PENN Entertainment Inc (PENN) 2015 Q4 法說會逐字稿

Welcome to the Penn National Gaming fourth-quarter results conference call.

(Operator Instructions)

As a reminder, this conference is being recorded today, Thursday, February 4, 2016.

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

Thanks, Nelson. Good morning, everyone, and thank you for joining Penn National Gaming's 2015 fourth-quarter conference call. We will get to management's presentation and comments momentarily, as well as your questions and answers, but first I will 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 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 in the Company's filings with the Securities and Exchange Commission, including the Company's reports on Form 10-K and Form 10-Q. Penn National assumes no obligation to publicly update or revise any forward-looking statements.

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 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, it is now my pleasure to turn the call over to the Company's CEO, Tim Wilmott. Tim?

Thank you, Joe, and good morning, everyone, to Penn National's fourth-quarter 2015 and year-end earnings conference call. With me today in Wyomissing, Pennsylvania, are our Chief Development Officer, BJ Fair; our Senior Vice President of Public Affairs, Eric Schippers; General Counsel Carl Sottosanti; Chief Financial Officer Saul Reibstein; and Chief Operating Officer Jay Snowden.

What I'd like to do today is first turn it over to Saul to give you an update on where we are with our accounting restatement efforts. Then I'm going to come back and give some color on the fourth-quarter 2015 and outlook into 2016. Then I'm going to turn it over to Jay to talk about what we are seeing in operations across the Enterprise, and give a little bit more detail on Plainridge Park in Massachusetts and our efforts at Tropicana Las Vegas. And then Saul is going to come back and talk about our 2016 guidance that we provided you this morning, and some other financial metrics.

So, with that structure, let's start with you, Saul.

Thanks, Tim.

As you know, since our last call, we've been engaged in the process of restating our financial statements for 2013 and 2014, to reclassify the master lease with GLPI. I am pleased to say that, as a result of extensive effort by our staff, we are well on our way to the finish line.

Within the body of our release today, we outline the financial statement areas affected, including the following items. Building and improvements resulting from the leased assets required to remain on our balance sheet, a financing obligation based on the discounted future minimum payments under the lease calculated at lease inception, changes to goodwill and intangible asset impairments, re-classification of relocation fees for the Ohio race tracks, changes through our deferred tax accounts, along with a full valuation allowance against our deferred tax assets, and classification as discontinued operations -- the results of Baton Rouge and Curryville -- that were contributed as of the date of the spin.

Nonetheless, as we have previously stated, these changes will not have any effect on our net cash flows for all prior and future periods, the Company's cash position, the leverage ratios under our credit facilities and other debt instruments, revenues from continuing operations or rental payments under the master lease. Also, to remind everyone, we have obtained waivers under our senior credit facilities, and have received approval from NASDAQ of our plan to regain compliance with their financial statement requirements.

In summary, we expect to complete all of the required SEC filings for 2013 and 2014 before the end of February. Further, given the sequential nature of the financial statement preparation process, we anticipate utilizing the normal SEC filing deadline extension process to extend the due date for filing our 2015 Form 10-K to no later than March 15, 2016, or earlier if possible.

Back to you, Tim.

Thanks, Saul.

I wanted to first comment on what we reported for fourth-quarter 2015. And we are pleased to report a very solid beat to our EBITDA guidance that we had put out there, on slightly better-than-expected revenues. And I have to continue to applaud our operations team, delivering continued margin improvement year over year of over 40 basis points. Jay is going to give a lot more color into the operations, and what we saw in the fourth quarter, so I will end it there.

But I do want to have one last comment about 2015. I characterize the year we had here at Penn National as transformative. We finally got a property on the strip in Las Vegas to send our 3 million Marquee Rewards customers to, and we are making good progress there.

We've entered the slot route business in Illinois with the acquisition of Prairie State Gaming, and see that as a platform for growth going forward. We launched our digital gaming products with Scientific Games in the second half of 2015, and look for more growth out of that segment as we move forward over the next couple years. So, clearly, there was a lot that we accomplished in 2015 that is going to pay long-term benefits to our shareholders.

As we are off now one month into 2016, I do want to let everyone know, we're off to a solid start in January. And at least from what we saw across the businesses in the first month of 2016, it looks very similar to what we saw in the fourth quarter. There is a lot of concern out there with the way the market started the year, and some concerns about -- are we heading into a recessionary period? Right now, we don't see any signals to that point.

As we look at things that we think are important to our customer -- the housing market looks good, all the metrics there have been very solid. Unemployment is low. We're still seeing wage inflation. And the concerns about the energy sector, we think, are helping our consumer -- lower gasoline prices. I was in New Jersey over the weekend, and saw $1.58 for a gallon of gasoline. And the fears about what is going on in China, I think, have very little effect on our customer as well. So, we are not seeing any softness yet in our Business, and right now we're off to a very, very solid start in January of 2016.

So with that, I will turn it over to Jay to give you a little bit more color in operations.

Thanks, Tim, and good morning.

We've got a lot of exciting things going on at Penn National Gaming right now. I plan to highlight some updates on a number of those. I'll provide updates today on our same-store fourth-quarter trends. I will follow that up with some updates with regards to our newer property openings and recent acquisitions, provide some color on our database results, as well as the competitive and promotional environment currently. And then I will finish with some updates with regards to what we are seeing in the month of January as we start 2016.

So, starting with the same-store fourth-quarter trends, as Tim alluded to, we continue to see improved consumer spending behavior, driven by a number of factors -- increasing home values, gas prices that are still in a state of free fall, firming labor markets, and improvements in consumer confidence as recent as January. We are encouraged by the market share gains, profitably, I'll note, in a couple of our key Midwest markets, specifically St. Louis and Kansas City.

And I think more generally, we are pleased with the same-store results in the fourth quarter, as I think it really highlights Penn's strong operating leverage model, as we took what was an $11.5 million outperformance relative to our guidance in revenue, down to close to $8 million in EBITDA, or 70% flow-through on that incremental revenue. And lastly, what I would mention from a same-store perspective is, we think the fourth quarter is also representative of the power of the diversified Penn portfolio, and I think underscores maybe that there's been a little too much attention paid to individual property results.

Moving now to our newer properties, in Ohio, we have now anniversaried the openings of Dayton and Mahoning Valley in late Q3, early Q4 2015. So, we've got really good comps on a year-over-year basis. We are seeing healthy revenue and EBITDA margin growth in both of those businesses; very encouraged about directionally where we're headed there.

In Massachusetts, we continue to learn more about the market and the competitive environment. And we are implementing prudent changes and tweaks to the operating model, as well as the overall marketing strategy and promotional calendar.

We are encouraged by what we saw in the month of January from a month-to-month basis, whether you're looking at the gross slot revenue, net slot revenue, win per unit, food and beverage metrics -- all looked better in January than they have the last several months. And that is also in the face of what has been a tremendous amount of negativity in the media, a blizzard that wiped out a weekend of business for us, as well as Patriot play-off games eating up a couple of Saturdays and Sundays.

So, we are encouraged by what we are seeing in the Business there -- really believe that we bottomed out in December, hit the trough. And we anticipate growing out of this from a revenue and EBITDA perspective, as we head into warmer weather in the spring.

In Illinois, we closed the books on our first full quarter of Prairie State Gaming in the Penn portfolio. We are very pleased with the results early on, and I think more importantly, the opportunities to grow this business, both organically, as well as the potential acquisitions as we move forward.

And then last but not least, from an acquisition perspective, on the Strip in Las Vegas, we made significant progress on continuing to improve the overall gaming experience by upgrading to slot and table game offerings at Tropicana Las Vegas in the fourth quarter. We continue to right-size the cost structure, of course, and prepare for our second-quarter launch of the Marquee Rewards program at Tropicana Las Vegas.

So, I don't think it's a surprise to anyone, our current gaming business volumes are still anemic at this point. But we anticipate some real acceleration in the second half of the year, once our regional database customers start to fill those hotel rooms.

Now, conversely, the non-gaming trends at the Tropicana, like the rest of the Strip operators in the fourth quarter, were very strong. We are forecasting some strength year over year in our group convention business. Occupancy rates, ADR, all look encouraging in the first quarter of 2016 as well. So, no doubt we are benefiting from the rising tide effect in Las Vegas until we get everything else where it needs to be from an offering perspective at Tropicana.

From a database perspective, the fourth quarter really closely resembled the third quarter. I won't spend a lot of time; it would just be repetitive from the last quarter. We are seeing across-the-board growth in spend-per-visit within all of our rated and unrated segments. Visitation remained healthy at the mid- and higher-worth segments, but it's still a bit of a mixed bag as you get down to the lower worth and unrated customer levels, depending on the market. The competitive promotional environment remains stable across all of our key markets, which I think continues to be good news, as was the case in most of 2015.

And with regards to what we are seeing so far in 2016, as Tim, I think, hit on some key points, in January, we are pleased with what we saw. We think that across our businesses, with the exception of those that were impacted either by the flood in the case of Alton, Illinois, or Winter Storm Jonas at Charles Town Penn National Race Course and Plainridge Park Casino -- other than that, we are happy with the continuation of solid trends and same-store sales growth that we are seeing in our key businesses.

So, all in all, we posted a strong finish in the fourth quarter to what we believe was a solid year at Penn. And we remain encouraged that, when all is said and done, 2016 will likely look a lot like 2015 in terms of regional gaming trends in the US.

So with that, I will hand it off to Saul Reibstein to go through 2016 guidance.

Thanks, Jay.

Shifting to 2016 guidance, as Tim and Jay have already described, we view the financial outlook as stable, despite recent uncertainty from risks in the marketplace, such as declining oil prices, and the widening spread between high-yield and investment-grade instruments. The overall economy seems to continue to be on track to grow 2% or so, with low unemployment levels. Job growth continues, with few layoffs, and slightly stronger wages. And consumer spending remains solid.

For the full-year 2016, we are forecasting an increase in net revenue of $215.5 million, or 7.6% over 2015 results. 2016 includes a full-year contribution from Plainridge Park, Tropicana Las Vegas, Prairie State Gaming, and our iGaming business, and contemplates a fourth-quarter 2016 opening of MGM National Harbor, which will impact our Hollywood Casino at Charles Town Races. It also includes the start of our management contract at Hollywood Casino at the Jamul Indian Village for the second half of the year. We are forecasting an adjusted EBITDA to increase over 2015 by $45.5 million or 5.7%.

Page 6 of our press release provides our current estimates for corporate overhead, interest expense, non-cash stock compensation, and depreciation and amortization. In addition, some other key data points are: cash on hand at December 31, 2015, of $237 million; all of our debt covenant ratios have been comfortably met; project CapEx, inclusive of the Jamul Indian Village project for 2016, is estimated at $278 million, with $92 million in the first quarter; maintenance CapEx for 2016 is estimated at $82 million, with $30 million in the first quarter; our cash basis effective tax rate for 2016 is currently estimated at 9.5%; and finally, free cash flow before project CapEx and principal repayments of $234 million for 2016.

And with that overview, we can open for your questions.

Operator, we are ready for any questions that may be out there from the audience.

Thank you.

(Operator Instructions)

Carlo Santarelli, Deutsche Bank.

Thanks for taking my question. When we look at your 2016 guidance and look at what is implied in the margins, obviously the margins appear to be down about 50 basis points year over year. Could you talk a little bit about how much, or to what degree, you expect same-store margins to be up year over year, or how you're thinking about it from a same-store basis as we move into 2016?

Sure thing, Carlo. This is Jay. On a same-store basis, margins are at or above where they were in 2015. Really what is driving that reduced margin year over year, as you know, is the recent acquisitions. Tropicana Las Vegas -- we are ramping that business. You've got $100 million-plus, with very little EBITDA, that is dragging the overall margin down a bit. Prairie State Gaming -- though we are happy with the margin, it's below Company average. Those are the two primary factors for why, year over year, you are seeing a decline.

Okay, great. And then Saul, thank you for some of the cash flow guidance. If we do think about how you guys are contemplating Jamul at this point, we could see from your guidance that the accrued interest income looks to be coming out maybe around the third quarter. Is that correct in terms of how you are baking in the potential refinancing of that? And can you confirm what is actually in your gross debt balance as of today for your Jamul CapEx?

There's a bunch of questions there, Carlo. In terms of the financing that is baked into the forecast, right now, as we've described before, we are continuing to explore interim financing possibilities. Those discussions are current and ongoing, but not finalized. And therefore, have included in the 2016 guidance estimates our continuing to finance that property, at least through post-opening 12 to 18 months. And that, of course, subject to change, but that interest income is baked into our numbers through -- as if we would be continuing to finance.

Throughout 2016?

Throughout all of 2016.

Okay, understood. And then would you mind providing what is in the debit balance today in terms of your spend on Jamul, like, to-date?

Through the end of 2015, it is approximately $155 million of advances.

Great. Thank you very much and congratulations.

Thanks, Carlo.

Joel Simkins, Credit Suisse.

Thanks for all the color, particularly around the start to the year. That is very helpful. It obviously seems like the southern Nevada market is pretty healthy right now. You've got some exposure there with [EM], which I imagine is doing pretty well. What is your thought process perhaps in terms of expanding your position in the locals market? Is that something of interest? And I will follow-up with another question.

We are seeing real strong results in southern Nevada, Joel, and we certainly look at all opportunities. It's just another regional market out there. If there is more potential for us to expand our presence in southern Nevada, we certainly entertain that analysis and those discussions. But we are encouraged with what we are seeing in the market and we are seeing as it rebounds. And it's clearly, I think, past the deeper section it had beginning in 2008.

The only thing I would add -- I was at other property last week, and there is a tremendous amount construction activity. Southern Highlands is expanding. There's a few other communities to the east of the property at M Resort. And trends in the locals market are strong, and we think are going to continue to move stronger as we move into 2016 and 2017.

Sure. And a quick follow-up question on the development front, maybe first starting with the VLT business. Given that you've acquired PSG, you've seen some other folks out there rolling out slot routes, should we expect to see some more activity from you in 2016? Is it getting a little bit more crowded out there? And also, what are your expectations with regard to potentially seeing a few other jurisdictions with gaming, like Pennsylvania potentially adding VLTs near-term?

That is a two-part question, Joel. I'm going to let BJ answer what we are doing in terms of looking at other operators in Illinois. And then have Eric talk about the potential for other jurisdictions getting into this line of business as well.

Joel, we continue to look at additional operators in Illinois. We are really also trying to understand as we go through, where in Prairie State -- exactly where we see the synergies, or not. And so we will continue to be examining all the different opportunities that are out there. And some of the advancements we've made with PSG allow us to really look a little bit creatively at that, and we want to move it up forward. With respect to the other jurisdictions?

Yes, so Pennsylvania, as you know, is the one that is looking most closely at VGT expansion, although it is inextricably intertwined with the ongoing budget standoff. And there are some other complicating factors, including expansions of potentially slots at the OTBs, and online gaming, and a number of other things. It's sort of muddled soup right now. So not a lot of clarity. I think the standoff will continue in Pennsylvania for the foreseeable future. And probably, there won't be a clean look at a VGT bill; it will be entangled with the other stuff.

Joel, I think we said this previously when we announced the acquisition of Prairie State Gaming, that we didn't get into this business just to buy Prairie State Gaming. We see this thing as a platform for growth over the next three to five years, organically and via acquisition opportunities as they arise. So that's the strategic plan we have in place for this business line.

Sure. And if I may, just one more follow-up. This might be for Eric or BJ as well. Obviously there are a couple of other new jurisdictional opportunities brewing -- Georgia, particularly around Atlanta. I imagine Texas, even though it's a bit dormant this year, given where oil is at, given your race tracks down there, there's probably going to be a little bit more momentum for 2017. So if you can just walk us through what you're thinking, particularly with Texas?

Eric?

Yes. So Texans can only meet every two years, in the odd year. So as you said, leading into 2017, we are going to be continuing to try to push for expanding gaming. However, the politics right now are not ripe for expansion. The state remains very conservative. So we keep pointing out the amount of money that crosses the border to neighboring states and jurisdictions. But the dynamics there, politically, are going to be very difficult in 2017 for us.

In Georgia, you probably saw there was a new poll that just came out that showed 84% of the citizens there want the right to vote on whether to expand gaming. And that includes those who are opposed to gaming -- because we've done some of our own polling. They just want to be able to decide this issue on their own. The challenge in Georgia is, the session ends on March 31, so there is not a lot of time to try to bake in all the details of the bill. And so the current effort is to consider just the constitutional question of expanded gaming, which would require a two-thirds vote. It is going to be a very up-hill climb to get it done in the time allowed.

Thank you.

I am trying to think what other state there might be. I think that covers it.

That's very helpful. Thanks a lot, guys.

Thanks, Joel.

Steven Kent, Goldman Sachs.

Two questions. First, can you just give a little bit more on the impairment charge for Plainridge? It just felt a little early to be doing that. And what should we be thinking about that over the next couple of quarters? And then can you talk about the uplift of sign-ups to your database since adding the Trop to your portfolio? You mentioned in your press release that a high percentage of your customers go to Vegas every year, that's the opportunity. What percentage do you think of your customers go to Vegas every year? And the reason I bring it up is because I very much remember [Hare] as having a very high percentage, and I'm wondering if yours is similar?

Steven, what we will do is, we'll have Saul answer your first question, and Jay, the second.

Okay.

So the impairment charge is based upon the standards of Generally Accepted Accounting Principles that call for a calculation based upon what's known as the Greenfield method. And under that very conservative -- and some might say severe -- method, we have to go back to the day when the license was first awarded, before any construction, before any operations -- and factor into that, along with our forecast, out into the future.

And so it is very usual, frankly, in our type of development, that in the early -- particularly in the early years, where forecasts of the property are uncertain, that the accounting requirements of an impairment charge take place. We have them -- as you might know from the past, we've had them, unfortunately, somewhat consistently driven by this Greenfield method, and the impact of our forecasting process, on a conservative basis, out into the future. Another aspect, unfortunately, about impairment charges is that they are all one-way directed. And so once you take them, you can never recover them, even after properties improve their performance going forward. I hope that was helpful.

Yes, and this impairment charge applies both to Dayton and Plainridge, that we described in our note. Jay, what about the second question Steven had?

Sure. I think it is a thoughtful question, Steven, with regard to the database. I would tell you that the composition of our database, from a geographic work-segment demographic perspective, looks very similar to the total awards database from Caesars' regional properties across the US. We have done surveys with our customers; we believe somewhere between 20% and 25% visit Las Vegas annually. We obviously have not been able to monetize that visitation in the past, and are looking forward to doing so in the future. We have not started the hard push on Tropicana visitation to-date, so we really haven't benefited from growth in the database.

But that's going to start in earnest in the second quarter. We anticipate being able to grow our database across the portfolio. It's close to 3 million active customers today. Some of our newer properties, we're growing our database significantly as we further penetrate those markets. Massachusetts, our database is up to 160,000 unique customers. In Ohio and other of our newer properties, we're still growing by several thousand per month. So we think that we'll be able to start to see some further penetration in even some of the more mature markets as we do the hard push for Tropicana starting in the second quarter. So more to come.

Okay, thank you.

Felicia Hendrix, Barclays.

Just wanted to step back to the Jamul loan again. In December, you guys acquired a promissory note relating to Jamul from Golden Entertainment. And as you mentioned earlier, I realize that a refinancing of the overall loan is still a work in progress. But I'm just wondering, what do you think the possibility of rolling that promissory note into the overall refinancing is?

Felicia, as you have correctly said, that financing contemplates including proceeds for that note as well.

Oh, okay, great. That's helpful. And then just moving on to your property operations, it's been a while, but we are seeing the declines in Lawrenceburg abate. Wondering, as you think about 2016, do you foresee any chance of stabilization there?

Felicia, we do, to answer your question. We probably should have talked a little bit more about it in the last couple of quarters. There was bridge repairs being done in what was a major artery to our property there, coming from southern Cincinnati and northern Kentucky. And that was throughout the third quarter and the fourth quarter. That bridge work was completed on December 15. So we were encouraged by the trends around the holidays. The January numbers are better than what we saw in the third and fourth quarter, on a year-over-year basis, and we do believe that we can get that business stabilized over the course of the remainder of the year.

Great. And then just a final. And I know you guys get asked about this a lot, or you talk about this a lot, but another opportunity to talk about it. Just at Charles Town, as you are preparing for the opening of MGM National Harbor, what are you doing there?

Sure. Well, we have been doing a lot. We are not necessarily doing anything at the moment that we haven't been preparing for the last year and a half. We opened a full-blown entertainment center about a year and a half ago that performed very well throughout the course of 2015. We continue to upgrade our slot product on the floor gaming offering. We renovated a couple of our restaurants -- so food and beverage offerings.

And we've renovated all of our hotel rooms on properties. So we've been preparing for all of the competition -- Maryland Live, Horseshoe Baltimore, MGM National Harbor. What I would tell you, and what certainly we are encouraged by is that, outside of the impact from this storm, our trends at Charles Town the last several of months have been very positive. We're growing our slot business. Our table gaming business is stable. And we believe that the northern Virginia and western Maryland market is still deep. And even with MGM National Harbor, we think that we can run a very successful business at Charles Town.

So in light of all that, in your guidance, I know you're being conservative in terms of assuming some impact. Can you maybe help us get our arms around what is quantifying the impact that you are expecting?

We have been saying, Felicia -- this is Tim -- that it's going to be more than Horseshoe Baltimore, but less than Maryland Live -- somewhere in that range. Very tough to predict.

Yes, okay, thanks. Have a good one.

Thanks, Felicia.

Harry Curtis, Nomura.

A quick follow-up to Felicia 's last question. Can you give us a sense of what percentage of Charles Town's customers come from the DC area?

Well, I will answer a little bit differently. Our business is usually split pretty evenly between Baltimore and Washington DC. And since the opening of Maryland Live and Horseshoe Baltimore, we are now low-single digit of our business coming out of Baltimore. The vast majority not necessarily DC Proper, but northern Virginia, importantly, and western Maryland, are our primary feeder markets there. So the majority of our business is more proximate to Charles Town than it will be MGM National Harbor. There is some that is proximate to both properties. But we believe that we've got strong relationships through our loyalty program, and we will continue to build those relationships once we have the opportunity to send offers to those customers to Tropicana Las Vegas, coming soon this summer. So that's not a specific answer to your question, but we feel as though this is a deep, healthy market, and we've got very strong, long-lasting relationships there.

Very good. And my last question is related to Steve's question, going back to your database and its impact on the Tropicana. Just generally speaking, what are your expectations for an EBITDA uplift there? And specifically, how do you monetize rooms that are tied to a reward program, in the sense that you need to balance that with the increased demand that Vegas is seeing for cash-paying customers?

Again, I will answer that a little differently. We don't get into property-specific EBITDA guidance, as you know, Harry. But what I would tell you is that we still have -- it has gotten better. When we acquired this property, close to 50% of the business was coming from wholesale or online travel agency bookings. That's down now closer to 40%. We envision taking that down to as close to zero as we can -- 10%, 15% is probably the sweet spot for some weekday softness periods. But we are going to be looking to move that business aside as we bring our database customers in, and still have plenty of room for the other 50%-plus of the rooms to go towards strong cash ADRs of group business, convention business, transient customers. That is what we are seeing strength in right now. We think we've got plenty of rooms to accommodate those customers, as well as our gaming customers.

And Harry, I will add to what Jay just said. We have the yield management technology to make those decisions based on the demand at a specific period of time, of who the most profitable customers are to say yes to, and the ones to say no to. And we are just going to be, with turning on our Marquee Rewards program, opening up a channel of very profitable customers that are going to, hopefully over time, represent 40% to 50% of our room nights at Tropicana Las Vegas. That's our goal internally. And as Jay said, displace customers that are filling those rooms today that are far less profitable than our Marquee Rewards customers are expected to be.

Just one final addition, to remind you that we have not baked into any of our 2016 guidance numbers, any lift whatsoever at the property level as a result of opening the database to Tropicana Las Vegas.

Meaning, at the regional property level.

At the regional property level, correct.

Okay. Well, just as a quick follow-up on that, I don't know if you can give us some sense from 30,000 feet, when you replace an OTA customer with a customer from your database, do you think that the EBITDA per customer lifts by a factor of two times, three times, five times -- just a general sense?

That is an extremely creative way of trying to get the property level EBITDA, Harry. (laughter) It would be a multiple of EBITDA profitability, but we will see once we get going here in the next couple of quarters.

Okay, well, we'll go back to our Ouija boards. Thanks very much. (laughter)

Thomas Allen, Morgan Stanley.

Can you give us a sense of what your same-store revenue growth was in 2015, and then what are in your assumptions for 2016? Thanks.

Sure. Low-single digit is the answer to both, between 1% and 2%.

And is that assuming steady trends, or an acceleration?

We are looking at steady trends. We really experienced that 1% to 2% growth -- there was some weather factors of course, as there always is, in the first quarter last year, mostly in February-March. But as you got into the second quarter, third quarter, fourth quarter, there was growth in all three. And we anticipate that continuing into Q1 and the remainder of 2016.

Typically what you see, Tom, is some of our newer properties that are still growing in the early years of their revolution, are better than the -- mature properties tend to be below. But blended out, it's about 1% to 2%.

Helpful. And then what are you thinking about wage inflation? You guys and some of your peers said last quarter that you were not expecting -- you were not seeing any major increases in costs, or employee costs. Do you still expect that to be the case for 2016?

Thomas, this is Tim. I view what we're seeing in terms of market wage inflation, as overall, a positive effect to our business, helping our consumers. And we are not at all anticipating any increase in our labor cost structure across the enterprise, and our ability to manage that, which we do very well. We are not seeing any pressure on wages affecting our cost structure, or planning for that in 2016.

Helpful. And then just a final question. You guys reiterated guidance on December 30, and then you've obviously been ahead. I assume it wasn't just a strong New Year's Eve, but just wanted to double-check on that?

I think what we said on December 30 is, we confirmed --

Confirmed existing guidance.

-- existing guidance. We are still closing out the year, but that was just a message to say that we felt comfortable that guidance was going to be net at that time. And obviously we had a good New Year's Eve period, but we had a good overall fourth quarter, as the numbers reflected.

Yes. Highlighted by particular strength in October, and then December, particularly the latter half of December. November was a little soft relative to the other two months, but a [real pleasant] quarter overall.

Great. Helpful color. Thank you.

Joe Greff, JPMorgan

Just your last comment about 1% to 2% revenue growth is underlying in your 2016 guidance, Jay. I'm presuming that excludes Charles Town?

That would exclude Charles Town, only because there's an impact starting in the fourth quarter. But up --

Got it. I just wanted to make sure I'm understanding that. Okay.

Up until that point, Joe, it would be consistent.

Got it. And then when we think about Plainridge Park, obviously we saw the monthly progression in gross gaming revenues in the 4Q relative to their performance in the 3Q. And we are glad to hear that you think December is the bottom, and seeing better performance here in January. But last quarter, you indicated that 3Q EBITDA would imply an annualized 20% EBITDA run rate. I guess my question is, what is that now? And I'm presuming the decline in revenues is probably greater than the decline or the change in margins, or margins have the potential to improve. But if you could help us understand both the gross gaming revenue to net revenue, to the margin relationship there, that would be helpful. Thank you.

Sure. There is a lot of factors in the response to that question, Joe. I would tell you that we're still comfortable with what we said last quarter, that we believe this property is going to achieve 20% cash-on-cash return. And you have to remember that, even though we had high revenue levels in the first quarter post-opening, we had significant advertising expense hitting the P&L for all of the efforts in Boston, to a large extent, and to a lesser extent, in Providence -- not cheap markets to advertise. So the margins, believe it or not, in the month of January, for example, are looking very good as compared to Q3 or Q4, despite lower revenues than July and August. So we are encouraged by what we are seeing in growing the database, visitation, certainly our rated business. We had our best month ever, believe it or not, in January. Unrated obviously was a decline from July-August, but our rated business was as strong as it's ever been. And so we believe that there is an opportunity to still ramp business, not just on the revenue side, but margins as well, as we don't have to advertise as aggressively going forward.

Great, thank you.

Thanks, Joe.

David Katz, Telsey Advisors Group.

I wanted to just go back to Tropicana a little bit, and just think about that from a little longer-term perspective. If I look at the purchase price and I think about what a guess of a decent return would be on that, I then -- I'm trying break down what that EBITDA generation would be between what I would consider low-hanging fruit or just operational changes, versus ones that will roll in much more slowly, say, over a two- or three-year period. How would you help me break down the yield or the performance in that property? Assuming when you got it, it obviously was generating very little EBITDA, and there is a fair distance to get to some-15% return, or some reasonable number. How much of that is easy work and how much of that is heavier lifting?

Sure. David, I will take the first half. Feel free, others, to jump in with color. We had said at the time of the acquisition that we believe that after three years, we would have a look back and see EBITDA at about a 10-multiple of the purchase price. And we still feel that, that is the case, consistent with what we said at the time of acquisition. With regards to the ramp to get there, I would expect less in 2016 than I would in 2017, as we're going to be continuing to be under construction in 2016. We're going to add some food and beverage offerings to the property. Most of the game activity, I think -- construction activity, will be behind us by the time our database customers start to show up in the late second quarter, early third quarter. But you are really back-half loaded, from a revenue ramp perspective, in 2016. So I wouldn't expect a lot in the first half of the year. Start to expect revenue and EBITDA growth the second half of the year, and then continuing to ramp more aggressively into 2017 and 2018.

Okay, perfect. And then I know there has been a little bit of discussion around Charles Town and what happens on the MGM opening. If you could break that down a little bit and just help us think about tables versus slots? And look at the different segments within that business, and help us understand which could be at risk and which would not be at risk? I would love to try and get just a little more depth around what we can expect out of that property over the next couple of years.

Let me start, David, and then I will turn it over to Jay to add his color. What we saw with Maryland Live and Horseshoe Baltimore generally is that our slot business held up better than our table games business. So I would expect, given the location of National Harbor, that, that trend will hold with their opening in the fourth quarter of 2016. But it's been across the board in terms of its impact across all segments. As we all know in this business, proximity usually carries the day, in terms of where customers choose to visit. And there is going to be some battle zones that we are well-aware of, between our location and National Harbor, that we are preparing for. But I would think the general trends of what we saw impact slots versus tables will hold when National Harbor opens.

The only thing I would add to Tim's comments is, we're got very strong, deep relationships with our mid-, and in particular, our high-end VIP customers. So I think if there is leakage to be concerned about, it's going to be more of that unrated, unknown and lower-level spend we sell a customer, both slots and tables. But it's going to be very difficult for MGM to steal our better customers away, because we are not going to make that easy on them.

Understood. Both very helpful. Thanks very much.

Yes.

Any other questions operator?

My computer is not responding.

All right. Well, I'd like to thank everyone who participated with our call today. We look forward to getting back with everyone in about three months and talk about what we see at the end of the first-quarter 2016. Take care, everybody.

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 your line.