PENN Entertainment, Inc. Q4 FY2025 earnings call

• Retail business healthy and growing, generating sustainable free cash flow, with 2 more retail growth projects opening by end of 2Q 2026 and continued momentum at projects opened in 2025. • Interactive segment expected to inflect to breakeven adjusted EBITDA for full year 2026, $268M y-o-y improvement. • Rightsized maintenance capital spend, bringing recurring maintenance CapEx levels down by $20M to near pre-COVID level. • New organizational structure announced in early January to become leaner and flatter, saving over $10M in annualized run rate expenses. • Retail side showed resilience, Interactive segment successfully rebranded to Score Bet in U.S. • Upcoming catalysts in 2026 include opening of new Aurora property, Columbia Hotel, continued ramp of Joliet and M Resort Hotel tower, and achieving breakeven in Interactive. • Welcomed 3 new board members with relevant experience.

Retail: Generated revenues of $1.4 billion, adjusted EBITDAR of $456.4 million, and segment adjusted EBITDA margins of 32.3%. Theoretical revenue grew year-over-year across all rated worth and age segments, with older demographics and VIP play contributing. Bad weather in December negatively impacted segment adjusted EBITDA by ~$7 million. New supply in Louisiana and Iowa impacted the segment. Core business trends stable with regional strength in Ohio, St. Louis, etc. M Resort in Las Vegas had record gaming volumes in December and record net revenue in January. Hollywood Casino Joliet delivered strong results. Interactive: Fourth quarter rec gaming revenue driven by iCasino and online sportsbook growth. Revenue growth excluding tax gross-up 52% y-o-y in Q4, primarily attributable to iCasino growth of 40%+ and online sports book growth of 73%. Adjusted EBITDA improved $70 million y-o-y in Q4. Expected Interactive revenues of ~$1.6 billion in 2026, excluding tax gross-up ~$20% growth y-o-y. Marketing expenses to decline significantly, rightsized interactive operations with lower payroll and G&A.

• Retail: Forecast retail net revenues range $5.7B - $5.85B and retail adjusted EBITDA range $1.86B - $1.98B in 2026. Severe weather in Q1 negatively impacted retail adjusted EBITDA by ~$5M - $10M. Aurora property expected to have ~2 weeks downtime in 2Q 2026. Second half of 2026 to benefit from opening of all 4 retail growth projects. • Interactive: Expect Interactive segment to generate breakeven adjusted EBITDA in 2026, with all components (U.S. OSB, iCasino, Canadian operations) to generate positive contribution margin. U.S. OSB MAUs to decline y-o-y, while U.S. iCasino, Canadian OSB, and iCasino MAUs to increase y-o-y. First 3 quarters of 2026 expected to generate small adjusted EBITDA losses, fourth quarter profitable. Other category adjusted EBITDA expected to be a loss of $119M in 2026. • 2026 free cash flow expected to be >$3 per share, reduce lease-adjusted net leverage by >1 turn. • 2026 CapEx total $445M, including $225M project CapEx, $220M maintenance CapEx. Cash payments under triple net leases expected $1B, cash interest expense projected $145M, not expected to be cash taxpayer in 2026.

• Weather can negatively impact segment adjusted EBITDA, e.g., bad weather in December 2025 impacted retail segment adjusted EBITDA by ~$7M. • New supply in markets can negatively impact segment adjusted EBITDA, e.g., new supply in Bossier City, New Orleans, Council Bluffs impacted retail segment. • Uncertainty around legalization and regulation of prediction markets and iGaming, e.g., Maine's iGaming bill situation and impact on operations. • Competition in the promotional environment, especially in sports betting, can impact retention and business performance. • Uncertainty around timing and impact of new iGaming legalizations, e.g., Alberta's potential launch and associated investment and market share impact.

Q: Brandt Montour with Barclays asked about digital top line '26 target of 20% revenue growth ex gross up, fleshing out what's driving it and conservativeness.

A: Driven primarily by iGaming growth, strong retention on stand-alone Hollywood app, NGR growth on sports betting despite lower handle due to lower promotional expenses.

Q: Barry Jonas with Truist Securities asked about guidance range, assumptions on new supply impact, project growth, and One Big Beautiful Bill.

A: Anticipated and contemplated factors, feel stronger about second half of year, weather impact in Q1 built into full year guide, Q2 has noise with Aurora opening, same-store EBITDA flat y-o-y, upside from 4 growth projects.

Q: Jordan Bender with Citizens asked about casino development pipeline and interactive guide shift.

A: Have a few more projects analyzing, stay tuned, interactive guide shift due to building budget from bottom up, delivering against breakeven, post rebrand on track.

Q: Daniel Politzer with JPMorgan asked about first quarter weather impact and tax refunds, relationship to property uplift.

A: Seeing some of all, weather and tax refunds contributing to volumes, March set to be good month.

Q: Joseph Stauff with Susquehanna asked about early returns of Joliet and M Resort, lessons and ramp, Aurora property.

A: M Resort hotel expansion has immediate positive impact on revenues and EBITDA, Joliet has room to grow margins, Aurora sits next to Chicago Premium outlets.

Q: Shaun Kelley with Bank of America asked about Alberta launch costs and strategic follow-up on prediction markets.

A: Alberta launch costs likely $15M - $20M range, prediction markets situation confusing, not putting licenses at risk.

Q: Jeffrey Stantial with Stifel asked about Interactive business promotional environment impact and market share growth.

A: Seeing competition in sports betting but staying out of that realm, focused on iCasino in hybrid states and Canada, expect to grow market share on iCasino side and shrink handle share on OSB side.

Q: Stephen Grambling with Morgan Stanley asked about OpEx growth rate on property side.

A: Typical OpEx growth with ~45% flow-through on incremental revenues, primarily driven by labor annual merit increases and some natural growth in insurance, utilities, etc.