PENN - Earnings call transcript Q4 2017 | PENN Entertainment, Inc.

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Operator

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

During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded on Thursday, February 8, 2018. I would now like to turn the conference over to Mr. Jaffoni. Joe 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 fourth 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 of 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

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

Timothy Wilmott

and conference saw Chief County, Jamul loan, Justin with Diego Treasurer, General San are to Penn we saw the about comment. financial of be XXXX. morning month to Fair, talk call and Senior and Las by a what Chief also where the our good first Also and XXXX of with what we followed XXXX with year will the to welcome Joe tribe Snowden, I'm the guidance, our is fourth quarter, our going you, Jay Public in be into Sebastiano; of going will going followed speak also Officer, metrics, with the reported talk Wyomissing the Eric our on we our with in Schippers; Jay who's from who tax quarter operational about California. bit me traditional the fourth speak some our National's consumer in impact speak Affairs, little in to Vegas by color and I Sottosanti. of Carl bit Financial to January states Counsel, President in new federal give Thank a that Operating Officer, code, our is the the BJ start Vice off to trends, my the call.

that Jake's share of net begin being significant and -- still But to saw earlier out revenue that saw what on on that XXth, consistent another you announced the and stock-based cash of impact and to me December that most trends that Pinnacle, the of get in due compensation guidance increase where than announcement we with close to meetings we going are fourth quarter. $XX transaction anticipated our we margins the a audience that it one we all $X.XX non-operational exceeded and had provide and Pinnacle of had Penn update give approval have shares. shareholders into in half EBITDA we XXth conversations Let the was our with saying net with well a The the Yet, announced we the as the second with just by said, in consideration initial in settled more and an deal recently that with remind to Washington as strong. as in XXXX quarter I we're the report our items. detail solid XXXX. remained that which price and we remaining of wanted the done on we're higher pleased on largely to you states to on going I'm require after the with noisy quarter regulatory and/or recognize December revenue early cash FTC everyone, can consumer transaction. Since solid of quarters and Pinnacle of work to confident them

past with part our the also people XX contact and of the quality mention Corporate will our couple Proxy on in see in to of the occur expect the side Vegas properties properties Las worked that and both should days and shareholder and and next the we to And with with the side Center. impressed We've visited of company be the Pinnacle bring how spring. that SX this also and the of to days. a over leadership all with we've visiting come with we be anticipate Service Penn initiated new to talented we most side discussions January and You on the continue their I Filing team Penn the the month the quality of integration together soon began with his the and spent Anthony of be two planning companies of work also to acquired vote must

confident the synergies. $XXX with We continue be in million to very cost

operations. million corporate from centers. Las combination also XX% than centers XX as come the still from Nevada synergies Over of Wyomissing, corporate that sized. the combine with more significant that the Vegas, we $XXX of There's will expect We operations the come be XX% the revenue the are of Pennsylvania Pinnacle to will

to to our Program We have together represents gamers a My on Rewards lot the on million bring the continue with two XX the the who Program about it have been aggregate, companies playing of Choice X with side to months. In Marquee the Pinnacle active do side. Penn work in last

in So, these Category think X final see are to be work believe are synergies additional working XX. January. update that are the right done, revenue to first months. flags location our we will of investment. to We in eight to four location bid level we're the We best licenses under-serve financing for want Maryland along this the provide there's Pennsylvania our meaningful. awarded we are the Pennsylvania be of all more quantify there this as with still the a get in before with much transaction. financing There still We is certainly occurred -- information Pennsylvania. Northern the but where Category location $XX.X State we make the determination next of the and of County, the million other Interstate -- placed placed the over wanted on that distributed access that market our these in licenses is to where York with of into his cover license something in flag and won I State also X BJ

inclusive in we're take here, returns the in X I three and impact call our of after the Pennsylvania will next going Harrisburg, assure license place location. want solid to license Grantville, investors this that for new up fact, happen have at from But we National to what to will round Category of Penn In Pennsylvania. our get

So, to call additional about to over to before landscape but final see With this where that, But the turn Snowden. come, our competitive I'd more may we good very be want are on to make like confident Jay returns get we forward. going to we the investment any ability determinations. very

Jay Snowden

Good Tim. everyone. Thanks morning

quarter quarter when our quarter. and really growth our hear fourth that to continue of will Penn to largely we reflected did was solid margin grew covered from third cost But earnings sales excluded. the even release target is also that have when the our have margins including year-over-year what you one-time Charlestown we on fourth the nearly into improvement a again the points cut of concluded costs that terrific when us in basis significant the impacted and with guidance. not and including third-party consultant shortly. we've in always when the XXXX experienced the EBITDA XX% to that X% that third were and same-store our figure flow-through the at that in were healthy We confident guidance XX on year That remainder Similar non-operational XX% sales consumer. approximately a Same-store for initiatives the quarter, the XXXX. the back through us noise, baked in X.X% we revenues and outlined and associated aim you'll BJ was in flow-through, the incremental While

quarter specific fourth Some highlights.

year-over-year at our and Our sequential over improvement showed facility Charlestown QX. revenues QX net

on lower and the Jamul remains was business last cancellations as years our markets transient our in and volatile of significant to first well perform that exceptions at San the in market-leading clean coupled but severe, end unpredictable been revenue year-over-year. XXXX in really growth rate December, continues Kansas Our City -- and of over quarter. with fourth XX%, We property growth of unaffected, strip our X,XXX The and and the certainly Performance those quarter continue to sequentially well. the has in it Diego over showed The over closed the few the the the points with margins. into four quarter, year over has momentum four in in some several the the very since less and anticipate convention of to revenue supply of and due Tropicana, challenged growth improve and face a properties group and property fantastic continued true time. similar we truly Massachusetts tragedy. EBITDA than improvement year-over-year our a promotional first the We've months. comp a Xst the hotel largely where team experienced plus new conversely trend been had management south Vegas operating and largely carrying the to both last our into October meaningfully Las relatively segments was margins. fourth since with basis opening Ohio, out XXXX more EBITDA other leisure improved of XX%, of very aftermath travelers been which backfill -- has properties has all

heading several demand some Low were good pent-up from the in the mid-worth feeling the and over the or across us extremely [ph] Board, XXXX. confident our saying, coupled the and into database properties of once But XXXX and Midwest QX. harsh business last in we're be unemployment in Now, two-thirds per have quarter consumer January up, our has quarter the particularly last weather visit experiences a unrated across fourth story and business high the record a values, quarters the year-over-year. -- see Certainly of wages, February as weather very frigid market and good segments first February continues the end grew that and a here year-over-year and given very to the later and similar eases stock at spending, early in March. gains in and nearly healthy couple with trends the rising March in the years, perspective, we'll Northeast was U.S. Spend our at goes well. story and been but without home

turn So, walk XXXX to I with over it to and through you will QX BJ that guidance.

William Fair

few to items for notable Thanks the highlights Jay. would guidance a other our as financial XXXX I provide as few well quarter. financial a discuss of like

no release. on everyone Our made of remind assumptions nor closing they being a of the for the timing combined are the company. revised this to include assumptions and is guidance standalone of underlying Penn guidance, do transaction, guidance the that I'd the press any Pinnacle like found are page five for

$XXX billion, XXXX, million. Master $XXX adjusted is and $X.XXX to after EBITDA payments adjusted full anticipated EBITDA of of Lease For million, revenue be our the

adjusted QX, of million. payments of Master and after EBITDA revenue $XXX of Lease adjusted EBITDA in $XXX Specifically million, million, $XXX

previously our As on be last $XXX XXXX reflect the the implement Jim year. our amount adjusted includes call. that Maintenance for figures to million -- a expected target, we mentioned CapEx performance that improvement before, achieves associated plan with disclosed the This to initiatives. with million improvement is the earnings end of our EBITDA merger margin margin above, $XX higher disclosed

maintenance XXXX. in for continuing cap Some to is of of from may rent million; $X impacted by amount Approximately be It million integration capita projects $XXX this also QX. QX. transaction. $XXX be million our is Master per the incurred million efforts are expected $XX the Lease includes Pinnacle forecasted payments in

cash this satellite between payment the be determined. And Lease the was prior which of tax lease X.XX that $XXX to at year I'd X.XX. last end yet have As million. our of like contribution our rent of reset end our of coverage everyone adjusted take X from are million this Tim primary always, was taxes the forecasted net taxes of that debt in our estimated the is mentioned be Category with rent Cash in any free be million, and lease year, the will in remind EBITDA quarter. is $XX Village. $XXX $XX XX/XX/XX, and has the year. the at Master traditional payments for end We agreements of as at to coverage generation cost year forecast the to flow will the year met. is debt Cash XX/XX/XX. flow not rent cash million year, earlier, The casino project cash first mandatory million at year. due to this as anticipated hand the flow after million also for easily Indian does the capital assume is on $XXX payment Free And year Pennsylvania cash year -- versus at QX. our and our -- guidance million rebates interest in due is to expected Jamul covenants $XX on for Cash $XX difference free the at anticipated the effect

-- and Job to Tax will of wanted I Next, the Tax the of highlight projected a on Act and the the few Act impacts Cuts Job have Cut company.

a our repatriate made Canadian $XX we approximately subsidiary. previously to held million First, decision in

rate will legislation that the which We've a be year, in impact have the incur over the an repatriated million over will result of on but tax a divested in decrease million. transaction. associated company million transaction. the sale the rate Pinnacle result eight estimated alone. The combined for anticipate tax Penn also will approximately in leakage reduction tax that $XX to asset leaseback will of of amount, we post will years. to and the XX% with We a our We of for next The tax the minor to annual assets -- proceeds on our in write-down result $XXX benefit sales annual the upcoming impact $XX not deferred of

been evidenced as of the the continue been although Unfortunately, provide by on an proposed and in XXXX. to the an -- Loan amendment amendment the Term the tax transaction an EBITDA both as agreement other and hope is we the impact and encouraged the have and to be financing structure The is current is our Pinnacle in between on want financing adjustment is the this and Tribe Master call, week year-over-year adjusted results. had B with operations continue Term of however, reached said fully accounting amendment to B last our funding And Importantly, fully Loan approvals proposed respect signed, to support agreement strong of within does will close is update and deductible obtained subordinated. transaction not to income rental financing purposes. until an the default improvements objectives status strong by be the next property Jay payments signed. cash. to transaction. not default future we in any the signed finally, be the our the and We've against brief for has loan serviced. transaction, received Jamul, vendors. the although structure and Lease or the or and of us our has is concept a on our On I Loan we for finalize not Term the met finally, And efforts. and half been We've prepared review had the for the in in been bank being earlier, loan second the to fully reported then C group the the and With

the has to with the Tribe provide that agreement resolution in work are like in no that, I'd The I our record it reiterate extremely does turn been loan remain agreement us that fourth assurances amicable amendment an against the that $XX.X committed signed. license year. charge disappointed or that assume be Tim. the achieved. not one impairment We We million guidance not to can With of will our solution for has the back contribution caused will And the to an any uncertainty of from coming EBITDA management quarter. to

Timothy Wilmott

Thank may audience that you we're BJ. Operator, any to take from the be questions out ready there. now

Operator

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

Carlo Santarelli

couple Hey, this the about of And obviously, update in had you status half for that provide an everybody, process Rama half be? just to are But guys -- what the how should Could of they Casino back of guys Rama good housekeeping in about kind somewhat year. you talk that Casino morning. the is could will the the items. -- you think periods? future first we for as I the release, guided and a

William Fair

included Hey be submitted. -- is the the process. continue modernization that's continuing of that anticipate on why that schedule second in will that for they Casino OLG applications the to they the the previously timeframe outlined a with Carlos. the We that quarter quarter Carlos which is which the identified bundle, that means know end this that bundle of be that is The been that end we've have [ph] the We we BJ. second -- for have and would operator or their the removed. that will they new is by selecting do with that middle Rama that the

Timothy Wilmott

Carlos we elected bundle. that That's why expectation our have central And not have we bid in to guidance. that on

Carlo Santarelli

this, obviously the to you status then on or give don't if your in Bill Charlestown. And wants for what expectations Could us handle Eric's but know making kind guys on of Virginia progress. I are to there seems around Understood. some be impact whoever update West Senate XXX

Eric Schippers

by Judiciary committees Committee it's Carlo, voted hey first cleared hurdle; are like to House years. and the like fee be and ultimately But we then go Bill, Yes, provides tax XX% both the payable Judiciary additional five has chambers. over the on importantly, where which we now Senate Bill the through and Eric. important we $XXX,XXX It Yes, right structure license two the more a a still and of rate namely Committee.

Timothy Wilmott

States. the things sorry I on the Carlos, the betting of sports things United one want to did legalized comment with in Carlos And regard potential of -- one of the to I'm

As legislation they're of we're including the expecting -- many possibly everyone U.S. Virginia amendment tax. are are and spring a or knows, take as the from going to advantage states speak Supreme we repeal on significant how West of ruling Court contemplating

the other Eric followed to that, sports West state level. make are our and take the suggested, be level potential footprint soon to of of at strategic as currently in to states, have the closely of West Virginia we're different sure XX gets that Given expanded model very betting number by by in happened the and being legislation legalization economics states. that pleased trying to at state-by-state transaction, this what's been level by make full footprint with is sure the Virginia very something advantage a we're approached that Us present watching the Pinnacle with federal we partners the in with we're and

Carlo Santarelli

wrong the in mentioned tough that the you've you for there south I'm just in point, one Tropicana. of And of from have a little comparisons have you. of could year what remains I Tropicana with Thank property and what the relative about could quarter said there? you are you Jay market might more if are added then on you want thought And final of Understood. some expectations when talk from obviously, the XQ but XQ, XXXX the a end fourth about acknowledging the obviously one. me the correct were strip full amenities you just bit very you additional XXXX, now promotional the some think your that looking for total if I at was same that to

Jay Snowden

Sure Carlo.

the very Conference of mention with be a somewhat So, there what that held low we'll leisure fine, in did continuation first severe things, more actually in more was yes, on transient softness [ph] up the tough experiencing than quarter customer. but as the Though I fourth obviously seeing the AG than a of we're we're side promotional a quarter. some for on Con seeing comp prices January March February year-over-year. is

better So, looks seeing QX see year the this of better is point we can QX what we're what the and in for than at remainder than QX.

So, to to see up be QX comp, answers QX the experiencing it's But and currently QX in trends we're from that like. I'm QX I an encouraged if what QX your versus and what today but determined still QX will question. we come for look easy

Timothy Wilmott

work were flow between bridge And was summer the if see that we remember the Tropicana. we the Carlos completed disrupted pedestrian fortunately being see of XXXX, XXXX, you first MGM should should favorable didn't we the so also traffic of in pedestrian of closed construction And and because year. the bridge that by half in we last

William Fair

we're doing QX, back of to where still we strong in Tropicana And were solid September quarter opened coming that. had in if August and with tracks go July. you a We we and we late really after really obviously, were on came at Xst October a turbines the off just and Carlos off

visitation lot been the a assets, the of performance on some softness but the has side. with and of building standalone rate noise the basis Tropicana we're by a on because the in everything at new the there's impacted happy side of So,

Carlo Santarelli

you Great. guys. Thank very much

Operator

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

Steven Wieczynski

guys. morning good hey, Yes,

little look I I your net-net, differently. of property at about still Trop if guidance, look a understand think I it? at good that I if a your XXXX, Jay Is you the [ph] guess that ask a you -- you if could embedded you question for assume kind what's I way be to So, will up in bit year-over-year. bit if fair correctly is think Carlos'

Jay Snowden

don't Again, visibility through easy into seeing complete Steve. QX. an remainder is I It what the comp and we're by have the of offset QX The in the I that is think what think be QX largely and QX. that assumptions but I fine until in but XXXX. visibility determined your going customers continue into that won't and I are And year, rates by correct we're is the to dates. softness for QX to ultimately, and go don't I on Tropicana have it will point, be look we're QX -- closer transient at growth looking at we leisure are today, But at that -- those I seeing this get what cancellations in happens

Steven Wieczynski

think Do them Can about little us help that what saw getting you have have weaker? in you about a of terms you. -- thinking And year, just in of you guidance then for help can in terms Jay overall just think in more? the the just for of about from us quo Do bit stronger? another your that getting a the how year. them you little status got Is kind you're consumer you your Okay, XXXX? and a question maybe bit general

Jay Snowden

Sure.

most unrated the that and at properties, Midwest great the it We've very in of experienced continuation and impacted the earlier, our you'll the a QX and we've the I segments of concentration [ph] When high of such with the trends If our assuming mild tend the side, revenue assumptions pretty have mentioned today, health with been at pleased the what significantly. of challenge close on see I high a you is we transaction continue. the the same-store XXXX. growth. we're because think of a the Northeast. the very have obviously second mid-worth look as can pleased a And and database end been winter, consumer, of we growth We've to be at weather the in half

to we out, remain a strong. of do but So, anticipate determined it's the as bit to for soft consumer to is QX be shakes year the start, that how going a

Steven Wieczynski

Appreciate Okay, it. great. Thanks guys.

Operator

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

Felicia Hendrix

Good Hi in in Vegas throw morning. Las I'll thanks. too. one there

the relative to the million, Las $X Vegas if much Las million you impacts. highlighted Just break you release guidance that of coming that from out hurting of guys and operations, directly wondering you $X said kind Vegas. was impact that and of could how in was of was I just hurricane

Timothy Wilmott

majority it's Yes, that. of the

why -- Coast not there the we in two-thirds, think is insignificant which impact of it more -- in kind of Certainly answer added Gulf sort So, that Nate. Hurricane as from was of that a Coast table. the is it of at than Though in one-third the way Felicia. question would I Gulf trough was are impacts properties our

Felicia Hendrix

just expansion you more to all you. to you us moving Okay, give clear you if say to were going information. And are need Thank the expansion of you and were mitigation can of great. then about kind that? take first more at impact thinking net information pretty Pennsylvania. how of before Pennsylvania, kind that of would you're know then you in think you But the stab about a you How

Timothy Wilmott

Well, looked down of XX. way locations different around certainly Maryland all the Interstate number of in city off the of York to Felicia, have the at and a we border

have X have the slot We a in to Cat location. of machines XXX minimum

table and games. think XX XXX a maximum I of

and the ranges we're whether XX-mile on And the at to depend all as today. our -- circle So, of to the competition of bid. based what west protected that first are we on there's going is it looking those be still have we east going our to winning

those a XX-mile most Category Category at that come impact of are we X, Pennsylvania the that National. and our look had collected I from know at over Penn now protection on outside X that's X, spring, provided we we by National, on location customers our Category radius. right we the that certainly customers and as should thoughts Penn So, know the probably zone late XX-mile and licenses. fully And think have where We

we're business all mindful location County and County scope where Lancaster from in investment. So, coming terms that's of and determination into the of our to York and on go is final going of very and level

Felicia Hendrix

expectation, about just And you and was confidence but Pinnacle wondering give then color the properties $XXX did bring you you the at things seeing million specifically so are wondering just that? incremental And some guys to there some -- Okay. taking that I'm Penn if maybe gave operationally number. the that -- benefits can could talk And generate synergy just weren't and there, in like take also that just legacy moving you of. then that you're I us things from some advantage properties things Penn Pinnacle that that to that can to you they you transaction

Jay Snowden

areas side we more and think this the part They as better impressed, efficiently the we've Look but second are practices. opening the answer the Penn -- differently. Jay. we do. the things do better lot in the the quality Felicia where is cases, than and of makes Tim a to think areas, Pinnacle assets, just In very maybe decisions mentioned yes do comments, just the or quality things of question. some with of many in we great companies, a two we been on is bit the seen of the we little the We've people, quality

a discovery we're our -- well So, made as the tremendous no of amount we've we properties as on a we're in trips see to the corporate very in-taking information we're all is and doubt process, that the what encouraged by offices from fronts. this

And has will a $XXX the half to well with think we've of of large the the million part, We know is from out regards to nothing composition answer a you laid So, just -- of yes little first really two synergies the of over as publicly-traded as and cost part. overlap previously. second changed companies. gaming the come between that redundancy lot

in but had, progress We smarter either opportunities in the to of think can -- we combined, of job more and had there's the of we made best the to sides. how our Pinnacle we property company there's with of our majority of then the on regards things on we do area where the to spend today. that's from. be be better company to that's level the remainder can on cost much there's the to you coming be managing a And does dollars. combined scheduling there's So, sourcing labor gets much just side that side both marketing lots as as our that than to Pinnacle Penn strategic marketing the synergies. progress It's made effectively not practices tremendous think also do procurement. and Penn And going and side

So, million changed the composition those buckets. the the changed. and three haven't big side hasn't Those are on cost of $XXX

that hear the from companies. of there's we from to earlier better And feels on import database is I going be to to the think that we also initially what customers for amount have many and and do opportunity this believe cross-market both Vegas. Las of database these to for business visits, a continue you Pinnacle thought been from -- real synergies side than tremendous on revenue ever the you'll visitation us opportunity business heard because positive a Tim real Penn beyond that there's what the

there revenue more So, will months are We're but real be some so far. and into we're two to process, opportunities the very encouraged those come.

Felicia Hendrix

Great. in expectation could that approvals And risk -- like terms state-by-state half -- for to the second front anything closing? of put on are jurisdiction push could the seeing that you your the

Timothy Wilmott

working our second the Felicia stage the XXXX. we're us in this close we and the half and with that going of to FTC that Myself at nothing and on been this indication this not gives deal state is jurisdictional have with any legal team approvals these Tim. compliance see

have with a our and the meetings appreciate conversations certainly and They Boyd for very productive been encouraging. to states facilitated and had of over divesting has upfront four we that the solution really assets as All that that are going of the FTC well. the conversations

we're answer conversations no having the So, and meetings. there to these seeing no, as are question we're concerns your is that

Felicia Hendrix

so Thanks much. Great.

Operator

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

Thomas Allen

morning. good Hey,

that future about in How reap savings over of you're redeploying are Just the you that the in going terms tax now. to cash? thinking

William Fair

the whether to at out we cash not potential shareholders. look our is got viewed taking is the post there have cash that of really we'll that M&A Thomas leverage addition down Clearly to to back it's that we'll the flow opportunities ability allocation looking then to there, the a different all how always levels capital return entirety get in And other it perspective that, than the think an from -- like. are of we'll to the BJ, be I post-transaction, be extent no what on it we've we've this be decisions. a or to

always generate So, to as of incremental cash we will continued we've the -- free on amounts substantial flow. not cash

capital Our how allocate changed. of that we determination hasn't really

Timothy Wilmott

One Thomas of Tim. is the this --

with structured have excess cash, to the a the it past start or the with gives currency, the we to that moderate about in to a has if One we're it of is like quickly shareholders in And a generating the level that that if best very cash allocators of can we're to said sheet to Pennsylvania. and can't excess outcomes our as us close for we assure returns as willingness flows -- ground-up the of the ammunition the talking prudent leverage will gives very the acquisitions capital Pinnacle of down how we did cash. appropriate to like very tuck-in be consideration continue of we in find of us pre-synergies be Penn the we the at that's XXXX, of for we grow and past, balance investors continue return we in shown use worked going capital use developments

Thomas Allen

a basis? on now you the of Thanks. trends Charlestown how MGM from year go-forward about are Harbor, a that opening -- we're Thanks. Helpful. removed thinking National And

Jay Snowden

XXXX lot we're Sure closer see we going comps start year-over-year assuming that Thomas. a to are flat Look into year-over-year. that a to

obviously, what MGM we're So, now We National the to in in XXXX would we operation. XXXX. storm saw high we net from second the significantly revenues that -- improve our single-digits and trends well anticipate down the saw weathered then XXXX, Harbor's of we quite in full year

is So, of to a year. this sort what for down about anticipate low flattish as think we very would it single-digit

Thomas Allen

you. Thank Perfect.

Operator

Jefferies. from Please with next proceed. the line Katz Our of David question comes

David Katz

everyone. Hi. morning Good

Timothy Wilmott

Good morning David.

David Katz

maybe where you and of do volume in or bill levels commentary segments Have ask. tax reason bit consumer that you know may see improvement expect be of as a they're positions we've specifically? economy and you've of to what result to from seen any have about the and wanted I looking you'll just new that receiving the of quite a different in a that us I any the forward the one-time given consumer bonuses. beneficiaries seen

Timothy Wilmott

David, just I'll commentary. some turn this to I over to have Jay, but want

in states. As a New let resident this of I'll favorable said, New and question. But code New Massachusetts, answer to certain York, of tax consumers the the other couple new Jay Jersey, State California, is Jersey, that a not

Jay Snowden

David know don't the I answer to to would love Look question. know. just your I

that You argument of operate, to impact. interest can should strong well core rise states That's our certainly rates a in be consumer another the income. benefit for as the make on slowly majority there fixed where positive we factors, some a contributing

But and XXXX. extrapolate frigid been that early year. first so will weather. tell. hard of It's time from There's just half in the in anything a month a seen the we've lot so it's to So,

to color second I I'll think first to quarter call our in can have our respond I your on on question -- late that April. more

David Katz

if on any can, But that -- that you to Got part whether end the and be two, the enhanced combining company's of again the expect Pinnacle side. on I of detail to just possibilities have the you that? thought might and an what that might there loyalty something investments what the be around gain building any like program to given sort database and in from I you that Jay, accumulate follow-up. know And of you will gave terms some it. by what marketing

Timothy Wilmott

leadership Tim. start of and an one our Marquee on the of both two over integration integration taking My something The and critical of Jay. the to with turn I'll the our today. both of and is -- current working most Choice programs companies even elements and that's improvement this marketing David, planning it are is best forward moving and Program that Rewards that probably I'll of team

how of is So, we and to the the that come assure program the that that you resources that's best to TBD, come of and when energy of lot there integration be of there details can making a together of take be with out this advantage with are this on a going but to sides transaction forward to move lot sure I the going both both. of going are and changes of close

Jay Snowden

and Marquee more compelling were mean consumers both -- question, to general And about They're greater thing My It we things the it it I groups and we're the on we on there's like we program only more the best and practices always many and summarized together and learn, to add program would things and that Rewards we well. sides understand, the of responded I well goes are that unique more there's on our we that's about is of now the thought was terrific both -- Yes, think more right talk feel. side Choice terrific. we've where to are Tim sides. very aspects as we how -- that which getting to that programs I very back the Felicia's marketers the

right come exactly is better that viewed it to as the if to a either when do going our closer what's have toward going that we out to this ready So, is mission rewards certainly communicate standalone we're new program than of today of is programs we're QX. that's and what that

Timothy Wilmott

one I'll add David thing. other

David Katz

go ahead. Sorry,

Timothy Wilmott

Let me Tim other just one thing. add again. is This

in that extract have Boyd-specific to the through that the of One to we're now we of their database get the database is the into Pinnacle right we we details the so that customers work through things working and as don't and real looking lifting their have Once is information, some that clear metrics done. of our the start work being and database. visibility heavy database, information That then toward the out, that. we to do at we'll FTC

get of to going have but dissemination that's come knew more -- to we we'd So, we things work after into information the Boyd. through the through, to of over that we this, one

David Katz

in and to any Right. in theirs? there follow-up to And database was indication that you quick how able those between Are is as your we yet? those -- tell just my much yet do overlap have

Jay Snowden

David. not We're

database For this reason the view their not we really stage. quite we Tim that at had frankly single a and have described, can't into

get the and we of given divested the through come, to So, months the first FTC information we properties. to have in will more the have scrubbing but database the

Timothy Wilmott

overlap will some we Kansas That's can statement. market, and be City imagine, in overlap expect you As a St. general Cincinnati some the market. in the overlap in there Louis, some

we'll answer that's have us mostly I Rewards coordinate, do combining think and in that Marquee But, work to us, order Pinnacle Penn probably of the again, the that properties, for with question. we to for Boyd new their database. has rest to the customers not have with

David Katz

of Can is see am or about And I'm say it. adjust basis. something which my its coming SG quick in the ask I a a to I've degree And really which a asked to more the business we make typically in should it driver model and actually business? an that Universe chips I earnings to think about give Can a how virtual in a a I a and at actually and hollywoodcasino.com strategic comment we can the ask drive just driver point ton on past member ability year one does which one as of signed-up sorry. quick I result that is you regular and as for a And sense.

Timothy Wilmott

database, launched I Yes, and social how was SG Universe to answer that. to and here's it Look, hollywoodcasino.com platform -- offer that our product we gaming creative When our would I a David. earnings.

it value how visibility better be able the to visibility information more be the I'm revenue time synergies into we on earlier. in this unique of categories we'll it as some versus more one not comes acquisition, side. say say have is is, But as in question Tim that was answer database that but I are when overall? the would we'll synergy we part customers about We something the get that's certainly would have so place your and as material of our I revenue we into that crossover talk And many sure would database. once model and referencing

David Katz

it. very you Got much. Thank

Operator

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

Barry Jonas

could namely meaningful was And it think just maybe like it's Jonas. your maybe thoughts versus I plays impact little book the out. more depending betting revenue indirect on say sports hoping a how sports Thanks. properties? upside to to color more how be for get you direct Hey, Barry on from this Penn legalization; visitations on

Timothy Wilmott

think sportsbook Vegas room the having actual Barry, big of are this case, revenues areas know by regional gaming experience other that you're from I of is non-gaming. relative aware is Tim. and with sportsbook Las see the advantage operations we'll Nevada in food EBITDA and and the higher operations rates, of of But our visitation deminimus properties the the for us increased to where visitation we at is advantage that higher revenues. we beverage that volumes can take certainly

when in large Las certainly business see event Nevada in the sporting market. Vegas volumes I think have we game of table higher we

the revenue or in business is of will tax very to traditional the increased back as table benefit business understand We're and that encouraged a the it visitation. don't to New well as Jersey, think we also we it. operation. and and not well by just in margin you a West Virginia, Nevada that think brings our seeing as we're very that a revenue like the that's areas who do or But have I states have supportive message it as be rate we're more betting that So, is slot due of it to sports games low bigger from recognize indirect

Jay Snowden

the we've in that states which right is what And Yes, XX% real might mean of on are as the sports add-on I quick. exuberance said Pennsylvania potential saw on there are focus main -- is down said There XX of And be. irrational that tamping terms revenue Tim rate tax betting. now have betting some just sports currently pass considering them our approximately that are so. We to ridiculous.

send little some to out margins. are the our the high, West also we're something around that they at a firm there Nevada trying who try like keep X%. but are get time, we same at to to And that we're it of recognize to to trying least it. is trying So, Virginia hold model, pretty thin colleagues

nice just So, to a have. cash to states. and got cow it's Tim we've It's as not impress said, to upon the continue

Let's greedy not subject. this on get

Barry Jonas

reform. question just And another then part Great. another of on tax

I'm new the CapEx whether maybe how lot growth deductibility general plays your CapEx, Thanks. Tropicana sizing or of about maintenance into the Given thoughts it's CapEx? or curious the Pennsylvania rules, that expansion just

William Fair

included that to allocation right going right Pinnacle we with Obviously, this it, the We year to really but that We us. the has capital been -- are on decisions viewing not BJ. Pinnacle We've policy looking them. for this is override it's time the is allow Barry, on capital integration. we're are that is focused tax upcoming projects we're a decision of benefit making. the a clear they number

Tropicana integration We pushed the to as off well. go as that have into the we XXXX we

at CapEx individual capital appreciate want the make allocation decision so looking are projects look really and And definitely as it we've while -- the we we our it's made a at. of that the ROI is well. and benefit to we through we improvements based It's that sure maintenance got upon

Timothy Wilmott

we're that -- projects we'll considering; improves cash improves anything IRR that flow it yes our to. and -- Barry, to the analysis, And easier but of it discounted say NPV make anything

William Fair

Yes, clearly.

Barry Jonas

the Thanks. depending a at stock quick, that moving either is that options, or point headwind or upon Great. the real any settled Then cash stock does forward? going just tail-off continually tailwind

Timothy Wilmott

We love over spike Barry, quarter to had in out was. gone occur variances units our down there the that course in -- we fourth of I an it really share unusual over caused in I the the -- wouldn't amount number that had of where has share the price dramatically price to our XXXX. doubling large due see what to of XXXX. be to was XXXX in want in

However, be as XXXX. denominators, in out the the case. reduced the But dramatically these base we has that been the we've to there management hands of of don't through expect units gone

Barry Jonas

much guys. Great. Thanks so

Operator

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

Chad Beynon

taking Hi, thanks question. for my

one-time margin that And guess, First just go improvement the wanted for will of laid that goals that CapEx million quarter last I or plan. out the of quarter margin noted this one before a goals? -- a to to $XX of to the for is the maintenance if of you then kind XXXX regarding Thanks. ask, CapEx million side? year, just is million margin, And the $XXX you follow-up this to or a on this upside included that, $XX potentially your more

William Fair

The programs The be -- investment able we for really million BJ. had operational be $XX to in plan. Chad, the margin is put this of achieve -- that some is to capital intended to improvement place we

one-time So, capital cost. it since capital was included margins it a in not -- was actual

As the that we to on had of put said, a upon try pause we some and integration, we the we've some what's get Pinnacle out that learnings into as understand based may there. of

will we it's had little we that Again, last had. that the from other as items deal described and a improvement the systems know be of bit we we don't integration indicate some time, with the impacted plan able understand Jay, $XX did Pinnacle. so objectives but of have likely capital will TBD, And of million to and we we to really that may start I if-- be as margin potential to achieve would that to

Jay Snowden

No.

Chad Beynon

Jay; noted $X because results it know everyone's to how follow-up My the talked quarter. didn’t I about about get just over that was big you interactive. million property that, Could you around the back Okay. variance any in Thank a little and You increased release press think was level the on business? Interactive Thanks. side, unfavorable Penn XXXX a that you. details bit more is the in you pretty model? you the go

Jay Snowden

say that I can majority level think are what Chad. the we -- of variance, property is reserves

Chad Beynon

very Okay, helpful.

Jay Snowden

in And level notes a that legal as those region, the couple questioned impacted all say, of Midwest Midwest in all reserves the flow-through Midwest, were I property properties. the reserves just

Chad Beynon

Thank you much. very

Operator

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

Patrick Scholes

morning. good Hi,

from that had last of a basis the long-term concerning XXX reaching margin a Just growth. October you points follow-up comment

assumption revenue You a here? growth low that organic the to -- Does still fair growth. had single-digit part, is assumed single-digit use still that low

Timothy Wilmott

Nothing has It changed is, Patrick. there.

Patrick Scholes

of the is issue lenders color And Okay. Is Tribe? also Jamul. clarity any with the with Good. on or bit little the issue other

Timothy Wilmott

to amendment. Tribe Right has they the -- have the amendment approval been approval now, and has for the not the approved

Patrick Scholes

Okay.

So--

Jay Snowden

amendment The upon been lenders. between agreed has the

Patrick Scholes

Okay.

court the Tribe. ball in of So,

Okay.

Timothy Wilmott

That's correct.

Patrick Scholes

That's all. Thank you.

Timothy Wilmott

Patrick. Thanks

Operator

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

Timothy Wilmott

on how three attention with information We Thanks Pinnacle well. new on give morning. work on moderator. call going getting months. for flag on this in your with look this give about the color forward you you and you, Certainly, the the for the more of Thanks and back as the Thank we'll -- integration to some our you certainly morning your more in take care. additional about our combination attention flag Pennsylvania State thoughts is

Operator

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

PENN Entertainment (PENN) 8 Feb 182017 Q4 Earnings call transcript