Penn National Gaming, Inc. (PENN: Nasdaq) (“Penn National” or the “Company”) announced today that it has raised its financial guidance for the 2017 first quarter ending March 31, 2017. Reflecting strong broad-based property performance to date, the Company now expects to report 2017 first quarter net revenue of between $770 million and $771 million and Adjusted EBITDA of between $222 million and $223 million. As a result, Penn National projects Adjusted EBITDA after master lease payments will be $110 million to $111 million for the 2017 first quarter ending March 31, 2017. The Company’s prior financial guidance for the 2017 first quarter (issued February 2, 2017) contemplated net revenue of $761.0 million and Adjusted EBITDA of $209.3 million. Penn National’s guidance included an assumption for master lease payments of $111.9 million in the first quarter of 2017 which would imply original guidance of Adjusted EBITDA after master lease payments of $97.4 million. Penn National expects to report its 2017 first quarter results before the market opens on April 27, 2017 and plans to update its 2017 full year financial guidance at that time.

Timothy J. Wilmott, Penn National’s President and Chief Executive Officer, stated, “Our year-to-date performance reflects strength across the portfolio and Penn National’s updated first quarter Adjusted EBITDA after master lease payments is pacing approximately 13% to 14% ahead of our prior expectations. As we look to the balance of the year, our ongoing efforts to optimize operating efficiencies are enabling us to further improve margins which, combined with our strategy of growing our omni-channel platform of casino operations, retail gaming and social gaming assets, support our efforts to increase cash flows, reduce leverage and return capital to shareholders.”

The updated adjusted EBITDA and updated Adjusted EBITDA after master lease payments for the period ending March 31, 2017 do not include potential fluctuations in corporate expense related to cash-settled, stock-based awards.

Use of Non-GAAP Measures

In addition to GAAP financial measures, adjusted EBITDA is used by management as an important measure of the Company’s operating performance. We define adjusted EBITDA as earnings before interest, taxes, stock compensation, debt extinguishment charges, impairment charges, insurance recoveries and deductible charges, depreciation and amortization, changes in the estimated fair value of our contingent purchase price obligations, gain or loss on disposal of assets, and other income or expenses. Adjusted EBITDA is also inclusive of income or loss from unconsolidated affiliates, with our share of non-operating items (such as depreciation and amortization) added back for our joint venture in Kansas Entertainment. Adjusted EBITDA excludes payments associated with our Master Lease agreement with Gaming and Leisure Properties, Inc. (“GLPI”) as the transaction was accounted for as a financing obligation. Adjusted EBITDA has economic substance because it is used by management as a performance measure to analyze the performance of our business, and is especially relevant in evaluating large, long lived casino projects because they provide a perspective on the current effects of operating decisions separated from the substantial non operational depreciation charges and financing costs of such projects. We also present adjusted EBITDA because it is used by some investors and creditors as an indicator of the strength and performance of ongoing business operations, including our ability to service debt, fund capital expenditures, acquisitions and operations. These calculations are commonly used as a basis for investors, analysts and credit rating agencies to evaluate and compare operating performance and value companies within our industry. In addition, gaming companies have historically reported adjusted EBITDA as a supplement to financial measures in accordance with GAAP. In order to view the operations of their casinos on a more stand-alone basis, gaming companies, including us, have historically excluded from their adjusted EBITDA calculations certain corporate expenses that do not relate to the management of specific casino properties. However, adjusted EBITDA is not a measure of performance or liquidity calculated in accordance with GAAP. Adjusted EBITDA information is presented as a supplemental disclosure, as management believes that it is a widely used measure of performance in the gaming industry, is used in the valuation of gaming companies, and that it is considered by many to be a key indicator of the Company’s operating results. Management uses adjusted EBITDA as an important measure of the operating performance of its segments, including the evaluation of operating personnel. Adjusted EBITDA should not be construed as alternatives to operating income, as indicators of the Company’s operating performance, as alternatives to cash flows from operating activities, as a measure of liquidity, or as any other measures of performance determined in accordance with GAAP. The Company has significant uses of cash flows, including capital expenditures, interest payments, taxes and debt principal repayments, which are not reflected in adjusted EBITDA. It should also be noted that other gaming companies that report adjusted EBITDA information may calculate adjusted EBITDA in a different manner than the Company and therefore, comparability may be limited.

Adjusted EBITDA after master lease payments is a measure we believe provides useful information to investors because it is an indicator of the performance of ongoing business operations after incorporating the cash flow impact of lease payments to GLPI. Additionally, this treatment is consistent with how our conventional debt and Master Lease financial covenant calculations are calculated and is the metric that our executive management team is measured against for incentive based compensation purposes.

A reconciliation of the Company’s net income (loss) per GAAP to adjusted EBITDA, as well as the Company’s income (loss) from operations per GAAP to adjusted EBITDA, was included with the Company’s 4Q 2016 earnings press release dated February 2, 2017, in addition to a reconciliation of each segment’s income (loss) from operations to adjusted EBITDA. The Company is not including an updated reconciliation with respect to the revised guidance included in this press release because the Company is not presently able to estimate certain of the items excluded from Adjusted EBITDA that would be necessary to calculate net income; the Company intends to provide such a reconciliation when it reports its financial results for the first quarter of 2017. All references to the master lease refer to the Master Lease between GLP Capital, L.P. and Penn Tenant, LLC dated November 1, 2013.

About Penn National Gaming

Penn National Gaming is a diversified, multi-jurisdictional owner and manager of gaming and racing facilities and video gaming terminal operations. The Company recently expanded into social online gaming offerings via its Penn Interactive Ventures, LLC division and its recent acquisition of Rocket Speed, Inc. (formerly known as Rocket Games, Inc.). Penn National currently owns, manages, or has ownership interests in twenty-seven facilities in the following seventeen jurisdictions: California, Florida, Illinois, Indiana, Kansas, Maine, Massachusetts, Mississippi, Missouri, Nevada, New Jersey, New Mexico, Ohio, Pennsylvania, Texas, West Virginia, and Ontario, Canada.

Forward-Looking Statements

This press release may include “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements can be identified by the use of forward looking terminology such as “expects,” “believes,” “estimates,” “intends,” “may,” “will,” “should” or “anticipates” or the negative or other variation of these or similar words, or by discussions of future events, strategies or risks and uncertainties. Such forward looking statements are inherently subject to risks, uncertainties and assumptions about Penn National Gaming and its subsidiaries, including risks relating to achieving or exceeding the financial guidance set forth herein and accordingly, any forward looking statements are qualified in their entirety by reference to the forward looking statements described in the February 2, 2017 press release announcing our initial guidance for 2017, the factors described in Penn National Gaming’s Annual Report on Form 10-K for the year ended December 31, 2016, subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K as filed with the Securities and Exchange Commission. All subsequent written and oral forward looking statements attributable to Penn National Gaming or persons acting on the Company’s behalf are expressly qualified in their entirety by the cautionary statements included herein. Penn National Gaming undertakes no obligation to publicly update or revise any forward looking statements except as required by law.