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v3.22.2.2

Segment Information | 9 Months Ended
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Sep. 30, 2022
Segment Reporting [Abstract] |
Segment Information | Segment Information We have aggregated our operating segments into five reportable segments. Retail operating segments are based on the similar characteristics within the regions in which they operate: Northeast, South, West, and Midwest. Our Interactive segment includes all of our iCasino and online sports betting operations, management of retail sports betting, media, and our proportionate share of earnings attributable to our equity method investment in Barstool. The Other category is included in the following tables to reconcile the segment information to the consolidated information. The Company utilizes Adjusted EBITDAR (as defined below) as its measure of segment profit or loss. The following table highlights our revenues and Adjusted EBITDAR for each reportable segment and reconciles Adjusted EBITDAR on a consolidated basis to net income.
| For the three months ended September 30, |  | For the nine months ended September 30,
(in millions) | 2022 |  | 2021 |  | 2022 |  | 2021
Revenues: |  |  |  |  |  |  |
Northeast segment | $ | 685.4 |  |  | $ | 672.4 |  |  | $ | 2,028.8 |  |  | $ | 1,895.8 |
South segment | 329.8 |  |  | 318.2 |  |  | 1,009.8 |  |  | 982.3 |
West segment | 156.5 |  |  | 145.7 |  |  | 451.2 |  |  | 382.7 |
Midwest segment | 298.4 |  |  | 285.7 |  |  | 877.6 |  |  | 815.2 |
Interactive segment | 158.7 |  |  | 93.0 |  |  | 455.1 |  |  | 275.3 |
Other (1) | 4.2 |  |  | 3.5 |  |  | 17.4 |  |  | 6.8 |
Intersegment eliminations (2) | (8.0) |  |  | (6.7) |  |  | (23.8) |  |  | (25.6) |
Total | $ | 1,625.0 |  |  | $ | 1,511.8 |  |  | $ | 4,816.1 |  |  | $ | 4,332.5 |
Adjusted EBITDAR (3): |  |  |  |  |  |  |
Northeast segment | $ | 217.9 |  |  | $ | 221.1 |  |  | $ | 637.5 |  |  | $ | 645.9 |
South segment | 139.9 |  |  | 137.0 |  |  | 429.7 |  |  | 448.0 |
West segment | 60.5 |  |  | 54.5 |  |  | 171.4 |  |  | 151.1 |
Midwest segment | 129.4 |  |  | 125.8 |  |  | 386.2 |  |  | 374.0 |
Interactive segment | (49.3) |  |  | (32.0) |  |  | (80.1) |  |  | (29.5) |
Other (1) | (26.5) |  |  | (26.1) |  |  | (73.6) |  |  | (75.6) |
Total (3) | 471.9 |  |  | 480.3 |  |  | 1,471.1 |  |  | 1,513.9 |
Other operating benefits (costs) and other income (expenses): |  |  |  |  |  |  |
Rent expense associated with triple net operating leases (4) | (31.5) |  |  | (116.0) |  |  | (119.6) |  |  | (342.9) |
Stock-based compensation | (13.6) |  |  | (8.5) |  |  | (45.1) |  |  | (21.9) |
Cash-settled stock-based awards variance | 3.8 |  |  | (5.2) |  |  | 16.2 |  |  | (14.3) |
Gain (loss) on disposal of assets | 0.2 |  |  | (0.3) |  |  | (7.0) |  |  | (0.1) |
Contingent purchase price | (0.1) |  |  | (0.6) |  |  | 0.9 |  |  | (1.9) |
Pre-opening expenses (5) | (0.5) |  |  | (1.6) |  |  | (4.1) |  |  | (2.8) |
Depreciation and amortization | (148.7) |  |  | (83.7) |  |  | (417.2) |  |  | (246.9) |
Impairment losses (6) | (104.6) |  |  | — |  |  | (104.6) |  |  | — |
Insurance recoveries, net of deductible charges | 1.9 |  |  | — |  |  | 10.7 |  |  | — |
Non-operating items of equity method investments (7) | (2.6) |  |  | (3.0) |  |  | (4.7) |  |  | (6.0) |
Interest expense, net | (193.3) |  |  | (144.9) |  |  | (547.7) |  |  | (418.6) |
Other (5)(8) | (41.7) |  |  | 6.0 |  |  | (126.1) |  |  | 27.3 |
Income (loss) before income taxes | (58.8) |  |  | 122.5 |  |  | 122.8 |  |  | 485.8 |
Income tax benefit (expense) | 182.0 |  |  | (36.4) |  |  | 78.1 |  |  | (110.1) |
Net income | $ | 123.2 |  |  | $ | 86.1 |  |  | $ | 200.9 |  |  | $ | 375.7 |
(1)The Other category consists of the Company’s stand-alone racing operations, namely Sanford-Orlando Kennel Club, Sam Houston and Valley Race Parks (the remaining 50% was acquired by PENN on August 1, 2021), the Company’s joint venture interests in Freehold Raceway, and our management contract for Retama Park Racetrack. Expenses incurred for corporate and shared services activities that are directly attributable to a property or are otherwise incurred to support a property are allocated to each property. 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 to a property. (2)Primarily represents the elimination of intersegment revenues associated with our internally-branded retail sportsbooks, which are operated by PENN Interactive. (3)We define Adjusted EBITDAR as earnings before interest expense, net, income taxes, depreciation and amortization, rent expense associated with triple net operating leases (see footnote (4) below), stock-based compensation, debt extinguishment and financing charges, which is included in “Other” (see footnote (8) below), impairment losses, insurance recoveries, net of deductible charges, changes in the estimated fair value of our contingent purchase price obligations, gain or loss on disposal of assets, the difference between budget and actual expense for cash-settled stock-based awards, pre-opening expenses (see footnote (5) below), and other. Adjusted EBITDAR is also inclusive of income or loss from unconsolidated affiliates, with our share of non-operating items (see footnote (7) below) added back for Barstool and our Kansas Entertainment joint venture. (4)Solely comprised of rent expense associated with the operating lease components contained within our triple net master lease dated November 1, 2013 with GLPI and the triple net master lease assumed in connection with our acquisition of Pinnacle Entertainment, Inc., our individual triple net leases with GLPI for the real estate assets used in the operation of Tropicana (on September 26, 2022, we sold the equity interests to Bally’s) and Hollywood Casino at The Meadows, and our individual triple net leases with VICI for the real estate assets used in the operations of Margaritaville Resort Casino and Hollywood Casino at Greektown (of which the Tropicana Lease, Meadows Lease, Margaritaville Lease and the Greektown Lease are defined in “Note 9, Leases”) and are referred to collectively as our “triple net operating leases”. As a result of the Lease Modification defined in Note 9, “Leases”, the land and building components associated with the operations of Dayton and Mahoning Valley are classified as operating leases which is recorded to rent expense, as compared to prior to the Lease Modification, whereby the land components of substantially all of the Master Lease properties were classified as operating leases and recorded to rent expense. Subsequent to the Lease Modification, the land components associated with the Master Lease properties are primarily classified as finance leases. (5)During the first quarter of 2021, acquisition costs were included within pre-opening and acquisition costs. Beginning with the quarter ended June 30, 2021, acquisition costs are presented as part of other expenses. (6)Amount primarily relates to a $102.8 million impairment charge in the Northeast segment. (7)Consists principally of interest expense, net, income taxes, depreciation and amortization, and stock-based compensation expense associated with Barstool and our Kansas Entertainment joint venture. We record our portion of Barstool’s net income or loss, including adjustments to arrive at Adjusted EBITDAR, one quarter in arrears. (8)Includes holding losses on our equity securities of $10.8 million and $66.4 million for the three and nine months ended September 30, 2022, respectively, and holding gains on our equity securities of $10.1 million and $28.9 million for the three and nine months ended September 30, 2021, respectively, which are discussed in Note 15, “Fair Value Measurements.” Also consists of non-recurring acquisition and transaction costs of $31.9 million and $46.3 million for the three and nine months ended September 30, 2022, respectively, and $12.9 million and $14.7 million for the three and nine months ended September 30, 2021, respectively, finance transformation costs associated with the implementation of our new Enterprise Resource Management system, and a $10.4 million debt extinguishment and financing charge incurred in the second quarter of 2022, which is discussed in Note 8, “Long-term Debt.” The table below presents capital expenditures by segment:
| For the three months ended September 30, |  | For the nine months ended September 30,
(in millions) | 2022 |  | 2021 |  | 2022 |  | 2021
Capital expenditures: |  |  |  |  |  |  |
Northeast segment | $ | 26.4 |  |  | $ | 35.1 |  |  | $ | 82.1 |  |  | $ | 71.3 |
South segment | 14.8 |  |  | 16.4 |  |  | 51.1 |  |  | 24.5 |
West segment | 3.3 |  |  | 2.3 |  |  | 7.3 |  |  | 5.5 |
Midwest segment | 11.3 |  |  | 7.3 |  |  | 25.5 |  |  | 12.8 |
Interactive segment | 6.5 |  |  | 2.7 |  |  | 9.7 |  |  | 4.1 |
Other | 1.7 |  |  | 9.4 |  |  | 13.9 |  |  | 19.6 |
Total capital expenditures | $ | 64.0 |  |  | $ | 73.2 |  |  | $ | 189.6 |  |  | $ | 137.8 |
The table below presents investment in and advances to unconsolidated affiliates and total assets by segment:
(in millions) | Northeast |  | South |  | West |  | Midwest |  | Interactive |  | Other (1) |  | Total
Balance sheet as of September 30, 2022 |  |  |  |  |  |  |  |  |  |  |  |  |
Investment in and advances to unconsolidated affiliates | $ | 0.1 |  |  | $ | — |  |  | $ | — |  |  | $ | 79.9 |  |  | $ | 160.2 |  |  | $ | 6.1 |  |  | $ | 246.3 |
Total assets | $ | 2,172.8 |  |  | $ | 1,169.7 |  |  | $ | 375.0 |  |  | $ | 1,382.4 |  |  | $ | 4,228.8 |  |  | $ | 8,206.4 |  |  | $ | 17,535.1 |
Balance sheet as of December 31, 2021 |  |  |  |  |  |  |  |  |  |  |  |  |
Investment in and advances to unconsolidated affiliates | $ | 0.1 |  |  | $ | — |  |  | $ | — |  |  | $ | 83.8 |  |  | $ | 164.4 |  |  | $ | 6.8 |  |  | $ | 255.1 |
Total assets | $ | 2,283.6 |  |  | $ | 1,224.6 |  |  | $ | 394.8 |  |  | $ | 1,215.8 |  |  | $ | 2,618.3 |  |  | $ | 9,135.0 |  |  | $ | 16,872.1 |
(1)The real estate assets subject to the Master Leases, which are classified as either property and equipment, operating lease ROU assets, or finance lease ROU assets, are included within the Other category.

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 31 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8924-108599 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 34 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8981-108599 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 21 -Subparagraph (a) -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8721-108599 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 40 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e9031-108599 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (f) -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8933-108599 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (e) -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8933-108599 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 26 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8844-108599 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 41 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e9038-108599 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (d) -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8933-108599 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 22 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8736-108599 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 42 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e9054-108599 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 15 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8657-108599 Reference 13: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 21 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8721-108599 Reference 14: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -URI https://asc.fasb.org/topic&trid=2134510 + Details
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