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Penn National Gaming Reports Third Quarter Revenue Of $714.4 Million And Adjusted EBITDA Of $182.1 Million

Stocks in this article: PENN

Penn National Gaming, Inc. (PENN: Nasdaq) (“Penn National Gaming” or the “Company”) today reported third quarter operating results for the three months ended September 30, 2013, as summarized below:


Summary of Third Quarter Results

(in millions, except per share data)       Three Months Ended

September 30,

        2013 Actual    

2013 Guidance


    2012 Actual
Net revenues       $ 714.4       $ 714.1       $ 707.0  
Adjusted EBITDA (1)         182.1         189.7         168.6  

Less: Impact of stock compensation, depreciation and amortization,

gain/loss on disposal of assets, interest expense - net, income taxes,

and other expenses

        (140.8 )       (145.6 )       (122.2 )
Net income       $ 41.3       $ 44.1       $ 46.4  
Diluted earnings per common share       $ 0.40       $ 0.43       $ 0.44  
(1)   Adjusted EBITDA is income (loss) from operations, excluding the impact of stock compensation, impairment losses, insurance recoveries and deductible charges, depreciation and amortization, and gain or loss on disposal of assets, and is inclusive of gain or loss from unconsolidated affiliates. A reconciliation of net income (loss) per accounting principles generally accepted in the United States of America (“GAAP”) to adjusted EBITDA, as well as income (loss) from operations per GAAP to adjusted EBITDA, is included in the accompanying financial schedules.
(2) The figures in this column present the guidance Penn National provided on July 23, 2013 for the three months ended September 30, 2013.

Review of Third Quarter 2013 Results vs. Guidance and Third Quarter 2012 Results

Three Months
September 30, 2013
Pre-tax     After-tax
(in thousands)
Income, per guidance (1) $ 72,273 $ 44,087
EBITDA variances
Total segment variances (1,846 ) (1,084 )
Termination charge associated with spin-off included in property results (3,807 ) (2,439 )
Spin-off transaction costs recorded in corporate overhead (5,075 ) (3,038 )
Other corporate items   3,056         1,829  
Total EBITDA variances from guidance (7,672 ) (4,732 )
Guidance miscalculation on sale of Bullwhackers 5,848 3,496
Unfavorable tax rate variance   -         (1,534 )
Income, as reported $ 70,449       $ 41,317  
Three Months Ended
September 30,
2013 2013 Guidance (1) 2012
Diluted earnings per common share excluding items not included in guidance $ 0.43 $ 0.44 $ 0.57
Termination charge associated with spin-off included in property results (0.02 ) - -
Spin-off transaction costs recorded in corporate overhead (0.03 ) - -
Other corporate items 0.02 - -
Guidance miscalculation on sale of Bullwhackers - (0.03 ) -
Unfavorable tax rate variance - 0.02 -
Foreign currency translation gain and Other - - (0.01 )
Maryland lobbying efforts - - (0.18 )
Discrete tax benefits not anticipated in guidance - - 0.06
Diluted earnings per common share $ 0.40       $ 0.43       $ 0.44  
(1)   The guidance figures in the tables above present the guidance Penn National provided on July 23, 2013 for the three months ended September 30, 2013.

Peter M. Carlino, Chairman and Chief Executive Officer of Penn National Gaming, commented, “Third quarter operating results reflect a continuation of the soft regional gaming revenue trends that the industry has experienced throughout 2013. As a result, third quarter revenues were in line with guidance and adjusted property operating results were approximately $1.8 million less than contemplated in our guidance. The remaining $5.8 million adjusted EBITDA variance relative to guidance is primarily the result of expenses incurred as a result of the planned spin-off of Gaming and Leisure Properties, Inc. (“GLPI”). Property margins, excluding $3.8 million of termination charges related to the spin-off, were 29.7% which is consistent with the corresponding period in the prior year. Given the challenging soft regional trends we are relatively satisfied with our property results.

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