Segment Information |
Segment Information We have aggregated our operating segments into four reportable segments based on the similar characteristics of the operating segments within the regions in which they operate: Northeast, South, West and Midwest. The Other category is included in the following tables in order to reconcile the segment information to the consolidated information. Inter-segment revenues were not material in any of the years presented below. During the fourth quarter of 2018, the Company made revisions to its reportable segments upon the consummation of the Pinnacle Acquisition. Apart from the addition of the new properties, the most significant change was dividing the South/West segment into two separate reportable segments. The financial information presented below reflects such changes, including restating the prior period comparative financial 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 March 31, | (in thousands) | 2019 | | 2018 | Revenues: | | | | Northeast segment | $ | 550,578 |
| | $ | 458,719 |
| South segment | 291,942 |
| | 63,330 |
| West segment | 158,654 |
| | 97,966 |
| Midwest segment | 271,262 |
| | 185,534 |
| Other (1) | 10,135 |
| | 10,536 |
| Revenues | $ | 1,282,571 |
| | $ | 816,085 |
| | | | | Adjusted EBITDAR (2): | | | | Northeast segment | $ | 164,754 |
| | $ | 144,977 |
| South segment | 97,844 |
| | 21,118 |
| West segment | 49,923 |
| | 23,931 |
| Midwest segment | 99,219 |
| | 68,185 |
| Other (1) | (20,303 | ) | | (15,665 | ) | Adjusted EBITDAR (2) | 391,437 |
| | 242,546 |
| | | | | Other operating benefits (costs) and other income (expenses): | | | | Rent expense associated with triple net operating leases (3) | (84,730 | ) | | — |
| Stock-based compensation | (3,417 | ) | | (2,929 | ) | Cash-settled stock award variance | (472 | ) | | 7,462 |
| Loss on disposal of assets | (522 | ) | | (55 | ) | Contingent purchase price | (4,717 | ) | | (1,134 | ) | Pre-opening and acquisition costs | (4,380 | ) | | (6,093 | ) | Depreciation and amortization | (104,053 | ) | | (60,390 | ) | Impairment losses | — |
| | (618 | ) | Non-operating items for Kansas JV | (1,073 | ) | | (1,294 | ) | Interest expense | (132,587 | ) | | (115,740 | ) | Interest income | 319 |
| | 249 |
| Loss on early extinguishment of debt | — |
| | (882 | ) | Other | — |
| | 4 |
| Income before income taxes | 55,805 |
| | 61,126 |
| Income tax expense | (14,818 | ) | | (15,689 | ) | Net income | $ | 40,987 |
| | $ | 45,437 |
|
| | (1) | The Other category consists of the Company's standalone racing operations, namely Sanford-Orlando Kennel Club, located in Longwood, Florida, and the Company’s joint venture interests in Texas and New Jersey (see Note 10, “Investments in and Advances to Unconsolidated Affiliates”). The Other category also includes PIV, our management contract for Retama Park Racetrack, and our live and televised poker tournament series that operates under the trade name, Heartland Poker Tour. 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 otherwise been allocated to a property. | | (2) | We define Adjusted EBITDAR as earnings before interest income and expense, income taxes, depreciation and amortization, rent expense associated with triple net operating leases, stock-based compensation, debt extinguishment and financing charges, impairment charges, insurance recoveries and 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 and acquisition costs, and other income or expenses. Adjusted EBITDAR 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 EBITDAR excludes payments associated with our Master Leases, the Meadows Lease, and the Margaritaville Lease, as such amounts are included as either interest expense or rent expense. |
| | (3) | As of and for the three months ended March 31, 2019, for purposes of this definition, the Company’s triple net operating leases include components of the Master Leases (principally pertaining to the land), the Meadows Lease, and the Margaritaville Lease. |
| | | | | | | | | | For the three months ended March 31, | (in thousands) | 2019 | | 2018 | Capital expenditures: | | | | Northeast segment | $ | 12,685 |
| | $ | 4,212 |
| South segment | 8,872 |
| | 682 |
| West segment | 7,027 |
| | 2,730 |
| Midwest segment | 7,039 |
| | 3,007 |
| Other | 2,043 |
| | 1,182 |
| Total capital expenditures | $ | 37,666 |
| | $ | 11,813 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | (in thousands) | Northeast | | South | | West | | Midwest | | Other | | Total | As of March 31, 2019 | | | | | | | | | | | | Investment in and advances to unconsolidated affiliates | $ | 105 |
| | $ | — |
| | $ | — |
| | $ | 88,899 |
| | $ | 38,920 |
| | $ | 127,924 |
| Total assets (1) | $ | 1,470,512 |
| | $ | 1,458,782 |
| | $ | 752,189 |
| | $ | 1,489,105 |
| | $ | 8,327,583 |
| | $ | 13,498,171 |
| | | | | | | | | | | | | As of December 31, 2018 | | | | | | | | | | |
| Investment in and advances to unconsolidated affiliates | $ | 105 |
| | $ | — |
| | $ | — |
| | $ | 89,350 |
| | $ | 39,033 |
| | $ | 128,488 |
| Total assets (2) | $ | 1,330,256 |
| | $ | 1,082,304 |
| | $ | 755,665 |
| | $ | 1,411,468 |
| | $ | 6,381,319 |
| | $ | 10,961,012 |
|
| | (1) | As of March 31, 2019, total assets of the Other category includes the real estate assets subject to the Master Leases, which are either classified as property and equipment, operating lease ROU assets, or finance lease ROU assets, depending on whether the underlying component of the Master Leases was determined to be an operating lease, a finance lease, or continue to be financing obligations, upon adoption of ASC 842. |
(2) As of December 31, 2018, total assets of the Other category includes the real estate assets subject to the Master Leases, which are classified as property and equipment.
|