Gaming & Leisure Properties(GLPI) - 2019 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements The company's nine-month financials show increased revenue but decreased net income due to impairment and debt charges Condensed Consolidated Balance Sheet Data (unaudited) | (in thousands) | September 30, 2019 | December 31, 2018 | | :--- | :--- | :--- | | Total Assets | $8,504,752 | $8,577,293 | | Real estate investments, net | $7,154,980 | $7,331,460 | | Right-of-use assets and land rights, net | $859,293 | $673,207 | | Total Liabilities | $6,398,120 | $6,311,686 | | Long-term debt, net | $5,749,136 | $5,853,497 | | Lease liabilities | $201,497 | — | | Total Shareholders' Equity | $2,106,632 | $2,265,607 | Condensed Consolidated Statements of Income (unaudited) | (in thousands, except per share data) | Nine Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2018 | | :--- | :--- | :--- | | Total revenues | $864,489 | $752,410 | | Income from operations | $529,167 | $469,926 | | Loan impairment charges | $13,000 | — | | Losses on debt extinguishment | $21,014 | $3,473 | | Net income | $276,590 | $293,585 | | Diluted earnings per common share | $1.29 | $1.37 | Condensed Consolidated Statements of Cash Flows (unaudited) | (in thousands) | Nine Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2018 | | :--- | :--- | :--- | | Net cash provided by operating activities | $583,686 | $518,218 | | Net cash (used in) provided by investing activities | ($2,046) | $21,861 | | Net cash (used in) provided by financing activities | ($581,867) | $593,641 | | Net (decrease) increase in cash and cash equivalents | ($227) | $1,133,720 | - The company adopted the new lease accounting standard ASU 2016-02 on January 1, 2019, recording $203 million in right-of-use assets and related lease liabilities[31][37][123] - A full impairment charge of $13.0 million was recorded in Q1 2019 for the unsecured loan to CQ Holding Company (Casino Queen)[51][87][186] Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Revenue growth was driven by 2018 acquisitions, while expenses rose due to depreciation, impairment, and debt costs Financial Highlights Comparison (unaudited) | (in thousands) | Three Months Ended Sep 30, 2019 | Three Months Ended Sep 30, 2018 | | :--- | :--- | :--- | | Total Revenues | $287,612 | $254,139 | | Income from Operations | $187,625 | $164,834 | | Net Income | $90,547 | $104,815 | - The increase in total income from real estate was primarily driven by the Tropicana Transactions and the Penn-Pinnacle Merger, which closed in Q4 2018[147][175] - Operating expenses increased due to higher depreciation from newly acquired assets, a $13.0 million loan impairment charge on the Casino Queen loan, and accelerated depreciation from the closure of the Resorts Casino Tunica property[148][184][186] - In Q3 2019, the company issued $1.1 billion of new senior unsecured notes and used the proceeds to tender for $784.8 million of its 4.875% notes due 2020, resulting in a $21.0 million loss on debt extinguishment[71][72][191] Non-GAAP Financial Measures Reconciliation (unaudited) | (in thousands) | Nine Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2018 | | :--- | :--- | :--- | | Net income | $276,590 | $293,585 | | Funds from operations (FFO) | $452,930 | $368,094 | | Adjusted funds from operations (AFFO) | $554,539 | $502,080 | | Adjusted EBITDA | $779,761 | $668,624 | Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk is interest rate exposure on its $5.8 billion of indebtedness - The company's main market risk exposure is interest rate risk on its $5.8 billion in debt[213][214] Debt Profile at September 30, 2019 | Debt Type | Total Amount (in thousands) | Fair Value (in thousands) | | :--- | :--- | :--- | | Fixed Rate | $5,290,174 | $5,681,846 | | Variable Rate | $509,000 | $503,949 | Controls and Procedures Management concluded that disclosure controls and procedures were effective, including new controls for lease accounting - The principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective as of September 30, 2019[218] - New internal controls were implemented to manage the adoption of the new lease accounting standard, ASU 2016-02[219] PART II. OTHER INFORMATION Legal Proceedings Ongoing legal proceedings are not expected to have a material adverse effect on the company's financial position - The company is involved in various legal proceedings arising from the normal course of business, which are not expected to have a material adverse effect[88][221] Risk Factors No material changes to risk factors were reported since the last annual filing - No material changes in risk factors were reported since the company's last Annual Report[222] Unregistered Sales of Equity Securities and Use of Proceeds The company reported no share repurchases or unregistered security sales in the third quarter of 2019 - No common stock was repurchased and no unregistered securities were sold during the three months ended September 30, 2019[223] Exhibits This section lists filed exhibits, including new debt indentures, certifications, and XBRL data - Exhibits filed include supplemental indentures for the 3.350% Senior Notes due 2024 and the 4.000% Senior Notes due 2030[228] - Standard CEO and CFO certifications under Sarbanes-Oxley Sections 302 and 906 were filed with the report[228]