WYOMISSING, Pa.--(BUSINESS WIRE)--Penn National Gaming, Inc. (NASDAQ: PENN) today reported financial results for the three and six months ended June 30, 2020.

Jay Snowden, President and Chief Executive Officer, commented: “While the last several months have presented unprecedented challenges for our Company, I am extremely proud of the way our corporate and property leaders and valued team members have risen to the occasion and, working tirelessly alongside our regulators and public health officials, have successfully reopened all but two of our casino properties as of today (Zia Park and Tropicana Las Vegas). The tremendous resilience of our team, along with the steps we’ve taken to strengthen our financial position and achieve ongoing operational efficiencies, have helped ensure that Penn National remains well-positioned for near- and long-term success.

“Our team members are the life blood of our Company and, while some remain furloughed given the ongoing capacity restrictions and limited amenities at our properties, I am pleased to announce that we will extend medical and pharmacy benefits to all impacted team members through August 31. In addition, our COVID-19 Emergency Relief Fund, for which we’ve raised more than $1.7 million, has already provided needed financial assistance to approximately 1,000 team members and remains available to help others in need. I would like to thank all of our team members and valued stakeholders for their continued support, dedication and patience during this difficult time.

“Despite starting the second quarter with our entire property portfolio closed due to the COVID-19 pandemic, we ended the quarter in a significantly improved financial position as a result of continued mitigation efforts that contributed to significant margin improvement, a successful capital raise, and very strong financial performance at our properties since reopening. The outstanding results to date at our reopened properties highlight our unique strategic position as a best in class operator of market leading regional properties, which have rebounded more quickly than casinos in destination markets. In addition, our geographic diversification across 19 states -- with no more than 15% of our revenues being derived from any single state -- has proven to be a significant benefit as states have reopened casinos on a staggered basis. Although visitation has yet to return to pre-COVID levels, in large part due to state mandated capacity restrictions and limited amenities, spend per visit has been notably strong, resulting in better than expected revenues.”

Q2 Financial Results Summary

For the second quarter ended June 30, 2020, Penn National generated revenues of $305.5 million and Adjusted EBITDAR of $24.5 million. Revenues for reopened properties from the applicable date of reopening through June 30th decreased 6% compared to the prior year period, while adjusted property EBITDAR at reopened properties increased 33% and adjusted property EBITDAR margins expanded by over 1,300 basis points from the comparable prior year period. Reflecting this strong performance and our recent capital raise, we ended the quarter with over $1.2 billion of cash.

Encouraging Q3 Trends

“While May and June results may have benefited in part from pent-up demand, we continue to be highly encouraged by revenue and EBITDAR trends in July and early August, despite the continuation of safety protocols, including capacity restrictions and social distancing mandates,” added Mr. Snowden. “We anticipate that a meaningful portion of the margin improvements realized since our properties reopened will be recurring as we continue to make fundamental changes to improve our offerings and efficiencies across our organization. For example, we are working closely with regulators in several jurisdictions to introduce cashless, cardless, and contactless technology to our casinos, which we believe will increase safety and provide improved service while delivering additional efficiencies and accountability. Our cashless and contactless initiatives will also bring our property technology in line with other industries, while helping to attract a younger customer to our properties. We look forward to reopening the remainder of our properties and to the easing of restrictions at our reopened properties when it is safe to do so. We also anticipate resuming construction later this year on both of our Category 4 projects in Pennsylvania, which we expect will open in the second half of 2021.”

Penn Interactive Represents Transformational Opportunity

Mr. Snowden continued, “Over the last few months we have made significant progress on the development of the Barstool Sportsbook mobile app and remain on schedule to launch what we believe will be a best-in-class sports betting product in September. We currently anticipate launching the app in Pennsylvania with additional states to follow throughout Q4-20 and Q1-21. We have already seen very high levels of interest in the Barstool Sportsbook app from the Barstool audience as well as on a wide range of social media platforms, and we are extremely excited about Barstool’s plans to introduce the app to their growing and loyal audience. Underscoring the strength of its brand and following, Barstool has continued its positive momentum through the second quarter, recording the highest number of podcast downloads in the company’s history in June, making Barstool one of the top 4 largest podcast networks in the country, despite the lack of live sports. In addition, we are very pleased to report that we now have official data access agreements in place with the NFL, MLB and the NBA, which will allow us to provide an exciting variety of in-game betting opportunities for our sports betting customers.

“Our Hollywood Casino branded real-money iCasino product in Pennsylvania continues to grow rapidly, with quarterly sequential revenue growth of 108% in the second quarter. By leveraging our deep, proprietary casino database, our iCasino product has achieved over 10% share of the highly competitive Pennsylvania market while delivering strong EBITDA margins. Our demonstrated ability to convert our casino database, together with our powerful partnership with Barstool Sports, should provide significant organic customer acquisition and cross-sell opportunities. As a result, we believe the Company is poised to capture an outsized share of the high growth U.S. sports betting and online casino markets and achieve market-leading profitability.

“Finally, we are excited about the third-quarter launch of our all new mychoice social casino product, which we believe will serve as an exciting interactive gaming experience for our guests, as well as an important customer acquisition tool in states where we have not yet launched iCasino.”

Commitment to Inclusion and Diversity

Penn National has a strong long-term record of supporting local nonprofits and organizations in its communities, which provide assistance to underrepresented and disadvantaged individuals through property level charitable donations and the Penn National Gaming Foundation. Consistent with that philosophy, this year, in celebration of Juneteenth, the Company committed to spend at least $1 million annually to support the following diversity and inclusion initiatives:

• Creation of a scholarship fund to help underrepresented team members and their children pursue higher education, as well as increasing recruitment efforts at, and support of, Historically Black Colleges and Universities;
• Support for organizations in our communities promoting equality and justice and by encouraging team members to donate their time and energy to help support the change needed in their communities; and
• Increasing the number of minority business networking events hosted each year in order to support MBE, WBE, and Veteran Owned business partners.

The Company also announced the formation of a Diversity Committee, which will be chaired by Justin Carter, General Manager of Hollywood Casino Toledo. This committee will be comprised of underrepresented team members from around the country and at varying levels in the organization to help implement these new initiatives and to ensure Penn National has mechanisms in place to listen to team members about important ongoing social justice issues.

Mr. Snowden concluded, “While we recognize that it may be several months or longer before we’re able to resume full operations at our properties, we are confident that our team of best-in-class operators will continue to find creative ways to maximize property performance. Our goal is to come out of this pandemic as a stronger company, and we believe the operational changes we have implemented, together with our strengthened balance sheet and unique omni-channel strategy supercharged by Barstool Sports, position us to achieve this goal and drive enhanced shareholder returns.”

About Penn National Gaming

With the nation's largest and most diversified regional gaming footprint, including 41 properties across 19 states, Penn National continues to evolve into a highly innovative omni-channel provider of retail and online gaming, live racing and sports betting entertainment. The Company's properties feature approximately 50,000 gaming machines, 1,300 table games and 8,800 hotel rooms, and operate under various well-known brands, including Hollywood, Ameristar, and L'Auberge. Our wholly-owned interactive division, Penn Interactive, operates retail sports betting across the Company's portfolio, as well online social casino, bingo, and iCasino products. In February 2020, Penn National entered into a strategic partnership with Barstool Sports, whereby Barstool will exclusively promote the Company's land-based and online casinos and sports betting products, including the Barstool Sportsbook mobile app, to its national audience of over 66 million. The Company's omni-channel approach is bolstered by the mychoice loyalty program, which rewards and recognizes its over 20 million members for their loyalty to both retail and online gaming and sports betting products with the most dynamic set of offers, experiences, and service levels in the industry.