Penn National Gaming Reports Second Quarter Revenue of $796.5 Million and Income from Operations of $135.0 Million Resulting in Adjusted EBITDA after Master Lease Payments of $105.2 Million
- Property Level EBITDA Exceeds Guidance by
- Establishes 2017 Third Quarter Guidance and Raises 2017 Full Year Guidance -
Conference Call: |
Today, July 27, 2017 at 9:00 a.m. ET |
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Dial-in number: |
212/231-2908 |
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Webcast: |
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Replay information provided below |
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Summary of Second Quarter Results |
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Three Months Ended | ||||
(in millions, except per share data) |
June 30, | ||||
2017 Actual | 2017 Guidance (2) | 2016 Actual | |||
Net revenues | $ 796.5 | $ 776.8 | $ 769.4 | ||
Net income | $ 17.1 | $ 20.4 | $ 34.0 | ||
Adjusted EBITDA (1) | $ 219.1 | $ 219.9 | $ 223.8 | ||
Less: Master Lease payments | 113.9 | 112.2 | 110.8 | ||
Adjusted EBITDA after Master Lease payments (1) | $ 105.2 | $ 107.7 | $ 113.0 | ||
Diluted earnings per common share | $ 0.18 | $ 0.22 | $ 0.37 |
(1) | Adjusted EBITDA is income (loss) from operations, excluding the impact of stock compensation, debt extinguishment and financing charges, impairment charges, insurance recoveries and deductible charges, depreciation and amortization, changes in the estimated fair value of our contingent purchase price obligations, 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 the non-operating items added back for our joint venture in Kansas Entertainment, LLC (“Kansas Entertainment” or “Kansas JV”). Adjusted EBITDA excludes payments pursuant to the Company’s Master Lease (the “Master Lease”) with Gaming and Leisure Properties, Inc. (“GLPI”), as the transaction was accounted for as a financing obligation. | |
(2) | The guidance figures in the table above present the guidance Penn National provided on April 27, 2017 for the three months ended June 30, 2017. |
Review of Second Quarter 2017 Results vs. Guidance |
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Three Months |
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Ended | ||
June 30, 2017 | ||
Pre-tax | After-tax | |
(in thousands) (unaudited) | ||
Income, per guidance (1) | $ 29,278 | $ 20,422 |
Adjusted EBITDA variances: | ||
Favorable property level variance | 2,499 | 1,512 |
New Tunica properties post-acquisition EBITDA | 3,327 | 2,116 |
Severance charges for new Tunica properties | (519) | (330) |
Cash-settled stock-based awards variance | (6,092) | (3,874) |
Other variance | 31 | 20 |
(754) | (556) | |
Net contingent liability variance, mostly due to Rocket Speed | 3,432 | 2,178 |
Impairment of Jamul note receivable | (5,635) | (3,583) |
Interest income variance from application of cash basis method on Jamul loan | (2,315) | (1,472) |
Other variance | (702) | (425) |
Tax variance | - | 515 |
Income, as reported | $ 23,304 | $ 17,079 |
(1) | The guidance figure in the table above presents the guidance Penn National provided on April 27, 2017 for the three months ended June 30, 2017. | |
“Penn National’s solid second quarter operating cash flows enabled us to
reduce traditional debt net of cash at
Broad-based Property Performance Growth Continues
Mr. Wilmott continued, “Our strong broad-based property results include
the continued ramp of Penn National’s
“Overall, second quarter property level Adjusted EBITDA (before
contributions from the recently acquired Tunica properties) surpassed
guidance by
“At Hollywood Casino Jamul-San Diego, we continue to leverage the
property’s best-in-market proximity to downtown
“In the two years since acquiring Tropicana Las Vegas, we have
undertaken property-wide initiatives to improve the casino floor
experience and expand the resort’s non-gaming amenities to allow us to
leverage the property’s high quality room base. Since late 2016, we have
added Barista Café, a coffee bar with a grab and go experience, as well
as Fresh Mix, a quick serve restaurant with salad and wraps. In
addition, during the second quarter we opened
Strong Operating Margins, Goals for Further Growth and Diversification of Cash Flows
Mr. Wilmott continued, “With our ongoing focus on driving operating efficiencies and margin expansion, all three of our operating segments generated year over year Adjusted EBITDA and margin growth (when excluding a Tropicana Las Vegas legal settlement which benefited the South/West segment in the second quarter of 2016). Our ability to consistently improve operating efficiencies resulted in company-wide second quarter Adjusted EBITDA operating margin growth of approximately 30 basis points year over year to 30.2% when excluding the previously mentioned legal settlement and one-time property tax benefits in the 2016 second quarter. Importantly, we remain committed to leveraging our scale, distribution and purchasing power to drive ongoing margin improvements in the periods ahead.
“During the quarter, we continued to make significant progress in
growing and diversifying our Adjusted EBITDA mix with assets that are
not subject to the Master Lease. Adjusted EBITDA for the trailing four
quarters from these operations was 14.2% of our total Adjusted EBITDA,
or
Cash Flow Generation and Continued De-Leveraging
“During the first half of 2017, we reduced total traditional net debt by
approximately
“Gaming trends in our regional markets remain healthy and, when combined
with the ability of our operating teams to drive improved Adjusted
EBITDA margins and the ongoing ramp of our recently opened or acquired
operations, we are raising our guidance for the second half of 2017 by
Financial Guidance
Reflecting the current operating and competitive environment, the table below sets forth third quarter and full year 2017 guidance targets for financial results based on the following assumptions:
MGM National Harbor opened onDecember 8, 2016 , impactingHollywood Casino at Charles Town Races;- A full year contribution from the Company’s management contract for Casino Rama;
-
Does not anticipate any Adjusted EBITDA contribution from the
Company’s agreements with
Jamul Indian Village ; -
Second half 2017 Adjusted EBITDA from the recently acquired Tunica
assets of
$7.6 million inclusive of one-time acquisition related expenses of$1.7 million . -
Full year corporate overhead expenses of
$87.5 million , with$19.5 million to be incurred in the third quarter; -
Depreciation and amortization charges of
$266.7 million , with$66.3 million in the third quarter; -
Full year payments to GLPI of
$454.8 million (inclusive of$6.0 million attributable to the recently acquired Tunica assets), with$114.0 million in the third quarter; -
Maintenance capital expenditures of
$78.1 million , with$31.9 million in the third quarter; -
Cash interest on traditional debt of
$55.3 million , with$22.1 million in the third quarter; -
Interest expense of
$465.2 million , with$116.7 million in the third quarter, inclusive of interest expense related to the Master Lease financing obligation with GLPI; -
Our rent coverage ratio for year four of the Master Lease at
June 30, 2017 is 1.83 and we expect to incur a rent escalation of$4.1 million atOctober 31, 2017 , which is the conclusion of year four of the Master Lease, of which$0.7 million will be incurred in 2017 and is reflected in interest expense; -
Our share of non-operating items (such as depreciation and
amortization expense) associated with our Kansas JV will total
$5.9 million , with$1.3 million to be incurred in the third quarter; -
Estimated non-cash stock compensation expenses of
$8.1 million , with$2.0 million to be incurred in the third quarter; - LIBOR is based on the forward yield curve;
- A diluted share count of approximately 92.8 million shares for the full year; 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.
Three Months Ending September 30, | Full Year Ending December 31, | |||||||||||
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2017 |
2016 |
2017 Revised | 2017 Prior | |||||||||
Guidance |
Actual |
Guidance | Guidance (1) | 2016 Actual | ||||||||
(in millions, except per share data) | ||||||||||||
Net revenues | $ 790.9 | $ 765.6 | $ 3,120.3 | $ 3,066.1 | $ 3,034.4 | |||||||
Net income | $ 18.6 | $ 46.5 | $ 54.2 | $ 55.0 | $ 109.3 | |||||||
Income tax provision | 15.2 | (9.5) | 34.6 | 23.8 | 11.3 | |||||||
Other | - | (0.4) | 25.4 | 25.2 | 1.7 | |||||||
Income from unconsolidated affiliates | (4.9) | (3.5) | (19.7) | (19.3) | (14.3) | |||||||
Interest income | (0.3) | (8.2) | (3.3) | (5.6) | (24.2) | |||||||
Interest expense | 116.7 | 114.4 | 465.2 | 459.6 | 459.2 | |||||||
Income from operations | $ 145.3 | $ 139.3 | $ 556.4 | $ 538.8 | $ 543.0 | |||||||
Loss (gain) on disposal of assets | 0.2 | (2.8) | 0.3 | 0.4 | (2.5) | |||||||
Impairment losses | - | - | 5.6 | - | - | |||||||
Insurance recoveries | - | (0.7) | - | - | (0.7) | |||||||
Charge for stock compensation | 2.0 | 1.5 | 8.1 | 8.3 | 6.9 | |||||||
Contingent purchase price | 0.4 | - | 4.7 | 14.4 | 1.3 | |||||||
Depreciation and amortization | 66.3 | 67.9 | 266.7 | 270.8 | 271.2 | |||||||
Income from unconsolidated affiliates | 4.9 | 3.5 | 19.7 | 19.3 | 14.3 | |||||||
Non-operating items for Kansas JV | 1.3 | 2.6 | 5.9 | 5.9 | 10.3 | |||||||
Adjusted EBITDA | $ 220.4 | $ 211.3 | $ 867.4 | $ 857.9 | $ 843.8 | |||||||
Master Lease payments | (114.0) | (109.7) | (454.8) | (447.7) | (442.3) | |||||||
Adjusted EBITDA, after Master Lease payments | $ 106.4 | $ 101.6 | $ 412.6 | $ 410.2 | $ 401.5 | |||||||
Diluted earnings per common share | $ 0.20 | $ 0.51 | $ 0.59 | $ 0.60 | $ 1.19 |
(1) | The guidance figures in this column in the table above present the guidance Penn National provided on April 27, 2017 for the full year ended December 31, 2017. |
PENN NATIONAL GAMING, INC. AND SUBSIDIARIES |
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Segment Information – Operations |
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(in thousands) (unaudited) |
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NET REVENUES | INCOME FROM OPERATIONS | ADJUSTED EBITDA | |||||||||||
Three Months Ended June 30, | Three Months Ended June 30, | Three Months Ended June 30, | |||||||||||
2017 | 2016 | 2017 | 2016 | 2017 | 2016 | ||||||||
Northeast (1) | $ 405,099 | $ 401,516 | $ 108,119 | $ 103,695 | $ 129,876 | $ 127,009 | |||||||
South/West (2) | 153,151 | 140,108 | 20,062 | 27,622 | 35,049 | 36,472 | |||||||
Midwest (3) | 224,847 | 220,256 | 59,283 | 57,446 | 75,490 | 73,169 | |||||||
Other (4) | 13,366 | 7,542 | (52,475) | (39,426) | (21,277) | (12,870) | |||||||
Total | $ 796,463 | $ 769,422 | $ 134,989 | $ 149,337 | $ 219,138 | $ 223,780 | |||||||
NET REVENUES | INCOME FROM OPERATIONS | ADJUSTED EBITDA | |||||||||||
Six Months Ended June 30, | Six Months Ended June 30, | Six Months Ended June 30, | |||||||||||
2017 | 2016 | 2017 | 2016 | 2017 | 2016 | ||||||||
Northeast (1) | $ 798,564 | $ 794,722 | $ 210,752 | $ 204,616 | $ 256,451 | $ 249,744 | |||||||
South/West (2) | 292,970 | 276,076 | 47,180 | 53,607 | 71,390 | 71,197 | |||||||
Midwest (3) | 453,185 | 441,334 | 120,813 | 115,670 | 153,596 | 148,256 | |||||||
Other (4) | 27,968 | 13,741 | (103,469) | (84,025) | (40,589) | (32,533) | |||||||
Total | $ 1,572,687 | $ 1,525,873 | $ 275,276 | $ 289,868 | $ 440,848 | $ 436,664 |
(1) | The Northeast 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 Toledo, Hollywood Casino Columbus, Hollywood Gaming at Dayton Raceway, Hollywood Gaming at Mahoning Valley Race Course, and Plainridge Park Casino. It also includes the Company’s Casino Rama management service contract. |
(2) | The South/West reportable segment consists of the following properties: Zia Park Casino, Hollywood Casino Tunica, Hollywood Casino Gulf Coast, Boomtown Biloxi, the M Resort, Tropicana Las Vegas, and Bally’s Casino Tunica and Resorts Casino Tunica, which were acquired on May 1, 2017, as well as our management contract with Hollywood Casino Jamul-San Diego, which opened on October 10, 2016. The South/West segment results include earnings from our May 1, 2017 acquisition of Bally’s/Resorts in Tunica of $2.8 million, inclusive of acquisition related charges of $0.5 million. Our South/West segment results for the three and six months ended June 30, 2016 include a $3.5 million benefit from a litigation settlement gain at the Tropicana Las Vegas, which is partially offset by severance charges and gaming floor disruption. The South/West segment second quarter results for the prior year also include additional expenses of $1.6 million, which is primarily due to insurance accrual adjustments. |
(3) | The Midwest reportable segment consists of the following properties: Hollywood Casino Aurora, Hollywood Casino Joliet, Argosy Casino Alton, Argosy Casino Riverside, Hollywood Casino Lawrenceburg, Hollywood Casino St. Louis, Prairie State Gaming, and includes the Company’s 50% investment in Kansas Entertainment, which owns the Hollywood Casino at Kansas Speedway. |
(4) | The Other category consists of the Company’s standalone racing operations, namely Sanford-Orlando Kennel Club, and the Company’s joint venture interests in Sam Houston Race Park, Valley Race Park, and Freehold Raceway. 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. The Other category also includes Penn Interactive Ventures, the Company’s interactive division which represents Penn National’s social gaming initiatives, including Rocket Speed, Inc. |
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The Other category also includes the Company’s corporate overhead costs, which were $26.0 million and $50.0 million for the three and six months ended June 30, 2017, respectively, as compared to corporate overhead costs of $14.0 million and $34.6 million for the three and six months ended June 30, 2016, respectively. Corporate overhead costs included cash-settled stock-based compensation charges of $9.2 million and $17.6 million for the three and six months ended June 30, 2017, respectively, compared to $0.1 million and $5.0 million for the corresponding period in the prior year. In addition to the increased cash-settled stock-based compensation costs primarily due to the increase of Penn National’s stock price during 2017, the variance in corporate overhead for the three and six months ended June 30, 2017, includes $2.0 million and $2.7 million higher acquisition and development costs and $0.9 million and $1.6 million higher bonus expense due to the Company’s better overall performance against its budget, respectively, as compared to the prior year. |
Reconciliation of Comparable GAAP Financial Measures To |
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Adjusted EBITDA |
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PENN NATIONAL GAMING, INC. AND SUBSIDIARIES |
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(in thousands) (unaudited) |
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Three Months Ended | |||||||||||
June 30, | March 31, | December 31, | September 30, | June 30, | |||||||
2017 | 2017 | 2016 | 2016 | 2016 | |||||||
Net income | $ 17,079 | $ 5,104 | $ 5,032 | $ 46,535 | $ 34,035 | ||||||
Income tax provision (benefit) | 6,225 | 2,198 | 2,242 | (9,473) | 10,804 | ||||||
Other (1) | 173 | 25,183 | (299) | (404) | (44) | ||||||
Income from unconsolidated affiliates | (5,021) | (4,548) | (2,675) | (3,505) | (3,548) | ||||||
Interest income | (235) | (2,646) | (4,147) | (8,202) | (6,597) | ||||||
Interest expense | 116,768 | 114,996 | 113,695 | 114,349 | 114,687 | ||||||
Income from operations | $ 134,989 | $ 140,287 | $ 113,848 | $ 139,300 | $ 149,337 | ||||||
Loss (gain) on disposal of assets | 52 | (45) | 969 | (2,781) | 441 | ||||||
Charge for stock compensation | 1,801 | 2,173 | 2,317 | 1,517 | 1,582 | ||||||
Contingent purchase price | 1,362 | 2,560 | 2,388 | (30) | 119 | ||||||
Impairment charges | 5,635 | - | - | - | - | ||||||
Depreciation and amortization | 68,969 | 70,236 | 71,109 | 67,903 | 66,182 | ||||||
Insurance recoveries | - | - | - | (726) | - | ||||||
Income from unconsolidated affiliates | 5,021 | 4,548 | 2,675 | 3,505 | 3,548 | ||||||
Non-operating items for Kansas JV | 1,309 | 1,951 | 2,598 | 2,572 | 2,571 | ||||||
Adjusted EBITDA | $ 219,138 | $ 221,710 | $ 195,904 | $ 211,260 | $ 223,780 | ||||||
Master Lease payments | (113,968) | (112,450) | (110,420) | (109,710) | (110,761) | ||||||
Adjusted EBITDA, after Master Lease payments | $ 105,170 | $ 109,260 | $ 85,484 | $ 101,550 | $ 113,019 |
1) | March 31, 2017 figures include debt extinguishment and financing charges of $25.1 million. |
Six Months Ended | ||||||
June 30, |
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2017 | 2016 | |||||
Net income | $ 22,183 | $ 57,743 | ||||
Income tax provision | 8,423 | 18,538 | ||||
Other (1) | 25,356 | 2,382 | ||||
Income from unconsolidated affiliates | (9,569) | (8,157) | ||||
Interest income | (2,881) | (11,837) | ||||
Interest expense | 231,764 | 231,199 | ||||
Income from operations | $ 275,276 | $ 289,868 | ||||
Gain (loss) on disposal of assets | 7 | (660) | ||||
Charge for stock compensation | 3,974 | 3,037 | ||||
Contingent purchase price | 3,922 | (1,081) | ||||
Impairment charges | 5,635 | - | ||||
Depreciation and amortization | 139,205 | 132,202 | ||||
Income from unconsolidated affiliates | 9,569 | 8,157 | ||||
Non-operating items for Kansas JV | 3,260 | 5,141 | ||||
Adjusted EBITDA | $ 440,848 | $ 436,664 | ||||
Master Lease payments | (226,418) | (222,157) | ||||
Adjusted EBITDA, after Master Lease payments | $ 214,430 | $ 214,507 |
June 30, 2017 | March 31, 2017 | December 31, 2016 | |||
Cash and cash equivalents | $ 224,399 | $ 259,488 | $ 229,510 | ||
Bank Debt | $ 812,002 | $ 896,439 | $ 962,703 | ||
Notes | 399,208 | 399,227 | 296,895 | ||
Other long term obligations (1) | 127,488 | 127,437 | 155,936 | ||
Total Traditional Debt | $ 1,338,698 | $ 1,423,103 | $ 1,415,534 | ||
Traditional debt, net of cash | $ 1,114,299 | $ 1,163,615 | $ 1,186,024 | ||
1) | Other long term obligations at June 30, 2017 primarily include $112.2 million for the present value of the relocation fees due for both Hollywood Gaming at Dayton Raceway and Hollywood Gaming at Mahoning Valley Race Course, and $13.8 million related to our repayment obligation on a hotel and event center located near Hollywood Casino Lawrenceburg. |
Reconciliation of Comparable GAAP Financial Measures To |
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Adjusted EBITDA By Segment |
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PENN NATIONAL GAMING, INC. AND SUBSIDIARIES |
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(in thousands) (unaudited) |
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Three Months Ended June 30, 2017 |
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Northeast | South/West | Midwest | Other | Total | |||||
Income (loss) from operations | $ 108,119 | $ 20,062 | $ 59,283 | $ (52,475) | $ 134,989 | ||||
Charge for stock compensation | - | - | - | 1,801 | 1,801 | ||||
Impairment losses | - | 5,635 | - | - | 5,635 | ||||
Depreciation and amortization | 21,525 | 9,353 | 9,508 | 28,583 | 68,969 | ||||
Contingent purchase price | 277 | - | 16 | 1,069 | 1,362 | ||||
(Gain) loss on disposal of assets | (45) | (1) | 88 | 10 | 52 | ||||
Income (loss) from unconsolidated affiliates | - | - | 5,286 | (265) | 5,021 | ||||
Non-operating items for Kansas JV (1) | - | - | 1,309 | - | 1,309 | ||||
Adjusted EBITDA | $ 129,876 | $ 35,049 | $ 75,490 | $ (21,277) | $ 219,138 | ||||
Three Months Ended June 30, 2016 |
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Northeast | South/West | Midwest | Other | Total | |||||
Income (loss) from operations | $ 103,695 | $ 27,622 | $ 57,446 | $ (39,426) | $ 149,337 | ||||
Charge for stock compensation | - | - | - | 1,582 | 1,582 | ||||
Depreciation and amortization | 23,209 | 8,839 | 9,460 | 24,674 | 66,182 | ||||
Contingent purchase price | 119 | - | - | - | 119 | ||||
(Gain) loss on disposal of assets | (14) | 11 | (52) | 496 | 441 | ||||
Income (loss) from unconsolidated affiliates | - | - | 3,744 | (196) | 3,548 | ||||
Non-operating items for Kansas JV (1) | - | - | 2,571 | - | 2,571 | ||||
Adjusted EBITDA | $ 127,009 | $ 36,472 | $ 73,169 | $ (12,870) | $ 223,780 | ||||
Six Months Ended June 30, 2017 |
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Northeast | South/West | Midwest | Other | Total | |||||
Income (loss) from operations | $ 210,752 | $ 47,180 | $ 120,813 | $ (103,469) | $ 275,276 | ||||
Charge for stock compensation | - | - | - | 3,974 | 3,974 | ||||
Impairment losses | - | 5,635 | - | - | 5,635 | ||||
Depreciation and amortization | 44,548 | 18,570 | 19,179 | 56,908 | 139,205 | ||||
Contingent purchase price | 1,182 | - | 25 | 2,715 | 3,922 | ||||
(Gain) loss on disposal of assets | (31) | 5 | 29 | 4 | 7 | ||||
Income (loss) from unconsolidated affiliates | - | - | 10,290 | (721) | 9,569 | ||||
Non-operating items for Kansas JV | - | - | 3,260 | - | 3,260 | ||||
Adjusted EBITDA | $ 256,451 | $ 71,390 | $ 153,596 | $ (40,589) | $ 440,848 | ||||
Six Months Ended June 30, 2016 |
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Northeast | South/West | Midwest | Other | Total | |||||
Income (loss) from operations | $ 204,616 | $ 53,607 | $ 115,670 | $ (84,025) | $ 289,868 | ||||
Charge for stock compensation | - | - | - | 3,037 | 3,037 | ||||
Depreciation and amortization | 46,202 | 17,604 | 19,028 | 49,368 | 132,202 | ||||
Contigent purchase price | (1,081) | - | - | - | (1,081) | ||||
Loss (gain) on disposal of assets | 7 | (14) | (45) | (608) | (660) | ||||
Income (loss) from unconsolidated affiliates | - | - | 8,462 | (305) | 8,157 | ||||
Non-operating items for Kansas JV | - | - | 5,141 | - | 5,141 | ||||
Adjusted EBITDA | $ 249,744 | $ 71,197 | $ 148,256 | $ (32,533) | $ 436,664 | ||||
(1) | Adjusted EBITDA excludes our share of the impact of non-operating items (such as depreciation and amortization) from our joint venture in Kansas Entertainment. |
PENN NATIONAL GAMING, INC. AND SUBSIDIARIES |
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Consolidated Statements of Operations |
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(in thousands, except per share data) (unaudited) |
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Three Months Ended June 30, | Six Months Ended June 30, | ||||||
2017 | 2016 | 2017 | 2016 | ||||
Revenues | |||||||
Gaming | $ 680,979 | $ 663,326 | $ 1,342,235 | $ 1,320,027 | |||
Food, beverage, hotel and other | 152,148 | 144,390 | 299,889 | 282,238 | |||
Management service and licensing fees | 2,932 | 2,964 | 5,259 | 5,437 | |||
Reimbursable management costs | 6,387 | 2,855 | 13,145 | 2,855 | |||
Revenues | 842,446 | 813,535 | 1,660,528 | 1,610,557 | |||
Less promotional allowances | (45,983) | (44,113) | (87,841) | (84,684) | |||
Net revenues | 796,463 |
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769,422 | 1,572,687 |
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1,525,873 | |
Operating expenses | |||||||
Gaming | 345,156 | 339,201 | 677,209 | 674,518 | |||
Food, beverage, hotel and other | 105,231 | 101,873 | 206,306 | 199,952 | |||
General and administrative | 130,096 | 109,974 | 255,911 | 226,478 | |||
Depreciation and amortization | 68,969 | 66,182 | 139,205 | 132,202 | |||
Reimbursable management costs | 6,387 | 2,855 | 13,145 | 2,855 | |||
Impairment charges | 5,635 | - | 5,635 | - | |||
Total operating expenses | 661,474 | 620,085 | 1,297,411 | 1,236,005 | |||
Income from operations | 134,989 |
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149,337 | 275,276 |
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289,868 | |
Other income (expenses) | |||||||
Interest expense | (116,768) | (114,687) | (231,764) | (231,199) | |||
Interest income | 235 | 6,597 | 2,881 | 11,837 | |||
Income from unconsolidated affiliates | 5,021 | 3,548 | 9,569 | 8,157 | |||
Loss on early extinguishment of debt | - | - | (23,390) | - | |||
Other | (173) | 44 | (1,966) | (2,382) | |||
Total other expenses | (111,685) |
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(104,498) | (244,670) |
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(213,587) | |
Income from operations before income taxes | 23,304 | 44,839 | 30,606 | 76,281 | |||
Income tax provision | 6,225 | 10,804 | 8,423 | 18,538 | |||
Net income | $ 17,079 |
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$ 34,035 | $ 22,183 |
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$ 57,743 | |
Earnings per common share: | |||||||
Basic earnings per common share | $ 0.19 | $ 0.38 | $ 0.24 | $ 0.64 | |||
Diluted earnings per common share | $ 0.18 | $ 0.37 | $ 0.24 | $ 0.63 | |||
Weighted-average common shares outstanding: | |||||||
Basic | 90,928 | 81,647 | 90,840 | 81,308 | |||
Diluted | 93,239 | 91,486 | 92,543 | 91,287 | |||
PENN NATIONAL GAMING, INC. AND SUBSIDIARIES |
Supplemental information |
(in thousands) (unaudited) |
The Company’s definition of Adjusted EBITDA adds back our share of the
impact of non-operating items (such as depreciation and amortization) at
our joint ventures that have gaming operations. At this time,
Three Months Ended June 30, |
Six Months Ended June 30, | ||||||
2017 |
2016 |
2017 | 2016 | ||||
Cash flow distributions | $ 7,250 | $ 5,950 | $ 13,000 | $ 13,350 | |||
The table below summarizes certain cash expenditures incurred by the Company during the periods presented in this earnings release.
Three Months Ended June 30, | Six Months Ended June 30, | ||||||
2017 | 2016 | 2017 | 2016 | ||||
Master Lease rental payments | 113,968 | 110,761 | 226,418 | 222,157 | |||
Cash income tax payments/(refunds) | 3,645 | 348 | (5,659) | (12,133) | |||
Cash interest expense on traditional debt | 7,923 | 17,880 | 24,503 | 32,214 | |||
Maintenance capital expenditures | 17,309 | 17,670 | 28,287 | 32,543 | |||
Share Repurchase Program
During the Company’s 2017 first quarter, Penn National repurchased
416,886 shares of its common stock at an average price of
Reconciliation of GAAP to Non-GAAP Measures
In addition to GAAP financial measures, adjusted EBITDA is used by
management as an important measure of the Company’s operating
performance. We define adjusted EBITDA as earnings before interest,
taxes, stock compensation, debt extinguishment and financing charges,
impairment charges, insurance recoveries and deductible charges,
depreciation and amortization, changes in the estimated fair value of
our contingent purchase price obligations, 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
Adjusted EBITDA after Master Lease payments is a measure we believe provides useful information to investors because it is an indicator of the performance of ongoing business operations after incorporating the cash flow impact of Master Lease payments to GLPI. Finally, adjusted EBITDA after Master Lease payments is the metric that our executive management team is measured against for incentive based compensation purposes.
A reconciliation of the Company’s net income (loss) per GAAP to adjusted EBITDA, as well as the Company’s income (loss) from operations per GAAP to adjusted EBITDA, is included above. Additionally, a reconciliation of each segment’s income (loss) from operations to adjusted EBITDA 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 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.
Specifically, forward-looking statements may include, among others,
statements concerning: our expectations of future results of operations
and financial condition; expectations for our properties or our
development projects; the timing, cost and expected impact of planned
capital expenditures on our results of operations; the impact of our
geographic diversification; our expectations with regard to the impact
of competition; our expectations with regard to acquisitions and
development opportunities, as well as the integration of any companies
we have acquired or may acquire; the outcome and financial impact of the
litigation in which we are or will be periodically involved; the actions
of regulatory, legislative, executive or judicial decisions at the
federal, state or local level with regard to our business and the impact
of any such actions; our ability to maintain regulatory approvals for
our existing businesses and to receive regulatory approvals for our new
businesses; our expectations regarding economic and consumer conditions;
and our expectations for the continued availability and cost of capital.
As a result, actual results may vary materially from expectations.
Although the Company believes that its expectations are based on
reasonable assumptions within the bounds of its knowledge of its
business, there can be no assurance that actual results will not differ
materially from our expectations. Meaningful factors that could cause
actual results to differ from expectations include, but are not limited
to, risks related to the following: the assumptions included in our
financial guidance; the ability of our operating teams to drive revenue
and adjusted EBITDA margins; the impact of significant competition from
other gaming and entertainment operations; our ability to obtain timely
regulatory approvals required to own, develop and/or operate our
facilities, or other delays, approvals or impediments to completing our
planned acquisitions or projects, construction factors, including
delays, unexpected remediation costs, local opposition, organized labor,
and increased cost of labor and materials; the passage of state, federal
or local legislation (including referenda) that would expand, restrict,
further tax, prevent or negatively impact operations in or adjacent to
the jurisdictions in which we do or seek to do business (such as a
smoking ban at any of our facilities or the award of additional gaming
licenses proximate to our facilities); the effects of local and national
economic, credit, capital market, housing, and energy conditions on the
economy in general and on the gaming and lodging industries in
particular; the activities of our competitors and the rapid emergence of
new competitors (traditional, internet, social, sweepstakes based and
VGTs in bars and truck stops); increases in the effective rate of
taxation for any of our operations or at the corporate level; our
ability to identify attractive acquisition and development opportunities
(especially in new business lines) and to agree to terms with, and
maintain good relationships with partners/municipalities for such
transactions; the costs and risks involved in the pursuit of such
opportunities and our ability to complete the acquisition or development
of, and achieve the expected returns from, such opportunities; our
ability to maintain market share in established markets and ramp up
operations at our recently opened facilities; our expectations for the
continued availability and cost of capital; the impact of weather;
changes in accounting standards; the risk of failing to maintain the
integrity of our information technology infrastructure and safeguard our
business, employee and customer data; factors which may cause the
Company to curtail or suspend the share repurchase program; our ability
to generate sufficient future taxable income to realize our deferred tax
assets; with respect to the recently opened Hollywood Casino Jamul-San
Diego, particular risks associated with the repayment, default or
subordination of our loans to the
View source version on businesswire.com: http://www.businesswire.com/news/home/20170727005422/en/
Source:
Penn National Gaming, Inc.
William J. Fair, 610/373-2400
Chief
Financial Officer
or
JCIR
Joseph N. Jaffoni, Richard
Land, 212/835-8500
penn@jcir.com