- Establishes 2016 Second Quarter Guidance
and Updates 2016 Full Year Guidance -
Penn National Gaming, Inc. (PENN: Nasdaq):
Conference Call:
Today, April 28, 2016 at 9:00 a.m.
ET
Dial-in number:
212/231-2929
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 months ended March 31, 2016, as
summarized below.
Summary of First Quarter
Results
(in millions, except per share data)
Three Months Ended March
31,
2016 Actual 2016 Guidance (2)
2015 Actual Net revenues $ 756.5 $ 756.9 $ 664.1
Adjusted EBITDA (1) 212.9 203.1 184.4
Less: Impact of stock compensation,
non-operating items forKansas JV, depreciation and amortization,
changes in the estimatedfair value of contingent purchase price,
gain/loss on disposalof assets, interest expense - net, income
taxes, and other expenses
(189.2) (191.0) (182.5)
Net income $
23.7 $ 12.1 $ 1.9
Diluted earnings
per common share $ 0.26 $ 0.13 $ 0.02 (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 the contingent purchase
price payable 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”), as the transaction was accounted for as
a financing obligation. Payments to GLPI totaled $111.4 million and
$108.8 million for the three months ended March 31, 2016 and 2015,
respectively. (2) The guidance figures in the table above
present the guidance Penn National Gaming provided on February 4,
2016 for the three months ended March 31, 2016.
Review of First Quarter 2016 Results
vs. Guidance
Three Months Ended March 31,
2016 Pre-tax After-tax (in thousands)
(unaudited) Income, per guidance (1) $ 21,280 $ 12,130
Adjusted EBITDA variances: Positive operating segment
variance 8,680 5,294 Favorable litigation settlement for Joliet and
Aurora 667 422 Other 477 304 Total Adjusted EBITDA
variances from guidance 9,824 6,020 Gain on sale of Raceway
Park assets 1,099 695 Contingent purchase price variance 1,479 942
Foreign currency translation losses (2,426) (1,546) Other 186 113
Tax variance - 5,354 Income, as reported $ 31,442 $
23,708 (1) The guidance figure in the table above
presents the guidance Penn National Gaming provided on February 4,
2016 for the three months ended March 31, 2016.
Timothy J. Wilmott, President and Chief Executive Officer,
commented, “The 15.5% year-over-year increase in 2016 first quarter
adjusted EBITDA to $212.9 million, exceeded guidance based on our
continued progress in driving operating efficiencies and margins
combined with meaningful contributions from our expansion
initiatives over the last year, including Plainridge Park Casino,
Tropicana Las Vegas and Prairie State Gaming. Notably, first
quarter adjusted EBITDA exceeded guidance by 4.3% even after
excluding the favorable litigation settlements and other positive
non-operating adjusted EBITDA variances.
“Adjusted EBITDA margin growth in the East/Midwest segment
reflects year-over-year revenue and adjusted EBITDA improvements at
all four of our Ohio properties, which continue to ramp, and led to
an overall 15.7% increase in this segment’s adjusted EBITDA. The
12.2% increase in our West segment adjusted EBITDA reflects the
contribution from last August’s acquisition of Tropicana Las Vegas.
Our Southern Plains segment delivered a 6.7% year-over-year
increase in first quarter adjusted EBITDA as margin strength across
our casinos in this segment were offset by the lower margin Prairie
State Gaming video gaming terminal operations which were acquired
last September. On an overall basis, Penn National’s ongoing
execution of strategies to improve operating efficiencies drove
consolidated first quarter 2016 adjusted EBITDA margin growth of
approximately 58 basis points on a year-over-year basis to 32.0%,
excluding the favorable property litigation settlements and the
impact of the lower margin Tropicana Las Vegas and Prairie State
Gaming operations. Notably, on a same facility basis, all three
operating segments delivered year-over-year improvements in
adjusted EBITDA margins.
“Since acquiring Tropicana Las Vegas for $360 million, we’ve
reconfigured the gaming floor with updated slots, altered game
placements and refined the table game mix. In addition, earlier
this month, we launched Sky Beach Day Club, the property’s outdoor
day club at the pool. Our initial facility enhancements and
operational improvements have already strengthened the property’s
results and we are now focused on improving the food and beverage
offerings at the property.
“With the recent introduction of Marquee Rewards at the
Tropicana Las Vegas, we have begun marketing the property to our
database of nearly three million active regional gaming customers,
a significant percentage of which regularly visit Las Vegas. We
expect that over time, this transition will enable us to attract
new and more profitable customer segments to Tropicana Las Vegas.
In addition, the property is poised to benefit from the improving
Las Vegas economic environment, including the new attractions and
activity on the south end of the Strip, such as the new 20,000-seat
capacity arena that opened earlier this month. Longer-term, we
continue to evaluate additional non-gaming amenities and other
potential enhancements, with the scope, budget and timing of any
such improvements to be based upon property results as well as
customer demand.
“One of Penn National’s key growth catalysts this year is the
mid-summer opening of the $390 million Hollywood Casino Jamul-San
Diego, for which we are acting as developer, manager and lender.
The property is a spectacular three-story gaming and entertainment
facility, with the region’s most convenient access to the local
downtown San Diego population. Hollywood Casino Jamul-San Diego
will open with more than 1,700 slot machines, 43 live table games,
an upscale lounge featuring national and regional entertainment, a
beer garden, a broad range of dining amenities including a
four-venue food court and Tony Gwynn’s Sports Pub, and an
eight-story partially subterranean parking garage with over 1,800
parking spaces. Earlier this month, the County of San Diego Board
of Supervisors approved a Memorandum of Understanding between the
County and the Jamul Indian Village, which, along with a Fire
Services Agreement, provides funding to the County for fire and
public safety services, and for County roadway improvements.
Throughout the first quarter we continued to pursue third party
financing for the Jamul Indian Village note and remain confident in
the overall economics of this project and prospects for permanent
financing at a time that is optimal for both the Jamul Indian
Village and Penn National.
“We also continue to advance our initiatives in social gaming,
which represent emerging growth platforms that complement our
expanding regional gaming portfolio. Last week we announced the
launch of our new mobile social casino game, Hollywood Slots, which
features exclusive content incorporating entertaining elements of
Penn National’s popular Hollywood brand. The launch of Hollywood
Slots further expands Penn National’s presence in the social casino
marketplace, providing players with an outstanding suite of mobile
games which we expect to generate incremental revenue as well as
increase customer engagement through anytime, anywhere social
casino games available for any screen.
“In addition, we are encouraged by the results being achieved by
the deployment of Scientific Games’ Play4Fun platform,
HollywoodCasino.com. Since its launch during the third quarter of
2015, this offering has begun to generate revenues, enhance our
customer data base analytics and has been rolled out across all of
our gaming properties as we seek to address the significant portion
of our database members that already participate in social and
online gaming.
“Our first quarter results mark a strong start to 2016 and with
regional gaming trends remaining solid, we are confident in our
prospects for continued growth this year based on the
macro-economic environment, the abilities of our operating teams to
drive improved adjusted EBITDA margins from existing properties,
the mid-summer opening of Hollywood Casino Jamul-San Diego, and the
ongoing ramp of our recently opened or acquired operations in Ohio,
Massachusetts, Nevada and Illinois.”
Development and Expansion
Projects
The table below summarizes Penn
National Gaming’s ongoing development project:
Project/Scope
NewGamingPositions
Planned Total
Budget
Amount Expendedthrough
March31, 2016
Expected Opening
Date
(in millions) (unaudited)
Jamul Indian Village project (CA) -
Construction continues at the site for thisnew Hollywood Casino
branded gaming operation which Penn will manage.The facility is
anticipated to feature over 1,700 slot machines, 43 live tablegames
including poker, multiple restaurants, bars and lounges.
1,958 $390 (1) $209.9 (1) mid-summer 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 $60 million subordinated promissory note from the previous
developer of the project during the fourth quarter of 2015 for $24
million.
Financial Guidance
Reflecting the current operating and competitive environment,
the table below sets forth 2016 second quarter and full year
guidance targets for financial results based on the following
assumptions:
- A mid-summer opening of Hollywood
Casino Jamul-San Diego and no third party financing obtained for
the facility during 2016;
- MGM National Harbor opens in the fourth
quarter of 2016 impacting Hollywood Casino at Charlestown
Races;
- A full year contribution from the
Company’s management contract for Casino Rama;
- Full year corporate overhead expenses
of $81.5 million, with $20.2 million to be incurred in the second
quarter of 2016;
- Depreciation and amortization charges
in 2016 of $267.5 million, with $67.3 million in the second quarter
of 2016, which includes depreciation expense related to real
property leased from GLPI;
- Payments to GLPI of $445.4 million in
2016, with $111.8 million in the second quarter of 2016, which will
reduce our March 31, 2016 financing obligation by $13.0 million at
June 30, 2016 and $37.9 million at December 31, 2016, respectively,
with the remaining payments recorded as interest expense.
- Our rent coverage ratio for year three
of the Master Lease at March 31, 2016 is 1.80 and we expect to
incur the maximum rent escalation of $5.1 million at October 31,
2016, which is the conclusion of year three of the Master Lease, of
which $0.9 million will be incurred in 2016 and is reflected within
interest expense;
- Interest expense in 2016 of $466.9
million, with $115.9 million in the second quarter of 2016, which
includes the interest expense related to the Master Lease financing
obligation with GLPI;
- Non-cash accrued interest income on the
loan to the Jamul Tribe of $11.5 million, with $6.5 million accrued
in the second quarter of 2016;
- Our share of non-operating items (such
as depreciation and amortization expense) associated with our
Kansas JV will total $10.3 million for 2016, with $2.6 million to
be incurred in the second quarter of 2016;
- Estimated non-cash stock compensation
expenses of $7.6 million for 2016, with $2.0 million to be incurred
in the second quarter of 2016;
- LIBOR is based on the forward yield
curve;
- A diluted share count of approximately
91.9 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, except per share data) Three
Months Ending June 30, Full Year Ending December 31,
2016 Guidance 2015 Actual
2016 RevisedGuidance
2016 PriorGuidance (1)
2015 Actual Net revenues $ 786.8 $ 701.0 $
3,053.5 $ 3,053.9 $ 2,838.4
Adjusted EBITDA 225.5
195.4 851.0 841.2 796.3
Less: Impact of stock compensation,
impairment charges,insurance recoveries, non-operating items for
Kansas JV,depreciation and amortization, changes in the estimated
fair valueof contingent purchase price, gain/loss on disposal of
assets,interest expense - net, income taxes, and other expenses
(200.4) (192.4) (771.0) (771.4)
(795.6)
Net income (loss) $ 25.1 $ 3.0 $ 80.0 $ 69.8 $ 0.7
Diluted earnings
(loss) per common share $ 0.27 $ 0.03 $ 0.87 $ 0.76 $ 0.01
(1) The guidance figures in the table above present
the guidance Penn National Gaming provided on February 4, 2016 for
the full year ended December 31, 2016.
PENN NATIONAL GAMING, INC. AND
SUBSIDIARIESSegment Information – Operations(in thousands)
(unaudited)
NET REVENUES ADJUSTED EBITDA Three
Months Ended March 31, Three Months Ended March 31,
2016 2015 2016 2015
East/Midwest (1) $ 437,457 $ 386,544 $ 134,798 $ 116,477 West (2)
87,559 62,585 20,055 17,879 Southern Plains (3) 225,235 210,269
77,694 72,806 Other (4) 6,200 4,740 (19,664)
(22,783)
Total $ 756,451 $
664,138 $ 212,883 $ 184,379
(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,
Hollywood Gaming at Mahoning Valley Race Course, 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 three months ended March 31, 2015 included
preopening costs of $2.5 million, partially offset by a property
tax refund of approximately $2.0 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 mid-summer of 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, and Hollywood
Casino St. Louis and Prairie State Gaming, which was acquired on
September 1, 2015, and includes the Company’s 50% investment in
Kansas Entertainment, which owns the Hollywood Casino at Kansas
Speedway. (4) The Other category consists of the Company’s
standalone racing operations, namely 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 gaming initiatives. The Other
category also includes the Company’s corporate overhead costs,
which were $20.6 million for the three months ended March 31, 2016,
as compared to corporate overhead costs of $23.2 million for the
three months ended March 31, 2015. Corporate overhead costs
included cash-settled stock-based compensation charges of $4.9
million for the three months ended March 31, 2016 compared to $9.0
million for the corresponding period in the prior year. Results for
the first quarter of 2016 also included severance costs of $0.5
million.
The Company recently announced a realignment of its reporting
structure that will result in certain changes to our reportable
segments. We plan to finalize these changes to our internal
management reporting system in the second quarter which will result
in the following three geographic regions: Northeast, Midwest and
South/West. Therefore, we anticipate providing supplemental
disclosures that will restate our historical segment information
for each quarter in 2014 and 2015 as well as the first quarter of
2016 in the first quarter Form 10-Q to conform to our new
structure. The changes in the segment reporting will have no effect
on the Company’s previously reported consolidated operating
results.
Reconciliation of Net income (GAAP) to
Adjusted EBITDA
PENN NATIONAL GAMING, INC. AND
SUBSIDIARIES(in thousands) (unaudited)
Three Months Ended March 31, 2016
2015 Net income $ 23,708
$ 1,869 Income tax provision 7,734 10,415 Other 2,426
(3,089) Income from unconsolidated affiliates (4,609) (3,982)
Interest income (5,240) (1,870) Interest expense 116,512
108,346
Income from operations $
140,531 $ 111,689 (Gain) loss on disposal of
assets (1,101) 153 Charge for stock compensation 1,455 2,084
Contingent purchase price (1,201) 351 Depreciation and amortization
66,020 63,369 Income from unconsolidated affiliates 4,609 3,982
Non-operating items for Kansas JV 2,570 2,751
Adjusted EBITDA $ 212,883 $
184,379
Reconciliation of Income (loss) from
operations (GAAP) to Adjusted EBITDA
PENN NATIONAL GAMING, INC. AND
SUBSIDIARIESSegment Information(in thousands) (unaudited)
Three Months Ended March 31,
2016
East/Midwest West
Southern Plains Other Total Income (loss) from
operations $ 111,140 $ 13,833 $ 60,158 $ (44,600)
$
140,531 Charge for stock compensation - - - 1,455
1,455 Depreciation and amortization 24,840 6,205 10,281
24,694
66,020 Contingent purchase price (1,201) - - -
(1,201) Loss (gain) on disposal of assets 19 17 (33) (1,104)
(1,101) Income from unconsolidated affiliates - - 4,718
(109)
4,609 Non-operating items for Kansas JV (1) -
- 2,570 -
2,570 Adjusted
EBITDA $ 134,798 $ 20,055 $
77,694 $ (19,664) $ 212,883
Three Months Ended March 31,
2015
East/Midwest West Southern Plains
Other Total Income (loss) from operations $ 90,863 $
15,526 $ 55,385 $ (50,085)
$ 111,689 Charge for stock
compensation - - - 2,084
2,084 Depreciation and amortization
25,385 2,172 10,782 25,030
63,369 Contigent purchase price
351 - - -
351 (Gain) loss on disposal of assets (122) 181
100 (6)
153 Income from unconsolidated affiliates - - 3,788
194
3,982 Non-operating items for Kansas JV (1) -
- 2,751 -
2,751 Adjusted
EBITDA $ 116,477 $ 17,879 $
72,806 $ (22,783) $ 184,379
(1) Adjusted EBITDA excludes our share of the impact
of non-operating items (such as depreciation and amortization) from
our joint venture in Kansas Entertainment.
PENN NATIONAL GAMING, INC. AND
SUBSIDIARIESConsolidated Statements of Operations(in thousands,
except per share data) (unaudited)
Three Months Ended March 31, 2016
2015 Revenues Gaming $ 656,701 $
591,336 Food, beverage, hotel and other 137,848 108,763 Management
service fee 2,473 1,927 Revenues 797,022 702,026 Less
promotional allowances (40,571) (37,888) Net revenues
756,451 664,138
Operating expenses
Gaming 335,317 294,895 Food, beverage, hotel and other 98,079
77,929 General and administrative 116,504 116,256 Depreciation and
amortization 66,020 63,369 Total operating expenses
615,920 552,449 Income from operations 140,531
111,689
Other income (expenses) Interest
expense (116,512) (108,346) Interest income 5,240 1,870 Income from
unconsolidated affiliates 4,609 3,982 Other (2,426)
3,089 Total other expenses (109,089) (99,405)
Income from operations before income taxes 31,442 12,284
Income tax provision 7,734 10,415
Net income $
23,708 $ 1,869
Earnings per common share: Basic
earnings per common share $ 0.26 $ 0.02 Diluted earnings per common
share $ 0.26 $ 0.02
Weighted-average common shares
outstanding: Basic 80,968 79,400 Diluted 91,091 90,392
PENN NATIONAL GAMING, INC. AND
SUBSIDIARIESSupplemental information(in thousands)
(unaudited)
March 31, 2016 December 31, 2015
Cash and cash equivalents $ 214,238 $ 237,009 Bank
Debt $ 1,230,031 $ 1,239,049 Notes 296,413 296,252 Other long term
obligations (1) 167,968 175,658 Total Debt (2) $
1,694,412 $ 1,710,959 Financing obligation with GLPI (3) $
3,551,981 $ 3,564,629 1) Other long term obligations
at March 31, 2016 include $125.3 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, $14.4 million
related to our repayment obligation on a hotel and event center
located near Hollywood Casino Lawrenceburg and $28.2 million
related to capital lease obligations primarily attributable to a
corporate airplane lease. 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 March 31, 2016 or December 31, 2015. 3) The
financing obligation is calculated based on the present value of
the future minimum lease payments over the remaining lease term,
which includes all renewal options since they were reasonably
assured of being exercised at lease inception.
The Company’s Master Lease with GLPI is accounted for as a
financing obligation. As such, payments to GLPI are recorded as
interest expense and a reduction to our financing obligation. The
table below reflects the total payments to GLPI for the three
months ended March 31, 2016 and 2015 and the treatment of these
payments on Penn’s financial statements.
Three Months Ended March 31, 2016
2015 Reduction in GLPI financing obligation $ 12,648
$ 12,475 Amount attributable to interest expense 98,748
96,370 Total payments to GLPI $ 111,396 $ 108,845
The Company’s definition of adjusted EBITDA adds back our share
of the impact of non-operating items (such as depreciation and
amortization) at our joint ventures that have gaming operations. At
this time, 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. The table below presents cash flow
distributions we have received from this investment for the three
months ended March 31, 2016 and 2015.
Three Months Ended March 31, 2016
2015 Cash flow distributions $ 7,400 $ 8,000
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 payments associated with
our Master Lease agreement with GLPI as the transaction was
accounted for as a financing obligation. 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.
A reconciliation of the Company’s net income (loss) per GAAP to
adjusted EBITDA, as well as the Company’s income (loss) from
operations per GAAP to adjusted EBITDA, is included above.
Additionally, a reconciliation of each segment’s income (loss) from
operations to adjusted EBITDA is also included above. On a segment
level, income (loss) from operations per GAAP, rather than net
income (loss) per GAAP is reconciled to adjusted EBITDA due to,
among other things, the impracticability of allocating interest
expense, interest income, income taxes and certain other items to
the Company’s segments on a segment by segment basis. Management
believes that this presentation is more meaningful to investors in
evaluating the performance of the Company’s segments and is
consistent with the reporting of other gaming companies.
Conference Call, Webcast and Replay Details
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 212/231-2929.
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 March 31,
2016, 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 March 31, 2016, 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 its expectations
are based on reasonable assumptions within the bounds of its
knowledge of its business, there can be no assurance that actual
results will not differ materially from our expectations.
Meaningful factors that could cause actual results to differ from
expectations include, but are not limited to, risks related to the
following: the assumptions included in our financial guidance; the
ability of our operating teams to drive improved adjusted EBITDA
margins; 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 litigation by the Ohio Roundtable addressing the legality
of gaming in Ohio; changes in accounting standards; the impact of
weather; with regard to our recent Restatement, risks relating the
remediation of any material weaknesses and the costs to strengthen
our internal control structure, potential investigations,
litigation or other proceedings by governmental authorities,
stockholders or other parties, and the risks related to the impact
of the recent restatement of the Company’s financial statements on
the Company’s reputation, development projects, joint ventures and
other commercial contracts; the ability of the Company to generate
sufficient future taxable income to realize its deferred tax
assets; with respect to the proposed Jamul project near San Diego,
California, particular risks associated with financing/refinancing
a project of this type, sovereign immunity, local opposition
(including several pending lawsuits), building a complex project on
a relatively small parcel and the receipt of all necessary permits
and licenses; with respect to our Massachusetts project, the
ultimate location and timing of the other gaming facilities in the
state and region; 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 Prairie State Gaming, 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, 2015, 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/20160428005380/en/
Penn National Gaming, Inc.Saul V. Reibstein, 610-401-2049Chief
Financial OfficerorJCIRJoseph N. Jaffoni / Richard
Land212-835-8500penn@jcir.com
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