PENN Entertainment (PENN) Q2 2024 earnings summary

Executive summary

• Retail business delivered solid results, with strong market share growth in Ohio, Maryland, and Iowa, and notable performance at flagship properties like Hollywood Casino at Greektown and M Resort in Las Vegas.

• Interactive segment achieved record quarterly NGR, narrowing losses quarter-over-quarter despite a seasonally slower sports calendar.

• PENN Play loyalty database grew to 31 million members, with digital users up over 80% since ESPN BET launch.

• New Chief Technology Officer, Aaron LaBerge, joined in July, bringing experience from Disney and ESPN, focused on product innovation and integration.

• Four development projects remain on budget and on schedule for first half of 2026 openings.

Financial highlights

• Q2 2024 revenues were $1.66 billion, down slightly year-over-year; net loss was $27.1 million compared to net income of $78.1 million in Q2 2023.

• Adjusted EBITDA for Q2 2024 was $212.1 million (12.8% margin), down from $330.4 million (19.7%) in Q2 2023.

• Interactive segment adjusted revenues (excluding skin tax gross-up) were $151 million, a 65% sequential improvement over Q1 2024.

• Interactive adjusted EBITDA loss was $103 million, an improvement of $93 million quarter-over-quarter.

• Total liquidity at quarter-end was $1.9 billion, including $878 million in cash and cash equivalents.

Outlook and guidance

• 2024 retail guidance remains unchanged, with stable demand and new supply in select markets.

• Interactive segment 2024 Adjusted EBITDA guidance improved by $15 million to a loss of $510 million to $460 million, reflecting higher OSB gaming taxes in Illinois and severance charges.

• ESPN BET launch in New York planned for late August, pending regulatory approvals, and not including a future Alberta launch.

• 2024 CapEx expected to be approximately $500 million, with $275 million for projects.

• Lease-adjusted net leverage expected to peak in Q3 2024, with significant deleveraging starting in Q4 and throughout 2025.