Penn National Gaming Reports Fourth Quarter Revenue of $651.4 Million and Adjusted EBITDA of $64.0 Million, Inclusive of $107.8 Million of Rent Expense
- Fourth Quarter Results Reflect
- Establishes 2015 First Quarter and Full Year Guidance -
Conference Call: |
Today, January 29, 2015 at 10:00 a.m. ET |
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Dial-in number: |
212/231-2904 |
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Webcast: |
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Replay information provided below |
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Summary of Fourth Quarter and Full Year Results |
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(in millions, except per share data) |
Three Months Ended |
Twelve Months Ended |
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2014 Actual | 2014 Guidance (3) | 2013 Actual | 2014 Actual | 2014 Guidance (3) | 2013 Actual | |||||||||||||||||||||||||
Net revenues (1) | $ | 651.4 | $ | 621.1 | $ | 644.7 | $ | 2,590.5 | $ | 2,560.2 | $ | 2,918.8 | ||||||||||||||||||
Adjusted EBITDAR (1) | 171.8 | 162.4 | 153.2 | 706.5 | 697.1 | 776.1 | ||||||||||||||||||||||||
Rental expense related to Master Lease | (107.8 | ) | (106.7 | ) | (69.5 | ) | (421.4 | ) | (420.2 | ) | (69.5 | ) | ||||||||||||||||||
Adjusted EBITDA (2) | 64.0 | 55.7 | 83.7 | 285.1 | 276.9 | 706.6 | ||||||||||||||||||||||||
Less: Impact of stock compensation, impairment charges, |
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insurance recoveries and deductible charges, non-operating |
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items for Kansas JV, depreciation and amortization, gain/loss on |
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disposal of assets, interest expense - net, income taxes, loss on |
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early extinguishment of debt, and other expenses (4) |
(314.4 | ) | (61.8 | ) | (972.4 | ) | (518.3 | ) | (265.8 | ) | (1,500.9 | ) | ||||||||||||||||||
Net (loss) income | $ | (250.4 | ) | $ | (6.1 | ) | $ | (888.7 | ) | $ | (233.2 | ) | $ | 11.1 | $ | (794.3 | ) | |||||||||||||
Diluted (loss) earnings per common share (5) | $ | (3.18 | ) | $ | (0.07 | ) | $ | (11.40 | ) | $ | (2.97 | ) | $ | 0.13 | $ | (10.17 | ) | |||||||||||||
(1) | Adjusted EBITDAR is adjusted EBITDA (defined below) excluding rent expense associated with our Master Lease with Gaming and Leisure Properties, Inc. (“GLPI”). Results for the three and twelve months ended December 31, 2013 included net revenues of $12.5 million and $140.8 million, respectively, and adjusted EBITDAR of $3.0 million and $35.3 million, respectively, related to Hollywood Casino Perryville and Hollywood Casino Baton Rouge, which were contributed to GLPI on November 1, 2013 as part of the spin-off. | |
(2) | Adjusted EBITDA is income (loss) from operations, excluding the impact of stock compensation, impairment losses, insurance recoveries and deductible charges, depreciation and amortization and gain or loss on disposal of assets. Adjusted EBITDA is also inclusive of income or loss from unconsolidated affiliates, with our share of the non-operating items added back for our joint venture in Kansas Entertainment, LLC (“Kansas Entertainment”). A reconciliation of net income (loss) per accounting principles generally accepted in the United States of America (“GAAP”) to adjusted EBITDA and adjusted EBITDAR, as well as income (loss) from operations per GAAP to adjusted EBITDA and adjusted EBITDAR, is included in the accompanying financial schedules. | |
(3) | The guidance figures in the table above present the guidance Penn National Gaming provided on October 23, 2014 for the three and twelve months ended December 31, 2014. | |
(4) | During the fourth quarter of 2014, we recorded pre-tax goodwill and other intangible assets impairment charges of $316.5 million, as we determined that a portion of the value of our goodwill and other intangible assets was impaired primarily due to our outlook for a continuation of the challenging regional gaming conditions that persisted in 2014 at certain properties in our Southern Plains segment. | |
(5) | Since the Company reported a loss from operations for the three and twelve months ended December 31, 2014 and 2013, it was required by GAAP to use basic weighted-average common shares outstanding, rather than diluted weighted-average common shares outstanding, when calculating diluted loss per common share. | |
Review of Fourth Quarter 2014 Results vs. Guidance |
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Three Months | |||||||||||
Ended | |||||||||||
December 31, 2014 | |||||||||||
Pre-tax | After-tax | ||||||||||
(in thousands) | |||||||||||
Loss, per guidance (1) | $ | (4,985 | ) | $ | (6,133 | ) | |||||
EBITDA variances: | |||||||||||
Positive operating segment variance | 10,501 | 6,615 | |||||||||
Lobbying costs related to the November Massachusetts referendum | (4,325 | ) | (4,325 | ) | |||||||
Benefit from cash-settled stock-based awards | 3,972 | 2,450 | |||||||||
Rent variance due to escalator and Ohio outperformance | (1,191 | ) | (750 | ) | |||||||
Pre-opening cost variance | (475 | ) | (293 | ) | |||||||
Other | (231 | ) | (147 | ) | |||||||
Total EBITDA variances from guidance | 8,251 | 3,550 | |||||||||
Goodwill and gaming license impairment charges | (316,529 | ) | (253,544 | ) | |||||||
Foreign currency translation gain and other | 674 | 406 | |||||||||
Tax variance | - | 5,314 | |||||||||
Loss, as reported | $ | (312,589 | ) | $ | (250,407 | ) | |||||
(1) | The guidance figures in the table above present the guidance Penn National Gaming provided on October 23, 2014 for the three months ended December 31, 2014. | |
“Fourth quarter consolidated net revenue, adjusted EBITDAR and adjusted
EBITDA all exceeded guidance on the strength of our property operating
results, which was broad based throughout our portfolio. Despite the
still choppy consumer spending environment, our property portfolio
performed well in the fourth quarter. Operating results benefited from
the first full quarter of contributions from Hollywood Gaming at
“Overall, fourth quarter adjusted EBITDA exceeded guidance by
“During the fourth quarter we generated adjusted EBITDAR margin improvements in our Southern Plains and West operating segments. These results offset a slight margin decline in our East/Midwest segment, which was primarily attributable to pre-opening costs, including the current racing operations at Plainridge Racecourse. Overall, Penn National’s ongoing execution of strategies to improve operating efficiencies drove consolidated fourth quarter 2014 adjusted EBITDAR margin growth of approximately 262 basis points on a year-over-year basis to 26.4%.
“We expect our 2015 operating results to benefit from: our ongoing
disciplined management of our existing properties; a full year of
operations of Hollywood Gaming at
“The referendum in
“Finally, construction remains on budget and on schedule on the
“Penn National’s solid 2014 results and future prospects highlight the value of our efforts to pair our disciplined operating approach with new facility openings to deliver property-level adjusted EBITDAR growth to support our goal of enhancing long-term shareholder value.”
Development and Expansion Projects |
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The table below summarizes Penn National Gaming’s recently completed and ongoing development projects: |
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Project/Scope |
New |
Planned |
Amount Expended |
Expected |
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(Unaudited, in millions) | ||||||||||
Zia Park Casino (NM) - Opened a 154 room, five story hotel which includes |
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six suites, a breakfast room, a business center, meeting and exercise rooms, |
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as well as additional surface parking. |
- | $26 | $25.0 | Opened August 28, 2014 | ||||||
Hollywood Gaming at Dayton Raceway (OH) - Opened our new Hollywood |
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themed facility featuring a new 5/8 mile harness racetrack and |
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simulcasting and the ability to hold up to 1,500 video lottery terminals, |
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as well as various restaurants, bars and other amenities. |
1,000 | $165 (1) (2) | $62.5 | Opened August 28, 2014 | ||||||
Hollywood Gaming at Mahoning Valley Race Course (OH) - Opened our new |
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Hollywood themed facility featuring a new one-mile thoroughbred racetrack |
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and simulcasting and the ability to hold up to 1,000 video lottery terminals, |
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as well as various restaurants, bars and other amenities. |
850 | $161 (1) (2) | $66.4 | Opened September 17, 2014 | ||||||
Plainridge Park Casino (MA) - Construction is underway at the site of the |
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Plainridge Racecourse for our new gaming operation, which will be |
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integrated with the existing live harness racing and simulcasting, featuring |
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1,250 gaming devices, as well as various dining and entertainment options. |
1,250 | $225 (3) | $115.7 | June 2015 | ||||||
Jamul Indian Village project (CA) - Construction is underway at the site for |
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this new Hollywood Casino branded gaming operation which Penn will |
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manage. The facility is anticipated to feature over 1,700 slot machines, 43 |
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live table games as well as multiple restaurants, bars and lounges. |
1,958 | $360 (4) | $52.4 | Mid-2016 | ||||||
(1) | Includes a $50 million license fee and a relocation fee of $75 million based on the present value of the contractual obligation. We paid $7.5 million of the relocation fee upon opening, and will pay 18 additional semi-annual payments of $4.8 million beginning one year after opening. For the license fee, we paid $10 million in the second quarter of 2014 as well as $15 million upon opening, and will pay the remaining license fee of $25 million on the one year anniversary of the opening. As of December 31, 2014, the amount capitalized on the balance sheet for Hollywood Gaming at Dayton Raceway and Hollywood Gaming at Mahoning Valley Race Course was $156.2 million and $163.5 million, respectively. | |
(2) | GLPI is responsible for certain construction related real estate costs associated with these projects that are not included in the budgeted figures above. | |
(3) | Includes a $25 million license fee, which was paid in March 2014, and $42 million purchase price, both of which are included in the amount expended above. | |
(4) | As disclosed previously, funds advanced for this project will be accounted for as a loan. | |
Financial Guidance
Reflecting the current operating and competitive environment, the table below sets forth 2015 first quarter and full year guidance targets for financial results, based on the following assumptions:
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Horseshoe
Baltimore opened inAugust 2014 and will impactHollywood Casino at Charles Town Races; -
Plainridge Park Casino is anticipated to open inJune 2015 ; - A full year contribution from the Company’s management contract for Casino Rama;
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Full year corporate overhead expenses of
$76.6 million , with$18.3 million to be incurred in the first quarter of 2015; -
Full year 2015 pre-opening expenses of
$3.7 million , with$1.6 million to be incurred in the first quarter of 2015; -
Full year 2015 rent expense of
$434.1 million , with$109.2 million to be incurred in the first quarter of 2015, excluding any additional rent escalation at the conclusion of year two of the Master Lease; -
Depreciation and amortization charges in 2015 of
$177.2 million , with$44.3 million in the first quarter of 2015; -
Our share of non-operating items (such as depreciation and
amortization expense) associated with our joint venture in
Kansas Entertainment total$10.5 million for 2015, with$2.8 million to be incurred in the first quarter of 2015; -
Estimated non-cash stock compensation expenses of
$8.6 million for 2015, with$2.3 million to be incurred in the first quarter of 2015; -
Interest expense in 2015 of
$57.2 million , with$11.6 million in the first quarter of 2015; - LIBOR is based on the forward yield curve;
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Full year 2015 non-cash accrued interest income on loan to
Jamul Tribe of$15.9 million , with$1.9 million in the first quarter of 2015; - A diluted share count of approximately 90 million shares for the full year 2015; 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.
(in millions, except per share data) | Three Months Ending March 31, | Full Year Ending December 31, | ||||||||||||||||||
2015 Guidance | 2014 Actual | 2015 Guidance | 2014 Actual | |||||||||||||||||
Net revenues | $ | 670.6 | $ | 641.1 | $ | 2,742.3 | $ | 2,590.5 | ||||||||||||
Adjusted EBITDAR | 183.8 | 177.6 | 739.8 | 706.5 | ||||||||||||||||
Rental expense related to Master Lease | (109.2 | ) | (104.3 | ) | (434.1 | ) | (421.4 | ) | ||||||||||||
Adjusted EBITDA | 74.6 | 73.3 | 305.7 | 285.1 | ||||||||||||||||
Less: Impact of stock compensation, impairment charges, |
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insurance recoveries, non-operating items for Kansas JV, |
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depreciation and amortization, gain/loss on disposal of assets, |
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interest expense - net, income taxes, and other expenses |
(65.2 | ) | (68.8 | ) | (264.4 | ) | (518.3 | ) | ||||||||||||
Net income (loss) | $ | 9.4 | $ | 4.5 | $ | 41.3 | $ | (233.2 | ) | |||||||||||
Diluted earnings (loss) per common share | $ | 0.10 | $ | 0.05 | $ | 0.46 | $ | (2.97 | ) | |||||||||||
PENN NATIONAL GAMING, INC. AND SUBSIDIARIES |
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NET REVENUES | ADJUSTED EBITDAR | ||||||||||||||||||
Three Months Ended December 31, | Three Months Ended December 31, | ||||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||||
East/Midwest (1) | $ | 385,070 | $ | 359,194 | $ | 112,819 | $ | 111,694 | |||||||||||
West (2) | 62,831 | 59,026 | 16,455 | 15,105 | |||||||||||||||
Southern Plains (3) | 198,656 | 220,549 | 63,463 | 64,578 | |||||||||||||||
Other (4) | 4,804 | 5,933 | (20,873 | ) | (38,183 | ) | |||||||||||||
Total | $ | 651,361 | $ | 644,702 | $ | 171,864 | $ | 153,194 | |||||||||||
NET REVENUES | ADJUSTED EBITDAR | ||||||||||||||||||
Twelve Months Ended December 31, | Twelve Months Ended December 31, | ||||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||||
East/Midwest (1) | $ | 1,467,380 | $ | 1,652,585 | $ | 437,125 | $ | 522,578 | |||||||||||
West (2) | 241,410 | 240,083 | 65,970 | 61,524 | |||||||||||||||
Southern Plains (3) | 857,447 | 994,097 | 276,372 | 306,369 | |||||||||||||||
Other (4) | 24,290 | 31,989 | (72,943 | ) | (114,377 | ) | |||||||||||||
Total | $ | 2,590,527 | $ | 2,918,754 | $ | 706,524 | $ | 776,094 | |||||||||||
(1) | The East/Midwest reportable segment consists of the following properties: Hollywood Casino at Charles Town Races, Hollywood Casino Bangor, Hollywood Casino at Penn National Race Course, Hollywood Casino Lawrenceburg, Hollywood Casino Toledo, Hollywood Casino Columbus, Hollywood Gaming at Dayton Raceway, which opened on August 28, 2014, and Hollywood Gaming at Mahoning Valley Race Course, which opened on September 17, 2014. It also includes the Company’s Casino Rama management service contract and the Plainville project in Massachusetts, which the Company expects to open in the second quarter of 2015. Current year results do not include results for Hollywood Casino Perryville as it was contributed to GLPI on November 1, 2013. This property had net revenues of $7.1 million and $77.5 million and adjusted EBITDAR of $1.4 million and $15.3 million for the one and ten months ended October 31, 2013, respectively. Our East/Midwest segment results for the three and twelve months ended December 31, 2014 included preopening costs of $1.7 million and $10.2 million, respectively, whereas results for the twelve months ended December 31, 2013 included preopening charges of $0.2 million. | |
(2) | The West reportable segment consists of the following properties: Zia Park Casino and the M Resort, as well as the Jamul development project, which the Company anticipates completing in mid-2016. Results for the twelve months ended December 31, 2013 included spin-off transaction costs of $3.8 million. | |
(3) | The Southern Plains reportable segment consists of the following properties: Hollywood Casino Aurora, Hollywood Casino Joliet, Argosy Casino Alton, Argosy Casino Riverside, Hollywood Casino Tunica, Hollywood Casino Gulf Coast, Boomtown Biloxi, and Hollywood Casino St. Louis, and includes the Company’s 50% investment in Kansas Entertainment, which owns the Hollywood Casino at Kansas Speedway. On July 30, 2014, the Company closed Argosy Casino Sioux City. Starting with the second quarter of 2014, adjusted EBITDA and adjusted EBITDAR from our joint venture in Kansas Entertainment exclude our share of the impact of non-operating items (such as depreciation and amortization expense). The prior year amounts were restated to conform to this new presentation. Additionally, current year results do not include results for Hollywood Casino Baton Rouge as it was contributed to GLPI on November 1, 2013. This property had net revenues of $5.4 million and $63.3 million and adjusted EBITDAR of $1.6 million and $20.0 million for the one and ten months ended October 31, 2013, respectively. | |
(4) | The Other category consists of the Company’s standalone racing operations, namely Rosecroft Raceway, Sanford-Orlando Kennel Club, and the Company’s joint venture interests in Sam Houston Race Park, Valley Race Park, and Freehold Raceway, as well as the Company’s 50% joint venture with the Cordish Companies in New York. Results in the prior year also included the Company’s Bullwhackers property which was sold in July 2013. | |
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If the Company is successful in obtaining gaming operations at these locations, they would be assigned to one of the Company’s regional executives and reported in their respective reportable segment. |
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The Other category also includes the Company’s corporate overhead costs, which was $19.6 million and $69.4 million for the three and twelve months ended December 31, 2014, respectively, as compared to corporate overhead costs of $36.9 million and $114.1 million for the three and twelve months ended December 31, 2013, respectively. Corporate overhead costs decreased by $17.3 million for the three months ended December 31, 2014, as compared to the corresponding period in the prior year, primarily due to lower spin-off transaction and development costs of $14.9 million and lower costs on cash-settled stock based awards of $6.4 million primarily due to the favorable impact from declines in GLPI’s stock price for GLPI awards held by Penn employees and the fact that certain members of Penn’s executive management team transferred their employment to GLPI as part of the spin-off, both of which were partially offset by higher lobbying costs of $3.8 million. Corporate overhead costs decreased by $44.7 million for the twelve months ended December 31, 2014, as compared to the corresponding period in the prior year, primarily due to lower spin-off transaction and development costs of $30.0 million, lower costs on cash-settled stock based awards of $13.9 million primarily due to the favorable impact from declines in GLPI’s stock price for GLPI awards held by Penn employees and the fact that certain members of Penn’s executive management team transferred their employment to GLPI as part of the spin-off, higher transition service fees received from GLPI of $1.2 million, and a reduction in various other items due to cost containment measures, all of which was partially offset by higher lobbying costs of $3.5 million. Additionally, the Other category includes $0.3 million and $1.3 million for the three and twelve months ended December 31, 2014, respectively, in costs from our New York joint venture (which is expected to be dissolved in 2015). |
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Reconciliation of Net income (loss) (GAAP) to Adjusted EBITDA and Adjusted EBITDAR |
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PENN NATIONAL GAMING, INC. AND SUBSIDIARIES |
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Three Months Ended | Twelve Months Ended | ||||||||||||||||||||
December 31, | December 31, | ||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||||||
Net loss | $ | (250,407 | ) | $ | (888,747 | ) | $ | (233,195 | ) | $ | (794,339 | ) | |||||||||
Income tax benefit | (62,182 | ) | (232,004 | ) | (38,586 | ) | (121,538 | ) | |||||||||||||
Other | (1,553 | ) | (1,173 | ) | (2,944 | ) | (3,803 | ) | |||||||||||||
Loss on early extinguishment of debt | - | 61,660 | - | 61,660 | |||||||||||||||||
Income from unconsolidated affiliates | (1,702 | ) | (1,819 | ) | (7,949 | ) | (9,657 | ) | |||||||||||||
Interest income | (1,448 | ) | (413 | ) | (3,730 | ) | (1,387 | ) | |||||||||||||
Interest expense | 12,606 | 17,048 | 45,982 | 97,092 | |||||||||||||||||
Loss from operations | $ | (304,686 | ) | $ | (1,045,448 | ) | $ | (240,422 | ) | $ | (771,972 | ) | |||||||||
Loss on disposal of assets | 640 | 819 | 738 | 3,652 | |||||||||||||||||
Insurance recoveries, net of deductible charges | - | (2,392 | ) | (5,674 | ) | 108 | |||||||||||||||
Impairment losses | 316,529 | 1,060,571 | 321,089 | 1,132,417 | |||||||||||||||||
Charge for stock compensation | 2,655 | 4,738 | 10,666 | 22,809 | |||||||||||||||||
Depreciation and amortization | 44,179 | 60,672 | 178,981 | 298,326 | |||||||||||||||||
Income from unconsolidated affiliates | 1,702 | 1,819 | 7,949 | 9,657 | |||||||||||||||||
Non-operating items for Kansas JV | 3,004 | 2,913 | 11,809 | 11,595 | |||||||||||||||||
Adjusted EBITDA | $ | 64,023 | $ | 83,692 | $ | 285,136 | $ | 706,592 | |||||||||||||
Rental expense related to Master Lease | 107,841 | 69,502 | 421,388 | 69,502 | |||||||||||||||||
Adjusted EBITDAR | $ | 171,864 | $ | 153,194 | $ | 706,524 | $ | 776,094 | |||||||||||||
Reconciliation of Income (loss) from operations (GAAP) to Adjusted EBITDA and Adjusted EBITDAR |
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PENN NATIONAL GAMING, INC. AND SUBSIDIARIES |
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Three Months Ended December 31, 2014 |
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East/Midwest | West | Southern Plains | Other | Total | |||||||||||||||||
Income (loss) from operations | $ | 13,595 | $ | 4,255 | $ | (298,724 | ) | $ | (23,812 | ) | $ | (304,686 | ) | ||||||||
Charge for stock compensation | - | - | - | 2,655 | 2,655 | ||||||||||||||||
Impairment charges (1) | - | 1,420 | 315,109 | - | 316,529 | ||||||||||||||||
Depreciation and amortization | 28,514 | 2,466 | 11,509 | 1,690 | 44,179 | ||||||||||||||||
Loss (gain) on disposal of assets | 30 | 99 | 518 | (7 | ) | 640 | |||||||||||||||
Income (loss) from unconsolidated affiliates | - | - | 3,101 | (1,399 | ) | 1,702 | |||||||||||||||
Non-operating items for Kansas JV (2) | - | - | 3,004 | - | 3,004 | ||||||||||||||||
Adjusted EBITDA | $ | 42,139 | $ | 8,240 | $ | 34,517 | $ | (20,873 | ) | $ | 64,023 | ||||||||||
Rental expense related to Master Lease | 70,680 | 8,215 | 28,946 | - | 107,841 | ||||||||||||||||
Adjusted EBITDAR | $ | 112,819 | $ | 16,455 | $ | 63,463 | $ | (20,873 | ) | $ | 171,864 | ||||||||||
Three Months Ended December 31, 2013 |
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East/Midwest | West | Southern Plains | Other | Total | |||||||||||||||||
(Loss) income from operations | $ | (391,002 | ) | $ | 8,713 | $ | (570,658 | ) | $ | (92,501 | ) | $ | (1,045,448 | ) | |||||||
Charge for stock compensation | - | - | - | 4,738 | 4,738 | ||||||||||||||||
Impairment charges | 429,568 | - | 592,573 | 38,430 | 1,060,571 | ||||||||||||||||
Insurance recoveries | - | - | (2,392 | ) | - | (2,392 | ) | ||||||||||||||
Depreciation and amortization | 26,799 | 1,768 | 20,428 | 11,677 | 60,672 | ||||||||||||||||
Loss (gain) on disposal of assets | 597 | (232 | ) | 449 | 5 | 819 | |||||||||||||||
Income (loss) from unconsolidated affiliates | - | - | 2,351 | (532 | ) | 1,819 | |||||||||||||||
Non-operating items for Kansas JV (2) | - | - | 2,913 | - | 2,913 | ||||||||||||||||
Adjusted EBITDA | $ | 65,962 | $ | 10,249 | $ | 45,664 | $ | (38,183 | ) | $ | 83,692 | ||||||||||
Rental expense related to Master Lease | 45,732 | 4,856 | 18,914 | - | 69,502 | ||||||||||||||||
Adjusted EBITDAR | $ | 111,694 | $ | 15,105 | $ | 64,578 | $ | (38,183 | ) | $ | 153,194 | ||||||||||
Twelve Months Ended December 31, 2014 |
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East/Midwest | West | Southern Plains | Other | Total | |||||||||||||||||
Income (loss) from operations | $ | 58,042 | $ | 24,791 | $ | (235,332 | ) | $ | (87,923 | ) | $ | (240,422 | ) | ||||||||
Charge for stock compensation | - | - | - | 10,666 | 10,666 | ||||||||||||||||
Impairment charges (1) | 4,560 | 1,420 | 315,109 | - | 321,089 | ||||||||||||||||
Insurance recoveries | - | - | (5,674 | ) | - | (5,674 | ) | ||||||||||||||
Depreciation and amortization | 105,552 | 7,725 | 58,597 | 7,107 | 178,981 | ||||||||||||||||
(Gain) loss on disposal of assets | (75 | ) | 211 | 624 | (22 | ) | 738 | ||||||||||||||
Income (loss) from unconsolidated affiliates | - | - | 10,720 | (2,771 | ) | 7,949 | |||||||||||||||
Non-operating items for Kansas JV (2) | - | - | 11,809 | - | 11,809 | ||||||||||||||||
Adjusted EBITDA | $ | 168,079 | $ | 34,147 | $ | 155,853 | $ | (72,943 | ) | $ | 285,136 | ||||||||||
Rental expense related to Master Lease | 269,046 | 31,823 | 120,519 | - | 421,388 | ||||||||||||||||
Adjusted EBITDAR | $ | 437,125 | $ | 65,970 | $ | 276,372 | $ | (72,943 | ) | $ | 706,524 | ||||||||||
Twelve Months Ended December 31, 2013 |
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East/Midwest | West | Southern Plains | Other | Total | |||||||||||||||||
(Loss) income from operations | $ | (102,192 | ) | $ | 42,420 | $ | (514,063 | ) | $ | (198,137 | ) | $ | (771,972 | ) | |||||||
Charge for stock compensation | - | - | - | 22,809 | 22,809 | ||||||||||||||||
Impairment charges | 429,567 | - | 664,420 | 38,430 | 1,132,417 | ||||||||||||||||
Insurance deductible charges, net of recoveries | - | - | 108 | - | 108 | ||||||||||||||||
Depreciation and amortization | 148,697 | 11,883 | 113,838 | 23,908 | 298,326 | ||||||||||||||||
Loss (gain) on disposal of assets | 774 | 2,365 | 822 | (309 | ) | 3,652 | |||||||||||||||
Income (loss) from unconsolidated affiliates | - | - | 10,735 | (1,078 | ) | 9,657 | |||||||||||||||
Non-operating items for Kansas JV (2) | - | - | 11,595 | - | 11,595 | ||||||||||||||||
Adjusted EBITDA | $ | 476,846 | $ | 56,668 | $ | 287,455 | $ | (114,377 | ) | $ | 706,592 | ||||||||||
Rental expense related to Master Lease | 45,732 | 4,856 | 18,914 | - | 69,502 | ||||||||||||||||
Adjusted EBITDAR | $ | 522,578 | $ | 61,524 | $ | 306,369 | $ | (114,377 | ) | $ | 776,094 | ||||||||||
1) | Due to our outlook of continued challenging gaming conditions at certain properties in our Southern Plains segment, goodwill and gaming license impairment charges were recorded in the fourth quarter of 2014 in connection with our annual impairment test. | |
2) | Starting with the second quarter of 2014, adjusted EBITDA and adjusted EBITDAR from our joint venture in Kansas Entertainment exclude our share of the impact of non-operating items (such as depreciation and amortization expense). Prior periods were restated to conform to this new presentation. |
PENN NATIONAL GAMING, INC. AND SUBSIDIARIES |
|||||||||||||||||
Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
Revenues | |||||||||||||||||
Gaming | $ | 577,118 | $ | 575,638 | $ | 2,297,175 | $ | 2,615,169 | |||||||||
Food, beverage and other | 109,311 | 105,457 | 432,021 | 461,048 | |||||||||||||
Management service fee | 2,847 | 2,777 | 11,650 | 13,176 | |||||||||||||
Revenues | 689,276 | 683,872 | 2,740,846 | 3,089,393 | |||||||||||||
Less promotional allowances | (37,915 | ) | (39,170 | ) | (150,319 | ) | (170,639 | ) | |||||||||
Net revenues | 651,361 | 644,702 | 2,590,527 | 2,918,754 | |||||||||||||
Operating expenses | |||||||||||||||||
Gaming | 290,429 | 289,063 | 1,148,968 | 1,318,546 | |||||||||||||
Food, beverage and other | 82,811 | 81,699 | 319,792 | 345,345 | |||||||||||||
General and administrative | 114,258 | 131,035 | 446,405 | 526,482 | |||||||||||||
Rental expense related to Master Lease | 107,841 | 69,502 | 421,388 | 69,502 | |||||||||||||
Depreciation and amortization | 44,179 | 60,672 | 178,981 | 298,326 | |||||||||||||
Impairment losses | 316,529 | 1,060,571 | 321,089 | 1,132,417 | |||||||||||||
Insurance recoveries, net of deductible charges | - | (2,392 | ) | (5,674 | ) | 108 | |||||||||||
Total operating expenses | 956,047 | 1,690,150 | 2,830,949 | 3,690,726 | |||||||||||||
Loss from operations | (304,686 | ) | (1,045,448 | ) | (240,422 | ) | (771,972 | ) | |||||||||
Other income (expenses) | |||||||||||||||||
Interest expense | (12,606 | ) | (17,048 | ) | (45,982 | ) | (97,092 | ) | |||||||||
Interest income | 1,448 | 413 | 3,730 | 1,387 | |||||||||||||
Income from unconsolidated affiliates | 1,702 | 1,819 | 7,949 | 9,657 | |||||||||||||
Loss on early extinguishment of debt | - | (61,660 | ) | - | (61,660 | ) | |||||||||||
Other | 1,553 | 1,173 | 2,944 | 3,803 | |||||||||||||
Total other expenses | (7,903 | ) | (75,303 | ) | (31,359 | ) | (143,905 | ) | |||||||||
Loss from operations before income taxes | (312,589 | ) | (1,120,751 | ) | (271,781 | ) | (915,877 | ) | |||||||||
Income tax benefit | (62,182 | ) | (232,004 | ) | (38,586 | ) | (121,538 | ) | |||||||||
Net loss | $ | (250,407 | ) | $ | (888,747 | ) | $ | (233,195 | ) | $ | (794,339 | ) | |||||
Loss per common share: | |||||||||||||||||
Basic loss per common share | $ | (3.18 | ) | $ | (11.40 | ) | $ | (2.97 | ) | $ | (10.17 | ) | |||||
Diluted loss per common share | $ | (3.18 | ) | $ | (11.40 | ) | $ | (2.97 | ) | $ | (10.17 | ) | |||||
Weighted-average common shares outstanding: | |||||||||||||||||
Basic | 78,805 | 77,939 | 78,425 | 78,111 | |||||||||||||
Diluted | 78,805 | 77,939 | 78,425 | 78,111 | |||||||||||||
PENN NATIONAL GAMING, INC. AND SUBSIDIARIES |
|||||||||
December 31, 2014 | December 31, 2013 | ||||||||
Cash and cash equivalents | $ | 208,673 | $ | 292,995 | |||||
Bank Debt | $ | 806,444 | $ | 748,777 | |||||
Notes | 300,000 | 300,000 | |||||||
Other long term obligations (1) | 154,388 | 2,015 | |||||||
Total Debt (2) | $ | 1,260,832 | $ | 1,050,792 | |||||
1) | Other long term obligations at December 31, 2014 include the present value of the relocation fees due for both Hollywood Gaming at Dayton Raceway and Hollywood Gaming at Mahoning Valley Race Course of $135.0 million. See Note 1 on page 5 of this release for further details. It also includes a liability of $19.2 million based on the estimated fair value of contingent purchase price consideration that is payable over ten years to the previous owners of Plainridge Racecourse. | |
2) | Although our joint venture in Kansas Entertainment is accounted for as an equity method investment and is not consolidated, this joint venture had no debt outstanding at December 31, 2014 or December 31, 2013. | |
During the second quarter of 2014, Penn refined its definition of
adjusted EBITDA and adjusted EBITDAR to add back our share of the impact
of non-operating items (such as depreciation and amortization) at our
joint ventures which have gaming operations. At this time,
Three months ended | ||||||||||||||||||||
March 31, 2014 | December 31, 2013 | September 30, 2013 | June 30, 2013 | March 31, 2013 | ||||||||||||||||
Adjusted EBITDA as historically reported | $ | 70,429 | $ | 80,779 | $ | 182,070 | $ | 211,398 | $ | 220,748 | ||||||||||
Non-operating items for Kansas JV | 2,921 | 2,913 | 2,902 | 2,922 | 2,859 | |||||||||||||||
Adjusted EBTIDA as revised | $ | 73,350 | $ | 83,692 | $ | 184,972 | $ | 214,320 | $ | 223,607 | ||||||||||
Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||||||
Cash Flow distributions | $ | 5,500 | $ | 4,500 | $ | 23,000 | $ | 21,500 | ||||||||||||
Diluted Share Count Methodology
In connection with the spin-off,
Reconciliation of GAAP to Non-GAAP Measures
Adjusted EBITDA and adjusted EBITDAR are used by management as the
primary measure of the Company’s operating performance. We define
adjusted EBITDA as earnings before interest, taxes, stock compensation,
debt extinguishment charges, impairment charges, insurance recoveries
and deductible charges, depreciation and amortization, gain or loss on
disposal of assets, and other income or expenses. Adjusted EBITDA 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
A reconciliation of the Company’s net income (loss) per GAAP to adjusted EBITDA and adjusted EBITDAR, as well as the Company’s income (loss) from operations per GAAP to adjusted EBITDA and adjusted EBITDAR, is included above. Additionally, a reconciliation of each segment’s income (loss) from operations to adjusted EBITDA and adjusted EBITDAR is also included above. On a segment level, income (loss) from operations per GAAP, rather than net income (loss) per GAAP is reconciled to adjusted EBITDA and adjusted EBITDAR due to, among other things, the impracticability of allocating interest expense, interest income, income taxes and certain other items to the Company’s segments on a segment by segment basis. Management believes that this presentation is more meaningful to investors in evaluating the performance of the Company’s segments and is consistent with the reporting of other gaming companies.
Conference Call, Webcast and Replay Details
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
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,
including future plans, strategies, performance, developments,
acquisitions, capital expenditures, and operating results. Actual
results may vary materially from expectations. Although the Company
believes that our expectations are based on reasonable assumptions
within the bounds of our knowledge of our 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: our ability to obtain timely regulatory approvals
required to own, develop and/or operate our facilities, or other delays
or impediments to completing our planned acquisitions or projects,
including favorable resolution of any related litigation, including the
ongoing appeal by the Ohio Roundtable addressing the legality of video
lottery terminals in
Source:
Penn National Gaming, Inc.
Saul V. Reibstein, 610-401-2049
Chief
Financial Officer
or
JCIR
Joseph N. Jaffoni, Richard Land
212-835-8500
penn@jcir.com