PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) PENN Entertainment's unaudited Q2 2025 financials report $1.765 billion revenue, an $18.3 million net loss, and H1 net income of $93.2 million, boosted by a one-time gain Consolidated Balance Sheets PENN Entertainment's balance sheet as of June 30, 2025, reports total assets of $15.21 billion, liabilities of $12.22 billion, and stockholders' equity of $2.98 billion, reflecting an increase in equity | (in millions) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total current assets | $1,095.6 | $1,154.4 | | Total assets | $15,206.7 | $15,261.7 | | Total current liabilities | $1,392.9 | $1,415.1 | | Total liabilities | $12,224.1 | $12,403.3 | | Total stockholders' equity | $2,982.6 | $2,858.4 | Consolidated Statements of Operations Q2 2025 revenues were $1.765 billion with an $18.3 million net loss, while H1 2025 achieved $93.2 million net income, a turnaround driven by a one-time gain | (in millions, except per share data) | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Total revenues | $1,765.0 | $1,663.0 | $3,437.5 | $3,269.9 | | Operating income | $77.5 | $74.5 | $120.3 | $53.1 | | Net income (loss) | $(18.3) | $(27.1) | $93.2 | $(142.0) | | Diluted earnings (loss) per share | $(0.12) | $(0.18) | $0.59 | $(0.93) | - A one-time gain on a financing arrangement of $215.1 million significantly contributed to the net income for the six months ended June 30, 202512 Consolidated Statements of Comprehensive Income (Loss) Q2 2025 total comprehensive income was $74.0 million, a substantial improvement from Q2 2024, primarily due to a $92.3 million positive foreign currency translation adjustment | (in millions) | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income (loss) | $(18.3) | $(27.1) | $93.2 | $(142.0) | | Foreign currency translation adjustment | $92.3 | $(19.5) | $92.0 | $(55.5) | | Total comprehensive income (loss) | $74.0 | $(46.6) | $185.2 | $(197.5) | Consolidated Statements of Changes in Stockholders' Equity Stockholders' equity increased from $2.86 billion to $2.98 billion by Q2 2025, driven by net income and currency adjustments, partially offset by $115.3 million in share repurchases - During the six months ended June 30, 2025, the company repurchased 7,249,349 shares for a total cost of $115.3 million19 Consolidated Statements of Cash Flows H1 2025 net cash from operating activities significantly increased to $220.1 million, with investing activities using $272.5 million due to higher capital expenditures, and financing providing $28.3 million | (in millions) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $220.1 | $81.7 | | Net cash used in investing activities | $(272.5) | $(146.1) | | Net cash provided by (used in) financing activities | $28.3 | $(128.6) | | Change in cash, cash equivalents, and restricted cash | $(23.3) | $(193.9) | - Capital expenditures increased to $284.6 million in H1 2025 from $129.6 million in H1 202422 - Financing activities in H1 2025 included $567.5 million in proceeds from the revolving credit facility, offset by $223.8 million in convertible debt repurchases and $115.3 million in common stock repurchases24 Notes to the Consolidated Financial Statements This section details accounting policies, segment performance, long-term debt, lease agreements, and ESPN partnership commitments, providing further context to the financial statements - The company operates under five reportable segments: Northeast, South, West, Midwest, and Interactive33 - In Q2 2025, the company repurchased $223.8 million of its 2.75% Convertible Notes, resulting in an $11.8 million loss on early extinguishment of debt69 - The strategic agreement with ESPN involves annual cash payments of $150.0 million and warrant issuance; H1 2025 recognized $75.0 million expense for the Sportsbook Agreement and $28.5 million for the Investment Agreement112116 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial performance, strategic initiatives, and liquidity, highlighting strong Interactive segment growth, mixed retail results, ongoing development projects, and solid liquidity despite increased capital expenditures Executive Overview This overview details PENN's integrated entertainment and gaming business, emphasizing its ESPN partnership, theScore ownership, major development projects, and omni-channel growth strategy leveraging retail casinos and media assets - The company is executing a highly differentiated strategy centered on its partnership with ESPN and ownership of theScore to expand its customer ecosystem through organic cross-sell opportunities181 - Four major development projects are underway: the relocation of Hollywood Casino Joliet (opening Aug 2025) and Hollywood Casino Aurora (opening H1 2026), and hotel additions at M Resort and Hollywood Casino Columbus (both opening H1 2026)182186187188 - A new project to relocate the Ameristar Council Bluffs riverboat to a land-based facility, rebranded as Hollywood Casino Council Bluffs, was announced with an anticipated cost of $180-$200 million190 Results of Operations Q2 2025 consolidated revenues grew 6.1%, driven by a 35.9% increase in the Interactive segment, with mixed retail performance; H1 net income was aided by a one-time gain | (dollars in millions) | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $1,765.0 | $1,663.0 | $3,437.5 | $3,269.9 | | Net income (loss) | $(18.3) | $(27.1) | $93.2 | $(142.0) | | Adjusted EBITDA | $236.1 | $212.1 | $409.4 | $313.5 | - The Interactive segment's revenues increased by 35.9% in Q2 2025 YoY, and its Adjusted EBITDA loss improved from $(102.8) million to $(62.0) million244 - General and administrative expenses increased, partly due to $9.4 million in Q2 and $17.1 million in H1 2025 of legal and advisory costs related to activist shareholder activity217 Liquidity and Capital Resources H1 2025 operating cash flow significantly increased to $220.1 million, with anticipated 2025 capital expenditures of $730 million, total debt of $2.8 billion, and $115.3 million in H1 share repurchases | (dollars in millions) | Six Months Ended June 30, 2025 | | :--- | :--- | | Net cash provided by operating activities | $220.1 | | Net cash used in investing activities | $(272.5) | | Net cash provided by financing activities | $28.3 | - For 2025, the company anticipates capital expenditures of approximately $240.0 million for maintenance and $490.0 million for projects, largely related to the PENN Development Projects265 - During H1 2025, the company repurchased 7.2 million shares for $115.3 million; as of August 6, 2025, $634.4 million remained available under the share repurchase authorization273274 Item 3. Quantitative and Qualitative Disclosure About Market Risk The company's primary market risks are interest rate fluctuations on $1.9 billion variable-rate debt and foreign currency exchange rates from Canadian operations, which generated a $92.0 million unrealized gain in H1 2025 - The company is exposed to interest rate risk on its $1.9 billion of variable-rate debt outstanding under its Amended Credit Facilities as of June 30, 2025292 - Exposure to foreign currency translation risk from Canadian operations (theScore) resulted in an unrealized gain of $92.0 million for the six months ended June 30, 2025, compared to a loss of $55.5 million in the prior year period295 Item 4. Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting during Q2 2025 - Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2025296 - No material changes in internal control over financial reporting occurred during the quarter ended June 30, 2025297 PART II. OTHER INFORMATION Item 1. Legal Proceedings The company is involved in a lawsuit filed by HG Vora Capital Management, LLC, alleging breaches of fiduciary duty and securities law violations related to board composition and proxy materials - HG Vora Capital Management, LLC filed a lawsuit against PENN and its board alleging violations of Pennsylvania's Business Corporation Law, breach of fiduciary duties, and federal securities law violations concerning board reduction and misleading proxy statements300 - The court has stayed the breach of fiduciary duty claim for 30 days but allowed other claims to proceed; the company has filed a motion to dismiss the non-stayed claims300 Item 1A. Risk Factors This section updates risk factors, emphasizing sensitivity to discretionary consumer spending, and detailing risks from shareholder activism, including the ongoing HG Vora litigation, which could cause disruption and costs - The company's business is sensitive to economic downturns and inflation that impact discretionary consumer spending302 - Shareholder activism, such as recent actions by HG Vora, poses a risk of increased costs, business disruption, diversion of management attention, and potential litigation304306 - The ongoing lawsuit filed by HG Vora related to the 2025 annual meeting could result in substantial costs, divert management resources, and have adverse implications for gaming licenses307308 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds In Q2 2025, the company repurchased 5,835,467 shares at an average price of $15.47 per share, with $634.4 million remaining under the repurchase authorization as of June 30, 2025 | Period | Total Shares Purchased (Program) | Average Price Paid Per Share | | :--- | :--- | :--- | | April 2025 | 511,923 | $14.87 | | May 2025 | 2,450,950 | $15.36 | | June 2025 | 2,872,594 | $15.68 | | Q2 2025 Total | 5,835,467 | $15.47 | Item 5. Other Information The company entered a new executive employment agreement with CEO Jay Snowden, effective through January 1, 2029, with an annual base salary of $1.8 million and a target annual bonus of 250% of his base salary - A new Executive Agreement was signed with CEO Jay Snowden on August 5, 2025, with a term extending to January 1, 2029313 - The agreement sets Mr. Snowden's annual base salary at $1.8 million and his target annual bonus at 250% of his base salary313 Item 6. Exhibits This section lists exhibits filed with the 10-Q report, including the new executive agreement for CEO Jay Snowden and the amended 2022 Long Term Incentive Compensation Plan - Key exhibits filed include the Executive Agreement for CEO Jay Snowden and the amended 2022 Long Term Incentive Compensation Plan320
PENN(PENN) - 2025 Q2 - Quarterly Report