PENN YOUTUBE

In preparation for PENN's FQ1 2012 earnings release tomorrow, we’ve put together the recent pertinent forward looking company commentary.

 

 

Telsey Advisory Group Spring Consumer Conference (3/28/2012) 

  • There is a process in place to legalize slots at the tracks. We own two of the seven tracks. We recently signed an MOU with the governor and we anticipate relocating those tracks to Austintown and to Dayton. There'll be a spend at each facility of $200 million, including the license fee, and we also agreed to pay a $75 million relocation fee at each facility.”
  • “They'll have a 33.5% tax rate plus some sort of horsemen subsidy. We expect that to be around 10% to 11% and we have some guarantees if that exceeds 45%. The biggest thing we buy for the relocation fee is a buffer, a 50-mile buffer around our stand-alone facilities and also around our slots at tracks. There are a few exceptions to that 50 miles. Scioto Downs, that I talked about, is one of them. I'll get to the other two. This is still contingent. There are more developments necessary. There is – there needs to be an agreement signed with the horsemen and there needs to be a resolution to the constitutional challenge. So we're excited for the progress that we've made in Ohio, but this is not yet shovels in the ground go time.”
  • "Hollywood Bangor recently added table games, one example, seven poker tables and six blackjack tables. There's a 16% tax rate and – not quite as exciting as our other stories, but there is certainly an opportunity for incremental EBITDA at that property."
  • [January/February trends] “We've seen more spend particularly on the higher tier customers.  February, as you said, there was an extra day and there was also great weather that contributed to our results. January was a good month, not quite as good as February, but so far we're pleased with the quarter. And I don't think that as a company we're quite ready yet to determine whether the consumer's back. I think that there's more optimism right now.”
  • [Kansas cannibalization] “It's still better than expected.”

 Barclays Capital High Yield Bond and Syndicated Loan Conference (3/26/2012)

  • [I-gaming] I don't think we expect federal legalization this year. There is the potential for state by state. If it happens state by state, that raises a lot more questions. You have to look at what kind of bill it is, who is allowed to be involved, what the tax rates are going to be, how hard it is to get a license. So we're kind of in wait and see mode on that, although we've had some discussions so if something is legalized we would be able to move quickly.”
  • “Charles Town is doing very well, Penn National is doing very well, the Gulf Coast is struggling along a little bit, Illinois is struggling because of the new competition there, and that's kind of how it looks as far as our markets go.”

 

Q4 Conference Call:

  • "I think there's some continued expectations for improvement, although relatively minor in the markets that are not going to be affected. The markets where we've got cannibalization taking place, it will be very difficult to maintain – certainly almost impossible to improve and very difficult to maintain, and we are showing some expectations for some declining margins in those businesses where we're expecting cannibalization. And then we've got to help kind of offset the whole piece is – we've got some pretty good expectations for where we think margins will be relative to the new properties opening."
  • "Relative to markets of concern, well clearly Charles Town with Anne Arundel opening is clearly going to be one of those that we are going to be very focused on and we will be reacting appropriately. But Anne Arundel also has a little bit of an impact on Perryville and even less impact on Penn National. We've got the full year to see how the whole thing in Illinois pans out with the Rivers Casino. If we look at last couple of months results in Illinois that has been a little bit concerning. And then obviously there is the Pinnacle opening in Baton Rouge and we've got our property opening in Kansas, that's going to have an impact. So, clearly it's very difficult to predict."
  • "Let me just talk about the ramp up in Ohio. I think Carlo you are right. I think the good proxy for how that's going to evolve over the first two to three years would be Penn National out in Grantville, PA. That's the way we are thinking about a ramp up there, both from a revenue growth standpoint and also margin improvement standpoint. So, I think that is the right proxy to use as you think about Toledo and Columbus opening later this year.”
  • “Given the projections for racing in general and the prospects of what looks on a going forward basis in New Jersey, they came to a conclusion that the previously booked goodwill need to be written off [on the Freehold track JV]. I can tell you at this point there is no more goodwill in the joint venture, so it's all been written off and although there is a very small remaining delta between the underlying land values and the total book values, they're comfortable that we are going to be okay with that on a going-forward basis.”
  • [Sioux City litigation] "We are looking collectively at various sites right now and are hopeful that we have some agreement reached by midyear to continue to move forward with our business in Sioux City and enhance our operations there. We are hopeful that the litigation that's out there can be put to rest through an agreement that can come together between us and our non-profit sponsor. But, a lot more to come between now and midyear."
  • [Casino Rama] “As you saw in our guidance we have reached an agreement to extend our existing relationship for another six months, which takes us out to September 30 of this year. We've been told by the Ontario Lottery and Gaming Commission that they suspended the RFP process and they are not sure what direction they're going to take yet with the Rama contract, and I think it has broader political implications. They're trying to determine what they want to do strategically going forward with overall gaming in the province, which we're just a part of. So, we've been told that hopefully within the next couple of months they'll provide us with a little bit more direction on where they're going to go and it's tough to predict right now what's going to happen between – post- September 30, but it is a very politicized process right now that really is out of our hands.”

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