Q3 2024 Churchill Downs Inc Earnings Call
Good day, ladies and gentlemen, and welcome to the Churchill Downs incorporated 2024 third quarter earnings Conference call.
Speaker Change: At this time all participants are in a listen only mode. Later, we'll conduct a question and answer session and instructions will be given at that time.
Speaker Change: We ask all question and answer participants to please limit themselves to one question.
Speaker Change: We're accelerating the marketing as we approach the Grand opening date.
Speaker Change: We are excited to see the Roseville alive and are immensely proud of our team for their efforts to get us open.
Speaker Change: As we discussed on the July earnings call, we filed a building permit application in northwestern Henrico County, Virginia, which is just north of Richmond to open a new upscale ASRM entertainment venue called the ROE Shire gaming parlor.
Speaker Change: We plan to convert a former furniture store into a new facility that will feature 175 games and have other gaming related amenities.
Speaker Change: The permitting process is far along and we will begin construction when it is complete.
Speaker Change: We will update you on our next earnings call.
Speaker Change: We are also expanding the number of HRS that we have in our Richmond venue.
Speaker Change: During the third quarter, we added approximately 100 games and we anticipate adding an additional 400 before the end of 2025.
Speaker Change: We will be renovating an unused section of our building to enable this expansion.
Speaker Change: Separately, we will also shift some of our existing HRS between locations to optimize the overall performance of all of our Virginia properties.
Speaker Change: By the end of 2025. After we've completed this expansion we will have 5000 HRS deployed the maximum permitted under the law in Virginia up from approximately 4450 machines that we have deployed today after the opening of the Roes This week.
Speaker Change: Virginia has been a great investment and business environment for us and we look forward to expanding our footprint in partnership with the Commonwealth.
Speaker Change: Our HRA opportunities are inextricably tied to our colonial downs racetrack and our franchise as the exclusive operator of Thoroughbred racing in the Commonwealth.
Speaker Change: In 2025, we will introduce a significant Kentucky Derby qualifying race, which will be a first in the history of racing in Virginia.
Speaker Change: The winner of this race is virtually assured a slot in the starting gate for the Kentucky Derby in 2025.
Speaker Change: Many in the Commonwealth are very excited to see this new race and also to see the increase in the number of race days from 27. This year to <unk> 44 in 2025 and 50 in 2026.
Speaker Change: We believe we are meeting or exceeding the expectations of the Commonwealth and in turn Virginia has been a great place for us to grow.
Speaker Change: In Kentucky, we are on track to open our new Owensboro HRS venue in the first quarter of 2025 on time and on budget.
Speaker Change: It is located next to highway 60, just east of Owensboro fourth largest city in Kentucky.
Speaker Change: This venue will initially opened was 600 HRA machines, along with a center bar sports bar and other amenities and we'll celebrate Kentucky's rich Bourbon heritage.
Speaker Change: We also announced last evening that we will be developing a new HR entertainment venue in Calvert City.
Speaker Change: And $550 million for the year.
Speaker Change: Based on the project capital for the Churchill Downs, starting gate pavilion, and courtyard, and our <unk> expansion projects in Virginia, and Kentucky, We expect our 2025 project capital to be between 250 and $325 million.
Speaker Change: Regarding our dividend our board of directors approved a 7% increase in our dividend, which will be paid out on January three 2025 to shareholders of record on December five 2024, and this is the 14th consecutive year of increased dividends per share for our company.
Speaker Change: At the end of third quarter, our bank Covenant net leverage was 4.0 times and we expect it to remain at this level through year end 2024.
Speaker Change: We then expect our bank covenant net leverage to decline relatively quickly in 2025, as our investments in Indiana, Virginia, and Kentucky continue to deliver meaningful adjusted EBITDA and free cash flow.
Speaker Change: Overall, we are very pleased with the record results that our team has delivered for the third quarter, we remained well positioned to grow over the long term fueled by our tangible pipeline of growth initiatives and supported by our strong balance sheet.
Speaker Change: With that I'll turn the call back over to Bill So that he can open the call for questions Bill.
Bill: Thank you Marcia.
Bill: We're ready to take your questions now.
Bill: Certainly to ask a question. Please press star one on your telephone and wait for your name to be announced towards draw. Your question. Please press star one again one.
Speaker Change: One moment please for our first question.
Speaker Change: And our first question comes from the line of David Katz with Jefferies.
David Katz: Hi, good morning, everyone. Thanks for all the detail.
David Katz: So I'd like to just talk about Virginia, So far right that there is sort of a lot going on in their bill. If you could just talk about how you feel about your progress there any.
David Katz: Surprises good or not good.
David Katz: Any change.
David Katz: What you think the opportunity could be there.
David Katz: Over time.
David Katz: Any of that around Virginia, which appears to be going quite well so far thanks.
Speaker Change: Sure Good morning, David.
Speaker Change: A big component of the <unk> acquisition that we closed at the end of 2022 was.
Speaker Change: The promise of Virginia.
Speaker Change: When we acquired <unk> there were about 2300 <unk>. So deployed we knew there was authorization to go to 5000 and and we've been executing on that so obviously the biggest component.
Speaker Change: Component of that execution was was.
Speaker Change: The construction of a very complex property and Dumfries, which we've now completed and opened and we will be ramping over the next.
Speaker Change: Several quarters and it'll probably ramp over the next few years.
Speaker Change: So now now I think as good as its been to this point now we're going to really see.
Speaker Change: We're going to see the fruits of our labor around dump reason and the deployment of the other machines that were allowed to deploy in the jurisdiction. So.
Speaker Change: It's going very well, obviously, you can see that in our numbers.
Speaker Change: We thought that we could make improvements to operating processes. We thought we could improve game layouts and game selection and we also thought we could deploy the rest of the machines.
In a way consistent with some of the properties, we built around the country. So.
Speaker Change: So thats well underway very optimistic very proud of that team very proud of their capabilities.
Speaker Change: <unk> thrilled to open in the Washington D C Northern Virginia Metropolitan area.
Speaker Change: We've seen good good success with the.
Speaker Change: With the process by the state to curb the deployment of illegal Gray games, that's something that we've seen progress on there clearly illegal the attorney general.
Speaker Change: Other state law enforcement agencies and figures have commented on that and given direction on that and that's a battle that will continue there is still a great games deployed there they keep popping up but we're very pleased and confident that the law enforcement authorities are are hard at work to enforce enforced the law.
Speaker Change: And that's a benefit to not only that the safety of the consumer and the integrity and reliability of gaming in the jurisdiction, but it helps all the legal properties that are in the state that.
Speaker Change: That play by the rules and follow all the processes that are set by the state So a big thumbs up for Virginia optimistic.
Speaker Change: Encouraged and just want to get in there and get the work done on building the market around Dumfries.
Speaker Change: Thank you.
Speaker Change: I'm pleased for our next question.
Speaker Change: And our next question comes from the line of Barry Jonas with <unk> Securities.
Barry Jonas: Hey, good morning, guys.
Barry Jonas: Wanted to ask about your M&A strategy can you talk about the parameters you're most interested in and if there are things out there for sale that checks those boxes.
Speaker Change: Good morning, Barry So M&A has been a big part of of the growth we've delivered as a company over over the last number of years.
Speaker Change: I think if you look at the last couple of deals we've done <unk> exactly.
Speaker Change: We always want to have a plan for how we can.
Speaker Change: Not only improve on the operations of assets, we get but also also grow into new markets. We're looking for businesses, where we think we bring something to the table to improve those businesses to drive long term growth for the company. So in general.
Speaker Change: We look for businesses, where we think Theres a franchise there where we think there is an ecosystem, where our collection of skills and other assets can can add to the mix and deliver growth.
Speaker Change: We're not a synergy play type shop in general.
Speaker Change: While we are happy to take advantages of synergies generally we're more focused on true organic growth that we can drive with with our collection of skills added to.
Speaker Change: Whatever we pursue so our pipeline so I say all that to say that I think we've probably occasionally.
Speaker Change: Hopefully pleasantly surprised our investor base by by doing deals at once they understood. They realize made a lot of sense for us.
Speaker Change: But we're creative thoughtful shop.
Speaker Change: Our M&A team and our operations teams are very experienced and we look at a lot of different things.
Speaker Change: That are directly in our strike zone ore.
Speaker Change: Immediately adjacent to our strike zone.
Speaker Change: No.
Speaker Change: I believe right now is.
Speaker Change: A nice environment for M&A I think our pipeline feels good feels promising doesn't mean, we will get things done you can never tell it's not always in our control, but the type of things. We look at the type of things that are important to us and that we get excited about.
Speaker Change: We think there are possibilities out there in <unk>.
Speaker Change: I think if you look at our track record, we're always very patient we're always very thoughtful we're not on any kind of assembly line, we do deals when they make sense to do and we're fairly confident we can improve what we buy.
In general that's how I'd describe how we look at opt.
Speaker Change: Opportunities.
Speaker Change: Thank you.
Speaker Change: And our next question comes from the line of Dan pilot, Sir with Wells Fargo.
Speaker Change: Hey, good morning, everyone.
Speaker Change: So my question is on the project pipeline right you've announced Richmond.
Speaker Change: Facility Calvert City can you talk about maybe how you gain comfort investing in these property expansions.
Speaker Change: Given some of the challenges that you've experienced at Derby city downtown and along those lines in terms of Derby City downtown.
Speaker Change: Is there a glide path our expectation on when the profitability could could start coming in there.
Speaker Change: Sure good questions Dan.
Speaker Change: So we've had a lot of experience.
Speaker Change: Building properties and.
Speaker Change: I think it's fair to say they never go exactly as planned sometimes theyre better and sometimes they're a little worse, but our experience with HRS has been overwhelmingly positive.
Speaker Change: So.
Speaker Change: If we talk first about.
Speaker Change: Within this realm of <unk>, if we talk first about Virginia.
Speaker Change: We know the Richmond market really well so.
Speaker Change: We're capacity constrained right now so expansion within our facility, which is a converted.
Speaker Change: Old large department store.
Speaker Change: Conversion of some of the space, we were using for storage and to a more floor space just makes sense.
Speaker Change: Not a huge amount of risk there because we can see we can see our database and we can see our level of consumer activity. So we feel pretty confident about that and henrico was in the general market It's north.
Speaker Change: It's north, but it's still in the general area. So we feel pretty good about that market in general and we can see from our database where people come from in.
Speaker Change: And triangulate, where it makes sense for us to put a facility.
Speaker Change: So Dumfries also.
Speaker Change: We obviously feel really good about that given the wealth profile and the sheer demographics in that MSA. So just a lot of confidence based on experience not only generally across the country, but in those specific markets and in those specific states. When it comes to Kentucky, We've had a lot of success the one.
Speaker Change: The one.
Slower property has been Derby city downtown.
Speaker Change: I feel pretty good about the trajectory thats going to beyond but here's where we got surprised with Derby city downtown a lot of the thinking and planning around that occurred in the pre COVID-19 and Covid era, and Louisville as a city has been slow to rebound from Covid.
Speaker Change: People didn't go back to work downtown at the same level that they were there prior to Covid and that's created a little bit of headwinds for that property, but bill Mudd and the operating team have worked hard on on right sizing the cost structure there.
Speaker Change: We've seen sometimes properties ramp a little slower and.
We know what we're doing we understand the market and we will just go to work, but there was a macro change in downtown Louisville, not necessarily Louisville as a whole, but there was a macro change in downtown Louisville and that was bodies downtown post COVID-19 and that's been a headwind that we've been working through.
Speaker Change: But I've seen properties start slow.
Speaker Change: And I've been with this team a long time and we have a playbook when that happens we go after the cost structure, we manage the cost carefully and we slowly deliberately and consistently start working.
Speaker Change: Working.
Speaker Change: The database and the marketing.
Speaker Change: Built so that property will not be in the short term and a plus like we've seen with Derby city or like we've seen with Oak Grove or like we've seen with numerous of our properties, but we will get it in line, we will get it we'll get it functioning pretty well and I don't think Thats a long term thing that's I think youll see.
Speaker Change: Mediate and consistent improvement improvement.
Speaker Change: Quarter to quarter, starting next quarter.
Speaker Change: Thank you.
Speaker Change: Our next question comes from the line of Chad Beynon with Macquarie.
Chad Beynon: Hi, good morning, Thanks for taking my question.
Chad Beynon: Bill last quarter, you teased us a little bit with <unk>.
Chad Beynon: Some of the potential growth drivers down the road with exact.
Chad Beynon: The internal saves and the growth in the third party deals I think those were <unk> opportunities and also international anything to report or give us just a little bit more.
Chad Beynon: Hope or clarity in terms of what growth could be.
Chad Beynon: Beyond 'twenty four 'twenty five in those in those areas. Thanks.
Speaker Change: Sure Chad happy to happy to speak to that so those plants chug along were deployed in multiple <unk> and.
Speaker Change: And our partnership with another company I think there are other opportunities there, but as a company of our size and scale right now that's not material side decided not to comment directly on that during my my actual formal earnings comments, but thats underway and that's part of the that's part of the long term growth strategy for exacta and it feels good.
Speaker Change: It feels it feels like though there'll be opportunities not only internationally, but potentially in other jurisdictions within the United States. So I don't have any anything material to announce on this call, but it is something that our team works on and focuses on and it's a part of the overall strategy for <unk>.
Speaker Change: For that business over the next number of years.
Speaker Change: We are seeing success, we've already deployed overseas and I think youll see other examples of deployment overseas in the relative near term.
Speaker Change: Yeah.
Speaker Change: Thank you.
Speaker Change: And our next question comes from the line of Shaun Kelley with Bank of America.
Speaker Change: Pardon me, Sean please check your mute button.
Speaker Change: Well that was a pretty easy question I was hoping for a tougher one so we want to come back to Sean We can go down the list and returned to him if that if that makes sense.
Speaker Change: Sure.
Speaker Change: One moment please for our next question.
Speaker Change: Okay.
Speaker Change: And our next question comes from the line of Jeff substantial with Stifel.
Jeff Substantial: Great. Good morning, Thanks for taking our question maybe following up on Dan's question from earlier and focusing on dump reason really specifically more on.
Speaker Change: The cadence of how you see that that ramp up progressing bill you've talked about it a bit before on this call and in prior calls as well just variance and ramp timing for some of your other openings Northern Kentucky grew a bit more gradually than say an opening like Terra Haute just just curious where it is.
Speaker Change: Just to get your thoughts on where you think Dumfries might fall in the spectrum, given the project and the market characteristics here and maybe in that.
That just how we should think about Q4, specifically, even a full launch of the ribbon cutting will be until until early November.
Speaker Change: Yeah, I'd break that up into a couple of components.
Speaker Change: First.
Speaker Change: Our employee base, there will be somewhere around 450 or so.
Speaker Change: To start and so thats its a big property and that's a lot of new people in.
Speaker Change: And in a new market for a facility of that size. So it's really important to us that the customers when they visit that facility for the first time for the first couple of times. They have a really great experience. Obviously, we want them to have a great experience every time they come to visit and we will focus on that but when they first come.
Speaker Change: Tom.
Speaker Change: When they are sampling this for the first time.
Speaker Change: Most of these folks have been the other gaming properties they have expectations, we need to meet and exceed those expectations. So ramping carefully to ensure that we give the customers a great experience is really important and this is a big property. This this theres a lot of operational.
Speaker Change: Procedures and processes going on here and we want to make sure we get it right. So in general our experience has been bigger properties ramp a little bit slower than smaller properties. So.
Speaker Change: Now there are lots of things can affect that theres not a lot of direct competition in the immediate area of this properties and some of the further areas of the MSA there certainly are.
Speaker Change: So we'll have to see how that impacts how this opens up but.
Speaker Change: First and foremost focus is on give these new customers a great experience listen to their feedback train our team up to make them as good as they can be.
Speaker Change: And then we start mining our database building it and then mining it so in general compared to a real small facility. This will ramp a little bit slowly and I think we'll be looking at growth from this.
Speaker Change: For a long time to come so fourth quarter.
Speaker Change: I couldnt be more excited about this property than I am but success isn't defined in the fourth quarter of 2020 for success is defined.
Speaker Change: How we build this quarter to quarter over the next number of years and that depends on consistency focus on customer service.
Speaker Change: And giving the consumer the best experience that we can so this is not a harbinger that I think we're going to start slow that's a market with I think.
Speaker Change: Four plus or 5 million people over the age of 21. This is a big market to introduce a facility like this however, we are playing for the long term and and that means delivering great experiences for these customers all from it.
Speaker Change: A team member base that that is a real new to that market.
Speaker Change: Thank you.
Speaker Change: Our next question comes from the line of Joe Stauff with S. G.
Speaker Change: Good morning, Bill Marcia.
Speaker Change: I wanted to ask about.
Speaker Change: The Virginia revenue growth.
Speaker Change: That you experienced in the third quarter, obviously big growth.
Speaker Change: And realize there are a number of layers to that but I was wondering.
Speaker Change: Maybe if you could disaggregate that a bit.
Speaker Change: Tell us about say the bigger layers and contributions of that growth largely.
Trying to think about.
Speaker Change: The sustainability of that growth rate, specifically in Virginia.
Speaker Change: Going forward.
Speaker Change: Sure.
Speaker Change: <unk>.
Speaker Change: So it's.
Speaker Change: It's fun to talk about Virginia, it's fun to talk about a lot of the areas of our company, but Virginia is a jurisdiction where a lot of things are going very well at the same time and sometimes when you find that it's hard to run single variable experience experiments. So here are the things that are going very well we built.
Leave our operating team and our processes based on our experiences across the rest of our company have really made a difference in Virginia, We think we're operating the properties.
Speaker Change: Better than they've ever been operated before we think our work on game titles and game mix in our in our analytics around what's performing wear and potentially why have made a difference when we've responded to that data that we've mined.
Speaker Change: We think that.
Speaker Change: <unk>.
Speaker Change: The enforcement actions with respect to great games are a real tailwind that are that's driving performance. We also think the markets aren't mature yet and people are appreciating.
Speaker Change: <unk> is a gaming option and becoming more familiar with it and it's spreading deeper into into.
Speaker Change: Potential customers.
Speaker Change: Customer segments. So those are all things that are going well. This is a market that is not mature yet it is not a mature gaming market in any way.
Speaker Change: And we are learning we are operating better we are seeing.
Speaker Change: Strengthening action from legislators from law enforcement agencies on.
Speaker Change: I'm working against illegal gaming gaming all of those things are part of the tailwind that's driving the significant performance improvement.
Speaker Change: Virginia as a whole.
Speaker Change: And I'm going to leave my answer at that because trying to.
Speaker Change: Break all that down into specific percentages.
Speaker Change: Arent experiments require experiments that you can't deal in the real World. These are just all positive factors that are making a difference as a whole.
Speaker Change: Thank you.
Speaker Change: Our next question comes from the line of Shaun Kelley with Bank of America.
Speaker Change: Hi, everyone. We'll try this again.
Speaker Change: We can hear you Sean we're ready for you now.
Speaker Change: Glad we found you out there thank.
Speaker Change: Thank you.
Speaker Change: So.
Speaker Change: Actually I just wanted to ask a little bit about the comments on the race calendar for next year obviously.
Speaker Change: Very encouraging you can reciprocate with Virginia, and the ability to to kind of continue to add to it.
Speaker Change: On the horse racing side can you just help us think through the financial implications here in terms of increasing race calendar going to be something we need to factor in a little bit in terms of profitability and on the flip side is there an opportunity down the road as you kind of continue to partner with the state of Virginia about what this might mean for the future.
Speaker Change: Okay.
Speaker Change: Well racing in Virginia was a big component of why the legislature wanted to introduce HRS, Virginia as a jurisdiction that has a storied history.
Speaker Change: Thoroughbred racing.
Speaker Change: <unk>.
Speaker Change: That activity has largely disappeared all the racetracks had closed.
Speaker Change: And they wanted that back they wanted that.
Speaker Change: That agricultural component and that industry back in the state. So building that is a part of what the Commonwealth wanted to see with the introduction of <unk> and of course, it's a core component of our property and it goes back to one of our tenants of what we look for.
Speaker Change: We like the complexity of an ecosystem like this we understand how all this fits together we understand the racing we believe in the racing and the racing has a couple of components. When you can introduce good content into the racing ecosystem, we have several ways to capture that we can capture that with.
Speaker Change: On track activity.
Speaker Change: Sponsorships and other things attendance wagering on track, but we can also capture it through.
Speaker Change: Simulcast thing in and in particular online wagering on horse racing, including our own twin spires. So.
Speaker Change: I think as we introduce.
Speaker Change: Higher quality racing and better racing in Derby Prep racing that will improve the performance of racing, but given we've also deployed 5000 are will deploy 5000 machines relatively shortly in the jurisdiction the impact of that in terms of materiality to the overall operations of Virginia is harder to.
Speaker Change: To isolate and understand its not a big economic driver in and of itself given it sits as a part of <unk>, but but it's but it's a positive one and it's one that we're going to focus on and it's critical to the overall ecosystem and relationship with the state. It's part of the it's prior to the promise we have with the state that we will.
Build that industry, because not only is it of some improvement to our bottom line it drives economic.
Speaker Change: Activity throughout the rural regions of the state and across the training community the farms the.
Speaker Change: Feed providers and all of the other parts of the ecosystem that drive benefit and perceived value to the state.
Speaker Change: Thank you.
Speaker Change: Our next question comes from the line of Daniel Guglielmo with capital one Securities.
Speaker Change: Hello, everyone and thank you for taking my question.
Daniel Guglielmo: I wanted to focus on the HR and consumer strength in both Kentucky and Virginia.
Daniel Guglielmo: Why do you think the demand in those states has been able to hold up so well when compared to other regional gaming state and how is that demand compared to what you expected when building the platform in Kentucky and underwriting Petrie.
Daniel Guglielmo: Yes.
Speaker Change: Good question, Dan happy to talk to that.
Speaker Change: There are several factors that contribute to what you see is clear performance across Virginia, and Kentucky start with the fact that.
Speaker Change: It's not a mature product yet it's not mature in the market said its open end and as a product itself. It's still improving we are introducing more games better variety.
Speaker Change: Math.
Speaker Change: We're driving.
Speaker Change: Product improvement product awareness market penetration, it's very high margin. So when you do these things well you capture.
Speaker Change: Very high percentage of it.
Speaker Change: Bottom line. So it's different it's a newer thing it's a new thing and it just doesn't track because of that it has different attributes than say.
Speaker Change: Traditional regional gaming it just performs differently and that's a function of all the factors I've just mentioned they are all important and they all provide a tailwind that gives them a different financial profile than you see in other other spots in gaming right now.
Thank you one moment please.
Speaker Change: Our next question comes from the line of Jordan Bender with citizens JMP.
Jordan Bender: Good morning, and thanks for taking my question I wanted to touch on the balance sheet. We don't know the size of the budget for the multiyear project at the track that you just announced.
Speaker Change: The balance sheet, reaching the targeted range open up larger growth projects or opportunities that you might not have other otherwise looked out in recent years. Thank you.
Speaker Change: Well as our company has gotten bigger we can dream bigger and we can execute on bigger projects and thats been a thrill for those of us that have been around for a long time myself Bill Mudd Marcia Dall those of US who've been around for a long time are really pleased to see as we get bigger that that we have the capacity and.
Speaker Change: <unk> an experienced across our team to go execute on bigger projects.
Speaker Change: So as we.
Speaker Change: As we finalize worked through build out projections and cost for.
Speaker Change: The Derby projects, we talked about.
Speaker Change: We do so with a lot of confidence.
Speaker Change: Over the last couple of years, we've been focused on Dumfries, we've been focused on getting owensboro done completing the paddock renovation project. All of these projects will now we're going to see those pay off and we're going to see the cash flow come come off of those and we expect to.
Speaker Change: To be able to delever relatively quickly and that just means we've got more firepower to go out and do great things. So we're busy figuring out.
Speaker Change: How best to deploy that capital and.
Speaker Change: As we've gotten to be a bigger company and I think a very well run company.
Speaker Change: This capacity is important to us because we have a lot of ideas.
Speaker Change: <unk>.
Speaker Change: That we want to have the size to be able to.
Speaker Change: Go out and do and of course ultimately this is a function of what return we will provide to our shareholders total shareholder return is never.
Speaker Change: Far away its always be immediate focus for us.
Speaker Change: As we get bigger and stronger and do bigger projects, that's not going to change. It's that return we think we can generate but now we've got the sizes. We're growing we've got the size to go out and do bigger projects.
Speaker Change: Thank you.
Speaker Change: And our next question comes from the line of Ben Chaiken with Mizuho.
Ben Chaiken: Hey, How's it going thanks for taking my question.
Ben Chaiken: Virginia, Theres a lot of positive developments with you thoughtfully walked us through the race calendar Greenfield developments and then overall relationship with the state.
Ben Chaiken: I think you suggested in some of your earlier comments expanding your footprint in Virginia over time, there's obviously a goal there as a goal and a limit of 5000 machines within Virginia can you talk to us about the path. If any you see to potentially expanding that number over time, and then I guess related.
Ben Chaiken: With your existing footprint is there theoretically more capacity or would you would you want a require a new property.
Speaker Change: Well without speaking out of turn.
Speaker Change: We think the Virginia model works extremely well and we think we are delivering for the Commonwealth.
Speaker Change: As well as for our shareholders. So we do think it's a model that works and if the state has interests and.
Speaker Change: Yeah.
Speaker Change: Willingness, we hope to talk to them about.
Speaker Change: About more we think from a racing perspective.
Speaker Change: We'd love to see more days run in Virginia over time, and consequently, we'd like to see more <unk> deployed over time in order to support that and so.
Speaker Change: That.
Speaker Change: We serve at the discretion of the state our franchises are discretionary right given to us by the state.
Speaker Change: And we hope to talk to them about it but it's <unk>.
Speaker Change: Right now our focus is on delivering on the promises we've made them so far and delivering for the people of Virginia and for the state and hopefully if we prove the value of that model.
Speaker Change: There'll be will.
Speaker Change: Willing listeners to talking about improving and doing more in the state but.
Speaker Change: But it's hard to.
Speaker Change: To talk about things, we don't control and I don't want to make promises we can't keep but we think Virginia is a shining example of how you make Thoroughbred racing work in a jurisdiction in a way that is a win win for the state for us as the operator and for all the subset.
Speaker Change: <unk> of the Thoroughbred industry the farms that.
Speaker Change: Trainers the horse owners that people that grow the fee that people that take care of the.
Speaker Change: Horses, it's a win win for everybody connected to the industry.
Speaker Change: Thank you and I'm showing no further questions at this time.
Speaker Change: That I will hand, the call back over to CEO Bill <unk> for any closing remarks.
Thank you and for those of you on the call and for those of you who are investors in our company.
Bill Mudd: I want to thank you for your confidence that you've shown in us and I want you to know that we take it very very seriously.
Bill Mudd: This is an exciting time for our team because we think we have the support of our board and that the support of the Investor community and the opportunity to do great things. So we're going to do the best we can to drive returns for you.
Bill Mudd: And we're excited to talk to you in February.
Bill Mudd: To share more of our progress in the interim so thanks very much and talk to you all soon.
Speaker Change: Ladies and gentlemen, thank you for participating this does conclude today's program and you may now disconnect.
Speaker Change: Hum.
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Speaker Change: Okay.
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