Penn National Gaming Reports Record Third Quarter 2017 Revenue of $806.2 Million and Income from Operations of $143.7 Million, Resulting in Adjusted EBITDA of $107.3 Million, Which Exceeded Guidance
“The continued ramp of our newer properties and business segments has
been fundamental to our recent growth and confidence in further Adjusted
EBITDA expansion. All three of our operating segments generated adjusted
EBITDA margins increases over the prior year. Our
2017 Third Quarter Financial Highlights:
-
Net Revenues of
$806.2 million exceeded guidance by$15.3 million , or 2%, as all three of the company’s operating segments generated net revenue growth during the period -
Income from Continuing Operations grew by
$4.4 million , or 3%, to$143.7 million -
Adjusted EBITDA increased by
$10.5 million , or 5%, to$221.8 million -
Adjusted EBITDA after Master Lease payments was
$107.3 million - an increase of 6% or$5.7 million over the third quarter of 2016 -
Adjusted EBITDA for the trailing four quarters from the Company’s
operations not subject to the Master Lease was 14.7% of total
Adjusted EBITDA, or
$126.5 million , compared to 12.3%, or$104.7 million , in the prior year - Third quarter 2017 adjusted EBITDA contributions from the non-Master Lease assets grew approximately 21% compared to the prior year
-
Adjusted EBITDA after Master Lease payments was
-
The Company reduced traditional net debt by
$60.5 million compared toJune 30, 2017 , while also repurchasing approximately$19 million of common shares during the quarter
Continued Improvements to Industry-Leading Margins
Wilmott continued, “Our consistency in extracting operating efficiencies drove consolidated third quarter 2017 Adjusted EBITDA margins to 27.5%, an improvement over last year when excluding volatility related to the cash-settled stock-based awards. Notably, we remain committed to leveraging our scale, purchasing power and distribution capabilities to drive further margin improvements through ongoing refinements in procurement, marketing and labor. To that end, we have engaged third party consultants to help us validate and quantify a new set of strategic initiatives which we expect will improve our already industry-leading property level operating margins in the coming years. This effort encompasses both revenue and cost saving initiatives throughout the organization. A link to a presentation describing this initiative may be found here.
Cash Flow Generation and Capital Allocation
“Penn National’s solid third quarter operating cash flows allowed the
Company to reduce traditional net debt by over
“Pursuant to our current authorization, during the 2017 third quarter,
we repurchased over 847,000 shares for approximately
2017 Third Quarter Financial Statement Impacts
-
Corporate overhead expenses increased by
$4.4 million primarily due to cash-settled stock compensation charges from a higher Penn stock price of$1.3 million , higher acquisition and development costs of$1.4 million and higher bonus accrual expense of$1.3 million due to the Company’s better overall performance against its budget; -
Contingent purchase price obligation benefit of
$22.2 million driven by the recent resolution of the Rocket Speed earnout; -
Income from continuing operations includes
$18.0 million of goodwill impairment charges, the majority of which was triggered by our deferred tax valuation allowance reversal; -
Hollywood Casino Jamul-San Diego continues to drive quarterly
sequential operating improvements. Negotiations continue with the
Tribe and its other lenders to restructure their debt obligations,
including our Term Loan C facility. Based on the facts and
circumstances to date, we recorded an impairment charge of
$6.3 million associated with our loan; -
As a result of strong recent performance, future prospects, and
significant levels of historical earnings, the Company reversed the
majority of its valuation allowance on its deferred tax assets which
resulted in a non-cash tax benefit during the quarter of
$766.2 million .
Summary of Third Quarter Results
(in millions, except per share data) | Three Months Ended September 30, |
||||||||
2017 Actual | 2017 Guidance (3) | 2016 Actual | |||||||
Net revenues | $ | 806.2 | $ | 790.9 | $ | 765.6 | |||
Net income (1) | $ | 789.3 | $ | 18.6 | $ | 46.5 | |||
Adjusted EBITDA (2) | $ | 221.8 | $ | 220.4 | $ | 211.3 | |||
Less: Master Lease payments | 114.5 | 114.0 | 109.7 | ||||||
Adjusted EBITDA after Master Lease payments (2) | $ | 107.3 | $ | 106.4 | $ | 101.6 | |||
Diluted earnings per common share | $ | 8.43 | $ | 0.20 | $ | 0.51 |
1) Includes
2) 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
3) The guidance figures in the table above present the guidance Penn
National provided on
Review of Third Quarter 2017 Results vs. Guidance
Three Months | ||||||||
Ended | ||||||||
September 30, 2017 | ||||||||
Pre-tax | After-tax | |||||||
(in thousands) (unaudited) | ||||||||
Income, per guidance (1) | $ | 33,731 | $ | 18,552 | ||||
Adjusted EBITDA variances: | ||||||||
Favorable operating segment variance | 2,860 | 2,003 | ||||||
Cash-settled stock-based awards variance | (1,583 | ) | (1,006 | ) | ||||
Other variance | 70 | 44 | ||||||
1,347 | 1,041 | |||||||
Net contingent liability variance, mostly due to Rocket Speed | 21,151 | 13,406 | ||||||
Impairment of goodwill primarily due to deferred tax valuation allowance reversal | (18,026 | ) | (11,501 | ) | ||||
Impairment of Jamul note receivable | (6,291 | ) | (3,997 | ) | ||||
Interest expense variance | (1,537 | ) | (976 | ) | ||||
Other variance | (99 | ) | (69 | ) | ||||
Tax variance | 772,884 | |||||||
Income, as reported | $ | 30,276 | $ | 789,340 |
(1) The guidance figure in the table above presents the guidance Penn
National provided on
Financial Guidance for the 2017 Fourth Quarter and Full Year:
Reflecting the current operating and competitive environment, the table below sets forth fourth quarter and updates 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 ; -
Full year corporate overhead expenses of
$89.0 million , with$18.0 million to be incurred in the fourth quarter; -
Depreciation and amortization charges of
$268.6 million , with$62.9 million in the fourth quarter; -
Full year payments to GLPI of
$455.2 million (inclusive of$6.0 million attributable to the Tunica assets acquired in the 2017 second quarter), with$114.4 million in the fourth quarter; -
Maintenance capital expenditures of
$78.1 million , with$31.5 million in the fourth quarter; -
Cash interest on traditional debt of
$56.3 million , with$8.3 million in the fourth quarter; -
Interest expense of
$466.8 million , with$116.8 million in the fourth 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
September 30, 2017 is 1.83 and we expect to incur a rent escalation of$4.0 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
$5.8 million , with$1.3 million to be incurred in the fourth quarter; -
Estimated non-cash stock compensation expenses of
$7.8 million , with$2.0 million to be incurred in the fourth quarter; - LIBOR is based on the forward yield curve;
- A diluted share count of approximately 92.9 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 December 31, | Full Year Ending December 31, | ||||||||||||||||||||||
2017 |
2016 |
2017 Revised |
2017 Prior |
2016 |
|||||||||||||||||||
(in millions, except per share data) | |||||||||||||||||||||||
Net revenues | $ | 756.6 | $ | 742.9 | $ | 3,135.6 | $ | 3,120.3 | $ | 3,034.4 | |||||||||||||
Net income | $ | 16.2 | $ | 5.0 | $ | 827.7 | $ | 54.2 | $ | 109.3 | |||||||||||||
Income tax provision | 6.6 | 2.2 | (744.0 | ) | 34.6 | 11.3 | |||||||||||||||||
Other | - | (0.3 | ) | 25.6 | 25.4 | 1.7 | |||||||||||||||||
Income from unconsolidated affiliates | (5.1 | ) | (2.7 | ) | (19.4 | ) | (19.7 | ) | (14.3 | ) | |||||||||||||
Interest income | (0.2 | ) | (4.1 | ) | (3.4 | ) | (3.3 | ) | (24.2 | ) | |||||||||||||
Interest expense | 116.8 | 113.7 | 466.8 | 465.2 | 459.2 | ||||||||||||||||||
Income from operations | $ | 134.3 | $ | 113.8 | $ | 553.3 | $ | 556.4 | $ | 543.0 | |||||||||||||
Loss (gain) on disposal of assets | 0.2 | 1.0 | 0.3 | 0.3 | (2.5 | ) | |||||||||||||||||
Impairment losses | - | - | 30.0 | 5.6 | - | ||||||||||||||||||
Insurance recoveries | - | - | - | - | (0.7 | ) | |||||||||||||||||
Charge for stock compensation | 2.0 | 2.3 | 7.8 | 8.1 | 6.9 | ||||||||||||||||||
Contingent purchase price | 0.3 | 2.4 | (16.5 | ) | 4.7 | 1.3 | |||||||||||||||||
Depreciation and amortization | 62.9 | 71.1 | 268.6 | 266.7 | 271.2 | ||||||||||||||||||
Income from unconsolidated affiliates | 5.1 | 2.7 | 19.4 | 19.7 | 14.3 | ||||||||||||||||||
Non-operating items for Kansas JV | 1.3 | 2.6 | 5.8 | 5.9 | 10.3 | ||||||||||||||||||
Adjusted EBITDA | $ | 206.1 | $ | 195.9 | $ | 868.7 | $ | 867.4 | $ | 843.8 | |||||||||||||
Master Lease payments | (114.4 | ) | (110.4 | ) | (455.2 | ) | (454.8 | ) | (442.3 | ) | |||||||||||||
Adjusted EBITDA, after Master Lease payments | $ | 91.7 | $ | 85.5 | $ | 413.5 | $ | 412.6 | $ | 401.5 | |||||||||||||
Diluted earnings per common share | $ | 0.17 | $ | 0.05 | $ | 8.91 | $ | 0.59 | $ | 1.19 |
(1) The guidance figures in this column in the table above present the
guidance Penn National provided on
(2) The guidance table above includes prior period actual performance for the comparative period.
PENN NATIONAL GAMING, INC. AND SUBSIDIARIES |
||||||||||||||||||||||
Segment Information – Operations |
||||||||||||||||||||||
(in thousands) (unaudited) |
||||||||||||||||||||||
NET REVENUES | INCOME FROM OPERATIONS | ADJUSTED EBITDA | ||||||||||||||||||||
Three Months Ended September 30, | Three Months Ended September 30, | Three Months Ended September 30, | ||||||||||||||||||||
2017 | 2016 | 2017 | 2016 | 2017 | 2016 | |||||||||||||||||
Northeast (1) | $ | 401,818 | $ | 395,748 | $ | 106,575 | $ | 101,752 | $ | 127,644 | $ | 124,421 | ||||||||||
South/West (2) | 160,153 | 135,169 | 4,772 | 19,337 | 35,046 | 28,506 | ||||||||||||||||
Midwest (3) | 232,051 | 221,172 | 60,005 | 56,343 | 76,044 | 71,644 | ||||||||||||||||
Other (4) | 12,225 | 13,508 | (27,689 | ) | (38,132 | ) | (16,947 | ) | (13,311 | ) | ||||||||||||
Total | $ | 806,247 | $ | 765,597 | $ | 143,663 | $ | 139,300 | $ | 221,787 | $ | 211,260 | ||||||||||
NET REVENUES | INCOME FROM OPERATIONS | ADJUSTED EBITDA | ||||||||||||||||||||
Nine Months Ended September 30, | Nine Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||
2017 | 2016 | 2017 | 2016 | 2017 | 2016 | |||||||||||||||||
Northeast (1) | $ | 1,200,382 | $ | 1,190,469 | $ | 317,327 | $ | 306,368 | $ | 384,094 | $ | 374,165 | ||||||||||
South/West (2) | 453,123 | 411,245 | 51,952 | 72,944 | 106,436 | 99,703 | ||||||||||||||||
Midwest (3) | 685,236 | 662,506 | 180,818 | 172,013 | 229,640 | 219,900 | ||||||||||||||||
Other (4) | 40,193 | 27,250 | (131,158 | ) | (122,157 | ) | (57,535 | ) | (45,843 | ) | ||||||||||||
Total | $ | 2,378,934 | $ | 2,291,470 | $ | 418,939 | $ | 429,168 | $ | 662,635 | $ | 647,925 |
(1) The Northeast reportable segment consists of the following
properties:
(2) The South/West reportable segment consists of the following
properties:
(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,
(4) The Other category consists of the Company’s standalone racing
operations, namely
The Other category also includes the Company’s corporate overhead costs,
which were
Corporate Overhead Variance Reconciliation |
|||||||
Three Months Ended |
Nine Months Ended |
||||||
September 30, |
|||||||
(in millions) |
|||||||
Cash-settled, stock-based compensation | $ | 1.3 | $ | 13.8 | |||
Development and acquisition costs | 1.4 | 2.7 | |||||
Bonus expense | 1.3 | 2.9 | |||||
Other | 0.4 | 0.4 | |||||
Year over year variance | $ | 4.4 | $ | 19.8 |
Reconciliation of Comparable GAAP Financial Measures To |
Adjusted EBITDA |
PENN NATIONAL GAMING, INC. AND SUBSIDIARIES |
(in thousands) (unaudited) |
Three Months Ended | |||||||||||||||||||||
September 30, | June 30, | March 31, | December 31, | September 30, | |||||||||||||||||
2017 | 2017 | 2017 | 2016 | 2016 | |||||||||||||||||
Net income | $ | 789,340 | $ | 17,079 | $ | 5,104 | $ | 5,032 | $ | 46,535 | |||||||||||
Income tax provision (benefit) | (759,064 | ) | 6,225 | 2,198 | 2,242 | (9,473 | ) | ||||||||||||||
Other (1) | 236 | 173 | 25,183 | (299 | ) | (404 | ) | ||||||||||||||
Income from unconsolidated affiliates | (4,781 | ) | (5,021 | ) | (4,548 | ) | (2,675 | ) | (3,505 | ) | |||||||||||
Interest income | (304 | ) | (235 | ) | (2,646 | ) | (4,147 | ) | (8,202 | ) | |||||||||||
Interest expense | 118,236 | 116,768 | 114,996 | 113,695 | 114,349 | ||||||||||||||||
Income from operations | $ | 143,663 | $ | 134,989 | $ | 140,287 | $ | 113,848 | $ | 139,300 | |||||||||||
Loss (gain) on disposal of assets | 96 | 52 | (45 | ) | 969 | (2,781 | ) | ||||||||||||||
Charge for stock compensation | 1,853 | 1,801 | 2,173 | 2,317 | 1,517 | ||||||||||||||||
Contingent purchase price | (20,716 | ) | 1,362 | 2,560 | 2,388 | (30 | ) | ||||||||||||||
Impairment charges (2) | 24,317 | 5,635 | - | - | - | ||||||||||||||||
Depreciation and amortization | 66,483 | 68,969 | 70,236 | 71,109 | 67,903 | ||||||||||||||||
Insurance recoveries | - | - | - | - | (726 | ) | |||||||||||||||
Income from unconsolidated affiliates | 4,781 | 5,021 | 4,548 | 2,675 | 3,505 | ||||||||||||||||
Non-operating items for Kansas JV | 1,310 | 1,309 | 1,951 | 2,598 | 2,572 | ||||||||||||||||
Adjusted EBITDA | $ | 221,787 | $ | 219,138 | $ | 221,710 | $ | 195,904 | $ | 211,260 | |||||||||||
Master Lease payments | (114,489 | ) | (113,968 | ) | (112,450 | ) | (110,420 | ) | (109,710 | ) | |||||||||||
Adjusted EBITDA, after Master Lease payments | $ | 107,298 | $ | 105,170 | $ | 109,260 | $ | 85,484 | $ | 101,550 |
1)
2) The Company’s goodwill was tested for impairment during the third
quarter, before the next annual impairment test date
Nine Months Ended | ||||||||
September 30, | ||||||||
2017 | 2016 | |||||||
Net income | $ | 811,523 | $ | 104,278 | ||||
Income tax provision | (750,641 | ) | 9,065 | |||||
Other (1) | 25,592 | 1,978 | ||||||
Income from unconsolidated affiliates | (14,350 | ) | (11,662 | ) | ||||
Interest income | (3,185 | ) | (20,039 | ) | ||||
Interest expense | 350,000 | 345,548 | ||||||
Income from operations | $ | 418,939 | $ | 429,168 | ||||
Gain (loss) on disposal of assets | 103 | (3,440 | ) | |||||
Charge for stock compensation | 5,827 | 4,554 | ||||||
Contingent purchase price | (16,794 | ) | (1,111 | ) | ||||
Impairment charges | 29,952 | - | ||||||
Depreciation and amortization | 205,688 | 200,105 | ||||||
Insurance recoveries | - | (726 | ) | |||||
Income from unconsolidated affiliates | 14,350 | 11,662 | ||||||
Non-operating items for Kansas JV | 4,570 | 7,713 | ||||||
Adjusted EBITDA | $ | 662,635 | $ | 647,925 | ||||
Master Lease payments | (340,907 | ) | (331,867 | ) | ||||
Adjusted EBITDA, after Master Lease payments | $ | 321,728 | $ | 316,058 |
Reconciliation of Comparable GAAP Financial Measures To |
Adjusted EBITDA By Segment |
PENN NATIONAL GAMING, INC. AND SUBSIDIARIES |
(in thousands) (unaudited) |
Three Months Ended September 30, 2017 |
||||||||||||||||||||
Northeast | South/West | Midwest | Other | Total | ||||||||||||||||
Income (loss) from operations | $ | 106,575 | $ | 4,772 | $ | 60,005 | $ | (27,689 | ) | $ | 143,663 | |||||||||
Charge for stock compensation | - | - | - | 1,853 | 1,853 | |||||||||||||||
Impairment losses | - | 21,111 | - | 3,206 | 24,317 | |||||||||||||||
Depreciation and amortization | 19,661 | 9,224 | 9,560 | 28,038 | 66,483 | |||||||||||||||
Contingent purchase price | 1,480 | - | (44 | ) | (22,152 | ) | (20,716 | ) | ||||||||||||
(Gain) loss on disposal of assets | (72 | ) | (61 | ) | 56 | 173 | 96 | |||||||||||||
Income (loss) from unconsolidated affiliates | - | - | 5,157 | (376 | ) | 4,781 | ||||||||||||||
Non-operating items for Kansas JV (1) | - | - | 1,310 | - | 1,310 | |||||||||||||||
Adjusted EBITDA | $ | 127,644 | $ | 35,046 | $ | 76,044 | $ | (16,947 | ) | $ | 221,787 |
Three Months Ended September 30, 2016 |
|||||||||||||||||||
|
Northeast | South/West | Midwest | Other | Total | ||||||||||||||
Income (loss) from operations | $ | 101,752 | $ | 19,337 | $ | 56,343 | $ | (38,132 | ) | $ | 139,300 | ||||||||
Charge for stock compensation | - | - | - | 1,517 | 1,517 | ||||||||||||||
Depreciation and amortization | 22,975 | 9,097 | 9,593 | 26,238 | 67,903 | ||||||||||||||
Contingent purchase price | (293 | ) | - | - | 263 | (30 | ) | ||||||||||||
Loss (gain) on disposal of assets | (13 | ) | 72 | 64 | (2,904 | ) | (2,781 | ) | |||||||||||
Insurance recoveries | - | - | (726 | ) | - | (726 | ) | ||||||||||||
Income from unconsolidated affiliates | - | - | 3,798 | (293 | ) | 3,505 | |||||||||||||
Non-operating items for Kansas JV (1) | - | - | 2,572 | - | 2,572 | ||||||||||||||
Adjusted EBITDA | $ | 124,421 | $ | 28,506 | $ | 71,644 | $ | (13,311 | ) | $ | 211,260 |
Nine Months Ended September 30, 2017 |
||||||||||||||||||||
Northeast | South/West | Midwest | Other | Total | ||||||||||||||||
Income (loss) from operations | $ | 317,327 | $ | 51,952 | $ | 180,818 | $ | (131,158 | ) | $ | 418,939 | |||||||||
Charge for stock compensation | - | - | - | 5,827 | 5,827 | |||||||||||||||
Impairment losses | - | 26,746 | - | 3,206 | 29,952 | |||||||||||||||
Depreciation and amortization | 64,209 | 27,794 | 28,739 | 84,946 | 205,688 | |||||||||||||||
Contingent purchase price | 2,662 | - | (19 | ) | (19,437 | ) | (16,794 | ) | ||||||||||||
(Gain) loss on disposal of assets | (104 | ) | (56 | ) | 85 | 178 | 103 | |||||||||||||
Income (loss) from unconsolidated affiliates | - | - | 15,447 | (1,097 | ) | 14,350 | ||||||||||||||
Non-operating items for Kansas JV | - | - | 4,570 | - | 4,570 | |||||||||||||||
Adjusted EBITDA | $ | 384,094 | $ | 106,436 | $ | 229,640 | $ | (57,535 | ) | $ | 662,635 |
Nine Months Ended September 30, 2016 |
|||||||||||||||||||
Northeast | South/West | Midwest | Other | Total | |||||||||||||||
Income (loss) from operations | $ | 306,368 | $ | 72,944 | $ | 172,013 | $ | (122,157 | ) | $ | 429,168 | ||||||||
Charge for stock compensation | - | - | - | 4,554 | 4,554 | ||||||||||||||
Depreciation and amortization | 69,177 | 26,701 | 28,621 | 75,606 | 200,105 | ||||||||||||||
Contingent purchase price |
(1,374 | ) | - | - | 263 | (1,111 | ) | ||||||||||||
(Gain) loss on disposal of assets | (6 | ) | 58 | 18 | (3,510 | ) | (3,440 | ) | |||||||||||
Insurance recoveries | - | - | (726 | ) | - | (726 | ) | ||||||||||||
Income (loss) from unconsolidated affiliates | - | - | 12,261 | (599 | ) | 11,662 | |||||||||||||
Non-operating items for Kansas JV | - | - | 7,713 | - | 7,713 | ||||||||||||||
Adjusted EBITDA | $ | 374,165 | $ | 99,703 | $ | 219,900 | $ | (45,843 | ) | $ | 647,925 |
(1) Adjusted EBITDA excludes our share of the impact of non-operating
items (such as depreciation and amortization) from our joint venture in
PENN NATIONAL GAMING, INC. AND SUBSIDIARIES |
||||||||||||||||
Consolidated Statements of Operations |
||||||||||||||||
(in thousands, except per share data) (unaudited) |
||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Revenues | ||||||||||||||||
Gaming | $ | 691,028 | $ | 654,591 | $ | 2,033,263 | $ | 1,974,618 | ||||||||
Food, beverage, hotel and other | 153,833 | 147,554 | 453,722 | 429,792 | ||||||||||||
Management service and licensing fees | 3,550 | 3,130 | 8,809 | 8,567 | ||||||||||||
Reimbursable management costs | 6,679 | 5,965 | 19,824 | 8,820 | ||||||||||||
Revenues | 855,090 | 811,240 | 2,515,618 | 2,421,797 | ||||||||||||
Less promotional allowances | (48,843 | ) | (45,643 | ) | (136,684 | ) | (130,327 | ) | ||||||||
Net revenues | 806,247 | 765,597 | 2,378,934 | 2,291,470 | ||||||||||||
Operating expenses | ||||||||||||||||
Gaming | 350,847 | 336,669 | 1,028,056 | 1,011,187 | ||||||||||||
Food, beverage, hotel and other | 107,057 | 102,110 | 313,363 | 302,062 | ||||||||||||
General and administrative | 107,201 | 114,376 | 363,112 | 340,854 | ||||||||||||
Depreciation and amortization | 66,483 | 67,903 | 205,688 | 200,105 | ||||||||||||
Reimbursable management costs | 6,679 | 5,965 | 19,824 | 8,820 | ||||||||||||
Impairment charges | 24,317 | - | 29,952 | - | ||||||||||||
Insurance recoveries | - | (726 | ) | - | (726 | ) | ||||||||||
Total operating expenses | 662,584 | 626,297 | 1,959,995 | 1,862,302 | ||||||||||||
Income from operations | 143,663 | 139,300 | 418,939 | 429,168 | ||||||||||||
Other income (expenses) | ||||||||||||||||
Interest expense | (118,236 | ) | (114,349 | ) | (350,000 | ) | (345,548 | ) | ||||||||
Interest income | 304 | 8,202 | 3,185 | 20,039 | ||||||||||||
Income from unconsolidated affiliates | 4,781 | 3,505 | 14,350 | 11,662 | ||||||||||||
Loss on early extinguishment of debt | - | - | (23,390 | ) | - | |||||||||||
Other | (236 | ) | 404 | (2,202 | ) | (1,978 | ) | |||||||||
Total other expenses | (113,387 | ) | (102,238 | ) | (358,057 | ) | (315,825 | ) | ||||||||
Income from operations before income taxes | 30,276 | 37,062 | 60,882 | 113,343 | ||||||||||||
Income tax provision | (759,064 | ) | (9,473 | ) | (750,641 | ) | 9,065 | |||||||||
Net income | $ | 789,340 | $ | 46,535 | $ | 811,523 | $ | 104,278 | ||||||||
Earnings per common share: | ||||||||||||||||
Basic earnings per common share | $ | 8.68 | $ | 0.52 | $ | 8.93 | $ | 1.16 | ||||||||
Diluted earnings per common share | $ | 8.43 | $ | 0.51 | $ | 8.74 | $ | 1.14 | ||||||||
Weighted-average common shares outstanding: | ||||||||||||||||
Basic | 90,913 | 83,065 | 90,865 | 81,917 | ||||||||||||
Diluted | 93,589 | 91,422 | 92,903 | 91,330 |
PENN NATIONAL GAMING, INC. AND SUBSIDIARIES |
Supplemental information |
(in thousands) (unaudited) |
|
September 30, 2017 | June 30, 2017 | March 31, 2017 | December 31, 2016 | ||||||||
Cash and cash equivalents | $ | 264,907 | $ | 224,399 | $ | 259,488 | $ | 229,510 | ||||
Bank Debt | $ | 798,608 | $ | 812,002 | $ | 896,439 | $ | 962,703 | ||||
Notes | 399,229 | 399,208 | 399,227 | 296,895 | ||||||||
Other long term obligations (1) | 120,855 | 127,488 | 127,437 | 155,936 | ||||||||
Total Traditional Debt | $ | 1,318,692 | $ | 1,338,698 | $ | 1,423,103 | $ | 1,415,534 | ||||
Traditional net debt | $ | 1,053,785 | $ | 1,114,299 | $ | 1,163,615 | $ | 1,186,024 |
1) Other long-term obligations at
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 September 30, | Nine Months Ended September 30, | |||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||
Cash flow distributions | $ | 8,200 | $ | 8,150 | $ | 21,200 | $ | 21,500 |
The table below summarizes certain cash expenditures incurred by the Company during the periods presented in this earnings release.
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||
Master Lease rental payments | 114,489 | 109,710 | 340,907 | 331,867 | |||||||
Cash income tax (refunds)/payments | (15,793 | ) | 413 | (21,452 | ) | (11,720 | ) | ||||
Cash interest expense on traditional debt | 22,927 | 12,242 | 47,429 | 44,457 | |||||||
Maintenance capital expenditures | 18,344 | 18,888 | 46,631 | 51,431 |
Share Repurchase Program
During the 2017 third quarter, Penn National repurchased 847,263 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.
Management Presentation, 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; 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 relative
to margin improvement initiatives; our expectations regarding economic
and consumer conditions; and our expectations for the continued
availability and cost of capital. As a result, actual results may vary
materially from expectations. Although the Company believes that its
expectations are based on reasonable assumptions within the bounds of
its knowledge of its business, there can be no assurance that actual
results will not differ materially from our expectations. Meaningful
factors that could cause actual results to differ from expectations
include, but are not limited to, risks related to the following: the
assumptions included in our financial guidance; the ability of our
operating teams to drive revenue; the impact of significant competition
from other gaming and entertainment operations; our ability to obtain
timely regulatory approvals required to own, develop and/or operate our
facilities, or other delays, approvals or impediments to completing our
planned acquisitions or projects, construction factors, including
delays, and increased costs; the passage of state, federal or local
legislation (including referenda) that would expand, restrict, further
tax, prevent or negatively impact operations in or adjacent to the
jurisdictions in which we do or seek to do business (such as a smoking
ban at any of our facilities or the award of additional gaming licenses
proximate to our facilities); the effects of local and national
economic, credit, capital market, housing, and energy conditions on the
economy in general and on the gaming and lodging industries in
particular; the activities of our competitors and the rapid emergence of
new competitors (traditional, internet, social, sweepstakes based and
VGTs in bars and truck stops); increases in the effective rate of
taxation for any of our operations or at the corporate level; our
ability to identify attractive acquisition and development opportunities
(especially in new business lines) and to agree to terms with, and
maintain good relationships with partners/municipalities for such
transactions; the costs and risks involved in the pursuit of such
opportunities and our ability to complete the acquisition or development
of, and achieve the expected returns from, such opportunities; our
ability to maintain market share in established markets and to continue
to ramp up operations at our recently opened facilities; our
expectations for the continued availability and cost of capital; the
impact of weather; changes in accounting standards; the risk of failing
to maintain the integrity of our information technology infrastructure
and safeguard our business, employee and customer data; factors which
may cause the Company to curtail or suspend the share repurchase
program; with respect to 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/20171026005428/en/
Source:
Penn National Gaming, Inc.
William J. Fair, Chief Financial
Officer, 610/373-2400
or
JCIR
Joseph N. Jaffoni, Richard
Land
212/835-8500 or penn@jcir.com