Pinnacle Entertainment Reports 2017 Fourth Quarter and Full Year Financial Results
2017 Full Year Highlights:
- Net revenues increased by
$183.0 million or 7.7% year over year to a record$2.6 billion . Net revenues included a$281.9 million contribution from The Meadows versus$83.9 million in the prior year. The Company acquired The Meadows onSeptember 9, 2016 . - Income from continuing operations was a record
$61.7 million versus a loss of$457.9 million in the prior year. GAAP diluted net income per share was$1.02 versus a net loss per share of$7.79 in the prior year. Income from continuing operations for the fourth quarter and full year 2017 included a benefit of approximately$21.5 million related to the Tax Cuts and Jobs Act of 2017. - Consolidated Adjusted EBITDAR increased by
$47.4 million or 7.2% year over year to a record$701.9 million , and included growth of$9.1 million or 1.4% in the Company's same-store portfolio. Same-store Consolidated Adjusted EBITDAR margin increased by 60 basis points to 28.5%. - Consolidated Adjusted EBITDA, net of Lease Payments, was
$295.6 million , an increase of$26.0 million or 9.6% year over year. - The Company repurchased 1.15 million shares of its common stock for total consideration of
$22.3 million or an average price of$19.51 per share. - Conventional Debt was reduced by
$131.2 million in 2017, including$12.8 million in the 2017 fourth quarter, bringing the Company's Conventional Debt balance to$821.7 million as of December 31, 2017. - On
December 17th , the Company entered into a definitive agreement under whichPenn National Gaming, Inc. (NASDAQ:PENN) ("Penn National") will acquire the Company. Under the terms of the agreement, Pinnacle stockholders will receive consideration of$20 .00 in cash and 0.42 shares of Penn National common stock for each Pinnacle share they own. The transaction is expected to close in the second half of 2018, subject to customary closing conditions, required regulatory approvals and approval by Penn National’s and Pinnacle’s stockholders.
2017 Fourth Quarter Highlights:
- Net revenues decreased by
$16.6 million or 2.6% year over year to$620.8 million . - Income from continuing operations was
$22.2 million versus a loss of$9.0 million in the prior year. GAAP diluted net income per share was$0.36 versus a loss per share of$0.16 in the prior year. - Consolidated Adjusted EBITDAR decreased by
$1.5 million or 0.9% year over year to$168.2 million . Consolidated Adjusted EBITDAR of$169.7 million in the prior year period included a benefit of$4.6 million due to lower expense accruals from compensation program changes. - Consolidated Adjusted EBITDAR margin increased by 50 basis points year over year to 27.1%.
- 2017 fourth quarter Consolidated Adjusted EBITDAR and margin expansion was led by strong performance of the Company's
Ameristar St. Charles, River City, Ameristar Black Hawk, The Meadows, andBelterra Park businesses. - Consolidated Adjusted EBITDA, net of Lease Payments, was
$65.3 million , a decrease of$3.0 million or 4.4% year over year.
Summary of Fourth Quarter and Full Year Results | |||||||||||||||
(amounts in thousands, except per share data) | Three months ended December 31, |
Year ended December 31, |
|||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
(unaudited) | |||||||||||||||
Net revenues (1) | $ | 620,829 | $ | 637,424 | $ | 2,561,848 | $ | 2,378,855 | |||||||
Income (loss) from continuing operations (2,3,4) | $ | 22,184 | $ | (9,039 | ) | $ | 61,758 | $ | (457,880 | ) | |||||
Income (loss) from continuing operations margin (2,3,4) | 3.6 | % | (1.4 | )% | 2.4 | % | (19.2 | )% | |||||||
Consolidated Adjusted EBITDAR (1,5) | $ | 168,214 | $ | 169,703 | $ | 701,886 | $ | 654,496 | |||||||
Consolidated Adjusted EBITDAR margin (1,5) | 27.1 | % | 26.6 | % | 27.4 | % | 27.5 | % | |||||||
Consolidated Adjusted EBITDA, net of Lease Payments (1,2) | $ | 65,288 | $ | 68,320 | $ | 295,601 | $ | 269,584 | |||||||
Operating income (loss) (2,3,4) | $ | 99,426 | $ | 84,538 | $ | 428,620 | $ | (146,325 | ) | ||||||
GAAP net income (loss) attributable to Pinnacle Entertainment, Inc. | $ | 22,377 | $ | (9,026 | ) | $ | 63,104 | $ | (457,410 | ) | |||||
Diluted net income (loss) per share | $ | 0.36 | $ | (0.16 | ) | $ | 1.02 | $ | (7.79 | ) |
(1 | ) | The Company's financial results for the three months and year ended December 31, 2017 reflect full periods of contribution from The Meadows, including net revenues of $67.5 million and $281.9 million, respectively, and Adjusted EBITDAR of $12.1 million and $51.2 million, respectively. The Company made rent payments for the Meadows Lease of $6.4 million and $25.4 million for the three months and year ended December 31, 2017. | |
(2 | ) | Loss from continuing operations and operating income (loss) for the three months and year ended December 31, 2016 include $1.2 million and $322.5 million, respectively, of non-cash impairment charges to goodwill and $17.0 million and $146.5 million, respectively, of non-cash impairment charges to other intangible assets. The year ended December 31, 2016 amounts principally relate to an interim assessment for impairment as a result of the Company's separation of its real estate assets from its operating assets. | |
(3 | ) | Income (loss) from continuing operations and operating income (loss) for the three months and year ended December 31, 2017 include $6.5 million and $9.5 million, respectively, of pre-opening, development and other costs, versus $1.0 million and $56.0 million, respectively, in the prior year periods. | |
(4 | ) | Income (loss) from continuing operations and operating income (loss) for the three months and year ended December 31, 2017 include $3.1 million and $15.8 million, respectively, of write-downs, reserves and recoveries, net, versus $3.1 million and $16.9 million, respectively, in the prior year periods. | |
(5 | ) | For a further description of Consolidated Adjusted EBITDAR, Consolidated Adjusted EBITDAR margin and Consolidated Adjusted EBITDA, net of Lease Payments, see the Glossary of Terms and Non-GAAP Financial Measures and the reconciliations to the GAAP equivalent financial measures below. | |
2017 was an outstanding year for
"Our strong 2017 financial results were driven by balanced regional same-store Adjusted EBITDAR growth and margin expansion, as well as the first full year of contributions from The Meadows. Overall, we achieved net revenue growth of 7.7% to a record
"Our 2017 financial results were led by exceptional performances from our River City, L'Auberge Baton Rouge, L'Auberge Lake Charles, and Ameristar Black Hawk businesses throughout the year. In the South segment, L'Auberge Lake Charles, the perennial thoroughbred of our portfolio, grew Adjusted EBITDAR 2.6% and expanded margins 170 basis points despite the severe hurricane headwinds the property faced in the third quarter of the year due to flooding in
"Our focus in 2018 remains on operations and our initiatives to drive profitable revenue streams and expense efficiency. We continue to pursue prudent capital investments to maintain the high quality businesses in our portfolio and expand the amenities we provide our guests. At Ameristar East Chicago, we have an approximately
"The most notable moment of 2017 occurred on
"We will make every effort to maximize the financial performance of our gaming entertainment businesses and to repay debt on our balance sheet, with the goal of having our Company on its best financial footing at the time of the closing of the transaction with Penn National. We will also work closely with the Penn National team to obtain the necessary regulatory approvals and to plan a smooth transition and seamless integration of these two great companies upon the closing of the transaction," concluded Mr. Sanfilippo.
2017 Fourth Quarter Operational Review
Midwest Segment
In the Midwest segment, net revenues decreased by
River City produced high single digit Adjusted EBITDAR growth despite a slight decline in net revenues. Adjusted EBITDAR margin increased by approximately 260 basis points versus the prior year period. River City achieved these results through marketing expense efficiency.
The Meadows generated mid-single digit Adjusted EBITDAR growth despite a slight decline in net revenues, resulting in Adjusted EBITDAR margin expansion of approximately 110 basis points. These results were achieved by strategically driving profitable table gaming revenues, cost control, and marketing efficiencies.
South Segment
In the South segment, net revenues decreased by
L'Auberge Lake Charles experienced a mid-single digit decline in net revenues while holding Adjusted EBITDAR to a decline of less than 1%. Consequently, L'Auberge Lake Charles expanded Adjusted EBITDAR margin by approximately 160 basis points year over year in the fourth quarter.
L'Auberge Baton Rouge experienced double digit net revenue and Adjusted EBITDAR declines on a year over year basis. Adjusted EBITDAR margin contracted approximately 400 basis points year over year. Declines in input costs and additional marketing efficiencies were not enough to offset softer gaming revenues in comparison to a strong fourth quarter 2016.
West Segment
West segment net revenues were
Ameristar Black Hawk produced low single digit growth in net revenues and Adjusted EBITDAR. Adjusted EBITDAR margin declined approximately 70 basis points year over year. The operating results at Ameristar Black Hawk were driven by a low single digit increase in gaming revenues and continued marketing and promotional efficiency.
Corporate Expenses and Other
Corporate expenses and other, which is principally comprised of corporate overhead expenses, as well as the Retama Park Racetrack management operations, decreased by
Lease Payments | |||||||||||||||
For the three months ended December 31, |
For the year ended December 31, |
||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
(amounts in thousands, unaudited) | |||||||||||||||
Reduction of financing obligation (1) | $ | 13,035 | $ | 11,751 | $ | 49,770 | $ | 30,988 | |||||||
Interest expense attributable to financing obligation (1) | 83,445 | 83,274 | 331,106 | 225,149 | |||||||||||
Total payments to GLPI related to Master Lease (1) | $ | 96,480 | $ | 95,025 | $ | 380,876 | $ | 256,137 | |||||||
Long-term prepaid rent (2) | $ | 2,275 | $ | 2,275 | $ | 9,100 | $ | 2,831 | |||||||
Rent expense attributable to Meadows Lease (2) | 4,171 | 4,083 | 16,309 | 5,081 | |||||||||||
Total payments to GLPI related to Meadows Lease (2) | $ | 6,446 | $ | 6,358 | $ | 25,409 | $ | 7,912 |
(1 | ) | The Company completed its transactions with GLPI and entered into the Master Lease on April 28, 2016. The Company began accruing and making rent payments as of the closing date. |
(2 | ) | The Company completed the acquisition of the operations of The Meadows and entered into the Meadows Lease on September 9, 2016. |
Interest Expense | |||||||||||||||
For the three months ended December 31, |
For the year ended December 31, |
||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
(amounts in thousands, unaudited) | |||||||||||||||
Interest expense from financing obligation | $ | 83,445 | $ | 83,274 | $ | 331,106 | $ | 225,149 | |||||||
Interest expense from debt (1) | 11,027 | 12,763 | 50,297 | 108,024 | |||||||||||
Interest income | (195 | ) | (37 | ) | (490 | ) | (484 | ) | |||||||
Capitalized interest | (7 | ) | — | (54 | ) | (105 | ) | ||||||||
Other (2) | — | (823 | ) | — | 1,709 | ||||||||||
Interest expense, net | $ | 94,270 | $ | 95,177 | $ | 380,859 | $ | 334,293 |
(1 | ) | The three months and year ended December 31, 2017, represent interest expense and fees attributable to the Company's Conventional Debt, which was issued at the closing of the transactions with GLPI on April 28, 2016. In addition to interest expense and fees attributable to the Company's Conventional Debt, the year ended December 31, 2016, also includes interest expense and fees related to the Former Pinnacle debt capital structure. | |
(2 | ) | Represents a nonrecurring expense associated with the GLPI transaction. | |
Liquidity and Capital Expenditures
Liquidity
As of December 31, 2017, the Company had
As of December 31, 2017, the Company had a total principal balance of Conventional Debt of
Capital Expenditures
Capital expenditures were approximately
In 2018, the Company anticipates capital expenditures related to maintenance on its existing operating businesses and corporate initiatives to be between
Investor Call
Pinnacle will not host an investor conference call or webcast related to the announcement of its 2017 fourth quarter and full year financial results due to the pending acquisition by Penn National. Investors may find a detailed report of the Company's 2017 fourth quarter and full year financial results in the tables below, as well as in financial statements and related footnotes on Form 10-K filed with the
Pending Merger
As previously announced, on
Additional Information
This communication does not constitute an offer to buy or solicitation of an offer to sell any securities. In connection with the proposed merger, Penn National has filed with the
Certain Information Regarding Participants
Penn National and Pinnacle and their respective directors and executive officers may be deemed to be participants in the solicitation of proxies in respect of the proposed merger under the rules of the
Glossary of Terms
Adjusted EBITDAR: is defined for each segment as earnings before interest income and expense; income taxes; depreciation; amortization; rent expense associated with the Meadows Lease; pre-opening, development and other costs; non-cash share-based compensation; asset impairment costs; write-downs, reserves, recoveries; inter-company management fees, gain (loss) on sale of certain assets; gain (loss) on early extinguishment of debt; gain (loss) on sale of discontinued operations; and discontinued operations. The Company uses Adjusted EBITDAR to compare operating results among its properties and between accounting periods.
Adjusted EBITDAR margin: is defined as each segment’s Adjusted EBITDAR divided by net revenues for such segment. The Company uses Adjusted EBITDAR margin to compare operating results among its properties and between accounting periods.
Adjusted Lease Payments: is defined as Lease Payments (which is defined below) adjusted as if the Master Lease (which is defined below) had been in place for the entirety of the applicable prior year periods, as the Company owned and operated the 14 gaming entertainment businesses associated with the Master Lease in both time periods. Lease Payments associated with the Meadows Lease are actual lease payments included in the current year periods, the prior year periods lease payments were not adjusted for the Meadows Lease as the Company did not own and operate that business in the entire applicable prior year periods or consolidate its financial results for those entire time periods.
Cash Income Taxes: is defined as the cash payments made for income taxes to Federal and State governmental agencies during the period.
Cash Interest Expense: is defined as the cash paid for interest on Conventional Debt (which is defined below) in the period.
Capital expenditures: is defined as cash payments made in connection with capital improvements at the Company's existing operating businesses, for corporate initiatives or on growth and expansion projects, both stand alone and to improve the Company's existing operating businesses. These reflect cash payments made during the period as opposed to accrued capital expenditures reflected in the financial statements.
Consolidated Adjusted EBITDAR: is defined as earnings before interest income and expense, income taxes, depreciation, amortization, rent expense associated with the Meadows Lease, pre-opening, development and other costs, non-cash share-based compensation, asset impairment costs, write-downs, reserves, recoveries, gain (loss) on sale of certain assets, gain (loss) on early extinguishment of debt, gain (loss) on sale of equity security investments, income (loss) from equity method investments, non-controlling interest and discontinued operations. Management eliminates the results from discontinued operations at the time they are deemed discontinued.
Consolidated Adjusted EBITDA, net of Lease Payments: is defined as Consolidated Adjusted EBITDAR (which is defined above) minus Adjusted Lease Payments (which is defined above).
Consolidated Adjusted EBITDAR Margin: The Company defines Consolidated Adjusted EBITDAR margin as Consolidated Adjusted EBITDAR divided by revenues on a consolidated basis.
Conventional Debt: is defined as debt from borrowed money, which substantially consists of the outstanding principal amount from the Company's senior secured credit facilities, which consists of a
Financing Obligation: is defined as the liability recorded on the Company's balance sheet in connection with the Master Lease. As a result of the transaction with GLPI, the Company's Master Lease with GLPI is accounted for as a financing obligation in accordance with GAAP. The financing obligation is calculated based upon the present value of the future minimum lease payments made to GLPI under the Master Lease over the remaining lease term, which includes all renewal options. The derivation of the present value of the future minimum lease payments is made using an imputed borrowing rate of 10.5%.
Former Pinnacle: is defined as
Lease Payments: is defined as cash rent payments made to GLPI for the Master Lease and the Meadows Lease. The Company’s annual rent payment is currently
Master Lease or GLPI Master Lease: is defined as the lease the Company entered into on
Meadows Lease: is defined as the lease the Company entered into on
Non-GAAP Financial Measures
The Non-GAAP Financial Measures used in this press release include Consolidated Adjusted EBITDAR, Consolidated Adjusted EBITDAR margin and Consolidated Adjusted EBITDA, net of Lease Payments.
The Company uses Consolidated Adjusted EBITDAR and Consolidated Adjusted EBITDAR margin as relevant and useful measures to compare operating results between accounting periods. The presentation of Consolidated Adjusted EBITDAR has economic substance because it is used by management as a performance measure to analyze the performance of its business and is especially relevant in evaluating large, long-lived casino-hotel projects because it provides a perspective on the current effects of operating decisions separated from the substantial, non-operational depreciation charges and financing costs of such projects. Management also reviews pre-opening, development and other costs separately, as such expenses are also included in total project costs when assessing budgets and project returns, and because such costs relate to anticipated future revenues and income. Management believes that Consolidated Adjusted EBITDAR and Consolidated Adjusted EBITDAR margin are useful measures for investors because they are indicators of the strength and performance of ongoing business operations. These calculations are commonly used as a basis for investors, analysts and credit rating agencies to evaluate and compare operating performance and value of companies within our industry. Consolidated Adjusted EBITDAR also approximates the measures used in the debt covenants within the Company’s debt agreements. Consolidated Adjusted EBITDAR does not include depreciation or interest expense and therefore does not reflect current or future capital expenditures or the cost of capital. The Company compensates for these limitations by using other comparative measures to assist in the evaluation of operating performance.
In addition, the Company uses Consolidated Adjusted EBITDA, net of Lease Payments as a relevant and useful measure to compare operating results between accounting periods. Management believes that Consolidated Adjusted EBITDA, net of Lease Payments is useful to investors because it is an indicator of the performance of ongoing business operations after incorporating the cash flow impact of Adjusted Lease Payments and to assess the historical impact of the Adjusted Lease Payments as if they had been incurred in prior evaluation periods.
Not all of the aforementioned benefits and costs occur in each reporting period, but have been included in the definitions based on historical activity.
Each of these measures is not calculated in the same manner by all companies and, accordingly, may not be an appropriate measure of comparing performance among different companies. See the attached “supplemental information” tables for reconciliations of these measures to the GAAP equivalent financial measures.
About
Forward Looking Statements
This communication may contain certain forward-looking statements, including certain plans, expectations, goals, projections, and statements regarding Pinnacle’s business generally, expected results of operations and future operating performance and future growth, about the benefits of the proposed merger, adequacy of resources to fund development and expansion projects, liquidity, financing options, Pinnacle’s plans, objectives, expectations and intentions, the expected timing of the completion of the proposed merger, and other statements that are not historical facts. Such statements are subject to numerous assumptions, risks, and uncertainties. Statements that do not describe historical or current facts, including statements about beliefs and expectations, are forward-looking statements. Forward-looking statements may be identified by words such as “expect,” “anticipate,” “believe,” “intend,” “estimate,” “plan,” “target,” “goal,” or similar expressions, or future or conditional verbs such as “will,” “may,” “might,” “should,” “would,” “could,” or similar variations. The forward-looking statements are intended to be subject to the safe harbor provided by Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, and the Private Securities Litigation Reform Act of 1995. While there is no assurance that any list of risks and uncertainties or risk factors is complete, below are certain factors which could cause actual results to differ materially from those contained or implied in the forward-looking statements including: Pinnacle’s sensitivity to reductions in consumers’ discretionary spending as a result of downturns in the economy; significant competition in the gaming industry in all of Pinnacle’s markets, which could adversely affect revenues and profitability; Pinnacle is required to pay a significant portion of its cash flows pursuant to and subject to the terms and conditions of the Master Lease and Meadows Lease, which could adversely affect our ability to fund Pinnacle’s operations and growth and limit Pinnacle’s ability to react to competitive and economic changes; fluctuations in the trading volume and market price of shares of Pinnacle’s common stock, general business and market conditions; risks related to the acquisition of Pinnacle by Penn National and the integration of the businesses and assets to be acquired; the possibility that the proposed merger does not close when expected or at all because required regulatory, shareholder or other approvals are not received or other conditions to the closing are not satisfied on a timely basis or at all; the risk that the financing required to fund the proposed merger is not obtained on the terms anticipated or at all; the possibility that the
References in this press release to "
Ameristar, Belterra, Boomtown, Casino Magic, L’Auberge, River City, Meadows, mychoice, and
Investor Relations & Financial Media Inquiries |
Vincent J. Zahn, CFA |
Vice President & Treasurer |
investors@pnkmail.com |
(702) 541-7777 |
Pinnacle Entertainment, Inc. | |||||||||||||||
Condensed Consolidated Statements of Operations | |||||||||||||||
(amounts in thousands, except per share data) | |||||||||||||||
For the three months ended December 31, |
For the year ended December 31, |
||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
(unaudited) | (unaudited) | ||||||||||||||
Revenues: | |||||||||||||||
Gaming | $ | 555,448 | $ | 571,390 | $ | 2,286,881 | $ | 2,128,026 | |||||||
Food and beverage | 32,245 | 33,026 | 133,082 | 126,927 | |||||||||||
Lodging | 11,647 | 11,874 | 51,671 | 50,745 | |||||||||||
Retail, entertainment and other | 21,489 | 21,134 | 90,214 | 73,157 | |||||||||||
Total revenues | 620,829 | 637,424 | 2,561,848 | 2,378,855 | |||||||||||
Expenses and other costs: | |||||||||||||||
Gaming | 303,738 | 313,770 | 1,243,187 | 1,135,951 | |||||||||||
Food and beverage | 30,920 | 31,524 | 126,506 | 120,791 | |||||||||||
Lodging | 6,050 | 6,219 | 25,430 | 24,895 | |||||||||||
Retail, entertainment and other | 9,199 | 9,184 | 40,327 | 28,483 | |||||||||||
General and administrative | 111,184 | 113,923 | 455,525 | 454,790 | |||||||||||
Depreciation and amortization | 50,725 | 55,943 | 217,025 | 218,366 | |||||||||||
Pre-opening, development and other costs | 6,481 | 1,029 | 9,478 | 55,980 | |||||||||||
Impairment of goodwill | — | 1,157 | — | 322,457 | |||||||||||
Impairment of other intangible assets | — | 17,000 | — | 146,500 | |||||||||||
Write-downs, reserves and recoveries, net | 3,106 | 3,137 | 15,750 | 16,967 | |||||||||||
Total expenses and other costs | 521,403 | 552,886 | 2,133,228 | 2,525,180 | |||||||||||
Operating income (loss) | 99,426 | 84,538 | 428,620 | (146,325 | ) | ||||||||||
Interest expense, net | (94,270 | ) | (95,177 | ) | (380,859 | ) | (334,293 | ) | |||||||
Loss on early extinguishment of debt | — | — | (516 | ) | (5,207 | ) | |||||||||
Loss from equity method investment | — | — | (90 | ) | (90 | ) | |||||||||
Income (loss) from continuing operations before income taxes | 5,156 | (10,639 | ) | 47,155 | (485,915 | ) | |||||||||
Income tax benefit | 17,028 | 1,600 | 14,603 | 28,035 | |||||||||||
Income (loss) from continuing operations | 22,184 | (9,039 | ) | 61,758 | (457,880 | ) | |||||||||
Income from discontinued operations, net of income taxes | — | — | — | 433 | |||||||||||
Net income (loss) | 22,184 | (9,039 | ) | 61,758 | (457,447 | ) | |||||||||
Less: Net loss attributable to non-controlling interest | 193 | 13 | 1,346 | 37 | |||||||||||
Net income (loss) attributable to Pinnacle Entertainment, Inc. | $ | 22,377 | $ | (9,026 | ) | $ | 63,104 | $ | (457,410 | ) | |||||
Net income (loss) per common share—basic | |||||||||||||||
Income (loss) from continuing operations | $ | 0.40 | $ | (0.16 | ) | $ | 1.12 | $ | (7.80 | ) | |||||
Income from discontinued operations, net of income taxes | — | — | — | 0.01 | |||||||||||
Net income (loss) per common share—basic | $ | 0.40 | $ | (0.16 | ) | $ | 1.12 | $ | (7.79 | ) | |||||
Net income (loss) per common share—diluted | |||||||||||||||
Income (loss) from continuing operations | $ | 0.36 | $ | (0.16 | ) | $ | 1.02 | $ | (7.80 | ) | |||||
Income from discontinued operations, net of income taxes | — | — | — | 0.01 | |||||||||||
Net income (loss) per common share—diluted | $ | 0.36 | $ | (0.16 | ) | $ | 1.02 | $ | (7.79 | ) | |||||
Number of shares—basic | 56,639 | 55,819 | 56,518 | 58,741 | |||||||||||
Number of shares—diluted | 62,008 | 55,819 | 61,911 | 58,741 | |||||||||||
Pinnacle Entertainment, Inc. | |||||||||||||||
Supplemental Information | |||||||||||||||
Revenues, Adjusted EBITDAR, Consolidated Adjusted EBITDAR and | |||||||||||||||
Consolidated Adjusted EBITDA, net of Lease Payments | |||||||||||||||
(amounts in thousands, unaudited) | |||||||||||||||
For the three months ended December 31, |
For the year ended December 31, |
||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Revenues: | |||||||||||||||
Midwest (1,8) | $ | 375,211 | $ | 379,126 | $ | 1,546,956 | $ | 1,359,940 | |||||||
South (2) | 184,083 | 198,111 | 767,073 | 777,104 | |||||||||||
West (3) | 60,132 | 58,706 | 242,205 | 235,942 | |||||||||||
Total Segment Revenues | 619,426 | 635,943 | 2,556,234 | 2,372,986 | |||||||||||
Corporate and Other (4) | 1,403 | 1,481 | 5,614 | 5,869 | |||||||||||
Total Revenues (8) | $ | 620,829 | $ | 637,424 | $ | 2,561,848 | $ | 2,378,855 | |||||||
Adjusted EBITDAR: | |||||||||||||||
Midwest (1,8) | $ | 105,525 | $ | 103,388 | $ | 439,746 | $ | 402,363 | |||||||
South (2) | 60,589 | 65,599 | 250,289 | 246,097 | |||||||||||
West (3) | 22,297 | 21,655 | 93,110 | 88,419 | |||||||||||
Segment Adjusted EBITDAR | 188,411 | 190,642 | 783,145 | 736,879 | |||||||||||
Corporate Expenses and Other (4) | (20,197 | ) | (20,939 | ) | (81,259 | ) | (82,383 | ) | |||||||
Consolidated Adjusted EBITDAR (5,7,8) | 168,214 | 169,703 | 701,886 | 654,496 | |||||||||||
Adjusted Lease Payments (6) | (102,926 | ) | (101,383 | ) | (406,285 | ) | (384,912 | ) | |||||||
Consolidated Adjusted EBITDA, net of Lease Payments (5,7) | $ | 65,288 | $ | 68,320 | $ | 295,601 | $ | 269,584 | |||||||
Consolidated Adjusted EBITDAR margin % (5,7) | 27.1 | % | 26.6 | % | 27.4 | % | 27.5 | % |
(1 | ) | Consists of Council Bluffs, East Chicago, Kansas City, St. Charles, Belterra Resort, Belterra Park, Meadows and River City. | |
(2 | ) | Consists of Vicksburg, Bossier City, New Orleans, Baton Rouge, and Lake Charles. | |
(3 | ) | Consists of Black Hawk, Cactus Petes, and Horseshu. | |
(4 | ) | Includes corporate expenses, as well as results from the management of Retama Park Racetrack. | |
(5 | ) | The Master Lease is accounted for as a financing obligation. Payments made to GLPI for the Master Lease are recorded as a reduction of the financing obligation on the balance sheet and as interest expense attributable to the financing obligation. As a result, rent payments made to GLPI for the Master Lease are not recorded as an operating expense and are not reflected in Consolidated Adjusted EBITDAR. The Meadows Lease is accounted for as an operating lease. The Company records rent expense related to this lease as an operating expense in its unaudited Condensed Consolidated Statements of Operations. Consolidated Adjusted EBITDAR is presented before the impact of rent expense associated with the Meadows Lease. | |
(6 | ) | See the Glossary of Terms for a detailed description of Adjusted Lease Payments. The Company made cash payments to GLPI for the Master Lease and Meadows Lease of $96.5 million and $6.4 million, respectively, in the three months ended December 31, 2017 and $380.9 million and $25.4 million, respectively, during the year ended December 31, 2017. | |
(7 | ) | See the Glossary of Terms and discussion of Non-GAAP Financial Measures above for a detailed description of Consolidated Adjusted EBITDAR, Consolidated Adjusted EBITDAR margin and Consolidated Adjusted EBITDA, net of Lease Payments. | |
(8 | ) | The Company's financial results for the three months and year ended December 31, 2017 reflect full periods of contribution from The Meadows, including net revenues of $67.5 million and $281.9 million, respectively, and Adjusted EBITDAR of $12.1 million and $51.2 million, respectively. | |
Pinnacle Entertainment, Inc. | |||||||
Condensed Consolidated Balance Sheets | |||||||
(amounts in thousands) | |||||||
December 31, 2017 |
December 31, 2016 |
||||||
(unaudited) | |||||||
ASSETS | |||||||
Cash and cash equivalents | $ | 184,218 | $ | 185,093 | |||
Land, buildings, vessels and equipment, net | 2,629,013 | 2,768,491 | |||||
Other assets, net | 1,136,997 | 1,123,483 | |||||
Total assets | $ | 3,950,228 | $ | 4,077,067 | |||
LIABILITIES AND STOCKHOLDERS’ DEFICIT | |||||||
Liabilities, other than long-term debt and long-term financing obligation | $ | 345,346 | $ | 349,948 | |||
Long-term debt, including current portion (1) | 812,324 | 936,700 | |||||
Long-term financing obligation, including current portion (2) | 3,113,529 | 3,163,299 | |||||
Total liabilities | 4,271,199 | 4,449,947 | |||||
Total stockholders' deficit | (320,971 | ) | (372,880 | ) | |||
Total liabilities and stockholders' deficit | $ | 3,950,228 | $ | 4,077,067 |
(1 | ) | The December 31, 2017 balance represents Conventional Debt related to the Company's senior secured credit facilities and 5.625% Senior Notes due 2024, net of unamortized discount and debt issuance costs. Total unamortized discount and debt issuance costs were $9.4 million and $16.2 million as of December 31, 2017 and December 31, 2016, respectively. | |
(2 | ) | The Master Lease is accounted for as a financing obligation. The financing obligation is calculated based upon the present value of the future minimum lease payments made to GLPI for the Master Lease over the remaining lease term, which includes all renewal options since they were reasonably assured of being exercised at the inception of the Master Lease. The derivation of the present value of the future minimum lease payments is calculated using an imputed borrowing rate of 10.5%. | |
Pinnacle Entertainment, Inc. | |||||||
Supplemental Information | |||||||
Principal Balances of Conventional Debt | |||||||
(amounts in thousands) | |||||||
December 31, 2017 |
December 31, 2016 |
||||||
(unaudited) | |||||||
Revolving Credit Facility (1) | 169,250 | 107,220 | |||||
Term Loan A Facility (1) | 152,437 | 180,375 | |||||
Term Loan B Facility (1) | — | 165,250 | |||||
Senior Secured Credit Facilities | 321,687 | 452,845 | |||||
5.625% Senior Notes (2) | 500,000 | 500,000 | |||||
Other | 69 | 76 | |||||
Total Conventional Debt | $ | 821,756 | $ | 952,921 |
(1 | ) | Represents the outstanding principal amount of Conventional Debt from the Company's senior secured credit facilities, which consists of a revolving credit facility, a term loan A facility and a term loan B facility. | |
(2 | ) | Represents the outstanding principal amount of Conventional Debt. As of December 31, 2017 and December 31, 2016, consists of the Company's 5.625% Senior Notes due 2024, $375.0 million of which was issued on April 28, 2016 and $125.0 million of which was issued on October 12, 2016. | |
Pinnacle Entertainment, Inc. | |||||||||||||||
Supplemental Information | |||||||||||||||
Selected Cash Flow Data | |||||||||||||||
(amounts in thousands) | |||||||||||||||
For the three months ended December 31, |
For the year ended December 31, |
||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
(unaudited) | (unaudited) | ||||||||||||||
Cash paid for interest related to Conventional Debt (1) | $ | 17,075 | $ | 15,366 | $ | 42,302 | $ | 113,647 | |||||||
Cash paid for state and federal income taxes | $ | 795 | $ | 2,658 | $ | 3,796 | $ | 12,469 | |||||||
Capital expenditures | $ | 22,549 | $ | 24,829 | $ | 78,941 | $ | 97,932 |
(1 | ) | The three months and year ended December, 2017 and the three months ended December 31, 2016, represent cash paid for interest and fees attributable to the Company's Conventional Debt, which was issued at the closing of the transactions with GLPI on April 28, 2016. In addition to the cash paid for interest and fees attributable to the Company's Conventional Debt, the year ended December 31, 2016, also includes cash paid for interest and fees attributable to debt under Former Pinnacle’s debt capital structure. The 5.625% Senior Notes due 2024 pay interest semi-annually on May 1st and November 1st of each year. |
Pinnacle Entertainment, Inc. | |||||||||||||||
Supplemental Information | |||||||||||||||
Reconciliations of Income (Loss) from Continuing Operations to | |||||||||||||||
Consolidated Adjusted EBITDAR and Consolidated Adjusted EBITDA, net of Lease Payments and | |||||||||||||||
Income (Loss) from Continuing Operations Margin to | |||||||||||||||
Consolidated Adjusted EBITDAR Margin | |||||||||||||||
(amounts in thousands, unaudited) | |||||||||||||||
For the three months ended December 31, |
For the year ended December 31, |
||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Income (loss) from continuing operations | $ | 22,184 | $ | (9,039 | ) | $ | 61,758 | $ | (457,880 | ) | |||||
Rent expense under the Meadows Lease | 4,171 | 4,083 | 16,309 | 5,081 | |||||||||||
Depreciation and amortization | 50,725 | 55,943 | 217,025 | 218,366 | |||||||||||
Pre-opening, development and other costs | 6,481 | 1,029 | 9,478 | 55,980 | |||||||||||
Non-cash share-based compensation expense | 4,305 | 2,816 | 14,704 | 35,470 | |||||||||||
Impairment of goodwill | — | 1,157 | — | 322,457 | |||||||||||
Impairment of other intangible assets | — | 17,000 | — | 146,500 | |||||||||||
Write-downs, reserves and recoveries, net | 3,106 | 3,137 | 15,750 | 16,967 | |||||||||||
Interest expense, net | 94,270 | 95,177 | 380,859 | 334,293 | |||||||||||
Loss on early extinguishment of debt | — | — | 516 | 5,207 | |||||||||||
Loss from equity method investment | — | — | 90 | 90 | |||||||||||
Income tax benefit | (17,028 | ) | (1,600 | ) | (14,603 | ) | (28,035 | ) | |||||||
Consolidated Adjusted EBITDAR (1,2) | 168,214 | 169,703 | 701,886 | 654,496 | |||||||||||
Adjusted Lease Payments (3) | 102,926 | 101,383 | 406,285 | 384,912 | |||||||||||
Consolidated Adjusted EBITDA, net of Lease Payments (1,2) | $ | 65,288 | $ | 68,320 | $ | 295,601 | $ | 269,584 | |||||||
Income (loss) from continuing operations margin % | 3.6 | % | (1.4 | )% | 2.4 | % | (19.2 | )% | |||||||
Consolidated Adjusted EBITDAR margin % (2) | 27.1 | % | 26.6 | % | 27.4 | % | 27.5 | % |
(1 | ) | The Master Lease is accounted for as a financing obligation. Payments made to GLPI for the Master Lease are recorded as a reduction of the financing obligation on the balance sheet and as interest expense attributable to the financing obligation. As a result, rent payments made to GLPI for the Master Lease are not recorded as an operating expense and are not reflected in Consolidated Adjusted EBITDAR. The Meadows Lease is accounted for as an operating lease. The Company records rent expense related to this lease as an operating expense in its unaudited Condensed Consolidated Statements of Operations. Consolidated Adjusted EBITDAR is presented before the impact of rent expense associated with the Meadows Lease. | |
(2 | ) | See the Glossary of Terms and discussion of Non-GAAP Financial Measures above for a detailed description of Consolidated Adjusted EBITDAR, Consolidated Adjusted EBITDAR margin and Consolidated Adjusted EBITDA, net of Lease Payments. | |
(3 | ) | See the Glossary of Terms for a detailed description of Adjusted Lease Payments. The Company made payments to GLPI for the Master Lease and Meadows Lease of $96.5 million and $6.4 million, respectively, during the three months ended December 31, 2017 and $380.9 million and $25.4 million, respectively, during the year ended December 31, 2017. | |
Source: Pinnacle Entertainment, Inc.