Earnings Call: Q1 2019

May 2, 2019

Quarterly report

Greetings, and welcome to the Penn National Gaming First Quarter Conference Call. During the presentation, all participants will be in a listen only mode. Afterwards, we will conduct a question and answer session. I would now like to turn the conference over to Mr. Joe Jaffoni, Investor Relations. Please go ahead, sir. Thanks, Silvana. Good morning, everyone, and thank you for joining Penn National Gaming's 2019 Q1 conference call. We'll get to management's presentation and comments momentarily as well as your questions and answers, but first I'll review the Safe Harbor disclosure. In addition to historical facts or statements of current conditions, today's conference call contains forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which involve risks and uncertainties. These statements can be identified by the use of forward looking terminology such as expects, believes, estimates, projects, intends, plans, seeks, may, will, should or anticipates or the negative or other variations of these or similar words or by discussions of future events, strategies or risks and uncertainties, including future plans, strategies, performance, developments, acquisitions, capital expenditures and operating results. Such forward looking statements reflect the company's current expectations and beliefs, but are not guarantees of future performance. As such, actual results may vary materially from expectations. The risks and uncertainties associated with the forward looking statements are described in today's news announcement and in the company's filings with the Securities and Exchange Commission, including the company's reports on Form 10 ks and Form 10 Q. Penn National Gaming assumes no obligation to publicly update or revise any forward looking statements. Today's call and webcast will include non GAAP financial measures within the meaning of SEC Regulation G and when required a reconciliation of all non GAAP financial measures to the most directly comparable financial measure calculated and presented in accordance with GAAP can be found in today's press release as well as on the company's website. Thank you for your patience with that. And it's now my pleasure to turn the call over to Penn National's CEO, Tim Wilmot. Tim? Thank you, Joe, and good morning to Penn National's Q1 conference call. After I provide some introductory comments, I'll be followed by Jay Snowden, our President and Chief Operating Officer and then following Jay will be BJ Fair, our Chief Financial Officer. But to begin to talk about our Q1 results, despite softer volumes in the 1st couple of months due to weather, primarily in the Midwest, a little bit in the North East. I really have to acknowledge our operations team, who managed our cost structure very, very well. And as we looked at the results, after you back out the one time prior period adjustment for the marketing loyalty program, we were able to meet our adjusted EBITDAR guidance of $394,500,000 Our results demonstrated a year over year improvement in EBITDA margin by 80 basis points. And I do want to comment that after the weather cleared, the month of March finished very strong for the quarter and helped facilitate these results. Moving on to an update on where we are with the Pinnacle integration. We did announce today that we're increasing by 15 percent our estimate of cost synergies from $100,000,000 to $115,000,000 And we believe $55,000,000 of that run rate will be achieved by the end of 2019 and the other $60,000,000 will be achieved by the end of 2020. At the end of the Q1, we've now realized about $40,000,000 of run rate cost synergies. We're still at revenue synergies at $15,000,000 to $20,000,000 most of that coming in 2020 2021. And the catalyst for that will be the completion of the implementation of our My Choice loyalty program, which will be in place at all of our properties by the end of this July. Turning to an update on development and M and A activity. We closed as we announced our MargaritavilleBossier City acquisition in early January of 2019. We are working with the Michigan regulators and pending their approval. We expect to close on our $300,000,000 purchase of the Greektown operating assets in Detroit by the end of May in partnership with VICI as our landlord. And an update on the Category 4 casinos in Pennsylvania, specifically in York and in Morgantown. We continue to work through the approval process and we expect both to open in the second half of twenty twenty. And just to reiterate, including cannibalization at Penn National, the Hollywood Casino there in Central Pennsylvania, this combined $230,000,000 investment we believe will generate north of a 15% cash on cash return. And finally, utilizing our free cash flow in the Q1, we remain focused on deleveraging our balance sheet and we're able to reduce our traditional debt by just under $40,000,000 in the Q1 and we remain on target to reduce lease adjusted net leverage to under 5.5 by the end of 2020. With that, I'd like to turn the call over to Jay Snowden to provide a little bit more color of what's going on into the what's going on in the operating segments of our business. Jay? Thanks, Tim. Good morning to everyone on the call. Well, harsh winter weather in January February aside, we were very pleased with our Q1 performance across portfolio. March, as Tim mentioned, was particularly strong as 9 of our properties posted all time record monthly EBITDA results, which definitely speaks to the general health of the consumer. Also, as Tim mentioned, we were able to identify another $15,000,000 in cost synergies from the Pinnacle transaction, bringing the current total to $115,000,000 $5,000,000 of that to be realized in $19,000,000 $10,000,000 in 20 20. The incremental $5,000,000 in 20 19 was pulled forward into Q1 and helped offset the weather impacts and brings our current run rate as of March 31 to 40,000,000 dollars These incremental cost synergies are the results of our best in class property and corporate leaders accelerating the sharing of best demonstrated practices across the organization and continuing to challenge the long held industry orthodoxies. The $115,000,000 cost synergy target is still separate and unique from the $15,000,000 to $20,000,000 in revenue synergies we announced last quarter. Those efforts are beginning to gain momentum as we prepare to launch our consolidated enterprise wide player affinity program, My Choice, later this summer. Moving to Q1 regional results, despite the aforementioned bounce back in March, the severe weather that plagued our Pennsylvania, Chicagoland and Council Bluff markets in January February was too much to overcome and caused top line softness that ultimately negatively impacted EBITDA results in our Midwest and Northeast regions in the Q1. Moving to the West region, weather was less of an issue year over year and we experienced a solid quarter on both the top and bottom lines highlighted by a record quarter in revenue, EBITDA and margins at our Blackhawk property in Colorado. Finally, in the South region, which experienced no significant weather issues year over year, our properties produced EBITDA growth of over 5% inclusive of the smoking ban impact in Baton Rouge and the I-ten excuse me, I-two ten bridge work in Lake Charles. Of note in the South, half of our properties, including the recently acquired Margaritaville in Bossier City grew EBITDA by double digit percentage versus Q1 of 2018. Now shifting to some high level database and sports betting trends. Spend per visit remains a good story across all worth segments, while visitation is more of a mixed bag with year over year declines at the lower worth segments as we continue to refine our profitability filters to maximize EBITDA. VIP results were robust and we posted our strongest year over year table games growth quarter on record, partly due to the introduction of retail sportsbooks in West Virginia, Pennsylvania and Mississippi. These trends have us very excited about the continued state by state legalization and rollout across the country. As we prepare to close on the Greektown transaction at the end of May, we will soon be operating in 19 states by far the most of any casino company in the U. S, presenting significant sports betting, icasino and mobile gaming value creating opportunities for Penn in the near future. With regard to April, results have been mixed in the regional markets predominantly due to the year over year Easter shift as well as some tax refund noise. That said, the economic indicators of employment, wage growth, stock market performance, home values and consumer confidence remain at or near all time highs and have us feeling good about the remainder of the year. With that, I'll hand it off to BJ. Thanks, Jay, and good morning, everyone. I'd like to provide an update to our 2019 guidance. I'll remind everyone that although we are projecting to close Greektown by the end of May, our guidance does not include any provision or assumptions for Greektown performance. In addition, the guidance only includes $5,000,000 of the incremental $15,000,000 cost synergies identified in our release. The 2019 guidance and underlying assumptions are found on Pages 45 of the press release. We have provided detailed line item guidance in the release for the Q2 and an update to our full year guidance. On a high level, the updated revenue guidance for the full year is $5,173,000,000 The reduction in revenue guidance is primarily attributable to the flow through of the Q1 operating results, plus a reduction of the revenue associated with the previously announced closing of our resorts property in Tunica. Our adjusted EBITDA for the full year is estimated to be $1,538,000,000 which reflects the flow through of the Q1 operating results, but otherwise maintains our EBITDAR guidance for the remainder of the year. Our total lease payments for the year, including the Penn Master lease, the amended Pinnacle lease, the Meadows lease and the Margaritaville lease are forecasted to be $836,000,000 Our trailing 12 month rent coverages as of threethirty onenineteen for each lease are as follows. The Penn Master lease was 1.88, the amended Pinnacle lease was 1.83 and the Meadows lease was 1.99. We do expect to incur full escalation in November under the Penn master lease. We do not expect to incur escalators under the amended Pinnacle lease or the Meadows lease at the end of their respective lease years. Free cash flow generation for the year is estimated at $374,000,000 and net free cash flow after mandatory debt payments and other obligations is expected at $299,000,000 Cash taxes and cash interest are identified in the release and there is no change to our maintenance CapEx guidance. Cash on hand as of threethirty onenineteen was $400,000,000 Our lease adjusted gross and net leverage ratios as of threethirty onenineteen were 6.09 and 5.79 respectively. Our cash flow generation remains on pace to return to our target leverage ratio of 5.0 to 5.5 times EBITDAR within 12 to 18 months following the close of Greektown. All of our debt covenants will be comfortably met. So just one final note regarding an explanation of the one time point liability accrual adjustment that was related to prior periods that we took in the quarter. During the migration of our customer database to our new upgraded system, we uncovered a discrepancy in our accounting reports related to prior years for the customer loyalty point liability accrual. The discrepancy was only related to the accounting accrual and had no impact to the individual customer accounts. The amount of the discrepancy is not material to our financial reporting, but we believe it was important to identify since absent the adjustment, the operating performance of the company was consistent with our adjusted EBITDAR guidance. It's also worth noting that the $3,000,000 charge was a contra revenue account. So it also had the impact of depressing our 1st quarter revenues by 3,000,000 dollars And with that, I'll turn it back to Tim. Thank you, BJ. Operator, we're now ready to take questions from our And our first question comes from the line of Harry Curtis with Instinet. Please proceed with your question. Good morning, everyone. I've got a 2 part question. Tim, when you look at the map of the U. S, are there holes in your locations that you'd like to fill? Or are you satisfied with your distribution? And then if you're satisfied, then if you could talk about the strategies that going forward you're going to be using to drive shareholder value from here? Thanks. Well, there are certainly Harry, certain markets, one offs, that we don't have representation in that could be an opportunistic play for Penn National. But as Jay said in his commentary, we're going to be in 19 different jurisdictions. So we certainly like our current geographic footprint. And with that, as I've said in prior calls, as we think about the remainder of 2019 into 2020, we've got a lot on our plate to execute against and to realize the synergies of the Pinnacle transaction, the Margaritaville transaction and the soon hopefully to be completed Greektown transaction that if we just execute on those integrations and realize the synergies in those transactions, we're going to be generating a lot of free cash flow that will give us the opportunity, as we said, to delever, to continue, if appropriate, to return capital to shareholders and to continue to do tuck in M and A acquisitions that are accretive to our shareholders. So absent nothing else, we have a lot to execute on for the balance of this year into next year that I think is going to generate value to our shareholders over the years to come. Thanks. And maybe a quick follow-up on that. Based on where multiples are today on the strip, is it just unrealistic to think that at this point in the cycle, it makes sense to be aggressive on looking for an asset on the strip at this point? I mean, certainly the multiples are at points where we certainly couldn't do it alone. We need a landlord that has the ability to use their multiples to do some kind of acquisition. But I certainly think, as I said before, Harry, that we've got enough on our plate to focus our team on to execute. And given where things are on the strip right now, it would be challenging in the near term for us to focus on that. Okay. Very good. Appreciate it. Thank you. Our next question comes from the line of Steve Wieczynski with Stifel. Please proceed with your question. Yes. Hey, guys. Good morning. So Jay, you had an interesting comment about you're seeing, I guess, you said weakness in your low tier customer level, which is expected given the change in marketing spend around those customers. But I guess the question is, have you seen that lower tiered customer gravitate to competitors' properties? Or in general, you really just don't care about that customer? And I guess what I'm getting at here is the overall promotional environment pretty rational around most of the country? Sure, Steve. It is rational right now. And even some of the flare up we saw last year points last year in Chicagoland and parts of Northern Mississippi have calmed. And really the way we look at it on the low worth segments is there's a number of those customers that given the level of reinvestment typically in the industry are just unprofitable. And so you have to be really thoughtful around what inducements you're providing those customers. And what we've seen is that there are a number of them that come less frequently. That's why frequency is down. But when they visit, those trips are profitable. And then we've seen a shift, a migration from low worth rated customers in the database many times to our unrated segment where they're not receiving offers anymore, but they're still coming to the property, which is why we've seen unrated growth for the last several years. So we're comfortable with the migration. I think you're seeing it across not just the Penn database, but also within regional gaming in general. Our competitors, I think, are making a lot of the same movement. And these are trends that I think you're going to continue to see for probably quarters, if not years to come. Okay. Got you. And then Jay, another question for you, I guess. I think you talked about April being I think you used the word choppy maybe or something along those lines. Do you think that's a function of and I know you talked about tax receipts and stuff like that, but is if you looked at something, I think you said the South was kind of a market where there was no impact to weather. Is something like the South still choppy? Or is it just those markets where March was so strong? Maybe you've seen some visitation levels kind of fall off a little bit because of that. And I guess, as you look to your guidance, specifically for the Q2, is it more kind of around what you saw in April? Or is it kind of more just what you saw in March or maybe help us think about that? Yes. I think most of the what we're seeing in April and why I mentioned it was mixed, choppy, use your term, is largely due to the Easter shift. It was entirely or almost entirely in the month of March last year. It was entirely in the month of April. So you have a lost weekend of only 4 weekends. You have 5 Mondays and 5 Tuesdays. So April was set up to not have great year over year comps. And we anticipate that the remainder of the year will be strong. You have more favorable calendar set up for May June than you did for April in Q2. The only other thing that I think is worth mentioning that is a little bit specific to us is that we're going through, as Tim mentioned, and consolidating our player loyalty card program. A lot of hard work and some disruption that takes place in the Q2. And we're going to be 100% on the same system, same platform and aggressively starting to market that My Choice player loyalty program the second half of the year. And so we anticipate the second half of the year to be stronger than the first half of the year. Okay, great. Thanks guys. Appreciate it. Our next question comes from the line of Felicia Hendrix with Barclays. Please proceed with your question. Hi, good morning and thanks. Jay, we'll keep you on that hot seat here. So of the $5,000,000 in incremental synergies you realized in the Q1, I just wanted to confirm that that was entirely incremental to your initial guidance. And then I was wondering if you could just help us understand mechanically what you're able to do to pull that forward and realize that in the quarter. And then I'm wondering if there's any way you could help us understand on a go forward basis by quarter how we should think about the synergies? Sure, Felicia. So yes, the $5,000,000 that we pulled forward into Q1 and into 2019 was incremental to what we had previously stated. So before today, we had communicated $50,000,000 of run rate synergies in 2019 $50,000,000 of run rate synergies in 2020, and we're now at $55,000,000 in 2019 and $60,000,000 in 2020. So there's $15,000,000 of incremental cost synergies. Look, there's a lot going on, and we have a number of initiatives at the corporate level, at the property level. And so some of what was brought forward into Q1 is just an acceleration of what we had planned to happen in Q2 or Q3. And then in that process, throughout the last 6 months, we've also identified incremental synergies. It's not as though we've come up with new categories, but we've just gotten a little bit better in the areas of labor management and marketing efficiencies and procurement that lead us to feel comfortable that we can hit a minimum of $115,000,000 on the cost side as we move forward. And so when we think about Q2, are you willing to kind of quantify how much of that guidance is coming from synergies? I think it's probably safe to assume, Felicia, for modeling purposes that you've got $15,000,000 run rate remaining in 20 19. So $5,000,000 per quarter is probably the easiest way to think about it. Okay. That's super helpful. And then maybe while I have you just a couple of things just regionally. One is just wondering with the now delayed opening of the Monarch Casino, I was just wondering if there's any way that you could use that to your advantage as you're positioning your property for the initial impact of that opening. And then also just in terms of Plain Ridge, are some you listed in the release a lot of assumptions that you had from some well known headwinds. But on Plain Ridge, how are you thinking about that in terms of your guidance in light of the win opening in June? Sure. So hitting Monarch first, we did read the earnings release from Monarch that there's going to be a delay by the time the hotel and casino expansion open to end of Q3. I think previously they had said end of Q2. We have not adjusted any of our modeling with regard to Blackhawk because we're just not close enough to it to understand is that a phased opening throughout Q3. So, look, we're very happy with the results at our Blackhawk property. As I mentioned in my prepared remarks, we had our best quarter ever, top line, bottom line and margins. And we've got a lot of momentum there. VIP business is extremely strong. I think we picked up some business while competitors are going through expansion or renovation, and we plan to give those customers reasons to stay with us as we move forward. So I would anticipate a solid remainder of the year, certainly Q3 for the Blackhawk property, but we did not build that into our modeling. With regards to Plain Ridge, now that there's certainty around the June 23 opening date, that's what we had always modeled. That date has been out there now for about 6, 9 months. And so as we forecasted and guided for the year, for the Q2, we always knew that date and anticipated them opening on that date. So it did not impact our guidance moving forward. Okay. Thanks. And then just a quick housekeeping question for BJ. Your full year guidance, is that before or inclusive of the $3,100,000 add back from the Q1? It's inclusive of the $3,100,000 It's all rolled forward. Okay, great. All right, super. Thank you. Our next question comes from the line of Barry Jonas with SunTrust. Please proceed with your question. Hi, guys. I just wanted to dig in a little bit to the full year guidance composition. I see that you float as you said, you flowed through the $3,100,000 accounting true up in Q1, but then you've got the 5,000,000 dollars synergies. And then I believe also that the rent as part of your rent assumption, it's about $3,500,000 lower than before, dollars $900,000 of that relates to the escalators. And then I guess there's another $2,600,000 which maybe is Ohio or something else. So I'm just trying to understand compositionally how with all those things changing how the guidance really just flowed through the Q1 miss? Thanks. Yes, Barry, this is BJ. You're right in that with the $3,000,000 miss on the or the $3,000,000 reduction as a result of the point liability, We did have a positive $3,000,000 on the rent side, which ended up again primarily from the percentage rent associated with Ohio as well as some of the change in the escalators as well. And so in addition, we also had the cash interest, which ended up with some positive on the cash flow flow through as a result of change in LIBOR as well as we were fortunate enough to be able to we were being conservative in our Q1 of a tier level of our interest rates associated in the for our revolver. And so we actually were a little bit lower in that tier. So we ended up a positive side there. There were also some additional noise and as we go through in guidance we talked about some of the closing costs and other items that we have for the resorts property in Tunica created some severance and other items that ended up with a negative cat flow through on the cash flow. So hopefully that clears it up for you. Got it. And then just a question on Lake Charles. Our understanding of construction on the 210 could finish up a little bit early. Just curious what the latest is there from your perspective and if that potentially could cause some upside to guidance? Yes, Barry. The latest from our perspective, what we're hearing is that we're still anticipating an end of year completion. There is an incentive for the contractor to finish early by 60 days, which would have that project complete in October, excuse me, versus December. For now, we're trying to stay focused on anticipated impact through the remainder of the year. And if it moves up to October, that would obviously be good news for us. Great. And then just last one for me for sports betting. I think you've done 1 or 2 state specific deals with 3rd parties. But how are you thinking about just larger JVs or partnerships at this point? I would anticipate, Barry, that by our next earnings call, we'll be able to we'll be ready to articulate our sports betting and iCasino strategy as we move forward. We're getting a lot closer both with regards to our primary strategy and then we've got some pretty exciting secondary strategies given the number of states and licenses that we have across the country. So more to come on that. The other thing, Barry, we're also watching as states right now are in session, how they're going to be enabling legislation for sports betting, whether it's going to be retail only or retail and online and whether or not there's going to be additional skins per licensee or not. So there's a lot of moving parts right now. And as Jay said, I think in the next 90 to 120 days, we'll be able to articulate a more clear strategy of how we're going to take advantage of this opportunity. Fantastic. Thanks so much, guys. Our next question comes from the line of Carlo Santarelli with Deutsche Bank. Please proceed with your question. Hey, great. Jay, you provided some color. I just wanted to see if I could just follow-up a little bit on kind of the revenue outlook. When you look at the delta in the quarter and then lop off the second half, Resorts, Tunica, the revenue outlook is very modestly changed, if anything. I think it was $3,000,000 or so is what I calculated. But you had obviously a difficult January February. April was mixed. It's been some time since we've kind of seen well, December, I guess, since we've seen some real strength. So my sense is the confidence that you guys see in kind of the top line guidance from now stems more from what you're seeing on non weather impacted, non calendar impacted periods. Is that largely fair? I think that's fair, Carlo. And as I mentioned before, we're also a little bit more bullish on the second half of the year for Penn because we're going to have our new loyalty program fully launched and consolidated, and we've got some strong top line drivers that should fuel some growth the second half of the year. Great. Thanks. And then BJ, just quickly, your free cash flow guidance for the year is up about $3,000,000 and that includes a $3,000,000 I'm assuming that includes the $3,000,000 that EBITDA missed guidance by for the Q1, so up about 2% or so overall. Is that a shift in cash taxes, I imagine? No. Cash taxes remain the same, Carlo. It was the cash interest that we had to change in. So basically, the first quarter operating results and the improvement in rent expense kind of washed and the $3,000,000 up really was ended the change in our cash interest assumptions. Great. Thank you both. Our next question comes from the line of Chad Beynon with Macquarie. Please proceed with your question. Good morning. Thanks for taking my questions. First on capital allocation, I believe in the Q1 you replaced a retiring repurchase plan with a bigger one and the stock has obviously had a little bit of dislocation as we've kind of worked through the quarter. I believe in that earlier release you mentioned that you could be implementing a 10b 51 kind of automatic programmatic plan. Could you just remind us on kind of what the situation is from share repurchases and then if a 10b 10b5-1 will be implemented? Thank you. Chad, hi, this is BJ. We in our last release, we said we left it open that we could implement a purchase plan as well as do open market purchases. We did not repurchase any shares in the Q1. I think that we really focus and as we've been saying previously, we've been focusing on our debt reduction. And that's primarily the focus that we had in the Q1 going forward. As we look, I mean, obviously, we think our share price is extremely well priced right now. But in our overall capital allocation, as we looked at it, I think we're determining that the delevering is really where our focus is right now. In the short term, and we'll get to a point, like I said before, Chad, that we'll delever and then that'll give us other tuck in M and A and also returning capital back to shareholders. But right now, as BJ mentioned, our short term focus is to delever. Spread geographically across the board or is there any one particular geography that could have higher flow through than what you had anticipated before? I think for modeling purposes, Chad, I would just spread it evenly across the regions. There might be a little bit incremental at the corporate level as well, but it's not pronounced in any particular part of the country. Okay. Thank you very much. Our next question comes from the line of Joseph Greff with JPMorgan. Please proceed with your question. Good morning, guys. Two questions. Jay, you may have addressed this in some way, but you talked in your prepared remarks that spend per visit was great and visitation more of a mixed bag. Can you talk about that visitation comment, how much of that is weather related? How much of it is outside of the scope of bad weather? And then my second question relates to the 2Q guidance. I know the full year is fine and that's great, but the seasonality of the 2Q, I would have expected sequential growth just for seasonality reasons in the 2Q versus the 1Q. What do you have baked in there that's different from historical seasonality, whether it's one time issues like the Lake Charles Bridge work? And that's all for me. Thank you. Yes, Joe. Yes, spend per visit across all of the tiers of the database showed growth on a year over year basis. And visitation at the VIP level was also strong. We did see declines, as I mentioned, in my prepared remarks at the lower worth segments. And look, I don't know exactly how much of that is due to weather. I would tell you that it's really confluence of weather factor in the Q1 and then this continued migration of customers that are receiving different levels of incentives and they're either visiting less but more profitably when they visit or they're shifting over to unrated play. So there's some weather impact there and there's some continued strategic impact to the visitation trends as well that we're very comfortable with. And then with regard to our guidance for the year, look, there's the April shift or excuse me, the Easter shift in the month of April. And as I mentioned, the only other real significant noise for us that might be unique to Penn is that we were going to have some disruption in the Q2 that we anticipated as we put our guidance out for the year. We knew we would be back half heavy given that we're not going to have any disruption once we have My Choice live at all of our properties by the end of July. So there'll be a little bit of noise throughout the second quarter on the top line. We'll manage margins as we always do to get to the forecasted levels. And we think the second half of the year is going to be pretty strong for us. Great. Thank you. Our next question comes from the line of Thomas Allen with Morgan Stanley. Please proceed. Hi, thank you. Good morning. So just on the Q1 results, the South region really stood out as meaningfully outperforming expectations. And I assume it didn't have much weather impact. But anything other broadly happening that's really supporting that strength? Thank you. Thomas, we were very pleased with the results in the South. It's a combination of factors. Margaritaville had their best quarter ever. Timing of that acquisition was terrific. Property has got tremendous momentum right now. Timing of that acquisition was terrific. Property has got tremendous momentum right now. Baton Rouge, though we still have the headwind of the smoking ban year over year, we will anniversary that on June 1, but we did invest about 4,000,000 tariffs at the property that went live in early March, and that has been a real shot in the arm for us the last couple of months. Customer it's been very well received by our customer base in Baton Rouge, and we've gotten back some of that lost business on the slot side. And then just generally, we have more of the new Penn properties, the legacy Pinnacle properties. We have more concentration in the South region and there's a lot of good synergy work being pursued and implemented in that region, which is why I think we saw outsized gains. But generally, certainly helps when you don't have the weather impacts year over year and we anticipate having a strong full year in the South region. Thanks. And then just a follow-up on the second quarter guidance. There has been some freak bad weather in the Midwest quarter to date. Has that impacted you at all? A little bit. We had snow last Saturday in Chicagoland. Just when you're getting ready for spring, you get hit with a snowstorm in Chicago, it doesn't help. All of that is baked into our Q2 guidance. There's been some weather noise. There's some Easter noise. We feel comfortable with the guidance that we put out for the Q2. Any way to quantify that weather hit in the second I don't think so. We're just looking at April results and what we anticipate for May June at point, Thomas. Okay. Perfect. Thank you. Our next question comes from the line of Shaun Kelley with Bank of America Merrill Lynch. Please proceed with your question. Hi, good morning everyone. Just one for me, since a lot of ground has already been but I thought that the comment in the opening remarks about what you guys are seeing on activity levels and table games volumes as sort of a derivative of sports betting activity was interesting. I was just wondering if you could elaborate a little bit on traffic patterns in those markets. What are you seeing on the casino floor? Just kind of how is that behavior trending? What more precisely are you seeing? I just thought it was interesting. Yes. Look, I think the best properties for us, the best proxies would be our Charlestown property in West Virginia and then our Penn National bump is and where you see the bump is and it's well documented, you see a bump in table games as well as in your food and beverage volumes. And we've seen properties that were flattish to down slightly in table games or food and beverage are now seeing growth of between 5% 10% at those properties. So tough to say exactly what it's going to be across the country, especially with some markets you're going to have retail only, others you're going to have retail and mobile. But I will tell you that the retail sportsbooks certainly are helpful, particularly during the large events. March Madness, we saw great volumes, not just in the sports book, but our table game results and our food and beverage results at the properties that have retail sports books were very strong. Perfect. Thanks for that, Jay. And then maybe just as a follow-up, it's been a little while since we've sort of done just an overview or kind of prognosis now that we know a little bit more and a few states have opened. I mean, what are you guys thinking or what's the current thinking about sort of overall profitability impact for sports betting on both the retail side where I think traditionally we've thought about it more in this big traffic driver type environment, but not a huge standalone P and L? And then what are you seeing on the marketing side or the early have thought and sort of how could that end up impacting profit in the medium or long term? Again, not hard numbers, just thinking theoretically. Yes. Look, the only market that has a significant online sports betting business is New Jersey, and we don't operate there. So it's hard for me to give you any real color on what that impact has meant to the brick and mortar retail sportsbooks. I would tell you that we're running healthy margins on a standalone basis with the sportsbook in West Virginia and in Mississippi because the tax rate is appropriate. Pennsylvania, it's more of a volume driver for us, and we have to monetize those guests elsewhere in the casino because the tax rate is extraordinarily high and makes it very difficult to drive any level of profit whatsoever. So we're using it more as an acquisition tool in Pennsylvania, but we are on a stand alone basis driving profit in the other markets. Charlestown is our significant sports book operation. And it's not immaterial on a property level basis. It's certainly in the low single digit millions of profit for us. But I wouldn't use that and extrapolate across the rest of the country because every state is going to roll out a bit differently. The good news is that most states have not followed Pennsylvania's mistake with this tax rate and are we believe are going to be in the 10% to 15% range, which is good for us. We can certainly drive a margin there, whereas Jay said, in Pennsylvania with the 35% tax rate, the margins are very slim and that's the reason we didn't invest a lot of capital in Pennsylvania because there were no returns to be realized. Thank you for all the color. And our final question comes from the line of David Katz with Jefferies. Please proceed with your question. Good morning, everyone. I just wanted to we've covered a lot of ground and I appreciate that. I just wanted to go back to the M and A landscape one more time and just make sure that we understand where the boundaries are. Tim, some of your commentary suggested that there's a bit more of drift into harvest mode, but I wanted to make sure I heard that correctly. And what would you consider the probabilities of some other large acquisitions that are out there in the next 12 months or so? Or should we be looking more towards capital returns at the level at this point? What I said, David, was specifically we have a lot on our plate to execute against on for the balance in 2019 2020. And I think that was the first question or so Harry Curtis had raised. There are opportunities for us to take a look at And obviously, we don't comment on any specific M and A activity, but we continue to look at opportunities and we'll continue to do so. And if it makes sense, we'll certainly take advantage of like we have post the Pinnacle deal with both Margaritaville and Greektown. If it fits into our distribution strategy and it makes sense, the math makes sense for us for our shareholder accretion, we'll take a look at it. But I would say there's no increase or no decrease in M and A opportunities as we look at it. It's really the normal course of business as we look at as we've looked at in years past. It's not heightened, it's not lessened. But as I said, our focus operationally is to execute against what's already on our plate. Got it. And if I can just follow-up with one detail. Just looking back at the Tunica circumstance and the property that closed, have you told us whether there's some specific financial impact or benefit for that matter that's factored into the current guidance? We haven't communicated anything at this point, David, other than the impact for the second half of the year to our overall revenues. We anticipate in the short term being able to move the very small levels of EBITDA and profitable customers in Tunica to our 2 other properties in that market. Time will tell as we get into 2020 beyond if we can drive incremental EBITDA from this. But for look, we knew when we acquired the two properties, Bally's and Resorts in Tunica, that 95% of the EBITDA came from Bally's, which has been branded to First Jackpot. And we stayed very close to the Mississippi regulators. And obviously, you never want to close a property. It impacts people's lives. And we put a lot of time and a lot of thought into how we went about doing that. I think that we have a good plan to hire most of those folks elsewhere in Tunica, and we're working with our competitors in Tunica to place them if we can't place them at our 2 properties. But at this point, we view it as a revenue impact and neutral to EBITDA. And just to be clear, David, all of second half of the year, that is all running in our guidance. So everything is included in there. Okay. And then just second half of the year. That is all running in our guidance. So everything is included in there. Got it. Perfect. Thank you very much. Thanks, David. And there are no further questions at this time. I'll turn the call back to you. Thank you, operator. Well, thanks for your time and attention this morning. We'll continue to provide updates as things materialize. And we should, as I said, expect the close Greektown to occur pending regulatory approval at the end of May. And with that, we'll be also back on a call in another 90 days or so to talk about our Again, thanks for your attention this morning. That does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your line.