here<\/a>.<\/p>\n\nJay Snowden, Chief Executive Officer and President, announced: \u201cWe are pleased to report that PENN delivered another solid quarter in what remains an uncertain macroeconomic environment. PENN generated first quarter revenues of $1.67 billion and Adjusted EBITDAR of $478.2 million as strong performance in the Northeast mostly offset softer year-over-year results in the South. In addition, our proprietary sports betting and iCasino technology platform, which is live in Ontario, continues to drive compelling results and market share. As previously announced, on February 17th we completed our acquisition of the remainder of Barstool Sports Inc. (\u201cBarstool Sports\u201d or \u201cBarstool\u201d). Accordingly, we are raising our prior 2023 revenue guidance range to $6.37 billion \u2012 $6.81 billion to reflect the Barstool acquisition, which is neutral to Adjusted EBITDAR. As such, our prior 2023 Adjusted EBITDAR guidance range of $1.875 billion \u2012 $2.0 billion remains unchanged.<\/p>\n
Retail Performance Driven by Growth in Older Demographics and Strong VIP Play<\/b><\/p>\n
\nProperty level highlights1<\/sup>:<\/p>\n\n- \nRevenues of $1.44 billion;<\/p>\n<\/li>\n
- \nAdjusted EBITDAR of $511.2 million; and<\/p>\n<\/li>\n
- \nAdjusted EBITDAR margins of 35.5%.<\/p>\n<\/li>\n<\/ul>\n
1<\/sup>Property level consists of retail operating segments which are composed of our Northeast, South, West, and Midwest reportable segments.<\/p>\n\n\u201cGrowth in our older demographics and VIP play led to largely consistent performance across the majority of our retail properties,\u201d said Mr. Snowden. \u201cHowever, the regional shift in our gaming revenues year-over-year to higher taxed jurisdictions, and to a lesser extent, the settlement of certain property litigation matters, negatively impacted retail EBITDAR margins by approximately 100 basis points.<\/p>\n
\n\u201cOperationally, our broader portfolio benefited in the first quarter from improvement of our older demographic\u2019s retail theoretical while we experienced consistent engagement from our younger 21-44 year-old demographic. Our properties also proved to be more resilient than initially anticipated given the increased supply in a few of our markets. Additionally, VIP play remained strong across our properties, driven by both guest count increases and frequency of visitation. Our database grew by over 350,000 members in the first quarter, representing a 13% increase year-over-year, with 63% of the database growth coming from our online offerings. Coordinated marketing efforts combined with enhanced amenities and positive customer experiences also led to strong growth in the number of customers that engage with us across multiple channels. In April, we unveiled our enhanced and rebranded customer loyalty program, PENN Play\u2122, which is designed to better align all of our brands under the PENN Entertainment umbrella and create a more seamless omni-channel experience for our approximately 27 million members.<\/p>\n
Launched Online Sports Betting in Ohio and Massachusetts; Proprietary Technology Platform Continues to Propel Impressive Ontario Performance<\/b><\/p>\n
\nInteractive Segment highlights:<\/p>\n
\n- \nRevenues of $233.5 million (including tax gross up of $92.3 million); and<\/p>\n<\/li>\n
- \nAdjusted EBITDA loss of $5.7 million.<\/p>\n<\/li>\n<\/ul>\n
\n\u201cThe Interactive Segment generated year-over-year revenue improvement this quarter driven in part by our acquisition of Barstool Sports, while our EBITDA results reflect our investment in two state launches and low hold in January and February. Our mobile launches on January 1st in Ohio and March 10th in Massachusetts highlight the advantages of our organic, omni-channel customer acquisition strategy, as we leveraged our PENN Play\u2122 database and the Barstool Sports audience to drive incremental revenue both online and at our retail properties. Additionally, during March Madness, top Barstool personalities performed live streams from our market leading retail sportsbooks in Ohio and Louisiana, leading to increased brand awareness and digital engagement.<\/p>\n
\n\u201cIn Ontario, we are seeing the benefits of our proprietary technology stack, which has led to our sustained market share in one of the most competitive markets in North America. Having full control of our product roadmap in the U.S., which remains on track for July, will enable us to connect with our customers on a more personalized level and quickly add new features and betting markets to the Barstool Sportsbook, while also enhancing our iCasino product with new content and bonus mechanics. In addition, with an improved guest experience post-migration, we will be well positioned to drive stronger loyalty and retention, while offering seamless cross-play in our omni-channel ecosystem.<\/p>\n
\n\u201cOn February 17th, we completed the full acquisition of Barstool Sports. Barstool has more than doubled its annual revenues since our initial investment in February of 2020 by providing relevant and entertaining content to their growing, loyal audience. Looking forward, we expect to unlock even greater value from the Barstool audience as we refine our cross-sell strategies and pursue new growth channels.<\/p>\n
\n\u201cLikewise, theScore\u2019s media business is delivering strong results in both revenue and engagement metrics, with total user sessions up 22% year-over-year. theScore\u2019s award winning digital sports media app provides its highly engaged audience with up-to-date scores, news, community chat features, and betting lines, which has proven to be a perfect \u2018second screen\u2019 for watching live sports and another acquisition funnel for PENN\u2019s retail and digital offerings.<\/p>\n
ESG \u2013 Caring for our People, our Communities and our Planet<\/b><\/p>\n
\n\u201cOn April 25th, we issued our 2022 Corporate Social Responsibility Report, which details the significant progress PENN has made in advancing our Environmental, Social and Governance (\u201cESG\u201d) priorities over the last year.<\/p>\n
\n\u201cMore recently, we celebrated Black History Month in February by holding numerous events to drive open and meaningful conversation around Diversity, Equity & Inclusion. We also celebrated women\u2019s achievements during the month of March, including hosting a virtual panel discussion on International Women\u2019s Day for Team Members with two of PENN\u2019s female Board members: Jane Scaccetti and Marla Kaplowitz. Additionally, following the devastating tornados in the Rolling Fork area of Mississippi, our Ameristar Casino Vicksburg and Hollywood Casino Tunica teams donated water, food and essential items to those in need, in addition to providing temporary housing to displaced team members.<\/p>\n
\n\u201cFinally, in April, Barstool launched a mental health awareness initiative on college campuses as part of its Viceroy and Chicks Ambassador Program, reaching over 500 universities, 1,200 unique social media channels, and 20 million cross-platform followers.\u201d<\/p>\n
Share Repurchase Authorization Update<\/b><\/p>\n
\nDuring the three months ended March 31, 2023, the Company repurchased 1,646,963 shares of its common stock in open market transactions for $50.0 million at an average price of $30.36 per share.<\/p>\n
\nSubsequent to the quarter ended March 31, 2023, the Company repurchased 647,319 shares of its common stock at an average price of $29.21 per share for an aggregate amount of $18.9 million. The remaining availability under our February 2022 authorization was $80.4 million and $750.0 million under our December 2022 authorization as of May 3, 2023.<\/p>\n
Liquidity Remains Strong<\/b><\/p>\n
\nTotal liquidity as of March 31, 2023 was $2.3 billion inclusive of $1.3 billion in cash and cash equivalents. Traditional net debt as of the end of the quarter was $1.4 billion, an increase of $302.6 million from December 31, 2022 due to a lower cash balance reflecting a net cash payment of approximately $315.3 million for the acquisition of Barstool and recent activity under our share repurchase program. Lease-adjusted net leverage as of March 31, 2023 was 4.6x compared to 4.4x as of December 31, 2022.<\/p>\n
\nAdditional information on PENN\u2019s reported results, including a reconciliation of the non-GAAP results to their most comparable GAAP measures, is included in the financial tables below. The Company does not provide a reconciliation of projected Adjusted EBITDA and Adjusted EBITDAR because it is unable to predict with reasonable accuracy the value of certain adjustments that may significantly impact the Company\u2019s results, including realized and unrealized gains and losses on equity securities, re-measurement of cash-settled stock-based awards, contingent purchase payments associated with prior acquisitions, and income tax (benefit) expense, which are dependent on future events that are out of the Company\u2019s control or that may not be reasonably predicted.<\/p>\n
Summary of First Quarter Results<\/b><\/p>\n\n\n| \n \n\u00a0<\/p>\n<\/td>\n | \n For the three months
\n
ended March 31,<\/b><\/p>\n<\/td>\n<\/tr>\n\n| \n (in millions, except per share data, unaudited)<\/span><\/i><\/b><\/p>\n<\/td>\n | \n 2023<\/b><\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n 2022<\/b><\/p>\n<\/td>\n<\/tr>\n\n| \n Revenues<\/b><\/p>\n<\/td>\n | \n \n$<\/p>\n<\/td>\n | \n \n1,673.3<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n$<\/p>\n<\/td>\n | \n \n1,564.2<\/p>\n<\/td>\n<\/tr>\n | \n| \n Net income<\/b><\/p>\n<\/td>\n | \n \n$<\/p>\n<\/td>\n | \n \n514.4<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n$<\/p>\n<\/td>\n | \n \n51.6<\/p>\n<\/td>\n<\/tr>\n | \n| \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n<\/tr>\n | \n| \n Adjusted EBITDA (1)<\/sup><\/b><\/p>\n<\/td>\n| \n \n$<\/p>\n<\/td>\n | \n \n332.2<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n$<\/p>\n<\/td>\n | \n \n434.6<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nRent expense associated with triple net operating leases (2)<\/sup><\/p>\n<\/td>\n| \n \n\u00a0<\/p>\n<\/td>\n | \n \n146.0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n60.1<\/p>\n<\/td>\n<\/tr>\n | \n| \n Adjusted EBITDAR (1)<\/sup><\/b><\/p>\n<\/td>\n| \n \n$<\/p>\n<\/td>\n | \n \n478.2<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n$<\/p>\n<\/td>\n | \n \n494.7<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nPayments to our REIT Landlords under Triple Net Leases (3)<\/sup><\/p>\n<\/td>\n| \n \n$<\/p>\n<\/td>\n | \n \n233.2<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n$<\/p>\n<\/td>\n | \n \n229.3<\/p>\n<\/td>\n<\/tr>\n | \n| \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n<\/tr>\n | \n| \n Diluted earnings per common share<\/b><\/p>\n<\/td>\n | \n \n$<\/p>\n<\/td>\n | \n \n3.05<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n$<\/p>\n<\/td>\n | \n \n0.29<\/p>\n<\/td>\n<\/tr>\n<\/table>\n \n\n| (1)<\/td>\n | | \n\n \nSee the \u201cNon-GAAP Financial Measures\u201d section below for more information as well as the definitions of Adjusted EBITDA and Adjusted EBITDAR. Additionally, see below for reconciliations of these Non-GAAP financial measures to their GAAP equivalent financial measure.<\/p>\n<\/td>\n<\/tr>\n | \n | \n | \n\u00a0<\/td>\n<\/tr>\n | \n| (2)<\/td>\n | | \n\n \nConsists of the operating lease components contained within our triple net master lease dated November 1, 2013 with Gaming and Leisure Properties, Inc. (Nasdaq: GLPI) (\u201cGLPI\u201d) that was amended and restated effective January 1, 2023 (referred to as the AR PENN Master Lease and prior to January 1, 2023 referred to as the PENN Master Lease); our triple net master lease effective January 1, 2023 entered in conjunction with and coterminous to the AR PENN Master Lease (referred to as the 2023 Master Lease); our individual triple net lease with GLPI for the real estate assets used in the operations of Hollywood Casino at The Meadows prior to the effective date of the 2023 Master Lease (referred to as the Meadows Lease); our individual triple net lease with GLPI for the real estate assets used in the operations of Tropicana Las Vegas which terminated on September 26, 2022 (referred to as the Tropicana Lease); as well as our individual triple net leases with VICI Properties Inc. (NYSE: VICI) (\u201cVICI\u201d) for the real estate assets used in the operations of Margaritaville Resort Casino (referred to as the Margaritaville Lease) and Hollywood Casino at Greektown (referred to as the Greektown Lease) and referred to collectively as our \u201ctriple net operating leases.\u201d<\/p>\n<\/td>\n<\/tr>\n | \n | \n | \n\n \nEffective January 1, 2023, the Company and GLPI amended and restated the PENN Master Lease which was concluded to be a lease modification under ASC 842, \u201cLeases.\u201d As a result of the amendment and restatement, all the land and building components contained within the AR PENN Master Lease as well as all the land and building components contained within the 2023 Master Lease are classified as operating leases which are recorded to rent expense.<\/p>\n<\/td>\n<\/tr>\n | \n | \n | \n\u00a0<\/td>\n<\/tr>\n | \n | \n | \n\n \nFor the three months ended March 31, 2023, rent expense associated with triple net operating leases pertains to (i) the AR PENN Master Lease; (ii) the 2023 Master Lease; (iii) the Margaritaville Lease; and (iv) the Greektown Lease.<\/p>\n<\/td>\n<\/tr>\n | \n | \n | \n\u00a0<\/td>\n<\/tr>\n | \n | \n | \n\n \nFor the three months ended March 31, 2022, rent expense associated with triple net operating leases pertains to (i) the PENN Master Lease (specific to the land and building components associated with the operations of Hollywood Gaming at Dayton Raceway and Hollywood Gaming at Mahoning Valley Race Course); (ii) the Meadows Lease; (iii) the Margaritaville Lease; (iv) the Greektown Lease; and (v) the Tropicana Lease which terminated on September 26, 2022.<\/p>\n<\/td>\n<\/tr>\n | \n | \n | \n\u00a0<\/td>\n<\/tr>\n | \n| (3)<\/td>\n | | \n\n \nConsists of payments made to GLPI and VICI (referred to collectively as our \u201cREIT Landlords\u201d) under the AR PENN Master Lease, the PENN Master Lease, the 2023 Master Lease, the Pinnacle Master Lease, the Meadows Lease (prior to the effective date of the 2023 Master Lease), the Perryville Lease (prior to the effective date of the 2023 Master Lease), the Margaritaville Lease, the Greektown Lease, the Morgantown Lease, and the Tropicana Lease and collectively referred to as our \u201cTriple Net Leases.\u201d The rent under the Tropicana Lease was nominal prior to lease termination.<\/p>\n<\/td>\n<\/tr>\n | \n | \n | \n\u00a0<\/td>\n<\/tr>\n<\/table>\n PENN ENTERTAINMENT, INC. AND SUBSIDIARIES<\/b><\/p>\n Segment Information<\/b><\/p>\n \nThe Company aggregates its operations into five reportable segments: Northeast, South, West, Midwest, and Interactive.<\/p>\n \n\n| \n \n\u00a0<\/p>\n<\/td>\n | \n For the three months
\n
ended March 31,<\/b><\/p>\n<\/td>\n<\/tr>\n\n| \n (in millions, unaudited)<\/span><\/i><\/b><\/p>\n<\/td>\n | \n 2023<\/b><\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n 2022<\/b><\/p>\n<\/td>\n<\/tr>\n\n| \n Revenues:<\/b><\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nNortheast segment (1)<\/sup><\/p>\n<\/td>\n| \n \n$<\/p>\n<\/td>\n | \n \n700.5<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n$<\/p>\n<\/td>\n | \n \n658.5<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nSouth segment (2)<\/sup><\/p>\n<\/td>\n| \n \n\u00a0<\/p>\n<\/td>\n | \n \n314.8<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n341.4<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nWest segment (3)<\/sup><\/p>\n<\/td>\n| \n \n\u00a0<\/p>\n<\/td>\n | \n \n129.7<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n140.9<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nMidwest segment (4)<\/sup><\/p>\n<\/td>\n| \n \n\u00a0<\/p>\n<\/td>\n | \n \n295.3<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n282.9<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nInteractive (5)<\/sup><\/p>\n<\/td>\n| \n \n\u00a0<\/p>\n<\/td>\n | \n \n233.5<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n141.5<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nOther (6)<\/sup><\/p>\n<\/td>\n| \n \n\u00a0<\/p>\n<\/td>\n | \n \n5.8<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n7.3<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nIntersegment eliminations (7)<\/sup><\/p>\n<\/td>\n| \n \n\u00a0<\/p>\n<\/td>\n | \n \n(6.3<\/p>\n<\/td>\n | \n \n)<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n(8.3<\/p>\n<\/td>\n | \n \n)<\/p>\n<\/td>\n<\/tr>\n | \n| \n Total revenues<\/b><\/p>\n<\/td>\n | \n \n$<\/p>\n<\/td>\n | \n \n1,673.3<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n$<\/p>\n<\/td>\n | \n \n1,564.2<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n<\/tr>\n | \n| \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n<\/tr>\n | \n| \n Adjusted EBITDAR:<\/b><\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nNortheast segment (1)<\/sup><\/p>\n<\/td>\n| \n \n$<\/p>\n<\/td>\n | \n \n212.9<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n$<\/p>\n<\/td>\n | \n \n205.2<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nSouth segment (2)<\/sup><\/p>\n<\/td>\n| \n \n\u00a0<\/p>\n<\/td>\n | \n \n123.6<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n146.5<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nWest segment (3)<\/sup><\/p>\n<\/td>\n| \n \n\u00a0<\/p>\n<\/td>\n | \n \n49.1<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n51.2<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nMidwest segment (4)<\/sup><\/p>\n<\/td>\n| \n \n\u00a0<\/p>\n<\/td>\n | \n \n125.6<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n125.5<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nInteractive (5)<\/sup><\/p>\n<\/td>\n| \n \n\u00a0<\/p>\n<\/td>\n | \n \n(5.7<\/p>\n<\/td>\n | \n \n)<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n(10.0<\/p>\n<\/td>\n | \n \n)<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nOther (6)<\/sup><\/p>\n<\/td>\n| \n \n\u00a0<\/p>\n<\/td>\n | \n \n(27.3<\/p>\n<\/td>\n | \n \n)<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n(23.7<\/p>\n<\/td>\n | \n \n)<\/p>\n<\/td>\n<\/tr>\n | \n| \n Total Adjusted EBITDAR (8)<\/sup><\/b><\/p>\n<\/td>\n| \n \n$<\/p>\n<\/td>\n | \n \n478.2<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n$<\/p>\n<\/td>\n | \n \n494.7<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n<\/tr>\n<\/table>\n \n\n| (1)<\/td>\n | | \n\n \nThe Northeast segment consists of the following properties: Ameristar East Chicago, Hollywood Casino at Greektown, Hollywood Casino Bangor, Hollywood Casino at Charles Town Races, Hollywood Casino Columbus, Hollywood Casino Lawrenceburg, Hollywood Casino Morgantown, Hollywood Casino at PENN National Race Course, Hollywood Casino Perryville, Hollywood Casino Toledo, Hollywood Casino York, Hollywood Gaming at Dayton Raceway, Hollywood Gaming at Mahoning Valley Race Course, Marquee by PENN, Hollywood Casino at The Meadows, and Plainridge Park Casino.<\/p>\n<\/td>\n<\/tr>\n | \n | \n | \n\u00a0<\/td>\n<\/tr>\n | \n| (2)<\/td>\n | | \n\n \nThe South segment consists of the following properties: 1st<\/sup> Jackpot Casino, Ameristar Vicksburg, Boomtown Biloxi, Boomtown Bossier City, Boomtown New Orleans, Hollywood Casino Gulf Coast, Hollywood Casino Tunica, L\u2019Auberge Baton Rouge, L\u2019Auberge Lake Charles, and Margaritaville Resort Casino.<\/p>\n<\/td>\n<\/tr>\n\n | \n | \n\u00a0<\/td>\n<\/tr>\n | \n| (3)<\/td>\n | | \n\n \nThe West segment consists of the following properties: Ameristar Black Hawk, Cactus Petes and Horseshu, M Resort, Tropicana Las Vegas Hotel and Casino (sold on September 26, 2022), and Zia Park Casino.<\/p>\n<\/td>\n<\/tr>\n | \n | \n | \n\u00a0<\/td>\n<\/tr>\n | \n| (4)<\/td>\n | | \n\n \nThe Midwest segment consists of the following properties: Ameristar Council Bluffs, Argosy Casino Alton, Argosy Casino Riverside, Hollywood Casino Aurora, Hollywood Casino Joliet, our 50% investment in Kansas Entertainment, LLC, which owns Hollywood Casino at Kansas Speedway, Hollywood Casino St. Louis, Prairie State Gaming, and River City Casino.<\/p>\n<\/td>\n<\/tr>\n | \n | \n | \n\u00a0<\/td>\n<\/tr>\n | \n| (5)<\/td>\n | | \n\n \nThe Interactive segment includes all of our online sports betting, iCasino and social gaming operations, management of retail sports betting, media, and the operating results of Barstool (the remaining 64% of Barstool common stock, not already owned by PENN, was acquired on February 17, 2023). Interactive revenues are inclusive of a tax gross-up of $92.3 million and $50.3 million for the three months ended March 31, 2023 and 2022, respectively.<\/p>\n<\/td>\n<\/tr>\n | \n | \n | \n\u00a0<\/td>\n<\/tr>\n | \n| (6)<\/td>\n | | \n\n \nThe Other category, included in the tables to reconcile the segment information to the consolidated information, consists of the Company\u2019s stand-alone racing operations, namely Sanford-Orlando Kennel Club, Sam Houston and Valley Race Parks, the Company\u2019s JV interests in Freehold Raceway and our management contract for Retama Park Racetrack. The Other category also includes corporate overhead costs, which consist of certain expenses, such as: payroll, professional fees, travel expenses and other general and administrative expenses that do not directly relate to or have not otherwise been allocated.<\/p>\n<\/td>\n<\/tr>\n | \n | \n | \n\u00a0<\/td>\n<\/tr>\n | \n| (7)<\/td>\n | | \n\n \nPrimarily represents the elimination of intersegment revenues associated with our retail sportsbooks, which are operated by PENN Interactive.<\/p>\n<\/td>\n<\/tr>\n | \n | \n | \n\u00a0<\/td>\n<\/tr>\n | \n| (8)<\/td>\n | | \n\n \nAs noted within the \u201cNon-GAAP Financial Measures\u201d section below, Adjusted EBITDAR is presented on a consolidated basis outside the financial statements solely as a valuation metric or for reconciliation purposes.<\/p>\n<\/td>\n<\/tr>\n | \n | \n | \n\u00a0<\/td>\n<\/tr>\n<\/table>\n\n\n | <\/tr>\n \n| \n PENN ENTERTAINMENT, INC. AND SUBSIDIARIES
\n
<\/b>Reconciliation of Comparable GAAP Financial Measure to Adjusted EBITDA,
\n
<\/b>Adjusted EBITDAR, and Adjusted EBITDAR Margin<\/b><\/p>\n<\/td>\n<\/tr>\n\n | <\/tr>\n \n| \u00a0<\/td>\n<\/tr>\n | \n| \n \n\u00a0<\/p>\n<\/td>\n | \n For the three months
\n
ended March 31,<\/b><\/p>\n<\/td>\n<\/tr>\n\n| \n (in millions, unaudited)<\/span><\/i><\/b><\/p>\n<\/td>\n | \n 2023<\/b><\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n 2022<\/b><\/p>\n<\/td>\n<\/tr>\n\n| \n Net income<\/b><\/p>\n<\/td>\n | \n \n$<\/p>\n<\/td>\n | \n \n514.4<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n$<\/p>\n<\/td>\n | \n \n51.6<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nIncome tax expense<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n167.9<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n47.6<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nInterest expense, net<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n113.0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n161.3<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nInterest income<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n(10.4<\/p>\n<\/td>\n | \n \n)<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n(0.5<\/p>\n<\/td>\n | \n \n)<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nIncome from unconsolidated affiliates<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n(2.6<\/p>\n<\/td>\n | \n \n)<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n(8.7<\/p>\n<\/td>\n | \n \n)<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nGain on Barstool Acquisition, net (1)<\/sup><\/p>\n<\/td>\n| \n \n\u00a0<\/p>\n<\/td>\n | \n \n(83.4<\/p>\n<\/td>\n | \n \n)<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u2014<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nGain on REIT transactions, net (2)<\/sup><\/p>\n<\/td>\n| \n \n\u00a0<\/p>\n<\/td>\n | \n \n(500.8<\/p>\n<\/td>\n | \n \n)<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u2014<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nOther expenses<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n1.0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n40.7<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nOperating income<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n199.1<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n292.0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nStock-based compensation<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n16.5<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n17.0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nCash-settled stock-based awards variance (3)<\/sup><\/p>\n<\/td>\n| \n \n\u00a0<\/p>\n<\/td>\n | \n \n(2.9<\/p>\n<\/td>\n | \n \n)<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n(2.9<\/p>\n<\/td>\n | \n \n)<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nLoss on disposal of assets<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u2014<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n(0.1<\/p>\n<\/td>\n | \n \n)<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nContingent purchase price<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n0.3<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n(0.1<\/p>\n<\/td>\n | \n \n)<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nPre-opening expenses<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u2014<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n1.5<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nDepreciation and amortization<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n107.5<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n118.2<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nInsurance recoveries, net of deductible charges<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u2014<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n(8.8<\/p>\n<\/td>\n | \n \n)<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nIncome from unconsolidated affiliates<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n2.6<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n8.7<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nNon-operating items of equity method investments (4)<\/sup><\/p>\n<\/td>\n| \n \n\u00a0<\/p>\n<\/td>\n | \n \n4.5<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n1.8<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nOther expenses<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n4.6<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n7.3<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n<\/tr>\n | \n| \n Adjusted EBITDA<\/b><\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n332.2<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n434.6<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nRent expense associated with triple net operating leases<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n146.0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n60.1<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n<\/tr>\n | \n| \n Adjusted EBITDAR<\/b><\/p>\n<\/td>\n | \n \n$<\/p>\n<\/td>\n | \n \n478.2<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n$<\/p>\n<\/td>\n | \n \n494.7<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nNet income margin<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n30.7<\/p>\n<\/td>\n | \n \n%<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n3.3<\/p>\n<\/td>\n | \n \n%<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nAdjusted EBITDAR margin<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n28.6<\/p>\n<\/td>\n | \n \n%<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n31.6<\/p>\n<\/td>\n | \n \n%<\/p>\n<\/td>\n<\/tr>\n<\/table>\n | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |