PENN - Earnings call transcript Q1 2021 | PENN Entertainment, Inc.

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Operator

Greetings and welcome to the Penn National Gaming First Quarter Conference Call.

During the presentation, all participants will be in a listen-only mode. [Operator Instructions] It is now my pleasure to turn the conference over to Joe Jaffoni. Please go ahead.

Joe Jaffoni

Thank you, Tina. thank quarter for conference and Gaming’s Penn everyone first XXXX call. morning, you joining again National Good

We will first, get as the well to Harbor management’s presentation your Safe and and questions answers. But disclosure. I review as will comments momentarily

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

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

Jay Snowden

Good for joining and Joe. us. you, morning, Thank thanks everyone

Here our this Felicia her for CFO, Penn Hendrix. least is Wyomissing side me first earnings call new on at with in official

So, welcome Felicia.

Todd have who Operations about to well our answer also respond George, executive questions our We to can my as help help team of as business here members Head core of your questions other needed. follow-up as

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that higher than also much it per visit We was spend is note pre-COVID.

visitation or of in In is near fact, now our levels at markets. XXXX our most

XX steadily our can our in Importantly, as slide has of to mychoice We gain continues plus unprecedented April, provided demographic our these over the particularly since in age to XX our unrated this where new segment group younger beginning with to compelling entertainment while has loyalty convert casinos. deck and Page has gaming age X, programs opportunity Further, players the from play year. illustrate momentum, growth the while see view is through option, the age a that point XX you to continues incentives. been program on us and to the member accelerated XX demonstrating which segments, younger our to growth, returning

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stoolies Sportsbook next with we our months. at Michigan. the along land On these Chicago results we about better for Barstool large us had thank the information area, expectations, Barstool the Pennsylvania requirement exceeded of excited the XX to Illinois goodness registration are deposit operations couple or on in XX, providing in the conversions relative NCAA part just first really in-person in first March of the ahead thanks launched return, The app successfully are of with the of we what and initial the to generated in the in timing partners Basketball of our much time state. more loyal following of in Tournament and for ahead projects days We XXXX

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acquisition retention rates, features high costs, exclusive adoption customer expect We the and our long-term. unique casual betters among over betting profitability strong promotions, outsized will low drive

over-index allowed of online handle mychoice our expectations. our XX% initial GGR power Barstool’s our compared us long-term. of with to successfully over iCasino placed fierce as to betting and trend In base, March, customer wager for aggregate the we uniques a We over be bit continue loyalty sports Michigan, the on of product the example, on offerings. has audience, month this online during cross-sell NGR was anticipate a monthly which to our and above continuing our combined to The a in the of

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hand a our I for call of want I the financials, attention first our it of the review over continued on summary to to are to Felicia front. a making quarter Before we results special and strides ESG

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Felicia Hendrix

part team. great here being Jay. Thanks, It’s and talented tremendously this of being

three by Over I been Penn. was the company were me say once years, biggest over pleasant past have asked Having and I than surprise of what months, discoveries for few that there surprises more you the covered many XX I for would the standouts. joined

every the The and company, to of depth has Penn the level. every of is and level at the across creativity the first seen the entire aspect talent, excellence in commitment bench that of company

Penn’s community commitment communication and to respected second different the is well-known inclusion diversity and is is investment and transparency. to community transparent service, and finally, internally. The Jay’s certainly ethos that And is no commitments inspiring. by

above results, EBITDAR said, XXXX overhead of of Park. of pro $X.XX proud a January So XXXX and first $XX with that closures the basis you and adjusted very increased after margins EBITDAR increased which is basis, our forma a the more in quarter On segment, revenues. COVID-related and the of pro in quarter know Greektown, EBITDAR XXX% was we more COVID-related XXX full forma is even our which Penn excluding Pro being Zia other impressive as previously margins late million forma goals. $XXX the XXX our reopening quarter in XX% billion EBITDAR corporate given of quarter points. in adjusted stated are of points. adjusted especially decline for first as Interactive, million, compared than flow-through reported ‘XX for X% on to the of of our represented XX% and Adjusting basis increased revenues of closures EBITDA Revenues this

record COVID-related Midwest and South Our the EBITDAR in in January in reported the closures and weather margins quarter regions in despite uncharacteristically and harsh February. South

of Our improvement as the compared performance quarter in the region the particularly X,XXX ‘XX. was period margin segment basis generated in first points South of noteworthy the same to

While also the revenue example, continue cost first Last drove as of points in protocols efficiencies to despite compared adjusting unfavorable XXX remainder all removed state. environment for Midwest, an mandatory open basis savings, the quarter, In certain restrictions first restrictions regions marketing for COVID the certainly promotional in back and portfolio margin segment benefited the up. in the property our and markets. the impressive competitively EBITDAR irrational of our restrictions that bodes COVID gain nearly well week, closures reported Mississippi to and growth ‘XX, results, for which as quarter reduce less of restricted

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I reevaluate such, turn continue will we As which our we providing on now guidance, Jay. to back quarter-to-quarter. will will it pause

Jay Snowden

Thanks, Felicia.

S&P our moved impressive results, upgraded notable accomplishments last stable. quarter, other these had to senior rating XXX being and to addition many the week, to In secured the our in including just outlook we one and added notch Moody’s

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leading work Pennsylvania growth up be all value before on Our the on in football we for Michigan that, Further, season we open and positions initiatives, has handle, differentiated XX and of at and by shareholder with a strategy NGR to year. of With it driving remain and variety busy states us well in to turn like questions. over and market live earned in line the a track GGR X remain terms would this to focus or end future. I the more Tina, of on into you states

Operator

first comes Instructions] And Greff that go [Operator question JPMorgan. from Joe My ahead. of pleasure. Please

Joe Greff

you just several over of in customer respect component states the of you and what technology engagement, maybe or bringing side, have launched digital any here with start what you months have promotion, with you the learned technology have to on Jay, morning. that views acquiring in learned last acquisition side and the of maybe can about in-house? the Good kind which things

Jay Snowden

lot you morning. been Thank the Look, has as live you We a just Thanks, know in went question. learnings. for of Joe. Sure. September. Good there

through got our And are now states. live so X first we madness March we football our first in season, and

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fully with Barstool, the the media it’s have and mind, learnings Some of even we not our integrated based that know come best our approach on CPAs to we close. that partnership and industry the differentiated in

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profile have. that take of to that So we are great advantage going margin we

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mix. We have customer a very different

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than have space things as as a way approach and One great think differentiated focus that’s and that very engage is is the well it that I we of others the to learned the have unique retention promotions obviously and for we relates we us long-term. different that on content in and

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businesses. and and infancy, more think every something Chris our why course, are That but anything end the as to to in you to is business lot to that got relates M&A, definitely and right just we folks, good we there we that Rogers It’s I as in ownership tough a It is relates mean things stack as to partners and our still are really QX QX Part we touches it long-term. Kambi and certain control QX relates of of, up. have sense you it also, in in see means of overhead potential of there that QX. from we looking are imminent. have the always expense comes aspects certain corporate really don’t from Gaming. are I more have think learning that want to are BXB we as doesn’t at have tech over ever that development corporate you the very own active I White hear growth don’t growth X it control to user. envy opportunities problem And because especially make busy I now. I partnerships guess, Hat about BXB it, that And the the

We lobbying busy are is now like that the to and states make dust sure very have an in right New said and and York we to when Florida operate settles. opportunity done all

So, but a Joe, a we a approach. answer, with I differentiated a high think kind level, of long at it’s question simple have

the I still time states money, losing not goes really that have have we for share market well prove bodes think to able here out going as and fact we it’s are we and think, the scaling I in, we business, and in the launched the really to future. that are low-teen are

Joe Greff

just leverage. areas but low scale I of billion that’s And How M&A? mean, do acquisitions? growth like moving? $X.X more external things advantage? something liquidity, you. incredibly potential Thank Are that Great. driven by there a have your Perryville, opportunities needle larger follow-up, you which then you are In to there not use

Jay Snowden

we in I as to love it right the as relates sheet. I that in – feel here position now are balance to Yes. well. Felicia, jump the and free

in certainly, like at million our have have this, And our amazing. position since real levels of And leverage $XXX have spun to been been X.Xx. never is traditional we to leverage like a We have net estate. off

think right opportunities on I there There we what is some medium to like relates we small, are we large, could looking it So, at. that stack. are to – that as have few busy check would be Joe, that technology still a and are or you boxes now, depending

paid There widening, it We compelling continue to approach potential the some we funnel there along something right other that to is if of technology we The wider organizations for has acquisition. in if sense that’s of be connected partnership And relates think make to deeper. us the media to there just are a long-term. I spades with and make And could Barstool are international broadening a what could that going that over that us. of other look lot little that doing sort potential looking a that we now. are and and could be have at with all moat little are built as at opportunities comes offerings any potentially

things. So, we actively tires of on lot kicking are a

next I think us to be active into you relatively should heading year. this expect year

Joe Greff

Thank you.

Felicia Hendrix

as question our balance add, that’s one I do just I time that’s also thanks for it’s market-leading free pleasant of short I to stronger and power things leverage the and been cash I the And on currently, going investment discoveries. only have get we If about. been were me And our flow And community in here. prepared evident I revenues mentioned that in and think don’t sheet thinking comment something is – the my levels want Joe, to on operating conversion, remarks, EBITDA. may some the that grow I which enough our really because that is to other of

think faster, Jay flow strategic increasing business talked and sheet that should growth that higher position puts just our even about and our cash it, reinvest in then and and in the to to about. free needs our grow stronger you us cash today, balance if as EBITDA, both even further revenue on our opportunities stable drives based pursue minimal bolsters So

Operator

Thank Please from of you. Needham Co. Bernie comes next The & ahead. question McTernan go

Bernie McTernan

Thanks for the taking question. Good morning.

expect you And to Just in acquire season. you being you color I to this provide more if any just customers NFL upcoming on a the follow-up. could Jay, was wondering mean. aggressive mentioned what

book external something marketing remarks, other on prepared TV mean your in mentioned but else? sports this does promo, virtual or more the You early spots,

Jay Snowden

us. you thing, less to expect traditional Sure Look, think what from continue I is Bernie. should

sponsorship new we about in are talked we I sports In talked that think going ways. key and very soon. to we there Barstool really be make sense about And are talents, a it there of markets. affiliates. to and about us locking both are think I at branded verticals there and bars think up how partnerships opportunities TBD, we for lot partnership for and/or more more think out relates acquisitions, on have the as can potentially Investing influencers that digital people where new and ecosystem. us the business. having are going our Sportsbooks. own in media just of aggressive share core We and and into That’s casino, standalone it get about I omni-channel this once nice you the control potential Barstool on want approach thing the to orthodox, because XXX% some effective we but to more to

are the really business. people and to in keep all to our them able just of invest And going more ecosystem, confident we and digital so in brings aspects can in invest be we as we core it long healthy business, into the want are can on-prem, can you funnel invest as And there, you you to standalone widens media. drive your in margins

sports down every they playoff. am it’s watch And noise you every commercial am be So, listen I will tell the don’t me mean, and sucker, radio of talk radio, about betting. I in people let time am we the with a – not and linear Pennsylvania this even expect really the spend sports I their I TV to is week. overwhelming. And to Sixers, in care others. the though us would majority us. so to and here, year Bernie, competitor where when the to I I I I decide wallet that

who to know is even don’t you. You advertising

in not to are space. that We going play

and I think very loyalty. that zero believer low ROI a I am that, return, is that big creates

actually around the it’s are chasing This am customers you is thrown who I your promo. lot. like from takes – value Apple This cost, if the because I phone. a And to minutes. am life. on element know I Lifetime I betting phone can’t tangent, people that of Apple is not be it’s value switching something to touches but loyal this going a a interesting Switching up. bring is around next cell forever. sports promiscuous Android are to to And with important going that’s customer is I think with calculating bit are going you moving I something Bernie, apps, forever. switch. is every not X Apple costs of stuck and switching about lifetime your is think

business think commercials asset following of don’t media time very sort as a a really of on the think you fantasy that share we You the the a register, bulletproof and are like that a database real of loyal going advantages time strong I around. combination that’s to aggressive deposit winners Barstool, goes spend all a database going ones you market is casino And what’s and app, strategic linear, download those and the sticks audiences, are that whether that this to media that’s be or daily happen I over or then gamble. have sports have and some and I think integration going structural of to

going from continues be I to jump think that that’s app to to app. the business

have are in be different head doing perspective. going to more my yes, finally that’s but will it But football season, into scale we So, as We be we ways. we aggressive.

Bernie McTernan

about the then for Celtic call my it, Is of, probably that kind with strategy customers? pretty Appreciate same XX% there really opportunity for I acquisition opportunity do will converting about Barstool the in Barstool it’s on this personalities be in the is think interesting let’s we – I the what betting. iGaming? better of some would so at Sixers eyes could opportunity that just you there using is Exclusives, or is sports imagine strategy And the think sports working live content-driven iGaming, betters think to If that. the the same year Illinois, betting do Like showing Barstool dealer is iGaming? Great. the of mychoice sort of a worth. get And follow-up

Jay Snowden

we mind, you in and on think Yes. the of Studios that as really formation our have Penn HitPoint, done our of we have actually, the it while Monday, working working you saw bespoke could content in and HitPoint we our was we formation last the with Barstool. have with developing late that’s sorry, these boardroom conversations. And of Well, I getting Bernie, sitting – been on deal week we actually been at acquisition what have were partners exactly announced

out, is sorts So keep craps planned. Portnoy, players Big make fun people launched their dealers and are to other in you, a yes, is there would you iCasino that roulette they iCasino today and convert bones. casino. product anticipate to an sure bit not mind games and bare sports say, are with to and in we think to first it opportunity and to Michigan Blackjack have little the stuff want Dave we It’s the because where should that their interacting needs that to giving thing our all and we into in is be. and I We And miss we didn’t talking Cat be we of from want

think that it’s titles are one-tenth have our to ramped offer, offer, we like XX going one-fifth we of table up. and get I we and games competitors that and different slot to what

iCasino. studio. And how going have content their our more betting that well-known is you sports the are world, be but much see season, it, side through over IGTs the what offering football about think, ourselves going see percentage to from heard games I and this of they you created going this think case to content to September if to you – call of upcoming, in converted talk are by year, audience, we not some the BetMGM Barstool point, just iCasino of I

there not yet. are We

are at We XX%.

you expect content, need like at very on us on. But or side. that’s are I XX% It’s better to betting like we and or so. yes, sports working XX% or think they high much the what And a to do should percentage. we XX% are have

We take are that comes tapping really loyalty to that things and differently going of the with do advantage into names. Barstool

Bernie McTernan

it. the Got for quests. Thanks Thanks Jay. taking

Jay Snowden

Thank you, Bernie.

Operator

you. next comes Bank go Thank Shaun America. Kelley The Please of question from of ahead.

Shaun Kelley

welcome hear morning everyone good Hi, to your voice. good and Felicia,

Felicia Hendrix

Shaun. Thanks

Shaun Kelley

Jay, So on. touch I things wanted two to

some your And wanted low-teen launch just some at share. thoughts staring online and you I kind and stick are in the to digital, things of think to kind all – have share there. you guys been First, versus get patterns. the of And time of then you level of well, with a follow-through just new where of tend we not probably we when that bit out little you to some some on these in over sequential the seem kind of do just exceptionally the penetration, the about talked market market given to given Barstool market I of markets, see

should investors Just you over kind pattern time, as look kind are more moves at are assets you that to watching it you of are KPIs about markets? gain bit performing? thinking And as it, what on your little expect how really a across judge scale of what start as you how to

Jay Snowden

about are more football couple the a We are Shaun. keep going mentioned to it’s can app No, much to playing it’s into a example, you question, app. spend season, around promiscuous One, customers right we headed game more now. is now. as that not talk day. standpoint to – things And is how great of gold we we as a scale, – ‘XX in expensive drive mind. just from have And rush I there are obviously Yes. in Michigan right to an And obviously every this marketing it’s earlier. a for Everybody take Uber from

be lot opposed and scale national long-term And work you for so more us very when it marketing to spend ROI. and have little localized, makes more very and sense you regional more aggressive very expensive a on can approaches more as with to

think Number every be a one. I that’s market different. two, to going bit So, is

results have If you look remarkably Pennsylvania, they consistent. at been in our

low-teen share, whether pretty launched in We in since September. every much month looking been NGR handle GGR, are to at XX% market we you XX% have that

hurt going clock Bowl. you we and got think mention what season. volatility going season. the really – in because – to basically we bit and don’t so in folks, don’t is pretty Pennsylvania. Big been And much It’s in surprise most about their very month-to-month, headed the during Michigan football but Super anybody, football. see are will And the you that most sports work, the think be is us would I other this I basketball be I the when launched are be Barstool we I to thing talking especially Portnoy weekend, think of to are that And think hockey, NFC Cat end and a competitive, of for is we part. the January but that probably at which championship football months the through going into is competitive And right little then We I AFC, September top

as think into start once we that more efforts you it And marketing to especially get going up have football so spend season, the ramped scale. self-correct get some and with see are in back drop-off to more you to I Michigan,

and seems I at to are not I get much need the we step does continue monthly football an X long-term. a go second season, think more another the I there handle. through. to period So or back get us And a to and like a strategy, back think through that over to overreaction full you and a it over look model the than margin And matters month what of let’s take be to look profile, season business the months give – to really what

We we have confident out. to things are lot, a shake and going learned with are where

Shaun Kelley

too to far we it, of without much made just core kind business. the maybe but think, this And I about brick-and-mortar gears, talking switch

of sustainable are a a what eyes is I just funding, April trying stimulus pent-up much of lot March to how asking think, the demand. some lack sort versus investors seeing what understand are one-time is in some us truly entertainment in options, possibly our and of about of we

seem guys to of that. around You have lot data a

for by cohorts broken have out You us. it

tailor just margin to to if little and your the on and get repeating kind kind want and real our too, bit one-time? you around of a front, arms of both what’s revenues thoughts to I trying get it So, little just what’s a versus

Jay Snowden

Todd, Yes. want to grab you do one? that

Todd George

question. have I of been gone think what our everyone this. industry asked through kind Jay. it’s Great Thanks, we in as has Shaun. And Thanks,

of the everyone from big more similar, volumes, Revenue, even wouldn’t point and us XXXX encouraged gamers. end XXX% EBITDA obviously, to, over many a There There the handle, of of visited all as groups, that last And – stimulus performance we as Mississippi trends. marketplace. you week pandemic unrated acknowledge a the driving that’s well it the that Louisiana, across drop numbers. it’s your realize of of pent-up properties entertainment and by in as any demand. a a seeing money things in the was that are In combination March the of lot they is we see. revenue So things. obviously is There is are even Louisiana restrictions, was of all to also high seeing and are would group definitely our the QX way offerings. different are going I was to a customers, went it April, we was core there and which But in to more are there trends well way, you the South amazing in And X Louisiana. on. visitation, removed encouraging. really and It lack

pool, and great being the spending themselves, having restaurants. really tables, it to time see at was encouraging a time out enjoying there at dining So, people

EBITDA, provided rest of we the XX% which get performance the kind And than country going. your So, you in conservative. We quarter. we have improvement. of on a is goal discussed point XXXX now This XXX To saying margin, that it we more been coming on of do that, XXX% first any internally, margin past, with framework of obviously a maybe really, the other was basis could volumes, number of really feel equates out metric the where a of when X,XXX. see math, XXXX a to has of to little the that about

volumes. are as are continue we XX-plus will to steady. first from all April. younger the we we of to demographic, think remain a in May, performance got vaccines, trend the the we holding on where those after volumes to seeing through I margin now the days as by point continues come feel And the And be driven X

very So into move as encouraged year. very the optimistic, we

Jay Snowden

like I tough long is as to from they to what been is, highlighted great this said XX It’s the Well looking the months, Yes. and months, Todd would Todd it last right add, there. are now. in continue well profile months. revenues thanks months, have the and environment, X to how in what as we be lot does the you right anticipate sort our the should out now that’s as in XX the margin Todd. And a now. are field. couple We volumes as profile, what’s X team long it of predict margin it to thing One be seeing months about But feel sustainable as going operations of

Shaun Kelley

Thank very much. you

Operator

The ahead. question Please next go you. Thank of Union comes John DeCree from Gaming.

John DeCree

but about of is morning Good for and slide in GGR And share have of side early seeing if sports play retail you about, location? properties crossover Sportsbook. Are seen if customers have then sports I go in talk your you a online the market book. you a And play you places my could Jay, question a betting re-branded of the on deck your this betting, everyone. sports taking kind I where and congratulations for to have was conference those retail at hopping was from could they that other you online Felicia if very the are about where Barstool play early, sports that of home Thanks book there I two bit on, it’s value call. different or retail talks little a you anything present? know couple customers? wondering the talk wondering a re-branded

Jay Snowden

And Todd, Yes. with help one. can you me this

property, and to they a in of beverage, most of are while that in the many customers games, property. Here bet And slots books, branded these is sports retail what never is food and in table Barstool them, little we a coming bit seeing engaging are lot them they have are not on actually into that surprisingly. mostly been are in

us are their Erika at all Barstool, is do we excited really at that interesting of audience. the been to and and able one we, the most acquired is that activation of this for Big Dave we I most think since is things what’s and bars have on-prem something Cat others this are and about, not as

bars Black it’s games books, entirely sports half are down. other these Barstool-branded every very are opened slot So limited through other with or slot that we’ve and shut every still though even down seat shut Jack and capacity

get So really about the that think results early how we lot be very activate audience. but about thinking more a those I can can when encouraging, excited stronger when seeing you we’re are much volumes

Todd George

Yes. earning only time spending stickiness Well actually property, in at everybody add, mychoice the really your now to with us earning loyalty, you question, I are online John, program, the would The is whether that your said, Jay. the thing so your rewards. or

So a we’ve nice seen there. uptick from

in They brand as way gambling if are back they I well casinos. loyalty, the think, their indexing, people us online as Sportsbook. with as So the over find the are into obviously,

and definitely it’s saw a nice was really folded loyalty everything So encouraging a the trend increase after program. into

John DeCree

your and in your returns where look ask That’s cash have? in flow addition more, you’d generate a I revenue today EBITDA you you one picture, I week. Jay and high shareholder to kind in model. kind tuck-in flow to guys it on How a is cash the investment kind before do as the opportunity will spend little great. and ultimately, comments pay Felicia That’s pick one accelerate you uses acquisitions see being able of could free of of recovery cash back different position think would the level, that acquisition we deploying this you of grow hasn’t we great, to to were up the color. in and of invest bit and If and going clear about about that pretty in accelerates I or sense your here, to cash, there amount in content sheet debt as digital helpful business mean, how in Jay, earlier as of a But buckets? perhaps unique been digital want your Felicia’s balance or long dividends it business? ticks get cash think of where can a like big Just is deploy remember. in our flow an down continue you think the to up as dollars that

Felicia Hendrix

John. Thanks, Yes.

online talk business, about all investing heard you’ve I the right, channel stack. now, inclusive our today, and tech Jay think for of many and that’s for times growing in our solving and also

where So that’s today. really are we

return balance lot discussed. regarding It’s definitely cash on consider dry that’s powder of number much capital, growth. now, of a something focused But different our something to certainly over Our strategies. a of road. time, we’re pursue we But down growth us the right gives will very

Jay Snowden

we mean don’t look by John, I month, look you you if at, of but slide. if sort at month level detail results, we the March-April provided this provide of a

level I’m that the You’re because flow close leverage looking tops $XXX to rate run to to the not months. a business each to million I But earlier, those free cash saying little EBITDA in March tops roughly don’t we’re this at million Felicia’s corporate maybe the at to X and of should over going strong flow And is how of of $XXX is free long, seeing point EBITDAR industry. all and what or the operating now. is of you conversion, close be we cash month, tremendous. know of think, EBITDAR a

John DeCree

Thanks, Felicia. Jay. Thanks,

Operator

Thank you. Sachs. question comes Stephen Please Grambling The of ahead. go Goldman next from

Stephen Grambling

on Skybet the the online gave book. sports you analogy Jay, Thanks.

think size peers how customer to you As about a those market your like without think things at segment do across versus any you metrics can how you how look customer frequency color concentration that perhaps we you about disclosing as And perhaps you compare in is more concentrated? market? the base more bet of your in stats provide on customer of think mass specifically, and peers fragmented

Jay Snowden

we XX, the the know it, that know than we I They sort some They be of sports earlier, from visibility hear XX our based we Yes, our bet what the I And what over-index where It’s Michigan, bit we what is this in are call speculation. average where mentioned you’re would young. of there ourselves ours in size, us, know, just seeing lower, great thought XX hearing I Stephen, would and rates XX. of know in question. just be, average I’m ecosystem about so especially what competitors for been have sort higher. are what more But of hold the age not size age. terms more But on And as a – than we’re that competitors, we is of to lion’s and average maybe surprisingly, share betters the our average Illinois is is Michigan, Pennsylvania is their bet say seeing XX an XX, it Michigan in there. and has lower. to younger

because you anything more when lot play what betting. we’re I in us, exactly and but the Michigan, they out the And than have the about how recreational or time. all been UK we’ve at for to that’s than we getting think That’s has over because Skybet’s of based handle. And percentage are in value, And Skybet long GGR rather a that’s great. if I the have our hold of older than think been look betting, And a hold so doing for that that’s younger, I’d parlay think the XX bets versus casual competition. rates lifetime states on at they over-index a of now an years, going in early ecosystem. sort better in on to higher life-to-date a you in to including say better. And casual and Illinois, hold XX last still average X tend It’s X are lot

what what up to internally, the model compares is that else, in how that heard, on difference that’s we we’ve how competitive do exactly I’ve I the from based line quite know really set everybody Skybet think and what don’t the well just I then seen our what and read So UK. to I’ve but

Stephen Grambling

That’s as a results of the is follow-up, in question Shaun’s on And this then a sustainability asking helpful. different way. perhaps

you had think seen longer XX% changed given what your sustainable still maybe Is levels about of has revenues. lower should XXXX margin of that EBITDA, think you’ve in achieving I view talked business? how or levels previously term, we about improvement the

Jay Snowden

of that’s it think at you’re sustained, Stephen, like pumping levels earlier. now. the out where think, and they at us pretty we’re Todd well, if you That’s conservative what in I see said revenue margins the to out now, going way based That about seeing I pumping on And are now should feels we’re are sort it. think business.

Stephen Grambling

Awesome. Best luck. of Thanks.

Jay Snowden

Stephen. Thanks,

Operator

Barry next Truist. comes Please of ahead. question you. from go Thank The Jonas

Barry Jonas

Vegas. Hi, all about color. the guys. Thanks for a question had I

another think market you of be term, do Strip? sale operator, specifically in about back you to longer to how the the think need that Tropicana With with

Jay Snowden

is a it road – when retail Strip And it to Penn of trough, has want And hub-and-spoke look being great to in for we And We some we rearview It to that and a the the think we at the of struggles destination think have be mirror. to. a with Yes. that’s database And location, lack send trying of down people relates and representative our I and envision the Vegas asset wasn’t there that. a on-prem sort conversion have could all a need that’s property is a feel you standpoint. is right But you I to at and well. think quite at market. that the strategy? I of Absolutely. location you it amenity at an right story, of like the executed the to asset competitive actually has great we be end day, an from and as

time sheet it’s database, a right everything taking on we an if would making line But be and like going say, balance will something not think there in investment associated has feel our a that with imminent. is absolutely that I is for have and for opportunity feel but done, So based we that the we with It’s as us, we sale imperative. company, our comfortable look have a if quality on that. Vegas to I with assets not something very we it and was be not

market, is people, asset a there We’re if but there not taking making a out will offers on the good look. we to definitely be

Barry Jonas

quarters you think question, then lagging just where I out. was ago, Okay. of internal that now? was Felicia’s Actually, in-game your Great. mentioned I as curious it betting is And some follow-up, a but goals few live a think

Jay Snowden

can you sorry, Barry, I didn’t out, repeat that? make that I’m

Barry Jonas

was quarters I’m just think your live ago, a goals. said lagging stands that in-game you curious where I now? internal betting Yes. few mentioned you

Jay Snowden

Yes.

as betting to and popular most sport, over probably So is I why get levels at is and don’t somewhere for so I in-game XX% to basketball her as do probably trying challenging those that going Europe. the more you betting up in popular itself north in-game in-game, I U.S. and to the do offense But there with part would market, the not be And off to there. in-game which in-game in is because soccer look how of your think think football end we’re up lends head popular you’re we – blow think is well. can of

creating created and in We’re time last right is those I a you’ll take having over iCasino bespoke to content studio I more going that in-game that’s to and on a see think and little think I focused about XX% now, higher bit a And grow. than it’s to time. to we both honestly, the of continue great talked now numbers we little more And going within so reported. that sports, we content which But think be great And it’s time. take specialized very product. going have

Barry Jonas

Jay. Great. Thanks so much,

Jay Snowden

Barry. Thanks,

Operator

ahead. next from of Please question comes go Group. Craig-Hallum Ryan The Sigdahl Thank you.

Ryan Sigdahl

to about a morning. lot monthly reported is guess, be to you sub-XXX Jay, mentioned there know states clear, Good CPA, external guess, misinformation, Thanks very talked relative that down. very lot I we’ve by this the marketing. I there just for about think, of promotions want I I on basis a because a break industry. taking I impressive versus questions.

kind from strategy Michigan, spend So then how early expectations do etcetera? Illinois, between those promotions marketing? learnings you And your changed and in of your versus there initial external has think two about Pennsylvania, your

Jay Snowden

cost to per that. acquisition. CPA by those as different. mean, mean, happy No, very I Yes. share definition, two view I is look, I

I so promotional more how spend get standpoint, to is app our place from very think you spend and that bet. on much about to to much customer that focused that’s And much your download a the did have to retention. And

customer a a cash us on And number We these those promiscuous things very within as And is more they that and versus ecosystem. maybe the a reasons they sure that’s differently. are it of I spending a maybe more compelling a attracting reasons somebody content very of in and already who’s of you’ll in have spend to why making also two little bit as and to have stay you’re see looking think view And on in markets. We It’s tax-efficient percentage relates your compelling compelling bit retention. ecosystem. sure investing paid little promotions hard promos laser-focused compelling compelling media at on GGR.

begs I So it where spend CPA it’s being being we it for sure thoughtful as and going as we well, to just what is, long-term what us, around spend, should but be obviously, higher, make think that we be? ROI. should question want we’re the that of, low it it to create

aggressive we keep need as as as we customers we be we’re to be long attracting will We as believe can ecosystem. that within our

Ryan Sigdahl

I for bid also in sports and a fairly do there an Great. And then there, structure guess, opportunity is betting, you just competitive licensing state? mobile ROI a think York on confusing New expensive. the complex

Jay Snowden

well, said I see we it Ryan. the It’s and have plays will out. it way. this think conundrum, a you how view to same We

We’re right a And our multiple that number to bids structured, go set the because providers. talking was now. of can way on very active this with comps you actually in platform

is And complicated. so it

and that than because ecosystem. up be out. I be low I we our to fact can money get how the in will but loyal a have hugely think sort important, that to an that see monetize CPAs the made, tax that money spend is that don’t think anybody if say we’re our better of such audience that, into I we to like anybody attracting have we have set of can plays obviously, and rate, would going to environment

rate, want don’t tax a So trust think rate, if I is value high I and create But environment tax we I benefits the and don’t higher-than-average at profitability. high think me, a an tax rate it’s a state long-term can we know that all. still

Ryan Sigdahl

guys. luck, Good Jay. Thanks,

Jay Snowden

Ryan. Thanks,

with, go Tina, one Let’s question, please. more

Operator

Perfect.

Please from comes go of Steve question final ahead. Wieczynski Our Stifel.

Steve Wieczynski

Yes. welcome. want cruise am operators I talk this Thanks about shocked anymore Felicia, I Hey, me. guys. don’t to morning. Thanks. you for mean squeezing Good in environment.

– a betting. about a originally legal those think be guys or this attacking converting specifically see are there else. my entity as and all are to might you money, is gray that those do my I estimates anyway, market how somebody obviously I want sports around is, question And question So Jay, ask out mean, type more picture longer the gray of market they folks that actually into around you like gray question market bigger And setup do converting TAM yourselves that folks from map. And a there over the than expected? term difficult risk a

Jay Snowden

easy. their great legal question. that’s are question. think even a It’s by And pretty Penn legal make competitors every day that now part to more markets understand And our it day I industry in that all than it the doing I sure advertising question a is is an are and people certainly, think that

a As X it’s minute mentioned, transaction. I

to operators So good decades. illegal have products. for those there them I have have we really had some of all They out – think

good, than to create we of UI, we’ve bet so And And are we all make operators. illegal. not at of have if those done AGA UX I features continue that as when And legal to have you functionality think offshore good bet some really that done and collectively asked know. prefer a to sure a want better, we would has people, like with people, to It’s it internally people pull you don’t not you Penn this, versus well. lot and as

it so gray you’re overnight. just And going And that time, where The sort convert to especially what becomes is states where think to and people an which it’s see aren’t. a that’s [indiscernible], effort ones I more not. continue But regulated and I than But necessarily going I and ones some more an to not over industry think see get as market I and legal is that just you’re that to even going to scale. think we this think so time, as more grow to industry common more has legal of are it’s into happen are effort. which it’s over to our of it Penn legalized, realize is going have scale better and black option? time more knowledge market, sort ability of betters over

Steve Wieczynski

I release Jay, talked threat. you sounds if it but was guys the I then, wrote you thought that about about like I this being in being almost earlier, to disruptor you talked about I about – talked a to And it. it, industry. Got a And interesting – it if missed you and or was gaming thought the apologize me,

bit about I statement? can by little guys more expand meant you you So actually that what a guess,

Jay Snowden

as a I it view threat. don’t Well,

it going So we infancy. what it we a areas. And disruptive. we first first we’re its the think of that the saying, lot businesses. that casino or on at acquired view in a were pursuing Steve, that We a say was work? mover lot were When mover when route We to is eyebrows creating were We is I’ll a investing first in look Barstool, space. be clear way in raised we’ve so as wow, I that. been REITs. at operations as to I first attempting a social first were And mover that the industry’s mover of a on in

when gaming. to we and to really adjacent expecting to think hear see that well got figure how step compelling wider continue comfortable this the entertainment, tech. chaotic, really, of I when we’ve We from that. and be It’s this do industries for the convergence is set well, that. different to a sort all day. media, verticals It’s and you coming and I like out up somebody’s like industries And that deeper, be breathe the it’s environment set sort current on it’s I and We should very live and We not on a through said, really we it’s got going up moat We’re of as And make how of chaos disruptive. to to create of and it’s us. just some and a say this, think it’s every strategy think us can we’ve place sports, of more we ideas And team vision. we’re together. built, we’re

Steve Wieczynski

Thanks. great. appreciate it. I Okay,

Jay Snowden

Steve. Thanks,

Operator

Thank for you. you call any closing back I’ll to over remarks. the turn

Jay Snowden

appreciate touch morning, we Really you. taking this have. the you I and time all in us That’s join to of everybody soon. be will Thank with all

Operator

the for Thank ask participation a conference you thank you and that for That good and you We your Thank conclude call have please lines. disconnect your today. day. you. does

PENN Entertainment (PENN) 6 May 212021 Q1 Earnings call transcript