Saul V. Reibstein Chief Financial Officer Justin Sebastiano Vice President, Finance Andrew Ranalli Vice President, Controller

Transcription

1 Saul V. Reibstein Chief Financial Officer Justin Sebastiano Vice President, Finance Andrew Ranalli Vice President, Controller High Yield Bond & Syndicated Loan Conference June 11, 2015

2 Safe Harbor In addition to historical facts or statements of current conditions, this presentation contains forward-looking statements that involve risk and uncertainties within the meaning of the Private Securities Litigation Reform Act of Such forward-looking statements reflect the Company s current expectations and beliefs but are not guarantees of future performance. As such, actual results may vary materially from expectations. The risks and uncertainties associated with the forward-looking statements, including, in particular, those associated with our operations in Ohio (such as litigation addressing the legality of VLTs in Ohio), San Diego, California (such as the risks of financing a project of this type, sovereign immunity, local opposition and building a complex project on a relatively small parcel), and Plainville, Massachusetts (such as the ultimate location of the other gaming facilities in the state), are described in the Company s filings with the Securities and Exchange Commission, including the Company s reports on Form 8-K, Form 10-K and Form 10-Q. Penn National assumes no obligation to publicly update or revise any forward-looking statements. This presentation includes Non-GAAP financial measures within the meaning of SEC Regulation G. A reconciliation of all Non-GAAP financial measures to the most directly comparable financial measure calculated and presented in accordance with GAAP can be found at in the Investors section. 2

3 Company Overview Leading, diversified, multi-jurisdictional operator of regional gaming and pari-mutuel facilities 26 properties in 17 jurisdictions at March 31, 2015 (1) Approximately 31,000 slot machines, 760 table games and 3,100 hotel rooms LTM 3/31/15 net revenue of $2.6 billion and regional segment Adjusted EBITDAR of $713.1 million (1) Diversified revenue and Adjusted EBITDAR composition Disciplined, market-tested management team and expanding development pipeline Strong property operating margins Disciplined maintenance capex in existing properties Strong development and acquisition track record Project capex calibrated to market size, tax rate and cash return Near-term growth projects: Plainridge Park Casino (MA); Jamul Indian Village (CA) tribal development/management agreement (1) Beulah Park closed in May 2014, Raceway Park closed in June 2014, Argosy Casino Sioux City closed in July 2014, Hollywood Gaming at Dayton Raceway opened in August 2014 and Hollywood Gaming at Mahoning Valley Race Course opened in September

4 Leading Regionally Diversified Gaming Company East/Midwest 1. Hollywood Casino Bangor 2. Hollywood Casino at Penn National Race Course 3. Hollywood Casino at Charles Town Races 4. Hollywood Gaming at Mahoning Valley 5. Hollywood Casino Columbus 6. Hollywood Casino Toledo 7. Hollywood Gaming at Dayton Raceway 8. Hollywood Casino Lawrenceburg 9. Casino Rama (3) 10. Plainridge Park Casino (1) Southern Plains 11. Hollywood Casino Joliet 12. Hollywood Casino Aurora 13. Argosy Casino Alton 14. Hollywood Casino St. Louis 15. Argosy Casino Riverside 16. Hollywood Casino at Kansas Speedway (2) 17. Hollywood Casino Tunica 18. Boomtown Biloxi 19. Hollywood Casino Gulf Coast West 20. Zia Park Casino 21. M Resort 22. Jamul Indian Village (1)(3) 23. Tropicana Las Vegas (4) Racetracks 23. Freehold Raceway (2) 24. Rosecroft Raceway 25. Sanford-Orlando Kennel Club 26. Sam Houston Race Park (2) 27. Valley Race Park (2) (1) Plainridge Park Casino and Jamul Indian Village are currently under development (2) Hollywood Casino at Kansas Speedway, Freehold Raceway, Sam Houston Race Park and Valley Race Park are joint ventures (3) Casino Rama and Jamul Indian Village are management contracts (4) Penn National has entered into a definitive agreement to acquire Tropicana Las Vegas Casino Hotel Resort and the transaction is expected to be completed by year-end

5 Property Level Overview LTM LTM % of $ in thousands Gaming Table Hotel 3/31/2015 3/31/2015 Property Location Machines Games Rooms Parking Net Revenue EBITDAR EBITDAR East/ Midwest Segment Hollywood Casino at Charles Town Races Charles Town, WV 2, ,781 Hollywood Casino at Penn National Race Course Grantville, PA 2, ,700 Hollywood Casino Columbus Columbus, OH 2, ,616 Hollywood Casino Toledo Toledo, OH 2, ,300 Hollywood Casino Lawrenceburg Lawrenceburg, IN 2, ,290 Hollywood Casino Bangor Bangor, ME ,500 Hollywood Gaming at Dayton Raceway Dayton, OH ,800 Hollywood Gaming at Mahoning Valley Race Course Youngstown, OH ,251 Casino Rama Management Contract Orillia, Ontario 2, ,642 Total East/Midwest 16, ,880 $1,504,475 $451, % West Segment Zia Park Casino Hobbs, NM ,500 M Resort Henderson, NV 1, ,700 Total West 2, , ,075 65, % Southern Plains Segment Hollywood Casino St. Louis Maryland Heights, MO 2, ,600 Argosy Casino Riverside Riverside, MO 1, ,000 Hollywood Casino Aurora Aurora, IL 1, ,500 Hollywood Casino Joliet Joliet, IL 1, ,680 Hollywood Gulf Coast Bay St. Louis, MS 1, ,626 Argosy Casino Alton Alton, IL ,341 Hollywood Casino Tunica Tunica, MS 1, ,635 Boomtown Casino Biloxi, MS ,450 Hollywood Casino at Kansas Speedway JV (1) Kansas City, KS 2, ,253 Total Southern Plains 11, ,645 19, , , % Other Segment 22,075 (79,402) -11.1% Total 30, ,078 56,165 $2,613,584 $713, % 1) EBITDAR excludes our share of the impact of non-operating items (such as depreciation and amortization expense) 2) Includes partial year of results from Argosy Sioux City which had been in Southern Plains segment and closed in July ) The Tropicana Las Vegas Casino Hotel Resort includes approximately 844 gaming machines, 38 table games, 1,467 hotel rooms and 2,950 parking spaces 5

6 Hollywood Gaming at Dayton Raceway Hollywood Gaming at Dayton Raceway Opened August 28, ,000 VLTs and a variety of food and beverage options $255 million investment inclusive of license and relocation fees $50 million license fee ($25 million paid prior to opening and remaining $25 million paid within one year of opening) $75 million relocation fee ($7.5 million paid at opening and $4.8 million paid every six months after first year of operations) Penn portion of capital spend is $165 million (inclusive of license and relocation fees) 6

7 Hollywood Gaming at Dayton Raceway 7

11 Hollywood Gaming at Mahoning Valley Race Course Hollywood Gaming at Mahoning Valley Race Course Opened on September 17, VLTs and a variety of food and beverage options $261 million investment inclusive of license and relocation fees $50 million license fee ($25 million paid prior to opening and remaining $25 million paid within one year of opening) $75 million relocation fee ($7.5 million paid at opening and $4.8 million paid every six months after first year of operations) Penn portion of capital spend is $161 million (inclusive of license and relocation fees) 11

12 Hollywood Gaming at Mahoning Valley Race Course 12

15 Development Pipeline Project/Scope Planned Capital Spend PENN Share of Capital Spend Amount Spent to Date (3/31/15) Population (1) Gross Gaming Revenue Tax Rate Completion Date Plainridge Park Casino Plainville, MA $250 (2) $250 $ million 51.0% June 24, 2015 Jamul Indian Village (3) Jamul, CA $360 (4) N/A $ million <2.0% Mid-2016 (1) Adult population (25+) within 90 miles, adjusted for existing competition. (2) Total cost includes the purchase of the real estate of the existing race track and the $25 million gaming license fee. (3) Penn earns management and license fee; gaming tax is a device fee. (4) Penn is committed to providing financing to the extent the tribe cannot secure financing elsewhere. $ in millions 15

16 Plainridge Park Casino Sole Category 2 license in Massachusetts Penn was awarded the Category 2 license on February 28, 2014 $250 million fully integrated racing and gaming operation 106,000 square foot facility with ~44,000 square foot gaming floor and 1,250 gaming devices High-end casual dining restaurant, Doug Flutie Sports Bar, fourvenue food court, multi-purpose banquet room, entertainment lounge and casino bar 1,620 structured and surface parking spaces Penn expects to open Plainridge Park Casino on June 24, 2015 Penn to be first to market in MA by several years 16

17 Plainridge Park Casino 17

18 Plainridge Park Casino 18

19 Plainridge Park Casino 2,414 panels on the building s roof will supply 14% of the property s power use 19

20 Jamul Indian Village $360 million development located seven miles east of San Diego beltway Hollywood-branded, 200,000 square foot, three-story gaming and entertainment facility 1,700 slot machines and 43 live table games (including poker) Multiple restaurants, bars and lounges Structured parking with over 1,800 spaces Penn managed with Penn backstopped financing commitment Construction commenced January 2014 and property is expected to open in mid

21 Jamul Indian Village Gaming Age Population 0-30 minutes = 648k minutes = 20k minutes = 44k Total 90 minutes = 712k Barona Viejas Sycaun Jamul 21

22 Jamul Indian Village 22

25 Tropicana Las Vegas $360 million acquisition of marquis resort with 35 acres of land on the LV Strip 50,000 square foot casino with over 1,000 gaming positions and sports book Approximately 1,500 guest rooms including 181 suites Three full service restaurants and a food court 1,200-seat theater and 300 seat Laugh Factory comedy club Over 100,000 square feet of exhibition and meeting space 5-acre tropical beach event area and spa Over $200 million of property upgrades in the last four years Transaction to be funded through an expansion of Penn s existing credit facilities and cash on hand Opportunity to leverage Penn National s database of nearly 3 million active regional gaming customers Well-defined plan to realize near-term cost and operating synergies New local leadership appointed with significant Las Vegas market and large resort experience Acquisition expected to close by year-end

26 Tropicana Las Vegas 26

27 Tropicana Las Vegas 27

28 Capital Structure ($ in millions) As of 3/31/15 Cash $237.7 Revolver $115.0 Term Loan A $468.7 Term Loan B $246.9 Senior Sub Notes $300.0 Other Liabilities (1) $34.8 Net Debt (2) $927.7 Covenants measured on Net Debt less Project Cap-ex (1) Includes $19.5 million contingent debt obligation related to the purchase of Plainridge Race course and $15.3 million related to the repayment obligation of a hotel and event center located near Hollywood Casino Lawrenceburg (2) Excludes $135 million in relocation fees related to Ohio racetracks 28

29 Balance Sheet and Credit Profile Net Debt: EBITDA EBITDA: Interest Expense Gaming Industry (1) 7.2x 2.3x Penn National Gaming (2) 3.1x 4.9x (1) Source: Credit Suisse / Company Reports - gaming industry peer group comprised of BYD, CEOC, ISLE, MGM, PNK, STN and WYNN LV (2) Based on the Company s full year 2015 guidance as provided on April 23,

30 Investment Considerations Leading, geographically diversified gaming company Robust domestic growth pipeline Hollywood Gaming at Dayton Raceway opened on August 28, 2014 Hollywood Gaming at Mahoning Valley Race Course opened on September 17, 2014 Plainridge Park Casino expected to open on June 24, 2015 Jamul expected to open in mid-2016 Tropicana Las Vegas $360mm acquisition expected to close by year-end 2015 Capital spend matched to market size, tax rate and anticipated future profitability Strong, liquid balance sheet Attractive cost of capital Management team with established track record of capital and operational discipline Accretive M&A Leading property operating margins 30

31 APPENDIX 31

32 Highlights of Master Lease Terms Lease Structure: Term and Termination: Rent: Capital Expenditures: Triple Net Master Lease: Penn responsible for maintenance capital expenditures, property taxes, insurance and other expenses All properties subject to the lease are cross-defaulted / guaranteed Penn responsible all FF&E and personal property required for all operations 15 years with four 5-year extensions at Penn s option Causes for termination by lessor include lease payment default, bankruptcy and/or loss of gaming licenses At the end of lease term, Penn is required to transfer the gaming assets (including the gaming licenses) to successor tenant for fair market value Fixed base rent component with annual escalators (subject to minimum rent coverage of 1.8x) plus: Land base rent equal to 50% of 4% of net revenue fixed for the term of the lease Percentage rent equal to 50% of 4% of net revenue fixed for five years and then reset based on the average net revenue over the last five years Toledo and Columbus performance components established monthly with land rent set at 20% of monthly net revenues Penn required to maintain properties and spend a minimum of 1% of net revenues on maintenance capital (including FF&E and capitalized personal property required for operations) annually Rent expense estimated to be $433.8 million for twelve months ending December 31, 2015 excluding any additional rent escalation at the end of year two of the Master Lease. The development projects in Plainville, Massachusetts and San Diego, California are not subject to the master lease. 32

33 Definitions and Reconciliation of Non-GAAP Measures to GAAP Penn National defines adjusted EBITDA as earnings before interest, taxes, stock compensation, debt extinguishment charges, impairment charges, insurance recoveries and deductible charges, depreciation and amortization, gain or loss on disposal of assets, and other income or expenses. Adjusted EBITDA is also inclusive of income or loss from unconsolidated affiliates, with our share of non-operating items (such as depreciation and amortization) added back for our joint venture in Kansas Entertainment. Adjusted EBITDAR is adjusted EBITDA excluding rent expense associated with our Master Lease agreement with GLPI. Adjusted EBITDA and adjusted EBITDAR have economic substance because they are used by management as a performance measure to analyze the performance of our business, and are especially relevant in evaluating large, long lived casino projects because they provide a perspective on the current effects of operating decisions separated from the substantial non operational depreciation charges and financing costs of such projects. We also present adjusted EBITDA and adjusted EBITDAR because they are used by some investors and creditors as an indicator of the strength and performance of ongoing business operations, including our ability to service debt, fund capital expenditures, acquisitions and operations. These calculations are commonly used as a basis for investors, analysts and credit rating agencies to evaluate and compare operating performance and value companies within our industry. In addition, gaming companies have historically reported adjusted EBITDA as a supplement to financial measures in accordance with GAAP. In order to view the operations of their casinos on a more stand alone basis, gaming companies, including us, have historically excluded from their adjusted EBITDA calculations certain corporate expenses that do not relate to the management of specific casino properties. However, adjusted EBITDA and adjusted EBITDAR are not a measure of performance or liquidity calculated in accordance with GAAP. Adjusted EBITDA and adjusted EBITDAR information is presented as a supplemental disclosure, as management believes that it is a widely used measure of performance in the gaming industry, is the principal basis for the valuation of gaming companies, and that it is considered by many to be a better indicator of the Company s operating results than net income (loss) per GAAP. Management uses adjusted EBITDA and adjusted EBITDAR as the primary measures of the operating performance of its segments, including the evaluation of operating personnel. Adjusted EBITDA and adjusted EBITDAR should not be construed as alternatives to operating income, as indicators of the Company s operating performance, as alternatives to cash flows from operating activities, as measures of liquidity, or as any other measures of performance determined in accordance with GAAP. The Company has significant uses of cash flows, including capital expenditures, interest payments, taxes and debt principal repayments, which are not reflected in adjusted EBITDA and adjusted EBITDAR. It should also be noted that other gaming companies that report adjusted EBITDA information may calculate adjusted EBITDA in a different manner than the Company and therefore, comparability may be limited. 33

34 Reconciliation of PENN Non-GAAP Measures to GAAP Penn National Gaming, Inc. Reconciliation of Adjusted EBITDAR to reported net loss (in thousands) Three Months Ended March 31, 2015 Net income $10,996 Depreciation and amortization 42,922 Unconsolidated non-operating costs (Hollywood Kansas JV) 2,751 Charge for stock compensation 2,084 Loss (gain) on disposal of assets 153 Interest (net) 10,293 Other (3,089) Taxes on income 9,260 Rent 108,845 Adjusted EBITDAR as reported $184,215 34

35 Saul V. Reibstein Chief Financial Officer Justin Sebastiano Vice President, Finance Andrew Ranalli Vice President, Controller High Yield Bond & Syndicated Loan Conference June 11, 2015