PENN - Earnings call transcript Q3 2017 | PENN Entertainment, Inc.

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Penn National Gaming Third Quarter Conference Call.

During the presentation all participants will be in a listen-only. Afterwards we will conduct a question-and-answer session. [Operator Instructions] I would now like to turn the conference over to Mr. Joe Jaffoni. sir. ahead, go Please

Joseph Jaffoni

as Good Gaming's and call. XXXX presentation safe as to Frank. first answers, joining review I'll We'll you Penn management's the well momentarily comments National third disclosure. and questions morning, you, and thank but everyone harbor for get your Thank quarter conference

involve anticipates statements These or Reform of meaning the intends, can Securities Litigation historical In current will, by performance, Such forward-looking of today's the addition similar facts the to and uncertainties. not conference seeks, and expenditures plans, as or forward-looking or within of conditions, risks of risks beliefs XXXX, be results. the identified by developments, terminologies, variations which and Act may, including or projects, statements are future expects, statements operating call events, and contains other forward-looking these words use performance. plans, estimates, future beliefs, current acquisitions, Private strategies should uncertainties, such or company's expectations but capital of strategies, negative discussion or statements or or of the reflect guarantees future

forward-looking today's such, announcement company's results directly Securities the As obligation on Form Exchange from Tim? with as Penn today's be Wilmott. assumes measures Today's and With associated over publicly release in measures XX-Q. the pleasure in well non-GAAP with required, the non-GAAP company's to G. in it's and my measures National statements. vary a website. financial When within any expectations. turn press as call reconciliation calculated SEC most all and the accordance the call financial Commission, no actual to forward-looking found GAAP materially that, on the regulation webcast in the filings to described Tim are financial may or of company's CEO, with and company's to presented reports can risks the statements of The meaning comparable may the including uncertainties include and news revise XX-K and update

Timothy Wilmott

We're all Senior you, room our introduce Public Pennsylvania. Fair, Thank who Sottosanti; like Schippers; I'd Interactive with Joe, to our the Chief in and CFO; Sheffield; Wyomissing, Operating and our Penn Carl Sebastiano; Chris Counsel, in together morning Ventures, Director our General of here Justin Managing everyone. of Vice to Treasurer, just me, good Affairs, our Snowden. Officer, Eric President B.J. our Jay is

again month, into know, Before in of begin to employees. on our we to quarter we Tropicana just all I of and occur our Las third hundreds At right goers and come remarks had hundreds as seeking that acknowledge we results, had concert horrific our efforts the the next of my beginning shelter. I Tropicana Vegas Vegas incident the facility want the Las

there provide trained but facilities, blankets, and to reacted able compassion, team Our were the never we wounded well - real say to want said, And I for, you, heroes train provided I what and done. were executed and stayed sheets, this, shelter, team our a our very we job comfort, to who night. as there, who could and our thank in number never what ballrooms that and overnight of of to company on healthcare provide again, large pillows people the expect help for heroically get to

in continued specifically, highlight Now our consumer solid results very we that to had from especially quarter, of lot more like business, first turning newer the third going highlight solid assets. Jay our to but to is I'd a trends seeing we're

$XX actually that XX% Lease from Interactive for XX% Prairie those our the Penn Ventures free cash the debt also - Nevada, and We shareholders go saw in of improvement repurchasing well. total non-Master year-over-year. XX.X%, is to EBITDA bit B.J. well Penn million capital by of think of saw XX power million continue. than were were on going that by as retain third now margin as EBITDA generation showed returned produced We I the to our a growth little into shares. margin to detail approximately Massachusetts, Lease comp. stock-based third to third flow. key initiatives all a quarter. all into XX% going Ohio, and the of course able an next at more of the State get the segments specifics showed look assets drive end quarter quarter, of We working and coming improvement the exclude areas margins cash again when of three Gaming non-Master up We're in we're almost results on years. in you regional Jay of over assets operating further those year-over-year continue reduce of EBITDA couple we to As settled businesses on EBITDA is to in greater also more from net

B.J. there. improvement the and show continue the to are lender continue on facility. performance and any the of finally, will with we activity is We in comment we commentary. but yet, a only going have more color speculation making also M&A don't want and regarding We give something on if to resolution And to offer other do that. our the you Tribe occurs, progress Jamul I Negotiations material

at will and on You comment that not rumors point. speculation all this know we cannot and

turn we give to provide And wanted what that, on regarding any of the any quarter make with on operations. to that more over that. saw you that to like in I'd cannot Jay third color I further it we clear So, commentary to

Jay Snowden

Charles in year-over-year quarter when property with in third-party EBITDA up goes expenses quarter later detail this same-store last the our overall very level were portfolio. growth sales cover as increased that results you Tim. regions, presentation. topic in I'll not margins of which the our strongest onetime and geographic We third the mentioned, the years. through all in exclude three Property in Thanks, is third were the XX the across P&Ls this X.X%, running more would same-store insignificant. despite of number represent achieve Tim to pleased able that to X.X% quarter growth Town, We're and sales

range down Moving some to and the details. key year-over-year in quarter. Charles of some again At quarter quarter in our specific same as second the revenues the Town, first were markets, third

by to have and those XX%. point, business or from than group were In bridge November year to appear connector our digits those year-over-year. and quarter At Robert database many cases, be down cancellations given every not the first businesses San XX% quarter while Hollywood fact, the Not bottom-line the and range the or February, business revenue core benefited XX% both our improve volumes XX% slowly House five and our isolated double experienced of positive year. October and really in refine top of we and disruptions X% month of MGM a doubled. all we're has at in in last same net to a any performance cancellations, fantastic Restaurant. overall Xst. had - strategies. Ohio more in however, on we continue Jamul, performance or surprisingly relative businesses this June posted this the The we Las X strengthen Casino part latter reopening QX impact cancellations of at to continued a highest sure a year-over-year, Vegas, EBITDA Massachusetts, two either continued we Tim for single the least of the we been track of we with covered to revenues grew of is strong high understand following as month, until more up other In won't Diego, events we into the over and new weeks All in as Las October and really digits the ramp toward true fourth of relative year-over-year. quarter. recovering increased In Route Public EBITDA next since our in year. several however, the In relationships overall for or off to marketing Vegas our in and results At start the that momentum weeks end these we door October We had the more occurred with since than these of of overall at the know us month October. work the Tropicana encouraged this that at opening has the the Tropicana challenging September, event, heinous to customers Harvest festival XX businesses strong the And hotel month Irvine year. adjusted to

year-over-year are across up Moving per of to results. positive in over database increased database every was plenty and trends enterprise wide work Spend There X% the highlighting. worth entire segment. visit

the portfolio though third Our low growth was market by prior to also properties, unrated single-digits across quarters. And still roughly while our quarter. improvement grew business half not from market in of healthy year-over-year showing majority showed the as consistent at the from visitation,

remains values. trends bland home remain consumer we continue unemployment, as these increasing the environment due So, low to consumer growing will confident that confidence discretionary and

to I'll that, through turn to guidance. you with So, over it walk B.J.,

William Fair

Jay. quarter. Thanks, well updated a to guidance few our the discuss to like as few XXXX for as I'd financial financial highlights notable items provide a

revised of assumptions underlying release. on guidance our reminder, the a press and found As four are page

expenses. QX, QX. For is $X.X additional year, above of Lease million, offset level beat for in QX, million million payments adjusted EBITDA the will $XXX.X million in figures of to $XXX.X revenue the EBITDA be $X.XXX anticipated full $XXX.X property Master in guidance the the in carry year, achieved million after million our corporate be Adjusted QX. $XX.X The we $XXX.X billion, by

of fourth our guidance remains we a the Jay result guidance $X.X Our to QX. a include: already the hand $XX event the in of Tunica Maintenance - estimates Coast of merger-related to is at timing impacts the related year, repairs the and the Xpreviously stated, $XX.X Tropicana unchanged new to QX $XX remaining second year, costs are of million refund million quarter XXXX. half expenses And tragedy major of net of XXXX for acquisition result forecast of expansion Gulf expected the Las from the on as were to on and the to properties the approximately a million in the casinos of CapEx Tropicana Vegas certain be assets. quarter. CapEx decision the Items close year $XX.X for Project shifted the mentioned; Hurricane required as on impacting remains million. as impact Cash as full Nate, earliest. a for quarter second QX. weekend; million where is as to guidance million taxes just quarter Cash a last at the of we've end the remaining million $XXX.X for expected of be $X.X was for the performance

rent the end Master was ratio quarter. Lease coverage as the of Our X.XX, of

$XXX,XXX of year Free due of as lease to CapEx that million, cash the stated our $XXX be year comfortably covenants generation than anticipated conclusion assets. cash flow the be is is inclusion incur expect we flow after to mandatory performance always, the quarter, of be to approximately last will and to rent As be $X in million. at in And expected QX. increase $XXX escalation free we net new at higher reflected and of will all the our debt of million Tunica forecasted met. project payments

In significant the quarter non-EBITDA to accounting our impacts to had had third the that highlights, addition adjustments some statements. financial

which to is I'd reversal benefit impact. have The our significant of this not a effective obligation. in connection property cash is spin-off the way By deferred adjustment company time value created, our related of XX-month the Most the $XXX.X our financing does EBITDA real like costs mention or of the and primarily of at first placed allowance. company, subsequently OpCo, future current the a to or with Significant transaction valuation the an position. assets between tax a book deferred million PropCo accounting difference GLPI the reflected incurred importantly, cumulative background, asset the and was in loss spin-off the pretax tax item and of tax impairment

allowance valuation asset. the was tax deferred a against result, recorded a As

this Subsequently, As of confident this we and future quarter, was of levels year-end that income adjustment. are the non-cash cumulative in had of prospects. the determined we proper amount record by end anticipate to our and this period QX will pre-tax significant significantly grow

of is Speed. adjustment mention The Rocket second the item for earn-out

Rocket provision payable the earn-out of an first and acquisition included was Speed years. the second conclusion Our at of that

opening accelerate earn-out of a to This Rocket For Penn a which Ventures Interactive to the we integration elected and our which $XX.X of number reasons, historical EBITDA adjusted repurchased of favorable negotiate of of consistent In common excluded was benefit Tim's the foremost resulted provision. which with million, a buyout of indicated is stock. from in Speed, we the our P&L he is figures. remarks, shares

the average board at an average stock XXXX. quarter, property and concept as earlier per we And share. finally, approvals. a to September worth as million has we Jay of be evidenced authorization, agreement the share. the the in third of shares company is company operations Jamul, company encouraged documented million the continue $XX.XX the XXX,XXX Under February shares are of by agreement is The to of and strong Year-to-date, parties. the have results. During the Negotiations per at improvements has ongoing lenders, subject on between $XX.X February an repurchased up amongst by said the XXXX authority price of an $XX.XX X.XX to price combined its and repurchased repurchase additional to all in the additional being of common over shares reached Tribe by

on provide will detail any all obtained. not the have approvals until agreement We been

do non-cash the the our current being be the $X.X In reiterate as assume subordinated QX, of in EBITDA does the of all I not property. ongoing, million XXXX management of management entirety against to loan. received fully or the to We anticipate any we additional an charge like C impairment would Loan serviced. loans fees from from guidance are license test While negotiations that took date. and Term the are

it with to that, I'll back Tim. turn So,

Timothy Wilmott

working B.J. reduce to we from a on how very little cost About continue our a year to point. structure out started figure less Thanks, than we ago, starting strong can initiatives

the advance our expenses we looked opportunities couple industry-leading years. where to little felt we're highlighted going do Snowden investors it a wanted brought margins revenue margins in calls, have We We we Jay previous and our EBITDA a our to to on resources effort. color And to that today, our to that. at more but were little can give bit we're forward turn this on today wanted further of going. as efforts more now in over detail as business, I next continued and improve importantly provide outside help today, both we We us. enhance we've how that to we've where to over detail and to to there run And more

Jay Snowden

bit Thanks, our Relations few I've in either through is link And there our EBITDA an you earnings Penn as Tim. or page of of couple as year that to we've last quite a still we our of on can there good work I'm Tim Gaming. calls, on the going is noted, cover do referenced Investor believe that website slides embedded access at to that National the as been improving a the through release. margins

two of our If you we average. or move we that our level versus pride adjusted This way arguably this all particularly is to highly peer of our a enough. of one or slide group while deal something highlight gaming three, typically with you'll it consider in, see a gaming great And regional comparison places. perhaps it show that market property when of margins the exception tax you operate properties competitive in take don't

years challenge the been highest earnings. gaming that grow discipline reasons our is to primary continue quo we've the to this we the order over group, in rate forced of effective the to tax business the and our and constantly operating of One status behind have

enhance initiatives to in that If XXXX referenced sizing next the number us for in to we've working a identified you page with in we to of as a new release, and and our move opportunities referenced validating assist of had been third the much as party and order Tim we margins.

a refinements basis to-go believe margins enough done So, going a us our sourcing, couple the description in vendors. which the with we a much course over bag strategic six believe we we over to the just leveraging obvious areas purchasing nearly over the deliver for going our power reinvestment five marketing improve us reasons, over going really $XXX,XXX too few, of marketing in will of of but to properties of help our that's small key without we example that by Highlighting points return of our a across years. coming help restaurant make we into a focus the number XXX portfolio, getting continue that competitive detail just company provide to on a overall. last is regard to our haven't our spend the higher the to a With of single One we've good doubled year. by portfolio we discovered save the to years, consolidated job weeks last brief

lot more to onetime take make, looking there comes sourcing. initiatives. So, still labor, will doubt you in with regard with When the this a the going can it of imagine, us. a as size in and our there's that gives it And labor the properties deliver no deployed for results. our million else sense costs help that capital $XX our drive strategic in believe that's and range effective but labor opportunity improve a our returns down to margins There to million. software some to continue anyone out better it associated of to amount. think to enterprise-wide XXXX scheduling. we us than by scheduling of be it's these you number are technology can $XX we and manage nice new quantifying the of industry, to We're that We as at is investments We've very

as couple to of year, ownership early internal cases and will third the playbook we largely of the we coming continue transition quarter commences with years next completed Implementation revenue and 'XX, 'XX. slide, to you If this through in of move months. and and you'll fourth see over down EBITDA some continue in the much headed where will party's the winding believe is full in and environment. margins some stable illustration be is a are here next work finalized, The initiatives, an in to our end of the the even by

that, it will with to Tim back So, Wilmot. I over turn

Timothy Wilmott

Thanks, Jay.

provide know that, against expect. continue, to would we're around and there will you quarter-to-quarter these progressing turn - over continue audience. out these be improvement in our We activities highlighted, like as how With you the on obviously, as questions we initiative updates results the to to I'd let activities margin operator, will and it any

Operator

Carlo Instructions] Deutsche comes proceed. first Bank. question [Operator Santarelli of the from you. Please line Thank Our with

Carlo Santarelli

I you around to Hey bit respect were on guys good I morning. believe If to have some market. in you quarter with noted the out - in a million ask doing this this last M&A guys. last could buyback though back shorter ability commentary seemed an it itself. in we the Tim, that period might buy in of where M&A. that whereas earlier do had quarter, much one question have But $XX differently relative and quarter to can of might the had you how your maybe Thanks, extended quarter the your read into as a largely little prevented did you quarter stock so? to blackout from

Timothy Wilmott

you why B.J., don't go ahead?

William Fair

Carlo, I'll take that.

we as think looking M&A really much I we activity the between quarters, dry that a looked glean the our at and the was is M&A at at much a powder don't there were look between quarters. open to there's really a to the difference not of we're how think as determination window activity took was in looking really circumstances, we of in two set certain and difference I quarter-to-quarter. the that It from keeping

Carlo Santarelli

of could Canadian then the timing update and And thank that? kind guys, an of maybe bundle provide you. you're of what thinking the you about Great, kind if around status or

Timothy Wilmott

Toronto than everyone and knows, the suburbs, of mentioned to the of closest probably Just it in our in bundle is in us. interest B.J. Western any so past the we've

that answer decision. let the with So, question we him where to are I'll regard

William Fair

made Yes, bundle. Carlo. the not on Western yet decision A been has

have heard frame based legal We applications of they has central by of completed upon the the yet. through OLG has time. would time not the remaining for a had bundles has for result, have decision we made working been. there Tribe been that a have the - issues is some a The and claim Nations' as been not not There the been that expected this one had of that that First

so, respect is hear to - at soon, still forthcoming with this in Canada. And point. a to wait-and-see mode is would we're like but nothing relatively no We information

Carlo Santarelli

net And confirm in quick M? thanks. said the then one in was Tropicana that Vegas if Jay, Las follow-up. I your XQ. just Great, you XX% including revenue was just or overall thought Could up remarks, you

Jay Snowden

growth at had of Tropicana, and as was was That more quarter EBITDA doubling Tropicana Carlo. specific. specific to XX% quoted very well, the M I revenue a We numbers but strong than our net

Carlo Santarelli

thanks guys. a lot Great,

Timothy Wilmott

Thanks, Carlo.

Operator

next of Our the Please Stifel. from Steve line with Wieczynski question comes proceed.

Steven Wieczynski

morning. Good guys. Hey

if for called properties, the gave good color So, far we I any some you in I out a way give when get around your the those like as seen what and just quarter impacts? Jay, what those is to would can Trop looked and those you guess guess Xst. so the color you're are, B.J., there that trying you at guess, have guidance to Gulf look or sense I some October your of us know impact have Tropicana fourth guidance but I two Coast didn't post the guidance. you've what you impacts embedding for the and

Jay Snowden

is a XX, Jay. so properties. Look, and This puts takes Steve. with XX portfolio difficult because many of it's there's Sure,

rest saw October. we quarter. Massachusetts consistent at and performing I due had And Las as in M lost last rough what ramp referenced, Nate Biloxi then portfolio nicely with Resort, at a was and at little The to entire largely St. an Tropicana continue I October properties but mentioned, Vegas start of Xth. the so early October, think more Bay Xth in Hurricane as and at it B.J. our to in Louis Ohio So, is Tropicana. weekend you bit

in fourth somewhere range, It's quarter any it's for quarter make out be we really to it's after to say to change likely that hard early what to in put too but month. guidance. one have just So, the there only

Timothy Wilmott

end little probably have assess as but November bit December, to would we really into time give we of Steve, - at impact. Tropicana finally said, usual to back stabilization business And we'll of a more by Las total we and more as not. to want fully Vegas, see the Jay time we it's But or quantify know wanted that ever before whether to before we things

Steven Wieczynski

Okay. understood. Got you,

margin targets aggressive, around be would of are those of revenue pretty guys question and we conservative, view margins I maybe of a those right you as kind guess how Second the targets. assumptions much achieving your of kind mean, in question. terms now simple middle-of-the-road tied I it's then is to where continuation do of trends?

Jay Snowden

Sure. I mean, we provided ranges, Steve.

So, range I get implementation. leave going there. still would to to are a We're of to with come to new right plan great. And some lot reason. as then just going kind up out it a modify have work our ideas. The have Most we things. I We is now, going into think what for is out figure in we work of

we with So, We're years. the a we range. comfortable provided range provided those out that in

second your Steve? your of question, sorry, And part

Steven Wieczynski

revenue they current kind do just how trends? on of hinge of It was kind around

Jay Snowden

low it single-digit revenue a across environment, so the Yes, assumes growth assume stable organic revenue just portfolio.

Steven Wieczynski

got Appreciate great. guys. Okay, it. Thanks you,

Operator

Our comes of proceed. the from next question Please Barclays. Felicia with Hendrix line

Felicia Hendrix

you wondering morning. just flow-through in was good quarter. you I Hi, about talk thank could the the and if

if than the a some results. flow-through revenue quarter, You And expected. for bit we strong variances in adjust lower the guys very even the had was

any out were headwinds wondering just was there if there. wanted to call I you So,

Jay Snowden

and XX% would third-party if I earlier. you The only mention, costs thing about that's the of look these was inclusive Felicia, referenced flow-through property that I at level

the were costs third-party millions. The in

with is the third-party in quarter, XXs. at make more low the rate cost for that So, given consistent level, the adjustment effective when gaming tax the like what property pretty you we've which is XX% seen third that is our flow-through

year. accruals of performance have We the properties bonus this higher given

you the with noise, out some more we're when flow-through like it's there's happy So, and XX% there factors take but that.

Felicia Hendrix

made Okay. trying into margin you great arms actually because And next initiatives. the question segue is wrap just to my morning this I'm around improvement your your announcement my answer with then a that

getting this? I'm until we need serious to much it And industry kind cost feel think what But cost is should So, is, or you not gaming going add is the to everyone and of about and felt I realize leaders. that? how a now we always But you why it is seems the around can in there's you guys very think need understanding understand their the the or the have initiative near-term? you that definitely examining why see expenses like been what base impact in to or outsource I benefit. the cost the upside, how great, to

Jay Snowden

number us the Well, referenced, ideas at We in I that the they a had the the of at brought We beginning the year. Sure. conclude year. costs party third that we came corporate of end of as help don't some alike. resources wanted extra a But manage. project We both to up with just a group, leadership help property we to have and administrate.

So, it's mainly more of a project management role.

I from thought ideas third with outside were industries that gaming helpful. also some of work brought party The they

relying not at on in years. taking it's third Penn, starting We're January those this on project XXX% out we're as here though that Xst. party So, internally

guidance. costs So, and are in down quarter we're reflected them those winding just our fourth

Timothy Wilmott

calendar we begin to that highlighted not we and wanted anything in mind was why, in year, Felicia, XXXX execution. it had in resources see we reason bring margin. helped our my in the Another third could, bring more get as here the Jay we probably We would turn in the of in that party really third the improvements these speed period time implementation to if in than have party, wanted else we didn't so to these

my we in to outside bring So reason mind in that primary that help. an needed was the

Felicia Hendrix

And in going charges of Okay, through also a you accounting you kind changes. to B.J., Thank is just that's Tropicana you the took mean, Trop to impairment actually had like footnote But and of like you. I just plan. in for - helpful. to the or for ahead is the your - the was that because seems Trop that at some walking us some understand is want NOLs other of I through related release, that related it

just that ... So understand to trying

William Fair

And of was as to another individual ended one - having of into allowance impairment unfortunate was valuation of the the of that result, deferred allowance. the a that down - reversal push the when result Again, got we reversed, up when the properties. element tax Trop

we And the acquisition of of which as so, getting of that the part goodwill. booked at time up NOL had acquisition, Tropicana, ended had an acquired ultimately the the as we the

a but a it's result the the impact deferred again, strictly reversal. major to treatment, tax Tropicana of accounting allowance So is

Felicia Hendrix

a so the reversal doesn't holistic of it But and OpCo, with do Trop was of structure tax allowance deferred had Okay. even just PropCo the to though the view. kind kind

Okay.

William Fair

properties distributed well value. the out - the book Yes. that to gets It and increased as gets that

Felicia Hendrix

Okay. from Or we in And quarters? will is it? anything coming see this other this

William Fair

This is it.

Felicia Hendrix

thank Okay, you. right, great. All

William Fair

Felicia. Thanks,

Operator

Our next Morgan line the Thomas comes Allen with Please question Stanley. proceed. from of

Thomas Allen

Can now just getting that? right granularity that just around we give a you talk little a e-mail more I'm about you're expansion. bit Can little opposed Pennsylvania - saying to talk the an bit?

Timothy Wilmott

We will, months. Tom. I'd and of it been has to last the who Eric over living breathing like couple Schippers, Harrisburg to turn

Eric Schippers

XX% expansion ours completely Thomas. this on And flaws it for iGaming, passed XXX-page protective a mainly, unprecedented, some suffice night Yes, rate particular it. significant Hi, it there's Senate zones in and to which tax had sufficient from of casinos, say gaming. the the additional existing bill is last the in that lacks

got rank file and debating night They and the of issue on. is last hands their they it know honestly the were what this legislators house voting didn't in most So, the morning. late

real-time to now. right house this have But it's see on to floor how going plays in out. the we're So,

more come that to on So subject.

Timothy Wilmott

of is interest a There's say, and it it's Needless quickly Harrisburg in Thomas legislation then moving now. digest a real-time approved right in had for points the unfortunately, a provide what we'll and understand today through chance we what to night. lot be And the see was lot time last had that's haven't different and us house as of ourselves fully better to more to this has this But of legislation. not on process. we vetted a happens commentary, through that, lawmaking

Thomas Allen

scenario real what follow-up - you been think this rational like been long will I Eric, to discussion be? And of a this I do my time. will minds and I prevail feel is, guess it has Does on going if they has the mean, this mean, do, for

Eric Schippers

been has and there back on of ton So, this. a forth

And a situation to authority you over months. its solve to the fluid continue crisis last the house didn't senate been and know the budget As the own. governor to many the want to frankly, cede on it's very

just quickly. of let's this pass was there something So, sense

of like chance to the the even XXX-page review didn't get a I bill. said, many So, members

that cooler as going in is the have we're So, some we're don't hoping passing end house heads up and digest that will on what dissect this and hopeful. time pages additional to all of contained right situation the If they going from here. to prevail where out floor we XXX the to weigh for we bill. this, Tim remain in they'll in to now. can't of have they But said, the figure given you to the handicap our I go options. We're urge fluidity it really

Thomas Allen

And just finally, are attention there paying we any deadlines should that be to?

Eric Schippers

the have the So, casinos satellite option host current by passes its the host the bill the for prospective - out. in local municipalities, would opting communities the form, if the of local communities,

part of or of the till year that's the And hosting to facilities. If these of right passes, gray area see types to uncertainty the have who's the terms wait in who's end to bill the going we're this. and of around in now out so

Thomas Allen

thank Helpful, you.

Eric Schippers

Sure.

Operator

Our question of Merrill of Shaun from Lynch. line Please next Kelley with Bank the America comes proceed.

Shaun Kelley

back industry the and being whole the because, and gave guys Maybe, of guys. wanted margin you marketing about some more the talked initiatives aggressively again just a presentation morning types lot side. good in to specifically Hey, these around I'm that I of to optimization curious go are

to curious and back kind and revenue impact opportunity when much that start you do can pulling how promotion at from exactly you're what of going look So, you like would sort do of of of you margin the how seeing opportunities, kind up you some that the marketing line? contra think different on show of with to - that's since

Jay Snowden

efficient much trying do proprietary marketing with for again dollars nature. out drive we business more take and Shaun drive opportunities It's playbook a we believe the detail. getting there's cost return higher us to avoid of a spend. that spends Yes, and feel in to is into We

to So, specific each to categories. specific It's it's different market.

So, to leave I really there. it need

we a stable improving margins time to margins. a where continue market bone. meat this really more point assured, from see focus good everyone something for hold. there time stable. maybe two, to and and at on allows take are that to work finally been of you a is that your certainly It's we've because initiatives EBITDA a Revenues on that It's doing improving outside or promotional like environment for we a at rest think here on is Penn Just nice the this hear we're long to

Shaun Kelley

it. Got

sort meaning like who where mention aggressively property centralization you direction, of Okay, it to a operators some lot we more Jay. obviously, where for and opportunity Penn? on let's just it done mean, going a of And and recently the market do at is I call like that level of is is is you centralizations at Is mixed? you a or kind a part Or centralization that of to like back that driver the - did out then room slightly little spectrum of of maybe in do expenditures there's including sort coming a initiatives. more the that bit procurement or the Caesars have know of the lot some think kind of of here? you're lot procurement different a the of lot

Jay Snowden

with allowed the properties I largely biggest We done I of or just this Procurement VP level a We've We've Drew our a hired the background level. procurement, opportunity. to out, we're local of we Misher, In of of of the not we regional laid do handle largely exactly level. that think, a need at Sure. rolling here new lot at a outlier. corporate, few consolidating in what riding company corporate a this least other a an and procurement at and is, up the five doing resources. to the area is to And great

you XXX that even a can so, there's that we we in or for - one opportunity think is property our I business, at take of advantage enormous There smart of really out the And gave example. level, of list scale. price more haven't way us. an I our a leveraged we though very driven we've

that do I big time us. opportunity so, for - and it's mentioned, to as a again, that's And it's

Shaun Kelley

lot. a Thanks

Jay Snowden

Shaun. Thanks

Operator

comes proceed. Macquarie. Our the of line Please question Chad from with next Beynon

Chad Beynon

to focus on Thanks morning. good in the Hi, quarter. taking for revenues questions. my Wanted

about guidance $XX your line, where million increased exceeded that's by you on revenue by. You and the the annual guidance

Virginia, You West think talked about than what excluding growth better significantly same-store which were all X.X% we thinking. I was

just guidance revenue, from Increased the impact to Tropicana? Thanks. at Virginia? to versus impact West the So, assume that the X% no quarter of trying about XX% in bigger quarter, on fourth XQ. yet in your Just guidance the kind forward for outperformance a the in does think carry third

Jay Snowden

and important Sure, Chad. a - Look down just the Tropicana at number. very really lost change we want we it's didn't the Coast, Gulf that the the uncertainty it is fact weekend to

But number Gulf out conservative. it given is into play safe and as have there gone wanted we it keep Tropicana not other has the this where some to see the much play it lost science up is how uncertainty. than October, it then we and out. just the So and into at where was going it quarter recover point let's and the Coast make properties If ground likely things in just

Chad Beynon

kind the one these maybe implies way that improvements, a market greater synergies And great. of then a asked M&A, kind that and continue M&A. broad asked of improvements If kind are just to different on That's Okay, hit helpful. margin of earlier. goals, on than your

So, little you a repo down M&A kind debt towards allocation? versus with and the potentially bit case your if of the shift more would respect pay share to focus overall capital that's

Timothy Wilmott

think M&A or this it's - with I margin program. interest lessened don't improvement in Chad, heightened level is our of

look different We as there. lot at assets and collection are for is we out assets, of things a here in Penn, is Canada, at There on individual have in this things current we us assets a mentioned out front going of there enterprise the of that continue - to there.

gaming not And So, and But this don't for it of to say improvement something we years, always our program we've M&A or have here the I may is same think It's to level to I needed that had activity. grow say I states lessens still try margin that appetite would as business. appetite advantage we can that limited. may we take legislation of. enhances at do, not of that look couple next our it's enable would or

shareholder opportunities And so, have to and to all value. enhance that, to at you increase continue look platform with these your

Chad Beynon

Okay, very thank much. you

Operator

proceed. Patrick Our next question line the from comes SunTrust. of Please Scholes with

Patrick Scholes

fourth little you've you just in Vegas did the these, for pace you you give were but booking Wonder morning. how have seen. good see mostly, and quarter, weeks specifically significant stays XXXX, more obviously, that the I - for how Were cancellations been couple trending if for of for has assume, can Hi, a bit past on XXXX? color cancellations

Jay Snowden

cancellations mentioned goes had comments year-over-year, we XX%. to of I Patrick. it If December were my prepared that XX% isolated Sure, in to XX% the X-X, in those, November. of add increase in October,

it at into post little impact month first event. there'll XXXX, the though but still as appears it's So, going very be point, this

say Will in an for online XXXX agency cancellations also were out. impact that going play the the travel not? to exactly there would what's I or hard So, it's sure be segment. - it's in to going to largely how mention leisure

group have cancellations. business, So, any didn't we our

leisure up quarter. cancel that that plays held business has fourth to it see very block how We'll It's in in casino well. the out QX. really Our decided

Patrick Scholes

Okay, thank you.

Operator

the of Greff Our Please next proceed. JPMorgan. with line Joe question from comes

Joseph Greff

Good million morning is or related? regard today's will how With margin Jay, is to earlier you cost hit think everybody. there initiative program, your new systems CapEx that Where mentioned I much or P&L onetime investment. of that versus of and OpEx-related $XX

Jay Snowden

of probably CapEx Good Joe. CapEx. that XX% XX%, that majority Sure. The of morning, is Yes. is

some throughout of in to year XXXX. in harder initiatives either on XXXX. that OpEx that likely that roll in is or bit going well trickles to first be the perspective to through of are of will But little most that spread hits capital fourth any 'XX might a the get early at. the So, half of from There quarter as be

Joseph Greff

on just the $XX that Got annual based the you your of EBITDA, incremental presentation, the you I it. incremental margin based that way on million it's And thinking on incremental is, of contribution this have EBITDA slide think neighborhood million about $XX to what somewhere targets the here? from are the in

Jay Snowden

we ranges, Joe. provided Yes, the

making revenue the that you're can you you growth, for get can assumption So, to I - think whatever number way.

Joseph Greff

Thanks. enough. Good it. Got

Jay Snowden

Thanks, Joe.

Operator

with of comes question next Please Brian proceed. Bloomberg. Egger Our the from line

Brian Egger

morning. Good

the So fair is just you are you targeting, your points of part margin it that? reassessment go of assume - spend margin to marketing of that biggest XXX the sources is to the to the be that to back various reinvestment expansion going about, increase plan basis talked

Jay Snowden

long, on grown for We've opening still think, I the the top much year haven't local marketing we've we optimization so on been so years, list perspective the seven work at six, that but properties were as the for average over level. last a a much of it's couple of procurement for given because portfolio probably per spent us handling opportunity, we us there. is a from time procurement at largely real that

opportunity so, scale step you a and And consolidate and leverage take tremendous your there. back purchasing when and you power, there's that your

the biggest second us. probably marketing in procurement doubt So, for line, but no opportunity

Brian Egger

promotional for mean, operational perspective know much efforts whatever you to terms number of their follow-up. easier your reinvestment spending this a marketing having duplicative to markets. duplication in quick on that an one a makes rational more implement competitors take back of I is way just efforts big their has assuming from this And Ceaser more and about in of of left a point terms Okay. cut I large that I'm decidedly stance implementation recently so in a speak? in formal to made it and

Jay Snowden

XX% has That's I over of we've been living ago cost to that minutes disciplined forever. and because few West number Virginia, it in on a and you're mentioned been other business. on as our always our right, where Pennsylvania a been very for been margin as around your We've slot long environment gaming Penn a high we've Brian. tax structure due at enhancing just states that

be helpful primary your enhancing line. it's organic got that effective. the It the is costs and enhancing The more top reducing certainly makes environment margins all so margins. consumer much So on on that you've think appear yes, competitors I to growth their focused healthy, some

Brian Egger

Okay, great. Thanks very much.

Operator

line the Our question from Katz proceed. with comes David next Instructions] Please of [Operator Telsey Group.

David Katz

it's does if I this margin for And in process that it that it promote have aggressively a been pursuing cynical, do sounds from prior this and on follow-up other promoting focusing more spending operators and want you intend. a that and morning. pursue opportunity, promotional the good question little of to as a makes enable not notion itself thought excuse what more the bit around just to that about Hi, to the it. me The easier but I perspective if and less, you bit are was neighbors that less? talking

Jay Snowden

wasn't to it's then and focused mean, for around certainly on thought now. gaming sort going the the with It process the that's regional competitors it and helpful. I if everyone that only being common are appear focus in reinvestment group that right yes, that But their more also of marketing spend, in, disciplined and marketplace sense David. the improving helpful promotional it's does around their be margins

David Katz

Or a in which to I you're you being what customers just ask technical regard. curious have there share customers? that's manner advancement with available you that that can of more on it how you're connecting you years is Is the not it was is some some the spending. I ago? to been elaborate bit notional Is may efficient can in data values? just with and analytics more a their notion around the if the And function of promotional

Jay Snowden

use we're is than like There up we to a and little it's and And the haven't All we past. significant the opportunity. to in the we a a here the that I in there yes, smarter above, technology third-party mean, is that platforms little it believe more were today past. yes, advanced. adds David. all I'd

David Katz

Great, my thanks for taking questions.

Operator

Mr. Wilmott, remarks. Please or time. your further continue at no closing are with there this presentation questions

Timothy Wilmott

we'll in investors into back or XXXX. on for that we probably questions to be look talk specifically, listening thanks note a either early Again, And quarter. about be with our sir. the We'll XXXX Justin together following February but earnings finishing very certainly you, prospects strong in fourth forward to XXXX you. Thank Thank with call. to our for have everyone B.J. third quarter up

Operator

thank your a gentlemen, call and lines. for please and conclude you ask Have you Ladies your for disconnect everyone. great the day, We today. that conference participation does that

PENN Entertainment (PENN) 29 Oct 172017 Q3 Earnings call transcript