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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 |
|
||||||
Olympia Gaming, the developer of Casino Fandango in Carson City, NV and Legends Bay Casino in Sparks, NV and Quick Custom Intelligence (QCI) today announced the rollout of mobile apps, LB Rewards and CF Rewards. With this launch, Olympia Gaming becomes the first operator in Northern Nevada to deliver the QCI Player App, setting a new regional standard for real-time, mobile guest engagement.
Current Features (Now Available):
- Player Account Information – live tier status, point balance, free play, and comp dollars
- Offer Listing – view of current and upcoming offers including free play, dining and hotel
- Secure Tax Forms – digital retrieval of win/loss statements and tax documentations
- Push Notifications & Event Alerts – real-time updates tailored to guest preferences
Future Features (Coming Soon):
- Entertainment & Special Event Schedule – full calendar of concerts and events
- Host Chat & Service Requests – direct, secure messaging for concierge-level support
- Interactive Property Navigation – maps, parking guidance, and way-finding tools
- Interactive Prizes – in-app rewards that are redeemable at either casino
“Launching the QCI Player App is a milestone for both Casino Fandango and Legends Bay Casino,” said DeCourcy Graham, Chief Operating Officer at Olympia Gaming. “Our guests can now see their rewards, view exclusive offers, and even access tax forms—all from their mobile device, furthering the value of our rewards program. We are thrilled to pioneer this technology in Northern Nevada and elevate the guest experience across our properties.”
With a combined focus on value and exceeding guest expectations, Olympia Gaming and QCI’s collaboration is delivering on a promise to set a new industry standard, offering capabilities that surpass current market offerings.
“Olympia Gaming challenged us to create an app that goes beyond basic account lookup and truly empowers the player,” said Dr. Ralph Thomas, Chief Executive Officer at QCI. “This successful launch reflects a close collaboration between the Olympia team and QCI, and we are excited to see the QCI Player App drive deeper engagement and new revenue opportunities for both properties.”
The LB Rewards and CF Rewards mobile apps are now available for download on Apple IOS and Google Play store.
New Hampshire Lottery enthusiasts wagered over $20 million on the NCAA basketball tournaments, experiencing a more than 10% increase in wagering from the previous year. Florida secured the men’s championship, while UConn emerged victorious on the women’s side.
Charlie McIntyre, Executive Director of New Hampshire Lottery, said: “What an incredible month of college hoops! We love seeing our players getting in on the sports betting action! Sports betting just adds a little extra excitement to the sports viewing experience, especially during March Madness when there are dozens of games throughout the month—not to mention an expanding variety of ways to bet.”
McIntyre highlighted March Madness as a significant period for sports betting, contributing notably to funding New Hampshire’s public education. Alongside the excitement of March Madness, anticipation is building for the NHL and NBA Playoffs.
During the pre-tournament phase, local gamblers heavily backed Duke for the men’s category and strongly supported UConn for the women’s, with UConn delivering a favorable outcome. Conversely, Florida’s triumph in the men’s championship surprised many, as only 15% had initially placed their hopes on the team. However, by the championship game against Houston, two-thirds of bettors picked Florida, redeeming many bracket predictions.
Since its inception on December 30, 2019, mobile sports betting in New Hampshire has generated over $3.5 billion, benefiting public education by more than $140 million. Residents can place bets via the DraftKings Sportsbook app, available on iOS and Android, or online at Sportsbook.DraftKings.com. Responsible gaming is emphasized, with tools like My Stats Sheet, limit setting, cooling-off periods, and self-exclusion options available on the app.
Stats Perform, the global leader in sports AI, data and technology, has announced an official data partnership with the Northern Super League (NSL). The partnership will allow world-leading Opta data to be collected live from every NSL league game for the next three years.
Beginning this month, the Northern Super League (NSL) establishes a new era in Canadian sport as the country’s first professional domestic women’s soccer league — an ambitious and transformative initiative co-founded by former Canadian international and Olympic medallist Diana Matheson. Its inaugural season kicks off on April 16 and will feature six teams who have assembled multinational player rosters with extensive club and international experience, including 100-cap Canadian internationals Desiree Scott and Quinn.
Once the action begins, detailed data from every on-ball event, including advanced AI-powered Opta Analytics metrics such as Expected Goals (xG) and Expected Assists (xA), will be captured and distributed via feeds and Stats Perform products, including OptaAI Studio. This will enable various broadcasters, publishers and rights holders to generate stories and insights throughout the NSL season and provide them straight to the league’s fans in real time.
As part of the agreement, the NSL’s League Office and every NSL club will also have access to Opta Search, part of OptaAI Studio. This will allow their content creators to leverage all Opta data collected during the NSL season in the creation of data-led stories on the stand-out performers, and will help them generate key talking points for publication on official league and club platforms. Opta Search will also empower the NSL’s media team to create a range of data visualizations, including player shot maps and touch maps, to visually illustrate the impact of different players’ on-field performances.
Christina Litz, NSL President, said: “We are thrilled to have Stats Perform on board as our official data partner. When we talk about detailed performance data in soccer, Opta is the gold standard, so we are delighted to have it powering each of our official digital channels. As the season progresses, we want to put the spotlight on all the on-field heroes who emerge and having access to world-class data will help us tell their stories and inspire a new generation of Canadian soccer fans.”
Steve Xeller, Chief Revenue Officer at Stats Perform, said: “Stats Perform has been a huge supporter of expansion leagues around the world, so we are very pleased to be partnering with NSL in the lead-up to their first domestic campaign. Seeing a fully professional women’s soccer league launch in Canada is an incredibly exciting development for the sport in North America and we see considerable potential in working proactively with the League’s Head Office to help the competition grow, using the power of AI and data-led storytelling to build fan communities across the continent.”
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