Penn National Gaming Reports Fourth Quarter Revenues of $1.34 Billion, Net Loss of $92.9 Million, Adjusted EBITDA of $304.0 Million, and Adjusted EBITDAR of $399.4 Million

by Administrator
February 6, 2020 at 7:00 AM EST

- Traditional Debt Reduced by Approximately $70 Million in the Fourth Quarter -

- Company Initiates 2020 Full Year Adjusted EBITDAR Guidance Range of $1.67 Billion to $1.70 Billion -

WYOMISSING, Pa.--(BUSINESS WIRE)--Feb. 6, 2020-- Penn National Gaming, Inc. (NASDAQ: PENN) (“Penn National” or the “Company”) today reported financial results for the three months and year ended December 31, 2019 and initiated 2020 full year guidance.

2019 Fourth Quarter Financial Highlights:

  • Revenues of $1.34 billion, an increase of $185.9 million year over year;
  • Net loss of $92.9 million and net loss margin of 6.9%, principally driven by $173.1 million of impairment losses, as compared to net loss of $42.0 million and net loss margin of 3.6% in the prior year;
  • Adjusted EBITDA of $304.0 million, a decrease of $16.1 million year over year;
  • Adjusted EBITDAR of $399.4 million, an increase of $75.5 million year over year, which exceeded guidance for the fourth quarter;
  • Adjusted EBITDAR margin of 29.8%, marking an increase of 180 basis points year over year;
  • Cash payments to our REIT Landlords under Triple Net Leases of $224.4 million, an increase of $34.0 million year over year; and,
  • Traditional debt decreased by $69.8 million during the quarter, principally due to repayments under our senior secured credit facilities. As of December 31, 2019, our traditional net debt ratio was 2.4x and net leverage on a lease-adjusted basis was 5.5x.

Jay Snowden, President and Chief Executive Officer, commented: “This past year has been transformational for Penn National, our team members and our shareholders and we are proud of what our team has accomplished in 2019. We completed the integration of Pinnacle Entertainment, which added 12 new gaming properties and three new states to our portfolio and over 10,000 new team members to the Penn National family. We accomplished this while achieving record Adjusted EBITDAR, increasing margins, reducing debt, and just as importantly, coming together as one team under one company culture. We were honored to be named the casino industry’s Employer of Choice by Bristol Associates and Spectrum Gaming Group in its most recent survey, ranking ahead of 30 other prominent gaming companies. This demonstrates our ongoing dedication to fostering a service-focused culture that attracts and retains top talent. This is critical to our ability to provide unparalleled gaming entertainment experiences for our guests, which is highlighted in our fourth quarter results.

“Our quarterly Adjusted EBITDAR of $399.4 million exceeded our guidance of $394.5 million, which demonstrates the size and strength of our regional gaming footprint and our focus on execution. Despite new competition in the Northeast, all our segments generated year over year Adjusted EBITDAR growth and margin expansion. We are also starting to see the positive impact of Penn Interactive on the Other segment. Having fully integrated our loyalty program, mychoice, this past year, we are happy to report that we had the highest market share and best margins ever at our properties in Kansas City and St. Louis. This speaks to the power of operating a unified player loyalty program. In addition, our sports betting business has helped drive outsized table games volume and increased food and beverage business revenues. We are very excited about our growth prospects and the recent developments that set us up well for 2020 and beyond.”

Sports Betting / Barstool Sports and iCasino

Mr. Snowden continued: “As previously announced, we entered into an agreement to acquire an approximately 36% equity interest in Barstool Sports, Inc. (“Barstool Sports”), becoming its exclusive gaming partner for a period of up to 40 years. This investment creates a unique opportunity, allowing us to execute on our strategy to evolve from the nation’s largest regional gaming operator to a best-in-class omni-channel provider of retail and online gaming and sports betting entertainment. Barstool Sports is an ideal partner as it will allow us to attract a younger demographic that is complementary to our existing customer base. Barstool Sports’ 66 million monthly unique visitors, its significant reach and the loyalty of its audience will lead to meaningful reductions in customer acquisition and promotional costs. In connection with our partnership, we have the sole right to utilize the Barstool Sports brand for all the Company’s online and retail sports betting and iCasino products. We took a long-term perspective with our investment, retaining 100% of the economics from the retail and online sportsbook, as well as casino and non-gaming revenues. We see meaningful cross-selling opportunities and would expect recently enacted sports betting legislation in states such as Colorado and Michigan to positively impact our brick and mortar business. We anticipate being live with sports betting in these markets as soon as we receive all necessary regulatory approvals. In addition, apart from Nevada, which will be converted by February 2021, we expect our in-house team at Penn Interactive to manage all of Penn National's retail sportsbooks by the end of the first quarter of 2020. Our team of over 50 talented product developers and engineers are creating a best-in-class sports betting app that will introduce our 20 million mychoice customers and Barstool Sports’ 66 million monthly unique visitors to the Barstool Sportsbook brand, expected to be launched in the third quarter of 2020.”

“In regard to our Pennsylvania iCasino app, we have leveraged our land-based database to drive volume to our iCasino platform,” Mr. Snowden commented. “We are pleased with this strategy, which is geared towards increasing handle and minimizing customer acquisition costs. Executing with a focus on operational excellence, we were able to turn a small profit in the fourth quarter despite an onerous 54% tax rate on slot revenues. To date, a significant percentage of online play has been from existing mychoice guests, and more importantly, this business has been incremental to the brick and mortar business. In addition, iCasino has allowed us to reengage with a large portion of inactive mychoice members.”

“Finally, on the sports betting front, we compared the performance of our properties where we launched new sportsbooks in 2019 to their performance in 2018,” Mr. Snowden continued. “The analysis showed that existing guests, who started engaging in sports betting, visited our properties more frequently and contributed to meaningfully higher revenues in 2019 than they did in 2018. At Hollywood Casino Lawrenceburg, for instance, we saw a significant increase in gross gaming revenues, particularly driven by the table games segment. Likewise, our food and beverage business benefited substantially from the introduction of sports betting at this property.”

Pennsylvania Category 4 Casino Projects

“We are proceeding on track with the development of the $120 million Hollywood Casino York and the $111 million Hollywood Casino Morgantown projects (both inclusive of the gaming license fees),” affirmed Mr. Snowden. “We anticipate opening our Morgantown facility in November of this year. As for our York facility, we received final licensing approval from the Pennsylvania Gaming Control Board last December. Our intention is to open the York facility before year-end with 500 slot machines and 24 table games.”

Capital Management

“We continued to de-lever, reducing our traditional debt by approximately $70 million in the fourth quarter. We ended the period with net leverage on a lease-adjusted basis of 5.5x,” said Mr. Snowden. “Our ability to generate significant free cash flow provides us with the financial flexibility to capitalize on attractive investment opportunities, like Barstool Sports, and still focus on de-levering. As such, our goal remains to achieve a lease-adjusted net leverage level of 5.0x by the end of 2020.”

Summary of Fourth Quarter Results


For the three months ended December 31,

(in millions, except per share data, unaudited)

2019 Actual


2019 Guidance (1)


2018 Actual













Net income (loss)


















Adjusted EBITDA (2)












Rent expense associated with triple net operating leases (3)









Adjusted EBITDAR (2)












Cash payments to our REIT Landlords under Triple Net Leases (4)


















Diluted earnings (loss) per common share












  1. As provided by Penn National on October 31, 2019.
  2. 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.
  3. 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.”
  4. 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”).