Penn National Announces Record Fourth Quarter and Stock Offering

Penn National reported a record fourth quarter Monday with revenue climbing 48.1% and net income jumping 105.2%. The Pennsylvania racetrack and casino company also announced it will be offering 2.5 million in additional shares of common stock, which should generate about $74 million.

"The fourth quarter caps what, for our company, has been the most exciting period in our public history," said Peter Carlino, chairman and chief executive officer, during a teleconference with analysts. "This time reflects the culmination of all the work we've done since we became a public company."

Charles Town Races in West Virginia continues to be Penn National's leader in revenue and earnings before interest, taxes, depreciation, and amortization (EBITDA). The racetrack and its 2,000 video lottery terminals generated $50.3 million in revenue and nearly $12.3 million in EBITDA for the three-month period ending Dec. 31. Charles Town's revenue was 43% higher and its EBITDA grew 43%.

Rapid growth is expected at the West Virginia racetrack for another two years. About $60 million in new construction is planned for Charles Town, which includes a new 1,500-space parking garage with direct elevator access to the gaming floor, and an additional 100,000 square feet for gaming and customer services. Penn National expects to offer 500 new VLTs by July and another 500 by the end of the year.

"We will start to see an impact from the new machines later in the year," Carlino said. "The real story for us will be 2003. I think the next 24 months for Penn just looks very good."

Net income for the quarter rose to nearly $5.6 million compared with $2.7 million for the same quarter of 2001. Fourth quarter earnings rose to 35 cents per diluted share up from 18 cents per diluted share for the same period last year. For 2001, the company's earnings per diluted share was $1.53, or 96% higher than the 78 cents per diluted share earned in 2000.

For 2002, Penn National is expecting total revenue of $635 million, $130 million in EBITDA, and earning of $2 per diluted share. For the first quarter of the year, the company projects total revenue of $142 million, $29 million in EBITDA, and earnings of 45 cents per diluted share.

Debt reduction is the main purpose behind Penn National's stock offering, slated for early February.

Of the 3.5 million shares to be offered, 2.5 million will be sold by Penn National and the proceeds used to pay down senior bank debt. The Carlino Family Trust is selling the remaining 1 million shares. The offering is being underwritten by Merrill Lynch and Bear Stearns and a price should be set during the week of Feb. 11, the company said.