Penn National Gaming, Inc. (PENN: Nasdaq) (“Penn National” or
the “Company”) announced today that it has raised its financial
guidance for the 2017 first quarter ending March 31, 2017.
Reflecting strong broad-based property performance to date, the
Company now expects to report 2017 first quarter net revenue of
between $770 million and $771 million and Adjusted EBITDA of
between $222 million and $223 million. As a result, Penn National
projects Adjusted EBITDA after master lease payments will be $110
million to $111 million for the 2017 first quarter ending March 31,
2017. The Company’s prior financial guidance for the 2017 first
quarter (issued February 2, 2017) contemplated net revenue of
$761.0 million and Adjusted EBITDA of $209.3 million. Penn
National’s guidance included an assumption for master lease
payments of $111.9 million in the first quarter of 2017 which would
imply original guidance of Adjusted EBITDA after master lease
payments of $97.4 million. Penn National expects to report its 2017
first quarter results before the market opens on April 27, 2017 and
plans to update its 2017 full year financial guidance at that
time.
Timothy J. Wilmott, Penn National’s President and Chief
Executive Officer, stated, “Our year-to-date performance reflects
strength across the portfolio and Penn National’s updated first
quarter Adjusted EBITDA after master lease payments is pacing
approximately 13% to 14% ahead of our prior expectations. As we
look to the balance of the year, our ongoing efforts to optimize
operating efficiencies are enabling us to further improve margins
which, combined with our strategy of growing our omni-channel
platform of casino operations, retail gaming and social gaming
assets, support our efforts to increase cash flows, reduce leverage
and return capital to shareholders.”
The updated adjusted EBITDA and updated Adjusted EBITDA after
master lease payments for the period ending March 31, 2017 do not
include potential fluctuations in corporate expense related to
cash-settled, stock-based awards.
Use of Non-GAAP Measures
In addition to GAAP financial measures, adjusted EBITDA is used
by management as an important measure of the Company’s operating
performance. We define adjusted EBITDA as earnings before interest,
taxes, stock compensation, debt extinguishment charges, impairment
charges, insurance recoveries and deductible charges, depreciation
and amortization, changes in the estimated fair value of our
contingent purchase price obligations, gain or loss on disposal of
assets, and other income or expenses. Adjusted EBITDA is also
inclusive of income or loss from unconsolidated affiliates, with
our share of non-operating items (such as depreciation and
amortization) added back for our joint venture in Kansas
Entertainment. Adjusted EBITDA excludes payments associated with
our Master Lease agreement with Gaming and Leisure Properties, Inc.
(“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 used in the
valuation of gaming companies, and that it is considered by many to
be a key indicator of the Company’s operating results. Management
uses adjusted EBITDA as an important measure 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 a measure 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.
Adjusted EBITDA after master lease payments is a measure we
believe provides useful information to investors because it is an
indicator of the performance of ongoing business operations after
incorporating the cash flow impact of lease payments to GLPI.
Additionally, this treatment is consistent with how our
conventional debt and Master Lease financial covenant calculations
are calculated and is the metric that our executive management team
is measured against for incentive based compensation purposes.
A reconciliation of the Company’s net income (loss) per GAAP to
adjusted EBITDA, as well as the Company’s income (loss) from
operations per GAAP to adjusted EBITDA, was included with the
Company’s 4Q 2016 earnings press release dated February 2, 2017, in
addition to a reconciliation of each segment’s income (loss) from
operations to adjusted EBITDA. The Company is not including an
updated reconciliation with respect to the revised guidance
included in this press release because the Company is not presently
able to estimate certain of the items excluded from Adjusted EBITDA
that would be necessary to calculate net income; the Company
intends to provide such a reconciliation when it reports its
financial results for the first quarter of 2017. All references to
the master lease refer to the Master Lease between GLP Capital,
L.P. and Penn Tenant, LLC dated November 1, 2013.
About Penn National Gaming
Penn National Gaming is a diversified, multi-jurisdictional
owner and manager of gaming and racing facilities and video gaming
terminal operations. The Company recently expanded into social
online gaming offerings via its Penn Interactive Ventures, LLC
division and its recent acquisition of Rocket Speed, Inc. (formerly
known as Rocket Games, Inc.). Penn National currently owns,
manages, or has ownership interests in twenty-seven facilities in
the following seventeen jurisdictions: California, Florida,
Illinois, Indiana, Kansas, Maine, Massachusetts, Mississippi,
Missouri, Nevada, New Jersey, New Mexico, Ohio, Pennsylvania,
Texas, West Virginia, and Ontario, Canada.
Forward-Looking Statements
This press release may include “forward-looking statements”
within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. These statements can be identified by the use of forward
looking terminology such as “expects,” “believes,” “estimates,”
“intends,” “may,” “will,” “should” or “anticipates” or the negative
or other variation of these or similar words, or by discussions of
future events, strategies or risks and uncertainties. Such forward
looking statements are inherently subject to risks, uncertainties
and assumptions about Penn National Gaming and its subsidiaries,
including risks relating to achieving or exceeding the financial
guidance set forth herein and accordingly, any forward looking
statements are qualified in their entirety by reference to the
forward looking statements described in the February 2, 2017 press
release announcing our initial guidance for 2017, the factors
described in Penn National Gaming’s Annual Report on Form 10-K for
the year ended December 31, 2016, subsequent Quarterly Reports on
Form 10-Q and Current Reports on Form 8-K as filed with the
Securities and Exchange Commission. All subsequent written and oral
forward looking statements attributable to Penn National Gaming or
persons acting on the Company’s behalf are expressly qualified in
their entirety by the cautionary statements included herein. Penn
National Gaming undertakes no obligation to publicly update or
revise any forward looking statements except as required by
law.
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version on businesswire.com: http://www.businesswire.com/news/home/20170323005686/en/
Penn National GamingWilliam J. Fair, 610-373-2400Chief Financial
OfficerorJCIRJoseph N. Jaffoni / Richard
Land212-835-8500penn@jcir.com
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