PENN Entertainment, Inc.
Q1 2017 Earnings Call Transcript

Published: 27 Apr 2017

[Operator:]

Ladies and gentlemen, thank you for standing by. Welcome to the Penn National Gaming 2017 First Quarter Conference Call. During the presentation all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded, Thursday April 27, 2017. I would now like to turn the conference over to Joe Jaffoni, Investor Relations. Please go ahead sir.

[Joe Jaffoni:]

Thank you, Cathy. Good morning and thank you for joining Penn National Gaming's 2017 first quarter conference call. We'll get to management's presentation and comments momentarily, as well as your questions-and-answers, but first I'll review the Safe Harbor disclosure. In addition to historical facts or statements of current condition, today's conference call contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which involve risk and uncertainties. These statements could be identified by the use of forward-looking terminology such as expects, believes, estimates, projects, intends, plans, seeks, may, will, should, or anticipates, or the negative or other variations of these or similar words, or by discussions of future events, strategies, or risks and uncertainties, including future plans, strategies, performance, developments, acquisitions, capital expenditures and operating results. Such forward-looking statements reflect the Company's current expectations and beliefs but are not guarantees of future performance. As such, actual results may vary materially from expectation. 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 Gaming 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 measures calculated and presented in accordance with GAAP can be found in today's press release as well as in the Company's website. With that I'll now turn the call over to the Company's CEO, Tim Wilmott. Tim?

[Tim Wilmott:]

Thank you Joe, and good morning to all who joined us for our first quarter 2017 earnings conference call. With me here in our offices in Pennsylvania are our General Counsel, Carl Sottosanti; our Senior Vice President of Public Affairs Eric Schippers and is Treasurer, Justin Sebastiano; our Chief Financial Officer BJ Fair; and Chief Operating Officer, Jay Snowden. I'd like to begin by just characterizing our first quarter operating performance as very, very solid. I'm pleased to report that we exceeded our original guidance for the first quarter - EBITDA guidance by $17 million and even our updated guidance by $4 million that is exclusive of any cash settled stock-based compensation charges. I'm also very pleased with the performance out in our operations, we continue to improve our EBITDA margins, year-over-year we increased it by 40 basis points. Just a little bit under two years ago we got into new businesses Penn Interactive Ventures and the VGT business in Illinois Prairie State Gaming and through a number of tuck-in acquisitions. Over the past couple of years, we continue to show significant year-over-year growth in those two new business lines. Speaking of tuck-in acquisitions, I'm also pleased to report that late in the first quarter of this year we announced a $44 million acquisition for two properties in Tunica Mississippi, Bally's and Resorts that we're getting at a very attractive multiple. Pre-synergy is under four and we do expect synergies to take that number even lower. And the good news is we've made great progress with the Mississippi regulators and we expect to close that transaction next Monday, May 1. I'd also like to highlight out in Las Vegas, Nevada, where we are with Tropicana. We're completing our phase 1 $40 million capital program since we purchased the property just under two years ago. This summer we're opening up, Robert Irvine's Public House, an upscale tavern with 260 seats plus another quick service food concept. And I do want to reiterate that we're going to evaluate the impact of these new offerings before we commit any further capital to Tropicana Las Vegas and we're very excited about having these two new offerings opening up in the third quarter of this year. I'd like to summarize our current performance and where we are at this time as we are into the second quarter of 2017. Our message of being a company that's generating a lot of strong cash flow is evident in our first quarter performance. We were able to delever, return capital to our shareholders and make smart accretive tuck-in acquisitions. With that I'd like to turn the call over to Jay to give some perspective on property performance and some specific insight into Charles Town, Jamul [ph] and what we're seeing with Las Vegas trends.

[Jay Snowden:]

Thanks, Tim. We're very pleased with our first quarter performance across the portfolio, which certainly showcased the power of our unique operating leverage. We exceeded guidance by over 17 million as Tim mentioned due to revenue growth in several key markets and disciplined expense management resulting in an impressive flow through story. EBITDA margins improved year-over-year in all three regions and at two thirds of our properties. Of particular note in Las Vegas, we delivered strong results at both Tropicana Las Vegas and M Resort. Solid RevPAR growth year-over-year at both properties along with a stronger casino database contribution at Tropicana resulted in both properties, growing EBITDA year-over-year in the first quarter by over 20%. Moving to West Virginia, we continue to be very pleased with our result at Charles Town in the face of new supply and National Harbor in the marketplace. Our slot and table game volumes are holding up better than initially anticipated and while still early, we remain confident that these trends will indeed continue. In San Diego, in March, we post our strongest results since the opening month. April was also off to an encouraging start as well as visitation and all key volume indicators are up significantly from where they were in the month of December and January. Our database is now over 120,000 strong and we are pleased with where this property is currently trending. Transitioning to our database results in the first quarter, we saw a solid performance across most all geographies and work groups with particular strength at the VIP segment. Visitation was a little more of a mixed bag market-to-market but spend per visit was very strong across the portfolio. Weather in the first quarter was mild and really a non-issue when you compare it to prior year. And the calendar certainly benefited from the Easter shift from March to April this year, but February we had one last day as everyone knows in 2017 versus 2016. Consumer confidence, employment, wages, home values all continued to move in the right direction, which should remain positive catalysts for our core customer. Before handing off to BJ to cover second quarter guidance, I want to take a moment to recognize and thank our leaders across the organization for their tireless efforts and for delivering what has been a really another strong quarter of results. We're asked frequently by many of our investors and industry analysts that there is more room for margin improvement given we have long been the leaders in this category and regional gaming or whether we have reached a point of diminishing returns. We look at that certainly as a challenge of an organization and are collectively working on a number of exciting initiatives right now to have me personally very optimistic about where we can take the margins and this company in the quarters and years to come So with that I'll hand it over to BJ.

[BJ Fair:]

Thanks Jay. I just wanted to provide some updates on the 2017 financial guidance for the quarter and full year. Page 5 of the press release has all the detail and so you can refer to that. But some of the highlights here, on a full-year basis, revenue of 3.066 billion, adjusted EBITDA of 857.9 billion [ph] and adjusted EBITDA after the master lease payments of $410.2 million. Q2 specifically, the revenue of 776.8 million, adjusted EBITDA of 219.9 million and adjusted EBITDA after master lease payments of 107.7 million. Cash on hand at the end of March was 259.5 million. As we said earlier, the guidance does not include any impact from the pending Bally's and Resorts Tunica acquisition which will close next week. All of our debt covenants will be comfortably met. Our maintenance CapEx guidance remains at $78 million for the year, 31 million of which is expected in Q2. Project CapEx is expected to be $29 million for the year, 15 million of which is expected in Q2 and that does reflect pushing off any construction expenses of the Tropicana expansion into 2018. Cash taxes, there was no change to our guidance of a net refund of 40.6 million. Our master lease rent coverage ratio was 1.18 million as of the end of March and at this time we do not expect to incur rent escalation at the conclusion of our lease year. Free cash flow generation at the end of the year is anticipated to be 310 million and net free cash flow after mandatory payments on project CapEx is expected to be $202 million. I just wanted to briefly hit on a couple of other items that we were talking about during the quarter. One was the share repurchase program. As we previously announced, our Board of Directors authorized a share repurchase program in February. The program was a total of $100 million repurchase authorization and was valid for a two-year period. In February, we purchased 416,886 shares at an average price of 13.88 per share. I know some of you are overwhelmed by the number of shares that we have repurchased, but soon after we commenced the repurchase program, we began to give serious consideration to our intent to revise our guidance. And we are also actively involved in Tunican transaction. As much as we would like to continue repurchasing stock, we consulted counsel and determined we had material non-public information and elected to cease trading in our own stock. And then as of March 1, our normal blackout period was in effect. Going forward however, management will discuss the appropriate uses of the strong free cash flow generated by our company to achieve our desired capital allocation objectives and in no specific order those capital allocation objectives are debt reduction, executing against the repurchase program when appropriate, and taking advantage of tuck-in acquisitions and attractive growth opportunities. And as I said they are not specifically in that order, so we will discuss what the opportunities are as we come about. The last item I just briefly wanted to touch on was Jamul and as Jay mentioned we've been encouraged by the recent growth in the operating performance of Jamul. But I wanted to provide a brief update on the status of our loan at Jamul and the impact on Penn. Both the term loan B and the term loan C loans are current and are currently being fully serviced. We still anticipate that all of our portion of our term loan C will become subordinated. And discussions have been initiated between the tribe and its lenders and it's the intent of all the parties to come to a timely resolution of the potential issues based upon the current financial performance of the facility. With that I'll turn it back to Tim.

[Tim Wilmott:]

Thanks Jay, thank you BJ. Operator, we're now ready to take any questions that the callers may have.

[Operator:]

[Operator Instructions] And our first question comes from the line of Steve Wieczynski from Stifel Nicolaus. Please proceed with your question.

[Steve Wieczynski:]

So, I wanted to start in Vegas and the Trop. And I don't know if you can do this, but is there any way you guys can give us an idea how much the Trop benefited from, you know, during the quarter from the city's strength in regards to convention and group business meaning did you guys get a lot of overflow traffic from neighboring properties. And then maybe how your RevPAR in Vegas kind of trended through the quarter?

[Jay Snowden:]

Sure Steve, this is Jay. So, actually I'm very pleased with our performance at Tropicana given that we have some pretty significant construction disruption taking place right now, not sure if everyone knows but pedestrian bridge between MGM and Tropicana had been under construction since late December and won't be completed until June. So we will have had no traffic at all coming over from the MGM throughout the first quarter. And right on that same corner we're also under construction with the Robert Irvine restaurant that Tim covered earlier. So very pleased overall with the results, certainly there is a benefit for us at Tropicana of what took place in Las Vegas with ConAg coming back after the last couple of years, it's a once every three years as you know. So March was a very strong month. January was also a strong month. February was okay. And we also benefited of course at Tropicana by virtue of having our database customers visiting the property this year whereas last year that didn't start until really early May. So we benefited across the board, but RevPAR was strong at M Resort and Tropicana, a double-digit mid-teens at one property and strong single digit at the other property.

[Steve Wieczynski:]

And then second question would be around Ohio and just maybe it looks like obviously Dayton and Columbus continue to do very well, but it seems like a lot of the strength in Ohio continues to come out of the tracks there. Is there any way you guys can give us just your idea of what's driving such strong results out of those assets right now.

[Jay Snowden:]

Sure. I think some of it is just the typical cycle, we've been opened for three years - four years. And you learn the market, you learn the competition, you understand what motivates customers and it's not always the same even in the same state from one side of the state to the other. So we think Columbus is, said this before, it's a deep market with 2 million person population about the size of Kansas City. It's going to be a growth market for us for a long, long time. To lead off quite frankly given all of the road construction to our north really had a pretty solid quarter certainly on EBITDA margins and we think that once the road construction subsides that property will be showing trends on the topline, more similar to what we've been seeing out of Columbus the last couple of quarters. And the racetracks are performing very, very well, double digit topline growth and even stronger on the bottom line as margins continue to improve there as we right side the cost structure now that we've been opened for a few years. So it's a little bit of everything, but I would say this is the typical cycle you see with newer properties.

[Tim Wilmott:]

Steve, the only thing I'll add from Jay's to comments, in Youngstown, year-over-year we have added more slot units because of the strength in that market. And even with that I think we're up close to a thousand, just under a thousand in Youngstown. In March of this year, we saw win per unit net $320 or so. So we're still looking at Youngstown as an underpenetrated market and looking to potentially add more units there to continue to take advantage of the market characteristics. And Dayton as well as we're seeing very strong win per unit and continuing to penetrate into the Dayton market. And as Jay said, we haven't hit year three, so it's the maturation of properties that have yet to realize their full maturity.

[Operator:]

And our next question comes from the line of David Katz from Telsey Advisory Group. Please proceed with your question.

[David Katz:]

I will apologize up front because I'm jumping back and forth between two calls this morning. So if I'm asking something you've covered, I'll apologize but a couple of questions. One is, I think about the really surprising strength in the first quarter that even turned out to be better than what the preannouncement with seven days to go in the quarter. And then I looked at the guidance for the remainder of the year, I suppose we could have thought about a wide range of ways that you would guide for the remainder of the year. And I'm getting to sort of a mid-single digit revenue and EBITDA addition to the guidance after the first quarter. And so, if you could just discuss a little bit more about how you thought about or how you're thinking about the remainder of the year and your visibility into it I'd appreciate it if you haven't already.

[BJ Fair:]

David, this is BJ. I think there is two elements associated with it. One is to a certain extent resetting some of the prior year. And against on a quarter to quarter basis, last year there were approximately just under 6 million, $5.7 million of adjustments. The majority of that was actually the CCARs [ph] adjustments, which in this quarter is actually taking down our EBITDA, back then was increasing our EBITDA. And so if you take that CCARs adjustment out and then the other element is if you take out the revenue that is associated to the Jamul staffing which as we talked about last quarter is a 100% pass through of just cost coming through, I think you really start to see that there's a year-over-year increase both in a margin basis and then on the EBITDA basis as well. So there's also as you take a look on the full quarter, we've increased both revenue as well as the overall EBITDA on a full-year basis and then there was also incremental CCARs that were impacting the full-year results as well. So I think when you adjust up the CCARs and then you take into consideration the flow through of the 100% impact of the Jamul staffing, you really start to see the improvement on a year-over-year basis.

[Tim Wilmott:]

Look, the only thing that I would add to BJ's comments is that look, we beat by $17 million in the first quarter and we're guiding remainder of the year 5.5 ahead of the previous guidance. So it may be conservative, I'd love to be with you three months from now saying that we were conservative in our guidance, but we thought it was a prudent thing to do three months doesn't make a whole year trend. We're happy with our performance in the first quarter. We're optimistic about the remainder of the year, but didn't want to get ahead of ourselves.

[David Katz:]

I appreciate that, given say the past couple of years where there have been some expectations that moved around. My second issue is, I assume that some of us have included the Tunica acquisitions ahead of their closing, but you have not in your guidance. But if you could just elaborate on the thought process around increasing your presence in that market. I mean I think the accretion of it is fairly obvious, but how you thought about that as a long-term strategic opportunity versus the risk of over time that that market perhaps being in decline and how you sort of risk adjust and all that? Thank you. And that's all I have.

[Tim Wilmott:]

David, this is Tim. We obviously have a long history of performance in our memories of Tunica. We know exactly the market characteristics and what's happened there. However, this was such a compelling financial transaction for us to spend $44 million and purchase these two properties at a multiple under four pre-synergies with the expectation of the synergies being realized within year one. Even with the expected decline of the Tunica market, this is going to be a very accretive transaction for our shareholders and it was one even though the market we know is not robust, we could not pass up and we think it's going to be something that will produce very, very good returns for the $44 million that we allocated.

[David Katz:]

Thank you. And if I can just follow that up in terms of how you - what you see the opportunity for improvement with the property or do you think you can sort of run it in a stable way and I suppose that's more of a Jay question.

[Jay Snowden:]

Yeah. David, I mean, from a revenue perspective, it would be more in the stable category. We think there's a lot of opportunity on the cost side of the business there as you create shared services between what will ultimately be three operations in the same market. So marketing efficiencies, labor scheduling efficiencies, purchasing power that those two properties don't have today, we're very optimistic in our ability to grow EBITDA.

[Operator:]

And our next question comes from the line of Felicia Hendrix with Barclays. Please proceed with your question.

[Felicia Hendrix:]

Hi. Good morning. Just a very quick follow-up on Tunica, just wondering if at some point, you'll quantify the synergies or is it just something we'll kind of subtly see in your results?

[BJ Fair:]

We will be quantifying, but I think as - and part of the reason we didn't include it in the guidance and not only have we not closed yet, but as we get into it, there will be some time that we really need to understand what steps need to be taken in some of the potential costs associated with making some of those changes. So I think by the next quarter, we'll be in a position of definitely identifying what exactly we expect on a going forward basis and we will include that in the revised guidance as well.

[Felicia Hendrix:]

Perfect. Thanks. So can we move, I just wanted to talk about Charles Town for a second, the property has been performing better than our expectations and I think based on prior conversations, obviously better than yours? Now that MGM has fully activated their marketing there, just wondering have you seen any changes and just trying to get a feel for what the promotional environment looks like there.

[Jay Snowden:]

Sure, Felicia. Look, it's still early, so it's very difficult to say what's it going to look like three months, six months from now, but we've got four, five months under our belt. MGM has started to build their database and start to market to that database and I think what you're seeing is that that product is growing in the market significantly. They've grown the market over 30%, which you just don't see these days and I think that they've done it primarily on the table games side. Maryland Live I think has held up pretty well, they're down low-teen since MGM opened. We're down more in that 7%, 8%. And I'm sure they're probably pleased with where they're at. We're certainly pleased with where we're at and our relationship with our customers go back 15, 17, 20 years in some cases. So I think we're in a good place right now and I think that for as long as MGM and it looks like they are hitting their numbers or close to their numbers and it's on the table games side, where as you know in Maryland, there's a much more favorable tax rate. This could be a - it's a deep market, it's a very affluent market and it looks to me like all three of the big casinos are four, if you include Horseshoe Baltimore are probably happy with where they're at and I'd imagine it'll probably be a pretty rational environment. I don't see any reason why it wouldn't be.

[Felicia Hendrix:]

Great. That's helpful. And then just, Tim, maybe we could just talk about your Penn Interactive Ventures for a minute, with that ramping up and kind of becoming a bigger part of your other EBITDA line, I was just wondering if you could help us understand the expectations there and how we should think about that segment and if there's any plans in the future to help quantify that?

[Tim Wilmott:]

Well, down the road Felicia, clearly once it gets to be a little bit bigger piece of our business, we'll provide more clarity around Penn Interactive Ventures. We understand that obviously based on what double down was sold for, there's certainly valuation differences in that line of business than our traditional regional gaming line of business. We're not there yet. We want to continue to grow and look at additional potential tuck-in acquisitions there like Rocket and continue to grow organically our business and our relationship with side [ph] games and other content providers using our database and also obviously Rocket's database of business. And it's going to continue to show year-over-year growth and I wouldn't be surprised that in the not-too-distant future, we'll provide more clarity as the business continues to ramp up.

[Felicia Hendrix:]

Okay. Great. And then just finally, BJ just back to Jamul, thank you for the color on that in the prepared remarks. That was helpful. Just getting back to the Term C, you said that, you will come to a timely resolution of all issues. I was just hoping you could give some more details there.

[BJ Fair:]

I think that the discussions are really just beginning and so I think it's too preliminary to really - to give any further clarification around that.

[Felicia Hendrix:]

Okay. So we'll wait for that.

[Operator:]

And our next question comes from the line of Carlo Santarelli with Deutsche Bank. Please proceed with your question.

[Carlo Santarelli:]

Hey, guys. Good morning. Just a quick one, more housekeeping than anything else, as you guys kind of talked about the guidance range and Jay, I think you were fairly clear with the move in the 17 million incremental, which looks like the 12 million upside in the first quarter plus the 5 million from the stock compensation. Just to be clear with the new guidance, you are using the 221 reported number for the first quarter, right, as kind of your first quarter of the new guide with the 858 number for the year.

[Jay Snowden:]

Carlo, that is correct.

[Carlo Santarelli:]

Okay. Great. And then just on the - your earlier comments as well as it pertains to some of the costs and where costs could continue to be taken out of the business, in the work to you guys have done, are there any things that you could share with us at this point where you see some obvious, still low-hanging fruit, it's just a question of execution on it or do you feel like most segments of the businesses have been pretty well kind of gone through and I don't want to say picked over, but more or less you've executed on what you've wanted to and I was just kind of looking at little things here and there on the margin.

[Jay Snowden:]

Look Carlo, we have executed over the last number of years on what we wanted to. We're just continuing to challenge ourselves on what that list contains and there are still opportunities for us in a number of areas. I don't want to open the playbooks to all of our competitors, but there's things that we're looking at with fresh eyes and the three major buckets of course are procurement, efficiency in our labor and scheduling and marketing spend and, but those are the big buckets - big dollars and sometimes, it pays off the challenge the way you've done things in the past and we test a lot of ideas and we're finding some success in the things that we're testing that will be implemented in future quarters that we're very positive about.

[Operator:]

And our next question comes from the line of Shaun Kelley from Bank of America. Please proceed with your question.

[Barry Jonas:]

Hi, guys. This is Barry Jonas in for Shaun. Just a few questions. Stock has had a great run since you've preannounced, just curious how you are thinking about share repurchases at these levels?

[BJ Fair:]

I think that we will continue to take a look at the share repurchases to get out of the blackout range, really understand and assess whether we believe that the allocating capital to the share repurchase is going to be better than any of the tuck-in acquisition opportunities or the de-levering opportunities we're looking at and I think it continues to be as we look at what we believe the overall value of the company is, how we're seeing the stock price against that and making a determination at that time.

[Barry Jonas:]

Okay. Great. And then next, can you maybe just give some general commentary about the promotional environment across the regions. It does seem between commentary and some results that net revenue growth seems to be outpacing state reported gross gaming revenue growth. So just looking for some general commentary there?

[Jay Snowden:]

Yeah. Not much new to share, Barry. It's been pretty rational across most markets. Biloxi, it's still somewhat elevated since Scarlet Pearl opened, but it's really the exception versus the norm and yeah, you can see there's been really good flow through from net revenue down to EBITDA and the net revenue composition is maybe a little atypical from past years, where it's coming more on the non-gaming side as not being driven by promo allowances. It's a good healthy cash business for food and beverage, hotel, retail and entertainment and we had a very, very, very strong first quarter in Las Vegas on the non-gaming side, which is the bulk of that net revenue increase non-gaming.

[Barry Jonas:]

Great. And then the last one for me, just maybe a legislative update on Pennsylvania and your expectations around online and DLTs there.

[Eric Schippers:]

Sure. Not much has changed in terms of the legislative debate around the budget deficit in Pennsylvania in where they're projecting it's going to be [indiscernible] considering a huge menu of options, the Senate less so. iGaming is firmly in the mix on both sides. The key question around iGaming right now is focusing on the tax rate that would be applied. We are trying to knock down some sort of silly notion that you could have tax parity between iGaming and the slot machines and that it could be a successful industry and we're trying to convince them that if they do this, no one will sign up for it. And so we're spending a lot of time trying to educate legislators on that business, while at the same time frankly fending off an effort by the state lottery to be the provider themselves. So a lot of fluidity there. There's still discussion as well around video gaming terminals in the bars and taverns, more so in the House than in the Senate and there's some discussion around satellite facilities that would take the place of that concept. I would expect that you're going to see some of the discussions start to gel a little bit more this summer in the June timeframe, but until then, I think a lot of it's just going to be noise and posturing.

[Operator:]

And our next question comes from the line of Robert Shore with Wells Fargo. Please proceed with your question.

[Robert Shore:]

Hi. I just had a couple of questions on operating expenses. If we think about operating expenses throughout the year, is there any seasonality to that business? Will expenses kind of pick up as more kind of several amenities are added on, just I guess any way we would be thinking about operating expenses throughout the year. And also maybe anything specifically to talk about to reduce costs, whether mailing, promotions, anything maybe more specific you can talk about in terms of need to take this cost out of the business would be great. Thanks.

[Jay Snowden:]

Robert, I would say on your first question of operating expenses, the seasonality associated with it, this year, I think will be a typical year. I don't anticipate there being any interruption in our normal flow of business, whether you're talking revenues or operating expenses. And then I answered the question earlier with regards to our ability to continue to improve margins is not something I'm going to get into too much detail on the call, don't want to share the playbook with the world, but we've still got opportunities. We're focused and we're going to get them done.

[Operator:]

And our next question comes from the line of Chad Beynon with Macquarie Group. Please proceed with your question.

[Chad Beynon:]

Hi. Thanks for taking my question. Jay, I wanted to go back to your comment on funds spend per visit, you said a lot of the growth in the first quarter came from that and not visitation, can you help us think about where this is versus maybe prior quarters or prior years, are we starting to potentially see an inflection point, where if it hangs up at these levels, that alone would result in significant flow through, just some overall color on that please?

[Jay Snowden:]

Yeah. Chad, it's a great question and it's probably little too early for me to comment in terms of extrapolating what we saw in Q1 and over the course of future quarters or years, but yeah if you exclude Charles Town, we had the strongest same store sales growth since Q1 of 2012. So stronger same store sales within five years. I feel good about that and the strength was on spend per visit. Visitation was actually, I don't want to misstate, but visitation was a good story in many of our markets; Ohio, Las Vegas, parts of the Midwest, St. Louis, Kansas City, just not consistent where spend per visit was strong everywhere. So, yeah, I'm encouraged by those trends. Strength was particularly seen at the VIP segment and so when you're growing VIP and you're growing spend per visit, if the flow through is very healthy, will that continue, we'll have to wait out and see what the next couple of quarters present us.

[Chad Beynon:]

Okay. Thanks. And then on Jamul, you said that that has improved over the last couple of months as well. Do you think that's a function of the property just being open as long as it's been open and word of mouth, maybe a reduction of some of your competitors in the market buying some business or just like I said, players realizing the value in the service levels at your property, any color there would be helpful as well?

[Jay Snowden:]

Sure, Chad. Listen, it's all of the above. Typical cycle, you have a great first month. Your business falls off the following months two, three and four as you're building your database. You start to activate those customers through marketing efforts and reinvestment and your business builds from there. So as I mentioned in my opening comments, the database now is over 120,000. We'd like to get it to 140,000 to 150,000 by the end of this year. I think we will. And I think our revenues and our flow through is going to continue to be a good story as we move through the remainder of the year.

[Operator:]

[Operator Instructions] And our next question comes from the line of Thomas Allen with Morgan Stanley. Please proceed with your question.

[Thomas Allen:]

Hi. A couple of numbers questions. First on Tunica, if we were to include it in our models for the rest of the year, how should we think about the EBITDA, given the seasonality? And then also do you have incremental CapEx that you'll likely spend this year? Thanks.

[Justin Sebastiano:]

Thomas, this is Justin. So I would go back to the release where we announced the acquisition. It's 21 million for the year and you would just pro rate it for when you believe we're going to close on the acquisition through the end of the year and that's the EBITDA and then we gave you the rent as well. So you would look at normal seasonality from just our Mississippi operations in general. I think you can imply that as far as CapEx, I mean, we're not out there yet with that, but it's - when we close and on the next quarter, we'll talked through that and we'll give you some more color. It's not a big number, it's pretty small operations.

[Thomas Allen:]

Okay. So probably around $8 million for EBITDA for the 8 months if you close at May 1st.

[Justin Sebastiano:]

That's what your Excel tells you. Yeah.

[Thomas Allen:]

And then just on the increased corporate expense that you guys rated by $6 million, is that all a function of cash settled stock-based comp and is the increase in the cash settled stock-based comp just a function of your stock price has gone up a lot and this is how it's going to fall through?

[Justin Sebastiano:]

The answer is yes and yes.

[Operator:]

There are no other questions at this time. I'll turn the call back over to you.

[Joe Jaffoni:]

Thank you, operator. I'd like to again thank everyone who are listening on the call and again reiterate a very, very solid first quarter and all of the things we're working on are producing the results that we expected when we got involved in these new business lines or in these tuck-in acquisitions. So with that, I look forward to speaking with all of you again as we have our second quarter call sometime in the late July, early August time period. Take care.

[Operator:]

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