Q2 2019 Earnings Call
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It is now my pleasure to turn the webcast over to Steve Rubis, Vice President for Investor Relations, Steve the floor is yours.
Thank you Kim good afternoon, and welcome to the Caesars Entertainment second quarter 2019 earnings Conference call.
Joining me today from Caesars Entertainment Corporation are Tony Rodeo, Chief Executive Officer, Jim and Eric Hession, Chief Financial Officer.
A copy of the press release earnings presentation slides and a replay of this conference call are available in the Investor Relations section of our website and Caesars Dot com.
Also please note that prior to this fall we furnished a copy of the earnings release to the FCC in a form 8-K and will file our Form 10-Q before we get underway I would like to remind you to refer to slide 17 through 23. These slides include forward looking statements Safe Harbor disclaimers and definitions of certain non-GAAP measures. Our comments today will include forward looking statements as defined by the private Securities Litigation Reform Act.
Forward looking statements reflect our expectation as of today's date, and we have no obligation to update or revise that.
Actual results may differ materially from those projected in any forward looking statements due to unanticipated hold fluctuations weather or other unforeseen circumstances that we now.
There are certain risks and uncertainties, including those disclosed in our filings with the FCC that may impact. Our results. In addition, Caesars entertainment closed on the acquisition of Santander Holdings in the third quarter of 2018, Therefore, U.S. GAAP results do not include center holdings prior to the acquisition in the third quarter of 2018, unless otherwise stated.
The term same store refers to the performance of our portfolio properties prior to the acquisition of centers and therefore excludes all Sentara performance also note that whole adjusted results reflect full versus our expectations. You can find reconciliations on a GAAP and non-GAAP figures starting on slide 10.
I will now turn the call over to Tony Thanks, Steve I'll provide a quick review of our proposed merger with Eldorado and a high level overview of our second quarter performance before turning the call over to Eric to discuss our results in greater detail.
On June 24th we announced an agreement to merge with Eldorado resorts to create the largest owner and operator of U.S. gaming assets.
For Caesars shareholders. This cash and stock transaction will provide immediate cash value as well as the opportunity to participate in the combined company's future growth.
Our board of directors conducted a thorough evaluation of the past by which we can enhance.
Value the most and position the company for long term success.
They unanimously concluded that this transaction accomplishes those objectives.
I'm confident that combining El Dorado is attractive platform of regional gaming properties with our best in Class You Award program iconic Las Vegas assets and attract a regional portfolio will result in the creation of a leading domestic gaming platform poised for long term success.
We are working together with Eldorado to complete this transaction, which is expected to close in the first half of 2020 subject to receipt of shareholder and applicable gaming and regulatory approvals along with other customary closing conditions.
Until then I along with the rest of the season as a management team remain focused on improving the company's operations and financial performance through both revenue enhancing opportunities as well as operating efficiencies.
Since joining caesars in May I have been impressed with the expertise and professionalism of the Caesars team as well and the quality of our Las Vegas and regional asset portfolio.
Room renovations across our Las Vegas assets have been a major driver of our strong performance in recent years.
These investments are almost fully complete by the end of the year, we will have renovated 92% of our Las Vegas strip hotel products since 2014.
Providing us with a highly attractive portfolio of rooms.
We're also making exciting improvements in entertainment and food and beverage across our Las Vegas properties with new concepts like Vanderpol cocktail garden, and Jimmy Camels comedy club.
The Colosseum at Caesars Palace and set to reopen in September with Keith Urban.
Between the calcium and Zappos theater, we will feature several high profile are entertainers, including Christine Aguilera, Gwen Stefani guns, and Roses journey, Madonna and cyanide Twain among others.
Moving to the results during the second quarter, our net revenues totaled 2.2 billion up 4.9%.
Year over year, driven by the acquisition of centre and strong hotel and food and beverage results in Las Vegas on a same store basis net revenues declined 1.2% strength in Las Vegas was offset by the impact of increased competition in Atlantic City, and southern Indiana, and unfortunately year over year hold.
Adjusted EBITDAR was $631 million up 1.3% year over year or down 5.1% on a same store basis, mostly due to unfavorable hold and competition.
Adjusted EBITDAR margins declined 100 basis points to 28.4% driven by the high hold.
In the second quarter of 2018.
On a trailing 12 month basis, our domestic marketing costs represented 20% of gross revenue, reflecting a 90 basis point improvement year over year, while labor costs improved 30 basis points year over year to 23.5% of gross revenue.
We continue to believe that sports betting will be a growth catalyst for the company over the next few years.
This year Weve seen several favorable legislative decisions, allowing us to pursue expansion in this area.
We are currently designing and constructing nine sports books across Indiana, and Iowa, which all are expected to be operational in September of 2019.
We intend to develop additional sportsbook in Illinois, which we hope to have operational once the regulations are in place.
Additionally, the United Indian Nation in partnership with US recently opened Sportsbook at turning stone resort Casino in Verona, New York and point place Casino in Bridgeport, New York.
We're also pleased to North Carolina has legalized sports betting and we are working with our Cherokee nation partners to rollout our product as quickly as possible.
Our footprint now totals 20 source books across four states and we expect to be operational in seven states by year end.
During the quarter several states pass gaming legislation that directly impacts our operations in Indiana. We are very excited that are sent to our properties will be allowed to offer table games starting in 2020.
We are expanding our footprint to incorporate table games and training dealers in anticipation of dealing our first card at 12, although one am on new year's day.
In Louisiana, we are working towards finalizing a 30 year extension to operate Harrah's New Orleans through 2054.
In order to obtain the extension, we will invest $325 million in the property by 2024 to improve the facility at new restaurants, and add a new hotel.
We believe this is a great outcome for the city of New Orleans, the state of Louisiana and our business.
Finally, the state of Illinois enacted legislation, allowing significant gaming expansion in a largely saturated and high tax jurisdiction.
As a result, we expect our existing properties in Illinois, and northern Indiana to feel they expect the effects of the gaming expansion over the next several years.
I'll now turn the call over to Eric to review our financial results in more detail. Thank you Tony I'll discuss our second quarter results in more detail. Please note that our consolidated results include kantar unless otherwise stated.
For the second quarter, our Las Vegas business delivered solid performance net revenues were $1.0 billion up 1% year over year, which strengthen our hotel and food and beverage products Las Vegas cash hotel revenue grew 6.3% year over year occupancy increased 370 basis points to 97.5% in revpar increased 6.2% year over year.
In the second quarter of 2019, we established a record performance for both cash hotel revenue and occupancy breaking the records previously established in the first quarter of this year.
Overall positive hotel performance was the result of strong group demand, which saw double digit room night growth and increased leisure demand from growth in direct bookings at Caesars Dot com the increase in occupancy providing lift in performance in food and beverage as well. We believe our performance is indicative of a healthy consumer environment in Las Vegas, and expect hotel demand to remain strong throughout the remainder of the year.
Las game in Las Vegas gaming revenues decreased 6.1% year over year due to $18 million and unfavorable year over year hold. However, we're pleased that total gaming volume increased 3% year over year with table games volumes up 1% and slot volume up slightly more than 3%.
Food and beverage revenues were up 5.7% year over year, primarily due to higher hotel occupancy levels and the improvements we've made to our offerings in the last few years Caesars Palace drove most of the increase with strengths coming from Hell's kitchen, the newly opened vendor pump cocktail garden as well as in banquets.
Las Vegas, EBITDA totaled $389 million up 1.1% year over year or up 5.9% on a hold adjusted basis as unfavorable hold was a headwind versus prior year, but not significantly different than our expectations EBITDA margin expanded 30% to 38.8% up 20 basis points year over year, driven by revenue growth across the hotel and food and beverage verticals.
Turning to the other U.S. segment net revenues totaling $1.1 billion up 8.4%, including center are down 4.8% on a same store basis second quarter results were positively impacted by the inclusion of center, but partially offset by continued competitive and promotional activity in Atlantic City, and southern Indiana and to a lesser extent, Iowa and Pennsylvania.
Other U.S. EBITDA totaled $270 million up 4.7% or down 10.9% when excluding center. The same store decline was attributable to the net revenue declines I noted earlier EBITDA margin was 25.4% down 90 basis points year over year or down a 170 basis points, excluding sentara EBITDA, excluding both Sentara and Atlantic City declined 2.4% year over year.
In the all other segment net revenues totaled $156 million.
Up 7.6% year over year, primarily due to an increase in net revenue and managed properties, partially offset by decreases in table game volumes at our high end International properties. All other EBITDA loss increased $10 million to a loss of $28 million, primarily due to costs associated with our sports betting partnerships.
Looking ahead, we believe we are well positioned to benefit from growth in Las Vegas and continue to be bullish on the city over the long term in the second quarter visitor volumes to Las Vegas increased 9% convention at 10, sorry, 0.9% convention attendance increase 0.7% and Deplane passengers increased 3.6% we view the overall demand environment in Las Vegas as stable despite quarter to quarter volatility driven by shifts in the citywide event calendar and holidays.
With respect to Las Vegas for the full year of 2019, we continue to expect revenue growth to be in line with last year and expect modest EBITDA margin expansion on a year over year basis. Despite the labor headwinds. We noted in previous quarters. We continue to see strong group and convention business and expect this customer segment to generate low double digit growth in both total revenue and in room nights.
In 2020, the opening of Caesars form represents a major growth opportunity not only for Caesars, but for Las Vegas, as well Caesars Forum already has over $290 million in cumulative bookings total bookings in 2020 are currently over $80 million well ahead of our expectations and our other U.S. segment. We continue to expect a positive incremental contribution from center, which will be positive partially offset by the competitive pressure experienced in Atlantic city in the first half of 2019.
We expect the competitive impact of Atlantic City to subside as we annualize the impacts in the second half of the year.
The performance across the rest of the portfolio is expected to remain stable on a year over year basis.
Regarding the all other segment, we expect to generate a larger operating loss for the full year 2019, compared to 18 due to investments in technology infrastructure and our sports sponsorships.
I will now provide a few qualitative factors to consider in your modeling for the third quarter in Las Vegas, we expect to benefit from a continued healthy consumer demand.
With strength in the F.I.T. segment, we expect net revenues to increase slightly and EBITDA to grow low single digits on a year over year basis as macro trends continued to weigh on the international segment. We expect to see continued weakness in this consumer we expect our group business to exhibit typical seasonal weakness in third quarter as group can revenue is expected to be flat with low single digit growth in room nights. In addition to traditional seasonal weakness Las Vegas third quarter performance will be negatively impacted by the closure of the Colosseum at Caesars Palace, and Heres Mardi Gras tower room renovation.
We expect to complete the renovation for the Coliseum in September and the Mardi Gras tower in December in the fourth quarter, we expect to see a strong rebound in the group business, which will allow us to grow group revenue and room nights in the low double digits for the full year.
And the other U.S. segment, we expect a mixed environment across our regional portfolio as certain reasons remain more affected by competition than others Annualizing the competitive effects in Atlantic City and benefits from strong growth at center will help to offset the continued negative impacts in southern Indiana, Iowa, and Illinois due to competition.
Excluding the impact of center, we expect the other U.S. segment adjusted EBITDA to be flat on a year over year basis.
We expect center to remain a strong overall growth driver. Despite annualizing the acquisition in the third quarter as we continue to extract additional synergies and upside from the legalization of sports betting in Indiana in terms of the all other segment, we expect to generate revenue growth in the mid single digits and to generate and does adjusted EBITDA loss that represents a sequential improvement from the second quarter of 2019, the sequential improvement in adjusted EBITDA will come from the realization of savings from our corporate investments and the wind down of certain IP transformation process, partially offset by investments in our sports partnerships.
From a liquidity perspective, we ended the quarter with approximately $1.5 billion in cash.
As of June Thirtyth, we had nothing drawn on our revolver and had the full $1.2 billion in capacity available.
In Two Q1 9, we spent $161 million in same store capex and $55 million in development Capex, excluding the convertible notes and capitalizing our re lease payments at eight times, our net leverage stands at 5.3 times.
For Capex in 2019, we continue to expect a range of $375 million to $450 million for maintenance capital, which includes room renovations at Harrah's Las Vegas in Paris, we expect to spend approximately $475 million to $555 million for development related capex, mostly related to the Caesars form project and our investment in sports books across the us.
Before we open the call for questions. Please note that the purpose of today's call is to discuss our second quarter performance. While we look forward to answering any questions you have about Caesars for more information regarding the proposed merger with Eldorado. Please refer to our filings with the SEC with that we will open the call for questions.
At this time, if you would like to ask a question simply press Star then the number one on your telephone keypad.
Again to ask a question.
Please press Star then the number one on your telephone keypad, we'll pause for just a moment to compile to Kenya roster.
Your first question is from Carlo Santarelli from Deutsche Bank. Your line is now.
For the comments.
Tony you've had a couple of months now under your belt and I was just wondering kind of as you think back on the last several months and your observations of the company. What is it that has surprised you and maybe more importantly, how do you think about what you've learned thus far and the opportunities that that some of your learnings present.
Thank you very much for the question I would say, what's pleasantly surprise me overall is our performance in Las Vegas in general and more specifically our performance from a room standpoint in Las Vegas as Eric mentioned in his comments we had.
Record cash revenue out of hotel in Las Vegas in the second quarter, which exceeded our record that we had in the first quarter I think the capital dollar spent on rooms over the last number of years have really paid off.
And we're really excited about the the future outlook.
In that vertical as well.
In terms of where I think there are opportunities I think mid to longer term here in Las Vegas, I think that our east side properties. The properties on the east side of the strip across from Caesars Palace I think provide opportunities. If you look at places like Flamingo and valleys, what theyre large room supply, we don't do very well from a food and beverage revenue per available room, there and I think it's because of the lack of some compelling amenity. So I think we have an opportunity to do some things and add some non gaming amenities there to drive traffic longer term, we have a ton of vacant land behind those ESI properties that provide a great opportunity for us.
And then quickly from a regional market standpoint.
I think that we could also probably add some compelling non gaming amenities at certain larger properties, but I also think we could be a little bit strategic more strategic in the deployment of our marketing dollars to to hold on to our customers and win some profitable market share back.
Great. That's helpful and would you guys mind, just kind of maybe a little bit of an update on kind of how you're thinking about the the Korea.
Project at this point in time.
You know I think you guys have maybe a 180 million or so in your capex or in the Capex in general.
Could you guys kind of talk about where that stands.
Well, it's certainly a focus of ours, we've got $80 million that we put into it.
To date.
The certainly the first month and a half weve been focused on we're focused on the merger and then our our.
Properties and our business here in the U.S. and Thats going to be a focus of our attention over the next month or two to come up with a recommendation for the board and I'll, let Eric when if he's got anything additional you are the only thing I'd add Carlo is that the number that you referenced in terms of the Capex is because we're consolidating that entity.
Our maximum.
Future contribution to the project is $60 million.
And that would be the amount of the cash out from our balance sheet that we would contemplate in the entirety of the project.
Understood all right. Thank you guys.
Thanks. Thanks.
Your next question is from Shaun Kelley from Bank of America. Your line is now open.
Turning on everyone on.
Appreciate all the color upfront.
Both Eric and Tony Eric If you could could you just give us a little bit more color on the core regional performance first as a clarification I think.
I think you said something along the lines of the second half performance being flat on a core basis, excluding Santos, but I wasn't sure if I caught that correctly and then maybe if you could just talk about the on the environment a little bit more broadly in terms of what you're seeing.
Out there and the trends would be helpful.
Yes.
What you summarize is correct.
Excluding sentara, we anticipate during the third quarter that our portfolio the broadly flat, we're certainly seeing some unanticipated.
Competition.
In locations, such as Iowa, with a new tribe Thats opened up and then with the VLP is continuing in the Illinois.
And starting to affect some of the.
Hammond area there in Indiana.
But overall I would say that the regional portfolio, excluding Atlantic City Submarkets are performing better some markets are worse, but I wouldn't say there has been a real change in trend.
For this quarter, we happened to be down a couple of percent.
Terms of EBITDA adjusting for those.
But for the year, we're anticipating it to be about flat.
Yes, I mean, I would agree and also some competitive headwinds in southern Indiana with that.
The instant racing games across the river, but I think if you look at it from a longer term view, we have a ton of upside in Indiana with the sand to our properties with the addition of table games that are going to get here a lot quicker than we thought and the resolution of the long term lease in New Orleans provides us with a great opportunity in the longer term and I mean.
Call Me Crazy, but I think we can improve things in Atlantic City, a little bit I think that we've underperformed there and I think that there was an opportunity for us to turn those results around.
Thanks for both and maybe just as a follow up to elaborate on that last point, a little bit on just maybe a little bit of an overview on I'm sure. There's.
A decent planning that's going to be done, but timing for the investment in New Orleans, and maybe a little bit on scope like number of hotel rooms, you'd be targeting there and then for the for the tables, just any thoughts on underwriting.
Our expectations on on the the upside potential there would be helpful.
In terms of New Orleans.
The capital investment has to happen and I forget it was 2020 422024.
And there is also a limit to the number of rooms that we can add and I believe it's in the 400, some room range, but I again, I apologize for not knowing the exact number but that we're in the planning stage now and I would think that the deployment of that capital will be can probably in the second half. The latter part of 2020 and again, it's got to be done in the next four to five years anyway.
What was the net so I'd just add on that.
We do expect pure returns from the capital to be.
Above 10%.
Correct.
Below 15, so in that range.
In addition to being able to secure the license extension. So overall, we think it's a great deal like we said for for both the city the state but also for us.
As a company, yes, I mean, we're buying tens of thousands of rooms in New Orleans, each and every year and this will allow us to reduce.
That costs pretty significantly so we view this as a real big positive.
Great and just any any comment any I think you've given some prior I think when you underwrote the sentara deal a little bit of color there, but any color there that's it for me.
Any color on the Sentara property.
On the table game upside sorry.
Yes, the table games sure based on our experience from seeing other markets, where they have introduced table games from a competitor perspective, but also from us when we did it in Pennsylvania.
We expect to see about $40 million of incremental EBITDA from the introduction table games at the two properties.
As of right now, we're continuing to progress very well from a performance perspective, even absent the table games and are tracking right on if not slightly above our business case that we put together when we bought the properties.
In addition to the positive table games, Tony mentioned, the sports betting opportunity and beyond that we own five ltbs that we acquired with the purchase of Sentara and were anticipating being able to open those as well. So we will have seven sports books in the state of Indiana running very shortly.
Thank you very much.
Your next question is from Thomas Allen from Morgan Stanley . Your line is now open.
Just a clarification on slide five when you talked about the Las Vegas performance.
Hi, the gaming volumes were up 3%, but then gaming contribution.
On revenue was down $1 million can you just talk about it.
The disconnect there.
Is that the year over year.
Okay, well, we held thats. It I know, we have 20% and back in 2018 and 10% back this year and overall table hold went from 19 to last year to 15%. This year. So our volumes were up but our win was down pretty significantly and it's just a function of a bad luck or great luck last year.
That excludes hold so anything else going on is it like the promotional environment as it the mix of games potentially.
Yes, it's a mix thing that we're talking about so.
We had.
Very strong.
Baccarat volumes and then we had lower other team table games volumes and so.
That caused the volume on the table game side to be up slightly but the theoretical expected wind to be slightly lower than that.
On the slot side, we had saw volumes up approximately 3% and there's really not much variability on the slot side.
From a mixed.
Yes that makes sense.
And then just talking about Vegas in General you highlighted.
The.
Having a really strong convention calendar for the second half of your and some seasonality that just on the event calendar how's that shaping up for you guys versus last year for the back half there. Thanks.
I really well I mean, we feel good about our booking pace and the trends that we're seeing and then in a more longer term view I mean, we think that there is a number of positives are going to increase demand as we go into 2020.
In addition to the for you over the next couple of years, you've also got the Raiders coming down obviously the expansion of the Las Vegas Convention Center.
As well as the MSG is severe and then ultimately once once the merger is complete we've got.
For pretty significant metropolitan areas that will get plugged into seasons rewards are well that will also add to demand. So we think the prospects look very strong.
Perfect. Thank you.
Frank.
Your next question.
Your next question comes from the line of Barry Jonas from Suntrust. Your line is now open.
Question.
Just you noted some costs on the sports betting partnership this quarter next quarter, maybe just talk about your expected ROI and timing of when we might see that.
Yeah the.
The costs are coming in associated with our deal with ESPN and Bleacher report and the NFL.
We're expecting in the back half of this year when the NFL season comes along that will really start to see some share improvement.
Because we've been investing in that channel up until now.
We also have the.
Opening of the Sps and broadcasting Booth right on the Las Vegas strip at the link that will open later in the year as well and then finally next year, we'll have the draft here in Las Vegas with the preponderance of the events at our facilities.
And so we're very excited about that yeah, we view those as certainly longer term investments that we're not going to get returns on right up front, but as we expand sports betting in the more jurisdictions and.
You know leveraged the popularity of the NFL.
And and having a team here in Las Vegas, we certainly think that they're going to pay big dividends down the road.
Got it and then apologies if I missed this but in the presentation. You noted that hold had a $10 million to $15 million impact for revenue, but a 15 to 20 million dollar hit to EBITDAR. So why is the flow through so high.
Yeah, it depends on the jurisdiction and the tax rate associated with it so.
We have two properties that have a lot of volatility obviously Caesars palace here in Las Vegas, but also our London clubs operation and as you know the tax rate here is very low.
And the tax rate in London clubs is very high. So you can have more than 100% flow through based on the mix shift of where that hold habit.
Okay understood alright, thank you so much.
Thanks.
Your next question is from David Katz from Jefferies. Your line is now.
Hi, good afternoon, everyone.
I wanted to just follow up on it on Las Vegas for a moment.
No theres been so much discussion about.
The issues of resort fees and parking charges and finding other ways to.
Generate growth beyond just room rates can you just talk about what you're seeing and what your strategies are regarding those issues in Las Vegas today.
Well, we're certainly seeing them continue to escalate I think one of our competitors just announced an increase as well.
I look at that as something that we need to be a little bit cautious about as continuing to escalate those because I think that over time that at some point there is going to be the straw that breaks the camel's back I don't think we're there yet but.
I want us to be very judicious in.
You know as I said cautious about taking those rates any further I mean, it's certainly a revenue stream that is hard to walk away from and then it that it's been accepted to this point, but I think we're getting we're getting pretty high.
Yes, the only thing I'd add is that we we had revpar growth of 6.2%. This quarter, we had very strong revpar growth last quarter as well.
Much faster than the rest of the United States.
For both us and for my city as a whole and so I don't think that the resort fees and the parking fees are inhibiting our ability to grow the rates, we hit 97.5% occupancy up 380 basis points. So we really don't have a demand problem at this point with respect to interest of people coming to Las Vegas, Yeah. The other thing I would add on top of that is that if and when there is any kind of economic downturn I think that those those things will be felt a lot more by the consumer at that point than they are today, where the demand is so strong.
Got it and my my follow up question is.
Tony that you made the remark that.
You think there's room for improvement in Atlantic City could you elaborate on that just a bit and talk about what strategic levers you think are available.
Well I mean, if you just look at our performance of the same store properties that operate in Atlantic City.
The seven of them before Ocean and hard rock opened I think that we have underperformed the par three properties have underperformed the other four in totality.
So if those other properties could figure out a way to hold onto market share to some degree and do it in a profitable basis I, certainly think Caesars entertainment should be able to do it we reinvest 300 basis points lower than the market average and I'm not suggesting that we need to go out there and spend significantly more than we are but I think that we can be very strategic about testing some things to change customer behavior and win back some of that lost market share that would be number one number two I would say that we have particularly at Caesars Atlantic city, not so much at Harris, but I think that we could be deploying a little bit more.
Capital dollars to create some incentives in some non gaming amenities that give people a reason to come and visit our properties. If you look at the properties that are successful and I think.
Hard rocks, turning it around a little bit it's properties that have have reinvested in the experience and.
I think that.
We have failed to do that over the last couple of years.
Got it thank you very much.
Thanks, David.
Your next question is from Jared Shojaian from Wolfe Research. Your line is now.
Hey, good afternoon, everybody. Thanks for taking my question.
Eric I appreciate all the modeling help on the back half I think last call you indicated an expectation that margins for the full year would grow for the entire business are you feeling better about that target after getting through the second quarter here and would you expect both the third quarter and the fourth quarter, which show margin expansion.
Yes, we did mention.
Last quarter that we thought the company as a whole would have slightly higher margins than we do feel.
Confident as we head into the back half of the year with that.
If you noticed this this call. We did also call out that we expect Las Vegas margins to be modestly higher.
Last quarter, we weren't as confident in that.
We felt like we have very good momentum the verticals that we're talking about from the hotel standpoint in the gaming standpoint are very high margin verticals.
And so to see those growth gave us a lot more confidence in terms of the margin here in Las Vegas, but as a company as a whole yes, we continue to expect to see margin growth for the rest of the year.
So we're being very judicious as we have some attrition about replacing bodies, particularly here at corporate where were evaluating you each and every departure and.
Through the review those in the last three months, we recognized almost $15 million worth of annualized savings there and we're also looking at scaling back some of our participation games to the tune of about $10 million. There. So there's a few other cost initiatives that were engaged with that it's going to allow us to take some cost out of the business.
Great. Thank you and then with respect to asset disposition activity would you consider monetizing any of your assets over the next several months if the opportunity was right or is your thought to leave the current portfolio as is for now.
Well, we're reviewing things.
As we would whether we're heading into a merger or not well we have some inbound inquiries periodically and there's a few that are more interesting than others and we'll continue to follow up on those and if we think something makes sense then we'll present it to our board.
Great. Thank you very much.
Thank you.
Your next question is from Harry Curtis from Infinity. Your line is now open.
Yes, Hi, this is Daniel Adam on behalf of Harry Curtis.
Just one question.
To the extent you can comment on it.
And Tony I think you remarked on it before but the cost reduction effort in anticipation of.
Ahead of the closing of the El Dorado acquisition.
Where do you currently stand and what is your expectation over the next six to 12 months. Thanks.
Right now the the initiatives that we've already undertaken habits in the $25 million savings standpoint.
We will continue to review.
Replacements, particularly here at corporate as we move forward and.
And there's some other initiatives in terms of some outside contract and consulting fees that were going to look to reduce as well.
I hate to put a dollar amount on it but knowing that we've already gotten to $25 million I would anticipate by the first quarter of next year that that number will grow to something north of 50.
Something in that range.
Great.
Thanks Seth.
Thank you.
During no question over to Q presenters you may continue.
Yeah.
Yes.
Okay. Thanks, everybody.
I appreciate it.
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