Exceptional core business performance puts sparkle into Penn National Gaming Q2 financials

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Penn National Gaming Inc has reported financial results for the three and six months ended June 30, 2021, citing exceptional performance across its portfolio of core gaming business properties and positive contributions from Barstool Sports.

The headline figures show revenues of $1,545.8m, an increase of $1,240m year-on-year and $223m versus 2019. Net income was $198.7m with a net income margin of 12.9%, versus a net loss of $214.4m and (70.2)%, respectively, in the prior year and net income of $51.4m and net margin of 3.9% in 2019.

The firm also generated adjusted EBITDA of $470.1m, an increase of $549.4m year-on-year and $153.6m versus 2019. Adjusted EBITDAR of $586.6m was up $562.1m year-on-year and $180.1m versus 2019.

Jay Snowden, President and CEO, commented: “Penn National delivered a strong second quarter that exceeded our pre-announced results from June 24, 2021. For the second quarter ended June 30, 2021, Penn National generated revenues of $1.55bn, at the high end of our pre-announced range of $1.45bn to $1.56bn while adjusted EBITDAR of $586.6m exceeded the high end of our $540m to $580m range. 

“Compared to Q2 2019 pro forma results, revenues increased 13%, adjusted EBITDAR grew 38% and adjusted EBITDAR margins increased 694 basis points. The strong results were driven by exceptional performance across our portfolio of core gaming business properties. Contributions from Barstool Sports, the media company, were also positive. Further, we saw strong revenue growth across our Penn Interactive segment, which operated near breakeven for the quarter despite being live in only four states.”

He continued: “Separately, this morning Penn National announced that we have entered into a definitive agreement to acquire Score Media and Gaming, which is the number one sports app in Canada and the third most popular sports app in North America. 

“When we add theScore’s unique integrated media and betting platform and modern, state-of-the art technology, to the massive audience of Barstool Sports and its wildly popular personalities and content, we’ll be creating North America’s leading digital sports content, gaming and technology company. 

“We anticipate that the acquisition of theScore will provide adjusted EBITDA accretion by Year two, an incremental $200m medium term adjusted EBITDA, and $500m of incremental long term adjusted EBITDA upside.”

Snowden also commented on continued robust recovery in the firm’s core gaming business. He stated: “Sequentially improved visitation and length of play across all age segments of our player database led to our record results in the second quarter. Spend-per-visit has remained high since reopening last year, and our overall visitation numbers are encouraging as restrictions continue to be lifted. 

The traditional core gaming customer has reengaged with our properties as vaccines continue to roll out across the country, while the younger demographic’s engagement continued throughout Q2 and into Q3 despite the increased availability of alternative entertainment options. 

“Overall, our unrated play continues to perform well, and we have been pleased with our ability to convert these customers into our mychoice loyalty program. These noteworthy drivers of our revenue growth combined with the changes we have made to our offerings and our expense structure has led to tremendous flow-through and margin improvement. We have seen this strength across all geographic regions, with the South Region leading the way as demonstrated by the segment’s outsized performance in both revenues and EBITDAR.”

On Penn’s sportsbook launch, he added: “We are making great strides in the planned rollout of our Barstool Sportsbook. Following our Indiana launch in May, we anticipate more than doubling our footprint by the start of the 2021 NFL season in early September with upcoming launches in Colorado, New Jersey, Tennessee, Virginia, and Arizona. 

“By the end of the year, we plan to be operating in at least 10 states. Additionally, as we gain scale across the country, we will increase our marketing efforts to further widen the funnel into our omnichannel ecosystem while we remain focused on our measured and profit-driven approach. 

“For example, we recently announced an expansion of our NASCAR relationship with a comprehensive sponsorship and marketing partnership with the Phoenix Raceway. Further, we have agreed to act as the official sports betting partner for the upcoming August 29 boxing event between Tyron Woodley and Jake Paul, which will include Barstool Sportsbook branded segments featuring key personalities.”