- 2015 Fourth Quarter Adjusted EBITDA
Includes $7.9 Million Positive Operating Segment Variance and $16.8
Million Favorable Property Tax Adjustments Relative to Guidance
-
- Establishes 2016 First Quarter and Full
Year Guidance -
Penn National Gaming, Inc. (PENN: Nasdaq):
Conference Call:
February 4, 2016 at 9:00 a.m. ET
Dial-in number:
212/231-2921
Webcast:
www.pngaming.com
Replay information provided below
Penn National Gaming, Inc. (PENN: Nasdaq) (“Penn National
Gaming,” “Penn National,” “Penn,” or the “Company”) today reported
operating results for the three and twelve months ended December
31, 2015, as summarized below.
Summary of Fourth Quarter and Full Year
Results
(in millions) (unaudited) Three Months
Ended
December 31,
Twelve Months Ended
December 31,
2015 Actual 2015 Guidance (2)
2014 Actual 2015 Actual 2015 Guidance
(2) 2014 Actual (3) Net revenues $ 734.0 $
722.5 $ 651.4 $ 2,838.4 $ 2,826.9 $ 2,590.5
Adjusted EBITDA
(1) 206.2 181.6 171.8 795.7
771.1 709.3
(1)
Adjusted EBITDA is income (loss) from
operations, excluding the impact of stock compensation, impairment
charges, insurance recoveries and deductible charges, depreciation
and amortization, changes in the estimated fair value of contingent
purchase price to the previous owners of Plainridge Racecourse and
gain or loss on disposal of assets. Adjusted EBITDA is also
inclusive of income or loss from unconsolidated affiliates, with
our share of the non-operating items added back for our joint
venture in Kansas Entertainment, LLC (“Kansas Entertainment” or
“Kansas JV”). Adjusted EBITDA excludes payments pursuant to the
Company’s Master Lease (the “Master Lease”) with Gaming and Leisure
Properties, Inc. (“GLPI”) which amounted to $109.6 million and
$437.0 million for the three and twelve months ended December 31,
2015, respectively, and $107.8 million and $421.4 million for the
three and twelve months ended December 31, 2014, respectively.
(2)
The guidance figures in the table above
present the guidance Penn National Gaming provided on October 22,
2015 for the three and twelve months ended December 31, 2015.
(3)
Adjusted EBITDA for the twelve months
ended December 31, 2014 has been restated to reflect a favorable
accrual adjustment of $2.8 million.
Review of Fourth Quarter 2015 Results vs. Guidance
Three Months Ended December 31, 2015
(in thousands)
(unaudited)
Adjusted EBITDA, per guidance (1) $ 181,571 Adjusted
EBITDA variances: Positive operating segment variance 7,863
Cash-settled stock-based awards 2,390 Favorable property tax
settlements 16,796 Restatement and severance costs (2,270 ) Other
(191 ) Total Adjusted EBITDA variances from guidance
24,588 Adjusted EBITDA, as reported $ 206,159
(1)
The guidance figure in the table above
presents the guidance Penn National Gaming provided on October 22,
2015 for the three months ended December 31, 2015.
Timothy J. Wilmott, President and Chief Executive Officer of
Penn National Gaming, commented, “Penn National’s strong fourth
quarter financial results exceeded guidance and wrap up an active
and productive 2015, in which we achieved positive operating
results for the second straight year following the separation of
the Company’s operating and real estate assets. Our progress
throughout the year in enhancing operations, profitably growing
market share in several key markets, maximizing operating
efficiencies, and the continued success of our expansion
initiatives position us for further financial growth in fiscal
2016, all as reflected in the full year guidance provided
today.
“The fourth quarter results reflect year-over-year improvements
in regional gaming trends, the ongoing success of our operating
teams in driving improved adjusted EBITDA margins, and continued
growth at our Ohio properties, including those recently opened in
Mahoning Valley and Dayton, as well as in Toledo and Columbus.
Results also benefited from our 2015 expansion initiatives,
including contributions from Plainridge Park Casino, Tropicana Las
Vegas and Prairie State Gaming (“PSG”) all of which have
significant prospects for continued revenue, margin and adjusted
EBITDA growth going forward.
“Overall, fourth quarter adjusted EBITDA exceeded guidance by
$24.6 million, inclusive of a $7.9 million positive operating
segment variance. Reflecting Penn’s strong operating leverage and
flow through, the 1.6% revenue outperformance drove a 4.3% increase
in adjusted EBITDA relative to guidance when excluding the
favorable property tax settlements.
“While our West segment margin declined as a result of the
inclusion of Tropicana Las Vegas, we saw fourth quarter adjusted
EBITDA margin improvements in our East/Midwest and Southern Plains
operating segments. Overall, Penn National’s ongoing execution of
strategies to improve operating efficiencies drove consolidated
fourth quarter 2015 adjusted EBITDA margin growth of approximately
43 basis points on a year-over-year basis to 26.8%, excluding the
favorable property tax settlements and the acquisitions of
Tropicana Las Vegas and PSG.
“In Massachusetts, throughout the fourth quarter we continued to
refine Plainridge Park’s gaming floor offerings based on customer
preferences while further adjusting promotions and advertising, and
expanding our Marquee Rewards database to better compete with
gaming facilities in neighboring states. Plainridge Park’s database
now exceeds 160,000 customers and the property continues to
generate the highest average win per machine across our 22 casino
properties.
“In Las Vegas, we are making good progress toward positioning
the Tropicana Las Vegas to benefit from the improving Las Vegas
economic environment, new attractions and activity on the south end
of the Strip, and ultimately our database of nearly three million
active regional gaming customers, a significant percentage of which
regularly visit Las Vegas. Consistent with our operations in other
markets, we are updating the slot floor, altering game placement
and refining the table game mix in preparation for the introduction
of the Marquee Rewards customer loyalty program in the second
quarter of 2016, while simultaneously executing on opportunities to
improve hotel yield and margins at the property. Looking forward,
we plan to complement our initial operational improvements with
enhanced food and beverage offerings before the end of 2016. With
these changes and the property’s strong room product, which were
part of approximately $200 million in improvements completed by the
former owners, we believe Tropicana Las Vegas will create
shareholder value as we attract new and more profitable customer
segments and leverage our Marquee Rewards database. Longer-term, we
will evaluate other potential enhancements at the Tropicana Las
Vegas, with the scope, budget and timing of any such improvements
to be based upon our operation of the property as well as customer
demand for additional amenities.
“Our acquisition of PSG, a leading Illinois video gaming
terminal (“VGT”) operator, in the third quarter of 2015 is meeting
our return on invested capital expectations and provides a platform
for future growth. As one of Illinois’ largest and most respected
VGT route operators, PSG’s operations include more than 1,100
terminals across a network of 270 bars and retail gaming
establishments across the state. During the fourth quarter, we
entered into an agreement with Bally Gaming whereby PSG will place
popular, next generation VGT product and exclusive new premium game
content across its network of bars and retail gaming
establishments. We believe PSG offers Penn National a solid
platform for growth in the Illinois VGT market and a foundation for
expansion in other states where this form of gaming is now being
evaluated and could be authorized in the future.
“Finally, our anticipated mid-2016 opening of the $390 million
Hollywood Casino Jamul-San Diego, for which we are acting as
developer, manager and lender, is approaching. The three-story
gaming and entertainment facility, with the region’s most
convenient access to the local population, will include more than
1,700 slot machines, 43 live table games, an upscale lounge
featuring national and regional entertainment, a beer garden, a
four-venue food court, and an eight-story partially subterranean
parking garage with over 1,800 parking spaces. We recently
announced a broad range of dining amenities for the property
including the first ever Tony Gwynn's Sports Pub. While we continue
to explore the refinancing of the Jamul Indian Village note, we
remain confident in the overall economics of this project, which
will allow tribal members to become financially self-sufficient
while improving their education, healthcare and housing.
“Penn National’s solid 2015 results and future prospects, as
well as our disciplined operating approach, position us well for
continued adjusted EBITDA growth in 2016 and beyond.”
Development and Expansion Projects
The table below summarizes Penn National Gaming’s ongoing and
recently completed development projects:
Project/Scope New
Gaming
Positions
Planned
Total
Budget
Amount Expended through December 31, 2015
Expected
Opening
Date
(in millions) (unaudited)
Jamul Indian Village project (CA) - Construction continues
at the site for this new Hollywood Casino branded gaming operation
which Penn will manage. The facility is anticipated to feature over
1,700 slot machines, 43 live table games including poker, multiple
restaurants, bars and lounges. 1,958 $ 390 (1 )
$ 158.1 (1 ) Mid-2016 (1)
As disclosed previously, funds advanced for this project are
accounted for as a loan. The budget and expended amounts exclude
the purchase of a subordinated promissory note from the previous
developer of the project during the fourth quarter of 2015.
Financial Guidance
Reflecting the current operating and competitive environment,
the table below sets forth 2016 first quarter and full year
guidance targets for financial results based on the following
assumptions:
- Includes Tropicana Las Vegas (West
segment) and Prairie State Gaming (Southern Plains segment)
operations;
- MGM National Harbor opens in the fourth
quarter of 2016 impacting Hollywood Casino at Charlestown
Races;
- Does not include professional fees and
other costs to be incurred in connection with the pending
restatement of our financial statements;
- A full year contribution from the
Company’s management contract for Casino Rama;
- Full year corporate overhead expenses
of $82.5 million, with $21.1 million to be incurred in the first
quarter of 2016;
- Depreciation and amortization charges
in 2016 of $265.9 million, with $66.3 million in the first quarter
of 2016, which includes depreciation expense related to real
property leased from GLPI;
- Interest expense in 2016 of $465.5
million, with $115.5 million in the first quarter of 2016, which
includes additional interest expense related to the Master Lease
financing obligation with GLPI;
- Interest expense includes the impact of
the $5.0 million rent escalation that was incurred in year two of
the Master Lease but excludes any additional rent escalation at the
conclusion of year three of the Master Lease;
- Non-cash accrued interest income on the
loan to the Jamul Tribe of $12.1 million, with $4.9 million in the
first quarter of 2016;
- Our share of non-operating items (such
as depreciation and amortization expense) associated with our
Kansas JV will total $10.2 million for 2016, with $2.6 million to
be incurred in the first quarter of 2016;
- Estimated non-cash stock compensation
expenses of $8.2 million for 2016, with $2.0 million to be incurred
in the first quarter of 2016;
- LIBOR is based on the forward yield
curve;
- A diluted share count of approximately
92.2 million shares for the full year 2016; and
- There will be no material changes in
applicable legislation, regulatory environment, world events,
weather, recent consumer trends, economic conditions, oil prices,
competitive landscape (other than listed above) or other
circumstances beyond our control that may adversely affect the
Company’s results of operations.
(in millions), (unaudited) Three Months Ending
March 31, Full Year Ending December 31,
2016 Guidance 2015 Actual 2016 Guidance
2015 Actual Net revenues $ 756.9 $ 664.1 $ 3,053.9 $
2,838.4
Adjusted EBITDA 203.1 184.2
841.2 795.7
PENN NATIONAL GAMING, INC. AND
SUBSIDIARIES
Segment Information – Operations
(in thousands) (unaudited)
NET REVENUES ADJUSTED EBITDA Three
Months Ended December 31, Three Months Ended December
31, 2015 2014 2015 2014
East/Midwest (1) $ 428,320 $ 385,070 $ 129,040 $ 112,819 West (2)
88,855 62,831 17,319 16,455 Southern Plains (3) 211,807 198,656
81,370 63,467 Other (4) 4,985 4,804 (21,570 )
(20,873 )
Total $ 733,967 $
651,361 $ 206,159 $
171,868 NET REVENUES ADJUSTED
EBITDA Twelve Months Ended December 31, Twelve Months
Ended December 31, 2015 2014 2015 2014
(Restated) East/Midwest (1) $ 1,682,440 $ 1,467,380 $ 508,430 $
439,934 West (2) 285,933 241,410 68,478 65,970 Southern Plains (3)
849,049 857,447 299,858 276,376 Other (4) 20,936
24,290 (81,075 ) (72,943 )
Total $
2,838,358 $ 2,590,527 $ 795,691
$ 709,337
(1)
The East/Midwest reportable segment
consists of the following properties: Hollywood Casino at Charles
Town Races, Hollywood Casino Bangor, Hollywood Casino at Penn
National Race Course, Hollywood Casino Lawrenceburg, Hollywood
Casino Toledo, Hollywood Casino Columbus, Hollywood Gaming at
Dayton Raceway, which opened on August 28, 2014, Hollywood Gaming
at Mahoning Valley Race Course, which opened on September 17, 2014,
and Plainridge Park Casino, which opened on June 24, 2015. It also
includes the Company’s Casino Rama management service contract. Our
East/Midwest segment results for the twelve months ended December
31, 2015 included preopening costs of $9.2 million, whereas results
for the three and twelve months ended December 31, 2014 included
preopening charges of $1.7 million and $10.2 million, respectively.
Results for the three and twelve months ended December 31, 2015
also included favorable property tax accrual adjustments of
approximately $1.4 million and $3.4 million, respectively. While
the Company is in the process of completing its 2015 impairment
analysis, Adjusted EBITDA for the three and twelve months ended
December 31, 2015 exclude $40.0 million of impairment charges
related to the write-off of our Plainridge Park Casino gaming
license and a partial write-down of the gaming license at Hollywood
Gaming at Dayton Raceway due to a reduction in the long term
earnings forecast at both of these locations compared to the prior
year’s analysis. In addition, Adjusted EBITDA for the twelve months
ended December 31, 2014 has been restated to reflect a favorable
accrual adjustment of $2.8 million.
(2)
The West reportable segment consists of
the following properties: Zia Park Casino, the M Resort, and
Tropicana Las Vegas, which was acquired on August 25, 2015, as well
as the Jamul Indian Village project, which the Company anticipates
completing in mid-2016.
(3)
The Southern Plains reportable segment
consists of the following properties: Hollywood Casino Aurora,
Hollywood Casino Joliet, Argosy Casino Alton, Argosy Casino
Riverside, Hollywood Casino Tunica, Hollywood Casino Gulf Coast,
Boomtown Biloxi, Hollywood Casino St. Louis and Prairie State
Gaming, which the Company acquired on September 1, 2015, and
includes the Company’s 50% investment in Kansas Entertainment,
which owns the Hollywood Casino at Kansas Speedway. On July 30,
2014, the Company closed Argosy Casino Sioux City. Results for the
three and twelve months ended December 31, 2015 included favorable
property tax settlements of approximately $15.4 million.
(4)
The Other category consists of the
Company’s standalone racing operations, namely Rosecroft Raceway,
Sanford-Orlando Kennel Club, and the Company’s joint venture
interests in Sam Houston Race Park, Valley Race Park, and Freehold
Raceway. 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’s social online gaming initiatives.
The Other category also includes the Company’s corporate
overhead costs, which were $21.1 million and $82.1 million for the
three and twelve months ended December 31, 2015, respectively, as
compared to corporate overhead costs of $19.6 million and $69.4
million for the three and twelve months ended December 31, 2014,
respectively. Corporate overhead costs increased by $1.5 million
and $12.7 million for the three and twelve months ended December
31, 2015, respectively, as compared to the corresponding period in
the prior year, primarily due to higher cash-settled stock-based
compensation of $2.8 million and $13.3 million due to stock price
increases for Penn and GLPI common stock, restatement costs of $1.4
million for the three and twelve months ended December 31, 2015,
higher bonus expense of $1.7 million and $4.9 million due to better
overall company performance against its budget, and higher
severance expenses of $0.5 million and $1.2 million, all of which
were partially offset by lower lobbying expenses of $4.1 million
and $7.2 million due to the Massachusetts campaign in 2014, and
lower spin-off transaction and development costs. The twelve months
ended December 31, 2015 compared to the corresponding period in the
prior year were also impacted by lower transition service fee
payments of $1.2 million due to fewer departments supporting GLPI
in 2015, with the final transition services provided in October
2015.
PENN NATIONAL GAMING, INC. AND
SUBSIDIARIES
Supplemental information
(in thousands) (unaudited)
December 31, 2015 December 31, 2014
Cash and cash equivalents $ 237,009 $ 208,673 Bank
Debt $ 1,238,298 $ 785,683 Notes 296,252 295,610 Other long term
obligations (1) 150,719 154,388 Total Debt (2) (3) $
1,685,269 $ 1,235,681 Financing obligation with GLPI (4) $
3,564,628 $ 3,611,513
1)
Other long term obligations at December
31, 2015 include $131.7 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, $15.3 million
related to our repayment obligation on a hotel and event center
located near Hollywood Casino Lawrenceburg, and $3.7 million
related to capital lease obligations which were primarily
attributable to our acquisition of Tropicana Las Vegas.
2)
Although our joint venture in Kansas
Entertainment is accounted for as an equity method investment and
is not consolidated, this joint venture had no debt outstanding at
December 31, 2015 or December 31, 2014. Total debt excludes the
estimated fair value of contingent purchase price that is payable
over ten years to the previous owners of Plainridge Racecourse
which totaled $13.8 million at December 31, 2015 compared with
$19.2 million at December 31, 2014.
3)
In accordance with new accounting guidance
issued and early adopted by the Company in the first quarter of
2015, debt issuance costs are now classified as a direct reduction
to our debt balances rather than in other assets. Debt issuance
costs were $24.3 million and $25.2 million at December 31, 2015 and
December 31, 2014, respectively. The prior period amounts were
reclassified to reflect this change.
4)
The financing obligation is calculated
based on the present value of the future minimum lease payments
over the lease term of 35 years, which includes all renewal options
since they were reasonably assured of being exercised at lease
inception.
Penn’s definition of adjusted EBITDA includes 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, Kansas Entertainment, the operator of Hollywood Casino
at Kansas Speedway, is Penn’s only joint venture that meets this
definition. Kansas Entertainment does not currently have, nor has
it ever had, any indebtedness. We have presented the cash flow
distributions we have received from this investment for the three
and twelve months ended December 31, 2015 and 2014.
Three Months Ended December 31, Twelve
Months Ended December 31, 2015 2014
2015 2014 Cash Flow distributions $
5,100 $ 5,500 $ 27,150 $ 23,000
Restatement
As previously disclosed, the Company will restate its financial
statements filed since the spin-off (the “Spin-off”) of its real
estate assets to GLPI on November 1, 2013 (the “Restatement”). We
expect to submit the restated filings by no later than February 29,
2016, and to file the Company’s 2015 Annual Report on Form 10-K by
March 15, 2016.
On November 13, 2015, the Company disclosed that it received a
notice from The Nasdaq Stock Market (“NASDAQ”) that it is not in
compliance with NASDAQ Listing Rule 5250(c)(1) because the Company
did not file its Quarterly Report on Form 10-Q for the quarter
ended September 30, 2015 in a timely manner. We submitted a plan to
regain compliance with NASDAQ listing requirements, which extended
compliance for an additional 180 days through May 9, 2016. Further,
the Company obtained a waiver from its lenders under its Senior
Secured Credit Facility through March 15, 2016 to file its restated
filings.
The Restatement arose from the Company’s continuing involvement
in the Master Lease with GLPI which resulted in a failed sale
leaseback that caused us to account for the transaction as a
financing obligation rather than the original operating lease
treatment. The Company also currently expects to make adjustments
to reduce in the aggregate its previously recorded 2014 and 2013
goodwill and intangible asset impairment charges to report the $150
million of fees paid to relocate its Ohio racetracks as an
indefinite lived intangible asset as opposed to a depreciating
asset; to record a full valuation allowance on its deferred tax
assets; and, to reclassify the $240.2 million of cash contributed
to GLPI in connection with the Spin-Off from Investing Activities
to Financing Activities in our 2013 Consolidated Statement of Cash
Flows as well as certain other items that were not individually
material to the Consolidated Financial Statements. We will also
record a charge of approximately $10.7 million in our 2013
Consolidated Statement of Operations in connection with exchange
agreement entered into prior to the Spin-Off between the Company,
Peter M. Carlino and a trust for the benefit of his children.
Finally, the results of Hollywood Casino Perryville and Hollywood
Casino Baton Rouge that were contributed to GLPI on November 1,
2013 in connection with the Spin-Off will be accounted for as
discontinued operations.
The Company anticipates that as a result of the failed sale
leaseback it will no longer report rent expense on its Consolidated
Statement of Operations, but will now report additional interest
expense associated with the GLPI financing obligation of
approximately $390 million, $379 million and $62 million for the
years ended December 31, 2015, 2014, and 2013, respectively.
Additionally, the Company anticipates recording additional
depreciation expense associated with the leased assets from GLPI of
approximately $92 million, $90 million and $15 million for the
years ended December 31, 2015, 2014 and 2013, respectively.
The Company’s cash flows for all prior and future periods are
not affected by any of the above-noted changes in accounting, nor
will its current tax treatment with respect to the Spin-off
transaction. In addition, the adjustments in the Restatement will
have no impact on the following indicators of the Company’s
performance:
- the Company’s cash position;
- the Company’s leverage ratios under its
senior credit facility and other debt instruments (as the terms of
those obligations require the Master Lease to be treated as an
operating lease regardless of the treatment required under
GAAP;
- the Company’s revenues from continuing
operations; or
- the Company’s rental payments or other
obligations under the Master Lease.
Diluted Share Count Methodology
In connection with the spin-off, Penn National Gaming completed
its exchange and repurchase transaction with an affiliate of
Fortress Investment Group, LLC (“Fortress”) on October 11, 2013,
which resulted in the repurchase of $627 million of its Series B
Preferred Stock and the issuance of 8,624 shares of Series C
Preferred Stock, which is equivalent to 8,624,000 common shares
upon sale by Fortress to a third party.
Reconciliation of GAAP to Non-GAAP Measures
Adjusted EBITDA is used by management as the primary measure of
the Company’s operating performance. We define adjusted EBITDA as
earnings before interest, taxes, stock compensation, debt
extinguishment charges, impairment charges, insurance recoveries
and deductible charges, depreciation and amortization, changes in
the estimated fair value of contingent purchase price to the
previous owners of Plainridge Racecourse, 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 Kansas
Entertainment. Adjusted EBITDA excludes rent payments associated
with our Master Lease agreement with GLPI. 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
projects because they provide a perspective on the current effects
of operating decisions separated from the substantial
non-operational depreciation charges and financing costs of such
projects. We also 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, 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 addition, gaming companies have historically reported
adjusted EBITDA as a supplement to financial measures in accordance
with GAAP. 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 widely used measure
of performance in the gaming industry, is the principal basis for
the valuation of gaming companies, and that it is considered by
many to be a better indicator of the Company’s operating results
than net income (loss) per GAAP. Management uses adjusted EBITDA as
the primary measures of the operating performance of its segments,
including the evaluation of operating personnel. Adjusted EBITDA
should not be construed as alternatives to operating income, as
indicators of the Company’s operating performance, as alternatives
to cash flows from operating activities, as measures of liquidity,
or as any other measures of performance determined in accordance
with GAAP. The Company has significant uses of cash flows,
including capital expenditures, interest payments, taxes and debt
principal repayments, which are not reflected in adjusted EBITDA.
It should also be noted that other gaming companies that report
adjusted EBITDA information may calculate adjusted EBITDA in a
different manner than the Company and therefore, comparability may
be limited.
Conference Call, Webcast and Replay Details
Penn National Gaming is hosting a conference call and
simultaneous webcast at 9:00 am ET today, both of which are open to
the general public. The conference call number is
212/231-2921. Please call five minutes in advance to ensure
that you are connected prior to the presentation. Questions will be
reserved for call-in analysts and investors. Interested parties may
also access the live call on the Internet at www.pngaming.com.
Please allow 15 minutes to register and download and install any
necessary software. A replay of the call can be accessed for thirty
days on the Internet at www.pngaming.com.
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 Penn National Gaming
Penn National Gaming owns, operates or has ownership interests
in gaming and racing facilities and video gaming terminal
operations with a focus on slot machine entertainment. At December
31, 2015, the Company operated twenty-seven facilities in seventeen
jurisdictions, including Florida, Illinois, Indiana, Kansas, Maine,
Massachusetts, Maryland, Mississippi, Missouri, Nevada, New Jersey,
New Mexico, Ohio, Pennsylvania, Texas, West Virginia, and Ontario.
At December 31, 2015, in aggregate, Penn National Gaming operated
approximately 33,400 gaming machines, 800 table games and 4,600
hotel rooms.
Forward-looking Statements
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995. These statements can be identified by the use of forward
looking terminology such as “expects,” “believes,” “estimates,”
“projects,” “intends,” “plans,” “seeks,” “may,” “will,” “should” or
“anticipates” or the negative or other variations of these or
similar words, or by discussions of future events, strategies or
risks and uncertainties, including future plans, strategies,
performance, developments, acquisitions, capital expenditures, and
operating results. Actual results may vary materially from
expectations. Although the Company believes that our expectations
are based on reasonable assumptions within the bounds of our
knowledge of our business, there can be no assurance that actual
results will not differ materially from our expectations.
Meaningful factors that could cause actual results to differ from
expectations include, but are not limited to, risks related to the
following: our ability to obtain timely regulatory approvals
required to own, develop and/or operate our facilities, or other
delays or impediments to completing our planned acquisitions or
projects, our ability to secure federal, state and local permits
and approvals necessary for our construction 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); 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,
sweepstakes based and taverns); increases in the effective rate of
taxation at any of our properties 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 outcome of pending legal
proceedings, for example, the ongoing appeal by the Ohio Roundtable
addressing the legality of video lottery terminals in Ohio; changes
in accounting standards; the impact of weather; with regard to the
Restatement, risks relating to the final impact of the Restatement
on the Company’s financial statements, the impact of the
Restatement on the Company’s evaluation of the effectiveness of its
internal control over financial reporting, delays in the
preparation of the financial statements, the risk that additional
information will come to light during the course of the preparation
of restated financial statements that alters the scope or magnitude
of the Restatement, potential investigations, litigation or other
proceedings by governmental authorities, stockholders or other
parties, the risk that the Company will be unable to file its
financial statements in accordance with the timeline proposed in
this press release, which could give rise to a default under the
Company’s senior secured credit facility or under its note
indenture or have other detrimental consequences; the ability of
the Company to generate sufficient future taxable income to realize
its deferred tax assets; risks relating to our liquidity and
ability to raise capital and risks related to the impact on the
Restatement on the Company’s reputation, development projects,
joint ventures and other commercial contracts; with respect to the
proposed Jamul project near San Diego, California, particular risks
associated with financing a project of this type, sovereign
immunity, local opposition (including several pending lawsuits),
and building a complex project on a relatively small parcel; with
respect to our Massachusetts project, the ultimate location and
timing of the other gaming facilities in the state; with respect to
our social and other interactive gaming endeavors, risks related to
ultimate profitability, cyber-security, data privacy, intellectual
property and legal and regulatory challenges; with respect to PSG,
risks relating to our ability to successfully compete in the VGT
market, our ability to retain existing customers and secure new
customers, risks relating to municipal authorization of VGT
operations and the implementation and the ultimate success of the
products and services being offered; and other factors as discussed
in the Company’s Annual Report on Form 10-K for the year ended
December 31, 2014, subsequent Quarterly Reports on Form 10-Q and
Current Reports on Form 8-K, each as filed with the United States
Securities and Exchange Commission. The Company does not intend to
update publicly any forward-looking statements except as required
by law. In light of these risks, uncertainties and assumptions, the
forward-looking events discussed in this press release may not
occur.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160204005467/en/
Penn National Gaming, Inc.Saul V. Reibstein, Chief Financial
Officer, 610/401-2049orJCIRJoseph N. Jaffoni, Richard
Land212/835-8500penn@jcir.com
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