Q1 2021 Caesars Entertainment Inc Earnings Call
Ladies and gentlemen, thank you for standing by.
And welcome to the Caesars Entertainment.
The 21 of first quarter earnings conference call at this time, all participants lines are in a listen only mode. After the speaker.
And there will be the question did the answer session.
Questions. During the session you will need the press star one on your telephone I would now like the hand the conference over to Brian.
And your Vice President corporate Finance, and Treasurer and Investor Relations. Thank you. Please go ahead.
Thank you Erica and good afternoon to everyone on the call and welcome to our conference call to discuss our first quarter 2021 earnings.
This afternoon, we issued a press release announcing our first quarter financial results for the period ended March 31, 2021 of the top.
<unk> of the press release is available and the Investor Relations section of our website at Investor day of Caesars stockpile.
Joining me on the call today are Tom Reed, our Chief Executive Officer, Anthony Carano, Our President and Chief operating Officer, and Bret Yunker, our Chief Financial Officer.
Before I turn the call over to Anthony I would like to remind you that during today's conference call. We may make certain forward looking statements about the company's performance.
Such 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 to and 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 discussed and our forward looking statements you should refer to the cautionary statements contained in our press release as well as the risk factors contained in the company's filings with the Securities and Exchange Commission.
Caesars Entertainment undertakes no obligation to revise or update any forward looking statements to reflect events or circumstances that occur after today's call.
Also during today's call of the company may discuss certain non-GAAP financial measures as defined by SEC regulation G. The 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 in the comparable GAAP financial.
Measure can be found on the company's website at Investor day at Caesars Dot com by selecting the press release regarding the company's 2021 first quarter financial results.
I will now turn the call over to Anthony.
You, Brian and good afternoon to everyone on the call. We are very pleased with our quarter 13 of our properties.
EBITDA of records in Q1, 19 had EBITDA margin records in Q1, and 20 properties had all time EBITDA Records and March including four of our Vegas properties.
Turning to Las Vegas, we generated $161 million of adjusted EBITDA, and the quarter and of $172 million of property level EBITDA, excluding real rent payments EBITDA improved 80.
On a quarterly sequential basis March was our strongest months, where we generated approximately $90 million of EBITDA ex REO rent payments and an all time, EBITDA and EBITDAR margin record of 43%.
Total occupancy for Q1 was 63% with weekends at 85% and midweek and 52% March total occupancy was 77% and April was 84% weekends and Las Vegas are sold out for the foreseeable future.
Finally casino mix as a percentage of our occupancy was approximately 40% during the quarter.
Looking ahead, we remain encouraged by booking trends for the second half of the year group and convention room nights on the books for the second half of 'twenty. One versus 19 are currently pacing up approximately 20% and we're seeing good rate growth as well.
2022 group revenue on the books is pacing up approximately 15% Caesars Forum for all future periods has booked over 165 events $1 6 million room nights and $633 million of revenues, 80% of this businesses need of Caesars.
We're very optimistic regarding the remaining three quarters of the year and Las Vegas, and the return of the group and convention business and the entertainment offerings that will drive incremental demand to the market.
Now turning to our regional markets operating results improved significantly versus Q4 of 'twenty trends on a year over year basis regional revenues were flat and adjusted EBITDA was up 69% looking back to Q1 of 2019 revenues declined 14% and EBITDA of 4%, resulting and EBITDAR margin gains.
Of approximately 600 basis points and March of 'twenty, one revenues for the consolidated regional portfolio declined 10% versus 2019, and adjusted EBITDA was up 5%.
And our regional non destination properties and Q1, 'twenty, one versus Q1 of <unk> 19, and excluding Lake Charles which is close revenues were down 8% adjusted EBITDA was up 16% and adjusted EBITDA margins improved to approximately 800 basis points.
And finally, and a regional destination properties, we're starting to see encouraging trends for the segment.
Adjusted EBITDA for this group of properties on a quarterly sequential basis improved 110% and margins improved 980 basis points. We expect to see continued improvement from these properties throughout the remaining three quarters of the year.
I'm extremely proud of our operating teams and their execution during the first quarter the.
Execution, coupled with our operating philosophy will continue to lead to sustainable improvements in adjusted EBITDA margin forward.
We are excited about the remainder of the year and look forward to sharing our progress with you on future quarterly earnings calls and with that I'll now turn the call over to Tom.
Thanks Anthony.
Also since we last spoke to you we closed.
The William Hill transaction, it took a little longer than we had expected in the court hearing, but we got to the outcome that we wanted and now we control our own destiny and.
What I continue to believe is an extraordinarily exciting opportunity for the company and as I get into the speaking about it I want to recognize Joe Asher who built the.
William Hill business.
And we got to know each other well and the original partnership but as most of you know.
Joe You know me I've done quite a few deals.
And the time, we been of public company.
And put together that original partnership and never met until the the.
The licensing hearing where it was approved Joe belt of phenomenal business from really very little in the U S and we're excited to build on.
The foundation that he and his team at the <unk>.
Built.
As we move forward.
And if you look at what that combined business did in the quarter. We were about $150 million of revenue. We were positive EBITDA that was despite the limitations of the transaction where the.
With the UK rules, we are of kind of frozen and place William Hill had.
And some late and we have been effectively lame duck brands and a number of markets that it didn't make a lot of sense to invest a lot of money and William Hill with the UK parent and the UK.
Investor mindset that that was more conservative towards the leverage was not as aggressive as we expect we will be in this business and.
And so what we needed to.
And to move forward really was to take control of our destiny by buying William Hill.
And to come up with the capital.
And we invest appropriately and the business and as I get further into results, we'll get to the capital piece, but.
While we were working through the process William Hill was working on rolling the Liberty platform out and all of the jurisdictions, where it is not already employed we expect that to happen for football season, we're going to rebrand our books of Caesars, our App and Caesars sports.
And tie our business into our Caesars rewards database and as I look at what's out there in sports.
And do the analysis of the numbers that we can see there's some things that make us optimistic there isn't great.
Of.
Correlation between spend and market share at this point.
Not quite so much for brand or other non spend categories. Yes. That's a good sign for us when I talk about the cash flow that we're generating right now if you look at what our friends at MTS.
Again, and the quarter were they.
He came from a position similar to where William Hill. It was two of leadership position and a market where they had a large database that gives us.
A lot of confidence as we move forward, but we understand that we're going to need to invest in this business. Both on the tech and the customer acquisition side and you should expect a significant shift from us.
As we close the transaction and move forward.
The.
And where I want to get where I want to move to now is in terms of the.
The quarter, we reported a quarter like we reported any other quarter he of port reported year three months.
Your total of Anthony went through the numbers, but it really doesn't tell the story this quarter.
I spoke on the last cut.
A couple of calls about the demand that we expected was coming and the flow through that we would expect to see and I am pleased to report I can give you some evidence of what's happening.
In March and April I'm, not going to get and the habit of.
Disclosing a lot about the current bond.
But what's happening and our business is so different than the narrative that I see out there that I think in this quarter. It makes sense to give you.
A lot of metrics about what's going on.
As we started in.
The quarter, we had the Illinois, Pennsylvania were close we had significant restrictions across any number of states, including Nevada, We didn't open Nevada, even to 50% until two weeks were left in the quarter. So we saw demand bill.
And throughout the quarter as a.
Reopening happen and March EBITDA was almost half of the first quarter number.
So that brought us into April and the fear Thats been expressed to me is there there's going to be some sort of.
The mission in demand as the world Reopens people that were coming to.
The casinos when other options open up we're going to go away.
And what we said is we think that the.
The the segments that are not coming or at the time were going to come back and swamp whatever business that we were losing.
And that's in the been the case if you look at April obviously these are preliminary results on may 4th free.
And frankly, they tend to typically move up after our preliminary results.
But in April we did over 300 million of consolidated EBITDA as a company that was more than 25% ahead of 2019 numbers.
Consolidated margin was over 37%.
That was the 1000 basis points ahead of 2019 in those numbers Vegas is table hold percentage was 9%, which for those of you who followed the the industry for a while is.
The extremely low the.
Despite that low table hold Vegas has set another record and EBITDA margin for the market at 43.5%.
If you adjust for hold in the quarter Vegas EBITDA margin was almost 47 per cent.
Our regional run rate EBITDA is now over two and a half billion dollars just out of regionals.
The.
The destination markets Anthony touched on it a bit has been coming back.
As an example of Reno had the third best month, it's ever had in April and I'd Sushi I'd say when I talk about April Easter fell in April it's typically not of great month for the casino business. So these numbers happen during that time.
As Anthony touched and Vegas occupancy was 84% in April we expect that to increase in May and June and if you look on a property basis in April we had 36 properties.
And our portfolio that were over 40% EBITDA margin.
14 of those were over 50% EBITDA margin and one was over 60.
And as a result in April and our current run rate, we're generating over $100 million of free cash flow per month right now.
And with that I'll flip to bread on.
Our liquidity and capital.
Thanks, Tom given everything that Tom and Anthony just took you through it should come as no surprise that we will begin to aggressively pay down debt over the next 12 months, we intend to repay at least 2 billion of debt and that will accelerate as we move into 2020, two and look to divest the strip asset.
This initial $2 billion of debt repayment assumes a conservative sale price from William Hill's non U S assets with the transaction closing within 12 months importantly.
Importantly, this will in no way hamper our ability to continue investing and our brick and mortar portfolio and our sports and online business.
With William Hill, UX now officially folded in our 2021 calendar year Capex moves to four hundreds of $450 million, excluding spend and Atlantic City and Lake Charles which are covered by escrow and insurance proceeds with the.
Now I'll turn it back to Tom.
Thanks, Brad and.
And not a guidance guy, but here's a few things I expect you will happen as we move forward.
Absent a change in the.
And the public health situation I would expect us to print a quarter of at least of $1 billion of EBITDA in 2020 one.
And I'd expect us in 2020 two to be at worst below five times gross lease adjusted leverage.
With the reasonable possibility of being below four times.
And the sport side, I'm, not going to make any bold predictions.
And where we're headed we're going to put our heads down and do the work right now.
In.
Front of US, it's all about operating acumen and I'll put our ability to operate against anybody in this business, we feel very very good about where we're headed.
And with that I'll turn it back to the operator for questions.
As a reminder to ask.
The question you will need the press star one on your telephone.
So the question press the pound key.
Well, we can power of the Q&A roster.
Your first question is from Carlo Santarelli.
<unk> with Deutsche Bank.
Hey, guys. Thanks, everybody for the comments, Tom just kind of picking up on.
The commentary you made there towards the end of.
And as you think about the the demand that you see obviously right now and in Las Vegas, and and your regional assets and acknowledging the few that you believe.
Theres still more to come up with some of the older demographic coming back and and.
Some of that younger demographic would go away and that gets offset and.
And you look at kind of the the $1 billion a quarter this year.
Do you expect of Brent and I'm, assuming that's the consolidated after corporate number if you want to clarify that.
And is there any reason why the organization can't beyond kind of or can't give away a $4 billion number as soon as 2022.
So yes, that's the consolidated EBITDA number after core bread.
And I would be disappointed if 2020 two was less than 4 billion of EBITDA.
Okay, Great and then just as a follow up Brett you talked a little bit about the contemplation of the.
The $2 billion of debt pay down and the the expectation that they I think you would classify it as a as a conservative multiple but assuming that the transaction does get done.
And.
And just about the.
The timeline to get that sold and how long it will take the clothes and stuff.
When do you think you realistically have to have a deal in place to kind of get William Hill International Buttoned up you know within the next 12 months.
Yes, we expect to launch the sale process by the end of this quarter and announced the buyer and late Q3 of our early Q4 and half of that closed within 12 months of today.
Great. Thanks, guys.
Thanks Carla.
Your next question is from Joe <unk> with J P. Morgan.
Hey, guys, Tom you sort of talked about this and and general towns.
But when you were thinking about the U of sports betting market, how specifically do you.
And on it on attacking it and you know when you think about your competition and and and maybe the Guy down the Street from you MGM is sort of more likely like you and sports betting where the sports betting upwards of you then and not like you.
I mean are you looking at sort of a similar type of share and our objectives and as Dave talked about or how do you see.
This play out for you I know it's.
You sort of and had been previously constricted in terms of talking with specificity with the integrating William Hill. Thank you.
Yeah Joe.
I like the hand net.
Guys like us and MGM has to play out.
We've got.
We have the largest loyalty database in the business bar none.
We've got.
A fully immersive experience he's got in our case of fully vertically integrated tech stack. So we should be.
The effectively the low cost producer and we should be able to acquire.
And certainly a competitive cost if not one of the lowest and the business and.
And we are throwing off over $100 million of months of free cash flow.
And to invest in this business as aggressively as we need to going forward. So you shouldn't expect us to be.
And just throwing money away to buy market share you should expect us to build this thoughtfully, but you shouldn't expect to see the significant increase and investment in the side now that we've got all our ducks and Iraq.
Okay, Great and you touched on this a little bit about the asset divestitures.
Duane the whole non U S assets can you update us on your thinking in terms of divesting of a strip asset relative to previous commentary.
Given that mortgage.
We.
We remain convinced that it does not make sense.
For us to market and asset until week and marketed off the cash flow that we're doing where we're doing with it not a bridge to what we think we can do with it.
So that suggests it's a 2020 two event from a marketing and sale exercise that closes after licensing post and.
And I should say.
I've read a number of more rumors of different flavor of this quarter.
There are no active discussions on any Las Vegas asset as I sit here today.
So when youre doing a $1 billion of consolidated quarterly EBITDA.
At some point in 'twenty. One is that is that sort of the timing of when you would commence.
Yeah I've looked at it Joe like Vegas is third even in these numbers.
What we've seen is.
You know the pandemic ended well it didn't and we reopened right.
The risk taker showed up and three were people that were willing to get out of their house.
And go and socialize very quickly that was.
Kind of the 2020 story for the.
And the pandemic in 'twenty, one and what we've seen is vaccines have rolled out and numbers of come down.
As we've seen a surge in business in the I can drive to the casino in my neighborhood.
Our revenue and EBITDA numbers and regional or.
Off the charts, we're looking at if you look at legacy.
Eldorado IL assets assets doing.
The 10, 15, 20% more in revenue and 50, and 60% or double and EBITDA versus 19, what we haven't seen yet.
Is that wave of demand really reach and that's.
That's coming.
And we.
When that comes and that's when we're going to be optimizing what we can print from here and that's when we'll be thinking about initiating sales process of one quarter is that I would say, you're probably looking at something that's encapsulated within cash.
Calendar 2020 two.
Thank you very much guys.
Your next question is from Shaun Kelley with Bank of America.
Hi, good afternoon, everybody I'm, sorry can you hear me okay sorry.
Good afternoon everybody.
Tom or Brent just I, just wanted to kind of.
Ask about the some of the sequential flow of true that we saw and this quarter.
Kind of looking at our model correctly.
It does look like and.
Both Vegas, and and Regionals. Your operating expenses were down your revenues are up I mean, it's a pretty potent.
Reaction that you get and I appreciate you've already sort of given us the answer so maybe the the the piece of the cash don't matter. So much but just curious like are you just seeing sequential opportunities.
Is this as contracts roll off and you and you saw the things that you could do that you couldn't execute last year and what may be driving some of that debt that just an.
Absolute level of efficiency that you saw and itchy day improve on quarter on quarter.
So Sean I would say I know.
That we were the most optimistic people.
In the universe on what we could do once we closed Caesars.
What we have found since we've gotten and is.
Beyond our wildest expectations.
And part of that is.
Undeniably pandemic related things that where you could not have possibly moved as quickly as.
The virus force you to move accelerated a lot of savings that we would have eventually captured we have had tremendous buy in from.
The existing Caesars management team there.
That was here when we took over.
The way that we're executing now and the people that we've needed to step Bob and virtually every function has.
And have done it seamlessly this has been.
Without theres nothing close this has been the bats transaction that we ever put together.
Great and maybe just switch gears, if you could maybe just give us a little bit of essentially you talked about investing in customer acquisition and looking forward and and certainly leading in all of the digital opportunity.
Tom you're as aware as anybody is on some of the investments that the.
And kind of rack up into the triple figures that some people have made to target market share here.
Do you think you could do that and the different way or what's sort of the right guide post to think about within that within that area of the business.
I would say that the former.
William Hill, particularly and the last football season, which is really when the spotlight shown for the first time on the space.
And is fighting with and arm behind their back because of the.
The limbo between signing and closing the transaction.
And you have enough history with us.
To know that we are disciplined in our deployment of capital, but we are also silver and up to realize we have to invest considerably more of that has been invested historically here. We think we can do it.
And and efficient manner because of all of the advantages that we payable, but like I said, we're going to put our heads down and do it I'm not going to put a stake and the ground and say.
And we're going to have this much defensible market share by this date, we are very true.
Terry Earley and this process.
We've got a great hand to play and I have tremendous confidence in our ability to operate and be a leader here and that's what we're and we're setting out to do.
Thank you very much.
Yes.
Our next question is from Steve <unk> with Stifel.
Hey, good afternoon guys.
Tom you gave us a ton of numbers you gave us a ton of data to digest, but I want to clarify a couple of things so.
And you've always talked about getting to a fortyish kind of margin over time and I guess the question is does that target now seem somewhat conservative.
And then.
The 100 million of month and free cash flow just trying to understand where you think that could eventually get to and I guess my question is really just trying to reconcile getting to your your original magical $10 a share and free cash flow and then finally those leverage targets does that.
Did you talked about those are not dependent at all and asset sales correct.
Assets, there and that's not dependent on anything that has not been announced in terms of asset sales plus William Hill, plus of William Hill, and non U S. So it's not dependent on a strip asset sale or any other brick and mortar asset sale of your question on.
The margin since we're already bumping up against 40 without <unk>.
Group business back and Vegas or without full hotels yet.
Mid week, 84% is great, but this is the company that ran and whatnot.
About 90, 798% and a pre.
Pandemic World, we expect that to come back that's.
Tremendously high flow through business.
Yes, Yeah, I would say on a consolidated basis.
You should at the very least expect that each of.
Vegas regional and consolidate it ends up in excess of 40% and that's kind of a function of.
We came in.
Being that business could be done differently here in terms of what you've seen before and margins could be higher than you have historically seen in this market.
And the confluence of factors that we've seen.
Since we got here in particular the.
The way the team has come together and embraced what we abroad and really built upon it.
The expectations for margin or above what we were anticipating when we got here.
And I don't know is there the other one there at $1 a share of free yeah, I mean, so $10 a share of free cash flow.
With no bad debt Paydown.
Suggests we need to do.
What 4422 of.
Of.
EBITDA and I would say.
We should be able to do considerably more than that.
That's perfect. Thank you for all of the color I appreciate it.
Yes.
Your next question is from the Thomas Allen with Morgan Stanley.
Perfect. Thank you respect and your earlier comment and you don't want of a set of market share target on the sports betting or online gambling.
Can you just help us think about like the time and it'll take two.
Build that business.
And what your expectations are and like.
When we should start judging you. Thank you I would expect we will have.
And competitive.
Business and brand by this coming football season.
And we'll be building of single wallet likely is.
In the fall not in time for football season, and so there are things that we will add to it.
And move forward, but.
We expect to be of player. This fall.
Helpful. And then it's encouraging to hear how you're taking rate and Vegas on weekends.
Can you just talk a little of it around you know the food.
Biggest business, including weekdays like you know where room rates are trending and and how you see the potential pricing power and thank you.
Yeah. So room rates are still below 19, both weekday and weekend.
And if we recovered just that.
Just room revenue from an occupancy and rate standpoint in April it's over $20 million of EBITDA, We're running right now mid week.
And the eighties.
Wanna say yesterday would of I havent seen yesterday's numbers, but I suspect there around 80, and then they climb through the week and the weekends are.
Full as far as the eye can see and we're yielding but we're still on a typical weekend.
About 20 Bucks below on the ADR and that's where the.
And the return of group business can really help us in terms of compression because it'll bulk fill in that mid week GAAP.
And those group of customers.
That extend their trip on either and help us yield on weekends as well.
Hopeful thank you.
Your next question is from John decree with the Union.
And the game.
Hi, everyone. Thank you for taking my questions.
Tom I wanted to talk a little bit about the group business and April.
And I think we've kind of spoken around this point, but but wanted to attack it head on and so.
In April I think you mentioned the whole of adjusted margins for Vegas would've been high $40 of it was 47% or so.
Is it fair to assume that there was very little or no group business in April and that's typically a pretty high margin business.
Yeah as far as I'm aware of there was one small group during the quarter.
And net.
And that you would have that.
Room, obviously room business and you'd have the banquet business, that's high margin as well and then whatever they do.
Outside of their conference in terms of gaming and F&B.
Got it okay and.
Historically and.
And how big is international for your Las Vegas business.
So obviously, that's going to take a little longer to recover and we haven't talked about it that much but when we think about your run rates coming out of April we've got group business, hopefully picking up and the back half but.
Was there a big piece of international business in Las Vegas for you on a relative basis and.
Would that be additional opportunity whenever that might come back.
Relative to our peers, we have far less exposure to that piece of the business, but it would move the needle a little bit when it comes back.
Got it thanks for all of the color I'll hop back in the queue.
And.
Our next question is from Stephen Grambling with Goldman Sachs.
Thanks, two follow ups on the digital side first you mentioned I think in your prepared remarks of investing and tax so where do you see the biggest holes and the tech stack now and how do you perceive building or buying us.
The techs that we feel very good about where the tech stack is the big piece for US there is rolling out Liberty.
Liberty and they've got and mix of Liberty and CBS platforms.
In the various states, we Wanna be liberty throughout that's the competitive tech.
The technology.
And on the tech side of your constantly.
And can it be adding to it and you're going to be enhancing particularly the and experience.
So you should expect.
That that investment pipeline into Tac is long tail.
And then I guess the other follow up all of them on sports betting and you mentioned being thoughtful about marketing and customer acquisition, where do the content and or additional media partnerships fit into your strategy and how you're trying to position Caesars and that kind of convergence of media and bedding.
Yeah all of that.
And we.
Expanded our partnership with the NFL extended and expanded that's an important partner for us football is.
Clearly the big Kahuna and this space.
And the NFL is where you want to be the draft comes to Vegas next year, we'll have.
A lot of it at Caesars, which is.
Which will be fun.
We were very early telling people, we expect to see continued convergence.
On the media side.
We're really the only significant player at this point.
And now that we've.
William Hill that controls everything we're a one stop shop. If you are looking to get into this business, where certainly of logical call and you should expect we will continue to have those discussions and if theres something that creates more value for us down that road and you should expect.
Is to have them there.
Yeah.
Fair enough. Thanks, so much.
Your next question is from the channel.
Barry.
Good afternoon, and thanks for taking my question.
Firstly I just wanted to start with the regional markets. Your comments around March and April trends, where we're certainly very positive on the revenue side, but just wanted to ask about how youre thinking about.
The outlook over the next six months.
You know more entertainment options will be open to your customers, but that could be largely offset by you know a big portion of your customer base.
That currently isn't coming to the property. So just kind of wondering how youre thinking about the calculus at this point.
I think that.
Similar to my remarks of the last couple of quarters.
If you're thinking this is a short term.
Situation and I think you're wrong.
I think that.
This is.
If you think about investment history, you really have to go back to.
Kind of war time errors, where.
The the country and mobilized for.
And the case of World War, one and World War two to win warrants today pointed all of the economic capacity and bring the bulk of the economic capacity of the country.
The military outcomes.
And this case, we've spent the last year of pointing this.
And.
This virus and have made.
Progress on the vaccine front that I never would have imagined was possible.
And then we point of <unk>.
Fire hose of money.
Consumers so.
These consumers were at home largely.
For the better part of the year.
Not commuting that spending all of the money that you spend.
Going to and from work eating at work going out the <unk>.
Savings range is astronomical relative to historic norms.
As the World Reopens.
Already see this cash.
Capital being unlocked and coming into our doors.
We're still early there so I just don't expect this to change.
Quickly so I don't spend a lot of time worrying that.
What happens when you can go to a movie theater or get out of cruise ship I think the demand for.
For <unk>.
Entertainment and just fun.
After the last.
12 to 14 months is going to be like nothing any of us have seen in our lifetimes.
Thanks, Tom I agree.
And then separately just wanted to ask about <unk>.
And the William Hill, non U S digital business.
Given how strong your your core free cash flow was and kind of your path to deleveraging on.
The local business.
And given that that non U S. Digital business is humming along not at the same growth rate as the U S, but the U K, Spain, and Italy, etcetera are performing pretty well did you consider hanging on to this and I'm sure you're going to be disciplined around pricing, but we're just getting some questions that maybe the value of this is actually worth more.
And then what you originally thought so how are you thinking about.
But I believe you said the goal is to sell it and the next 12 months, but did you consider hanging onto this just given how everything else is has been going thank you.
One of my Pet Peeves was that when I was and investor is the.
The companies that didn't know what they were good.
And.
And I can't tell you, we're good at running and.
And non U S digital business I can tell you that they're almost certainly people out there that will do it better than us.
And see opportunity, there and I can't deploy that capital into businesses that I know will drive better returns to shareholders of no. We've not had a moment's pause in terms of selling the non U S business.
Thanks, Tom I appreciate it.
Your next question is from Daniel.
Loop capital markets.
Hey, guys. Thanks for taking the question.
I think you mentioned lease adjusted leverage with a four handle in 2020, two and recognizing that it's not on the near term radar.
But at what point do you start thinking about or maybe even just thinking about thinking about potentially allocating capital to the buybacks or dividend.
I would say that.
Down the list for US we've got.
We have told you we want to drive this company to an investment grade balance sheet, we want to continue to invest and our properties.
And we want to make sure we invest adequately adequate capital into sports and online so that we can build a leadership.
The stake.
And we think all of that are better uses for our capital than either a share buyback or a dividend for the foreseeable future.
Okay got it and then is there any way you could maybe quantify how much you think you need to invest and in online gaming to get it to where you'd like that business to be over the next day one to two years and then I guess related to that how can you know how much.
And to invest it in the business without having a market share target in mind. Thanks.
Yeah, well, because I don't share it with this group doesn't mean I don't have.
Our share targets.
And I have.
And.
We will.
We closed the deal 10 days ago. So.
I wish I thought we would have had a full month's worth of.
Under our belt I'll be able to better answer the question of <unk>.
What I think is the appropriate investment level on our next call as we head into football season.
Okay, great and look forward to it thanks, Tom Thanks, guys. Thanks, Tim.
Your next question is from David Katz with Jefferies.
Hi afternoon, everyone.
Thanks for taking my question.
You've covered a lot with respect to digital gaming brands.
Brands customers and I think there was some question around technology also on the subject of content.
Alright.
And that is breadth of wagers that is casino games on the I gaming side, how are you approaching sort of building that out and in particular on the sports betting side with respect to in game wagering.
And what's your view on that as an opportunity within sports betting.
I would tell you we're debating content as we speak.
How the how deep do you had need to be in that area of how much do you invest how would you invest that money I'd say the jury's out I see other.
Others are moving.
As we speak we're evaluating what we do on the content side.
<unk>.
Penn did today in terms of our announced today anyway and.
In terms of the ability to develop your own games on the casino side, we think is.
The smart move and.
<unk>.
Brilliant operators. So we would expect nothing less but you should expect us to be looking to build our own capabilities in terms of building games on the casino side.
And do you feel as though sports betting wise.
Wagering offerings et cetera, you have what you need.
Or is that still under evaluation also.
That will continue to expand and our tech stack is a big piece of that the ability to.
Build upon the tech platform is really one of the key differences between Liberty and the.
Legacy CBS system.
William Hill used so you should expect that that will be.
And ongoing living process as we move forward.
The one last detail if I may of the leverage targets that you discussed and the comments include some proceeds from the non U S. William Hill and produce correct.
Correct.
Thank you very much.
Thanks, David.
Your next question is from Barry Jonas with tourists Securities.
Hey, Tom it's all actually met coal filling in for Barry Jonas.
And just had two quick questions.
And you think.
I guess the thing that's come up and.
The recent earnings calls across the broader consumer discretionary space has been.
And hiring issues and wage inflation and.
How are you guys thinking about this moving forward.
Looking needs of the fixed base and how should we think about that from the model.
Hiring employees is certainly a challenge across the enterprise as we sit here today.
Yes.
The server the supplemental unemployment benefit rolls off.
I can't remember when and where it is that the fall.
I think that will be.
Helpful to Us I think you should expect that.
Our labor cost will increase some to make sure that we have adequate staff to meet demand.
But that increase will be swamped by the demand that we're seeing.
Got it and then just from my follow up question.
And you think about.
Curious to get your thoughts and how the the conversation with some of the larger groups has changed.
The because of the process.
Okay, and as we think about the the recovery and Vegas on the group side. How are you thinking about I know the timeline the booking window and whatnot the.
Change, but how are you guys thinking about it internally.
Well, we're really thinking about.
And what's the attrition rate going to be for.
For these groups on the books, we think we've modeled that.
Conservatively and early.
Early evidence suggests that we were conservative which suggests.
Groups are eager to return and ways that we were.
No.
More conservative in terms of modeling.
Three six months, so we feel good about what's coming.
You've got.
Vegas second half of the year is jam if you look at <unk>.
Forward dates in the market there is extremely robust demand.
And you basically sat out.
A year and a half by the time.
The business gets here. So we think the group story is going to be.
A very good story and when the doors open starting in June.
Awesome. Thank you very much I appreciate it.
And there are no further questions in queue at this time.
Alright, Thanks, everybody, we'll talk to you and.
And 90 days.
Ladies and gentlemen, this concludes today's conference call and thank you for participating you may now disconnect.
Okay.
And this year.
And.
Okay.