Penn Entertainment reports record retail revenue, narrows interactive loss

Penn Entertainment reported a seven per cent increase in third-quarter revenue, driven by a record performance in its retail segment and narrowing losses in its interactive division. Retail segment revenue reached $1.5 billion, while the interactive division generated $348.4 million, which included a tax gross-up of $191.4 million. Adjusted EBITDAR for the retail segment was $501.8 million, with margins of 33.7 per cent. The company's interactive segment posted an adjusted EBITDA loss of $18.3 million, an improvement from the previous year. "Penn’s third-quarter results were highlighted by strong year-over-year growth in retail segment Adjusted EBITDAR, continued progress toward interactive profitability, and further balance-sheet deleveraging," said Penn Entertainment CEO Jay Snowden. "Our retail segment achieved record third-quarter revenue, reflecting broad-based strength across the portfolio, including our completed development projects." He said the healthy operating trends experienced across both retail and interactive segments continued through October.

Snowden said the retail segment delivered better than expected revenue and adjusted EBITDAR results. "Property-level performance was supported by increases in rated revenue and spend per visit across all age segments, meaningful contributions from mid- and high-worth customers, and continued growth in unrated revenue," he said. For the third consecutive quarter, segment adjusted EBITDAR margins improved year-over-year. The company's northeast segment was the strongest performer, with revenue of $708.3 million and segment adjusted EBITDAR of $208.1 million.

Interactive segment trends

The company said its interactive segment's adjusted EBITDA improved meaningfully year-over-year. "US iCasino revenue growth was driven by the strength of standalone Hollywood iCasino, supported by efficient user acquisition and reinvestment," Snowden said. "Sustained revenue growth in U.S. standalone Hollywood iCasino and Canada, together with operational discipline, reinforces our confidence in achieving our full-year Adjusted EBITDA target in our interactive segment." In Ontario, increased users and revenue per user contributed to revenue growth across both iCasino and online sports betting. "We are also pleased with the early performance of our Alberta iCasino and OSB operations, which further expand our Canadian presence," Snowden said. The interactive business yielded a loss of $18.3 million in segment adjusted EBITDAR. "These encouraging trends reinforce our strategic focus on U.S. iCasino and Canada as key drivers of profitable growth," Snowden concluded. The company's total liquidity as of September 30 was $2 billion, which included $1 billion in cash and cash equivalents. Its traditional net debt stood at $1.8 billion. Snowden said the returns generated from investments highlight the opportunity across the company's remaining development pipeline.