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Penn National (PENN) Q1 Earnings & Revenues Miss Estimates

Zacks Equity Research

Penn National Gaming, Inc. PENN reported first-quarter 2020 results, wherein both earnings and revenues missed the Zacks Consensus Estimate. While the top line missed the consensus mark for the fifth straight quarter, the bottom line missed the same for the third consecutive quarter. Moreover, both the metrics declined year over year on account of the coronavirus-induced shutdowns. The company has already withdrawn its guidance due to the coronavirus outbreak.

The company commenced 2020 on a strong note, with sports betting witnessing robust growth. Introduction of sports betting at different properties drove both gaming and non-gaming revenues. However, temporary closure all 41 properties of the company in mid-March due to the coronavirus pandemic hurt the first-quarter results.

Despite the pandemic, the company remains confident about its long-term growth, which will be supported by differentiated omni-channel approach. Management stated that it continues to develop Barstool Sportsbook app and is on schedule for launch in third-quarter 2020.

Jay Snowden, president and CEO, said “Upon the reopening of our casinos, we believe Penn National is very well-positioned to resume its positive momentum. Our geographic diversification across 19 states - with no more than 15% of our revenues being derived from any single state - should be a significant benefit as states begin to open casinos on a sequential basis. We expect our regional gaming markets to rebound sooner than destination markets by virtue of our casinos being located in suburban areas that are more easily accessible by car from key population centers.”

Earnings & Revenues Discussion

Adjusted earnings came in at 6 cents per share, lagging the Zacks Consensus Estimate of 20 cents. Notably, the figure declined 82.5% year over year. Net revenues totaled $1,116.1 million, which missed the consensus mark of $1,277 million and declined 13% from the year-ago quarter.

The Northeast segment reported revenues of $520.7 million, down 5.4% year over year. The West, Midwest and South segments’ revenues came in at $126.6 million, $228.1 million and $223.3 million, down 20.2%, 15.9% and 23.5%, respectively, year over year. Meanwhile, the Other segment reported revenues of $20.3 million, up 99% year over year.

Penn National Gaming Inc Price, Consensus and EPS Surprise


Penn National Gaming Inc Price, Consensus and EPS Surprise

Penn National Gaming Inc price-consensus-eps-surprise-chart | Penn National Gaming Inc Quote

EBITDAR Declines

Adjusted EBITDAR decreased 35.5% from the year-ago quarter to $252.3 million. Moreover, adjusted EBITDAR margin contracted 790 basis points to 22.6%.

Penn National’s loss from operations in the first quarter totaled $560.6 million, against income from operations of $182.4 million in the prior-year quarter.

Other Financial Information

At the end of the first quarter, cash and cash equivalents decreased to $730.7 million compared with $437.4 million at the end of Dec 31, 2019. Further, the bank debt as of Mar 31, 2020, were $2,416.7 million, up from $1,896.5 million at the end of Dec 31, 2019.

Zacks Rank

Penn National — which shares space with Wynn Resorts WYNN, Caesars Entertainment Corporation CZR and Las Vegas Sands Corp. LVS in the Zacks Gaming industry — currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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