Investors
PRESS RELEASE
Gaming and Leisure Properties, Inc. Announces Third Quarter 2014 Results
- Delivers Results Exceeding Prior Guidance -
- Establishes 2014 Fourth Quarter and Updates Full Year Guidance -
- Commences Leases with Two New Gaming Facilities in
Financial Highlights
Three Months Ended September 30, |
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(in millions, except per share data) | 2014 Actual | 2014 Guidance (1) |
Net Revenue |
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Adjusted EBITDA (2) |
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Net Income |
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Funds From Operations (3) |
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Adjusted Funds From Operations (4) |
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Net income, per diluted common share |
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FFO, per diluted common share |
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AFFO, per diluted common share |
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(1) The guidance figures in the tables above present the guidance provided on |
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(2) Adjusted EBITDA is net income excluding interest, taxes on income, depreciation, (gains) or losses from sales of property, and stock based compensation expense. | |
(3) Funds from operations (FFO) is net income, excluding (gains) or losses from sales of property and real estate depreciation. | |
(4) Adjusted funds from operations (AFFO) is FFO, excluding stock based compensation expense, debt issuance costs amortization and other depreciation reduced by maintenance capital expenditures. |
Gaming and Leisure Properties, Inc. Chief Executive Officer,
FFO and AFFO were above guidance as a result of out-performance by our operating properties, increased rent from
Financial Update
Portfolio Update
GLPI owns approximately 3,114 acres of land and 7.2 million square feet of building space, which was 100% occupied as of
For the eleven months ended
Property maintenance capex was
Project |
Planned Total Budget |
Amount Expended Through September 30, 2014 |
(in thousands) | ||
Mahoning Valley Race Course (OH) - |
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Acquisitions
In
Balance Sheet Update
The Company had
As of |
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Interest Rate | Balance | |
(in thousands) | ||
Unsecured Term Loan A (1) | 1.737% |
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Unsecured |
1.653% | 196,000 |
Senior Unsecured Notes Due 2018 | 4.375% | 550,000 |
Senior Unsecured Notes Due 2020 | 4.875% | 1,000,000 |
Senior Unsecured Notes Due 2023 | 5.375% | 500,000 |
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(1) The margin on the term loan and revolver is Libor plus 1.50%. The Company's credit facility matures on |
Dividend
On
Guidance
The table below sets forth current guidance targets for financial results for the 2014 fourth quarter and full year, based on the following assumptions:
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Hollywood atDayton Raceway opened and began paying rent onAugust 28, 2014 andHollywood at Mahoning Valley Race Course opened and began paying rent onSeptember 17, 2014 ; -
The closing of
Argosy Casino Sioux City in the third quarter reducing rent by$1.6 million for the fourth quarter; -
Total rental income of approximately
$480.1 million for the year and$122.4 million for the fourth quarter, consisting of approximately$420.2 million for the year and$106.5 million for the fourth quarter from Penn, approximately$13.2 million for the year and$3.5 million for the fourth quarter fromCasino Queen ,$50.3 million for the year and$13.3 million for the fourth quarter of property taxes paid by our tenants, and reduced by approximately$3.6 million for the year and$0.9 million for the fourth quarter of non-assigned land lease payments made by PENN; - No escalator on the PENN building rent component;
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TRS EBITDA of approximately
$35.2 million for the year and$6.9 million for the fourth quarter and maintenance capex of approximately$3.3 million for the year and$1.2 million for the fourth quarter; - Blended income tax rate at the TRS entities of 40%;
- LIBOR is based on the forward yield curve;
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Real estate depreciation of approximately
$94.6 million for the year and$24.4 million in the fourth quarter; -
Non-real estate depreciation of approximately
$12.2 million for the year and$3.0 million in the fourth quarter; -
Equity-related employee compensation affecting EBITDA includes the following:
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Expense of approximately
$2.6 million for the year and$1.0 million for the fourth quarter related to cash-settled equity compensation awards issued pre-spin, which are fully vested by the first quarter of 2017; -
Expense of approximately
$13.2 million for the year and$3.3 million for the fourth quarter for payments in lieu of dividends on vested stock options issued pre-spin, which are to be paid for three years ending 2016;
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Expense of approximately
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Equity-related employee compensation that does not affect EBITDA includes non-cash expense of approximately
$12.2 million for the year and$3.6 million for the fourth quarter for amortization of stock options issued pre-spin and the issuance of new restricted stock awards; -
Interest expense includes approximately
$8.1 million for the year and$2.0 million for the fourth quarter of non-cash debt issuance costs amortization; -
For the purpose of the dividend calculation, AFFO is reduced by approximately
$9.6 million for the full year and$2.2 million for the fourth quarter prior to calculation of the dividend to account for dividends on shares that will be outstanding after options held by PENN employees are exercised; and - The basic share count is approximately 112.0 million shares for the year and 112.5 million shares for the fourth quarter and the fully diluted share count is approximately 117.7 million shares for the year and 117.8 million shares for the fourth quarter.
Three Months Ending December 31, | Full Year Ending December 31, | ||||
(in millions, except per share data) |
2014 Guidance |
2013 Actual |
2014 Revised Guidance |
2014 Prior Guidance (4) |
2013 Actual |
Net Revenue |
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Adjusted EBITDA (1) | 105.5 | 58.7 | 422.8 | 418.0 | 91.0 |
Net Income | 44.9 | 9.2 | 186.1 | 180.1 | 19.8 |
Funds From Operations (2) | 69.2 | 24.1 | 280.7 | 273.4 | 34.7 |
Adjusted Funds From Operations (3) |
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Net income, per diluted common share |
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FFO, per diluted common share |
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AFFO, per diluted common share |
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(1) Adjusted EBITDA is net income excluding interest, taxes on income, depreciation, (gains) or losses from sales of property, and stock based compensation expense. |
(2) Funds from operations (FFO) is net income, excluding (gains) or losses from sales of property and real estate depreciation. |
(3) Adjusted funds from operations (AFFO) is FFO, excluding stock based compensation expense, debt issuance costs amortization and other depreciation reduced by maintenance capital expenditures. |
(4) The prior guidance figures in the table above present the guidance provided on |
Conference Call Details
The Company will hold a conference call on
Webcast
The conference call will be available in the Investor Relations section of the Company's website at www.glpropinc.com. To listen to a live broadcast, go to the site at least 15 minutes prior to the scheduled start time in order to register, download and install any necessary audio software. A replay of the call will also be available for 90 days on the Company's website
To Participate in the Telephone Conference Call:
Dial in at least five minutes prior to start time.
Domestic: 1-877-705-6003
International: 1-201-493-6725
Conference Call Playback:
Domestic: 1-877-870-5176
International: 1-858-384-5517
Passcode: 13592809
The playback can be accessed through
Disclosure Regarding Non-GAAP Financial Measures
Funds From Operations ("FFO"), Adjusted Funds From Operations ("AFFO") and Adjusted EBITDA, which are detailed in the reconciliation tables that accompany this release, are used by the Company as performance measures for benchmarking against the Company's peers and as internal measures of business operating performance. The Company believes FFO, AFFO, Adjusted EBITDA provide a meaningful perspective of the underlying operating performance of the Company's current business. This is especially true since these measures exclude real estate depreciation, and we believe that real estate values fluctuate based on market conditions rather than depreciating in value ratably on a straight-line basis over time.
FFO, AFFO and Adjusted EBITDA are non-GAAP financial measures, that are considered a supplemental measure for the real estate industry and a supplement to GAAP measures. NAREIT defines FFO as net income (computed in accordance with generally accepted accounting principles), excluding (gains) or losses from sales of property and real estate depreciation. We have defined AFFO as FFO excluding stock based compensation expense, debt issuance costs amortization and other depreciation reduced by maintenance capital expenditures. Finally, we have defined Adjusted EBITDA as net income excluding interest, taxes on income, management fees, depreciation, (gains) or losses from sales of property, and stock based compensation expense.
FFO, AFFO and Adjusted EBITDA are not recognized terms under GAAP. Because certain companies do not calculate FFO, AFFO, and Adjusted EBITDA in the same way and certain other companies may not perform such calculation, those measures as used by other companies may not be consistent with the way the Company calculates such measures and should not be considered as alternative measures of operating profit or net income. The Company's presentation of these measures does not replace the presentation of the Company's financial results in accordance with GAAP.
About
GLPI is engaged in the business of acquiring, financing, and owning real estate property to be leased to gaming operators in "triple net" lease arrangements, pursuant to which the tenant is responsible for all facility maintenance, insurance required in connection with the leased properties and the business conducted on the leased properties, taxes levied on or with respect to the leased properties and all utilities and other services necessary or appropriate for the leased properties and the business conducted on the leased properties. GLPI expects to grow its portfolio by pursuing opportunities to acquire additional gaming facilities to lease to gaming operators. GLPI also intends to diversify its portfolio over time, including by acquiring properties outside the gaming industry to lease to third parties. GLPI intends to elect to be taxed as a real estate investment trust ("REIT") for
Forward-Looking Statements
This press release includes "forward-looking statements" within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended. These statements can be identified by the use of forward looking terminology such as "expects," "believes," "estimates," "intends," "may," "will," "should" or "anticipates" or the negative or other variation of these or similar words, or by discussions of future events, strategies or risks and uncertainties. Such forward looking statements are inherently subject to risks, uncertainties and assumptions about GLPI and its subsidiaries, including risks related to the following: the ability to receive, or delays in obtaining, the regulatory approvals required to own and/or operate its properties, or other delays or impediments to completing GLPI's planned acquisitions or projects (including successful resolution
of outstanding litigation against the owners of the Meadows Racetrack & Casino); GLPI's ability to enter into definitive agreements with a third party operator for the Meadows Racetrack & Casino; GLPI's ability to maintain its status as a REIT; GLPI's ability to satisfy any further dividend of historical accumulated earnings and profits in order to qualify as a REIT in 2014; the availability of and the ability to identify suitable and attractive acquisition and development opportunities and the ability to acquire and lease those properties on favorable terms; changes in the U.S. tax law and other state, federal or local laws, whether or not specific to REITs or to the gaming or lodging industries; and other factors described in GLPI's Annual Report on Form 10-K for the year ended
Contact
Investor Relations -
T: 203-682-8211
Brad.Cohen@icrinc.com
T: 646-277-1211
Email: Kara.Smith@icrinc.com
T: 610-401-2900
Email: Bclifford@glpropinc.com
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Consolidated Statements of Operations | ||||
(in thousands, except per share data) (unaudited) | ||||
Three Months Ended September 30, |
Nine Months Ended September 30, |
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2014 | 2013 | 2014 | 2013 | |
Revenues | ||||
Rental |
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$ — |
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$ — |
Real estate taxes paid by tenants (1) | 12,512 | — | 36,956 | — |
Total rental revenue | 119,838 | — | 357,694 | — |
Gaming | 36,473 | 38,129 | 114,677 | 123,508 |
Food, beverage and other | 3,015 | 2,984 | 8,934 | 9,573 |
Total revenues | 159,326 | 41,113 | 481,305 | 133,081 |
Less promotional allowances | (1,531) | (1,480) | (4,396) | (4,727) |
Net revenues | 157,795 | 39,633 | 476,909 | 128,354 |
Operating expenses | ||||
Gaming | 20,504 | 21,701 | 64,233 | 69,182 |
Food, beverage and other | 2,471 | 2,690 | 7,526 | 8,240 |
Real estate taxes (1) | 12,929 | 413 | 38,208 | 1,225 |
General and administrative (2) | 17,743 | 5,553 | 58,215 | 17,316 |
Depreciation and amortization | 26,526 | 3,611 | 79,397 | 10,826 |
Total operating expenses | 80,173 | 33,968 | 247,579 | 106,789 |
Income from operations | 77,622 | 5,665 | 229,330 | 21,565 |
Other income (expenses) | ||||
Interest expense | (29,378) | — | (87,460) | — |
Interest income | 623 | — | 1,837 | 1 |
Management fee (3) | — | (1,189) | — | (3,850) |
Total other expenses | (28,755) | (1,189) | (85,623) | (3,849) |
Income from operations before income taxes | 48,867 | 4,476 | 143,707 | 17,716 |
Income tax (benefit) expense | (1,035) | 1,795 | 2,481 | 7,122 |
Net income |
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Earnings per common share: | ||||
Basic earnings per common share (4) |
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Diluted earnings per common share (4) |
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(1) According to ASC 605, Revenue Recognition, the Company is required to gross up rental income by the amount of real estate taxes paid by our tenants under the triple net lease structure and also reflect an offsetting expense in operating expenses. |
(2) General and administrative expenses include payroll related expenses, insurance, utilities, supplies and other administrative costs. |
(3) Management fees are legacy charges for operating entities which were eliminated in consolidation prior to the Spin-Off. Management fees terminated as of |
(4) Basic and diluted EPS for the three and nine months ended |
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Operations | ||||
(in thousands) (unaudited) | ||||
NET REVENUES | ADJUSTED EBITDA | |||
Three Months Ended | Three Months Ended | |||
September 30, | September 30, | |||
2014 | 2013 | 2014 | 2013 | |
Real estate | $ 119,845 | $ — | $ 99,146 | $ — |
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37,950 | 39,633 | 8,392 | 9,275 |
Total | $ 157,795 | $ 39,633 | $ 107,538 | $ 9,275 |
NET REVENUES | ADJUSTED EBITDA | |||
Nine Months Ended | Nine Months Ended | |||
September 30, | September 30, | |||
2014 | 2013 | 2014 | 2013 | |
Real estate | $ 357,701 | $ — | $ 289,056 | $ — |
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119,208 | 128,354 | 28,307 | 32,360 |
Total | $ 476,909 | $ 128,354 | $ 317,363 | $ 32,360 |
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General and Administrative Expenses | ||||
(in thousands) (unaudited) | ||||
Three Months Ended | Nine Months Ended | |||
September 30, | September 30, | |||
2014 | 2013 | 2014 | 2013 | |
Real estate general and administrative expenses (1) | $ 11,569 | $ — | $ 40,156 | $ — |
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6,174 | 5,553 | 18,059 | 17,316 |
Total | $ 17,743 | $ 5,553 | $ 58,215 | $ 17,316 |
(1) Includes stock based compensation of |
Reconciliation of Net income (GAAP) to FFO, FFO to AFFO, and AFFO to Adjusted EBITDA | ||||
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CONSOLIDATED | ||||
(in thousands) (unaudited) | ||||
Three Months Ended September 30, |
Nine Months Ended September 30, |
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2014 | 2013 | 2014 | 2013 | |
Net income | $ 49,902 | $ 2,681 | $ 141,226 | $ 10,594 |
(Gains) or losses from sales of property | (146) | (1) | 13 | (31) |
Real estate depreciation | 23,472 | — | 70,205 | — |
Funds from operations | $ 73,228 | $ 2,680 | $ 211,444 | $ 10,563 |
Other depreciation (1) | 3,054 | 3,611 | 9,192 | 10,826 |
Debt issuance costs amortization | 2,020 | — | 6,038 | — |
Stock based compensation | 3,536 | — | 8,623 | — |
Maintenance CAPEX (2) | (641) | (766) | (2,109) | (2,510) |
Adjusted funds from operations | $ 81,197 | $ 5,525 | $ 233,188 | $ 18,879 |
Interest, net | 28,755 | — | 85,623 | (1) |
Management fees | — | 1,189 | — | 3,850 |
Income tax (benefit) expense | (1,035) | 1,795 | 2,481 | 7,122 |
Maintenance CAPEX (2) | 641 | 766 | 2,109 | 2,510 |
Debt issuance costs amortization | (2,020) | — | (6,038) | — |
Adjusted EBITDA | $ 107,538 | $ 9,275 | $ 317,363 | $ 32,360 |
(1) Other depreciation includes both real estate and equipment depreciation from our taxable REIT subsidiaries. | ||||
(2) Capital maintenance expenditures are expenditures to replace existing fixed assets with a useful life greater than one year that are obsolete, worn out or no longer cost effective to repair. |
Reconciliation of Net income (GAAP) to FFO, FFO to AFFO, and AFFO to Adjusted EBITDA | ||||
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REAL ESTATE and CORPORATE (REIT) | ||||
(in thousands) (unaudited) | ||||
Three Months Ended | Nine Months Ended | |||
September 30, | September 30, | |||
2014 | 2013 | 2014 | 2013 | |
Net income |
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$ — |
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$ — |
(Gains) or losses from sales of property | (150) | — | (150) | — |
Real estate depreciation | 23,472 | — | 70,205 | — |
Funds from operations |
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$ — |
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$ — |
Other depreciation | — | — | — | — |
Debt issuance costs amortization | 2,020 | — | 6,038 | — |
Stock based compensation | 3,536 | — | 8,623 | — |
Maintenance CAPEX | — | — | — | — |
Adjusted funds from operations |
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$ — |
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$ — |
Interest, net (1) | 26,155 | — | 77,821 | — |
Management fees | — | — | — | — |
Income tax benefit | (1,491) | — | (1,491) | — |
Maintenance CAPEX | — | — | — | — |
Debt issuance costs amortization | (2,020) | — | (6,038) | — |
Adjusted EBITDA |
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$ — |
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$ — |
(1) Interest expense, net is net of intercompany interest eliminations of |
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Reconciliation of Net income (GAAP) to FFO, FFO to AFFO, and AFFO to Adjusted EBITDA | ||||
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(in thousands) (unaudited) | ||||
Three Months Ended | Nine Months Ended | |||
September 30, | September 30, | |||
2014 | 2013 | 2014 | 2013 | |
Net income |
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(Gains) or losses from sales of property | 4 | (1) | 163 | (31) |
Real estate depreciation | — | — | — | — |
Funds from operations |
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Other depreciation (1) | 3,054 | 3,611 | 9,192 | 10,826 |
Debt issuance costs amortization | — | — | — | — |
Stock based compensation | — | — | — | — |
Maintenance CAPEX (2) | (641) | (766) | (2,109) | (2,510) |
Adjusted funds from operations |
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Interest, net | 2,600 | — | 7,802 | (1) |
Management fees | — | 1,189 | — | 3,850 |
Income tax expense | 456 | 1,795 | 3,972 | 7,122 |
Maintenance CAPEX (2) | 641 | 766 | 2,109 | 2,510 |
Debt issuance costs amortization | — | — | — | — |
Adjusted EBITDA |
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(1) Other depreciation includes both real estate and equipment depreciation from our taxable REIT subsidiaries. | ||||
(2) Capital maintenance expenditures are expenditures to replace existing fixed assets with a useful life greater than one year that are obsolete, worn out or no longer cost effective to repair. |
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