– Reduced Traditional Debt by Nearly $100 Million in the Third Quarter –
WYOMISSING, Pa.–(BUSINESS WIRE)–Penn National Gaming, Inc. (NASDAQ: PENN) (“Penn National” or the “Company”) today reported financial results for the three and nine months ended September 30, 2019, initiated 2019 fourth quarter guidance, and updated full year 2019 guidance.
2019 Third Quarter Financial Highlights:
- Revenues of $1.35 billion, an increase of $564.8 million year over year;
- Net income of $43.7 million and net income margin of 3.2%, as compared to $36.1 million and 4.6%, respectively, in the prior year;
- Adjusted EBITDA (1) of $311.6 million, an increase of $81.9 million year over year;
- Adjusted EBITDAR (1) of $407.9 million, an increase of $178.2 million year over year;
- Adjusted EBITDAR margin of 30.1%, marking an increase of 100 basis points year over year;
- Cash payments to our REIT Landlords under Triple Net Leases (1) of $222.6 million, an increase of $107.4 million year over year; and
- Traditional debt decreased by $97.2 million during the quarter, principally due to repayments under our senior secured credit facilities. As of September 30, 2019, our traditional net debt ratio was 2.5x and net leverage on a lease-adjusted basis was 5.6x.
(1) Beginning in the third quarter of 2019, management revised certain of its non-GAAP financial measures. We continue to present Adjusted EBITDAR on a consolidated basis as a valuation metric and now present Adjusted EBITDA on a consolidated basis as a performance measure. Furthermore, the Company no longer presents a financial metric showing Adjusted EBITDAR less the cash payments made to our REIT Landlords under our Triple Net Leases (as defined later in this release); however, the Company continues to believe that providing investors with information regarding cash lease payments helps them to better understand the Company’s business and financial results and will separately report this amount on a prospective basis. Refer to the “Non-GAAP Financial Measures” section below for more information.
Operating Update
Timothy J. Wilmott, Chief Executive Officer, commented: “Our results for the quarter reflect the consistency of the consumer that we have seen over the last year. Our quarterly Adjusted EBITDAR of $407.9 million was slightly off our guidance of $408.8 million due to a greater-than-expected impact from a new competitor in the Northeast, however, we did manage to offset much of that impact by strong performances from our West and South segments. We continue to make refinements to our marketing reinvestment strategy in lower worth segments of our database, which has driven profitability but impacted revenue. We remain confident in our ability to prudently deploy our promotional dollars and believe there is more opportunity in our targeted marketing effort. As a result, we have reaffirmed fourth-quarter Adjusted EBITDAR guidance to be unchanged from our implied fourth quarter guidance but have lowered our revenue guidance for the period. Our fourth quarter guidance highlights our focus on generating profitable revenues and our ability to grow industry-leading gaming tax Adjusted EBITDAR margins.”
iGaming and Sports Betting
“In the third quarter, we continued to expand our sports betting operations with the opening of a retail sports book at Ameristar Casino Council Bluffs in Iowa and two retail sports books in Indiana, one at Hollywood Casino Lawrenceburg and one at Ameristar Casino East Chicago,” said Mr. Wilmott. “Earlier this month we also opened our retail sports book at the Meadows Casino near Pittsburgh, Pennsylvania. One of our skin partners has also recently launched online sports betting operations in West Virginia and Indiana and should be live in Pennsylvania soon. Separately, we were very excited to launch our real money iGaming platform in Pennsylvania. We are very encouraged by early market share results from these operations and are excited about the new growth opportunity. The combination of our greater than 5 million active mychoice player database and our industry leading regional casino footprint positions us well to capitalize on the rapidly expanding sports betting and iGaming markets in a way that maximizes shareholder value.”
Pinnacle Synergies
“We remain on pace to achieve our two-year, $120 million cost synergy target by the end of 2020,” continued Mr. Wilmott. “At the beginning of the quarter, we also completed the relaunch of our mychoice loyalty rewards program throughout the Penn network. We believe we are now well-positioned to achieve incremental Adjusted EBITDAR associated with revenue synergies related to the Pinnacle acquisition in the range of $15-$20 million. Most of these revenue synergies should be realized in 2020 and 2021.”
Pennsylvania Category 4 Casino Projects
“Our development projects in Pennsylvania, the $120 million Hollywood Casino York and the $111 million Hollywood Casino Morgantown (both inclusive of the gaming license fees), remain on track,” said Mr. Wilmott. “Construction of the Morgantown project is well underway, and we expect to commence construction activities at the York site soon. We anticipate approval from the Pennsylvania Gaming Control Board for our York project in November. Both facilities are scheduled to open in the fourth quarter of 2020.”
Continued Debt Reduction Highlights Free Cash Flow Generation
“We reduced traditional debt by nearly $100 million in the third quarter and ended the period with net leverage on a lease-adjusted basis of 5.6x,” said Mr. Wilmott. “The third quarter repayments demonstrate our ability to generate increasing free cash flow from our expanded scale as well as our commitment to de-levering our balance sheet following the consummation of previous accretive acquisitions. We remain focused on debt reduction and expect to achieve a lease-adjusted net leverage level of 5.0x by the end of 2020.”
Summary of Third Quarter Results
|
|
For the three months ended September 30, |
|||||||||||
|
(in millions, except per share data, unaudited) |
2019 Actual |
|
2019 Guidance (1) |
|
2018 Actual |
|||||||
|
Revenues |
$ |
1,354.5 |
|
|
$ |
1,370.5 |
|
|
$ |
789.7 |
|
|
|
Net income |
$ |
43.7 |
|
|
$ |
49.3 |
|
|
$ |
36.1 |
|
|
|
|
|
|
|
|
|
|||||||
|
Adjusted EBITDA (2) |
$ |
311.6 |
|
|
$ |
312.0 |
|
|
$ |
229.7 |
|
|
|
Rent expense associated with triple net operating leases (3) |
96.3 |
|
|
96.8 |
|
|
— |
|
||||
|
Adjusted EBITDAR (2) |
$ |
407.9 |
|
|
$ |
408.8 |
|
|
$ |
229.7 |
|
|
|
Cash payments to our REIT Landlords under Triple Net Leases (4) |
$ |
222.6 |
|
|
$ |
222.7 |
|
|
$ |
115.2 |
|
|
|
|
|
|
|
|
|
|||||||
|
Diluted earnings per common share |
$ |
0.38 |
|
|
$ |
0.42 |
|
|
$ |
0.38 |
|
|
- As provided by Penn National on August 1, 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) and VICI 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 Third Quarter Results vs. Guidance
|
|
For the three months ended |
|||||||
|
(in millions, unaudited) |
Pre-tax |
|
Post-tax |
|||||
|
Income, per guidance (1) |
$ |
65.7 |
|
|
$ |
49.3 |
|
|
|
|
|
|
|
|||||
|
Adjusted EBITDAR favorable variances: |
|
|
|
|||||
|
Property tax refund |
2.8 |
|
|
2.2 |
|
|||
|
Change in contractual obligation (2) |
(2.7 |
) |
|
(2.1 |
) |
|||
|
Performance of properties, excluding property tax refund |
(1.4 |
) |
|
(1.1 |
) |
|||
|
Corporate overhead, excluding change in contractual obligation |
0.4 |
|
|
0.3 |
|
|||
|
Total Adjusted EBITDAR variances |
(0.9 |
) |
|
(0.7 |
) |
|||
|
|
|
|
|
|||||
|
Other favorable (unfavorable) variances: |
|
|
|
|||||
|
Interest expense, net |
1.0 |
|
|
0.8 |
|
|||
|
Rent expense associated with triple net operating leases |
0.5 |
|
|
0.4 |
|
|||
|
Depreciation and amortization |
0.2 |
|
|
0.2 |
|
|||
|
Cash-settled stock-based awards |
3.5 |
|
|
2.7 |
|
|||
|
Pre-opening and acquisition costs |
(7.4 |
) |
|
(5.7 |
) |
|||
|
Insurance recoveries |
1.5 |
|
|
1.2 |
|
|||
|
Other |
(0.8 |
) |
|
(0.6 |
) |
|||
|
Income taxes |
— |
|
|
(3.9 |
) |
|||
|
Income, as reported |
$ |
63.3 |
|
|
$ |
43.7 |
|
|
- As provided by Penn National on August 1, 2019.
- For further information, refer to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on September 26, 2019.
Financial Guidance for the Fourth Quarter and Full Year 2019
The Company’s fourth quarter and full year guidance targets reflect the ongoing bridge work in Lake Charles, Louisiana. In addition, the guidance is based on the following assumptions:
- Corporate overhead expenses, which is net of allocations to our properties, of $99.3 million, with $25.1 million to be incurred in the fourth quarter;
- Depreciation and amortization charges of $422.0 million, with $105.6 million in the fourth quarter;
- Cash payments to our REIT Landlords under Triple Net Leases (which continue to be fully tax deductible) of $869.7 million, with $223.9 million in the fourth quarter. This includes projected 2019 escalator payments of $0.9 million under the Penn Master Lease, $0.7 million under the Pinnacle Master Lease, and $0.2 million under the Meadows Lease;
- Maintenance capital expenditures of $172.8 million, with $54.3 million in the fourth quarter;
- Project capital expenditures for Hollywood York of $15.0 million, with $12.6 million in the fourth quarter;
- Project capital expenditures for Hollywood Morgantown of $21.5 million, with $5.7 million in the fourth quarter;
- Cash interest on traditional debt of $122.1 million, with $21.2 million in the fourth quarter;
- Interest expense, net, of $531.9 million, with $131.4 million in the fourth quarter, inclusive of interest expense related to the finance lease components associated with our Master Leases;
- Cash taxes of $21.8 million, with $0.7 million in the fourth quarter;
- Our share of non-operating items (such as depreciation and amortization expense) associated with our Kansas JV of $3.7 million, with $0.9 million to be incurred in the fourth quarter;
- Estimated non-cash stock compensation expense of $13.9 million, with $3.5 million in the fourth quarter;
- LIBOR is based on the forward yield curve;
- A diluted share count of approximately 117.7 million; 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.
The guidance table below includes comparative prior period actual results.
|
|
For the three months |
|
For the full year |
|||||||||||||
|
(in millions, except per share data, unaudited) |
2019 |
|
2018 |
|
2019 |
|
2018 |
|||||||||
|
Revenues |
$ |
1,350.7 |
|
|
$ |
1,155.3 |
|
|
$ |
5,310.9 |
|
|
$ |
3,587.9 |
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Net income (loss) attributable to Penn National |
$ |
43.1 |
|
|
$ |
(42.0 |
) |
|
$ |
179.5 |
|
|
$ |
93.5 |
|
|
|
Net loss attributable to noncontrolling interest |
— |
|
|
— |
|
|
(0.4 |
) |
|
— |
|
|||||
|
Net income (loss) |
43.1 |
|
|
(42.0 |
) |
|
179.1 |
|
|
93.5 |
|
|||||
|
Income tax expense (benefit) |
12.2 |
|
|
(43.6 |
) |
|
65.2 |
|
|
(3.6 |
) |
|||||
|
Loss on early extinguishment of debt |
— |
|
|
17.2 |
|
|
— |
|
|
21.0 |
|
|||||
|
Income from unconsolidated affiliates |
(6.8 |
) |
|
(5.5 |
) |
|
(28.5 |
) |
|
(22.3 |
) |
|||||
|
Interest expense, net |
131.4 |
|
|
192.7 |
|
|
531.9 |
|
|
538.4 |
|
|||||
|
Other expense (income) |
0.6 |
|
|
5.6 |
|
|
(8.1 |
) |
|
7.1 |
|
|||||
|
Operating income |
180.5 |
|
|
124.4 |
|
|
739.6 |
|
|
634.1 |
|
|||||
|
Stock-based compensation |
3.5 |
|
|
3.2 |
|
|
13.9 |
|
|
12.0 |
|
|||||
|
Cash-settled stock-based awards variance (1) |
— |
|
|
(18.3 |
) |
|
(6.4 |
) |
|
(19.6 |
) |
|||||
|
Loss (gain) on disposal of assets |
— |
|
|
(0.1 |
) |
|
8.3 |
|
|
3.2 |
|
|||||
|
Contingent purchase price |
0.3 |
|
|
(1.3 |
) |
|
7.2 |
|
|
0.5 |
|
|||||
|
Pre-opening and acquisition costs |
— |
|
|
77.9 |
|
|
15.5 |
|
|
95.0 |
|
|||||
|
Depreciation and amortization |
105.6 |
|
|
93.2 |
|
|
422.0 |
|
|
269.0 |
|
|||||
|
Provision for loan loss and unfunded loan commitments, net of |
— |
|
|
34.3 |
|
|
— |
|
|
17.9 |
|
|||||
|
Insurance recoveries, net of deductible charges |
— |
|
|
— |
|
|
— |
|
|
(0.1 |
) |
|||||
|
Income from unconsolidated affiliates |
6.8 |
|
|
5.5 |
|
|
28.5 |
|
|
22.3 |
|
|||||
|
Non-operating items for Kansas JV (1) |
0.9 |
|
|
1.3 |
|
|
3.7 |
|
|
5.1 |
|
|||||
|
Adjusted EBITDA (2) |
297.6 |
|
|
320.1 |
|
|
1,232.3 |
|
|
1,039.4 |
|
|||||
|
Rent expense associated with triple net operating leases (3) |
96.9 |
|
|
3.8 |
|
|
368.0 |
|
|
3.8 |
|
|||||
|
Adjusted EBITDAR (2) |
$ |
394.5 |
|
|
$ |
323.9 |
|
|
$ |
1,600.3 |
|
|
$ |
1,043.2 |
|
|
|
Cash payments to our REIT Landlords under Triple Net Leases (4) |
$ |
223.9 |
|
|
$ |
190.4 |
|
|
$ |
869.7 |
|
|
$ |
537.4 |
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Diluted earnings (loss) per common share |
$ |
0.37 |
|
|
$ |
(0.37 |
) |
|
$ |
1.53 |
|
|
$ |
0.93 |
|
|
- For a description of these items, see “Non-GAAP Financial Measures” section below.
- 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.
- The three months and year ending December 31, 2019 include rent expense associated with the operating lease components contained within the Master Leases, the Meadows Lease, the Margaritaville Lease and the Greektown Lease.
- The three months and year ending December 31, 2019 represent payments to our REIT landlords.
PENN NATIONAL GAMING, INC. AND SUBSIDIARIES
Segment Information
During the fourth quarter 2018, the Company made revisions to its reportable segments upon the consummation of the Pinnacle acquisition in order to maintain alignment with its internal organizational structure. Apart from the addition of the new properties, the most significant change was dividing the South/West segment into two separate reportable segments. The three and nine months ended September 30, 2018 have been restated to provide comparability, but do not reflect the pre-acquisition operating results of Pinnacle.
|
|
For the three months ended |
|
For the nine months ended |
|||||||||||||
|
(in millions, unaudited) |
2019 |
|
2018 |
|
2019 |
|
2018 |
|||||||||
|
Revenues: |
|
|
|
|
|
|
|
|||||||||
|
Northeast segment (1) |
$ |
628.9 |
|
|
$ |
441.4 |
|
|
$ |
1,778.6 |
|
|
$ |
1,365.4 |
|
|
|
South segment (2) |
276.6 |
|
|
60.4 |
|
|
850.7 |
|
|
186.4 |
|
|||||
|
West segment (3) |
161.5 |
|
|
92.6 |
|
|
484.4 |
|
|
291.2 |
|
|||||
|
Midwest segment (4) |
275.8 |
|
|
185.4 |
|
|
815.3 |
|
|
559.0 |
|
|||||
|
Other (5) |
12.4 |
|
|
9.9 |
|
|
31.9 |
|
|
30.6 |
|
|||||
|
Intersegment eliminations (6) |
(0.7 |
) |
|
— |
|
|
(0.7 |
) |
|
— |
|
|||||
|
Total revenues |
$ |
1,354.5 |
|
|
$ |
789.7 |
|
|
$ |
3,960.2 |
|
|
$ |
2,432.6 |
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Adjusted EBITDAR: |
|
|
|
|
|
|
|
|||||||||
|
Northeast segment (1) |
$ |
189.1 |
|
|
$ |
141.3 |
|
|
$ |
540.1 |
|
|
$ |
434.6 |
|
|
|
South segment (2) |
89.0 |
|
|
17.1 |
|
|
279.6 |
|
|
58.8 |
|
|||||
|
West segment (3) |
50.6 |
|
|
21.8 |
|
|
151.0 |
|
|
71.8 |
|
|||||
|
Midwest segment (4) |
104.3 |
|
|
65.4 |
|
|
301.3 |
|
|
201.1 |
|
|||||
|
Other (5) |
(25.0 |
) |
|
(15.9 |
) |
|
(66.1 |
) |
|
(47.0 |
) |
|||||
|
Intersegment eliminations (6) |
(0.1 |
) |
|
— |
|
|
(0.1 |
) |
|
— |
|
|||||
|
Total Adjusted EBITDAR (7) |
$ |
407.9 |
|
|
$ |
229.7 |
|
|
$ |
1,205.8 |
|
|
$ |
719.3 |
|
|
- The Northeast segment consists of the following properties: Ameristar East Chicago, Greektown Casino-Hotel (acquired May 23, 2019), Hollywood Casino Bangor, Hollywood Casino at Charles Town Races, Hollywood Casino Columbus, Hollywood Casino Lawrenceburg, Hollywood Casino at Penn National Race Course, Hollywood Casino Toledo, Hollywood Gaming at Dayton Raceway, Hollywood Gaming at Mahoning Valley Race Course, Marquee by Penn, Meadows Racetrack and Casino, and Plainridge Park Casino. The financial information for the nine months ended September 30, 2018 also includes the Company’s Casino Rama management service contract, which terminated in July 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, and Margaritaville Resort Casino (acquired January 1, 2019). Prior to its closure on June 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, and Zia Park Casino. The financial information for the nine months ended September 30, 2018 also includes the Company’s investments in and the management contract of Hollywood Casino Jamul-San Diego, which terminated in May 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 owns Hollywood Casino at Kansas Speedway; Hollywood Casino St. Louis; Prairie State Gaming; and River City Casino.
- 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. The Other category also includes Penn Interactive Ventures, LLC, 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. 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 and nine months ended September 30, 2019, corporate overhead costs were $27.5 million and $74.2 million, respectively, as compared to $18.9 million and $56.3 million, respectively, for the three and nine months ended September 30, 2018.
- Represents the elimination of intersegment operations, associated with Penn Interactive Ventures and Heartland Poker Tour.
-
As noted within the “Non-GAAP Financial Measures” section below, Adjusted EBITDAR is presented on a consolidated basis outside the financial statements solely as a valuation metric or for reconciliation purposes.
PENN NATIONAL GAMING, INC. AND SUBSIDIARIES
Supplemental Segment Information – Combined for the Acquisitions of Pinnacle, Margaritaville, and Greektown
Although Penn National did not own Pinnacle, Margaritaville, or Greektown, during the periods presented below, the Company believes the following financial information is useful to investors to assess the value these transactions bring to the Company and its shareholders.
The following financial information for the three and nine months ended September 30, 2018, shows (i) the Company’s reported operating results, (ii) the acquired Pinnacle properties, the acquired Margaritaville and Greektown properties for the pre-acquisition period, and (iii) the combined Company operating results for the pre-acquisition period as if the acquisitions of Pinnacle, Margaritaville, and Greektown, were completed on January 1, 2018. Combined Revenues and Combined Adjusted EBITDAR are non-GAAP financial measures. Further, the financial information below depicts the historical results of Penn National, Pinnacle, Margaritaville, and Greektown, and does not reflect any cost savings or revenue synergies from potential operating efficiencies or associated costs to achieve such savings or synergies that are expected to result from these transactions. See the “Non-GAAP Financial Measures” section below for more information as well as the definitions of Combined Revenues and Combined Adjusted EBITDAR. Additionally, see below for reconciliations of these Non-GAAP financial measures to their GAAP equivalent financial measure.
|
|
Revenues |
|||||||||||||||||||||||
|
|
Penn National, |
|
Pinnacle, |
|
Combined |
|
Penn National, |
|
Pinnacle, |
|
Combined |
|||||||||||||
|
(in millions, unaudited) |
For the three months ended September 30, 2018 |
|
For the nine months ended September 30, 2018 |
|||||||||||||||||||||
|
Northeast segment (2) |
$ |
441.4 |
|
|
$ |
199.6 |
|
|
$ |
641.0 |
|
|
$ |
1,365.4 |
|
|
$ |
607.9 |
|
|
$ |
1,973.3 |
|
|
|
South segment |
60.4 |
|
|
225.9 |
|
|
286.3 |
|
|
186.4 |
|
|
685.8 |
|
|
872.2 |
|
|||||||
|
West segment |
92.6 |
|
|
67.4 |
|
|
160.0 |
|
|
291.2 |
|
|
189.6 |
|
|
480.8 |
|
|||||||
|
Midwest segment |
185.4 |
|
|
97.0 |
|
|
282.4 |
|
|
559.0 |
|
|
290.4 |
|
|
849.4 |
|
|||||||
|
Other |
9.9 |
|
|
1.9 |
|
|
11.8 |
|
|
30.6 |
|
|
4.3 |
|
|
34.9 |
|
|||||||
|
Total |
$ |
789.7 |
|
|
$ |
591.8 |
|
|
$ |
1,381.5 |
|
|
$ |
2,432.6 |
|
|
$ |
1,778.0 |
|
|
$ |
4,210.6 |
|
|
|
|
Adjusted EBITDAR |
|||||||||||||||||||||||
|
|
Penn National, |
|
Pinnacle, |
|
Combined |
|
Penn National, |
|
Pinnacle, |
|
Combined |
|||||||||||||
|
(in millions, unaudited) |
For the three months ended September 30, 2018 |
|
For the nine months ended September 30, 2018 |
|||||||||||||||||||||
|
Northeast segment (3) |
$ |
141.3 |
|
|
$ |
44.2 |
|
|
$ |
185.5 |
|
|
$ |
434.6 |
|
|
$ |
139.2 |
|
|
$ |
573.8 |
|
|
|
South segment |
17.1 |
|
|
67.8 |
|
|
84.9 |
|
|
58.8 |
|
|
213.0 |
|
|
271.8 |
|
|||||||
|
West segment |
21.8 |
|
|
27.1 |
|
|
48.9 |
|
|
71.8 |
|
|
73.9 |
|
|
145.7 |
|
|||||||
|
Midwest segment |
65.4 |
|
|
35.8 |
|
|
101.2 |
|
|
201.1 |
|
|
108.6 |
|
|
309.7 |
|
|||||||
|
Other |
(15.9 |
) |
|
(14.4 |
) |
|
(30.3 |
) |
|
(47.0 |
) |
|
(42.8 |
) |
|
(89.8 |
) |
|||||||
|
Total (4) |
$ |
229.7 |
|
|
$ |
160.5 |
|
|
$ |
390.2 |
|
|
$ |
719.3 |
|
|
$ |
491.9 |
|
|
$ |
1,211.2 |
|
|
(1) 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.
(2) Revenues specific to Greektown were $80.1 million and $244.0 million for the three and nine months ended September 30, 2018, respectively.
(3) Adjusted EBITDAR specific to Greektown were $23.5 million and $68.3 million for the three and nine months ended September 30, 2018, respectively.
(4) 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 nine months ended |
|||||||||||||
|
(in millions, unaudited) |
2019 |
|
2018 |
|
2019 |
|
2018 |
|||||||||
|
Net income |
$ |
43.7 |
|
|
$ |
36.1 |
|
|
$ |
136.0 |
|
|
$ |
135.5 |
|
|
|
Income tax expense |
19.6 |
|
|
9.1 |
|
|
53.0 |
|
|
40.0 |
|
|||||
|
Loss on early extinguishment of debt |
— |
|
|
0.3 |
|
|
— |
|
|
3.8 |
|
|||||
|
Income from unconsolidated affiliates |
(9.8 |
) |
|
(5.7 |
) |
|
(21.7 |
) |
|
(16.8 |
) |
|||||
|
Interest expense, net |
133.5 |
|
|
114.6 |
|
|
400.5 |
|
|
345.7 |
|
|||||
|
Other expense (income) |
(7.2 |
) |
|
1.4 |
|
|
(7.2 |
) |
|
1.5 |
|
|||||
|
Operating income |
179.8 |
|
|
155.8 |
|
|
560.6 |
|
|
509.7 |
|
|||||
|
Stock-based compensation |
3.7 |
|
|
2.9 |
|
|
10.4 |
|
|
8.8 |
|
|||||
|
Cash-settled stock-based awards variance |
(3.4 |
) |
|
(1.7 |
) |
|
(6.4 |
) |
|
(1.3 |
) |
|||||
|
Loss on disposal of assets |
7.4 |
|
|
3.2 |
|
|
8.3 |
|
|
3.2 |
|
|||||
|
Contingent purchase price |
1.2 |
|
|
0.4 |
|
|
7.0 |
|
|
1.7 |
|
|||||
|
Pre-opening and acquisition costs |
7.4 |
|
|
5.2 |
|
|
15.5 |
|
|
17.2 |
|
|||||
|
Depreciation and amortization |
106.3 |
|
|
56.9 |
|
|
316.4 |
|
|
175.8 |
|
|||||
|
Recoveries on loan loss and unfunded loan commitments, |
— |
|
|
— |
|
|
— |
|
|
(16.4 |
) |
|||||
|
Insurance recoveries, net of deductible charges |
(1.5 |
) |
|
— |
|
|
(1.5 |
) |
|
(0.1 |
) |
|||||
|
Income from unconsolidated affiliates |
9.8 |
|
|
5.7 |
|
|
21.7 |
|
|
16.8 |
|
|||||
|
Non-operating items for Kansas JV |
0.9 |
|
|
1.3 |
|
|
2.8 |
|
|
3.9 |
|
|||||
|
Adjusted EBITDA |
311.6 |
|
|
229.7 |
|
|
934.8 |
|
|
719.3 |
|
|||||
|
Rent expense associated with triple net operating leases |
96.3 |
|
|
— |
|
|
271.0 |
|
|
— |
|
|||||
|
Adjusted EBITDAR |
$ |
407.9 |
|
|
$ |
229.7 |
|
|
$ |
1,205.8 |
|
|
$ |
719.3 |
|
|
|
Net income margin |
3.2 |
% |
|
4.6 |
% |
|
3.4 |
% |
|
5.6 |
% |
|||||
|
Adjusted EBITDAR margin |
30.1 |
% |
|
29.1 |
% |
|
30.4 |
% |
|
29.6 |
% |
|||||
Contacts
William J. Fair
Chief Financial Officer
610-373-2400
Joseph N. Jaffoni, Richard Land
JCIR
212-835-8500 or [email protected]
