Q4 2019 Earnings Call

[music].

Good day and welcome to the Eldorado Resorts fourth quarter earnings call. Today's conference is being recorded at this time I would like to turn the conference over to Joe's Your phony. Please go ahead Sir.

Thank you Todd good afternoon, everyone and welcome to Eldorado Resorts 2019 fourth quarter conference call joining us today from the company, our Chief Executive Officer, Tom Reeg, President and Chief Operating Officer, Anthony, Colorado, Chief Financial Officer, Brett younger and Brian Agnew, Vice President Finance and Treasurer.

On today's call will review, the company's fourth quarter financial results and the ongoing progress against the company's key strategic priorities, including the status of El Dorados proposed acquisition of Caesars Entertainment.

We will then open the call to participate for questions.

Good afternoon, Eldorado resorts issued a press release announcing its fourth quarter financial results for the period ended December 31st 2019 releases available in the Investor Relations section of the company's website at Www Dot Eldorado resorts Dot com.

Before we get started I'd like to remind everyone that this call is being recorded in a webcast replay will be available for 90 days D. The details of which are in today's press release.

During today's call we may make certain forward looking statements about the company's performance.

Forward looking statements are not guarantees of future performance and therefore, one should not place undue reliance on them.

Forward looking statements are also subject with the inherent risks and uncertainties that could cause actual results to differ materially from those expressed.

For additional information concerning factors that could cause actual results to differ from those discussions are forward looking statements should refer to the cautionary statements contain contained in our press release as well as the risk factors contained in the company's filings with Securities Exchange Commission.

<unk> resorts undertakes no obligation to revise or update any forward looking statements to reflect events or circumstances that occur after the call.

Also during today's call the company May discuss non-GAAP financial measures.

Finally, FCC regulation G GAAP financial measures most directly comparable to each non-GAAP financial measure discussed and the reconciliation of the differences between each non-GAAP financial measure and into comparable GAAP financial measure. It can be found on the company's website at www Dot Eldorado resorts dot com by selecting the press release regarding the company's 2019 fourth quarter financial.

Results.

Thank you for your patience with that and at this time, it's my pleasure turn calling from companies CEO, Tom Reeg. Tom. Please go ahead.

Thanks, Joe Good afternoon, everyone.

We're happy to be here to report fourth quarter results in the corridor.

We posted a slight increase in same store.

But again stay very tough.

Plus 22.5% comp in the prior year period, a there's some noise in the quarter in terms of.

You had the century assets that closed in December that come out as the same store.

Numbers that ultimately was a drag for us because it's a those properties were doing.

Well in the corridor, that's just kind of luck of the draw.

The other thing I'd call out as the Atlantic City Holden.

Atlantic City held.

Considerably while last year it was down 400 basis points this year.

In table hold which cost us over $3 million in EBITDA.

So from an operating perspective, the fourth quarter of 19, we're very pleased with.

2019 was obviously, a very big year for us.

On a number of friends.

We completed a number of asset sales, including the Pennsylvania assets to Churchill Downs.

Early in the year the assets to century later in the here, we announced integrate the agreement with.

Twin River to sell Kansas City and Vicksburg.

That should close in the first half of this year.

We announced the agreement to sell Hollywood, <unk> or I'm, sorry, Eldorado Casino Shreveport to Maverick that should also close.

In the first half of this year.

He.

The Big News of course is the Caesars Entertainment deal we continue to work through.

The licensing process. The FTC process, we can see the finish line from here. So you know we are reiterating we think we will we will close the deal in the first half of 2020.

I think if I were to place a wage or it would be early second quarter of just this year.

As far as you saw Caesars results last night.

They had another strong quarter, particularly in light of what we've seen there appears present in Las Vegas, and I would just say.

Tony and his entire executive team at Caesars.

Has been absolutely first class in every way.

In terms of.

Working through this transaction with us there's obviously a lot of work to do.

It's very difficult where you when you already in.

The targets C and often I'm.

Across the table from a seasoned employee thinking I hope if I'm in the same because if the situation is reversed.

That I'm as professional.

And focused on the best interests of the company as the people that I'm dealing went so we cannot.

You have enough credit to the Caesars team for operating over the last.

Eight months since we announced the deal.

So.

<unk>.

I used to be in the seat that many of you are in terms of.

Being an investor having to deal with markets that are.

Incredibly volatile I know that we have.

A lot of new investors that are interested in us now because of the Caesars deals.

A lot of you are familiar with us.

You should all know that.

We are we making a commitment to be 100% candid with you.

At all times, when we're addressing investors, we're not putting Easter eggs in.

Earnings releases that you have to decipher you don't have to parse what I'm, saying I don't call Tony up last night, and say see if you can slip and we may not be able to sell a strip asset in the queue and eight session of your earnings call.

We are.

100% focused on getting Caesars done.

There is absolutely zero risk on the financing side either.

With the financing that we will ultimately raise in the markets, which is already fully committed by.

A large syndicate of banks Beachy has already raised all over the money that it means to fund the transaction.

So I would just encourage you as you I understand the pressure that all of you are under in a market like this and the concern that maybe there's something different beyond.

Yeah, we're afraid of this virus, maybe there's something with the deal or with the financing.

There is nothing I spend zero time worrying about my ability to sell a strip asset.

We've been very clear that we are not going to sell a strip asset.

Until we all need we own Caesars, we'd intend to enter an agreement within the first 12 months post closing.

So if anyone we're calling Tony to talk about strip assets for sale, they're not listening to us. So we don't have any doubt that there's going to be a very strong execution out a vegas strip asset sale you guys had seen.

The recent real estate friends that ends up being about two thirds of your.

Transaction price beat the proceeds from that transaction.

On a sale basis are will be considerably higher than they were going to be when we announced a deal based on the comps that have been going on in the market.

Similarly, the financial markets.

Comparable credit said, many issuing and trading inside 5% on an unsecured basis.

So we feel very good about.

The execution that we'll get into credit markets, even in a complete beat this location of the credit markets.

We have a fully funded transaction.

You know so what I would say is as you ask questions. Today I know there are a lot of they'll be a lot of sell side guys in the queue.

If you have a question that came from the fever swamps today as you know whatever crazy rumor was bubbling up ask us directly.

We're very happy to answer.

This deal is closing its closing soon.

We are extremely confident in every number that we have put in front of view.

We're constantly finding new.

Levers within Caesars to pull as we go forward.

This transaction is going to be a homerun for all of our stakeholders and we're excited to get started.

So I really wanted to address.

That in the need of my remarks.

Anthony and Brett will get into financials and specifics of properties and I imagine we're happy to answer any questions I come up [noise].

Thank you Tom and good afternoon, everyone on the call I'd like to take a few minutes. It provides you with some fourth quarter operational highlights were pleased with our fourth quarter results, especially when considering the 22% comp we're up against in the fourth quarter of 2018 consolidated same store adjusted EBITDA was 146.2 million.

A 0.4% year over year, excluding the assets, we divested during the quarter to century casinos.

Looking at our five operating segments I'll begin with the East segment, where adjusted EBITDA declined 3.3% year over year to 34.3 million and the adjusted EBITDA margin declined 50 basis points to 26.5%.

We faced a challenging 47% increased in adjusted EBITDA for the segment in Q4 of 18 within the East segment Syros adjusted EBITDA rose for the Twentyth consecutive quarter and property level EBITDA growth accelerated in Q4 2019 versus the prior three quarters of the year.

Atlantic City faced a challenging comparing Q4 of 19 as the property held above normal last year on the table side.

Adjusted EBITDA for the South region was down 13.5% to 22.4 [laughter] on 11.8% decline in net revenue.

Adjusted EBITDA margins in the South declined 40 basis points to 21.2%.

Multiple factors negatively impacted the quarter in the south including linked lingering road construction in Lake Charles and the opening of a competitor D competitors, New Hotel project in Florida.

Turning to the West region, EBITDA declined 4.2% year over year to 33.1 million the west regions. Adjusted EBITDA margin improved 70 basis points to 26% driven by solid results in Reno during the quarter Black Hawk results were negatively impacted by winter weather late in Q4 of 19, but were.

Please with the quarter to date trends so far in 2020 for the west.

Revenues in the Midwest declined, 25% and segment adjusted EBITDA Rose, 3.8% to 27.1 million.

The Midwest adjusted EBITDA margin increased a 155 basis points to 36%.

Waterloo in Kansas City delivered impressive results in the quarter.

Finally, our central region delivered an exceptionally strong fourth quarter with EBITDA growth of 11.5% on a 1.3% decline and net revenues. The segment's EBITDA margin rose 370 basis points to 32.1% during the quarter the central region in 2019 delivered 15% you blog.

Growth with all three assets delivering strong results.

As I reflect upon our fourth quarter results, our diversified portfolio of 23 regional gaming assets performed well, especially considering the different difficult compare.

As we draw closer to the expect to closing for the Caesars transaction I'm excited about the opportunity to combined these two great companies and to deliver on our revenue and operating expense synergy goals in the months that.

With that I'll now turn the call over to breadth for some additional insights on the financial performance and details on our balance sheet in capital structure Brett.

Thanks Anthony.

We ended 2019 on yet another strong note in terms of our balance sheet and credit profile. During the fourth quarter. We successfully closed a century transaction repaid another 388 million on our term loan, bringing aggregate 2019 debt reduction to over $700 million.

Heading into 2020, our existing term loan B has been paid down to approximately 500 million. Our senior notes remain at 1.85 billion and we have no outstandings on our revolver.

In terms of our plans to raise capital in connection with closing of the Caesars transaction. This is not the first time that we've seen credit markets behave differently than equity markets. We have everything on track to take our committed financing out to market in the coming weeks and it's Tom already mentioned in light of recent debt issuance in the sector, we are eager to see where that.

Lands in terms of execution relative to our original expectations.

That I'll turn the call back over to Tom.

And I just speak about a couple of items that I didn't touch on.

Obviously, where we've seen what's going on in the sports betting market. All of you know that have been following us we have been.

Quite bullish on sports betting as a driver of.

Visitation and ultimately value to Eldorado and its shareholders going forward, we've seen the same.

Results at our peers have seen in terms of.

Every property that has a sportsbook that did not before has seen increased visitation and volumes.

We certainly see the valuations that have been starting to filter into the market through transactions you know that we have.

A portfolio of assets that lines up favorably with just about anybody out there and you should expect us to be prosecuting that opportunity in a way that is.

Done in a thoughtful manner, but drive significant value T. R. I shareholders also for <unk>.

Hit on 2020.

Yeah, we're off to a roaring start this year I would expect will and February north of 10% same store EBITDA growth, we probably give a little loved that back in March because you have a calendar shift but this has been a very strong start.

For the year and whats hardening as it has been revenue driven some of that is weather, but a lot of it is just customer strike. So we see we feel.

Very good about the current operations of the business.

You know we're seeing no.

Currently impacts from the virus scare and we feel very good about where we are and where we're headed.

With that I'll send it back to the operator for questions.

Thank you if you would like to ask a question. Please signal by pressing star one on your telephone keypad.

In the speaker phone. Please make sure your mute function is turned off to allow your signal to reach our equipment.

Again press Star one to ask a question.

Well take our first question from Carlo Santarelli with Deutsche Bank.

Hey, guys. Thank you very much for taking my question I'm, Tom you were fairly forthright in your views on obviously the deal closed in the financing so I'm not going to go down that route, but when you talked a little bit about the sports betting some of the valuations that you're seeing out. There. Obviously you guys have the William Hill partnership you have the I gaming.

Exposure.

Caesars ultimately in New Jersey, and your your own sports betting in their sports betting.

Could you talk a little bit about kind of how you could potentially foresee unlocking that value once that accompanies our combined and kind of what you see is kind of the endgame most of that business overtime.

Yeah, well, what I would say is when we were Eldorado Carlo.

We were not didn't see ourselves as a likely national player in sports betting, we Didnt think the Eldorado brand had the.

The cache to go Nash and also the thought was we need to partner with somebody who is going to.

You get a big piece of the U.S. business and share in that upside and that was the William Hill deal.

And you.

As it sits today William Hills property I'm, sorry, Caesars properties would go into that deal and the waterfall would be used the same as our sports betting properties.

Yeah, we are looking at it now is what Caesars brings to the table, we can be a national play player likely even a leader in the space given the partnerships the power of the Caesars brand name the power of the database the execution that William Hill brings so it becomes about.

You know what do you.

How do you put together transactions that.

Reduce your customer acquisition cost and increase your market share.

And then you think about how do I structure, something where it's.

Do I want to put cashin and own more of it or do I just want to throw everything into.

I transaction and that's the kind of analysis that you need to do.

I will tell you what I'm certain is is.

When you look at Draftkings slide deck as an example, and look at that.

Our projections going forward it doesn't look very different then.

What the combination that we're putting together would deliver and to have that buried in a giant casino operating company.

It's probably sub optimal for our shareholders. So you don't we're not going to run out and do something in two weeks because.

We like and stock market valuation, but we're going to do it in a thoughtful manner, but we're going to come out of it with a a business that can take a leadership position in the Sip space.

I would also tell you that our combined operations are already profitable, which is a big difference between.

Some of our peers and you know we think if we are able to highlight that value it'll make sense from a business perspective, and it will create value for.

Stakeholders on all sides.

Great. Thank you Tom that I was very helpful. And then just one kind of administrative follow up the 10% same store EBITDARM and EBITDAR growth that you referenced was that in February or coming out of the month of February I.E. January and February quarter to date through through February great. Thank you very much.

Thank you well take our next question from steep was zinski at Stifel.

Hey, guys. Good afternoon, so Tom if I can add onto that the last question are there to the 10% growth that you have seen year to date. It I think you said that was more revenue base versus anything else can you talk a little bit more about maybe whats driving that revenue growth, meaning is it more frequent visitations.

New players is a sports betting guys coming to the more liquidity or just a combination of all those things.

It's a combination of all those things and I want to be clear I'm, not saying, it's all revenue driven by.

But there is meaningful revenue gross.

Through the first you know where almost 60 days into the year and obviously the way we run the business there's super high flow through when you get additional revenue. So were yeah. We continue to operate more efficiently, but when you get increased organic demand the flow through is.

It's pretty strong.

Okay, Gotcha, and I know, you're not going to give [noise].

Formal guidance and you guys haven't given formal guidance, but anything you could say you know ballparkish, where you think margins could go this year given how strong those margins have been and like I understand the seizures deal is going to close this year, but if you looked at your portfolio right. Now is there anything you could say around what kind of margin upside you could potential.

We see this year.

Well, we had always thought we could get the.

The legacy Eldorado portfolio in excess of 30% and we were on a path to get there Caesars brings a lot lower tax jurisdictions and if you run the numbers of.

Where we think will be with our synergies your.

You're looking at mid Thirtys EBITDA margins.

On the combined company now.

Easily in 2020, you're going to have some sort of blended margin of a period of time, that's just D.R.I. in a period of time lets the combined company.

Okay got you <unk> tons I could do one more real quick here I think you said in your prepared remarks, you basically are reaffirming all those targets that you had out there around the Caesars deal that I did I hear that correctly minutes, whether that's the 500 million synergy target. The 10 dollar free cash flow assumption I assume all those are still very much.

In play at this point.

You heard that correctly.

Okay. Thanks, guys appreciate it.

Thank you well take our next question from Barry Jonas Suntrust.

Hey, guys, maybe just to start Tom what do you expect around any asset divestitures, whether it's 80, Nevada or any other market from here.

We've talked about how.

We're gonna have to address Tahoe, you Shouldnt presume that that's in progress.

Other than that there's nothing.

That we'd expect to be required for to close the transaction you should expect that we've talked about a strip asset sale post closing we've talked about how.

We want to maintain 50 50 leased to own. So if we sell a strip property you should probably expect will sell a leasehold interest somewhere else to maintain that balance, but you know those will be decisions that are based on.

Our desires not someone requiring area is telling us too.

Great and then.

And the commentary on selling strip out said for potentially selling are there other items you'd maybe consider noncore that could be on the table, whether that's entertainment related or on the convention side.

I got to wait for the next Bloomberg article buried and see what I'm doing there.

[laughter].

[laughter] I guess one other question you know the pro forma entity will have a very wide number brands Tom.

Corporate entities changed its name to Caesars should we expect any branding changes any specific properties are for me multiple properties.

Yeah, you should expect us to gravitate toward the Caesars brands, that's obviously a big.

Draw in terms of what was appealing about Caesars as a company.

I would expect we become.

You know heavy with.

Caesars would be a.

You know just the highest stand properties, but I'd expect to see a lot of our assets change into horseshoe or harrah's overtime.

Great. That's helpful. Thanks, so much guys.

Thank you we'll take our next question from Dan Pulitzer JP Morgan.

Hey, guys. Good afternoon, and thanks for taking my question.

On the center definitely sounds like you're still on page two to 500 million can you maybe.

With a bucket you've been surprised by thus far and maybe some areas that have merged that you maybe you want to lead untouched.

I would tell you on the cost side.

Really all we know more detail.

About what's in the buckets than we did certainly.

Eight months ago, and we've got a plan to execute from day, one and told he started you know before day, one which has been fantastic.

What's really what I'm much more excited about.

Since I've gotten involved is.

The revenue side Caesars is.

Incredibly strong ad.

Ah driving revenue.

Basically developing players from.

Where they show up into larger players.

You see it in all their win per position numbers throughout the organization. It's.

Well clearly Caesars rewards is a piece of that but it's clearly quite powerful so we think we're buying.

Well the best if not are among the best if not the best in the business that driving revenue.

And we think were.

The best are among the best on the cost side and we think it's it's a very it's a very good marriage between the two of US and we see you see the flow through when revenue comes into the everybody organic revenue growth comes into the system.

I think that's got to be quite powerful in both directions, bringing caesars rewards into our system.

And bringing our players into Caesars rewards and into the Vegas mix.

We think it's gonna be beneficial to both sides and I would say.

I personally am far more excited about that then I was when we announced the transaction.

Alright. Thanks, I appreciate that and then just just one more can can you remind us on lake Charles I'm on the land based project went what's the status of construction, there and maybe you're talking [laughter] earned from that investment.

You can probably find a picture of Anthony and it's hard hat from last week at the groundbreaking so construction is underway.

I expect the budget to be.

In $120 million range and I had expected.

20% plus cash ROI.

And Oh right timing, how long you think that takes before it's finished should be opening middle of next year.

Okay, alright, great. Thanks, so much guys I appreciate it.

[laughter].

Thank you well take our next question from David Katz of Jefferies.

Oh, Hi afternoon, everyone.

I appreciate all the information in the clarity so far I I wanted to just raise an issue that I've gone back to a number of times, which is pompano and what I'd like to do is tack onto it no other opportunities for land value or you know asset.

Got you may be coming across in your travels as you go through this and you know whether we could be seeing more opportunities that are.

Similar in the future.

Yeah. So we are through the entitlement process in pompano.

Which is.

That's a big step so we have.

The approval to do more than we'd want to do so we can kind of move pieces around do what we'd like to do.

Youre going to see.

Yes spend this year, we'll break out on the parking garage to highlight for the time.

The smoking patio kind of in the middle of the year that'll come online in early next year, you'll start to see pieces of the third party development, particularly the live district.

Uh huh.

And developing by the end of the year early next year and you that's gonna be multiple phases, but you should see.

No big pieces of it coming online second half of next year early 22.

There are other properties within.

Our portfolio Seo comes to mind that have.

A similar footprint and opportunity and then Caesars with the tracks in Indiana and the land that they have on each side of the strip.

Have.

You know similar opportunities to contribute property.

Two.

Dr.

That turned to drive value in a similar fashion. So we feel very good about.

The levers we have to pull there as we move forward.

Can I just follow that up and go back to Pompano for a second and get a sense for how much we should be thinking about you spending.

And you know how we might think about you know pencil in some of the pieces that you think.

Come on you know in essence, what do we due to the model.

So I would say I wouldn't be expecting.

Alive district similar to.

What you've seen elsewhere, but that core dishes built.

Our parking garage our expansion are smoking patio.

That that's probably 50 million on balance sheet to us.

The rest of it will be financed at the JV level with likely no further capital contribution necessary.

You should probably be thinking about a top golf you should be thinking about.

Ah multiple hotels, one let probably comes online.

Toward the end of 22, you should think be thinking about residential and office development that starts to come online in 22 and continues for several years after that.

Okay helpful. Thank you.

Thank you well take our next question from Harry Curtis with instant it.

Good afternoon, everyone I had two questions.

Oh, if you had a chance to prioritize.

Your Capex post closing and what I was.

Focusing on it if you've identified some high ROI targets.

That you're excited about yeah.

Yeah. So we're.

Caesars, obviously has projects in the pipeline you know New Orleans will get started shortly.

That should be a driver of growth Caesars is kind of winding down there.

Our room remodel program, we see significant opportunity at the tracks in Indiana, If you look at the.

Performance to date from the tables, it's off the charts, it's obviously early but.

They were capacity constrained there I think theres very high ROI capex, there that kinda adds a.

In addition out of the building that brings more tables to.

Both tracks and we think that would be.

A significant driver of growth and value.

ER and thank you and then the second question is.

Related to your frequent player programs your customer awards programs.

Again, you've had some time to digest best practices.

Of Caesars versus Eldorado can you discuss they're integration and and where you're probably going with the integration of that how how seamless isn't gonna be because it seems like and and and then.

Okay that we've been doing this the integration of rewards programs.

Can often be sticky on the 'cause it particularly on on the customer side.

Yeah, I'd I'd agree with that comment what I'd tell you as.

Their experience with center are and what they've demonstrated a post acquisition.

It's hard thing to us in that.

Thankfully they did it when they did because it provides a road map to what we're going to do post closing may have.

And internally developed product that is effectively a pad, it's something that patches. The two systems together so that in many places on day, one you're going to be able to use your points.

Almost like you know when an airline merger happens where you if you're at Eldorado player in a caesars property. They can see your points you can use them there it's not as seamless immediately as if you're already in the Caesars reward system, but it provides many of the benefit.

It's that the customers value immediately out of the box and we have spent.

An extraordinary amount of time.

Planning for this and making sure that the rollout goes as smoothly as we can because we see the same.

Yeah, the risks that you.

[noise] pointed out in the past performance in the space, we feel real good about following the center a roadmap and.

Getting value from it very quickly.

So I guess my follow up it <unk>, maybe you could provide one or two nuggets of.

Have a best practices that that that youre doing that you can apply it to their properties and vice versa.

Yeah, you know I would say clearly the.

The biggest opportunity for US is you know what we bring is.

Moving the decision, making at the down to the local level.

And eliminating the command and control functions that face customers.

There there was a lot of inefficiency in their system that.

Doesn't exist in ours, because we just don't have we don't run things.

Similarly, and that's where we're going to drive.

A lot of big value there are places where they are just.

Head and shoulders beyond us there, they're yield management, a in Vegas and elsewhere.

Is incredibly impressive I think you guys have seen it in.

The results that they've been delivering over the past 12 months or so, particularly in Vegas, we think that can be a big piece for us there.

They are out there you know the mobile that the.

The the customer contact.

They're just very very good.

And.

We're not as good and that's.

You got to know what you're good at know what you're not good and choose the best athletes and Caesars has a lot of great athletes they had.

No too many bodies, but there are.

A lot of people in Caesars that are extraordinarily talented that are going to remain here and help us drive value for the combined company going forward.

Very good that's a great start thank you.

Thanks, Eric.

Thank you won't take our next question from Jared Surgeon Wolfe research.

Hi, good afternoon, everybody. Thanks for taking my question.

So a question on the capital structure, maybe Brett for you can you just give us an update on what you expect for pro forma cash and debt at close and then can you remind me how the terms of the debt agreements work, meaning or the interest rates at the time of the announcement last June is that walked in on the fixed rate side or do you get the.

Prevailing market rate today, because obviously rates have come down pretty [laughter] I'm I guess, just given that drop in interest rates any sense on how much incremental cash savings that that would be I think you were expecting 700 million of interest expense, which was factored into your I wanted to have billion free cash flow target. Thank you.

[noise] alright, there, there's a bunch in there, but I'm going to try to hit a ball I think at a macro level or the capital structure is largely what you would've seen when we announced obviously there's been some incremental asset sales since the announcement it couldn't Rio.

So that's taken our debt funding need inside of $7 billion in terms of the closing funded debt will take out to the capital markets.

You're spot on we benefit from the outside of the better market.

Terms the credit markets. So any interest expense savings that we achieved versus what we underwrote ER is going to benefit us.

We expect today to be inside of that number that you quoted a in a downside it's not picked it up significantly material to us, but we have fully committed financing.

That would take us out to a downside interest expense.

If the market is choppy.

Uh huh.

Cash will be a little over a billion dollars and I think we talk to that when we announced.

You know occasion operating cash across the combined enterprise.

Okay. Thank you that's helpful. Brad and then maybe Tom a question for you just going back to sports betting. Obviously 2020 is very busy year you have a lot on your plate. So should we be thinking about the potential monetization that you're talking about of sports and I gaming being a more of a 2021 kind of event or anything you can help us frame the.

Timing around that and then if you could just kinda help help us understand the agreement with William Hill does that need to be amended in any way to account for some of the difference in house Caesars operates at sports books versus William Hill operating the books on the Eldorado side.

There's no amendments that are necessary.

The thought as more.

What can become now that we're bringing all the caesars assets into it I would not expected to take until 2020 watt.

But I also wouldn't expect it to happen three weeks from now.

Okay, Great. That's very helpful. Thank you very much.

Thank you well take our next question from Shaun Kelley of Bank of America.

Hi, good afternoon, everyone on it Tom maybe just stick with the sports betting themes tour. Just there you know obviously, there's probably a lot of different structure as you can evaluate here and I. Appreciate it's probably not finalized yet, but maybe strategically you could just let us know kind of how important do you think you know control is as a part of this.

Today, you know Youre, a stake in and William Hill, or the joint venture. The U.S. is relatively small, but specifically kind of you know how do you think about control and and then the igaming or I casino piece Alper in particular as you think about kind of maybe the long term future or long term trend line of gaming.

Yeah, we're not driven by the ego of.

Who controls that we're looking for what's the best economic outcome.

And we want to ensure the businesses run.

In the best manner, I can possibly be run so that's really the.

The parameters were operating.

Oh and then.

You know, we do anticipate that sports that I'm mindful wearable sports betting will lead to.

More mobile gaming overtime and that a single wallet solution is going to be what wins the day.

And you know that that's it all goes into the calculate because I you know I've had a lot of people run to me.

Since the recent deals and see you know I.

Thinking what me why don't you do something immediately yeah, we're dealing with the business here that.

Could should be driving value decades down the road, so we want to be thoughtful and put it together in the right fashion.

But when I look at what we've got.

Look at other People's presentations.

It looks pretty similar except we make money.

That's helpful. And then just what you kinda to the core and more core operations. Just you know if we go back to yeah, I guess the the overall core here from the closing of the Tropicana transaction and you know just maybe you could give us an update on your your overall view of the stage a of where are you.

Sure on achieving some of your goals or targets from that deal is should we think that I guess progressing from here.

We're gonna see more of the revenue <unk> more of the core business be about revenue and we've we've really recognize what we what we expected to on the cost side or you know how should we think about that kind of trade off between revenues and margins for let's call. It a breach period Q1 going into the closely and ended the closing Caesars that's it for me.

No I mean, you've seen our margin trajectory, Sean you know word we're never done.

We're going to keep going.

Obviously, the the Caesars revenue tools brings us something that we have never had.

In any prior acquisition or in our existing company.

So it's quite exciting, but we're going to continue drilling down on the cost side, you know I'd tell you.

Black Hawk, which was.

The I'll deal. So we voted since 17 it had its best January ever. This January so you know assets that we've owned for radios Stiolto continues to set records every quarter that property is up over $80 million of EBITDA.

Almost double what it was when we took it over and it's running margins in excess of 40%.

In a 42% tax rate jurisdiction.

So we are going to continue driving in the legacy portfolio. You know we are not done this is not.

You know we've done Caesars and Weve reached the finish line you know the reason you do Caesars is because it extends what's possible in terms of creating value and creates more avenues to create that value, but it doesn't mean, you stop what you've been doing before and we've.

Got a great team put together that has a tremendous track record.

Of execution and we're adding.

A lot of great people from Caesars and were excited to get started.

Thank you very much.

Thanks, Sean.

Thank you well take our next question from John degree of Union gaming.

Hi, guys. Thanks for taking the questions and all the color. So far I think you covered a lot of grounds, so maybe too high level questions.

The first one Tom you've talked earlier on the call I think in response to a prior question and consistent with your your past I'm looking to kind of stick around 50, 50, when we think about owned or leased assets, but given the significant interest we've seen from real estate investors across a broad spectrum or do you think you flex on.

Not at all is there does it ever make sense to monetize additional real estate. If we continue to see cap rate compression I guess, how do you think about.

Your real estate over the course of the next couple of years.

Unlikely, we do anything that's not.

Transaction based we haven't before pure sale leaseback is.

Unlikely in our portfolio anytime soon.

Got it that's helpful and then perhaps to kind of recap and maybe I'm kind of jumping the gun on some of your closing remarks, but you know for new investors to the story. There's there's clearly a lot of moving pieces here a lot of exciting things you guys have had a really over the next six months could you kind of help.

Yeah, our a ties how we should be thinking about milestones.

For you guys going forward, it's obviously getting the transaction over the finish line, but I'm kind of ranking selling masterbatch said and de leveraging and focusing on sports I mean, probably all the above but if you could kind of lay out kind of a brief road map or priorities just to kind of help people kind of pay attention to the milestones ahead.

Yeah. So obviously next milestone is getting to closing.

By next quarter call presumably were.

Announcing what are.

I.

Immediately realize synergies, where we're starting to track what we're generating reporting that to you.

You are going to start to see.

What happens on the revenue side.

Ah post closing.

We're gonna see within the first 12 months.

[noise] likely I.

I signed agreement on a strip asset.

You're going to see.

No that likely within 21, something on the sports side, So we feel I'm sorry within 20.

On the sports side, so there's a lot of markers coming up to measure our progress.

Very helpful. Thanks for all the color today guys I appreciate it.

Thanks, John.

Thank you we'll take our next question from David Dana Roth capital.

Great. Thank you.

Yeah.

And appreciate your reaffirming your targets for free cash flow synergies et cetera, and just just to be clear Brett.

I believe you spoke to the skewed a but just to that I'm clear the transaction. It's obviously secure but usually the current settlement impacts potential brought bond pricing as we finalize are we seeing no movement there right now.

We'd be well inside any kinda number than we were using last June there's there's material cash flow savings that accrue to us from where.

We are being indicated across the street in terms of where was it execute that levels.

So we'd encourage everyone to talk to your credit market counterparts to see what they said.

Okay, Great and then sorry again to live in kinda hypothetical over the last few days going a little volatile it in terms of conversations with the Caesars team any anything you're hearing in terms of impact on conventions in Las Vegas cancellations visitation.

To the krona virus and maybe any anything in terms of the divestiture plan that would change due to the.

Buyer, Matt that would delay or accelerate any strategies there.

No you heard them say yesterday.

Oh impact.

You shouldn't expect to see any change in the divestiture.

Perfect and then lastly, Tom you mentioned you don't stop at Caesars I mean, ultimately can you take that Caesars brand and moved this out of the casino to the more traditional hospitality back to sort of the kind of cost subsidy thesis that you've talked about previously transcendent non gaming or.

Or is there just still so much the doing the segments to think about theres. So much to do as a segment I'm, particularly excited about.

I I think that others that stretch Caesars has struggled to in terms of.

Generating material value out of that.

You know, it's unlikely to be a major focus in the foreseeable future.

Got it thank you very much.

Thank you I think our next question from David Hargreaves with Stifel.

Hi, I'm. So I just wanted to confirm when you speak about the 500 million and expected synergies I think Tony yesterday said they had achieved 100 last year should we be thinking the 500 is in addition to that.

Yeah, Tony said 100 since the beginning of 19.

Which encompasses a risk that they did before Tony arrived.

The numbers you should be thinking about that overlap with our synergies or something in the 50 to 75 right.

I see and could you give US a reminder, about the run rate lease expense, what we should be expecting based on the 50%.

[noise] 1.15 billion for 2020 round number.

Great and then when he expects to file your 10-K.

Tomorrow.

Excellent. Thank you very much.

Thanks.

Thank you we have no further questions in queue I'll turn it back to management for closing remarks.

Thanks, everybody, we'll see a in after the first core.

This concludes todays call. Thank you for your participation you may now disconnect.

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