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PENN Entertainment Reports Third Quarter Results
PENN Entertainment, Inc. reported financial results for the three and nine months ended September 30, 2023.
Jay Snowden, Chief Executive Officer and President, said: “Our property level performance was stable in the third quarter reflecting solid results from our rated traditional core customer. We continued to see relative strength in several locations, including our casinos in Ohio, Kansas, Massachusetts, and Missouri, which highlights the benefits of our geographically diversified portfolio of premier regional gaming assets and the addition of retail sports betting offerings at many of our properties. Third quarter Interactive segment results reflect curtailed marketing in the U.S. as we prepared to transition our online sportsbook to the ESPN BET brand. Finally, we are excited to announce that we plan to simultaneously launch ESPN BET on November 14 across the 17 states in which we operate online sports betting, subject to final approvals. This strategic alliance is expected to further expand our digital ecosystem and drive re-engagement with the millions of customers in our digital and retail databases, leading to compelling cross-sell opportunities.
Stable Retail Performance
Property level highlights1:
- Revenues of $1.42 billion;
- Adjusted EBITDAR of $523.4 million; and
- Adjusted EBITDAR margins of 36.8%.
“Retail performance this quarter was supported by a slight uptick in volumes from our rated customers, offsetting softness in our unrated segment in the South region, the continued return of our 65+ demographic, and moderate growth in our spend per visit trends,” said Mr. Snowden. “Additionally, our portfolio benefited from new and sustained engagement driven by our market leading retail sportsbook concepts. With the recent launch of our enhanced customer loyalty program, PENN Play™, we have continued to drive database growth and customer engagement. Our database now has over 27 million members, with approximately 40% of our growth for the quarter coming from our online offerings. Our continued investments in technology to improve the customer journey has led to 2.2 million app downloads, and we are seeing a double-digit premium in retail theoretical from guests that engage with us through the PENN Play app versus non app users. Finally, the adoption of our industry leading cashless, cardless and contactless technology (“3C’s”), which is now deployed at twenty-one properties, with more on the way, has resulted in approximately $225 million in deposits into the PENN Wallet.
“We are also pleased to announce that we expect to break ground on our four growth projects throughout November and December of this year. These investments in the aggregate will create long-term shareholder value driven by their attractive return profiles and also contribute to our strong free cash flow generation upon opening in late 2025 and early 2026.
ESPN BET Planned Launch on November 142
Interactive Segment highlights:
- Revenues of $196.3 million (including tax gross up of $102.6 million); and
- Adjusted EBITDA loss of $50.2 million.
“We are extremely excited to announce the planned launch of ESPN BET prior to the active Thanksgiving week sports calendar that includes the NCAA college football rivalry week and the Super Bowl rematch of the Kansas City Chiefs and the Philadelphia Eagles televised on ESPN’s Monday Night Football. ESPN BET will be powered by our proprietary and proven technology platform, which continues to drive impressive performance in Ontario under theScore Bet brand for both online sports betting and iCasino. Our ESPN BET product will include a wide array of popular betting options, including featured bets, quick bets (micro-markets), player props, same game parlays and more. In connection with the launch, ESPN will be implementing an initial wave of exclusive integrations targeting their 200 million loyal fans across their linear and digital platforms, including an advertising campaign headlined by SportsCenter anchors Scott Van Pelt and Elle Duncan. Looking ahead, we will be introducing even deeper platform and media integrations with ESPN over the upcoming months, providing an unmatched and seamless media/betting experience that will appeal to sports fans across the country.
ESG – Caring for our People, our Communities and our Planet
“Reflective of the continued strides we have made to date on the ESG front, Forbes Magazine once again named PENN as one of ‘America’s Best Employers for Diversity 2023’ and ‘America’s Best Large Employers for 2023.’ In addition, Newsweek added PENN to their list of ‘Greatest Workplaces for 2023’ and Time Magazine named PENN one of the ‘World’s Best Companies.’ Finally, on October 4, our Company was once again honored by the Women’s Forum as a 2023 Champion of Board Diversity. During the quarter we updated our Scope 1 and 2 greenhouse gas emissions inventory for 2022 and are finalizing our 2022 Scope 3 inventory, the results of which will be included in our Corporate Social Responsibility Report in April 2024. In addition to alignment with the Casino and Gaming industry standard of the SASB reporting framework, we are working toward alignment with the Task Force on Climate-Related Financial Disclosures (“TCFD”). We also recently submitted our inaugural CDP climate-change disclosure.”
Liquidity Remains Strong
Total liquidity as of September 30, 2023 was $2.3 billion inclusive of $1.3 billion in cash and cash equivalents. Traditional net debt as of the end of the quarter was $1.3 billion and the lease-adjusted net leverage ratio was 4.7x.
Additional information on PENN’s reported results, including a reconciliation of the non-GAAP results to their most comparable GAAP measures, is included in the financial tables below. The Company does not provide a reconciliation of projected Adjusted EBITDA and Adjusted EBITDAR because it is unable to predict with reasonable accuracy the value of certain adjustments that may significantly impact the Company’s results, including realized and unrealized gains and losses on equity securities, re-measurement of cash-settled stock-based awards, contingent purchase payments associated with prior acquisitions, and income tax (benefit) expense, which are dependent on future events that are out of the Company’s control or that may not be reasonably predicted.
Summary of Third Quarter Results
|
|
For the three months ended September 30, |
|||||
|
(in millions, except per share data, unaudited) |
|
2023 |
|
|
|
2022 |
|
Revenues |
$ |
1,619.4 |
|
|
$ |
1,625.0 |
|
Net income (loss) |
$ |
(725.1 |
) |
|
$ |
123.2 |
|
|
|
|
|
|||
|
Adjusted EBITDA (1) |
$ |
298.5 |
|
|
$ |
440.4 |
|
Rent expense associated with triple net operating leases (2) |
|
146.6 |
|
|
|
31.5 |
|
Adjusted EBITDAR (1) |
$ |
445.1 |
|
|
$ |
471.9 |
|
Payments to our REIT Landlords under Triple Net Leases (3) |
$ |
235.0 |
|
|
$ |
232.0 |
|
|
|
|
|
|||
|
Diluted earnings (loss) per common share |
$ |
(4.80 |
) |
|
$ |
0.72 |
|
(1) |
|
For more information, definitions, and reconciliations see the “Non-GAAP Financial Measures” section below. |
|
(2) |
|
Consists of the operating lease components contained within our triple net master lease dated November 1, 2013 with Gaming and Leisure Properties, Inc. (Nasdaq: GLPI) (“GLPI”) that was amended and restated effective January 1, 2023 (referred to as the AR PENN Master Lease and prior to January 1, 2023 referred to as the PENN Master Lease); our triple net master lease effective January 1, 2023 entered in conjunction with and coterminous to the AR PENN Master Lease (referred to as the 2023 Master Lease); our individual triple net lease with GLPI for the real estate assets used in the operations of Hollywood Casino at The Meadows prior to the effective date of the 2023 Master Lease (referred to as the Meadows Lease); our individual triple net lease with GLPI for the real estate assets used in the operations of Tropicana Las Vegas which terminated on September 26, 2022 (referred to as the Tropicana Lease); as well as our individual triple net leases with VICI Properties Inc. (NYSE: VICI) (“VICI”) for the real estate assets used in the operations of Margaritaville Resort Casino (referred to as the Margaritaville Lease) and Hollywood Casino at Greektown (referred to as the Greektown Lease) and referred to collectively as our “triple net operating leases.” For the three months ended September 30, 2023, rent expense associated with triple net operating leases pertains to (i) the AR PENN Master Lease; (ii) the 2023 Master Lease; (iii) the Margaritaville Lease; and (iv) the Greektown Lease. For the three months ended September 30, 2022, rent expense associated with triple net operating leases pertains to (i) the PENN Master Lease (specific to the land and building components associated with the operations of Hollywood Gaming at Dayton Raceway and Hollywood Gaming at Mahoning Valley Race Course); (ii) the Meadows Lease; (iii) the Margaritaville Lease; (iv) the Greektown Lease; and (v) the Tropicana Lease which terminated on September 26, 2022. |
|
(3) |
|
Consists of payments made to GLPI and VICI (referred to collectively as our “REIT Landlords”) under the AR PENN Master Lease, the PENN Master Lease, the 2023 Master Lease, the Pinnacle Master Lease, the Meadows Lease (prior to the effective date of the 2023 Master Lease), the Perryville Lease (prior to the effective date of the 2023 Master Lease), the Margaritaville Lease, the Greektown Lease, the Morgantown Lease, and the Tropicana Lease and collectively referred to as our “Triple Net Leases.” The rent under the Tropicana Lease was nominal prior to lease termination. |
Adjusted EPS
The following table reconciles diluted earnings (loss) per share (“EPS”) to Adjusted EPS (approximate EPS impact shown, per share; positive adjustments represent charges to income):
|
|
For the three months ended September 30, |
||||||
|
|
|
2023 |
|
|
|
2022 |
|
|
Diluted earnings (loss) per share |
$ |
(4.80 |
) |
|
$ |
0.72 |
|
|
Impairment losses |
|
— |
|
|
|
0.60 |
|
|
Business interruption insurance proceeds |
|
(0.09 |
) |
|
|
— |
|
|
Transaction related expenses |
|
0.10 |
|
|
|
0.26 |
|
|
Non-operating items: |
|
|
|
||||
|
Loss on disposal of Barstool |
|
6.12 |
|
|
|
— |
|
|
Loss related to debt and equity investments |
|
— |
|
|
|
0.06 |
|
|
Foreign currency transaction gain |
|
||||||
- The sponsorship agreement between CONMEBOL and Betano reinforces their commitment to the development of football, as part of organising one of the continent’s most important tournaments.
- The CONMEBOL Copa América Femenina 2025™ will be held in Ecuador from July 12 to August 2.
CONMEBOL (Confederación Sudamericana de Fútbol) and Kaizen Gaming are proud to announce the later’s premium sports betting and online gaming brand, Betano, as the Official Sponsor of CONMEBOL Copa América Femenina 2025™.
Hosted in Ecuador from July 12th to August 2nd, this year’s tournament is especially significant as it marks the 10th anniversary of the CONMEBOL Copa América Femenina™. Bringing together South America’s 10 women’s football teams, the tournament is a celebration of both football in the continent and women’s sport. At the end of each game, Betano will present the top-performing player with the “MVP Betano” award.
Alejandro Domínguez, President of CONMEBOL, said: “Women’s football is gaining unprecedented momentum across South America. At CONMEBOL, we are focused on promoting the sport, encouraging young women to get involved and fall in love with our beautiful game, and creating better conditions for those who want to pursue a career in football. There is still much work ahead, but having partners like Betano by our side will enable us to elevate women’s football across the continent to new heights. I am confident that our collaboration for the CONMEBOL Copa América Femenina 2025™ will be as successful as the one we had during the CONMEBOL Copa América™️2024”.
Julio Iglesias Hernando, Chief Commercial Officer of Kaizen Gaming, commented: “We are proud to be once again collaborating with CONMEBOL for what promises to be an exciting tournament for all football fans to enjoy. Sponsoring CONMEBOL Copa América Femenina 2025™ is very important for us, as we continue supporting the development of football globally and women’s football in particular. It is amazing to see how the competition has grown in size and strength, while showcasing the skills of some of the world’s best female footballers.”
The sponsorship of CONMEBOL Copa América Femenina 2025™ is part of Betano and CONMEBOL’s broader partnership, which started with the CONMEBOL Copa América™️ 2024 and extends through 2028. In addition to supporting CONMEBOL Copa América Femenina 2025™, the partnership also sees Betano as the Official Sponsor of the CONMEBOL Pre-Olympic tournament, CONMEBOL Copa América Futsal Men and Women and CONMEBOL Copa América Beach Soccer.
BETBY, a leading sportsbook supplier, has announced a new partnership with prominent LATAM-focused esports provider Mobadoo, in a move that will see its Betby.Games portfolio fully integrated into Mobadoo’s product lineup.
This collaboration enables Mobadoo — which has an established presence and deep market understanding across Latin America — to incorporate BETBY’s proprietary and award-winning esports offering, delivering dynamic and fast-paced betting content to its growing user base. Among Betby.Games’ titles are eSoccer, eBasketball, eFighting, eCricket, eShooter, eHorse Racing, eTennis, and the Brazil-relevant eVaquejada.
As one of the most comprehensive and high-frequency esports betting solutions in the industry, Betby.Games offers access to more than 70 tournaments, over 350 betting markets, and more than 300,000 live matches each month. This collaboration will not only enhance Mobadoo’s offering but also reinforce BETBY’s position as a leading esports supplier in the LATAM region, a key pillar in the supplier’s global expansion strategy.
“Mobadoo has an excellent reputation and strong regional expertise, making them an ideal partner for us. Their commitment to innovation in esports and the rapid growth of this vertical in the region made our partnership only a matter of time,” commented Kirill Nekrasov, BETBY’s Head of Sportsbook Product. “This agreement not only expands the reach of our unique Betby.Games content, but also aligns perfectly with our global strategy of delivering flexible, high-performance esports solutions to next-generation operators. Together, we’re set to further strengthen our leading position in the LATAM region.”
José Aníbal Aguirre, Chief Marketing Officer at Mobadoo, added: “We’re thrilled to integrate Betby.Games into our offering. The depth and quality of their esports content is unmatched, and this partnership gives us a powerful new edge in catering to LATAM’s passionate esports fanbase. With BETBY’s support, we’re confident we can elevate the player experience and unlock new growth opportunities across the region.”
The American Gaming Association (AGA) announced the launch of the Play Smart Consumer Hub, a new online resource designed to help consumers game responsibly. The hub builds on AGA’s Play Smart from the Start, a messaging platform that encourages players to make informed choices and develop habits that keep gaming fun.
“The AGA is committed to making responsible gaming a seamless part of the player experience. Part of the fun of gaming is that everyone plays differently, but no matter how or where you play, staying in control starts with habits that work for you. The Play Smart Consumer Hub provides players with straightforward, actionable tools to help them stay in control and keep gaming fun,” said Bill Miller, president and CEO of the AGA.
Grounded in player research, Play Smart from the Start centers around three key principles:
• Right State of Mind: Start every game with the right mindset—stay present, know your limits, and play on your terms.
• Know the Game: Understand the rules, odds, and bet with intention.
• Act Intentionally: Set a budget, take breaks, and stay aware, win or lose.
The Play Smart Consumer Hub offers practical tools, including:
• A Pre-Play Checklist to help players assess their mindset and set personal limits before betting.
• A Know the Game section that demystifies odds, house advantage, and common sports betting terms.
• A Responsible Gaming IQ Quiz that allows players to evaluate their gaming habits.
• Easy access to support resources like the National Problem Gambling Helpline (1-800-GAMBLER) and state self-exclusion options.
In addition to the consumer tools, the platform also features an Industry Toolkit, providing operators and other stakeholders with resources, including messaging guidance, creative assets, customer communications and activation ideas to support the integration of consistent, responsible gaming programs.
“Whether an operator or supplier is building a new responsible gaming program or looking to refresh existing efforts, this toolkit makes it easy to deliver consistent, player-first messaging across every customer touchpoint,” Miller said.
The Play Smart Consumer Hub is now live at playsmartfromthestart.org.
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