Penn National Gaming Reports Fourth Quarter Revenues of $1.34 Billion, Net Loss of $92.9 Million, Adjusted EBITDA of $304.0 Million, and Adjusted EBITDAR of $399.4 Million
- Traditional Debt Reduced by Approximately
- Company Initiates 2020 Full Year Adjusted EBITDAR Guidance Range of
2019 Fourth Quarter Financial Highlights:
-
Revenues of
$1.34 billion , an increase of$185.9 million year over year; -
Net loss of
$92.9 million and net loss margin of 6.9%, principally driven by$173.1 million of impairment losses, as compared to net loss of$42.0 million and net loss margin of 3.6% in the prior year; -
Adjusted EBITDA of
$304.0 million , a decrease of$16.1 million year over year; -
Adjusted EBITDAR of
$399.4 million , an increase of$75.5 million year over year, which exceeded guidance for the fourth quarter; - Adjusted EBITDAR margin of 29.8%, marking an increase of 180 basis points year over year;
-
Cash payments to our REIT Landlords under Triple Net Leases of
$224.4 million , an increase of$34.0 million year over year; and, -
Traditional debt decreased by
$69.8 million during the quarter, principally due to repayments under our senior secured credit facilities. As ofDecember 31, 2019 , our traditional net debt ratio was 2.4x and net leverage on a lease-adjusted basis was 5.5x.
“Our quarterly Adjusted EBITDAR of
Sports Betting / Barstool Sports and iCasino
Mr. Snowden continued: “As previously announced, we entered into an agreement to acquire an approximately 36% equity interest in
“In regard to our
“Finally, on the sports betting front, we compared the performance of our properties where we launched new sportsbooks in 2019 to their performance in 2018,” Mr. Snowden continued. “The analysis showed that existing guests, who started engaging in sports betting, visited our properties more frequently and contributed to meaningfully higher revenues in 2019 than they did in 2018. At Hollywood Casino Lawrenceburg, for instance, we saw a significant increase in gross gaming revenues, particularly driven by the table games segment. Likewise, our food and beverage business benefited substantially from the introduction of sports betting at this property.”
Pennsylvania Category 4 Casino Projects
“We are proceeding on track with the development of the
Capital Management
“We continued to de-lever, reducing our traditional debt by approximately
Summary of Fourth Quarter Results
|
For the three months ended December 31, |
||||||||||
(in millions, except per share data, unaudited) |
2019 Actual |
|
2019 Guidance (1) |
|
2018 Actual |
||||||
Revenues |
$ |
1,341.2 |
|
|
$ |
1,350.7 |
|
|
$ |
1,155.3 |
|
Net income (loss) |
$ |
(92.9 |
) |
|
$ |
43.1 |
|
|
$ |
(42.0 |
) |
|
|
|
|
|
|
||||||
Adjusted EBITDA (2) |
$ |
304.0 |
|
|
$ |
297.6 |
|
|
$ |
320.1 |
|
Rent expense associated with triple net operating leases (3) |
95.4 |
|
|
96.9 |
|
|
3.8 |
|
|||
Adjusted EBITDAR (2) |
$ |
399.4 |
|
|
$ |
394.5 |
|
|
$ |
323.9 |
|
Cash payments to our REIT Landlords under Triple Net Leases (4) |
$ |
224.4 |
|
|
$ |
223.9 |
|
|
$ |
190.4 |
|
|
|
|
|
|
|
||||||
Diluted earnings (loss) per common share |
$ |
(0.80 |
) |
|
$ |
0.37 |
|
|
$ |
(0.37 |
) |
-
As provided by Penn National on
October 31, 2019 . - See the “Non-GAAP Financial Measures” section below for more information as well as the definitions of Adjusted EBITDA and Adjusted EBITDAR. Additionally, see below for reconciliations of these Non-GAAP financial measures to their GAAP equivalent financial measure.
- Solely comprised of rent expense associated with the operating lease components contained within the Penn Master Lease and the Pinnacle Master Lease (referred to collectively as our “Master Leases”), the Meadows Lease, the Margaritaville Lease, and the Greektown Lease, which we refer to as our “triple net operating leases.” The finance lease components contained within our Master Leases (primarily buildings) are recorded to interest expense (as opposed to rent expense) in accordance with Accounting Standards Codification Topic 842, “Leases.”
-
Solely comprised of cash payments made to
Gaming and Leisure Properties, Inc. (NASDAQ: GLPI) andVICI Properties Inc. (NYSE: VICI) (referred to collectively as our “REIT Landlords”) under the Master Leases, the Meadows Lease, the Margaritaville Lease, and the Greektown Lease (referred to collectively as our “Triple Net Leases”).
Review of 2019 Fourth Quarter Results vs. Guidance
|
For the three months ended
|
||||||
(in millions, unaudited) |
Pre-tax |
|
Post-tax |
||||
Income, per guidance (1) |
$ |
55.3 |
|
|
$ |
43.1 |
|
|
|
|
|
||||
Adjusted EBITDAR favorable variances: |
|
|
|
||||
Performance of properties |
4.9 |
|
|
3.8 |
|
||
Total Adjusted EBITDAR variances |
4.9 |
|
|
3.8 |
|
||
|
|
|
|
||||
Other favorable (unfavorable) variances: |
|
|
|
||||
Interest expense, net |
(2.3 |
) |
|
(1.8 |
) |
||
Rent expense associated with triple net operating leases |
1.6 |
|
|
1.3 |
|
||
Depreciation and amortization |
7.8 |
|
|
6.0 |
|
||
Impairment losses |
(173.1 |
) |
|
(133.3 |
) |
||
Cash-settled stock-based awards |
(7.2 |
) |
|
(5.6 |
) |
||
Pre-opening and acquisition costs |
(6.8 |
) |
|
(5.3 |
) |
||
Insurance recoveries |
1.5 |
|
|
1.1 |
|
||
Other |
15.4 |
|
|
11.9 |
|
||
Income taxes |
— |
|
|
(14.1 |
) |
||
Loss, as reported |
$ |
(102.9 |
) |
|
$ |
(92.9 |
) |
-
As provided by Penn National on
October 31, 2019 .
Financial Guidance for the 2020 Full Year
The Company’s full year 2020 Adjusted EBITDAR range reflects the anticipated opening of a competitor’s expansion in
-
Adjusted EBITDAR range of
$1.67 billion to $1.70 billion , which includes costs associated with the launch of our sports betting app; -
Corporate overhead expenses of
$94 million , which is net of allocations to our properties; -
Cash payments to our REIT Landlords under Triple Net Leases (which continue to be fully tax deductible) in the range of
$901 million to $905 million . The low end of the range reflects no escalated rent, while the high end assumes full escalated rent; -
Maintenance capital expenditures of
$199 million ; -
Project capital expenditures for Hollywood Casino York of
$57 million ; -
Project capital expenditures for Hollywood Casino Morgantown of
$70 million ; -
Cash interest on traditional debt of
$105 million ; -
Cash taxes of
$60 million ; and, - A diluted share count of approximately 118 million.
The Company assumes there will be no significant 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.
PENN NATIONAL GAMING, INC. AND SUBSIDIARIES |
|||||||||||||||
Segment Information |
|||||||||||||||
The Company aggregates its properties into four reportable segments: Northeast, South, West and Midwest. |
|||||||||||||||
|
For the three months ended
|
|
For the year ended
|
||||||||||||
(in millions, unaudited) |
2019 |
|
2018 |
|
2019 |
|
2018 |
||||||||
Revenues: |
|
|
|
|
|
|
|
||||||||
Northeast segment (1) |
$ |
621.3 |
|
|
$ |
526.1 |
|
|
$ |
2,399.9 |
|
|
$ |
1,891.5 |
|
South segment (2) |
268.2 |
|
|
208.0 |
|
|
1,118.9 |
|
|
394.4 |
|
||||
West segment (3) |
158.1 |
|
|
146.6 |
|
|
642.5 |
|
|
437.9 |
|
||||
Midwest segment (4) |
279.2 |
|
|
264.7 |
|
|
1,094.5 |
|
|
823.7 |
|
||||
Other (5) |
15.6 |
|
|
9.9 |
|
|
47.5 |
|
|
40.4 |
|
||||
Intersegment eliminations (6) |
(1.2 |
) |
|
— |
|
|
(1.9 |
) |
|
— |
|
||||
Total revenues |
$ |
1,341.2 |
|
|
$ |
1,155.3 |
|
|
$ |
5,301.4 |
|
|
$ |
3,587.9 |
|
|
|
|
|
|
|
|
|
||||||||
Adjusted EBITDAR: |
|
|
|
|
|
|
|
||||||||
Northeast segment (1) |
$ |
180.7 |
|
|
$ |
149.2 |
|
|
$ |
720.8 |
|
|
$ |
583.8 |
|
South segment (2) |
90.2 |
|
|
60.2 |
|
|
369.8 |
|
|
118.9 |
|
||||
West segment (3) |
47.8 |
|
|
42.4 |
|
|
198.8 |
|
|
114.3 |
|
||||
Midwest segment (4) |
102.3 |
|
|
93.2 |
|
|
403.6 |
|
|
294.3 |
|
||||
Other (5) |
(21.7 |
) |
|
(21.1 |
) |
|
(87.8 |
) |
|
(68.1 |
) |
||||
Intersegment eliminations (6) |
0.1 |
|
|
— |
|
|
— |
|
|
— |
|
||||
Total Adjusted EBITDAR (7) |
$ |
399.4 |
|
|
$ |
323.9 |
|
|
$ |
1,605.2 |
|
|
$ |
1,043.2 |
|
-
The Northeast segment consists of the following properties: Ameristar East Chicago,
Greektown Casino-Hotel (acquiredMay 23, 2019 ), Hollywood Casino Bangor,Hollywood Casino at Charles Town Races, Hollywood Casino Columbus, Hollywood Casino Lawrenceburg,Hollywood Casino at Penn National Race Course, Hollywood Casino Toledo, Hollywood Gaming atDayton Raceway , Hollywood Gaming at Mahoning Valley Race Course, Marquee by Penn, Meadows Racetrack and Casino, andPlainridge Park Casino . The financial information for the year endedDecember 31, 2018 also includes the Company’s Casino Rama management service contract, which terminated inJuly 2018 . -
The South segment consists of the following properties: 1st
Jackpot Casino , Ameristar Vicksburg,Boomtown Biloxi ,Boomtown Bossier City ,Boomtown New Orleans ,Hollywood Casino Gulf Coast , Hollywood Casino Tunica, L’Auberge Baton Rouge, L’Auberge Lake Charles, andMargaritaville Resort Casino (acquiredJanuary 1, 2019 ). Prior to its closure onJune 30, 2019 , Resorts Casino Tunica was also included in the South segment. -
The West segment consists of the following properties: Ameristar Black Hawk, Cactus Petes and Horseshu,
M Resort , Tropicana Las Vegas, andZia Park Casino . The financial information for the year endedDecember 31, 2018 also includes the Company’s investments in and the management contract of Hollywood Casino Jamul-San Diego, which terminated inMay 2018 . -
The Midwest segment consists of the following properties: Ameristar Council Bluffs; Argosy Casino Alton; Argosy Casino Riverside; Hollywood Casino Aurora; Hollywood Casino Joliet; our 50% investment in
Kansas Entertainment , which ownsHollywood Casino atKansas Speedway ;Hollywood Casino St. Louis; Prairie State Gaming; andRiver City Casino . -
The Other category consists of the Company’s stand-alone racing operations, namely
Sanford-Orlando Kennel Club , and the Company’s joint venture interests inSam Houston Race Park ,Valley Race Park , andFreehold Raceway . The Other category also includes Penn Interactive, which operates our social gaming, internally-branded retail sportsbooks, and iGaming; our management contract for Retama Park Racetrack; and our live and televised poker tournament series that operates under the trade name, Heartland Poker Tour (“HPT”). Expenses incurred for corporate and shared services activities that are directly attributable to a property or are otherwise incurred to support a property are allocated to each property. The Other category also includes corporate overhead costs, which consists of certain expenses, such as: payroll, professional fees, travel expenses and other general and administrative expenses that do not directly relate to or have otherwise been allocated to a property. For the three months and year endedDecember 31, 2019 , corporate overhead costs were$25.1 million and$99.3 million , respectively, as compared to$23.8 million and$80.1 million , respectively, for the three months and year endedDecember 31, 2018 . - Represents the elimination of intersegment operations, associated with Penn Interactive and HPT.
-
As noted within the “Non-GAAP Financial Measures” section below, Adjusted EBITDAR is presented on a consolidated basis outside the financial statements solely as a valuation metric or for reconciliation purposes.
Supplemental Segment Information - Combined for
the Acquisitions of Pinnacle,
Although Penn National did not own Pinnacle,
The following financial information for the three months and year ended
|
Revenues |
||||||||||||||||||||||
|
Penn National,
|
|
Pinnacle,
|
|
Combined |
|
Penn National,
|
|
Pinnacle,
|
|
Combined |
||||||||||||
(in millions, unaudited) |
For the three months ended December 31, 2018 |
|
For the year ended December 31, 2018 |
||||||||||||||||||||
Northeast segment (2) |
$ |
526.1 |
|
|
$ |
101.0 |
|
|
$ |
627.1 |
|
|
$ |
1,891.5 |
|
|
$ |
708.9 |
|
|
$ |
2,600.4 |
|
South segment |
208.0 |
|
|
61.1 |
|
|
269.1 |
|
|
394.4 |
|
|
746.9 |
|
|
1,141.3 |
|
||||||
West segment |
146.6 |
|
|
9.2 |
|
|
155.8 |
|
|
437.9 |
|
|
198.8 |
|
|
636.7 |
|
||||||
Midwest segment |
264.7 |
|
|
14.5 |
|
|
279.2 |
|
|
823.7 |
|
|
304.9 |
|
|
1,128.6 |
|
||||||
Other |
9.9 |
|
|
0.2 |
|
|
10.1 |
|
|
40.4 |
|
|
4.5 |
|
|
44.9 |
|
||||||
Total |
$ |
1,155.3 |
|
|
$ |
186.0 |
|
|
$ |
1,341.3 |
|
|
$ |
3,587.9 |
|
|
$ |
1,964.0 |
|
|
$ |
5,551.9 |
|
|
Adjusted EBITDAR |
||||||||||||||||||||||
|
Penn National,
|
|
Pinnacle,
|
|
Combined |
|
Penn National,
|
|
Pinnacle,
|
|
Combined |
||||||||||||
(in millions, unaudited) |
For the three months ended December 31, 2018 |
|
For the year ended December 31, 2018 |
||||||||||||||||||||
Northeast segment (3) |
$ |
149.2 |
|
|
$ |
28.0 |
|
|
$ |
177.2 |
|
|
$ |
583.8 |
|
|
$ |
167.2 |
|
|
$ |
751.0 |
|
South segment |
60.2 |
|
|
16.4 |
|
|
76.6 |
|
|
118.9 |
|
|
229.4 |
|
|
348.3 |
|
||||||
West segment |
42.4 |
|
|
3.4 |
|
|
45.8 |
|
|
114.3 |
|
|
77.3 |
|
|
191.6 |
|
||||||
Midwest segment |
93.2 |
|
|
5.1 |
|
|
98.3 |
|
|
294.3 |
|
|
113.7 |
|
|
408.0 |
|
||||||
Other |
(21.1 |
) |
|
(3.3 |
) |
|
(24.4 |
) |
|
(68.1 |
) |
|
(46.1 |
) |
|
(114.2 |
) |
||||||
Total (4) |
$ |
323.9 |
|
|
$ |
49.6 |
|
|
$ |
373.5 |
|
|
$ |
1,043.2 |
|
|
$ |
541.5 |
|
|
$ |
1,584.7 |
|
-
The operating results of Pinnacle were derived from historical financial information of Pinnacle, adjusted to exclude the operating results of the four divested properties, and the operating results of
Margaritaville and Greektown were derived from historical financial information. In addition, the operating results were adjusted to conform to Penn National’s methodology of allocating certain corporate expenses to properties. -
Revenues specific to Greektown were
$82.8 million and$326.8 million for the three months and year endedDecember 31, 2018 , respectively. -
Adjusted EBITDAR specific to Greektown were
$24.7 million and$93.0 million for the three months and year endedDecember 31, 2018 , respectively. - As noted within the “Non-GAAP Financial Measures” section below, Adjusted EBITDAR on a consolidated basis and Combined Adjusted EBITDAR are presented outside the financial statements solely as valuation metrics or for reconciliation purposes.
PENN NATIONAL GAMING, INC. AND SUBSIDIARIES Reconciliation of Comparable GAAP Financial Measure to Adjusted EBITDA, Adjusted EBITDAR, and Adjusted EBITDAR Margin |
|||||||||||||||
|
For the three months ended
|
|
For the year ended
|
||||||||||||
(in millions, unaudited) |
2019 |
|
2018 |
|
2019 |
|
2018 |
||||||||
Net income (loss) |
$ |
(92.9 |
) |
|
$ |
(42.0 |
) |
|
$ |
43.1 |
|
|
$ |
93.5 |
|
Income tax expense (benefit) |
(10.0 |
) |
|
(43.6 |
) |
|
43.0 |
|
|
(3.6 |
) |
||||
Loss on early extinguishment of debt |
— |
|
|
17.2 |
|
|
— |
|
|
21.0 |
|
||||
Income from unconsolidated affiliates |
(6.7 |
) |
|
(5.5 |
) |
|
(28.4 |
) |
|
(22.3 |
) |
||||
Interest expense, net |
133.7 |
|
|
192.7 |
|
|
534.2 |
|
|
538.4 |
|
||||
Other expense (income) |
(12.8 |
) |
|
5.6 |
|
|
(20.0 |
) |
|
7.1 |
|
||||
Operating income |
11.3 |
|
|
124.4 |
|
|
571.9 |
|
|
634.1 |
|
||||
Stock-based compensation |
4.5 |
|
|
3.2 |
|
|
14.9 |
|
|
12.0 |
|
||||
Cash-settled stock-based awards variance |
7.2 |
|
|
(18.3 |
) |
|
0.8 |
|
|
(19.6 |
) |
||||
Loss (gain) on disposal of assets |
(2.8 |
) |
|
(0.1 |
) |
|
5.5 |
|
|
3.2 |
|
||||
Contingent purchase price |
— |
|
|
(1.3 |
) |
|
7.0 |
|
|
0.5 |
|
||||
Pre-opening and acquisition costs |
6.8 |
|
|
77.9 |
|
|
22.3 |
|
|
95.0 |
|
||||
Depreciation and amortization |
97.8 |
|
|
93.2 |
|
|
414.2 |
|
|
269.0 |
|
||||
Impairment losses |
173.1 |
|
|
34.3 |
|
|
173.1 |
|
|
34.9 |
|
||||
Recoveries on loan loss and unfunded loan commitments |
— |
|
|
— |
|
|
— |
|
|
(17.0 |
) |
||||
Insurance recoveries, net of deductible charges |
(1.5 |
) |
|
— |
|
|
(3.0 |
) |
|
(0.1 |
) |
||||
Income from unconsolidated affiliates |
6.7 |
|
|
5.5 |
|
|
28.4 |
|
|
22.3 |
|
||||
Non-operating items for Kansas JV |
0.9 |
|
|
1.3 |
|
|
3.7 |
|
|
5.1 |
|
||||
Adjusted EBITDA |
304.0 |
|
|
320.1 |
|
|
1,238.8 |
|
|
1,039.4 |
|
||||
Rent expense associated with triple net operating leases |
95.4 |
|
|
3.8 |
|
|
366.4 |
|
|
3.8 |
|
||||
Adjusted EBITDAR |
$ |
399.4 |
|
|
$ |
323.9 |
|
|
$ |
1,605.2 |
|
|
$ |
1,043.2 |
|
Net income (loss) margin |
(6.9 |
)% |
|
(3.6 |
)% |
|
0.8 |
% |
|
2.6 |
% |
||||
Adjusted EBITDAR margin |
29.8 |
% |
|
28.0 |
% |
|
30.3 |
% |
|
29.1 |
% |
PENN NATIONAL GAMING, INC. AND SUBSIDIARIES Reconciliation of Comparable GAAP Financial Measure to Combined Adjusted EBITDAR |
|||||||
(in millions, unaudited) |
For the three
|
|
For the year
|
||||
Net income (loss) |
$ |
(42.0 |
) |
|
$ |
93.5 |
|
Income tax benefit |
(43.6 |
) |
|
(3.6 |
) |
||
Loss on early extinguishment of debt |
17.2 |
|
|
21.0 |
|
||
Income from unconsolidated affiliates |
(5.5 |
) |
|
(22.3 |
) |
||
Interest expense, net |
192.7 |
|
|
538.4 |
|
||
Other expense |
5.6 |
|
|
7.1 |
|
||
Operating income |
124.4 |
|
|
634.1 |
|
||
Pinnacle, Margaritaville, and Greektown Adjusted EBITDAR, pre-acquisition |
49.6 |
|
|
541.5 |
|
||
Stock-based compensation |
3.2 |
|
|
12.0 |
|
||
Cash-settled stock-based awards variance |
(18.3 |
) |
|
(19.6 |
) |
||
Loss (gain) on disposal of assets |
(0.1 |
) |
|
3.2 |
|
||
Contingent purchase price |
(1.3 |
) |
|
0.5 |
|
||
Pre-opening and acquisition costs |
77.9 |
|
|
95.0 |
|
||
Depreciation and amortization |
93.2 |
|
|
269.0 |
|
||
Impairment losses |
34.3 |
|
|
34.9 |
|
||
Recoveries on loan loss and unfunded loan commitments |
— |
|
|
(17.0 |
) |
||
Insurance recoveries, net of deductible charges |
— |
|
|
(0.1 |
) |
||
Income from unconsolidated affiliates |
5.5 |
|
|
22.3 |
|
||
Non-operating items for Kansas JV |
1.3 |
|
|
5.1 |
|
||
Combined Adjusted EBITDA |
369.7 |
|
|
1,580.9 |
|
||
Rent expense associated with triple net operating leases |
3.8 |
|
|
3.8 |
|
||
Combined Adjusted EBITDAR (1) |
$ |
373.5 |
|
|
$ |
1,584.7 |
|
- See the “Non-GAAP Financial Measures” section below for more information, including the definition of Combined Adjusted EBITDAR.
PENN NATIONAL GAMING, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Operations |
|||||||||||||||
|
For the three months ended
|
|
For the year ended
|
||||||||||||
(in millions, except per share data, unaudited) |
2019 |
|
2018 |
|
2019 |
|
2018 |
||||||||
Revenues |
|
|
|
|
|
|
|
||||||||
Gaming |
$ |
1,083.5 |
|
|
$ |
929.0 |
|
|
$ |
4,268.7 |
|
|
$ |
2,894.9 |
|
Food, beverage, hotel, and other |
257.7 |
|
|
226.3 |
|
|
1,032.7 |
|
|
629.7 |
|
||||
Management service and license fees |
— |
|
|
— |
|
|
— |
|
|
6.0 |
|
||||
Reimbursable management costs |
— |
|
|
— |
|
|
— |
|
|
57.3 |
|
||||
Total revenues |
1,341.2 |
|
|
1,155.3 |
|
|
5,301.4 |
|
|
3,587.9 |
|
||||
Operating expenses |
|
|
|
|
|
|
|
||||||||
Gaming |
582.7 |
|
|
508.2 |
|
|
2,281.8 |
|
|
1,551.4 |
|
||||
Food, beverage, hotel and other |
172.2 |
|
|
155.2 |
|
|
672.7 |
|
|
439.3 |
|
||||
General and administrative |
304.1 |
|
|
240.0 |
|
|
1,187.7 |
|
|
618.9 |
|
||||
Reimbursable management costs |
— |
|
|
— |
|
|
— |
|
|
57.3 |
|
||||
Depreciation and amortization |
97.8 |
|
|
93.2 |
|
|
414.2 |
|
|
269.0 |
|
||||
Impairment losses |
173.1 |
|
|
34.3 |
|
|
173.1 |
|
|
34.9 |
|
||||
Recoveries on loan loss and unfunded loan commitments |
— |
|
|
— |
|
|
— |
|
|
(17.0 |
) |
||||
Total operating expenses |
1,329.9 |
|
|
1,030.9 |
|
|
4,729.5 |
|
|
2,953.8 |
|
||||
Operating income |
11.3 |
|
|
124.4 |
|
|
571.9 |
|
|
634.1 |
|
||||
Other income (expenses) |
|
|
|
|
|
|
|
||||||||
Interest expense, net |
(133.7 |
) |
|
(192.7 |
) |
|
(534.2 |
) |
|
(538.4 |
) |
||||
Income from unconsolidated affiliates |
6.7 |
|
|
5.5 |
|
|
28.4 |
|
|
22.3 |
|
||||
Loss on early extinguishment of debt |
— |
|
|
(17.2 |
) |
|
— |
|
|
(21.0 |
) |
||||
Other |
12.8 |
|
|
(5.6 |
) |
|
20.0 |
|
|
(7.1 |
) |
||||
Total other expenses |
(114.2 |
) |
|
(210.0 |
) |
|
(485.8 |
) |
|
(544.2 |
) |
||||
Income (loss) before income taxes |
(102.9 |
) |
|
(85.6 |
) |
|
86.1 |
|
|
89.9 |
|
||||
Income tax benefit (expense) |
10.0 |
|
|
43.6 |
|
|
(43.0 |
) |
|
3.6 |
|
||||
Net income (loss) |
(92.9 |
) |
|
(42.0 |
) |
|
43.1 |
|
|
93.5 |
|
||||
Less: Net loss attributable to non-controlling interest |
0.4 |
|
|
— |
|
|
0.8 |
|
|
— |
|
||||
Net income (loss) attributable to Penn National |
$ |
(92.5 |
) |
|
$ |
(42.0 |
) |
|
$ |
43.9 |
|
|
$ |
93.5 |
|
|
|
|
|
|
|
|
|
||||||||
Earnings (loss) per common share: |
|
|
|
|
|
|
|
||||||||
Basic earnings (loss) per common share |
$ |
(0.80 |
) |
|
$ |
(0.37 |
) |
|
$ |
0.38 |
|
|
$ |
0.96 |
|
Diluted earnings (loss) per common share |
$ |
(0.80 |
) |
|
$ |
(0.37 |
) |
|
$ |
0.37 |
|
|
$ |
0.93 |
|
|
|
|
|
|
|
|
|
||||||||
Weighted-average basic shares outstanding |
115.2 |
|
|
113.6 |
|
|
115.7 |
|
|
97.1 |
|
||||
Weighted-average diluted shares outstanding |
115.2 |
|
|
113.6 |
|
|
117.8 |
|
|
100.3 |
|
Selected Financial Information
Balance Sheet Data
|
December 31, |
||||||
(in millions, unaudited) |
2019 |
|
2018 |
||||
Cash and cash equivalents (1) |
$ |
437.4 |
|
|
$ |
479.6 |
|
|
|
|
|
||||
Bank debt (1) |
$ |
1,896.5 |
|
|
$ |
1,907.9 |
|
Notes |
399.4 |
|
|
399.3 |
|
||
Other long-term obligations (2) |
89.2 |
|
|
105.0 |
|
||
Total traditional debt (3) |
$ |
2,385.1 |
|
|
$ |
2,412.2 |
|
|
|
|
|
||||
Traditional net debt |
$ |
1,947.7 |
|
|
$ |
1,932.6 |
|
-
The
December 31, 2018 balance includes a$100.0 million draw on our revolving credit facility in order to close the acquisition ofMargaritaville Resort Casino onJanuary 1, 2019 . -
Other long-term obligations as of
December 31, 2019 primarily include$76.4 million for the present value of the relocation fees due for both Hollywood Gaming atDayton Raceway and Hollywood Gaming at Mahoning Valley Race Course, and$12.6 million related to our repayment obligation on a hotel and event center located near Hollywood Casino Lawrenceburg. -
Amounts are inclusive of debt discount and debt issuance costs of
$33.9 million and$41.2 million , respectively.
Kansas Entertainment Distributions
The Company’s definitions of Adjusted EBITDA and Adjusted EBITDAR add 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,
|
For the three months ended
|
|
For the year ended
|
||||||||||||
(in millions, unaudited) |
2019 |
|
2018 |
|
2019 |
|
2018 |
||||||||
Cash flow distributions |
$ |
7.0 |
|
|
$ |
5.4 |
|
|
$ |
29.0 |
|
|
$ |
27.0 |
|
Cash Flow Data
The table below summarizes certain cash expenditures incurred by the Company.
|
For the three months
|
|
For the year
|
||||||||||||
(in millions, unaudited) |
2019 |
|
2018 |
|
2019 |
|
2018 |
||||||||
Cash payments to our REIT Landlords under Triple Net Leases (1) |
$ |
224.4 |
|
|
$ |
190.4 |
|
|
$ |
869.8 |
|
|
$ |
537.4 |
|
Cash payments related to income taxes, net |
$ |
0.9 |
|
|
$ |
0.6 |
|
|
$ |
21.8 |
|
|
$ |
24.4 |
|
Cash paid for interest on traditional debt |
$ |
20.2 |
|
|
$ |
15.4 |
|
|
$ |
120.7 |
|
|
$ |
66.3 |
|
Maintenance capital expenditures |
$ |
47.0 |
|
|
$ |
34.9 |
|
|
$ |
165.5 |
|
|
$ |
89.7 |
|
-
The three months and year ended
December 31, 2019 include the following lease payments:$83.0 million and$328.6 million , respectively, relating to the Pinnacle Master Lease;$6.7 million and$26.4 million , respectively, relating to the Meadows Lease;$5.8 million and$23.1 million , respectively, relating to the Margaritaville Lease; and$13.9 million and$33.8 million , respectively, relating to the Greektown Lease. Lease payments related to the Penn Master Lease are included in all periods presented.
Non-GAAP Financial Measures
The Non-GAAP Financial Measures used in this press release include Adjusted EBITDA, Adjusted EBITDAR, Adjusted EBITDAR margin, Combined Revenues, and Combined Adjusted EBITDAR. These non-GAAP financial measures should not be considered a substitute for, nor superior to, financial results and measures determined or calculated in accordance with GAAP.
We define Adjusted EBITDA as earnings before interest expense, net; income taxes; depreciation and amortization; stock-based compensation; debt extinguishment and financing charges; impairment losses; insurance recoveries and deductible charges; changes in the estimated fair value of our contingent purchase price obligations; gain or loss on disposal of assets; the difference between budget and actual expense for cash-settled stock-based awards; pre-opening and acquisition costs; and other income or expenses. Adjusted EBITDA is inclusive of income or loss from unconsolidated affiliates, with our share of non-operating items (such as depreciation and amortization) added back for our joint venture in
Adjusted EBITDA has economic substance because it is used by management as a performance measure to analyze the performance of our business, and is especially relevant in evaluating large, long-lived casino-hotel projects because it provides a perspective on the current effects of operating decisions separated from the substantial non-operational depreciation charges and financing costs of such projects. We present Adjusted EBITDA because it is used by some investors and creditors as an indicator of the strength and performance of ongoing business operations, including our ability to service debt, and to fund capital expenditures, acquisitions and operations. These calculations are commonly used as a basis for investors, analysts and credit rating agencies to evaluate and compare operating performance and value companies within our industry. In order to view the operations of their casinos on a more stand-alone basis, gaming companies, including us, have historically excluded from their Adjusted EBITDA calculations certain corporate expenses that do not relate to the management of specific casino properties. However, Adjusted EBITDA is not a measure of performance or liquidity calculated in accordance with GAAP. Adjusted EBITDA information is presented as a supplemental disclosure, as management believes that it is a commonly-used measure of performance in the gaming industry and that it is considered by many to be a key indicator of the Company’s operating results.
We define Adjusted EBITDAR as Adjusted EBITDA (as defined above) plus rent expense associated with triple net operating leases (which is a normal, recurring cash operating expense necessary to operate our business). Adjusted EBITDAR is presented on a consolidated basis outside the financial statements solely as a valuation metric. Management believes that Adjusted EBITDAR is an additional metric traditionally used by analysts in valuing gaming companies subject to triple net leases since it eliminates the effects of variability in leasing methods and capital structures. This metric is included as supplemental disclosure because (i) we believe Adjusted EBITDAR is traditionally used by gaming operator analysts and investors to determine the equity value of gaming operators and (ii) Adjusted EBITDAR is one of the metrics used by other financial analysts in valuing our business. We believe Adjusted EBITDAR is useful for equity valuation purposes because (i) its calculation isolates the effects of financing real estate; and (ii) using a multiple of Adjusted EBITDAR to calculate enterprise value allows for an adjustment to the balance sheet to recognize estimated liabilities arising from operating leases related to real estate. However, Adjusted EBITDAR when presented on a consolidated basis is not a financial measure in accordance with GAAP, and should not be viewed as a measure of overall operating performance or considered in isolation or as an alternative to net income because it excludes the rent expense associated with our triple net operating leases and is provided for the limited purposes referenced herein. Adjusted EBITDAR margin is defined as Adjusted EBITDAR on a consolidated basis (as defined above) divided by revenues on a consolidated basis. Adjusted EBITDAR margin is presented on a consolidated basis outside the financial statements solely as a valuation metric.
We define Combined Revenues as revenues of Penn National, Pinnacle,
We define Combined Adjusted EBITDAR as Adjusted EBITDAR on a consolidated basis of Penn National, Pinnacle,
Each of these non-GAAP financial measures is not calculated in the same manner by all companies and, accordingly, may not be an appropriate measure of comparing performance among different companies. See the above presented “supplemental information” tables for reconciliations of these measures to the GAAP equivalent financial measures.
Conference Call, Webcast and Replay Details
Penn National is hosting a conference call and simultaneous webcast at
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,” “goal,” “seeks,” “may,” “will,” “should,” or “anticipates” or the negative or other variations of these or similar words, or by discussions of future events, strategies or risks and uncertainties. Specifically, forward-looking statements may include, among others, statements concerning: our expectations of future results of operations and financial condition, including our ability to reduce our debt; expectations for our properties or our development projects, including the expected openings of our Pennsylvania Category 4 Casino 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, potential divestitures and development opportunities, as well as the integration of and synergies related to any companies we have acquired or may acquire; our ability to maintain regulatory approvals for our existing businesses and to receive regulatory approvals for our new businesses; our expectations with regard to the impact of competition in online sports betting, iGaming and retail sportsbooks as well as the potential impact of this business line on our existing businesses; the potential benefits of the investment in Barstool Sports, including the benefits for the Company’s online and retail sports betting and iCasino products, the expected financial returns from the transaction with Barstool Sports; the performance of our partners in online sports betting, iGaming and retail/mobile sportsbooks, including the risks associated with any new business, the actions of regulatory, legislative, executive or judicial decisions at the federal, state or local level with regard to online sports betting, iGaming and retail sportsbooks and the impact of any such actions; and our expectations regarding economic and consumer conditions. As a result, actual results may vary materially from expectations.
Although we believe 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: the assumptions included in our financial guidance; the ability of our operating teams to drive revenue and 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 properties, 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 properties (as recently occurred with the new
View source version on businesswire.com: https://www.businesswire.com/news/home/20200206005208/en/
Source:
William J. Fair
Chief Financial Officer
610-373-2400
Joseph N. Jaffoni, Richard Land
JCIR
212-835-8500 or penn@jcir.com