Q1 2022 Urban One Inc Earnings Call
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Ladies and gentlemen, thank you for standing by.
During this conference call urban one will be sharing with you certain projections or other forward looking statements regarding future events or its future performance.
One cautions you that certain factors, including risks and uncertainties referred to in the 10, Ks 10, Qs and other reports it periodically files with the Securities and Exchange Commission could cause the company's actual results to differ materially from those indicated by its projections or forward looking statements.
This call will present information as of May 520, 22.
Please note that urban one disclaims any duty to update any forward looking statements made in the presentation.
In this call urban one may also discuss some non-GAAP financial measures in talking about its performance. These measures will be reconciled to GAAP either during the course of this call or in the company's press release, which can be found on its website at www dot urban one dot com.
A replay of this conference call will be available from 12 P. M. Eastern time May <unk> may 5th 2022 until 11 59 P. M may nine 2022.
You may access the replay by calling 8662071041 in the U S International callers may dial direct area code four zero to 90 700847.
The replay access code is 7445 to five nine.
Access to live audio and a replay of the conference call will also be available on urban one's corporate website at www Dot urban one dot com.
The replay will be made available on the website for seven days after the call no other recordings or copies of this call are authorized or may be relied upon.
I'll now turn the call over to Alfred C. Liggins, Chief Executive Officer of Urban one who is joined by Peter D Thompson Chief Financial Officer.
Thank you very much operator, and welcome to our first quarter results and conference call also joining.
Peter and myself are Christopher Simpson, who is our general.
General Counsel.
Karen Wishart, who is our chief administrative officer.
And Jody drill where he is the CFO of TV one.
Saw the press release I'm really excited.
Excited about the extraordinarily strong quarter that we had a cross.
All of our all of our business units bank.
<unk> performance.
Well in excess of I think what you know.
Most.
Analysts had predicted.
We had guided to.
Two yeah mid teens revenue growth in the in the radio business, but you know that at all.
Came in.
Very strong and and so did TV, one and so really.
Really strong performance from our team across our divisions now very proud of them.
I'm going to hit you know, what I think I kind of like the two highlight.
Areas of of conversation first here or guidance for the year and also an update on Richmond.
Given the strength in Q1, we do feel that we will exceed the top end of our $145 million to $150 million of EBITDA guidance for this year.
Not sure exactly where it's going to land, but you know, we'll we'll beat that however, yeah. It should be noted that we are seeing less robust pacing going forward and we.
We articulated that in the.
In the press release radios pacing mid single digits.
Our Austin once you start to lap tougher comps.
From last year so.
Even with all of that we still feel like were gone out.
See the top end of our guidance, but yeah.
Just want to let people know that there are tougher comps coming in you are starting to see a moderation in.
And the growth rate.
Particular in radio and you know, we don't know where the macro economic wins are going to blow, but we should be in good shape now by by the end of this year, but don't just extrapolate Q1's performance forward for the next three quarters yeah.
Moving to Richmond.
Question that people get.
Hum.
A question, we get all the time, what's going on so let me just articulate specifically.
So everybody knows that yes, we had been moving forward to get a second referendum scheduled the city council of the city of Richmond voted to.
To petition the court for a second referendum that was back in January .
We then went to the Virginia lottery to get pre certification for our second referendum.
Got that.
And in April beginning of April .
And actually as you know I think it was beginning of April and then we went to the circuit court of Richmond.
And petition the court for the second referendum to to be scheduled and and they granted that you now for November of this year.
And on.
The 18th of April that.
That court order became final and Unappealable.
So you know there is a referendum scheduled however.
There is still.
A there are still hurdles.
There is still a movement within the General Assembly.
To put language in their budget that would.
Attempt to block the second referendum and not let US run again until November of 'twenty, three and and and we are in the process of trying to lobby to get that language taken out not sure that we will be successful.
But that is that that that is one avenue.
Other Avenue is that the governor.
Also has the opportunity to veto language or amend language.
And bill's, including the budget Bill.
We believe that we have an extraordinarily strong legal argument.
That the court order is final and non appealable and that the general Assembly cannot retroactively undo a court order.
I spent a lot of time with lawyers looking at this.
By the way, we're probably the only entity that has looked at this.
In depth I do.
Believe that it is now starting to come into focus.
At.
At the at the legislature level, because they're still they still don't have a budget deal yet there in the processing.
And the Virginia General Assembly of trying to negotiate.
The budget, but you know there is a strong chance that this language for being there and if it is if we're not able to get it either vetoed out or taken out.
And by the legislature legislators, then there's probably going to have to be some sort of adjudication process not sure exactly how that's going to work yet if in fact that happens we think that if that happens we got the stronger argument yeah. So I just don't know.
We're very optimistic that we're going to be running a second referendum, but I don't want to lead anybody to believe that it is a slam dunk.
And quite frankly, there's probably unchartered territory, yeah, probably never before.
Has there ever been yeah.
In effort to use.
Budget language to retroactively.
Through art a a.
I E.
Finally, non appealable court order so some.
Judge may have to make that decision that's kind of like the worst case scenario I don't know how that works out on timing in the meantime, we're doing everything we can to continue da Vinci convince legislators that we.
We've got a stronger position than they should just.
Hum back down and let this.
Move forward and we're also.
I'm going to try to convince.
The the Governor's office that this is a legal right that they don't want to take away from the citizens of the city of Richmond, Virginia, The city feels like it has.
Is compelled to move forward with this referendum from a legal standpoint, they've got a court order that is compelling to do so.
And so that's where we sit.
It's a better position than we were in in December of last year for sure.
Keep making progress.
Towards it and and I also want to caution people and I think everybody knows this.
Referendum that we ran last time, we you know we lost at 58, 5% to 49.15, so very close vote, where we're focused on what can we do differently to get it over.
Give it over the finish line should we get the opportunity for short to run it again.
But it's a 50 50 proposition so not dead by any stretch of the imagination.
Not not not a slam dunk.
So that is in detail exactly where we're at.
Today I can't tell you when we'll have certainty on if we're if we're running for sure or not because it's a iterative process of lobbying the legislature the Governor's office and then.
Ultimately if there is some sort of judiciary judicial procedure I don't know what the timing is now on a on that either so.
With that I am going to turn it over to Peter So he can give you the details on the quarter and then we'll come back for Q&A. Thank you Alfred.
So as Alfred said, the first quarter of 'twenty. Two finished very strongly with net revenue and adjusted EBITDA across the board over prior year consolidated adjusted EBITDA was $42 million for the quarter up from $32 million in 2021, and up from $27 $7 million and pre pandemic 2019.
Revenue was up by 22, 9% year over year for the quarter at approximately $112 $3 million.
Net revenue for the radio segment increased 13, 3% year over year in the first quarter local AD sales, excluding political were up 14, 8% a national AD sales were up six 9% excluding political.
Most of the major advertising categories were up from last year with the exception of government and public which was down 13, 7% I don't want to motive, which was down 14, 3%.
Food and beverage down five 9%.
We saw a decrease in government funded pandemic outreach and political spending was down given the Georgia runoff election that occurred in Q1 of last year.
Services.
Our biggest AD category, driven by our return to spending by law firms and an increase in spending from tax services.
23, 3%.
The entertainment category.
Was up a 116% health care retail financial and travel and transportation.
So double digit increases compared to last year.
Telecoms was flat.
And as Alfred mentioned second quarter 'twenty. Two is currently pacing up in the mid single digit percentage range.
Net revenue for reach media was $10 million in the first quarter compared to $7 $8 million in the prior year.
The revenue increase was due to strong demand.
To reach the African American audience, which drove improved pricing.
The biggest revenue increases were on the Rickey Smiley morning show and the deal hugely show adjusted EBITDA and our reach segment was up by 43% for the quarter.
Net revenues for our digital segment increased by 49, 6% in first quarter to $15 $5 million.
Sponsored and branded content, where the primary direct sales drivers in Q1, a traditional budgets continue to shift to digital and video.
<unk> EBITDA increased for the quarter by 94%.
We recognized approximately $56 $4 million of revenue from our cable television segment during the quarter an increase of 22%.
<unk> cable TV advertising revenue was up 46, 9% excluding political with.
With a favorable rate volume impact of $5 million.
$700000 of free video on demand.
A million five increase for Cleo television advertising.
And a million six favorable <unk> burn off and increased advertising related to you one on one on this page.
<unk> TV affiliate revenue was up by one 9% for the quarter driven by rate increases and converting some free subs to paying subs, which was cost partially offset by churn.
Cable subscribers TV, one as measured by Nielsen.
Finished Q1 at $46 8 million compared to $49 3 million at the end of Q4.
<unk> had $41 8 million Nielsen subscribers.
We recorded approximately $2 million of cost method income less administrative expenses for our investment in the MGM National Harbor property for the quarter compared to $1 $7 million last year, a $1 $7 million in 2019.
Operating expenses, excluding depreciation amortization impairments and stock based compensation increased to approximately $73 $3 million in Q1 compared to $65 2 million in Q1 of 2021.
As a result of the continuing reopening of the economy and increase in revenue. The following operating expenses increased from prior year programming content amortization in our cable TV segment increased by $2 $2 million outside services, including contract to talent and consultancy fees increased by $2.
$1 million marketing and promotional spending increased by $2 million.
Revenue variable expenses increased by $1 $9 million and.
Unemployed compensation increased by approximately $933000.
Casino Chase costs were down by $1 1 million.
Added back to adjusted EBIT.
Radio operating expenses were up one 3%.
90% of the revenue increase is falling to adjusted EBIT.
Expenses relating to the revenue increase such as music licensing fees sales commissions and bonuses.
So the successful collection efforts drove a favorable bad debt allowance adjustment.
Reach media operating expenses were up by $1 million against a revenue increase of $2 2 million.
Affiliate fees and commissions drove most of the increase.
Operating expenses in the digital segment were up by $2 $8 million driven predominantly by variable expenses related to traffic acquisition and sales and also increased video production costs.
TV expenses were up $4 $6 million year over year programming content expense increased by approximately $2 2 million sales and marketing spend at TV, one was up by $1 9 million.
Operating expenses in the corporate and eliminations segment was down including a favorable year over year variance for Richmond Casino Chase cost of $1 1 million.
For the first quarter consolidated broadcast and digital operating income was approximately $48 4 million an increase of 33%.
Interest expense was approximately $15 9 million for the first quarter compared to approximately $18 million for the same period in 2021.
Company made cash interest payments of approximately $36 million in the quarter since semiannual debt service payments due in Q1 and Q3 of each year.
Provision for income taxes was approximately $5 6 million for the quarter company paid cash taxes net of refunds in the amount of $2000.
Net income was approximately $16 4 million or <unk> 32 per share compared to $7000 or zero cents per share for the first quarter of 2021.
Capital expenditures were approximately $1 6 million.
The company executed a stock vest tax repurchase of 2000, and 649 shares of class B common stock in the amount of $10000.
As of March 31, 2022, total gross debt was $825 million, our ending cash balance was $166 $4 million.
Resulting in a net debt.
Of approximately 6600, $59 1 million compared.
Compared to $162 million of LTM reported adjusted EBITDA for total net leverage ratio of 4.07 times.
With that I'll hand back to you. Thank you Peter.
Again, I want to reiterate that we will exceed the high end of our $145 million to $150 million of EBITDA guidance for 2022, we felt comfortable about.
That number.
Even if there is.
Continued economic slowdown.
And again, the Richmond update is a work in progress further along than we have.
<unk> been in.
Since December but.
Yeah, not all the way there, yet, but but optimistic.
Operator, I'd like to open it up for questions.
Absolutely ladies and gentlemen, if you do have questions press, one then zero on your Touchtone phone.
You'll hear an indication you've been placed into the queue and may remove yourself from the queue by repeating the one zero command.
Should you be using a speaker phone we ask that you. Please pickup your handset and make certain your phone is on mute before pressing any buttons.
Our first question will come from the line of Aaron Watts with Deutsche Bank Go ahead. Please.
Hello.
Your line is open go ahead Mr <unk>.
Hi, guys. Thanks for having me on after I appreciate the color that you gave around the AD environment.
The radio side I, just wanted to clarify something so I know you said that the the pacings are moderating and I was curious if theyre moderating because the comps are tougher as you move forward through the year or if theres actual softening coming through.
Yes, no concerns.
Yes, good question.
On the segment right digital is moderating mostly because the pacings were so strong and in.
In Q2, three and four of last year.
Radio.
Is moderating.
I think just because of economic slowdown.
And so I mean look theres a big difference between.
Mid teens, pacings and mid singles Pacings right.
I don't know how strong political is going to be.
It could be yeah.
It could be gangbusters political well look we know what's going to be an up number.
Compared to last year, but political is highly <unk>.
Upon the nature of the races close races runaway races scale.
Yeah. So.
We.
That's.
That's yet to be seen that could there could be upside there, but yes.
There is absolutely a slowdown.
Economic activity petition, particularly on the national level.
<unk>.
In the radio business, but look you can turn on CNBC and see that right now.
And.
It doesn't mean, it's going to be a recession right.
David Rubenstein today that all.
On CNBC and his predictions yet youre going to have a.
The higher wage pressure higher input pressure, but.
Things that growth slows, but doesn't push us and.
Into recession territory.
If interest rates go up and wage and input costs go up.
Earnings are going to slow and and I think youre seeing that.
In the market.
Where.
Multiples are compressing just across all sectors because of those factors and.
It doesn't mean, there won't be some breakout performances hopefully we can be one of those but.
Yeah.
I think that's where we are so.
Okay, that's helpful context and.
One other question I just wanted to ask you was around share within the kind of local marketplace do you feel that radio and your stations are maintaining their share or if.
Maybe youre, taking some share versus other local media curious the dynamics Youre seeing right now there maybe versus outdoor digital.
Yes.
Look I've got no color on radio's share versus other mediums.
In the local markets right.
Because we just don't get information on how much.
Of the total local add pie outdoors, taking versus radio versus versus digital.
We can get our own performance and share against the other radio competitors. We just don't have that information right. The second we're happy to provide it.
Offline just.
High level, though.
Our national platforms.
Digital radio.
National radio, whether it's our syndication business our national.
Our our irregular national business plus our.
Our radio station digital business or are outperforming just a traditional spots and dots on the on the terrestrial radio stations. So.
If you put those two.
Together.
Where we're doing just fine.
Local maybe lagging a bit but I'd have to go in and unpack that market by market.
And I'm happy to do that for you offline, we will take our.
Piccolo research.
That's great. Thank you for the time.
Appreciate it.
We will go next to line of Sudan about erosion with Florida, but go ahead. Please.
Yes, hi, Thank you for taking my questions a couple of questions. So first.
I just wanted to go back to your outlook.
You've kind of raised your guidance slightly by saying youre going to be <unk>.
Prior guidance, but I'm, just kind of given what you've done in Q1.
On the.
Pacing at about $160 million run rate on an annualized basis, and typically Q1, I think is kind of the weakest quarter.
Could you kind of is there anything in your expecting in the back half that.
That precludes you from being more constructive.
From a guidance perspective.
And then second on on the casino could you kind.
Kind of prep for the second referendum do you expect to see any spike in expenses and how much.
Yeah Yeah.
So.
Two good questions.
We specifically chose not to give a new guidance number because you know.
I don't know what the economy.
The effect of the economy is going to be and so.
I, just said, we're going to exceed it.
Youre going to have to sort of make an estimation.
Yourself on how much you think we're going to exceed it by now.
Yeah, we don't want to throw a number out there.
No we throw a number out there and it doesn't happen people would you be disappointed so I think all we're saying is we're going to beat what we told you last time.
And that's kind of how we're thinking about it I hope that helps.
So there isn't any significant economic slowdown.
But I do feel like that there is.
Absolutely want occurring now.
On the casino.
You can absolutely expect expenses to go up if we if we secure the second referendum, we've probably spent about $4 million last year.
On that on that referendum I don't see any reason why we would spend less than that than that.
Given we lost last time, we might end up.
Spending more.
This go around.
To try to cover off some constituencies that we didn't put a lot of resources towards.
Last time.
And so.
We haven't developed our budget for the second referendum, yet I think what we have in our budget right now.
Now is the same amount of money last year.
But.
Peter.
Our guidance do we have yeah, we do we have referendum second row, we adjusted out right. So we'd give adjusted EBITDA and we don't include that so I've got numbers better than my forecast with that no one's going to see those and adjusted EBITDA. Okay do they do flow through the expense lines in the press release.
Alright, so when we're giving you are.
Adjusted EBITDA guidance that's not.
Taken into account.
The referendum expenses for the second go round.
Got it and then I just.
I had one more follow up since.
There is some concern about a slowdown as we get to the end of the year and into next could you revisit for us you're.
Our leverage targets.
Assuming the.
We'll be the political year would be behind in 'twenty three is going to be a yeah. I mean, knowing your could you talk about where you shouldnt be net of the casino.
Net of the casino you want I'm, assuming the $100 million is spent on the casino as well so you've got one.
$100 million earmarked for the casino.
So assuming that the casino project happens and we spend.
Call it $10 million of cash this year on the things, we would need to do and including.
Not just referendum, but including all the other things we would need to do.
I still have is below four times at the end of this year.
So.
Hi ish threes.
And then.
It was a $100 million goes away for the casino well then the rest of that will go.
In Q3 of next year, and our projections right. So you go.
You've got the bulk of it and put it in Q3 of next year, we think.
Each point I have is.
Just a bump for a little above full but not much so that's the impact.
So we get below we get below four and then if we spend 100 million.
<unk> was back above four and we stay around four in my projections through the end of next year and then we drop.
The low four again in 2000 and for mid Threes, and then low threes thereafter.
That's kind of I mean look these projections right who knows but that's that's how we're thinking about include enrichment.
Yeah.
Thank you.
Welcome. Thank you and if there is any additional questions. Please take this opportunity now to press. One then zero on your Touchtone phone.
We'll go next to the line of Patrick Wang with Voya investments go ahead. Please.
Yes, hi, Thank you good morning.
Could you talk about TV, one because thats over half of your revenue and EBITDA.
And so what's the dynamics there for 2022.
Since like doing very well.
Yeah, I think TV, one is doing very well at a do over $100 million of EBITDA. What did we do last year, Yeah 90.
95% will do.
Over 100 of them.
At $1 55.
Of that 150, TV, one is going to be sort of.
One O seven 108.
Ratings are are hanging in there.
Doing well.
And.
It's in good shape I mean, you know I expect TV one.
Yeah.
To stay at a $100 million of EBIT.
Or are better for the next four years, now and feel pretty comfortable about that.
And that's.
That's including sort of the degradation of the pay TV ecosystem.
What I mean by that sub losses, due to churn and streaming and all that kind of stuff.
We still have to figure out what do we I mean like.
Like every other cable.
TV programmer.
Programmer you got to figure out.
How to stake out your position in this new world that will include linear cable and streaming and digital video and bashed channels.
But and I struggle with it right. There was a time, yeah I would say in.
In 2019, where a lot of investors loved radio more than they loved it.
Cable TV and then the pandemic happened in radio got crushed and cable TV did.
Really well.
Because people were inside they are watching TV and then you got you got two revenue streams.
Yes.
With radio you've got more control of your Destiny P. L. U you own your distribution with cable TV, you're relying on third parties.
For distribution.
So again I struggle with.
How I feel.
These two businesses BS V. One another.
Both of them are challenged by digital disruption.
Which is why I'm happy that we're diversified now.
I think radio has a long tail on it in terms of still being.
A useful and valuable ad medium.
Over time too.
To advertisers, but you can't deny the fact that advertisers.
Do backflips to buy.
TV impressions.
With the when they add broadcast television in the networks.
As table came into existence and started to grow advertisers paid increasingly higher C. P M to reach smaller audiences at the broadcast networks because that's.
As their preferred advertising medium yeah. So.
Having a stake in both areas is.
As I think important I don't believe that.
And now the streaming guys are having their challenges right Netflix is losing subs.
And so there's going to be some Milan.
All of these different distribution systems that ultimately ends up being the status quo.
Just to start.
Great.
Sub counts for TV one.
Right now I'm.
I'm sorry.
Whats the subscriber count at quarter end.
TV one.
Yes, I gave it for TV, one and Cleo didn't we just gave you that so.
<unk>.
Let's go back in my notes.
So $46 8 million.
TV one.
And 41 8 million Nielsen subsequent flow.
Great, we launched clear what two and a half years ago and now it's got almost as many subs as TV wont close a free network TV one gets a license fee part of the reason we wanted Korea would it be free so we can get the distribution.
<unk>.
And and monetize that so and by the way part of that.
It may be uncomfortable that's going to stay above 100.
For the next four years is the fact that we've successfully created another network at scale.
When I say at scale at a scale large enough to monetize it on a.
On a real basis.
<unk>.
And that is helping us drive more AD revenue and.
And maintaining.
EBITDA, even in the face of.
Declining pay TV subscribers.
Let me just let me just pull up a little bit of color on the numbers. So you can't extrapolate Q1 through the year. So you can't take the 45% AD revenue growth in TV, one just extrapolate that but when I.
What we're seeing and what we're projecting.
Obviously would come on at higher rates demand is strong so we are seeing.
And double digit.
Revenue increases for the rest of the year.
For the whole year, and then on the affiliate side.
We were up marginally one 9% in Q1 with modeling moderate declines for the rest of the year. So you could think about the affiliate revenue as being maybe down.
Low low single digits.
So when you combine those I think you're still going to hopefully see.
Double digit growth on the topline for TV one this year when you combine those lines.
Okay.
Great.
No question that as regarding the MGM stake.
Where does it show up on the income statement, because I don't see a equity investment.
That's not consolidated I assume that EBITDA.
That might be $50 million is not in the.
Consolidated EBIT number.
Yeah. It is and it comes through as other income in the corporate line.
Okay.
Yes, you will see that in the press release.
You'll see at the bottom of page you see at the bottom of page three is a reconciling item, but then you'll also see it.
In the corporate elimination segment under other income net.
Which is one one.
Yeah.
Right. So the current.
Arrangement with Mgm's, there's still portable.
So what's your current thinking on that stake or you are happy with the status quo.
It's a good question, we think that that stake it's puttable now it at its full multiple value of seven times, so that stakes worth over $100 million.
We only taken about $8 million of income.
A year on it so we're only getting whatever our trading multiple is on that $8 million. So we probably think that stake is worth twice, what we get value for it and so.
Right now we're going to hold on.
Two it this year now we believe that.
It's EBITDA will grow again this year, particularly because this is the first full year of sports betting.
And the state of Maryland, and their sports book opened.
But it's an option I mean, one way to think about us as you know.
There's another 50 plus million dollars of <unk>.
<unk> that is a captured now I don't think anybody ever does that math I mean, some people do right.
Yeah.
But in fact, the matter is is the.
The only way you really guarantee getting value for that as you monetize it and pay down debt.
Or are you monetize it and by cash flow with the residual value or something so.
We're not planning to do anything with it today, we certainly wouldnt put it.
The window to put it is past.
For the for this year, so we couldn't put it until first quarter of next year anyway.
Okay. Okay.
Now I've got the leverage down to four times.
Just another couple of terrific leverage.
What's your thinking on the.
I think it is a cash generating from the business.
Looking pretty strong probably in excess of $80 million going forward on free cash flow, what's what's your plan on that free cash how do you want to expand it.
Okay, Yeah, I mean Ah.
I think I've said on the last conference call, we want to wait and see whats going to happen with Richmond.
We have.
We're looking at some.
Strategic.
M&A opportunities in.
And.
In the radio business, particularly in.
Some markets that we already exist in.
We're being we're being careful and prudent.
Like our leverage.
Where we're at today I'd like to get it lower.
I think that we.
We'd like to ultimately get the company.
Into a place where.
We can continue to create value, but we also get ourselves into a return of capital to.
Shareholder.
Position.
But you got to balance those I mean, if we win the casino and it's definitely worth putting $100 million.
And to that opportunity.
We'll create a lot more value.
And we look at the same way for for M&A opportunities, but ultimately.
As.
The largest shareholder you want.
To get the company to a position where.
You can have leverage low enough, where you can return capital.
We announced a share buyback last.
Last quarter, we haven't executed on it.
The share price moved all on its own we didnt, we didnt, we didnt buy anything.
Because when it when it was high threes or $4, we definitely felt.
It was undervalued.
But by the same token multiples are compressing so yeah, I don't know what the market is ultimately going to value.
Media cash flow at right because were a mix of radio cable and digital.
And so.
But I am interested in getting to a position.
Of being able to return capital to shareholders, whether that's through a.
Combination of buybacks and.
Dividends.
Yes.
Or one or the other but look if we have to spend $100 million out the door that's going to change.
That's going to stall our leverage profile.
At where it's at right now we're not going to.
It's going to take us a year to get back down.
Below four if we have to.
Invest a $100 million into the Richmond Casino project.
Right.
Just a quick follow up on that that Richmond project that you'll partner PGP.
Just under one.
Okay buyout.
Has anything changed with the new owner.
Yeah, well look I'm glad you mentioned because I had hadn't mentioned it yes. The PQ, we got bought by Churchill Downs.
I've spent a lot of time with the Churchill Downs.
CEO and yeah and his team.
And while <unk> was a great partner with us they wanted to do.
This deal with us and we were successful in winning.
RFP.
<unk>.
Churchill.
Is just as excited if not more excited about partnering.
With us as you know I think that day.
We'd like to see.
Yes.
Class III happen enrichment, because that will be.
That'd be gravy for them right because now they can.
They agreed to buy it after we lost the referendum right and so we didn't we didn't get the referendum back on through the courts and stuff until after that that made the announcements so that would be all gravy and upside, but there are much bigger company with a much bigger balance sheet and a much bigger brand.
And.
And then the gaming and leisure space and I think that.
That will be helpful and a second reference Wyndham run enrichment because.
It's a different partner.
Which I think has got.
More cachet I hope that matters.
And the other thing is that they certainly have more economic resources. So should we.
Need more capital for the Richmond project.
They have indicated that they want to they want to participate at a higher level. So.
So that's all good yeah, there's nothing there's nothing bad about Churchill taken over PTA and know the terms of the deal have not changed.
But just like everything else the cost of that build out.
Now I know for short has probably increased by 10% since we.
<unk> modeled it out.
Last year.
And.
And it would be good to have a capital partner at the table that.
It can help take up some of that slack.
Great.
Thank you so much.
Thank you.
Yeah.
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