PENN Entertainment Inc (PENN) 2012 Q4 法說會逐字稿

Ladies and gentlemen, thank you for standing by and welcome to the Penn National Gaming fourth-quarter conference call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question and answer session.

(Operator Instructions)

I would now like to turn the conference over to Joe Jaffoni, Investor Relations. Please go ahead.

Thanks Gina. Good morning and thanks everyone for joining Penn National Gaming 2012 fourth-quarter conference call and discussion of the planned REIT. We'll get to management's presentation and comments momentarily as well as your Q&A, but first I'll review the safe harbor disclosure.

In addition to a historical factor or statements of current conditions, today's conference call contains forward-looking statements that involve risks and uncertainties within the meaning of the Private Securities Litigation Reform Act of 1995. 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-K and 10-Q. Penn National assumes no obligation to publicly update or revise any forward-looking statements.

Today's call and webcast may 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. With that, I'm happy to turn the call over to Peter Carlino, the Company's Chairman and CEO. Peter?

Well, thank you, Joe, and good morning, everyone. Well, to get right at it, the fourth quarter was a little softer than we and you all would have liked. We will take some time, perhaps, to talk about some of the reasons for that. Broadly, I think you can divine as well as I that the sense in the economy today, we had, of course, the election this fall, and I think a general despondency in the part of a lot of folks and a few of us still despondent following the results of that election. We've got higher taxes to deal with despite promises that it wouldn't affect the middle-class, we all know, of course, that it has. So, these are unsettled times. Nonetheless, there's still lots of good stuff going on at Penn. Ohio continues to ramp up for us.

You know, and I'm going to ask Tim to talk about this in a much more detail, as we open Penn National, I think we were pretty careful in saying then that we expected a multi-year evolution in a market that was largely new. We expect, and I think you could count on pretty much the same effect in the Ohio markets as they mature over the next couple of years, needless to say, we would have liked to had more out-of-the-box upfront. But, things are moving along well there and, ultimately, those properties will be everything that we think that they should be. We've got the racetracks coming along and we will probably get to that in more detail later. So, all in all, it was a tough last quarter.

Much tougher than we would've liked but this is a new year and we are off and running with a lot of good stuff. The REIT is making significant progress. Again, we will answer your questions about that. So, on balance, at Penn we always take the long view and the long view, in my mind, looks very good. Tim, why don't you take some time and share your thoughts.

Thanks, Peter. I'd like to cover three different subjects at the outset of our call. The first is what we are seeing in Ohio. And clearly, we are seeing a slower ramp-up in slot volumes than we initially expected, especially in Columbus, to a lesser extent in Toledo. But, we thought we'd be further ahead in slot volumes than we actually are. On the other side of it, though, table games, food and beverage revenues, and poker revenues are actually exceeding our expectations and have been very, very solid.

We continue to work in Columbus to try to continue to penetrate new households and continue to introduce our Hollywood facility to the new customers in central Ohio. And, in both Toledo and in Columbus, we do expect, in January, to show sequential growth month over month in our slot volumes. So, we are making progress. There's no question as we look at the metrics in Ohio and we look at the penetration levels, we are going to get to where we want to be. It's just going to be a slower ramp-up than we had originally thought. So, we are going to continue to stay focused very aggressively on introducing our Hollywood products to customers in those two markets and continue to grow the business as we progress through 2013.

Next, I wanted to just give an update on St. Louis. As many of you know, we closed the transaction of that acquisition in the first half of November. And we've been working very hard to integrate all of our systems in there. And, I believe by the end of the year, we've stabilized the customer experience and now have all of the information we need to service customers, and it's now turned our attention to rebranding the Hollywood look-and-feel into the public space and the casino space and that project got started right after the first of the year. We are breaking up the casino floor in chunks. We've got a large phase underway right now. We have about 400 machines offline as we do that Phase 1 work. And this will occur throughout the course of the year and conclude in the early December time period of 2013, and we are doing our very best to try to make sure we don't dampen revenues and diminish the customer experience while we do all this construction work. And the design and construction team has done a very good job up to this point to accomplish that objective.

The last thing, and my concluding remarks, just a general overview of what we saw in the fourth quarter, and clearly, as we look at the 18 properties that were showing year over year results, 50% of those properties are now experiencing the effect of new supply. As we look at that effect, as we expected, we are losing trips to this new supply in various markets. But, the average quality of the player that has stayed with us has, actually, improved a bit, and we're able to respond to the newer business volumes and the newer and updated trip frequencies. And, I think you'll see in our results that generally, overall, we are managing to our lower volumes very efficiently. We've shown 170 basis point improvement year over year in our EBITDA margin across the enterprise.

And, as I reflect back on the fourth quarter, October was a very soft month. The pre-election softness was evident across almost every market. Then we get into the fiscal cliff uncertainty toward the end of the year. And, now, what we are trying to assesses is the impact of workers seeing lower amounts in their paycheck with the increased payroll taxes. It's a time where we are still assessing what the impact is going to be on consumer spending. I will end with a final comment. We are seeing, so far in January, pretty similar volumes to what we saw in the fourth quarter. So, we are not seeing any changes to business volumes, at least through the first four weeks of the new year.

So, with that, we'd like to -- we got the entire team here, I'd like to turn it over to questions from the callers.

Thank you.

(Operator Instructions)

Our first question comes from Felicia Hendrix of Barclays.

Hi, good morning, everybody. Tim, thanks for those comments. Those were helpful. I just wanted to touch on a couple of things that you said. First, just regarding the outlook and what you are seeing or what you think we're going to see for the year. You lowered your guidance for '13; language in the release was cautious. Clearly, there is still a lot of uncertainty in the marketplace given some comments that you just made. With these new numbers, though, do you feel like you are in a better place, or do you still feel like if you had handicap your new guidance at all, how do you feel about that?

Well, our expert handicapped run guidance is Bill.

We're all pointing at Bill right now.

We're going to turn that question, Felicia, over to Bill to give you his insider's track.

The inside look at the numbers. I think we feel reasonably good about these numbers. I think -- I wouldn't want to indicate that this is like a slam dunk that we are going to hit the numbers, but I think, looking out over the year in its entirety, and assuming there is no catastrophic events that happened, like, all of a sudden Congress decides to do something really stupid, relative to itemized deductions or whatever, that we feel that this is a number that's attainable. I think -- I guess, in summary, cover it as probably 50/50 that there's probably in that range where -- we're in a 50/50 range in terms of expectations, could be a little bit higher, could be a little bit lower. But, I feel pretty good about the number.

Okay.

The one thing on the first quarter assessment of where we are, we looked last year, and we were fortunate enough to have just tremendous winter weather in our markets. So, I think we factored in that more of our normal winter going through the first quarter. And we also, obviously, factored in the fact that we don't have 29 days in February like we had last year.

Okay. Thank you. And then, in Ohio, and this is really for all of you because you guys have decades of experience in this industry and opening new markets, can you help frame for us what you think is going on in Ohio? It sounds like you are tone has gotten a little more cautious than it's been. Obviously, the numbers have been what they are. But, even in previous conversations, you guys seemed a little bit more optimistic. So, is it market saturation? Just overall, is that something else? What you think is going on in Ohio?

I think in Central Ohio, the primary issue is market penetration and getting into new households. We have to do a better job of introducing our new facility on the west side of town to more and more customers. I don't think its saturation, clearly not in Central Ohio. And I don't think its saturation in Northwest Ohio either, Felicia, because if you look at the Detroit market in the fourth quarter, they were only down 3%. Our numbers in the Toledo market really represented regional growth for that part of the Midwest. So, I don't believe there's a saturation issue that we are experiencing in Ohio right now. It's more a penetration issue.

Felicia, let me add something to that. I was thinking as Tim was talking about Charles Town. We started fairly slowly over the years in Charles Town, opening many, many years ago with 400 machines. There, we took our time. We grew that property to the lofty levels that we have it today. In 500 machine increments. Something to consider, just thinking about Columbus is that, literally, overnight we dumped over 5,000 machines into the market and expected instant results. And maybe, in a sense, that wasn't reasonable. So, as we look at it and just think about it, it's going to take some time to absorb that. As Tim well said, though, we have every confidence that those machines will be well and better absorbed over time. I think that's really the best illustration I can give you.

That's actually really helpful. Thanks. Just final housekeeping. Bill, corporate expense is a little bit higher than expected in the quarter. Should we look at that as a trend, or how should we said the trend especially as you work through the REIT conversion?

Well, listen. I think, in this quarter, we had some items that were one-time in nature, as we've disclosed relative to some development costs in the Cherokee County accrual that we've taken, as well as we were ended up about $2 million higher on the Maryland lobbying expenses than what we had indicated when we updated our expectations back in November. I think, going forward, I would expect corporate overhead to come back to a more normal level, probably on a normalized basis somewhere around $80 million would be our expectations.

Now, having said that, if we get to the REIT conversion, there's going to be a lot of stuff happening at the end that will have in a enormous amount of charges going all over the place as we go through the reorganization of the Company, tender costs, et cetera, et cetera, et cetera. So, when the actual -- there will be adjustments to goodwill, there will be a number of advisory fees and underwriting fees and all kinds of good stuff that keep the bankers on Wall Street very happy as well as attorneys and accountants. So, we'll have lots of happy consultants that we are not including in this number.

But, I kind of look at that as just kind of a cost of doing business to, obviously, make the transition. And we have not included those expenses in our guidance. We are trying to keep it -- trying to help people understand the run rates. Because that's how we look at the company, is we look at it going forward saying, what do we care about? Well, we care about is the sustainable run rates and what's the normalized expenditures and a fee on a going forward basis.

Okay. Thanks a lot.

Our next question comes from Joe Greff of JPMorgan.

Good morning, everybody. Just another question on the 2013 revised guidance. Revised guidance is 3% where it was before, not a huge amount. The delta in EBIDTA, is that kind of broad-based? Or is that concentrated, really based on this slower Ohio ramp?

And then, Tim, on the topic of Ohio, both Toledo and Columbus, should we think about the operating expense structure changing there if you are marketing a little bit more that? And maybe looking back at the 4Q in Columbus, maybe you are under spending on marketing relative to the market penetration rate that you've experienced?

And, third question, I guess, with respect to the two Ohio tracts, given this initial experience for the two properties in Ohio, does that experience, does this experience cause you to rethink how you are marketing or going to run those tracts? Thank you.

I will touch on the first question.

I'll get the last two.

Then turn it over to Tim. Relative to what changed in our guidance, I would say that it is a combination of primarily what we saw in November, December, and trend lines in January and its impact on just where we are today as a base level for Columbus and Toledo. And, recognizing where that's at is really what's caused the majority of the delta. And that's reflected, as you will see, in the rent adjustments if you translate that further out to the REIT, you can see that we've obviously brought down our revenue expectations in Columbus and Toledo, which is what's causing the rent reduction of roughly the $8 million in rent reduction.

There's also a little bit of an impact in terms of what we were seeing in Hollywood St. Louis. So, that's really the bulk of what's changed since -- and we're just working through some issues there and I'm sure were going to get everything in line and on track. But, also understanding just how much there may be in construction disruption. But, I would say that's, quite candidly, relative to the three items that have changed. That's certainly, by far, the smallest change was what we are seeing in St. Louis.

Joe, the second question regarding what we are seeing in terms of reinvestment. It was noticed that our competitor in Columbus outspent us four-to-one in the month of December, with promotional slot play. And we are going to respond and have responded in the fight zones we think are there for those customers. But, I don't think you are going to see that have a material effect on margins in the Columbus market. And, in Toledo, we are a little bit more by ourselves there. Detroit is an hour away north, and Cleveland is a couple of hours to the east. We are looking at, again, the fight zones, but any increase in reinvestment will be done very thoughtfully with a disciplined test and control process to make sure that it is going to enhance EBIDTA.

And then, finally, to talk about Dayton and Youngstown, based on what we've seen so far in the Columbus and Toledo markets, I think the one thing that we are going to look at, we still believe our location in North Dayton and Youngstown are very good operations for us. We are going to place a lot of thought into how much slot product we put on the floor initially, to make sure we allocate the capital properly to those markets. And then, as we see business trends improve, continue to add product when the win pre-units hit our certain thresholds that trigger us for more supply. But, it doesn't at all give us any concern that we are not going to get good returns on those investments in Dayton and Youngstown, as well.

Great. Thank you. And, Bill, my final question, if you can give us cash debt CapEx in the quarter? And, then, 2013 maintenance and project CapEx? Thanks.

Yes. At 12/31, well, fourth quarter, total cash was $260.5 million. That's obviously higher than we'd normally run. A big part of that was just the way the calendar broke and the way New Year's Eve broke so that there was -- we just didn't have an opportunity by the 1st to get the cash, not that that's terribly unusual compared to last year, either. But, definitely was part of the reason for the higher cash balances.

The total debt, total bank debt was $2.394 billion. We had capital leases of roughly $2.1 billion, [coupons] $325 million, and another item for the $10 million giving us total debt of $2.7306 billion at the end of the quarter. And, the CapEx for the quarter, total CapEx was $108 million, of which $87.8 million of that was project CapEx and $20.3 million of maintenance CapEx. Projects breaking down, primarily being Columbus and Toledo, drove $77 million of the $87 million, as well as we spent roughly $8.9 million in St. Louis and the rest was kind of spread across the Company.

Looking at '13, we are expecting $275 million of project CapEx and roughly $97.9 million worth of maintenance CapEx for next year. Looking at the first quarter, I would break that down that we expect to spend roughly $49.4 million on project CapEx in the first quarter and $27.2 million of maintenance CapEx.

Thank you.

You're welcome.

Our next question comes from Carlo Santarelli of Deutsche Bank.

Hey, good morning, guys. Tim, I appreciate some of the color that you provided on Ohio before. I was just wondering, if when we think about margins, does the activity that you guys previously provided, which was looking at the tax differential between Hollywood, Pennsylvania, and these assets, still hold true given the slot ramp and do still have similar expectations? And then I just had one quick follow-up.

Carlo, we do. And, I think that's still the proxy to use. If you look at the trends in margin over a three-year period at Penn National, and then do the tax differential, I think that thinking still applies.

Great. And then just quickly to touch on the Southern Plains region in the fourth quarter. It looks like, obviously, the revenue growth was solid, flow-through on it a bit weak. Is it -- could we attribute most of that just to some stuff thrown in the St. Louis here in the early days that obviously dragged down the margins? Or, should we be thinking about some of the other properties maybe seeing some kind of margin pressure, as well as being -- obviously, seeing some top line headwinds?

Well, go ahead, Bill, and then I will add.

Well, certainly, the St. Louis piece did have a little bit of an impact on the margins for that region. But, I would also highlight that there's been some tough markets down in the Gulf Coast. And, obviously, Baton Rouge is under pressure due to the competition in Baton Rouge. Baton Rouge has historically had very high margins, which, when you are under severe revenue pressures, are difficult to maintain. We are certainly doing, I think, a very credible and admirable job. It doesn't mean we don't have room for improvement. And, then, Tunica has been a bit of a rough market, as well. Especially in the fourth quarter.

Carlo, there's no question that in St. Louis there's pre-opening expenses that we had in the quarter that are affecting that number. The other thing that I will add is, unfortunately, in the fourth quarter in that region, we had some what we would characterize as fairly egregious attempts to increase our real estate taxes that we had to accrue for, as well, which we have appealed. And that is something, unfortunately, is going to be a fight for us to get a more reasonable level of taxation out of a couple of those markets in that region.

Understood. That's really helpful, guys. Thank you.

Our next question comes from Rich Hightower of ISI Group.

Hey, good morning, everyone. Actually, just looking forward to the PropCo structure. Can you give us any more color on discussions that you guys have had which potential sellers to PropCo? And how those discussions are going? And, then, any updates on how you intend to finance potential acquisitions under that structure?

I will give that went to Bill. (laughter) There's a real clear answer for that.

No, there haven't been any discussions because, quite candidly, are precluded from having those discussions by virtue of the regulations around tax respend. As I think I've been infamously quoted at this point, that 10 seconds after the spin is over we will be calling and approaching people with potential ideas for how to make that structure grow and, obviously, add properties to PropCo.

The -- I forgot your second question. Oh, the financing. The financing, we are right now in the process of putting together the lead arrangement group and I'm happy to report that we are getting very good enthusiasm for helping us get this done. The amount of commitments that we are asking for from our lead arrangers has been, from my perspective, we're very happy. In fact, I would expect that we would have all our pro-rata revolver and aid loan pieces of capital structure already completely done prior to actually going out to the open market. In terms of knowing that the money will be there.

And, I think, there's some room for enthusiasm that potentially we might be able to come in a little bit under what we've got in our guidance relative to interest expectations. But, obviously, not going to move those today because that's based on market conditions today and we are obviously not going to be in the -- get this finalized for a period of time. So we are going to leave our expectations where they are at. We will see where -- obviously, as we get closer to knowing exactly what the date is of the spin and seeing where market conditions are at the time, updating it as appropriate if that's important.

Right. Actually, on the financing side, I was actually referring to, and maybe I wasn't clear, I guess, theoretically, financing new acquisitions under PropCo. Maybe it's premature to have those discussions, but just, in general, how you guys were thinking about doing that going forward, post-spin?

Well, financing was contemplated for PropCo, is we are looking to have a very nice sized revolver that would take care of almost every normal, relatively decent sized acquisition so that we could then turn around, obviously, the revolver would be used to ensure that we had the money and were a credible buyer. And then, as soon as that either -- in advance, or immediately after the transaction gets done, then you replace that with a more permanent piece of capital structure.

I mean, would you intend to do that on sort of a leverage-neutral basis?

Yes.

Raising equity as the case would call for it?

No, that's an absolute.

Typical REIT structure, is a better way to --

That is nature of the REITs. When you are divvying out 90% of your pretax income at the minimum and you certainly have expectations to do 80% of AFFO, that doesn't leave a whole lot of room for deleveraging. So, yes, there will be equity raises as well.

Yes, of course. Okay. That's all, guys. Thank you.

No Problem.

(Operator Instructions).

Our next question comes from Shaun Kelley of Bank of America.

Hey, good morning, guys. I just wanted to go back to, I think in the prepared remarks, Tim, you mentioned a little bit about the consumer and that trends hadn't really changed in January. I was just wondering if you could help us break down what you are seeing? Because I think what was surprising to us in the fourth quarter was how broad-based some of the declines were. We obviously expected impacts at places like Lawrenceburg and in West Virginia, but I think what's surprising is some of the other markets that we are seeing that are kind of more what we would consider core or stable markets started to put up some very soft numbers.

So, could you just give it up a little bit of sense of whether it's -- is it high -- is it the lower end customer that's feeling a little bit more constrained? Or, what are you guys seeing out of this that you could give us a little but more color on, in terms of consumer behavior?

It's certainly, Shaun, is more at the lower end with less trips. The retail consumers. That is a general statement across the enterprise. We are seeing some trip decline throughout all the segments of the business. As I said in my prepared remarks, some of that is due to cannibalization. But, generally, the big issue and the majority of our loss of business volumes have been at the retail end.

Good. That's helpful. Then, I guess one more on Ohio, to kind of beat the dead horse there. But, the question is just as we think about the back half, clearly you are looking for some improvement as you guys kind of dig in pretty good on the slot side in Columbus. But, with the amount of supply with Cincinnati coming on, as big as it is, I think Northfield Park has announced a pretty substantial targeted amount of slots in that market. Is it still fair that even with -- I guess all I'm trying to understand is, even with all that additional supply, do you still think we can build off the current levels just given what you guys know about how these properties ramp and how this market is going to perform?

Yes, Sean, given the locations of the Horseshoe downtown Cincinnati facility and the Northville facility up in the Cleveland market, we do not think in our modeling, and in our guidance, in our expectations, that that's going to affect the business in Central Ohio, which is a couple hours away drive time. Our expectations and our thoughts around Central Ohio really are focusing on the 1.8 million people in the Columbus MSA.

Got it. That's helpful. Thank you.

Our next question comes from Dennis Farrell of Wells Fargo.

Good morning, everyone. I was just wondering how much slot markets here do believe Internet cafes are taking in Ohio? And do you believe lawmakers will regulate or ban these sweepstake facilities in the near future?

Great question. There are 800, over 800 Internet cafes in Ohio today. And I've visited those facilities and I've seen the customers there. And, my visual observation is it's having some affect on what you are seeing in Ohio and they are slot players that are in these Internet cafes. We are working along with others in the industry to try to get these illegal outlets to be taken off -- out of operation. I will let Eric Schippers, our head of government relations give you an update on our expectations in Columbus moving forward.

Yes, in Ohio there's been a bill that was filed, it's called HB 7, which there's going to be a hearing on next week. And there's a lot of momentum behind it. You're seeing the Attorney General and others, with a strong desire to crack down on these. And, I think, what you're going to see is a severe restriction to the point of virtual elimination of many of these unlawful sweepstakes cafes. So, we are hopeful. We've got a pretty broad coalition that's fighting for the bill. And, as you know, last session maybe it passed the House and we just ran out of time in the Senate. So, in both chambers, the legislation has been given priority status. So, we expect for a positive outcome this time around.

And, Dennis, we know we have support from the leadership in the Governor's office and both the House and Senate that that's the direction they all want this to head.

Great. Thank you.

(Operator Instructions).

We do have a follow-up from the line of Joe Greff of JPMorgan.

Hey guys. You may have had this in the press release and maybe we missed it with a busy morning. The pro forma leverage level at PropCo. Has that changed relative to the guidance that you provided on a pro forma basis on the November 15?

No. The one thing that's getting factored in is we are acknowledging and recognizing the free cash flow generated by Penn during 2013. And I expected PropCo leverage stays at 5.5%. We did move OpCo's leverage up a tenth to roughly 5.6%. The whole leverage concept and the amount that we have there, it's really a relatively fluid piece that moving a tenth is probably not -- I don't consider to be a big deal. But clearly, as we get down to the end, and as we get actual results and all the rest of it, there will be some movement in the E&P cash portion of dividends. There also may be some movement in the actual E&P amounts. Enough, obviously, the cash is available because we're basically back solving for the amount of cash based on the amount of cash we can generate and still keep leverage at the level we want.

The overall E&P amount may also fluctuate, especially as depending on how the Centerbridge and, well, how the Fortress shares are resolved. Right now, what we have is we have if the Company buys back the shares, that actually helps reduce the overall E&P. If Fortress goes out and sells them in the open market, then there's not, obviously, a reduction in E&P, but there would obviously be more cash available. So, all of this stuff is going to depend on where the share prices are as we get closer to the actual spin date.

Helpful. Thank you.

That's probably got everything really confused for everybody, but he seems to be happy that's straightened it out.

Our next question comes from Ray Cheesman of Anfield Capital.

Peter, you guys -- I really applaud your intellectual honesty, here, in a short window to adjust your '13 based upon the end of '12 in a couple of weeks. Do you see that a continuation of the trends of the moment -- and, obviously, if they end up being long-term impacted by the lack of $30, $40, $50 per paycheck for those customers that you are seeing get hit now -- does it introduce some caution into the numbers that people are throwing around for the big place in Maryland or the Western Massachusetts?

We are talking in enormous numbers. And you, of course, use your prior experience to figure out what a market will do, but if the rules change based upon acts of Congress, do you have to change your CapEx restriction, so to speak, in order to make sure that you get what you need as a company as opposed to what the AG would like with museums, water parks, other assorted craziness?

Ray, that is a very interesting question. Let's take it in two parts. The first part is just a general view of where is it all going? Can we in a very short period of time deduce what 2013 is going to look like? The answer is our guess is as good as yours. I mean, who the heck knows? We try, and have over the years, and this is not a self-serving comment, but we have been very, very rigorous for a very, very long time in trying to get out in front of the best story we can tell you, the most honest straightforward, and all that kind of stuff. You know we do. And we really sweat the details, as Bill said, to try to get it right. We do not like to get it wrong. That doesn't happen very often here. So, that's our focus. But, our sense about that is probably as good as yours. Where is this all going? So, I think we've given you a cautious, well thought out approach to that.

Now, whether and what the flow over into trends for the long haul -- if we can answer question one, we'd probably be able to tell you about question two. Clearly, there is an irrational exuberance around some of what we are hearing from competitors. You've heard me say on these calls in the past, we don't like bidding situations because there's always someone more stupid out there willing to do something completely nonsensical. And we're just not going to be that person or that company. We are going to watch these things play out. We are going to be competitive, right up to the point where we think that only a moron would go further.

There's always a chance that somebody else will do something that they oughtn't to do. It just isn't going to affect our judgment, frankly. So, could someone overspend in some of these markets? Even in light of a decent economy? Absolutely. Absolutely. I think a lot of folks just don't understand these regional markets. And they bring a different mindset. The days of the giant capital spend with rare exceptions are pretty much gone. We are just not there today. This has become a very mature business. It's a good business, but it's one that requires some pretty sage and careful management. So, that's sort of a broad, non-helpful answer. But, it's the best answer we can give you that we are just not going to change our philosophy here. As we look of these investments we will be competitive up to the point of suicide and we will let the other person commit suicide. So, that's all I can tell you. But as to where it goes, where the economy is going, your guess is as good as mine.

Thank you, Peter. I appreciate that.

Thank you. Mr. Carlino, there are no further questions at this time. I will turn the call back over to you.

Well, thank you all for joining us today. It's been kind of a fun morning. And onward and upward and see you next quarter. Thank you.

Thank you. Ladies and gentlemen, that does conclude the conference call for today. We thank you for your participation and ask that you please disconnect all lines. Thank you and have a good day.