PENN - Earnings call transcript Q1 2018 | PENN Entertainment, Inc.

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Operator

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

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

Joseph N. Jaffoni

Thanks, Kelly, and good morning, everyone, and thank you for joining Penn National Gaming's 2018 first quarter conference call. presentations answers. momentarily management's your well to and questions get and as comments as We'll I'll the first, But review Safe Harbor disclosure.

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

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

Timothy J. Wilmott

will call. BJ you, me Also Snowden, to our Joe, Officer, and Chief Operating earnings Officer, quarter Jay National's Penn today speaking Fair. be everyone, Thank our morning, with and first Financial and President Chief good

just by Northeast. weather our begin the the first results team delivered of Midwest the report about that and very me a to winter in the – pleased tough half despite results. quarter really I'm talking the bit in outstanding little first our quarter Let operating first some

In for first year fact, which last above about above and our EBITDA adjusted guidance $X of million $XXX.X million. $XXX.X the million quarter, of X.X% was

going quarter to by last I color think improvement little a plan, driven big prior our XX-basis-point Jay is year. a going in first over October, of part what communicated which bit margin is it improvement the on more in we a delivered provide we more is is that and are provide that. BJ accounting had quarter even changes dampening of effect his first details with XXXX that with that on And in on margins that actually the in where some some commentary. a to

wanted acquisition, overwhelmingly brief of and a quarter. I the update we happened on Penn on give where approved with to Pinnacle first the our two and Next, what And XX, shareholders combination in the companies. March are Pinnacle

on. and quarter we from are we considerably can call, I second remaining transaction. we're to-date to approval jurisdictions everything by get narrowed to our we're scheduled to required states of counted scheduled various and of the a approvals as this received yet, very number we we'll with the hard the compliance all half have We assure their because legal states but And timeframe on everyone to that approvals have still get working try folks seek of get have that XXXX, with don't second the saying

cost ever that today, Center Vegas investors see properties than more with spent quarter million of their a synergies, year be detail. to that of the in of remind through in the front. the a provide today first one Las first we our no issues will in and all of year update just be the XX% progress and State in Pennsylvania meeting I'd of of XX% good and Service I with our million time lot the the want are still making gotten We've of lot Pinnacle We And and, on synergies. like $XXX more of quarter. on believe And the confident are that $XXX FTC development activity will in an we two. also to

XXX are up licenses to As the acquire were able two table can Cat machines remind have we bidding in everyone, aware, you XX and and license, to to to many X process slot up of each games.

in We for remaining $XX for in licenses Berks XX approximately that be to been five the awarded. state the have The million. going awarded. of the yet for X two total and York fee of still to X Lancaster, is a licenses County locations accept Category selected license bids have have

the capital both operation last I everyone Category the Diego and orderly want The our locations where Penn conclusions National these Race five potential these have on areas. transition, with for in at is be consultants licenses even competition and these exiting an County licenses. share the final opportunities as work deliver Jamul licenses be consider you these will working That again, to with that to Penn cases, two to cannibalizing their work can in our before licenses and these in more of you tribe We as we'd National to be progress. awarded still these continue and in are we returns Course will additional But, the to with if is, on understand, toward update management that X I minimal looked allocated can impact two you scopes. that of our when with determining contract the and remind on going we you there's the two And from like San on see we XX. management are we on make final we May assure locations attractive effect in

to post and making a flow plan, forward see have look and I'd a to that do you from the existing funding the growing successful into are million in free just and of returning close. forward close. we very beyond We know give let can shareholders. think to moving we conclusion, operations, synergies M&A Pinnacle and/or But acquisitions, which on of significant de-lever, the the great realize we things, cash our years additional flexibility capital two sure looking that, will integration execute XXXX, focused cost you tuck-in $XXX of like in story, organic growth I us financial So, all at number transaction,

with first Jay quarter but our as future Penn-Pinnacle in that, and I'm and and look new pleased beyond. to So, to over optimistic about for shareholders even results, combination, we more Snowden. it's proud mean the I'm With going I'd very the now to the XXXX like turn at what it

Jay A. Snowden

our morning, very pleased with a quarter of We're everyone. Tim. on Thanks, certainly number Good first levels. results

delivered weather quarter and snow the First, with all the first the know that in Northeast four as across alone, Midwest we March and nor'easters and much portfolio in documented, of year-over-year. number winter our harsher twice was days in well XXXX nearly

weather are in improvement initiatives real many two-thirds the margins recognition XXX in mentioned, the revenue activity that our first basis Second, calls then And our couple continue and Pinnacle. of margins despite the events when discussed properties to earnings extreme increased have improved momentarily with the EBITDA at of the cover corporate last in quarter. been of be integration for margin fully will standards, Overall, bear which and changes points leaders nearly BJ fruit. adjusting and we beginning immersed to and year-over-year to third, Tim the

region to continues leaders Our continue discretionary be the to our consumer. Confidence now. and with to behavior and buoyant impressive happier couldn't and gears step up results personally and be right spending healthy. Shifting I performance team's property deliver

law value where macro in future. employment, Given changing perspective, wage change home dynamic foreseeable growth, this from we in is see the an the and don't tax economy

Moving despite strong at to of from businesses economic evaluate posted gains looks have the All M Las Prairie X finished again stabilized the and to State of finally business region post October strong highlights Gaming quarter, rooms strip and the Southern couple some very the route through. in tragedy. south Ohio, and strong there the in the headwinds revenue Las and more quarters, specific Resort healthy great Vegas continue our hotel Illinois our In continue with Kansas Valley. quarter along that first we post of end our location four business the on City in flow adding growth a Vegas, year-over-year last Massachusetts, Tropicana to to given the at the quarter. property

grew year-over-year we Transitioning the properties visit time Moving play spend data-based and the first was high-worth of levels into majority segments Vegas Tim years amazing and results in regional Center also talent the for Unrated going the the first activity, Spend all the worth leading properties, the not Pinnacle. and but Pinnacle quarter. visitation quarter. combining our in better strong on gaming synergy Service more per we the year-over-year. companies integration truly the of the the cost at feel at quality result in mid- revenue of and come. the Las to about improved with mentioned, to our at two also at organization only the to an as targets, across is This U.S.

has from into start the off into over weeks of quarter. second Lastly, April, we QX we're pleased carried is first to as new it's half very also worth with the the X.X highlighting ourselves quarter find that where strong momentum and a

more I'll So, to it quarter BJ in guidance on that note, cover over to turn second detail.

William J. Fair

present Jay, two as Thanks, to to financial our guidance notable changes everyone. I'd XXXX reporting. well financial our good like revised and morning, as discuss

found of and release. guidance are revised press X Our on the page assumptions underlying

assumptions nor company. for guidance closing a Pinnacle for Penn they the of made have the of the do guidance. quarter, combined this standalone last stated transaction As No been the include timing is any

prior the which over the our is total Lease anticipated $X million million, after QX the level million million revised for $XXX Adjusted EBITDA Master in quarter. full of the beat. of our $XX which increase property be $XXX over are an million $XXX full $XXX the incremental a guidance, expected quarter. guidance Our million, payments includes increase in Adjusted for $X.XXX second is This is to revenue in reflects million second quarter. EBITDA $XXX anticipated billion, second year year

performance operating end both the reflects revised targets that by and our are our mentioned been As guidance XXXX of than previously discussed. higher margin slightly Jay, Tim

our $XXX to and we Master million, QX. We remains year, $XX expected $XXX $XXX from operating changes rent current million million continue the from initiatives QX. in at payments anticipate enhancement significant forecasted are no the in CapEx the be environment. incurred Maintenance rollout approximately benefits to Lease for of million assume margin approximately

our XXXX five-year of $XXX,XXX. our X.XX. incur end of will increase XX/XX/XXXX, be coverage Lease XX/XX/XX, lease an this million of lease of effect the year which we in will at the Master result is approximately rent takes year, full in reduction fiscal that $X.X will was rent This reset for end year, FY also As in which than at by escalator resulting anticipate We offset XXXX. more the that the

not quarter. payments be will after be is forecast the second cash not Cash adjusted was $XX assume the are is million, Any flow projects million. numbers. $XX reduced debt hand contribution million XX/XX/XXXX million $X expenditures have And mandatory our on these for be Cash and Again, contract. free of to the year, in We Rama increased quarter. in cash is always, second million interest comfortably will guidance million. Pennsylvania capital year the taxes the We to $XXX our any expected our EBITDA does to at met. included net covenants for X on generation estimated from traditional $XXX free $XXX for on agreements all as expected million Indian debt as Village, the cash $XX Jamul half-year in estimated and assumes flow a contribution with our Casino from of Category it

reporting a I quarter. our changes that Next, methodologies to wanted highlight we to few this financial implemented

to adjusted First, we definition modified of three EBITDA items. exclude have our

preopening significant are costs. and two first transaction The

nature, These costs these not with more costs, competitors. and non-recurring EBITDA in of our they our ongoing they aligns operations. in are guidance closely are that of not budgeted reporting adjusted Excluding reflective our are

The stock cash-settled also or annual million our the during during reported the simply if awards made budget. difference our stock-based have the the the between each reporting charge for period. between old of This price our and our is period, These excluded variance adjusted period as budgeted underscore, we our ending be the is stock methodology, non-operational. mark-to-market preparation trading. assumptions price actual simply We higher and would result required this where EBITDA was awards. to the a be are To of expense with benefit $X.X expense incurred

to reporting and periods of prior press we our adjusted consistent in be these table We the have release. all all continue costs of methodology, with reconciliation to this report

new QX, in as prospective rules, the accounting commencing basis. Second, ASC company XXX known otherwise on revenue adopted the a recognition

press required have at this impacts, equated the provided was primarily of expense. to disclosures as to management our report We explains since results. which costs first revenue This change Among is to release, supplemental our of page zero a which our Rama, Casino we are million margin XX at a of of the pass-through approximately beginning other payroll, impact percent $XX revenue. it of quarter reimbursements expense on

clear, To our provide for new improvement As net year-over-year on Tim comparisons. mentioned alluded basis a on our contemplated margin the guidance. to be treatment rules accounting earlier, points. of approximately changes only revenue these We clarity reduced year-over-year it recognition to the or in the basis we XX effect

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

Timothy J. Wilmott

think Thank BJ. questions the take Operator, Jay. audience. we're you, from any Thanks, to I ready now

Operator

Thank comes you, our question sir. from Bank. Carlo with Deutsche And Santarelli first

You proceed with question. your may

Carlo Santarelli

on if to I net And which have that any assuming do, three wrong, had in down. the that's you like in And each that's operating reimbursed believe but your Hey, if is thanks adjustment of the in excess morning, the my year basis my in quarter. for guys. margin feel have points region by free regions of to If amend, case, looks Good you to segment and XXX that look could growth the calculation. so, I about this for some quarter, bring it drivers margins guys you level around that initiatives? doing bit little cost working the each margin doesn't the some impact you some it last first the year over a make at question. taking of things of did Jay, EBITDA, in and guys I of the on believe the discipline, talk Northeast an don't cost revenue and the

Jay A. Snowden

Carlo. Sure,

Rama highlighted takes look, course, in spot drivers all math procurement Northeast starting three I news, that in on. Casino the would the the early feel the on very quarter. first them here to quarter. in for the see our behavior. behaving implement where started really guidance, business is, fourth seeing We and growth results sales we our and reimbursement is versus innings. but Your And, be. as the to of year. initiatives last buckets: But this question. XX.X% are XX.X% our for to working the there if of initiatives is to That's going And And, these October prove And, the conservative. comes see throughout could well. and you large of the were And you're here's And We we're about at the answer at. The adjustment hard in marketing, these good the in, can good margins consumer we how margin XXXX, in improvement fees anticipate, healthy are moment to labor. year same-store that's anticipate, reinvestment, how had of And effort. the we spend as work company ultimately yeah, the of well. flow-through in then XXX as the remainder implementation be we this we're late We where people where across what the

Carlo Santarelli

I Thanks. That's bigger ask And question. super-helpful. one if could picture

months, you bit you December, a obviously, on how $XXX you more and the of some of called of employed it and guys, some where given competitive maybe marketing that provided favorable, to of when million regional your would you transaction Tim, operating then – the have but the asked landscape acquisitions about As you and promotional peers little could spread the whatnot, that that remarks. you changed, back were some only $XXX Pinnacle the operators disciplines also the has synergies. of a prepared a disciplines color it's out cost announced believe, do strategies you obviously I more about you of when seeing way, or some maybe think others, be contemplating as your in an side the the some million, think dynamics. think been pertains in the that in little environment, acknowledging with bit guys about larger way When different we're five earlier things on

Timothy J. Wilmott

Carlo, I'll just level. take that at a very high

create We traded with I will competitive a that seen, operators large spending. not of But do continued exceptions, promotional and one-off favorable perspective. not environment have more had I gaming consolidation a regional of that the with the promotional said, companies, the are spending recently publicly a couple removal high think levels consolidation do think competitive strategic the of from environments that of have

very happening but So, going of gaming all tough think on, transactions consolidating with the here the what's do it's to regional quantify, I space.

only Pinnacle think we I Penn as think that can benefit forward as company. it one us about moving operating and

Jay A. Snowden

The thing Penn. learn would be I lot deploy Penn continuing margin tell to great at And I'm you the as a they're are that my to with that across doing certainly these learning that the Pinnacle, on at not Tim's we're doing only lot leaders initiatives can would we in comments add I a portfolio. things we conversations improvement

benefit that good of these as information look, the ever targets, as as portfolio. about I've felt more I and feel think combined But synergy best the I to certainly today are time deploying now overall we'll So, goes. we're have practices some going

Carlo Santarelli

much, so guys. Great. Thanks

Operator

with question Barclays. comes from Hendrix next Felicia Our

may You proceed with question. your

Felicia Hendrix

morning. Good Hi.

Timothy J. Wilmott

Felicia. morning, Good

Felicia Hendrix

but come things. anticipated. your in – that with coming in you I'm of just you some kind program, only guidance you the than in questioning could originally And few a we you're not wondering better of implies just guys that better, on through, So, improvement the margin went you guys, just have done line

if is, understand first seeing. help of you maybe incremental benefits the that you're The us some can

quarter. You by margin did basis do on the XXX in the side better points

know of surprises. there's hard lot work, but a obviously, it's So, surprises. some there's some I probably

if quarter, that are Pinnacle I synergies rest getting wondering also to that could any higher So, the just the is, in anything I'm than into with the the And be you could as other there – you're the thing applying is learning into see close business. and you're talk wondering those to there and working of you be I'm today, about that but transaction their for was digging and just you from million. $XXX both that, year. them that could is chance wondering

Jay A. Snowden

Well, we're enough I'll one with months all the decisions Felicia. Pinnacle, but and second I look, do, in. that opportunities I like to just feel thorough Penn. tackle And, what understanding thing, how be of being more first, there's their run might leaders a the we regularly I they have certainly the that's to things are can you tell continuing and and vice-versa, four interact do really would at don't a frankly. think, we that they I better bit good businesses quite apply different, efficiently than and made because

on working With down now. mentioning head So we I responding people to regards that question improvement premature I was margin on initiative, and this. path Carlo's come XXX it's around more to as but to had to that, think earlier, the the specifics

go imagine can the this. exercise of And initiatives an so into as you number such that

We initiatives the in dozens. have

to deploy in the previously, and three and but we first we're I have quarters. months opportunities so, starting categories the they to coming into that just wave deploy of another And mentioned fall primary two-thirds all those

and into, that's we're what at to this we've as worked proprietary hard doing. So, information exactly get because specificity as I about much on want it's obviously,

Felicia Hendrix

(XX:XX:XX). Thanks Okay.

William J. Fair

in from talked this this And, when the the were you we year. we items phasing Felicia, the of in guidance, over at one specifically look also QX,

is is to expecting little of to really And done upon based that's great work we the all so, be a than quicker realized of this some starting been are see.

also a benefit. it's So,

Felicia Hendrix

Okay. Great. And...

Timothy J. Wilmott

the are communicate The side. very details on still and databases. the yet thing gotten from synergies revenue million your everyone better continuing we of that as the are We're about cost other we some there all the all Vegas time but cross-market are meaningful believe think we're only haven't what other that We question, of I'll and meaningful separate revenue we'll going remind into customers retain, but very get the Felicia, to divested here add, $XXX to to synergies synergies, on handle over just a going and assets out. elements, on there and to the Las visitation, be

Felicia Hendrix

expect I Thank of was wanted leverage there about year press Pinnacle want get talk about in you. and specific could to about for you and after talk Like in about do of that just kind I kind to after just if deal the that? close was cadence just talk a transaction. close perhaps directional maybe, don't – where you a example, if after release de-leveraging maybe maybe BJ, the the you generic your be comment the the way, the a wondering to closes? of post the

William J. Fair

publicly for There Pinnacle Yeah. would flow that use down down (XX:XX:XX) to subsets basically year. very the at year, range, we to of we're be we especially really we the We can for getting integration and this focused run which the said We've assuming we cash expect, de-lever is utilizing of XA and first the thereafter de-levering based right companies of get (XX:XX:XX) back X.X quickly be go to like now. side, synergies. out the the continuing coming where upon rate by transaction believe through approximately on will to the be as the

Felicia Hendrix

you. Thank Great.

Operator

Jefferies. with Our Katz comes next from question David

question. with You your proceed may

David Katz

Hi. Good morning.

Timothy J. Wilmott

Good morning, David.

David Katz

it for is of And to sold getting obviously, that some point. to be could that it's just sort back at bit ask whether up and morning. meeting trough where the point can if ask detail free of to I and a I'm going on a that forth specifically and expectations end Vegas, in a just capital other couple a more at calls this wanted uses? the great between wanted I property, Las you perhaps give your into is I'll the something and progress on and REIT congrats to – But us quarter. of of about apologize this

Jay A. Snowden

that. here's how answer I'd David,

as XXXX, back to product started everyone soft renovations the And Las knows. Vegas seeing. look third fourth on back We the Strip from demand quarter having quarter property. the I As had beginning of And solid expectations and completed had at and in new standpoint right see the of group meeting really in is terrible gained after March. after first a restaurants, floor, marketplace, Tropicana. We well, new was that a property a where traction we has into a had we and February X, you and were the quarter really on launched putting what can as yield October couple results we casino bit our of the little a see and and last set hotel like some into the certainly clearer year ramp for the future a we're huge floor but

in the be tell would property that we whether have on whether And that part and plans yet. not the added gotten of we EBITDA new we're of to not consider and the time asset have there. to what's you other we're on that future feel of or next, amenities Lease, plenty of I we've Master and to response when really as you discuss optionality but I that's and/or the plenty still want monetize from or – So, back there determined question though track terms we've good we and your not

Timothy J. Wilmott

transaction visitation obviously incremental start well. of impact get as that and revenues And one thing, mychoice the we to the EBITDA. incremental drive Pinnacle Tropicana to from driving will, customers is, we taking That David, the we I'll and see believe, want add really

going level So, to years before I new we of of is couple companies. as the think be a real the what a level going with to what really away do performance estate have we're assessment is combine comfort that probably we the

David Katz

you, point relates if and for and much or it Got can here and judge else is, I have opportunity bit a more is sort early debate at anyone a to And our how right, more is, commentary a get far, And And detail I'd love but industry correctly, or was or some we I know it's you you how in we the far. That'll along you you to for for going little I as the discussed be not about measure too it. topical important stages days I to regular promotional is been some can heard cost-cutting. on or else basis and Pinnacle get matter the good cutting, general. cost-cutting there of there gone around in is as move particularly from have that into this, which around to if just questions industry ask too an whether only integration. there us anyone know issue, we you expenditure of back the perspective, how color issue for go a some one early begin whether as but certainly they

Jay A. Snowden

seat about are question. not – that regional an and improve companies their just a a I'm I see basis what margins. asking, I great continuing quarterly see but And if your you gaming can David, they the questions in of think thinking I'm think most on where Penn, to environment, obviously it's

think I business the so, healthy. then growth, top-line with And is coupled

looks where XXXX of had markets I'd we to so, We certainly operated. same-store lot on from XXXX, what kind like. there supply growth very years focused of be entering sales new where And was for already several Penn, a

then forward took new for next and as much years. three back there's with so, step the constantly step And we not we're out a two, look supply as as but new battling we competition,

most marketplaces I continue you see improving, are can top-line you're of if so, these healthy growth margins then environment. think in that to and seeing And seeing that a you're

we same-store declining, the question, sales ask have are improvement, only I margin think start seeing then If to you're too but you gone far?

Timothy J. Wilmott

commentary. Jay's to add I'll David,

David Katz

Yeah.

Timothy J. Wilmott

listening our Internally also at our are measure, and cost-cutting customer, you and And monitor And the that of attention of where to at post look appropriately. but and can all our some service effect, And we continue certainly, customer could of any seen taking spend care our levels property we're internally negative other on certain to-date levels a members. our other lot engagement. seeing team Penn, see, not could management it. those we'll we've sure is of employee two with things have the constituents activities make to affect what we we're affect are

David Katz

to what road And otherwise? all you at value sort if in you specifically detail of business, the going keep closer probably bookmaking of in for roles where you We may in-house think, down what right. or obviously, what I announcement love farm we assume becomes be to ago, in classified a you potentially think on you opportunity this how are discussion is Jay, be information-gathering is, of for it out? And, I'd And, the I'm little an Supreme time I All when Court, asking big – an would to an And that changer between? know it opportunity you capabilities from you I understanding if somewhere about might or an is amenity incremental really game or comment sort I the one we're as had the can recall, a bit betting, ask Can subject I an some on mode. more are. sports getting a we it. farther chain the

Jay A. Snowden

either between. how we're evaluating a relationship to completely in potential out something David, or going self-manage tenant/landlord advantage farm this of are opportunity, in still or do to we take

that to of well like opportunities. that ground appropriate how and We until and the it's legislation see very what manage So, state how us XX%, in we decisions going West put going a the have a book states sports not does Court in management and stake their handle to on Supreme operations. a And it's any we're Virginia evolve rate premature see gives as puts we're made encouragement. of I we tax that before we how think the

that contrary, the like that see mid-XXs a On gives has rate state we tax pause. Pennsylvania a us

taking Jersey view to is we're going So, how to the play a what Supreme Court it of is full with this the starts case. going with do out, all and New

ADRs, we we'll excited standalone driving seen for to for the this but volumes. significant volumes visitation games of As benefit opportunity Nevada I've us see specifically incremental It's lifts table betting, not revenue in are what restaurant we said properties, our example, a about business see and hotel do in a that where beverage volumes, we've opportunity. as previously in sports

changes this, and very Court rules and Penn what So, participate, quarter and on Association or the that's And and color we Gaming will within allow work call. American new the by of going to not are this the right game once the place within will second supportive states there's more will subject a our that we lot Supreme take have of offer hopefully know to on we'll now.

David Katz

But I the tax little on answers. a Thanks taking up think this than I should a the give And Perfect. questions. appreciate pause. rate in my for you more XXs

Jay A. Snowden

David. Thanks,

Operator

Stifel Our next with comes from question Nicolaus. Steve Wieczynski

You may your with proceed question.

Steven Moyer Wieczynski

Yeah. Hey. Guys, good morning.

pretty know in So I weather guys don't first you the But, part to about talk was too weather harsh the obviously, much. want of quarter.

give can is, helpful. hit If expectations? I the guidance do function guys levels around essentially that be to of revenue and you But, so that? more guess days you was weather Thanks. still how You was exceeded the some were that'd your you normal when question us did color play a that visitation

Jay A. Snowden

Sure, a had it certainly aren't portfolio. we a in jurisdictions, very good wasn't But the board, because basis, the had a Las quarter. have the where our Steve. we guidance where revenue hit mentioned, you property-by-property we across numbers on I Vegas, less good some across reported quarter. Look, visibility,

January to where tough back, the then the how And quarter. very didn't the was weather was and of February half we prices bouncing we terrific March amazing. a month, was as was your we February really finished board carried lot given decline as much started. the momentum second cleared, April. oil and Mexico, quarter XX, demand. we had when the But first about us we little days there have of – with really – We same a New into just happened what just anticipated a strong, you quarter pent-up and across XX visibility question of roaring And that thing. has

Steven Moyer Wieczynski

then a And of little to you. bit, Got Okay. on kind follow that Jay.

about the for non-rated could sign health It accelerating, play. some Am way? about was quarter. you I maybe get if color around there's the pretty was that, up question – sounds, what of right a out that I wanted should consumer. as second database some non-rated good I'm we getting sign-ups you clearly more here is, The concern that that at said well. around be if like play in And But the the there's And guys. be there thinking to see will and around the

Jay A. Snowden

a lot stimulate the I database – are. our even certainly the to and offers, And, you play grew we you That's appealing amenities advertising are – effective play, But typically from to think unrated saw that with the at offerings more are they perspective, of unrated weather, absolutely yeah, hit you of at right. we all unrated health lot see our of where receiving the think majority our consumer. you are quarters fourth growth if it's the issues And when seeing can I for year, don't properties. weather those quarter were to a how way important of we visitation. go effective two-thirds our the properties. understand we look always how retail the Because in our you back have and consumer, it's of a unrated third an us three is last and more new into at

So, yeah, I the about you're it right way. think thinking

are where a signups about been. decline. of state they've card in today not They're New

in we're properties Kansas some the marketplaces, healthy X,XXX obviously signing Massachusetts, that have Ohio We few X,XXX, a month, and Speedway, a still and newer up very people clip. others

good products. about So, of yeah, about And now. our the the the of very feel consumer, yeah, demands right we feel positive good we're strength we

Steven Moyer Wieczynski

the for Great. Okay. Thanks guys. color. Thanks

Operator

of Our America next Lynch. Merrill Bank comes from with question Shaun Kelley

may proceed question. You your with

Shaun C. Kelley

Hi, guys. Good morning.

guidance. couple So, just on maybe of start clarifications with just I to a wanted to

guidance such the on BJ bit. terms the most just on could components the everything you clear on, be piece just two on of those ballpark revenue we're is know, change EBITDA accounting – margin, you of to virtually little a that seeing increase in in Just us was help

William J. Fair

guidance was our side in in to of respect the revenue included change with change policy original guidance. accounting on The the the

we segment. for individual on increases each that basically revenue what is guidance reflective we of anticipate provided the So,

Shaun C. Kelley

Okay.

So, the raise the in the accounting revenue guidance is a core operating number, not through just change? frontloading (XX:XX:XX)

William J. Fair

correct. That's correct. That's

Shaun C. Kelley

Okay. where clearly go guys, quarter. to back an really margin then, because the performance exceptional you Great. you, And that's posted this if discussion,

about, this or you just help three beginning. – initiatives or I think, of anything marketing, the a just break could buckets of you lot expected. could about us any But, you labor, kind if the faster that hit procurement, talked at think talked you down Jay, I you either stronger than

working or little of these really bit initiatives. story around roll clarity a out kind of some of guys, as you, Just what's

Jay A. Snowden

opportunities I'm just before, at to I vendors. I you tell the And of scale and the through that I our to one and accelerate, the is And going your as over it's power think partners areas continue leveraging said combination three, a just and of look last all good ramp would RFPs that and procurement proud – third-party It done with think providers purchasing they years we've really longer our it's off. working don't I are back our take job Shaun. because you're as Penn size I vendors. with and several that not a largest

in with very and And we're seeing what so for that we're time, the pleased we're lost playing catch-up results.

and year, from from So, you well. buckets of of still contributions but procurement labor can remainder I for sizeable to going more as the have the we're some marketing think anticipate the

Shaun C. Kelley

think, had question I Great. the relative target on the out. me mentioned again, for your for you that guidance remarks, And be about something to set BJ, just would in the – margins prepared last you

ahead going that were triangulate by XXXX where I and you you Just or from with the overall you're early there a was trying above think either be for expecting? is comment like, that being slightly it I XXXX last was or specifically or of quarter that year plan where think kind that. Was versus exactly maybe you a even could to that.

William J. Fair

XXXX. we to for specific guidance was That provided comment the

the right the we is And above guidance our for provided higher of that margin end current so, range XXXX. basically, now

Shaun C. Kelley

you Okay. Great. very Thank much, guys.

Operator

comes Allen with Our Stanley. Thomas from next Morgan question

proceed your may You question. with

Thomas G. Allen

Hey, City outlook you about you doing about Thanks. for and Massachusetts Can good morning. behind initial and that are just those talked your drivers very markets? the of talk In remarks, both how Kansas your well.

Jay A. Snowden

really think improve. than and continues pleased the some we and expectations, of great even newer is all and visitation We're this We the Thomas. but some spend We're just I few years growth, think to Park just eyes that across are activity, growth Pine property that seeing started of new Sure, our slower top-line what below visit to anticipated – in cycle. opened we're – ramp. Ridge Massachusetts, margins property see though early segments continuing still in Massachusetts in ago, per with ago years we're three properties a I very markets.

with how in two got I business. marketplace. figured focus the demographic But same results high St. you'll going So, until us And gets to continue then it's Massachusetts, be markets we're facility City, the we where would with see up we've we're think very And excited regards part the us. about think tell quite you've lot of time share end opens and when for pleased international what impact. a and don't forward, frankly, that those effectively there'll Louis I given in Everett out the to profitably really like facilities to of and to going that you Kansas some customers their ramp the market on the same and doors,

market – us property growth growth, combined every just customers visitation margin the loyal really our year River And getting seeing Speedway. and at We're look to facilities. more so, we top-line in City with our way two the Kansas improvement both and incentivizing between right be we're between share properties,

So, as about that do like we're acquisition marketplaces in forward. can that Louis, what and the we of marketplaces you excited St. with and helps know, going Pinnacle, other like a us few very

Thomas G. Allen

talk you're growth. forward? going numbers underlying bit sales you about of and here where helpful of now about you And Thanks. the that's actual Can kind expecting you All trended how color. what healthy just like then same-store and little talked a are

Jay A. Snowden

the for we Yes, be sure. or not believe We seeing the Town. would and in without mean, first year, digit. it that Charles that low-single I anticipated up in with quarter even we ended

as that a have exceptions, to VGTs continue sales challenge a marketplace. the So, we anticipate always marketplaces, that with Mississippi across entered we're see been challenging there we'll very going remainder exception that of to And same-store the low-single-digit with as well of today. all we There's where two, for we'll then, that couple Illinois, has proceed most Riverboat to given of those the operate. growth growth be the comfortable we see can just demand supply more really is be sales year. there's than of continue same-store the But that

Thomas G. Allen

All helpful. you. Thank

Operator

Our next Macquarie. Beynon from with comes Chad question

I proceed may Good Capital the X license the You wanted to Chad process. Macquarie Hi. with questions. morning. Thanks Beynon Inc. - my your ask (USA), about taking in for question. Cat

still your win been license of concluded details and on the any the defensive that? selected. timeline has of to as of Lancaster, process state X the you just more your process. or location other of And offensive just a then us secondarily, an state your recent pick first Cat when more the X not concludes, the that that kind what's have terms Thank with we similar situation in you. view should was of in you when have to that bid? mentioned You Could help XX I guess,

Timothy J. Wilmott

awarded, way is XXXX, the was license X me Category question. the it let of gaming half in answer structured that second statute the Chad, when The passed in new the is York, six and the case all you up was the regulators the mid-January, scope of have the to the specific provide of location regarding in to details that investment. months your and

request You a XX-day can extension that six-month. from

eight of to York. total finalize be for you could months potentially the it So, plans before have

have into could in Lancaster, clock be started So award before County conclude. there. it case, In the April Berks April, we got in the mid-September to that the case, in we so

your for provide area as bit of business - get much on the get And before, about invested than Berks see add location Capital that the capital York. County an as we that returns will an We Beynon very Chad out little strategy will area, but much our enterprise. play is offensive to Southern the I specifically Inc. business more play that get said we in good Regarding opportunity we as there. Macquarie National, that Berks offensive predominantly a deployed (USA), of view new the Lancaster, around at Penn not defensive. as County do question the And

XXXX, basis before lastly of on the assuming prior laid here. horse XXXX, Okay. put But XXXX I cart XXXX you. off points And believe of year. margins, to improvement of out kind margin XXXX the Thank then you're goals, the and you and XX not previously,

Thank So, as and in expect be it on of, like track now you, of ahead XXXX XXXX comes I XXXX could original your goals, still should guys, which looks that, for if for we those guess, continuous color a kind ceiling? out-years. to more you. continue more to goals grow were on the a margins or that through are some improvement medium-term of just bit Just little of

Jay A. Snowden

Sure, said Chad. would Look, quarters. XXXX for what – as lot in we we on sit and the say And a take more have of firm I color just here innings. for these coming materialize. hold let's today, now, XXXX, let's early But and time things we'll to

effective. are and be of to work these going ideas really and Some initiatives

we move and and XXXX just and we're Some if XXXX XXXX, can said you to everything that assumptions on (USA), I and we'll are from fast would to XXXX do on Macquarie doing Beynon won't, XXXX on. where and some we'll calls. is for posted to how where XXXX - assume future we'd the let's fail everyone not fix XXXX be, we're now, what continue forward now, we quickly margin But and in accelerate those going and for to how progressing keep keep Chad they Capital will Inc.

the Congrats sense. Makes on Okay. quarter. Thanks.

Jay A. Snowden

you, Chad. Thank

Operator

over the closing sir. to turn now will I time. continue your Please you, this at presentation questions further no or are There call with remarks. back

Thomas G. Allen

time in have of my to Pennsylvania. timing back Category X thank definitely to I said and listening and about operator. July some your that And of specifics I comments, specifics time morning late as about forward the about – together I regarding our getting look you, period. location want information the investment also more close call. more the for these thoughts our opening level we'll again. in earnings in Pinnacle everyone our this to Thank at licenses Thanks

Operator

we you ask for does please Ladies and for We and your conference that that you call lines. conclude thank disconnect participation gentlemen, your today. the

Joseph N. Jaffoni	JCIR
Timothy J. Wilmott	Penn National Gaming, Inc.
Jay A. Snowden	Penn National Gaming, Inc.
William J. Fair	Penn National Gaming, Inc.
Carlo Santarelli	Deutsche Bank Securities, Inc.
Felicia Hendrix	Barclays Capital, Inc.
David Katz	Jefferies LLC
Steven Moyer Wieczynski	Stifel, Nicolaus & Co., Inc.
Shaun C. Kelley	Bank of America Merrill Lynch
Thomas G. Allen	Morgan Stanley & Co. LLC
Chad Beynon	Macquarie Capital (NYSE:USA), Inc.

PENN Entertainment (PENN) 26 Apr 182018 Q1 Earnings call transcript