Penn Entertainment, Inc. · NASDAQ:PENN
Penn Entertainment — Q1 2023 Earnings Presentation
35 slides from Penn Entertainment's earnings presentation, May 4, 2023
Slide 1: First Quarter 2023 Earnings Presentation
FIRST QUARTER 2023 EARNINGS PRESENTATION May 4, 2023
Slide 2: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS This presentation contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements can be identified by the use of forward-looking terminology such as “expects,” “believes,” “estimates,” “projects,” “intends
Slide 3: Non-GAAP Financial Measures
NON-GAAP FINANCIAL MEASURES In addition to GAAP financial measures, management uses Adjusted EBITDA, Adjusted EBITDAR, Adjusted EBITDA margin, and Adjusted EBITDAR margin as non-GAAP financial measures. These non-GAAP financial measures should not be considered a substitute for, nor superior to, fin
Slide 4: Q1 Summary Results
Q1 SUMMARY RESULTS Q1 results reflect consistent retail performance across most of our portfolio, with revenue growth in Interactive driven in part by our acquisition of Barstool Sports REVENUES NET INCOME NET INCOME MARGIN $1,673.3 $514.4 30.7% ADJ. EBITDAR ADJ. EBITDA ADJ. EBITDAR MARGIN $478.2 $3
Slide 5: Q1 Financial Highlights
Q1 FINANCIAL HIGHLIGHTS Strong performance in our Northeast Segment mostly offset softer y/y results in the South Segment, while margins were impacted by approximately 100 bps from a shift in revenue to higher tax jurisdictions and, to a lesser extent, the settlement of certain litigation matters RE
Slide 6: Retail Segment Tax Rates and Margins
RETAIL SEGMENT TAX RATES AND MARGINS Our property-level margins are impacted by applicable gaming tax rates; as a result, our overall property-level margins are affected by relative contribution by segment Q1’23 Gaming Tax and Margins by Segment 41.8% 42.5% 39.3% 37.9% 30.4% 26.8% 22.3% 18.3% Northe
Slide 7: Q1 Interactive Segment Results
Q1 INTERACTIVE SEGMENT RESULTS Interactive segment results reflect our launches in Ohio and Massachusetts, as well as the acquisition of the remainder of Barstool Sports REVENUES Segment Notes $233.5 • Interactive includes all of our online sports betting, iCasino and online social gaming operations
Slide 8: Healthy Balance Sheet & Liquidity Position
HEALTHY BALANCE SHEET & LIQUIDITY POSITION Our strong balance sheet enabled us to repurchase 1,646,963 shares during the first quarter under our stock repurchase authorization at an average price of $30.36 DEBT MATURITIES(1) Undrawn Revolving Cash Balance $1,311 Credit Facility Liquidity(2) $2,288 $
Slide 9: Database Highlights
DATABASE HIGHLIGHTS As our database continues to build, we saw strong growth in rated theo from our older demographics in Q1, particularly the 65 and over segment PENN Play™ Registrations by Quarter 1400 (in thousands) Y/Y Change in Rated Theo By Age* (5%) 2% +11% 5% 1200 1000 800 21 to 34 35 to 44
Slide 10: Age Segment Database Trends
AGE SEGMENT DATABASE TRENDS The 21 to 44 year old age demographic was stable in Q1 after significant growth throughout 2021 and 2022, as the segment grew from 13.1% of total retail theo in Q1’19 to 18.5% in Q1’23 % of Company Rated Theo By Segment* 3% 4% 5% 6% 5% 10% 10% 13% 13% 13% Change in Rated
Slide 11: Cross-Channel Trends
CROSS-CHANNEL TRENDS Our omni-channel strategy drove impressive y/y increases in rated theo from cross-play across our retail and digital offerings Y/Y Increase in Rated Theo from Cross-Sell* Owned Media Assets +11% +16% +12% Best-in-Class Online and Online to Retail to Regional Retail Sport Retail
Slide 12: MyChoice Rewards is Now PENN Play
MYCHOICE REWARDS IS NOW PENN PLAY A NEW ERA OF LOYALTY Launched April 24, 2023 Better connects to the PENN Entertainment brand to reinforce our unified ecosystem of entertainment Further leverages structural advantages to drive omni-channel cross-sell and monetization across products Accelerates dat
Slide 13: Benefits of the PENN Play Loyalty Program
BENEFITS OF THE PENN PLAY LOYALTY PROGRAM More Ways to Earn and Redeem Across the Ecosystem (Retail and Online Gaming, Non-Gaming, and Partners) Growing Network of Leading Partners to Expand Reach and Provide Additional Value Reimagined Play and Promotions for Differentiated Benefits Digitally Power
Slide 14: Best-in-Class Retail Sportsbooks
BEST-IN-CLASS RETAIL SPORTSBOOKS During We recently Marchopened Madness,four notable temporary Barstool retailpersonalities sportsbooksparticipated in Ohio and in one live instreams Massachusetts, from our market leading retail sportsbooks in Ohio and Louisiana, leading to increased brand awareness
Slide 15: Recent Sports Betting Launches
RECENT SPORTS BETTING LAUNCHES Our recent retail and online sports betting launches in Kansas, Ohio and Massachusetts have helped drive strong performance at our retail properties Y/Y Retail Revenue Growth* +11% +7.9% +8.1% Kansas Ohio +14.1% Massachusetts * Represents revenue growth from Q1’22 to Q
Slide 16: iCasino & Penn Game Studios Growth
iCASINO & PENN GAME STUDIOS GROWTH We are seeing solid growth in our iCasino business and continue to develop and launch proprietary games from Penn Game Studios across the U.S. and Ontario iCasino GGR* Penn Game Studios Handle** ($ in millions) ($ in millions) $361.0 $59.5 $303.3 $272.8 $240.4 $44.
Slide 17: Strong Ontario Performance
STRONG ONTARIO PERFORMANCE Ontario continues to be our top market in North America for both sports betting and iCasino, with strong growth and encouraging trends through the NBA and NHL seasons GGR By Month While February was impacted by low hold in Sports Betting, we experienced record months for b
Slide 18: Benefits of Tech Stack Becoming Evident
BENEFITS OF TECH STACK BECOMING EVIDENT Our performance in Ontario illustrates the meaningful strategic advantages of a fully owned tech stack and provides a blueprint for success in the U.S. post-migration Ontario Performance v. U.S. Performance Since Migration +118% +26% 6-Month Cross-Sell into Re
Slide 19: theScore Media Performance
theSCORE MEDIA PERFORMANCE Leveraging our expansive reach and a highly engaged user base, theScore’s mobile media business recorded another quarter of growth ENGAGEMENT Award winning media app continuing to drive audience and engagement growth 1.9b +22% Q3 Total Y/Y Monthly Sessions* Sessions* Growt
Slide 20: Barstool Sports
BARSTOOL SPORTS On February 17, we completed our acquisition of Barstool Sports, which continues to build its audience through a diversified mix of highly engaging content 20 Year Anniversary #1 #1 #1 100+ Personalities Sports Podcast Hockey Podcast Publisher on TikTok 90+ Shows 60+ Brands Unrivaled
Slide 21: Barstool Sports Q1 Highlights
BARSTOOL SPORTS Q1 HIGHLIGHTS Barstool demonstrated strong audience and viewership growth in Q1, achieving record cross- platform views (>40% YoY) and growing >60% in both YouTube subscribers and TikTok followers The brand continues to lead with a wide variety of content in Sports, Pop Culture, and
Slide 22: Recent ESG Highlights
RECENT ESG HIGHLIGHTS • On April 25th, we issued our 2022 Corporate Social Responsibility Report, which details the significant progress PENN has made in advancing our Environmental, Social and Governance (“ESG”) priorities over the last year. • In February, to help celebrate Black History Month, we
Slide 23: Appendices
APPENDICES
Slide 24: North America's Leading Provider of Integrated Entertainment
NORTH AMERICA’S LEADING PROVIDER OF INTEGRATED ENTERTAINMENT, SPORTS CONTENT AND CASINO GAMING EXPERIENCES Strong Balance Sheet and Cutting-Edge Tech andExperiences, High Brand Licensing Dynamic Media and Merchandise Free Cash Flow Growth Digital Business Businesses Our diversified portfolio of lead
Slide 25: Omni-Channel Strategy
OMNI-CHANNEL STRATEGY Highly differentiated strategy focused on organic cross-sell opportunities from our portfolio of leading brands Media & Content Casinos & Racetracks Sports Betting Online Gaming SPORTSBOOK & CASINO v 25
Slide 26: Executing on Our Strategy
EXECUTING ON OUR STRATEGY We are focusing on organic cross-sell opportunities, reinforced by our investments in market-leading retail casinos, sports media assets and technology, including a state-of-the- art fully integrated media, betting and casino platform LEVERAGING OUR STRUCTURAL BUILDING OUR
Slide 27: Retail Sportsbooks
RETAIL SPORTSBOOKS We now operate 32 retail sportsbooks across the country, which are capturing outsized share while providing highly profitable cross-sell opportunities Colorado • Boomtown New Orleans Ohio • Ameristar Black Hawk* • L’Auberge Baton Rouge* • Hollywood Columbus* • L’Auberge Lake Charl
Slide 28: Industry Leading Cashless Solution
INDUSTRY LEADING CASHLESS SOLUTION Our 3C’s (cashless, cardless and contactless) technology is rapidly gaining adoption and delivering very encouraging results 3C’s Deployment To-Date 195k $104m • Indiana (2) • Kansas (1) Total PENN Wallet Total PENN wallet • Louisiana (3) customers* deposits* • Mic
Slide 29: Retail Growth Projects
RETAIL GROWTH PROJECTS We are continuing to progress on four exciting retail growth projects, all of which we expect to open by the end of 2025 Anticipated Budgets • Aurora relocation - $360 million • Joliet relocation - $185 million • M Hotel 2nd Tower - $205 million • Columbus hotel - $100 million
Slide 30: Historical Regional Resiliency
HISTORICAL REGIONAL RESILIENCY Regional markets performed far better than the Las Vegas Strip following the 2007-08 downturn, and the current operating environment is more favorable Gross Gaming Revenue Growth (as %)* Favorable Operating Environment 5.0% 2.6% • Rational promotional and marketing 0.0
Slide 31: Geographic Diversification
GEOGRAPHIC DIVERSIFICATION Our geographically diversified footprint helps reduce the impact of local economic pressures, while our ability to offer both retail and interactive experiences positions us to take advantage of changes in consumer behavior v 31
Slide 32: Illustrative Impact of a Recession
ILLUSTRATIVE IMPACT OF A RECESSION Although business trends remain strong, we are prepared to offset nearly half of any revenue declines through aggressive cost mitigation measures +11% We estimate approximately 45% of any revenue declines can be offset through expense reductions Our strong balance
Slide 33: Lease Summary (Effective as of Jan 1, 2023)
LEASE SUMMARY (EFFECTIVE AS OF JAN 1, 2023) Our leased properties are subject to modest and capped annual escalators AR PENN Master Lease PNK Master Lease VICI Leases 2023 Master Lease • Greektown PENN legacy properties, Pinnacle legacy Aurora, Joliet, Columbus, Properties (separate lease) excluding
Slide 34: GAAP to Non-GAAP Reconciliation
GAAP TO NON-GAAP RECONCILIATION (1) Includes a gain of $66.5 million associated with Barstool related to remeasurement of the equity investment immediately prior to the acquisition date of February 17, 2023 and a gain of $16.9 million related to the acquisition of the remaining 64% of Barstool commo
Slide 35: Entertainment
ENTERTAINMENT