Q1 2022 Penn National Gaming Inc Earnings Call

Please continue to standby the conference will begin momentarily we do appreciate your patience and I ask that you. Please remain on the line.

[music].

Greetings and welcome to the Penn National Gaming first quarter conference call. During the presentation. All participants will be in a listen only mode. Later, we will conduct a question and answer session at that time, if you have a quest.

<unk>. Please press the one followed by the four on your telephone if at any time during the conference you need to reach the operator. Please press star zero. It is now my pleasure to turn the conference over to Joe Joe Phony Investor Relations. Please go ahead.

Thank you Tina and good morning, everyone and thank you for joining Penn National Gaming's 2022, first quarter conference call, we'll get to management's presentation and comments momentarily as well as your questions and answers, but first I'll review the safe Harbor disclosure.

In addition to historical facts or statements of current conditions. Today's conference call contains forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995, which involve risks and uncertainties. These.

These statements can be identified by the use of forward looking terminology such as expects believes estimates projects intends plans seeks may will should or anticipates or the negative or other variations of these or similar words or by discussions of future events strategies or risks and uncertainties.

Putting future plans strategies performance developments acquisitions capital expenditures and operating results.

Such forward looking statements reflect the company's current expectations and beliefs, but are not guarantees of future performance as such actual results may vary materially from expectations.

The risks and uncertainties associated with the forward looking statements are described in today's news announcement and in the company's filings with the Securities and Exchange Commission, including the company's reports on Form 10-K and Form 10-Q.

So gaming assumes no obligation to publicly update or revise any forward looking statements.

Today's call and the webcast will include non-GAAP financial measures within the meaning of SEC regulation G. When required a reconciliation of non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP can be found in today's press release as well as on the company's website. Thank you for your patience with that and it's now my pleasure to turn the call over it.

The company's CEO Jay Snowden Jay Please go ahead.

Thanks, Joe Good morning, everyone are here with me and Wildlife Me. This morning is our CFO , Felicia Hendricks and our head of operations, Todd George as well as several other members of our executive team should you have any questions for them. We did provide a link to the investor presentation and our earnings release, So I'd encourage you to either print that out or pull it up and.

Maybe referenced that while we're talking because well will speak to a few of the slides in the investor deck.

We did talk on our last earnings call about what sets <unk> apart from the competition and what our strategic objectives and expectations are for the first quarter in terms of our core business. Our interactive segment investing in new technology and the launch of the score bet in Ontario.

And I'm proud to say, our corporate property and interactive teams have delivered on all fronts in the first quarter and I want to begin this morning by thanking our team members at all levels of the organization for their continued hard work and dedication in delivering best in class products and services to our guests.

And we don't always do that but I'm going to take a few minutes to call out a few of our top performers and some highlights across the company I'll start in Louisiana, where our properties led by Harold Rowland very irregular Kim again, and Dan Kennedy continue to post robust results and what are some of the most competitive markets in the U S.

Our team's focus on profitable revenue drivers guest service enhancements and a more efficient cost structure.

Has resulted in market share gains across the board and margins that are the best in all of the property's history I couldn't be more proud of all of our team members in the state of Louisiana two of our properties under competitive pressure due to new build outs and expansions in Black Hawk, Colorado, and East Chicago, Indiana led by Sean to meal, and Ryan Copel that have quickly re imagined.

In which we run the business and compete these properties are both pacing to deliver EBITDAR in the same range, if not higher than what they generated in 2019, despite the new competition, which is not an easy feat, so hats off to them as well.

In Las Vegas Hussein My roots and our creative team at M. Resort are now generating more EBITDA per quarter, then what the property did annually just a few years ago and with the growing population in that part of the Las Vegas Valley, We expect to see those results only gets stronger in the coming years.

In St. Louis Mitra, Lucky and Steve Pete and their teams are finally again able to compete on a level playing field. After the elimination of Covid mandates that were much more restrictive for our property is operating in a different county versus the nearby competition and are back to profitably growing market share in breaking EBITDA records along the way.

Our teams in Central Pennsylvania, led by Dan I'm, Ruben Warren and market. Stella has successfully opened two new properties in the last year and have done a terrific job growing the overall database for the company and ensuring we are looking at all three businesses and our results there on an incremental basis.

Hannibal as Asian in Central Pennsylvania has been minimal and early combined results have been very encouraging and then lastly, our interactive businesses led by Jon Kaplowitz and the Levy family in Toronto continue to demonstrate that there is a different way to approach the online vertical in North America disciplined organic marketing Omnichannel cross sell great products and owning our.

<unk> strategy with our friends at Barstool sports into score had led to growth in our net gaming revenue market share results in the first quarter.

We believe our differentiated approach will benefit us going forward as the relationships, we have and continue to build with our customers are based on delivering great products and customer service media integration branded and experiential events and promotions and a direct connection to our users via live streams and social media engagement with our content creators led by Dave.

And the way in Big cap, we don't lead with discounts.

These structural advantages are already proving themselves out real time and will deliver what we believe will be best in class margins over the long term.

I'm Super fortunate to be working alongside so many talented people every day and we collectively couldn't be more excited about our future prospects.

Now transitioning to our first quarter results, you'll see on slide five we achieved record first quarter revenues of 1.56 billion and adjusted EBITDAR of just under 495 million, which grew 23% and 11% respectively over 2021 levels driven primarily by strong property level performance across all segments, including the older.

Core demographic, who are re engaging through both increased visitation levels and spend per visit.

We're also encouraged by the ongoing and visitation of our younger demographic. We remain focused on re imagining our properties and offerings to enhance the entertainment appeal to the steadily growing segment of customers.

Now turning to slide eight during the quarter our industry, leading my choice customer database grew across all work segments and we also added 355000, new members to our ecosystem life to date, we have increased our database by over a million from digital registrations alone for the for the my choice App, providing valuable cross sell opportunity.

More specifically, we've seen 28% year over year growth in our VIP segment, and 11% in our core segments, driven by our new online and retail sports book offerings, and our recently opened Hollywood Casino properties in New York and Morgantown, Pennsylvania.

On slide nine you'll see we're starting to realize early benefits from our three CS, which as a reminder, as cashless cartilage and contactless technology, which powers. Our my wallet experience, we have exceeded 53000, my wallet downloads and more than $25 million in deposits.

<unk> technology is now live at nine properties in three states and has increased the value of our guests in terms of visitation frequency and time on device, we plan to introduce the three CS and an additional 14 properties in eight states over the next two quarters of course pending regulatory approvals.

As noted on slide 10, our interactive segment grew revenues year over year by 94% exclusive of tax reimbursements from our third party skin partners led by led by strong growth in online sports betting I Casino and media, we remain focused on profitable growth with our integrated media retail operations, helping to.

To deliver the lowest customer acquisition costs in the industry.

In addition, during the quarter, we introduced our market, leading retail Barstool sports book at Penn National Race course in Pennsylvania, and Lebaron as Lake, Charles and Louisiana, and we plan to roll out additional barstool sports books at six more properties throughout the remainder of the year slide.

Slide 12 shows the benefits of our integrated retail Barstool sports books, and gaming areas, which are helping to maximize cross sell opportunities on table game play, particularly in the younger statements comparing first quarter of this year to first quarter of 19, we've seen a 53% increase in table feel for ages 21 to 44.

At our properties with retail sports books.

On slide 13.

You'll see sports betting in Louisiana has been a great story for us and our market leading properties and partners at Barstool sports are a huge reason why.

Dave and Big Kat hosted the Super Bowl Watch party at Lebaron as Lake Charles and Louisiana, Nate has been met and Megan making money embarked on a mincey tour around the state to help promote our barstool sports book at this powerful combination of Barstool talent and our best in class retail sports book offerings underscores the benefits of our differentiated strategy.

Notably we secured more than 6000 pre registrations from our casino database and generated almost 11% N G R with limited external marketing spend.

Our interactive segment had an adjusted EBITDA loss of $10 million. This quarter. Later this month, we expect to make a second 12 and a half million dollar installment towards the California sports betting initiative, while not originally contemplated in our interactive segment guidance for 'twenty 'twenty. Two we remain on track however to generate an EBITDA loss of approximately $50 million.

From this segment in 2022, as we continue to scale operations and infrastructure.

Following our first quarter results, we anticipate the most significant losses will occur in the second and third quarters as we continue to ramp in our new markets and prepare our products and tech stack for football season fourth quarter will likely be closer to breakeven.

By 2023, we expect to be generating positive adjusted EBITDA as we start to realize the benefits of our wholly owned tech stack.

In addition to the successful launch of our Barstool Sports book App in Louisiana on January 28, we became which became our 12 state excuse me one of the top highlights of the quarter is undoubtedly the launch of the score mobile App in Ontario in April for it as.

As highlighted on slide 18, while still early the score Bache performance, thus far in Ontario has exceeded our expectations due in large parts of the scores incredible brand racking recognition and media footprint as well as the support from Barstool sports in the popular came from spit in check what's the number one hockey podcast in Canada.

As a reminder, about the population of 15 million people, Ontario would rank as the fifth largest state in the U S on a population basis.

Since launch the score that ranks of Canada's number one most downloaded sports sports betting app and the number one rated betting app in the iOS store.

Early results reflect strong cross sell opportunities currently 79% of all betters in Ontario are the score media App users and 50% of the score a sports book users have wagered on the eye casino products.

Just after launch the score announced an exclusive 10 year game in partnership with the Toronto Blue Jays. This the old grants a score that national marketing rights that extend across all gaming categories, including sports betting casino online casino and fantasy sports.

The Blue Jays and the score, but also plan to create a branded premium 365 days a year flagship sports bar and restaurant at the Roger Center that will serve as an entertainment hub and destination for fans.

Score about App is built on the score is state of the art account manage player account management system excuse me and bonus engine, which provides highly customized features and seamless integration into the score media App in the third quarter, we expect to transition as planned the score that in Ontario to the scores proprietary risk and trading platform as well which will allow.

US to significantly bolster the products features and capabilities, including expanded betting markets and partly options.

Meanwhile, we remain on track to transition the Barstool sports book to the scores Pam and trading platform in the third quarter of 2023, as previously communicated which will provide meaningful cost and revenue synergy opportunities. We are excited to have two very strong sports brands in our portfolio and the score in Barstool sports.

As we mentioned on previous calls we plan to lead with the score bat in Canada, given its strong brand equity there while focusing on the Barstool Sports book brand in the U S. We feel the best way to maximize the value of both brands in the U S is to fully integrate the barstool sports book App into the score media App, which will occur during the second half of this year.

As noted on slide 14, the Barstool Sports book App has gained market share in the three states that report net gaming revenue by operator, despite our spending a fraction of what our competitors do on promo and paid media we.

We continue to believe N. G. R is a more relevant measure of performance as opposed to handle market share, which doesn't mean as much when revenues are largely diluted by marketing and promotional expenses.

And while our popular Barstool sports book App is tied for the type of first on the Apple iOS store amongst sports betting apps with an average customer rating of 4.8 on a scale of five we are continuing to add new features to drive further adoption youll see youll see on slide 15, we introduced and that'll be same game parlay.

Parlay, plus option and will launch new withdrawal wellness methods, including Mastercard and Apple pay in the second quarter of this year, notably.

Approximately 90% of our withdrawals are now incident, which we're very proud of finally, we expect to add a search function and the ability to use my cash as currency later this summer.

Meanwhile, our barstool branded I casino business continues to grow as we improve our products add new games and leverage our casino database and creative marketing by Barstool Sports for example, Barstool recently launched an eye casino focused Twitch channel called the coin boys, which already ranks in the top 1% of all Twitch programming with an average of 5000 viewers per stream in a store.

<unk> average view time of just under two hours.

Flipping ahead to slide 17, we're also excited about the initial slate of games from our pen game Studios, which are drawing rave reviews and have contributed nearly 30% of barstool casinos online handle across Michigan, New Jersey, and West Virginia, We have high expectations for our first batch of games in Pennsylvania, which which launched last.

Weak on.

On the media front, we continue to build momentum as the score grew revenue 42% year over year in the first quarter and continues to garner high levels of engagement. Barstool has also continued to expand its audience and reach while pursuing new outside the box growth opportunities on March 18th the second Standalone Barstool Sports bar opened in Philly too.

Very strong demands in two additional locations are underdevelopment and major metropolitan locations.

In addition in April Franke, and traveling the Barstool golf podcast at 10 of the PGA Zurich Classic providing video commentary, what's garner garnered 4 million views and over 100000 engagements.

On may 7th Barstool, what broadcast and alternative commentary to the Canelo fight on the zone, representing a further extension of the Barstool brand and to live sporting events.

Looking forward, we believe there is significant upside for the media business and we'll talk a lot more a lot more about that in coming quarters. As we begin to realize the benefits of cross promotion with Barstool sports and additional monetization opportunities with both barstool and the score and with that I'll turn it over to Felicia. Thanks, Jay as Jay mentioned earlier, we reported record first quarter.

Revenues of 1.56 billion and adjusted EBITDA of $494 7 million, which grew 23% and 11% year over year, respectively. I'm happy to report the robust demand that Jay described in the first quarter has continued quarter to date overall the competitive environment has largely remained.

April and further we continue to work on mitigating inflationary pressures by adjusting our offerings and pricing strategies to keep cost in line.

We look toward the remainder of the year and take note of our growing my choice database.

<unk> benefits that our technology investments at our retail properties and our momentum in our interactive segment, we are increasing our prior 2022 revenue guidance range to $6. One 5 billion to $6 five 5 million and our EBITDA to a range of 1.8 75 billion to 2 billion we continue to.

I believe that our property level EBITDA margins are sustainable at 37%.

Now looking at our first quarter 'twenty to cash expenses in the first quarter corporate expense inclusive of cash settled stock based awards with 24.7 million, our cash rent payments to our REIT landlords with $229 3 million cash interest on traditional debt with.

$30 8 million cash taxes were $1 million and total Capex was $65 6 million of which 54.6 million with a combination of maintenance and return generating projects, including the three CS and our barstool retail sports books, the balance with <unk>.

<unk> capex associated with our new Hollywood, you arc and Morgantown projects in Pennsylvania as of March 31, 2022, we had $183 4 million fully diluted shares outstanding.

Regarding certain 2022 modeling metrics for your free cash flow forecast, we expect 'twenty to corporate expense of $98 8 million inclusive of a cash settled stock based awards total capex remains roughly $300 million of which 100 million is return generating disks.

<unk> projects.

We forecast to forecast 2022 cash interest expense of $98 3 million.

Cash taxes will be $110 million net of refunds received and for the full year fully diluted shares are expected to be $183 4 million shares which is before any incremental share repurchases.

I was talking about share repurchases, we were quite active in the quarter under our share repurchase authorization given our view that the market was undervalue our shares we repurchased three 8 million shares of our common stock in open market transactions for $175 1 million at an average price of 46 five.

Oh for per share there is 50, $574 9 million remaining under our 750 million authorization.

As I mentioned on our fourth quarter earnings call, our balance sheet gives us the flexibility to be opportunistic in a dynamic marketplace and to return capital to shareholders. We continue to see a dislocation between where we value our shares and where they are currently trading and we expect to allocate capital Accordingly, if this dislocation per se.

Now I'd like to call your attention back to slide seven of our earnings deck. We remain very proud of our balance sheet, which provides us with a great deal of flexibility the statistics on the page speak for themselves.

And I may 3rd we entered into a second amended and restated credit agreement with our various lenders, which provides for a 1 billion revolving credit facility Undrawn at close and Upsized from our prior 700 million revolver and a five year $550 million term loan a facility.

A seven year $1 billion term loan B facility. The proceeds from the credit facilities were used to repay the existing term loan a facility and term loan B one facility balances the transaction was leverage neutral and strengthens our balance sheet, even further as pro forma for the refinancing our liquidity.

He is 2.78.

And our earliest maturity is now 2026 and with that I will turn it back to Jay.

Thanks, Felicia on April 26th in conjunction with the filing of our proxy we published our 2021 corporate social responsibility report, which highlights the many ways Penn is continuing to live up to its commitment to being a good corporate citizen I'm really proud of the report what shines a spotlight on the tireless efforts of our team members at all levels of our organization to support.

Port those in need in our communities to further our diversity equity and inclusion efforts and to help preserve our finite natural resources. Some notable examples include the launch of a $4 million stem scholarship fund an internship program at historically black colleges and universities in states, where we operate we also contribute.

More than $7 million to help fund COVID-19, and hurricane relief efforts as well as supporting worthwhile charities and civic organizations around the country with thousands of hours of volunteer work by our team members. In addition to our financial donations.

Most recently on March 23rd members of my Executive team and I hosted in Louisiana, Governor John Bel Edwards and other local and state dignitaries at the annual Metanoia Gala at our La Bears Casino and hotel in Baton Rouge to help raise funds to support adolescent victims of human trafficking.

It was a very emotional evening, having visited this groups one of a kind shelter for girls, aged 11 to 18 years old where they are provided care for their mental physical and spiritual well being as well as instruction and academics life skills in job training, we're super proud to support this organization's critically important mission today and going forward at.

At Penn. We also spent the month of March celebrating women's history, which included a women behind the score bat virtual panel to recognize the critical role our female team members played in the development of the score about App I look forward to continuing to update you on our ongoing ESG efforts throughout the year and with that Tina we'll open it up to questions.

Thank you if you would like to register a question or comment. Please press. The one followed by the four on your telephone.

We'll hear a threshold prompt technology a request. If your question has been answered and you would like to withdraw your registration. Please press. The one followed by this three one moment please.

These first question comes from Joe Greff of J P. Morgan. Please go ahead.

Good morning, everybody.

I have a two part question on interactive and then one on the land based casino side.

On on Barstool Casino can you talk about.

From here.

The plan to launch new games and titles to the rest of year of the year and then how that rate of growth in new games entitles translates.

Into rate of growth in casino GTR.

Should that be moving and similar trajectories.

And then you've been the slides that thank you for doing it.

You know what the GTR for a casino has been can you talk about how that translates into N. G. R and then.

I'm presuming that's EBITDA positive right now that segment can you talk about the margins and maybe the scale benefits and the impact to margins as you introduce new titles and game introductions from here.

Do you want to throw out the land based question also and then we'll just talk home all Joe.

Sure, Yes, we repeat them I won't remember it but.

Obviously, one casino operator, this week talked about seeing slight softness in that lower end consumer.

On the land side.

Can you talk about what Youre seeing at the lower end of your database and for that matter any degradation in other segments.

Yes that might be worth calling out I know you haven't a slide deck.

A lot of data on the VIP and that core customer, which looks like it's pretty stable and not being impacted by whatever pick your poison macro factors that's out there. Thank you.

Yep. Thanks, Joe Todd do you want to tackle the last question first and then I'll hit the first couple sure. Thanks, Jay and thanks, Joe.

So you know, we've we've really dug into this and understanding everything that's going on with the economy in the world right now, but I'm very happy to say that we've seen very little fall off in that lower end segment and frankly, when we really started to dig into the numbers.

Combination of a couple of things some of those consumers are actually moving up into the right moving into our kind of mid mid core level customers are maybe a little bit reduced frequency, but higher value when they come in.

And then some of those you know the way we structure, our marketing and program incentives.

Some of those are frankly, moving into and unrated play segment. So when.

When we look at this and again as you know I'm not really a high profitability segment to begin with so we're very strategic in the way we reinvest in this group.

And what we've seen is that they've moved either up into the right or frankly into unrated, where they're actually more profitable for us.

Great. Thanks, Todd.

The first couple of questions on interactive Joe I'll provide some some detail we haven't provided all the detail publicly that you've asked for we will in time, obviously, we're still at the in the very early days in this nascent business, but on the Barstool casino side and we do have a slide as you mentioned that our pen game Studios, we continue to put out really good.

Content and we're now up to 30% of the handle in a casino in the states, where we've launched those games, which is west, Virginia, and Michigan and New Jersey.

Of total handle and so when we first launched obviously we were in the mid single digits. I think last call. We mentioned it was up to 20% of handle now it's up to 30%. We did just launch that entire batch of games. That's been live in the three states. We just launched those in Pennsylvania on the Barstool casino offering as well a couple of days ago. So we.

Would expect the percentage of play on our games to continue to grow in Pennsylvania now that those games are end market.

We also have a slide that shows you what the momentum on a sequential basis looks like from a G. G. Our perspective and I Casino. We're continue to move up into the right. We're not satisfied obviously with where we are an online casino.

Most of our energy and focus and resources for the first year and change that we've been live has been toward making sure that we had online sports betting products.

That was going to be competitive I think we've definitely delivered on that both here in the U S as well as in Canada.

And you should expect to see our online casino product continue to improve.

The number of games in our library continue to grow both from.

Well known third party providers as well as our own game and I think youre going to see that happen in all of the states that we're live in we.

We really prioritized online sports betting first because it's just you have so much more scale a legal across so many more states and it really serves is such a great acquisition tool for online casino as well as for our retail casinos and Todd highlighted in our.

Earnings release as well as in the slides just how rapidly we've been growing our database and then there's all of these great Omnichannel cross sell opportunity so I'll.

Online sports betting for US is so valuable not just because of the sort of stand alone P&L, which we feel good about and it's only going to get better in time as we have more scale and get better and also owning our own technology, but do you think about the cross sell to online casino and the cross sell to our brick and mortar casinos and elsewhere, it's very exciting.

The last part of your question was around G. G. R. A N G R and what I would tell you is that the correlation between G. G. R. A N G. R is very tight and online casino theres very little promotion and discounting that goes on there it's not like the Delta you see in the states that report G. G R and M.

G R on the sports betting side, where there is more of a delta and it's very volatile.

Don't see that on the online casino side, we typically don't have to discount much to two to convert G. G. R. A N G are an online casino.

Great. Thank you and then one final question regarding the <unk>.

Terry will launch.

A bunch of metrics on there regarding.

Downloads and registrations and average daily active users.

You can actually talk a little bit maybe in relation to Pennsylvania and Michigan.

Handle and GTR performance and do you think Ontario's.

Development or growth as the market is.

Acted by the transition from a gray market to us.

Legitimate developed market.

Yeah, there's there's a lot to go through on Ontario, all of which we feel really good about it's still early days, but we shared some stats you should assume that.

Handle results.

Looking very favorable compared to other states that we've launched in much like the D. A use that we've provided there.

One of the neat things about what we've seen in Ontario, a bit different than what we've seen in the U S is that well one we had a couple of weeks to work on pre registration and so our friends at Barstool sports and of course, the score or are we really.

We're very successful in getting a lot of downloads and registrations done before they go live date of April 4th.

So that was something that worked really well for us that we hadn't done as much in the U S. The other thing I would say is that when we went live on April 4th. We we're obviously really pleased with the volume we were seeing and downloads registrations and first time deposits, but what's been interesting in Canada and I had attributed just to having.

You know a little bit of a different strategy than in the U S and the U S really rely on organically, mostly with our partners at Barstool and when our partners at Barstool announced to their audience that we're alive in a state you just see so such a huge influx on the first day or two and that's the bulk of what you're going to get in those first few.

Do you still continue to grow downloads registration from first time deposits on you know week, two and week three but you do see it fall off a little bit faster because the audience follows so quickly.

And then Ontario, what we've seen is that even since the day of launch on April 4th everyday thereafter, we continue to see significant we're talking in the high hundreds in terms of first time deposits and in the thousands in terms of downloads every day incremental to what we saw on the first day. So we're continuing to build.

That business, we're seeing new users download the app and deposit and that every single day and and the churn has been low so we feel really good about the products. We're obviously live on our own player account management and bonus engine already so we're halfway there on the tech stack and we'll be live on the remainder of the minutes trading serve.

This platform this summer before football season, so so far so good we'll share a lot more detail about Ontario in the future I don't want to speak much more about the details of our numbers only because we don't know what everyone else's looks like at this point.

The last part of your question around it being a gray market. We didn't really know what to expect because people have been playing with gray market operators and apps for many years in Canada.

But given our ability to quickly penetrate and convert people from the media app to the betting app and to grab people through our other relationships throughout Ontario, we've been very pleased I don't I can't really compare it to anything within market because we don't know how everyone else is doing other than you can you know there's been some pause.

We reported a number of downloads of the App and things of that nature, which we obviously have scored very well and I would tell you all the other metrics are consistent with what's been reported publicly.

Great. Thanks, Jay.

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

Hey, good morning, everyone.

Jay a lot of ground already been covered but.

I don't know if this is for you or for maybe for Todd, but if we can go back to a couple of comments on the core consumer if I was going to kind of.

Summarize what we've heard from other operators I think some have hinted there could be some softness at the very low end of the database amongst the consumer others have largely said.

There is really nothing to see here.

Could you just really summarize that for US and then maybe take us through a slight walk around a handful of the regions, where you might be seeing some regional differences, particularly in the south maybe out west where it actually it sounds like trends are really good in the locals market, but maybe just a couple of highlights there would be really helpful for everyone.

I'll, let Todd answer that one as well.

Thanks, Sean so.

I'd put us in that camp with really nothing to see here.

Even going into April and now into May.

Just based on where our properties are in.

I just to give a little more color to what what Joe asked as well.

That lower end so look at it you know kind of that zero to 49, and that's that's really down less than half a percent, 0.3%, but really we're making that up on the 50 to 99, which is up three 7% the unrated, which is up five 4%, we're seeing really positive visitation, we kind of slice and dice our database and.

Look at not only the work segments, but also kind of the geo location.

We are seeing anybody that most of our customer bases within 50 miles just based on where our properties are located so everything in there is actually trending very well. We also are seeing a little bit more growth that some of our more destination type properties. So I think.

You start looking at the Midwest, the self and we're seeing really decent growth in across all segments and now that we're getting into their summer months, where we're increasingly entertainment options were located next to some bigger entertainment and sports options and everybody going back out to these events.

So again, we're seeing different growth patterns, and then what some of our some of the industry has seen but.

Really we couldn't be happier with what we're seeing right up into may.

Super very clear and then maybe just as my follow up you know Felicia one of the highlights.

You called out was around the stock repurchase obviously, we knew the authorization was out there, but you put some of its work on can you just help us think about parameters around that.

I think a lot of this should be.

Self funding out of free cash flow, but maybe just help us think about the balance and sort of programmatic versus opportunistic sort of operative words for us on wall Street.

Yeah.

Thanks, Sean Yeah, I think that we're going to continue to be opportunistic and so as you know we've we've already repurchased 175 1 million shares and if you go back to the K I think we reported that we did about 107. So we are you know obviously act.

And in March for as long as we could be which got us to that average price of roughly $46 and with our stock where it is now I think it's fair to say that if we thought our stock was undervalued at 46, we think it's undervalued.

The high thirties, and so it will be in the market again, but it's going to be opportunistic and I talked about our strong balance sheet and our liquidity and so we're just in a really fortunate place to be able to be nimble and take advantage of the dislocation that we see.

Thank you very much.

Thank you.

The next question comes from Barry Jonas Truth Securities. Please go ahead.

Great. Thank you.

Can you maybe give some more color about how you plan to re imagine your properties for that younger demographic.

I'm kind of interested how you think about balancing that with retaining interest from the older demographic.

Yeah, Todd do you want to tackle that one as well thanks, Jeff.

Thanks for the question Barry So.

You see that we touched on a lot of lesson in the slide presentations.

Really a lot of this is being done through technology, our food and beverage offering the design of our hotel rooms, and as we start to get into this year you look at our Greektown.

Our la Berge Lake Charles and the New hotel offerings that we're putting out there I think are going to be best in class best in market.

We've all been extremely fortunate and we've talked about this on numerous calls doing away with the dated completely David Buffet concept, which you know is very fortuitous now obviously with the rising prices, but using that space in a much better way, creating more interactive venues venues that can kind of change with the <unk>.

Seasons venues that can kind of change a lot easier than than a buffet that had been around for decades.

But the real big impact for US is trying to look at the guest experience the consumer experience and remove friction and a lot of that being done again through technologies, where the three CS that Jay mentioned.

But just kind of a imagine the process and going through the casino from just five years ago, when thinking about the queuing in the lines and what we've done is tried to move away from that so for all consumers and that's not something that just the younger demographics like it's really something that applies to everyone coming into a casino.

We want to make it easier for everyone coming in to really start enjoying their experience and enjoying their visit.

I was just going to add one thing I agree with everything Todd said when I'm highly.

Encourage we were just looking at our age trends age segment trends in the database for April for example, and last year. At this time there was a lot of stimulus money rolling through the economy. There were still very few things for people to be able to do for fun to go out there was no concerts restaurants.

Had restrictions you Couldnt go to bars or if you did they were closed early you couldn't go to the movies.

You can do all of that and I was actually I read an article this morning that talks about how customer behavior has so quickly return back to 2019 and like the last couple of months and you consider that all of those options are now available to people, who love all of those options and have been a part of that as options for many many years.

Yes.

And yet what we're seeing is that that younger demo that we were able to bring into our ecosystem over the course of the last couple of years. When there was less to do but our buildings, where open our offerings rope and were still seen sizable growth as you saw in the Q1 results April looks just as good on a year over year basis.

It's off of a very very large base of growth over 2019 last year. So it's not as though we brought these younger demos in and they didn't like the experience, but it was the only thing to do and then it was mass exodus as soon as they can go back to concerts and sporting events, we're growing on top of significant growth from last year and as you look at.

Q1 of this year versus Q1 of 19 the growth in those younger segments is super robust yeah.

To Jay's point that 21% to 30 for Berry is up.

83% compared to 2019, so you know the big problem that everybody was trying to solve pre pandemic was how do we attract and younger demos how will they engage with us what games, where they play.

And again this this created that unique opportunity. This moment in time, where they came in looked around and found something that they liked and were continuing to evolve as they are.

But we're holding on to them and a lot of that is kind of incorporating the entertainment that theyre looking for.

That's really helpful. And then just a question on the.

<unk> can you maybe talk a little bit about what underscores the raise is it kind of less concern about the macro.

And inflation, maybe less concerned about new supply cannibalizing you in the back half of the year and I would just add I think the implied margin actually went down at the midpoint. So any color there would be helpful.

If it did that's not intended I mean, we've committed to what we can do Barry on the land based side at 37%, we said that the last last quarter. We obviously delivered on that this quarter.

Look at this.

This is a it's a delicate right, where we put ourselves out there a little bit doing guidance at the beginning of the year. When most of our competitors did chose not to and I wasn't sure. If that was the right decision or not when we did it but we felt like we had enough visibility and we felt confident that what we were able to do in the second half of last year from a land based perspective, we'd be up.

Take into 2022.

And so we've we've done that and I mentioned at the beginning of the call and I highlighted a couple of our properties and markets, where we have seen that new competition and of course youre impacted by that in Black Hawk, Colorado are aerostar property there in our <unk> property in East Chicago with a new hard rock opening.

But our properties haven't made quick adjustments our leadership teams are Todd and Aaron Chamberlain, and Raphael Verity and our Gms and our property teams there have made adjustments and so we're we're able to raise guidance because we felt like we have visibility into our business at this point in time, we feel like we are.

Understand the competitive impacts from the new supply in some key markets and I'm. The only other market, where we know there's new supply coming is Nebraska, which will have some impact on council bluffs, but that is looking like it's it's a ways off there's gonna be temporary casinos for awhile before a permanent and so.

If you look at the guidance raise were taken every all of the consensus beat for the first quarter were sticking to what we had said at the beginning of the year for the remainder of the year and if trends that we're seeing today continues and that's likely a conservative position to take.

I would only add Jay and Joe you talked about this that 55, plus the 65 plus definitely.

They have been lagging behind me you heard others in the industry, we talk a little bit about the coronavirus impact in January .

So that that has kind of kept them a little behind and we feel there's upside definitely there and then with some of the capital projects that Felicia as mentioned.

As those come online we feel that there's really good really good momentum at a lot of our properties.

Okay, Thanks, guys and congrats on a great quarter.

Barry.

Thank you.

The next question comes from Thomas Allen of Morgan Stanley . Please go ahead.

Thanks, just a follow up on the guidance Super encouraging that you guys increased it I did think it was interesting that we're now one quarter into the year and you widen the range is.

Is that would be the macro uncertainty or or or something else. Thanks.

Hum.

Not really due to anything we just tried to provide a guidance range that took into account the beat for Q1.

I wouldn't read into it widening and I wouldn't read into that Thomas we feel obviously good about the midpoint of that new range, which is higher than what we had out there at the beginning of the year and look the only thing we don't know as you know macro impacts of things, there's a lot going on in the in the in the world today, but I would.

Also add that we haven't seen impacts from higher gas prices, but we've also been down this road before and our our regional businesses, you'll get the catchment areas you're talking about you know 20 minute drive this is not going to break the bank.

Youre not going to be spending a lot of money on gas to go to a casino once a week a couple of times a month whatever your habits are and so.

So we feel we feel good based on what we see what we have visibility of the trends as recent as today, because I mean yesterday's results I mean, we're looking at this every day and we feel good about the guidance we had out there we feel good about the guidance, we just raised but I wouldn't read into the range, meaning anything.

Perfect and then just on the interactive side, you know could you give us how much revenue you expect to generate this year and if youre not comfortable of that just did like qualitative commentary or are you more optimistic than you were last quarter around the amount you can generate this year.

Yeah, we haven't given that number but I would say our optimism continues to grow Ontario is off to a great start I had high expectations, we're doing better than I thought we would do in Ontario, which is it feels great to say.

And you know, we're continuing to grow our online casino business.

You know football season, it's gonna be are our second real full season of football at scale. We learn every month every quarter what works what doesn't I think are our partnership with Barstool just gets stronger in terms of how we communicate and what we do promotional Lee and through events and live streams and all.

That so yeah. The momentum is good and our confidence continues to grow in terms of the future prospects.

Perfect. Thank you.

Thank you.

The next question comes from Ryan <unk> of Craig Hallum Capital. Please go ahead.

Good morning, Thanks for taking my questions.

Hey, Brian .

Curious on so you've talked a lot about revenue kind of the demand side, but curious if you're willing to break out the cadence of property level EBITDAR margin by month in the quarter kind of January versus.

March and then if you're willing to comment on April has trended.

You should just assume for Q1 that it got sequentially better omicron have impacted January to some extent.

February was really good March was better and April was very good you have to remember and I always try to be transparent out. These things there were five four weekends in April . So you should expect april's margins to be really good but anytime historically that your April margins or anything like March that's very rare even when you have calendar Burnett.

March is typically the best months of the year and the momentum in the business right. Now is very good I don't know if you want to add anything to that.

Well, so Jay the only thing I would add.

In general were talking about this March is always one of the best month. Traditionally April is always one of the tougher months based on holidays and taxes and everything else, but the actual growth from 2019 to 2022.

April to date it has been one of our strongest months from a margin standpoint, so really really happy with where we're trending.

Great.

And then if you add up where you've launched Triple C. And then the coming properties over the next few quarters here at 23, how many total properties do you anticipate today will be allowed by regulations and then secondly on that you gave some good qualitative metrics, but anything you can share about the financial impact thinking revenue uplift margin.

Packed et cetera.

So the regulatory meetings, we've had who have gone great rich premise, who heads up our tech team and a bunch of his folks have done a great job working with the properties and the regulators and every time the regulators see what our offerings are.

There is this kind of Oh, we get it and we see it so I think you know.

Our goal is to be at say 30 properties, depending on regulatory schedules.

But that.

Not all of that will arguably happened this year just based on getting in front of regulators.

Making sure that we can roll everything out, but the impact you.

You you're looking at very much in its infancy as we move across states, but we are seeing a good lift that as we get more people into the ecosystem, we should be able to share. Some some really good data points, but I think we're probably a few quarters away on that.

Great.

One last one for me just MGM went through a rebrand expanded their loyalty rewards program earlier. This year, how do you feel about the breadth depth and really brand of your my choice program.

I would say stay tuned.

Great. Thanks, guys. Good luck. Thanks.

Thanks Ryan.

Thank you. The next question comes from Berny Mccarran Needham and co. Please go ahead.

Great. Good morning, Thanks for taking the questions Jay I was hoping you can just.

Zoom in on the Tech stack launch in Ontario, with your Pam and go in this engine how has the experience and maybe if you can compare it to the launch and some of the U S States, where you're using someone else's technology anything that you could call it that.

You were able to do that you had in another state launches and then just.

You talked about a little bit, but just the roadmap from here in terms of the <unk> rollout of your tech and trading platforms and then it just kind of a test period in Canada until the launch in the U S. Next year, just want to make sure.

We have it right and anything else to think about the tech stack. Thanks.

Yeah. The second one is easy Bernie the road map hasn't changed our plans haven't changed we actually have a slide I believe it might be in the appendix of the presentation. If you haven't seen it which just reinforces what we said day one when we announced we were acquiring the score in terms of key quarterly milestone dates.

And what we plan to do in those quarters that it takes you out through the end of 2023. So that one is status quo, which is great everything's as planned our engineering teams are working great together between Penn Interactive and the score and product design people. We're really excited it's neither of these are fun days and I would say on the.

You know the launch on our own Pam and bonus engine in Ontario.

Obviously early days I was thrilled that we really and I'm knocking on wood, we didn't have a hiccup I mean, it was a it was so smooth and seamless.

We handled it under a tremendous volume and stress.

At the launch with you know in Ontario was the N C. Double a national Championship game was the first day of launch there was a lot of volume and are handled it great that the team at at the score bet the Levy family.

Everybody. There, we just we're really happy with how that's gone so far and I think the probably the biggest things that are noteworthy and we highlighted these bernie but for us being able to have your sports betting offering fully embedded and integrated into your sports media offering is super powerful, especially <unk>.

Given how popular the score media App is throughout Canada.

It.

It's probably worth a trip for some of you guys on the sell side to get up there and actually try it out it's really amazing you can populate your bet slip do everything within the media App and then when you are ready. It just seamlessly takes you over to the betting App you deposit your bet and off you go so owning your own Pam allows that to happen and allows it to happen in the exact way that.

You want it to happen.

Sometimes challenging when you're working with third parties because the third parties are always going to look at least common denominator of what all of their b to b clients are looking for and in this case, we get to control the entirety of that product experience and roadmap and on the bonus engine side again still still very early but you should think about the benefits really.

Being that we can personalize and customize offers so when you're thinking about CRM opportunities and I think the industry online industry in the U S and Canada is still so so new and.

I don't think any of US currently are doing that well I think mostly the marketing efforts, whether it's promotional or media just kind of a shotgun approach and everybody gets whatever the offer is and what we're able to do now that we have our own promotional engine as customize offers based on individual behavior and that's obviously a super powerful I think.

Become quite sophisticated that being able to do that in our land based businesses and so to be able to apply that same science and knowledge and know how and apply it to our online business is going to be really powerful. So yeah. We're feeling we're feeling really good and then managed trading services.

As you'll see on that timeline that I referenced earlier in the slide deck, that's still planning to be launched before football season. This year in Ontario.

Obviously what comes with that is.

Just an expanded.

Our library of betting markets. When you think about same game parlays and all sorts of different parlay options.

It can be a lot more flexible on pricing and how we think about exclusive that's weather just in Canada, or Canada, and the U S with our friends at Barstool, and there's meaningful cost savings with all of this because today or up until recently the score had third party providers for their P. M as well as managed trading services much like we currently do in the U S.

And as those costs roll off and you're on your own technology, there's real meaningful cost synergies to go along with the revenue synergies that I referenced.

Understood and maybe just one follow up because admittedly I haven't taken the field trip up the candy, yet, but how does the comp if you were to isolate competition to just product and so you're obviously competing against a whole bunch of new operators with the great market operators aren't in the U S.

How does the just competitive landscape feel from a pure product standpoint.

Relative to the U S. Do you think the U S. Operators are ahead of maybe those gray market operators. Obviously, there's there's about 365, there too which is generally considered to be one of the better operators globally.

Yes, it's a great question and I think it really boils down to the individual end user and what are they looking for what are they are accustomed to theres going to be some people in Ontario that had been betting with that 365 in the grain market for a long time and that's what this is going to continue to do because that's what they've been doing and so.

I am confident that people, who have been betting with gray market operators, they take the opportunity to download our app and to register and deposit we're very confident that they're going to continue to come back to us at least as one of their options as we move forward because the player experience and how seamless everything is integrated between media.

And sports betting makes what we're doing there and obviously here a very very unique.

Our plan.

I've mentioned in the slides that 80% or 79 gets rounding up of our users on the score bet and Ontario were known.

On the score media App and so there's obviously a lot of value in being able to convert and being able to make this seamless on the media applications and we're gonna be doing the same thing here in the U S and bringing the barstool sports book offering and fully integrating that into the score media app throughout the United States.

Second half of this year not sure if that'll be beginning or middle of football season, but sometime during football season, and given what we're seeing in Ontario, We think that'll be another nice shot in the arm for our business here in the U S.

Got it thanks Jay.

Thank you. The next question comes from Chad Beynon Macquarie. Please go ahead hi, good.

Morning, Thanks for taking my question.

I wanted to ask about California, I think there's been some confusion from investors. This week because there's two separate measures on the ballot in November .

Do you have a sense of where California support is on the build that you're supporting understanding that there will be a lot of communication.

On the airwaves and in person between now and the election, and then secondarily on California is your database proportional in California to the U S population or do you have a higher percentage of stool is in California.

I'll tackle the second one first chat and then I'm going to ask Eric Schippers, who heads up that got relations and public relations for us because he's super close to what's going on in California, and can tackle some of the more detailed.

Part of the question that you had in terms of database and popularity AR. If you look at it across the country. The northeast obviously barstool is strongest because that's where it started but it's now such a national brand very strong in the Midwest, We can't wait to get launched in Ohio, one of the most popular states in the country.

Barstool sports and we obviously have four great casinos in Ohio, as well down south very very strong and out west strong and Dave actually spend quite a bit of time out in California for a variety of business thing so.

Yes, you should assume that what we've been able to do in some of the larger population states that would be our expectation for what we can deliver in California as well and then in terms of the polling there has been some competing pulls out there, but we're pretty confident in the strength of our polling which shows that 59% of respondents support our balanced.

Initiative, which would open up the market to mobile gaming the other initiative, which is on the ballot would be for retail only and so they're not really competing they're actually complementary and if both were to be approved.

We can go down the road and be very successful there.

Only ours is approved the trial still have an opportunity through partnerships with us to participate and I think the key thing here and what is driving the popularity of our initiative is the fact that 85% of the revenues are going to go to support mental health issues and that is wildly popular in California.

Yeah.

That's great. Thanks for that detail and then just wanted to ask.

The question you get from time to time on the.

Stripped it appears that there's still a few assets for sale out there.

What's your appetite for looking at properties on the strip at this time.

Not much interests, we're not we're not kicking the tires right now on anything Chad.

Occasionally we have in the past if it's a really unique opportunity and a really unique asset great location.

And we just we're not looking at anything apparently.

Thank you very much congrats on the results. Thanks, Chad will take one more question Tina.

Thank you.

The final question comes from David Katz of Jefferies.

Please go ahead.

Hi, Good morning, Thanks for working me in under the wire.

If you could just share some thoughts on how we look at the score in conjunction with Barstool.

The degree to which those customer populations overlap don't overlap fit together.

You know where the opportunities are if there are any to sort of crossover between those two.

Yes happy to David.

I would tell you that the the demographics are a bit different if you look at barstool are definitely skews, mostly people in their twenties into their thirties.

And if you look at the score it's more in your thirties and forties Theres, obviously it runs the gamut, but in terms of Youre looking at like the core demo that's what it would look like there is obviously some crossover here in the U S as well as in Ontario, but what we've seen is that when we have activated.

Barstool effort.

We tend to get a different response than when we activate the score efforts, which tells you that there's a lot.

Incremental between the two.

Customer bases and I think when you when you think about the opportunities from a peer media perspective, we're already starting to to dabble in we're seeing that there's a lot of opportunity as you think about advertising partnerships and partners that we have at barstool that have never been introduced to the score and vice versa.

Both have many fortune 100 companies as advertising partners, who maybe weren't familiar hadn't made it hasnt been made the introduction to the other media company that we have in our portfolio. So I think we're already starting to see that Theres a lot of a lot of upside in thinking about sales and revenue management and advertising partners.

Ships differently, there's obviously a lot we can do on the commerce and merchandise side. The score is just starting to dabble now and we're encouraged by what we're seeing there.

So I think you should expect to hear more from us there's a number of things that we're looking at right now Chris Rogers and I were just on a call yesterday about some ideas that we have with our media partners that as you know new different verticals, but really exciting as you think about the loyalty of the audiences, we have in our ecosystem and our products and serve.

It says that there.

May be using today outside of our ecosystem that they're not really excited about but they would love to be more involved in our ecosystem. So I would just say stay tuned, particularly when we close on full ownership of Barstool sports and Q1 of 2023, I think it will probably become a bigger part of our messaging from there going forward.

Got it.

That's great and then the context of all of the information.

We have and there's so much water under the bridge since we started this discussion.

How should we or should we at all think about market share or market share targets for what you have today.

Yeah, we talk about this a lot internally.

We've talked about you know our feelings on handle market share versus N G. Our market share I wish every state shared N G. Our market share because of the ones that do we not surprisingly score a lot higher in terms of market share overall so.

N G ours, where you start to pay the bills handle doesn't pay bills G. G. R does not pay bills N. G. R. You can start to pay the bills and so that's all we care about is N G. Our market share and you should expect that when the market becomes more rational.

And you don't have as much discounting and buying of the business, which we do not participate in to the extent that I think that most of the rest of the competition does today. If you look at what we invest promos as a percentage of handle promos as a percentage of revenue.

Paid media those spend levels from the competition have to come down or else no one will ever make money and I think everyone's been very clear about that as those spend levels from our competition come down I think that whoever has the best product the best brand. The best relationship with the end users is going to continue to grow their market share and we feel very.

Good about our positioning and all of those areas.

Got it thanks very much I appreciate it.

Thanks, David.

And thank you everybody for dialing in and joining US. This morning, we went a little bit over but I hopefully that was a value. We look forward to speaking with all of you again next quarter.

Thank you. This does conclude the conference call for today, we thank you for your participation and ask that you. Please disconnect. Your lines. Thank you and have a good day.

Yeah.

Uh huh.

Okay.

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