PENN Entertainment Inc (PENN) 2014 Q2 法說會逐字稿

Welcome to the Penn National Gaming 2014 second-quarter results 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)

As a reminder, this conference is being recorded today, Thursday July 24, 2014. I would now like to turn the conference over to Joe Jaffoni, Investor Relations. Please go ahead, sir.

Thank you, Nelson. Good morning, everyone, and thank you for joining Penn National Gaming's 2014 second-quarter conference call. We'll get to management's presentations 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, well, should, or anticipates, or the negative or other variations of these or similar words, or by the discussion 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 the Company's filings with the Securities and Exchange Commission, including the Company's reports on Form 10-K and 10-Q. Penn National Gaming assumes no obligation to publicly update or revise any forward-looking statement.

Today's call and webcast will also include non-GAAP financial measures within the meaning of SEC regulation G. When required, a reconciliation of all non-GAAP financial measures to the most directly comparable financial measures 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 pleased to turn the call over to the Company's CEO, Tim Wilmott. Tim?

Thank you, Joe. Good morning, everyone. With me today in Pennsylvania are the following people.

Our General Counsel from Penn, Carl Sottosanti; our Senior Vice President of Public Affairs, Eric Schippers; our Chief Development Officer, BJ Fair; and after I make my introductory comments, you are going to hear from Jay Snowden, our Chief Operating Officer, to give you some more color on what is going on in operations; and then from our Chief Financial Officer, Saul Reibstein, who will give you some more insight into our guidance and some financial information as well.

As you saw in our release this morning, we had results in the second quarter that were slightly better than our expectations that we provided you last quarter. And I think we have a very good handle on what's going on in our markets now and what's going on both competitively and with the consumer.

And I'm pleased to also show in these results the fact that we have continued margin improvement. And that is a result of efforts at the property level, and also tightening our belts a bit here at the corporate office, that improved margins by almost 50 basis points.

We continue at Penn to be encouraged by our development pipeline and a bit of an update there. We are having our opening for Hollywood Dayton a little over a month from now on August 28th. And that will be the opening of our VLT operation and later in the year, we'll be opening live racing for harness operation there.

Also on August 28th, we are going to be opening up our hotel at Hobbs, New Mexico at Zia Park, slightly over 150 rooms, to take care of our customers coming from our feeder markets of Lubbock, Midland, and Odessa, Texas, about two hours away from our casino. Then, later in September, we'll open up our second Ohio VLT operation outside of Youngstown and Mahoning Valley with approximately 850 units.

And then next year, we continue to move forward on our development in Plainville, Massachusetts, which we expect a late second-quarter 2015 opening, despite the efforts of people in Massachusetts to repeal the enabling gaming legislation, we still feel confident moving forward there with that operation to have 1250 slot machines up and running in the mid part of 2015 to be the first casino in the State of Massachusetts to open.

And we continue to make progress on our development outside of San Diego with the Jamul Indian Village. We did slightly move back the schedule about three months to a mid-2016 opening there, but we continue to make progress constructing that facility on about six acres. Again, that location is about 19, 20 miles east of downtown San Diego.

And then also in the quarter, in partnership with the Cordish Companies, we submitted our application for a proposal in South Blooming Grove, New York in Orange County. Slightly over $750 million, to include 3000 machines, a number of different non-gaming food and entertainment amenities, over 150 table games, and we expect the State of New York to begin the process of hearing the merits of all these applications sometime after Labor Day.

And we still expect, from the indications we get from the State, that decisions will be made by the end of 2014. So we continue to be encouraged with the things we know in the pipeline and the potential for New York.

And with that, I will turn it over to our Chief Operating Officer, Jay Snowden, to give you a little bit more color of what is going on in operations. Jay?

Thanks, Tim. As described in the earnings release, second-quarter operating environment remained challenged but was certainly less bad when compared to previous quarters. Nothing to get overly excited about, but positive news on a relative basis.

At the consumer level, visitation and revenue trends, most pronounced at lower worth segments, remained sluggish. Overall database performance largely mirrored previous quarters where we saw declines in visitation, growth in spend per visit, and health in our VIP segment.

At the regional level, Midwest and East Region experienced improved revenue trends at Charles Town and Lawrenceburg, largely due to the fact that we anniversaried the opening of Horseshoe Cincinnati, and we also lapsed live table games at the Maryland Live facility in the Baltimore, DC MSA. We realized slight margin improvement in our Southern Plains and West regions, and as Tim mentioned, similar to Q1 corporate overhead expenses reduced to the tune of approximately 20% year on year.

All this together resulted in EBITDAR and EBITDA that exceeded guidance, inclusive of our Sioux City facility, which had several extraordinary expenses one-time expenses in the quarter, to the tune of $1.4 million. Looking forward, third-quarter results will benefit from the tailwinds of our Dayton facility and Zia Park hotel opening on August 28th, and our Austin Town property in September.

Somewhat offset by the headwinds in the form of Belterra Park in the Cincinnati market continuing ramp their marketing and operations, and Horseshoe Baltimore opening up in late August, early September. With that, I'll turn it over to Saul to walk you through guidance.

Thanks, Jay. Just to put a little finer point on it, for the quarter we exceeded guidance by $3.2 million, of which $2.2 million was from operations, $2.5 million was from corporate overhead, mostly lower liability-based stock compensation, and those were offset by a negative to forecast result in Sioux City of $1.4 million, including $2.1 million of legal fees.

Overall, for the year, our guidance remained unchanged from the first quarter. But our update includes the $3.2 million beat for Q2, and an updated presentation of our Kansas City Speedway property. We have moved our share of nonoperating expenses below the EBITDA line, having the effect of increasing reported EBITDA by about $12 million for the year, about $3 million for quarter, and all of our periods have been restated to reflect that change.

Just some statistics, cash on hand at the end of the quarter of $251.3 million. Our maintenance CapEx for the quarter was $20.2 million, and is expected to be $72.5 million for the year. Project CapEx for the quarter was $99.5 million, and is expected to be $364 million for the full year 2014.

On a GAAP basis, our effective tax rate is now at 76%, due to our lower earnings base and continued impairment charges. On a cash basis, we expect the tax rate to be about 40%. Our diluted share count is at 89.1 million. Pre-opening expenses are expected to be $8.2 million for the year, and our debt covenant ratios are all comfortably achieved. With that, back to you, Tim.

Thanks, Saul. Before we open it up for questions, I did want to highlight one other thing. We are still waiting the final court decision in Iowa regarding Argosy to remain open. We have been continually disappointed with the decisions we have gotten to date about the way we have been handled in that jurisdiction.

And if we do close, we did highlight in the press release that we have a rent reduction to GLPI slightly over $6 million annually. But I do, on this call, want to publicly thank the approximately 250 employees that have stayed with us through this very difficult period in Sioux City to continue to provide an excellent experience for our customers and to stay with us as we try to preserve their jobs and keep that operation opening. And they deserve a lot of credit for their loyalty.

With that, Nelson, like to open up the call to questions.

(Operator Instructions)

Our first question comes from the line of Thomas Allen with Morgan Stanley.

Hey, guys, it is Mark Savino on for Thomas. Just looking at June regional trends, it looked like some of the sequential improvement that we had seen in April and May sort of took a step back in June.

So just wondering, one, if there was anything specific that drove that? And two, if you can give us any indication on if things in July have bounced back at all?

Sure, Mark, this is Jay Snowden. I really believe that what you saw in June versus the uptick, relative uptick we saw in May, was more calendar driven than anything else. You had a calendar improvement in May, and June, that was not the case.

And July, quite frankly, up to this point, I was just looking at our month-to-date figures through the first three weeks, and it is a mixed bag. Some markets you are seeing better than anticipated revenue trends, and others, you are feeling the effects of saturation or competitive pressures. But overall, July is shaping up as we anticipated and is reflective in our guidance.

That is helpful. Thank you. And then just as a quick follow up. Looking on the margin front, looking at the new guidance, it looks like revenue is -- you increased revenue by $34 million. The EBITDA guidance increased by about $3.5 million.

So just curious why the flow through isn't better there? I mean, does it go back to the increasing competitive pressure that you mentioned in the press release? Or is there other factors that are having an impact there? Thank you.

The other factor, Mark, to keep in mind is that as we approach the opening of our facilities in Ohio and the hotel in Zia, you've got elevated pre-opening expenses that will hit in the third quarter. So it is less that we are anticipating eroding margin trends in the existing operating environment and more so that we have got ramped up pre-opening for the new facilities opening in Q3.

I would just add to that the outlooks continues to remain uneven. The word I use is choppy, as Jay described earlier. And there is just no clear indication of a meaningful movement at this point to change our previous guidance.

Very helpful. Thanks, guys.

Our next question comes from the line of Felicia Hendrix with Barclays Capital.

Hey, guys, it's actually Dimitri on for Felicia. I just wanted to know, given the situation in Massachusetts and the potential for further delays in issuing the other gaming licenses, at this point how long would you expect to be operating as the only facility in the state?

Well, it's tough to predict, Dimitri, this is Tim. We expect to open, as I said, late second quarter of 2015. Springfield will not have any competitive effect on our operation given where the locations are within the commonwealth.

We expect the Boston license to be issued sometime in early September, and it's tough to predict when that winning applicant would begin construction. But we typically believe we are going to have about a two-and-a-half to three-year head start on anyone else opening up a casino in the commonwealth and that continues to be our thought process.

Great. That is helpful. And I know it is hard to handicap this, but what is your confidence in the referendum not passing? If you had to ballpark it?

Let me ask Eric Schippers, our Senior Vice President of Public Affairs, to give you an update on that.

Thanks, Tim. Yes, if you have been following the public opinion polls out there, they have been pretty consistent in showing us with approximately a 10 plus point lead.

While that can change, I think what's clear, the arguments in the voter's minds are pretty black and white. And the opponents, those who want to repeal the act, are essentially arguing old, tired myths and his propaganda that gaming causes crime and bankruptcy and other things that have been disproved in every other gaming jurisdiction.

And our argument is very simple, very straightforward, which is we are going to create more than 10,000 new jobs and we are going to recapture nearly $900 million that is being wagered by Massachusetts residents across the border. And so, I think that's why, because it is so simple, because it is so straightforward, you have seen some pretty consistent results in the latest public polls.

We have joined a broad-based coalition of not only gaming interests, but also business leaders, local and state officials from across the state, and we are going to continue to educate voters on what's at stake in this election. And as Tim said earlier in his opening remarks, we feel pretty confident about this upcoming race on November 4th.

Great. That's really helpful. Thank you for the color. That's all for me.

Our next question comes from the line of Steven Kent with Goldman Sachs.

Hey, thank you. Just a question in terms of the trend you are seeing can you maybe, with reference among other peers, can you break it down between whether it's rate of play, non-rate of play? And is it customers are coming but they're not spending as much, or they are just not coming at all?

And if you had to think about what the next, to sort of reinvigorate the customer base, if some of these trends continue, would you be more looking to whether improve play on your existing customer base or try to get new people in through your doors? Thank you.

Sure. This is Jay. I had mentioned in my comments what we are seeing, which really is a continuation of what we experienced in previous quarters, we are seeing declines in visitation largely at the lower worth segments of our database, and at the same time, we are seeing health at the VIP level.

So it really is a mixed bag. It looks quite different market to market, but overall, those are the trends that we are seeing today.

Obviously from a database perspective, as we look at acquisition and growing our database, we have got the four projects in our development pipeline that Tim reviewed with you earlier that we are very excited about. And that would take our active database from approximately $4 million to we think closer to $5 million.

So we have ways to grow that database through our new project, and we are continuing ramp in the newer markets of Columbus and Toledo. We are still relatively new in the St. Louis market with a newer facility there after the $70 million renovation.

So we think we have means to grow the database, we are seeing database growth still to the tune of close to 10,000 a month in Columbus and between 6000 to 8000 a month in Toledo in the new properties. As we think about growing the database, it is certainly more in those new markets.

As you think about in terms of which is a better return, it sounds like, at least from what you are saying, it is a better return to try to grow the database, so that once you have them in you can target them more. Is that the strategy?

And if so, do you think -- what are some of the other competitors doing? Are they trying to follow a different strategy or the same? Or are you all sort of rational in that sense?

It again depends market by market. But I think as you look at the more mature markets, penetration is probably about as high as it is going to get. Or there might be some slight opportunities to grow penetration.

But many of these markets have been operating for 20, 25 years, so the cost to acquire a new customer is expensive, in many cases, unless you have something new to offer. So we remain disciplined.

I can't speak to what our competitors, what their outlook is and what their strategies are, but I would say overall, most markets across the country are largely stable and rational with regards to marketing reinvestment, there's a couple of one offs. But as a whole, I would say that we are comfortable with the operating environment today.

Perfect, thank you.

Our next question comes from the line of Shaun Kelley with Bank of America.

Hey, good morning, guys. I wanted to start by asking about the Kansas JV restatement. And I was just curious first of all, what drove that?

And why do that right now? And then second of all, just wanted to understand, does that have any impact on the coverage ratio calculation as it relates to GLPI?

Shaun, it is Saul. The why now, it is an approach that is consistent with the other competitors in our market. And it was a change that we think more appropriately reflects our Company-wide EBITDA, and clearly, that is why we did it. In terms of our impact on our ratios, it has no effect on any of that.

Got it. And Saul, just because this is nontraditionals here, not changing anything, there is no -- this was not accounting, right?

Correct.

This is just your house definition of EBITDA. Because we look at it, City Center for instance at MGM, which is a joint venture, 50-50, is still the 50% EBIT calc that is typically done. The only exception I guess would be Boyd, but that was a control trigger based on the directorships there because MGM was removed from that jurisdiction.

I don't think this is actually consistent with how other people treat it from an accounting perspective, but I was just curious on it?

I just think again, Shaun, there is no impact whatsoever on our GAAP basis financial statements. However, if you look, this is exactly consistent with the way Boyd presents Borgata in their disclosures and inclusion in EBITDA. So all we've done is made the adjustment to be consistent with the way the industry has classically shown a 50-50 joint venture.

But Boyd consolidates 100% of revenues and you are not, correct?

Yes, we do not consolidate. We pick up for GAAP purposes 50% of the net income of the property. However, that net income includes nonoperating expenses, primarily depreciation. And therefore, is not indicative of a true EBITDA calculation.

Okay. I understand. And then, I guess just separately, was just curious on New York. So you guys obviously are very accelerated on your approach to this market and have an great partner.

I was curious, Tim, as you guys think about the landscape in Mid-Atlantic, there has been a few discussions and rattles more recently as it relates to the possibility of a North Jersey property. And you know, or something kind of rumbling in that area.

Would that impact, or first of all, how do you think about that? Do you think that is probable or possible at all? And second of all, would it impact your underwriting for a New York or a Hudson Valley property?

Well. Shaun, we have been following New Jersey closely, obviously, with what's gone on in Atlantic City over the past couple of years. And the discussions from North Jersey legislatures to do something in the Meadowlands area, it is far from a foregone conclusion that's going to happen. Anything that would have to happen there, it seems to be from what we are hearing from the Senate president, to have to include a solution for Atlantic City, and then it would have to go to the voters again to amend the state constitution, and at the earliest that would be in November of 2015.

And I'm not so sure that that would pass as well. There is a lot that has to happen before that threat materializes. That said, we are watching it closely and it certainly is factoring into our thought process of what could happen up in Orange County.

And we certainly look at markets like Bergen County, less so New York Westchester County, but Northern New Jersey. And that is, I think, where we'd see the risk there and that is what we are assessing as we speak.

Great. Thank you very much.

Our next question comes from the line of Joel Simkins with Credit Suisse.

Yes. Hey, guys. I have had some people, like in Belterra Park, to revel of Ohio. Can you just get us comfortable that Dayton and Youngstown will have a better revenue ramp? Just walk us through what you see in those markets and the potential competitive dynamic?

Yes, I'll start it and I'm sure Jay will add on to this. We see Dayton, Dayton is not in the Cincinnati market, which we, from our Lawrenceburg experience, know how crowded that market is now that there are six casinos serving Cincinnati. Dayton is a separate MSA that we love our location at the Interstate of 70 and 75.

We have access to the population in that Dayton market that is much more convenient than our nearest competitor, which is Miami Valley, which is 30 miles south of us. So we are continuing to be optimistic of what we are doing in Dayton with the addition of the facility opening up at the end of August.

And likewise, up in Mahoning Valley outside of Youngstown, we are going to be a good hour plus away from the nearest casino there at a great location right off Interstate 80, that will have access to those people in Northeast Ohio, with a tremendous location advantage.

So it is clearly not two properties coming into crowded markets. We view it as two new properties coming into new, underserved markets in the State of Ohio.

I don't have anything to add, that's great.

And one follow-up question, also. So you guys backed out of Philadelphia, which I thought was the right move. Is there still any risk that that license could be moved somewhere else in the state, particularly more a central location that would compete with Penn National Race Course?

There is also that risk that there could be legislative activity. But as we are looking at signals from the State of Pennsylvania, and watching them slowly decide what they want to do in Philadelphia, we think they are being cautious about the State and the Philadelphia market, specifically, being fully served right now with the supply.

And we don't see any immediate activity out of Harrisburg that would say that they are thinking about activating those licenses to other parts of the state. Eric, do you have anything else to add?

No, I think that's right. There was a recent legislative hearing where some of those very questions came up. Does the State already have enough operating licenses at this point?

And should we take a step back and figure out, given the amount of competition in this area, how we support those existing licenses, versus we shuffle the deck. Anything is possible, but certainly we have not received any indication that they want to spring loose that license for a relocation.

Joel, this is Jay. The only thing I would add to that is it is not as though at Penn National Race Course, we are experiencing revenue growth right now.

We have got competitive pressures to the north at Mohegan Sun and their hotel expansion to the east in the Berks Country Reading area with Valley Forge, as they continue to ramp their business. And in York, across the state line there, and soon to be more competition with Horseshoe Baltimore opening, but as the existing business of Maryland Live.

It is not as though there is a great Central Pennsylvania opportunity to tap into. We are seeing revenue declines at our own property right now.

Sure. Thanks, guys.

Our next question comes from the lin Carlo Santarelli with Deutsche Bank.

Hey, guys. I just had one quick follow up on the openings of two slot facilities in Ohio. Would you guys try and maybe give us some color around how you think about the cost side there?

Obviously, when you opened Columbus and Toledo, both of which opened with relatively stable margins and solid margins and obviously grew from there, but do you believe this year the two properties on the aggregate, given their opening times, could be additive to EBITDA for the three to four months that they are open?

This is Jay, Carlo. We do. Our strategy when we open is that our expectation is we are generating cash flow the first month we open. We don't expect to buy business or look at a six-month ramp.

We want to generate returns on investment capital immediately. We anticipate being able to do that with both of the tracks in Ohio as we open in August and September.

And as Tim mentioned, we liked our locations, the sites, the access off the Interstates in both locations, and we have an expectation of delivering shareholder value in the form of a return on vested capital there, similar to other projects that we have looked at and opened in years past.

Great that is helpful. Thank you very much, Jay. And then really quickly to follow up on that, or to follow up on a broader question, I should say, when you guys think about the acquisition landscape out there, obviously you have a full plate of development opportunities.

But when you start thinking more along the lines of acquisitions, is there anything, any change in your thought process around looking for deals or looking for specific markets?

No. We continue to look Carlo, this is Tim, at a number of different opportunities. There is nothing imminent.

We continue to look at Las Vegas strip opportunities. That's been a consistent theme that we have had in years past. We look at other opportunities where we think we can improve the operating performance of existing assets out there, based on our acumen to run the businesses at very, very high levels. Nothing's changed, but there is nothing new to report.

Thanks, Tim. Thanks, Jay.

Our next question comes from the line of Joe Greff with JP Morgan.

Joe, we are not hearing you.

Mr. Greff, your line is now open. If you can unmute your line. Thank you, we shall proceed with the next question. Our next question comes from the line of George Smith with Davenport Asset Management.

Hey there. Tim, you just touched on it a bit. But it seems like we have, have had, a very underutilized asset in the form of the database, which I guess would be best put to work in Vegas.

But just wondering your thoughts about how we could better use that, and when we may better use that?

Well, George, we concur. And we continue to look at opportunities. We certainly couldn't get to a value that was paid for Cosmopolitan from Blackstone, and their strategies are clearly different than an operator strategy there.

But there is no question that our 4 million plus active customers on our database, and from our research, their visitation currently to Las Vegas and to the Strip is something that we want to take advantage of. We continue to look there.

That is the play that continues, strategically, to make the most sense for us here in the United States. We just continue not to find the right asset at the right price at the right location.

Everything that we look at it, and take a hard look at, we just can't get comfortable with is it's the right play for our shareholders. But we continue and will continue to look for the right opportunities there.

And maybe, Saul, for a moment, if you could just touch on financial capacity as it pertains to deals? And whether it is Corporate-level debt versus maybe using some form of property-level debt?

George, given our robust pipeline of development activities, as I think you know, everything that is in the pipeline today is provided for under our existing credit agreements and cash flow generation during the development period. All of what we have on our plate is fundable within the existing terms of our credit agreements as they exist today.

We have additional capacity for a couple of small transactions if they arise. And if there is a large transaction that we are able to accomplish, clearly, we will go back to the debt and perhaps equity markets to look at funding opportunities as they arise.

Lots of the folks on the call have continued to offer and encourage increasing our debt capacity today. We are going to be prudent and continue to utilize what we have, and believe that market will allow us to generate more when it is needed.

Okay. Last thing for me. I know there is talk of a couple of things cropping up in AC, for instance, Showboat, which I know you guys are very familiar with and could perhaps improve upon.

In a situation like that, are we still just adamantly opposed to that market? Or do we start thinking about individual assets and opportunities?

George, this is Tim again, we continue to always look at things. I am not particularly bullish on Atlantic City. With what New York State is doing, that clearly will have an effect on visitation to Atlantic City.

There is also, as we have talked about earlier on the call, the potential for North Jersey. And the continued potential for another Philadelphia license.

So we always look at everything and see if there is an opportunity for us, but I think there is still further revenue declines to be realized in the Atlantic City market as casinos close and as more competition surrounds them, which makes our interest in Atlantic City difficult to rationalize.

Okay. Thanks a bunch for the time.

Thank you, George.

(Operator instructions)

Our next questions comes from the line of Justin Sebastiano with Brean Capital.

Thanks. Good morning, everyone. This may be for Tim or Jay.

The challenge is in regional gaming has been a deterioration of the low end of the player database. Everyone has been talking about that. Have you changed your philosophy on how you cater to these players?

Do you focus more on entertainment options like the concert venues at Charles Town? Or less about being the convenience play and trying to add more options on the entertainment side? Or what are your thoughts there?

Yes, Justin, it's a great question. We talk about this a lot here internally. And that customer, I think, is the one most impacted by stagnant wages and underemployment dynamics that are pervasive across the country.

But they are certainly spending money somewhere doing something, so we do talk about that. And that was certainly one of the justifications for the entertainment facility you referenced at Charles Town.

We are considering a few different options in Central Pennsylvania that could enhance the experience at our property in Grantville, as well as other locations. We don't talk about it much, but we are also opening a 180-room hotel with a 2000 seat event center in Lawrenceburg, Indiana in partnership with the city there, and that is going to open up in the September, October time frame of this year that we think will certainly help business trends there.

But yes, we are looking at new offerings, new amenities, certainly entertainment, things that maybe we haven't focused on as much in the past, to drive that unrated and the lower worth rated segments of our database back to the building. Even if they are not going to spend on the slot machine, perhaps they will in the non-gaming areas.

Okay, thanks. And that the Lawrenceburg, that is a third-party hotel, right? Are you guys contributing to that from a capital standpoint?

We are. We are contributing about one quarter of the CapEx for that project. It is flagged as a Doubletree, but we will be the operator of that hotel.

Okay. And then maybe for BJ or Saul, on the last call you guys talked about or gave a little bit of thoughts on what you think Plainridge Park can generate given the two, two-and-a-half year head start, and then what might happen as the competitors come online. Are there any updates to those numbers or anything you can share now?

Justin, this is Tim. There really isn't any changes to that. I think we have submitted in our Massachusetts application that we thought the gaming revenues were going to be somewhere around $250 million annually before the competition comes into the commonwealth, and that has not changed.

Okay. Thanks, guys.

I'm showing no further questions at this time.

Thank you, operator. Thank you, everyone, for listening on this call. I do want to conclude, again reiterating our expectation that we have the best development pipeline out there in the regional gaming space. And look forward when we are on the call a quarter from now to talk to you about our results in Dayton in Austin Town.

And also want to reiterate the fact that I think you have seen through the performance here in the second quarter, under a very difficult operating environment out there, that the team here at Penn National continues to produce the results that we have in years past. And that whatever happens in the future, that this team will react accordingly and adjust accordingly to deliver the results. Thank you, everybody, and talk to you in about three months.

Ladies and gentlemen, that does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your line.