpot Casino, Ameristar Vicksburg,
Boomtown Biloxi, Boomtown Bossier City, Boomtown New Orleans,
Hollywood Casino Gulf Coast, Hollywood Casino Tunica, L’Auberge
Baton Rouge, L’Auberge Lake Charles, and Margaritaville Resort
Casino. Prior to its closure on June 30, 2019, Resorts Casino
Tunica was also included in the South segment.
(3)
The West segment consists of the
following properties: Ameristar Black Hawk, Cactus Petes and
Horseshu, M Resort, Tropicana, and Zia Park Casino.
(4)
The Midwest segment consists of
the following properties: Ameristar Council Bluffs; Argosy Casino
Alton; Argosy Casino Riverside; Hollywood Casino Aurora; Hollywood
Casino Joliet; our 50% investment in Kansas Entertainment, which
owns Hollywood Casino at Kansas Speedway; Hollywood Casino St.
Louis; Prairie State Gaming; and River City Casino.
(5)
The Other category consists of
the Company’s stand-alone racing operations, namely Sanford-Orlando
Kennel Club and the Company’s joint venture interests in Sam
Houston Race Park, Valley Race Park, and Freehold Raceway; 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 months ended
June 30, 2021, 2020 and 2019 corporate overhead costs were $26.1
million, $16.7 million and $23.6 million, respectively, compared to
$50.1 million, $40.9 million, and $46.7 million, respectively, for
the six months ended June 30, 2021, 2020 and 2019. In addition,
Adjusted EBITDAR of the Other category includes our proportionate
share of the net income or loss of Barstool Sports after adding
back our share of non-operating items (such as interest expense,
net; income taxes; depreciation and amortization; and stock-based
compensation expense).
(6)
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 first and
second quarter in 2020, the Company believes presenting information
regarding the Company’s financial results for the three and six
months ended June 30, 2019 is useful to investors to evaluate the
Company’s performance for the three and six months ended June 30,
2021.
The Company acquired Greektown on May 23, 2019. Although the
Company did not 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 this transaction brings
to the Company and its shareholders. Revenues earned by Greektown
prior to the acquisition date of May 23, 2019 during the three and
six months ended June 30, 2019, were $49.8 million and $133.5
million, respectively. Adjusted EBITDAR earned by Greektown prior
to the acquisition date of May 23, 2019 during the three and six
months ended June 30, 2019 were $16.3 million and $43.0 million.
The operating results of Greektown were derived from historical
financial information. Greektown operating results were adjusted to
conform to the Company’s methodology of allocating certain
corporate expenses to properties. Revenues and Adjusted EBITDAR
earned by Greektown 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.
The Company ceased operations of Resorts Casino Tunica on June
30, 2019. Revenues earned by Resorts Casino Tunica for the three
and six months ended June 31, 2019 were $4.0 million and $9.8
million, respectively. Resorts Casino Tunica generated Adjusted
EBITDAR losses for the three and six months ended June 30, 2019 of
$1.6 million and $1.4 million, respectively.
PENN NATIONAL GAMING, INC. AND
SUBSIDIARIES
Reconciliation of Comparable
GAAP Financial Measure to Adjusted EBITDA,
Adjusted EBITDAR, and Adjusted
EBITDAR Margin
For the three months
ended
June 30,
For the six months
ended
June 30,
(in millions,
unaudited)
2021
2020
2019
2021
2020
2019
Net income (loss)
$
198.7
$
(214.4
)
$
51.4
$
289.6
$
(823.0
)
$
92.3
Income tax expense (benefit)
53.1
(58.4
)
18.5
73.7
(157.9
)
33.4
Loss (income) from unconsolidated
affiliates
(9.1
)
1.7
(6.2
)
(18.7
)
(2.4
)
(11.9
)
Interest expense, net
138.0
135.0
134.7
273.7
264.8
267.0
Other income
(2.8
)
(29.3
)
—
(23.9
)
(7.5
)
—
Operating income (loss)
377.9
(165.4
)
198.4
594.4
(726.0
)
380.8
Stock-based compensation
9.2
2.9
3.3
13.4
8.9
6.7
Cash-settled stock-based awards
variance
(12.4
)
16.1
(3.4
)
9.1
7.2
(3.0
)
Loss (gain) on disposal of assets
(0.1
)
(28.5
)
0.4
(0.2
)
(27.9
)
0.9
Contingent purchase price
1.2
0.8
1.0
1.3
(1.4
)
5.8
Pre-opening expenses (1)
(0.4
)
3.5
3.7
1.2
6.7
8.1
Depreciation and amortization
81.9
91.9
106.0
163.2
187.6
210.1
Impairment losses
—
—
—
—
616.1
—
Insurance recoveries, net of deductible
charges
—
—
—
—
(0.1
)
—
Income (loss) from unconsolidated
affiliates
9.1
(1.7
)
6.2
18.7
2.4
11.9
Non-operating items of equity method
investments (2)
1.4
1.1
0.9
3.0
2.0
1.9
Other expenses (1) (3)
2.3
—
—
2.6
—
—
Adjusted EBITDA
470.1
(79.3
)
316.5
806.7
75.5
623.2
Rent expense associated with triple net
operating leases
116.5
103.8
90.0
226.9
201.3
174.7
Adjusted EBITDAR
$
586.6
$
24.5
$
406.5
$
1,033.6
$
276.8
$
797.9
Net income (loss) margin
12.9
%
(70.2
)%
3.9
%
10.3
%
(57.9
)%
3.5
%
Adjusted EBITDAR margin
37.9
%
8.0
%
30.7
%
36.6
%
19.5
%
30.6
%
(1)
During 2020 and during the first
quarter of 2021, acquisition costs were included within pre-opening
and acquisition costs. As of and for 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 finance
transformation costs associated with the implementation of our new
Enterprise Resource Management system, other non-recurring
transaction costs, 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
June 30,
For the six months
ended
June 30,
(in millions,
except per share data, unaudited)
2021
2020
2019
2021
2020
2019
Revenues
Gaming
$
1,305.5
$
259.2
$
1,062.1
$
2,387.5
$
1,162.1
$
2,096.7
Food, beverage, hotel and other
240.3
46.3
261.0
433.2
259.5
509.0
Total revenues
1,545.8
305.5
1,323.1
2,820.7
1,421.6
2,605.7
Operating expenses
Gaming
620.9
142.0
564.1
1,148.7
642.9
1,111.6
Food, beverage, hotel and other
148.6
32.9
167.6
271.7
189.9
329.3
General and administrative
316.5
204.1
287.0
642.7
511.1
573.9
Depreciation and amortization
81.9
91.9
106.0
163.2
187.6
210.1
Impairment losses
—
—
—
—
616.1
—
Total operating expenses
1,167.9
470.9
1,124.7
2,226.3
2,147.6
2,224.9
Operating income (loss)
377.9
(165.4
)
198.4
594.4
(726.0
)
380.8
Other income (expenses)
Interest expense, net
(138.0
)
(135.0
)
(134.7
)
(273.7
)
(264.8
)
(267.0
)
Income (loss) from unconsolidated
affiliates
9.1
(1.7
)
6.2
18.7
2.4
11.9
Other
2.8
29.3
—
23.9
7.5
—
Total other expenses
(126.1
)
(107.4
)
(128.5
)
(231.1
)
(254.9
)
(255.1
)
Income (loss) before income
taxes
251.8
(272.8
)
69.9
363.3
(980.9
)
125.7
Income tax benefit (expense)
(53.1
)
58.4
(18.5
)
(73.7
)
157.9
(33.4
)
Net income (loss)
198.7
(214.4
)
51.4
289.6
(823.0
)
92.3
Less: Net loss attributable to
non-controlling interest
—
0.5
0.2
0.1
0.5
0.2
Net income (loss) attributable to Penn
National
$
198.7
$
(213.9
)
$
51.6
$
289.7
$
(822.5
)
$
92.5
Earnings (loss) per share:
Basic earnings (loss) per share
$
1.27
$
(1.69
)
$
0.44
$
1.85
$
(6.78
)
$
0.80
Diluted earnings (loss) per share
$
1.17
$
(1.69
)
$
0.44
$
1.72
$
(6.78
)
$
0.78
Weighted-average common shares outstanding
- basic
156.0
126.8
116.0
155.8
121.3
116.1
Weighted-average common shares outstanding
- diluted
172.7
126.8
117.7
172.8
121.3
118.2
Selected Financial Information
Balance Sheet Data
(in millions,
unaudited)
June 30, 2021
December 31, 2020
Cash and cash equivalents
$
2,274.7
$
1,853.8
Bank debt
$
1,595.9
$
1,628.1
Notes (1)
730.5
730.5
Other long-term obligations (2)
64.2
73.0
Total traditional debt
2,390.6
2,431.6
Financing obligation (3)
77.7
—
Less: Debt discounts and debt issuance
costs
(108.0
)
(119.0
)
$
2,360.3
$
2,312.6
Traditional net debt (4)
$
115.9
$
577.8
(1)
Inclusive of our 5.625% Notes due
2027 and our 2.75% Convertible Notes due 2026.
(2)
Other long-term obligations as of
June 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
June 30,
For the six months
ended
June 30,
(in millions,
unaudited)
2021
2020
2019
2021
2020
2019
Cash payments to our REIT Landlords under
Triple Net Leases (1)
$
229.1
$
85.8
$
214.9
$
455.1
$
309.6
$
422.8
Cash payments (refunds) related to income
taxes, net
$
36.5
$
(0.1
)
$
6.2
$
27.7
$
(1.2
)
$
4.5
Cash paid for interest on traditional
debt
$
17.5
$
20.5
$
24.0
$
43.3
$
54.3
$
62.5
Maintenance capital expenditures
$
24.2
$
14.5
$
46.8
$
39.0
$
44.2
$
83.0
(1)
Consists of payments made under
the Master Leases, 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 six months ended June 30, 2020, we utilized rent
credits totaling $130.8 million to pay rent under the Penn Master
Lease, Pinnacle Master Lease and Meadows Lease.
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 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 operation of Tropicana Las Vegas Hotel and Casino, Inc.
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. 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 212-231-2907. 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 42 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. The Company's omni-channel
approach is bolstered by the mychoice loyalty program, which
rewards and recognizes its over 20 million members for their
loyalty to both retail and online gaming and sports betting
products with the most dynamic set of offers, experiences, and
service levels in the industry.
Forward Looking Statements
This press release contains “forward-looking statements” within
the meaning of the Private Securities Litigation Reform Act of
1995. These statements can be identified by the use of
forward-looking terminology such as “expects,” “believes,”
“estimates,” “projects,” “intends,” “plans,” “goal,” “seeks,”
“may,” “will,” “should,” or “anticipates” or the negative or other
variations of these or similar words, or by discussions of future
events, strategies or risks and uncertainties. Specifically,
forward-looking statements include, but are not limited to,
statements regarding: COVID-19; 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 Perryville transaction with Gaming and Leisure
Properties, Inc.; the potential benefits of the Hitpoint
transaction; the Company’s estimated cash burn and future
liquidity, future revenue and Adjusted EBITDAR, including from the
Company’s iGaming business in Pennsylvania and Michigan; the
expected benefits and potential challenges of the investment in
Barstool Sports; the expected launch of the Barstool-branded mobile
sports betting product in future states and its future revenue and
profit contributions; 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 or its iGaming
initiatives; 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 Score Media & Gaming, Inc.
(“theScore”), including due to fees, costs and taxes in connection
with the integration of theScore and expansion of its betting and
content platform; (s) the closing of the acquisition of theScore
may be delayed or may not occur at all, for reasons beyond the
Company’s control; (t) the requirement to satisfy the closing
conditions in the agreement with theScore, including receipt of
regulatory approvals and the approval of shareholders of theScore;
(u) there is significant competition in the interactive gaming
market; (v) potential adverse reactions or changes to business or
regulatory relationships resulting from the announcement or
completion of the acquisition of theScore; (w) the ability of the
Company or theScore to retain and hire key personnel; (x) the
occurrence of any event, change or other circumstances that could
give rise to the right of one or both of the Company and theScore
to terminate the agreement between the companies; (y) the outcome
of any legal proceedings that may be instituted against the
Company, theScore or their respective directors, officers or
employees; and (z) 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/20210805005402/en/
Justin Sebastiano Senior VP, Finance & Treasurer
610-373-2400
Joseph N. Jaffoni, Richard Land JCIR 212-835-8500 or
penn@jcir.com
PENN Entertainment (NASDAQ:PENN)
Historical Stock Chart
From May 2024 to Jun 2024
PENN Entertainment (NASDAQ:PENN)
Historical Stock Chart
From Jun 2023 to Jun 2024