PENN 2Q REPORT CARD

In an effort to evaluate performance and as a follow up to our YouTube, we compare how the quarter measured up to previous management commentary and guidance

 

OVERALL

  • SAME:  There wasn't much change in guidance (it was just a little better) and the quarter was generally in-line.  Given the pessimism, however, PENN performed quite well.  

PENN 2Q REPORT CARD - penn

 

CONUSMER BEHAVIOR

  • SAME:  has not gotten better but not getting worse on consumer spending behavior

PROMOTIONAL ENVIRONMENT

  • MIXED:  In the Kansas City market, ASCA, CZR, and to a lesser extent, ISLE have been very aggressive in preserving their slot business but PENN is not going to be undisciplined in its reaction.  LV locals promotional market has been slightly more rational than a few months ago.  
  • PREVIOUSLY:  "There's rational promo environment out there."

CANNIBALIZATION

  • SAME:  Cannibalization, overall, was in-line with management projections.  Maryland Live! has adversely impacted Charles Town and Penn National properties.
  • PREVIOUSLY: 
    • "It's clear that the cannibalization immediately is not as strong as what we've been indicating in our previous thought process. So that doesn't mean that the cannibalization doesn't happen. It just seems to be a little bit more delayed than we had in our original numbers."
    • "Maryland Live! versus Charles Town, I mean, certainly we are incorporating a bit of that. We think that the cannibalization, original cannibalization thoughts may have been a little bit accelerated in terms of the immediate impact. So we have pulled that back just a little bit."

M RESORTS/ BOULDER STATION

  • WORSE:  LV locals market remains sluggish 
  • PREVIOUSLY:  "We started to see a little bit of improvement in the Boulder Station numbers for the Las Vegas locals....continue to show improvement to the overall performance in the M. But again, we're still early on in this, and it's going to take a couple more quarters going forward into this year and into next year for this to completely take hold. So we're off to a decent start this year, but there is more to come."

BATON ROUGE MARKET OUTLOOK

  • SAME:  L'Auberge Baton Rouge will be a 'disaster' for the Baton Rouge market
  • PREVIOUSLY:  "I think there is going to be very, very modest growth in this market, and I do think there is going to be significant cannibalization of the two existing casinos that are in that market. So we don't anticipate that there is going to be a good story in Baton Rouge once Pinnacle does open there. So we think the market is fairly well saturated and there will be modest overall growth. Probably not too different than what you're going to see in Atlantic City with the Revel opening that just occurred, given how saturated that market is, we see similar kind of effect in Baton Rouge. So we're preparing for lower business volumes and therefore ready to adjust our cost structure to accept a new paradigm of business levels."

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