Greetings, and welcome to the Penn National Gaming First Quarter Conference Call. During the presentation, all participants will be in a listen-only mode. Later we will conduct a question-and-answer session. [Operator instructions] It is now my pleasure to turn the conference over to Joe Jaffoni, Investor Relations. Please, go ahead..

Thank you, Tina, and good morning, everyone, and thank you for joining Penn National Gaming's 2022 First 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 terminologies 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 Gaming assumes no obligation to publicly update or revise any forward-looking statements. Today's call and webcast will include non-GAAP financial measures within the meaning of SEC Regulation G.

And when required, a reconciliation of the 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. Thank you for your patience with that.

And it's now my pleasure to turn the call over to company's CEO, Jay Snowden. Jay, please go ahead..

Thanks, Joe. Good morning, everyone. Here with me in Wyomissing this morning is our CFO, Felicia Hendrix; and our Head of Operations; Todd George, as well as several other members of our executive team, should you have any questions for them. We did provide a link to the investor presentation in our earnings release.

So I'd encourage you to either print that out or pull it up and maybe, reference it while we're talking, because we'll speak to a few of the slides in the investor deck.

We did talk on our last earnings call about what sets Penn apart from the competition and what our strategic objectives and expectations are for the first quarter, in terms of our core business, our interactive segment, investing in new technology and the launch of the theScore Bet in Ontario.

And I'm proud to say our corporate property and interactive teams have delivered on all fronts in the first quarter. And I want to begin this morning by thanking our team members at all levels of the organization for their continued hard work and dedication and delivering best-in-class products and services to our guests.

And we don't always do this, but I'm going to take a few minutes to call out a few of our top performers and some highlights across the company. I'll start in Louisiana, where our properties led by Harold Rowland, Barry Regula, Kim Ginn and Dan Kennedy, continue to post robust results in what are some of the most competitive markets in the U.S.

Their team's focus on profitable revenue drivers, guest service enhancements and a more efficient cost structure, has resulted in market share gains across the board and margins that are the best in all the property's history. I couldn't be more proud of all of our team members in the State of Louisiana.

Two of our properties under competitive pressure, due to new build-outs and expansions in Black Hawk, Colorado and East Chicago, Indiana led by Sean Demeule and Ryan Coppola have quickly reimagined the way in which we run the business and compete.

These properties are both pacing to deliver EBITDAR in the same range, if not higher, than what they generated in 2019, despite the new competition, which is not an easy feat. So hats off to them as well.

And in Las Vegas, Hussain Mahrous and our creative team at The M Resort are now generating more EBITDA per quarter than what the property did annually just a few years ago. And with the growing population in that part of the Las Vegas Valley, we expect to see those results only get stronger in the coming years. In St.

Louis, Mike Jerlecki and Steve Peate and their teams are finally again able to compete on a level playing field after the elimination of COVID mandates that were much more restrictive for our properties operating in a different county versus the nearby competition and are back to profitably growing market share and breaking EBITDA records along the way.

Our teams in Central Pennsylvania, led by Dan Ihm, Ruben Warren and Marc Guastella has successfully opened two new properties in the last year and have done a terrific job growing the overall database for the company and ensuring we are looking at all three businesses and our results there on an incremental basis.

Cannibalization in Central Pennsylvania has been minimal and early combined results have been very encouraging. And then lastly, our Interactive business is led by John Kaplowitz and the Levy family in Toronto, continue to demonstrate that there is a different way to approach the online vertical in North America.

Disciplined organic marketing, omnichannel cross-sell, great products and owning our media strategy with our friends at Barstool, Sportsbook and theScore has led to growth in our net gaming revenue market share results in the first quarter.

We believe our differentiated approach will benefit us going forward is the relationships we have and continue to build with our customers are based on delivering great products and customer service, media integration, branded and experiential events and promotions and a direct connection to our users via live streams and social media engagement with our content creators, led by Dave Portnoy and Big Cat.

We don't lead with discounts. These structural advantages are already proving themselves out real time and will deliver what we believe will be best-in-class margins over the long term. I'm super fortunate to be working alongside so many talented people every day, and we collectively couldn't be more excited about our future prospects.

Now, transitioning to our first quarter results.

You'll see on slide 5, we achieved record first quarter revenues of $1.56 billion and adjusted EBITDAR of just under $495 million, which grew 23% and 11%, respectively over 2021 levels, driven primarily by strong property level performance across all segments, including the older core demographic who are reengaging through both increased visitation levels and spend per visit.

We're also encouraged by the ongoing visitation of our younger demographic. We remain focused on reimagining our properties and offerings to enhance the entertainment appeal to the steadily growing segment of customers. Now turning to slide 8.

During the quarter, our industry-leading mychoice customer database grew across all worth segments and we also added 355,000 new members to our ecosystem. Life to date, we have increased our database by over 1 million from digital registrations alone for the mychoice app, providing valuable cross-sell opportunities.

More specifically, we've seen 28% year-over-year growth in our VIP segment and 11% in our core segments, driven by our new online and retail Sportsbook offerings in our recently opened Hollywood casino properties in New York and Morgantown, Pennsylvania.

On slide 9, you'll see we're starting to realize early benefits from our 3Cs, which, as a reminder, is cashless, cardless and contactless technology which powers our mywallet experience. We have exceeded 53,000 mywallet downloads and more than $25 million in deposits.

3Cs technology is now live at nine properties in three states and has increased the value of our guests in terms of visitation frequency and time on device. We plan to introduce the 3Cs in an additional 14 properties in eight states over the next two quarters, of course, pending regulatory approvals.

As noted on slide 10, our Interactive segment grew revenues year-over-year by 94%, exclusive of tax reimbursements from our third-party skin partners, led by strong growth in online sports betting, iCasino and media.

We remain focused on profitable growth with our integrated media retail operations, helping to deliver the lowest customer acquisition costs in the industry.

In addition, during the quarter, we introduced our market-leading retail Barstool Sportsbook at Penn National Race Course in Pennsylvania and at L'Auberge Lake Charles in Louisiana, and we plan to roll out additional Barstool Sportsbook at six more properties throughout the remainder of the year.

Slide 12 shows the benefits of our integrated retail Barstool Sportsbook and gaming areas, which are helping to maximize cross-sell opportunities on table game play, particularly in the younger segments, comparing first quarter of this year to first quarter of 2019, we've seen a 53% increase in Table Theo for ages 21 to 44 at our properties with retail sportsbooks.

On slide 13, you'll see theScore Bet in Louisiana has been a great story for us. And our market-leading properties and partners at Barstool Sports are a huge reason why.

Dave and Big Cat hosted a Super Bowl Watch Party at L'Auberge Lake Charles and Louisiana lead by Ben Mintz and Megan Making Money embarked on a show around the state to help promote our Barstool Sportsbook app.

This powerful combination of Barstool talent and our best-in-class retail Sportsbook offerings underscores the benefits of our differentiated strategy. Notably, we secured more than 6,000 pre-registrations from our casino database and generated almost 11% NGR with limited external marketing spend.

Our Interactive segment had an adjusted EBITDA loss of $10 million this quarter. Later this month, we expect to make a second $12.5 million installment towards the California sports betting initiative, while not originally contemplated in our Interactive segment guidance for 2022.

We remain on track however, to generate an EBITDA loss of approximately $50 million from this segment in 2022 as we continue to scale operations and infrastructure.

Following our first quarter results, we anticipate the most significant losses will occur in the second and third quarters as we continue to ramp in our new markets and prepare our products and tech stack for football season. Fourth quarter will likely be closer to breakeven.

By 2023, we expect to be generating positive adjusted EBITDA as we start to realize the benefits of our wholly owned tech stack.

In addition to the successful launch of our Barstool Sportsbook app in Louisiana on January 28, we became -- which became our 12th state, excuse me, one of the top highlights of the quarter is undoubtedly the launch of theScore mobile app in Ontario on April 4.

As highlighted on slide 18, while still early, theScore Bet's performance thus far in Ontario has exceeded our expectations, due in large part to theScore's incredible brand recognition and media footprint as well as the support from Barstool Sports in the popular team from Spittin Chiclets, the number one Hockey Podcast in Canada.

As a reminder, with a population of 15 million people, Ontario would rank as the fifth largest state in the U.S. on a population basis. Since launch, theScore Bet ranked as Canada's number one most downloaded sports betting app.

and he number one rated betting app in the iOS 4 Early results reflects strong cross sell opportunities, currently 79% of all bidders in Ontario are theScore Media app users and 50% of theScore's Sportsbook users have wagered on the iCasino products.

Just after launch, theScore announced an exclusive 10-year gaming partnership with the Toronto Blue Jays. This deal grants theScore Bet national marketing rights that extend across all gaming categories, including sports betting, casino, online casino and fantasy sports.

The Blue Jays and theScore Bet also plan to create a branded premium 365 days a year flagship sports bar and restaurant at the Rogers Center that will serve as an entertainment hub and destination for fans.

theScore Bet app is built on theScore's state-of-the-art account -- player account management system, excuse me, and bonus engine, which provides highly customized features and seamless integration into theScore media app.

In the third quarter, we expect to transition as planned, theScore Bet in Ontario to theScore's proprietary risk and trading platform as well, which will allow us to significantly bolster the product's features and capabilities, including expanded betting markets and parlay options.

Meanwhile, we remain on track to transition the Barstool Sportsbook to the theScore's PAM and trading platform in the third quarter of 2023 as previously communicated, which will provide meaningful cost and revenue synergy opportunities. We are excited to have two very strong sports brands in our portfolio in theScore in Barstool Sports.

As we mentioned on previous calls, we plan to lead with theScore Bet in Canada given its strong brand equity there, while focusing on the Barstool Sportsbook brand in the US.

We feel the best way to maximize the value of both brands in the US is to fully integrate the Barstool Sportsbook app into theScore media app, which will occur during the second half of this year.

As noted on slide 14, the Barstool Sportsbook app has gained market share in the three states that report net gaming revenue by operator despite our spending a fraction of what our competitors do on promo and paid media.

We continue to believe NGR is a more relevant measure of performance as opposed to handle market share, which doesn't mean as much when revenues are largely diluted by marketing and promotional expenses.

And while our popular Barstool Sportsbook app is tied for the type or first on the Apple iOS store among sports betting apps with an average customer rating of 4.8 on a scale of five, we are continuing to add new features to drive further adoption.

You'll see on slide 15, we introduced MLB Same Game Parlay, Parlay Plus option and will launch new withdrawal methods, including Mastercard and Apple Pay in the second quarter of this year. Notably, approximately 90% of our withdrawals are now instant, which we're very proud of.

Finally, we expect to add a search function and the ability to use mycash as currency later this summer. Meanwhile, our Barstool-branded iCasino business continues to grow as we improve our products, add new games and leverage our casino database and creative marketing by Barstool Sports.

For example, Barstool recently launched an iCasino focused Twitch channel, called the Coin Boys, which already ranks in the top 1% of all Twitch programming with an average of 5,000 viewers per stream and a staggering average view time of just under two hours. Flipping ahead to slide 17.

We're also excited about the initial slate of games from our Penn Game Studios, which are drawing rave reviews and have contributed nearly 30% of Barstool Casino's online handle across Michigan, New Jersey and West Virginia. We have high expectations for our first batch of games in Pennsylvania, which launched last week.

On the media front, we continue to build momentum as theScore grew revenue 42% year-over-year in the first quarter and continues to garner high levels of engagement. Barstool has also continued to expand its audience and reach while pursuing new outside-the-box growth opportunities.

On March 18, the second stand-alone Barstool Sports bar opened in Philly to very strong demand and two additional locations are under development in major metropolitan locations.

In addition, in April, Franking and Trent from the Barstool Gulf podcast attended the PGA Zurich Classic, providing video commentary, which garnered four million views and over 100,000 engagements.

On May 7, Barstool will broadcast an alternative commentary to the Canelo Fight on DAZN, representing a further extension of the Barstool brand into live sporting events.

Looking forward, we believe there is significant upside for the media business, and we'll talk a lot more about that in coming quarters as we begin to realize the benefits of cross promotion with Barstool Sports an additional monetization opportunities with both Barstool and theScore. And with that, I'll turn it over to Felicia..

Thanks, Jay. As Jay mentioned earlier, we reported record first quarter revenues of $1.56 billion and adjusted EBITDAR of $494.7 million, which grew 23% and 11% year-over-year, respectively. I'm happy to report the robust demand that Jay described in the first quarter has continued quarter to-date.

Overall, the competitive environment has largely remained stable. And further, we continue to work on mitigating inflationary pressures by adjusting our offerings and pricing strategies to keep costs in line.

As we look toward the remainder of the year and take note of our growing mychoice data base, the tangible benefits of our technology investments at our retail properties and our momentum in our Interactive segment, we are increasing our prior 2022 revenue guidance range to $6.15 billion to $6.55 billion and our EBITDAR to a range of $1.875 billion to $2 billion.

We continue to believe that our property level EBITDA margins are sustainable at 37%. Now looking at our first quarter 2022 cash expenses. In the first quarter, corporate expense, inclusive of cash settled stock-based awards was $24.7 million. Our cash rent payments to our REIT landlords were $229.3 million.

Cash interest on traditional debt was $30.8 million. Cash taxes were $1 million and total CapEx was $65.6 million of which $54.6 million was a combination of maintenance and return-generating projects, including the three Cs and our Barstool retail sportsbook.

The balance was project CapEx associated with our new Hollywood York and Morgantown projects in Pennsylvania. As of March 31, 2022, we had 183.4 million fully-diluted shares outstanding.

Regarding certain 2022 modeling metrics for your free cash flow forecast, we expect 22 corporate expense of $98.8 million, inclusive of our cash settled stock-based awards. Total CapEx remains roughly $300 million, of which $100 million is return-generating discretionary projects. We forecast 2022 cash interest expense of $98.3 million.

Cash taxes will be $110 million net of refunds received, and for the full year fully-diluted shares are expected to be 183.4 million shares, which is before any incremental share repurchases.

Now talking about share repurchases, we were quite active in the quarter under our share repurchase authorization given our view that the market was undervaluing our shares. We repurchased 3.8 million shares of our common stock in open market transactions for $175.1 million at an average price of $46.04 per share.

There is $574.9 million remaining under our $750 million authorization. As I mentioned on our fourth quarter earnings call, our balance sheet gives us the flexibility to be opportunistic in a dynamic marketplace and to return capital to shareholders.

We continue to see a dislocation between where we value our shares and where they are currently trading, and we expect to allocate capital accordingly if this dislocation persists. Now I'd like to call your attention back to slide 7 of our earnings deck. We remain very proud of our balance sheet, which provides us with a great deal of flexibility.

The statistics on the page speak for themselves.

And on May 3, we entered into a second amended and restated credit agreement with our various lenders, which provides for a $1 billion revolving credit facility undrawn at close and upsized from our prior $700 million revolver and a five-year $550 million term loan A facility and a seven-year $1 billion term loan B facility.

The proceeds from the credit facilities were used to repay the existing term loan A facility and term loan B1 facility balances. The transaction was leverage neutral and strengthens our balance sheet even further as pro forma for the refinancing, our liquidity is $2.78 billion, and our earliest maturity is now 2026.

And with that, I will turn it back to Jay..

Thanks, Felicia. On April 26th, in conjunction with the filing of our proxy, we published our 2021 corporate social responsibility report, which highlights the many ways Penn is continuing to live up to its commitment to being a good corporate citizen.

I'm really proud of the report, which shines a spotlight on the tireless efforts of our team members at all levels of our organization to support those in need in our communities to further our diversity, equity and inclusion efforts and to help preserve our finite natural resources.

Some notable examples include the launch of a $4 million STEM scholarship fund and internship program at historically black colleges and universities in states where we operate.

We also contributed more than $7 million to help fund COVID-19 and hurricane relief efforts, as well as supporting worthwhile charities and civic organizations around the country with thousands of hours of volunteer work by our team members in addition to our financial donations.

Most recently, on March 23rd, members of my executive team and I hosted Louisiana Governor, John Bel Edwards and other local and state dignitaries. At the Annual Metanoia Gala at our L'Auberge Casino & Hotel in Baton Rouge to help raise funds to support adolescent victims of human trafficking.

It was a very emotional evening, having visited this group's one of a kind shelter for girls aged 11 to 18 years gold were there, provided care for their mental, physical and spiritual well being as well as instruction in academic, life skills and job training.

We’re super proud to support this organization’s critically important mission today and going forward. At Penn, we also spent the month of March, celebrating women’s history, which included a women behind theScore Bet, virtual panel to recognize the critical role our female team members played in the development of theScore Bet app.

I look forward to continuing to update you on our ongoing ESG efforts throughout the year. And with that Tina will open it up to questions..

Thank you. [Operator Instructions] The first question comes from Joe Greff of JPMorgan. Please go ahead..

Good morning everybody. I have a two-part question on Interactive, and one on the land-based casino side.

On Barcelo iCasino, can you talk about from here the plan to launch new games and titles for the rest of the year? And then how that rate of growth in new games and titles translate into rate of growth in iCasino GGR, should that be moving in similar trajectories? And then you've given the slide deck, thank you for doing it, what the GGR for iCasino has been.

Can you talk about how that translates into NGR, and then I'm assuming that's EBITDA positive right now that segment, can you talk about the margins and maybe the scale benefits and the impact to margins as you introduce new titles and game introductions from here?.

Do you want to throw out the land based question also? And then we'll discuss on all those?.

Sure. I guess we repeat them. I won't remember it. But obviously one casino operator this week talked about seeing slight softness in that lower end consumer on the landing side.

Can you talk about what you're seeing at the lower end of your database and for that matter, any degradation and any other segments that might be worth calling out? I know you have a slide deck, a lot of data on the VIP and that core customer, which looks like it's pretty stable and not being impacted by whatever.

Pick your poison macro factor that's out there? Thank you..

Yeah. Thanks, Joe.

Todd, do you want to tackle the last question first and then I'll hit the first couple?.

Sure. Thanks Jay and thanks, Joe. We've really dug into this and understanding everything that's going on with the economy and the world right now. But I'm very happy to say that we've seen very little fall off in that lower end segment. And frankly, when we really started to dig into the numbers, it's a combination of a couple of things.

Some of those consumers are actually moving up into the right, moving into our kind of mid-core level customers, maybe a little bit reduced frequency, but higher value when they come in. And then some of those the way we structure our marketing and program incentives, some of those are frankly moving into an unrated place segment.

So, when we look at this and again as you know, not really a high profitability segment to begin with. So, we're very strategic in the way we reinvest in this group. And what we've seen is that they've moved either up and to the right or frankly, into unrated, where they're actually more profitable for us..

Great. Thanks Todd. The first couple of questions on interactive, Joe, I'll provide some detail. We haven't provided all the detail publicly that you've asked for. We will in time.

Obviously, we're still in the very early days in this nascent business, but on the Barstool iCasino side and we do have a slide, as you mentioned, that our Penn Game Studios, we continue to put out really good content.

And we're now up to 30% of the handle in iCasino in the States where we've launched those games, which is West Virginia, Michigan and New Jersey, a total handle. And so when we first launched, obviously we were in the single digits, I think last call we mentioned it was up to 20% of handle. Now it's up to 30%.

We did just launch that entire batch of games that's been live in the three States. We just launched those in Pennsylvania on the Barstool iCasino offering as well, a couple of days ago. So we would expect the percentage of play on our games to continue to grow in Pennsylvania.

Now that those games are in market, we also have a slide that shows you what the momentum on a sequential basis looks like from a GGR perspective in iCasino will continue to move up and to the right. We're not satisfied, obviously, with where we are an online casino.

Most of our energy and focus and resources for the first year and change that we've been live has been toward making sure that we had online sports betting products that was going to be competitive. I think we've definitely delivered on that both here in the US as well as in Canada.

And you should expect to see our online casino products continue to improve. The number of games in the library continue to grow both from well known third party providers as well as our own games. And I think you're going to see that happen in all the States that we're live in.

We really prioritize online sports betting first because it's just you have so much more scale, legal so many more states and really serve the such a great acquisition tool for online casino as well as for our retail casinos.

And Todd highlighted in our earnings release, as well as in the slide just how rapidly we've been growing our database and then there's all of these great omnichannel cross-sell opportunities.

So online sports betting for us is so valuable, not just because of the sort of standalone P&L, which we feel good about is going to get better in time as we have more scale and get better and also owning our own technology but you think about the cross-sell to online casino and the cross-sell to our brick and mortar casinos and elsewhere, very exciting.

Last part of your question was around GGR to NGR, and what I would tell you is that the correlation between GGR and NGR is very tight in online casino. There's very little promotion and discounting that goes on there.

It's not like the delta you see in the states that report GGR and NGR on the sports betting side, where there more of a delta, and it's very volatile. You don't see that on the online casino side. We typically don't have to discount much to convert GGR to NGR and online casino..

Great. Thank you. And then one final question regarding the Ontario launch. You have a bunch of metrics down there regarding downloads and registrations and average daily active users. Can you actually talk a little bit maybe in relation to Pennsylvania and Michigan, handle and GGR performance.

And do you think Ontario's development or growth as a market is impacted by the transition from a gray market to a legitimate developed market?.

Yes, there's a lot to go through on Ontario, all of which we feel really good about. It's still early days, but we shared some stats, you should assume that handle results look very favorable compared to other states that we've launched in, much like the DAUs that we provided there.

One of the lead things about what we’ve seen in Ontario is different than what we’ve seen in the US is that. One, we had a couple of weeks to work on pre-registration and so our friends at Barstool Sports and of course the score we really were very successful in getting a lot of downloads and registrations done before the go-live date of April 4.

So that was something that worked really well for us that we hadn't done as much in the US. The other thing I would say is that when we went live on April 4, we were obviously really pleased with the volume we were seeing in downloads, registrations and first-time deposits.

But what's been interesting in Canada and I attribute this just to having a little bit of a different strategy than in the US.

In the US, really relying organically mostly with our partners at Barstool and when our partners at Barstool announced to their audience that we're live in a state, you just see such a huge influx on the first day or two, and that's the bulk of what you're going to get in those first few weeks.

You still continue to grow downloads registrations and first-time deposits on week two and week three, but you do see it fall off a little bit faster because the audience follows so quickly.

And in Ontario, what we've seen is that even since the day of launch on April 4, every day thereafter, we continue to see significant -- we're talking in the high hundreds in terms of first-time deposits and in the thousands in terms of downloads every day incremental to what we saw in the first day. So we're continuing to build that business.

We're seeing new users, download the app and deposit and bet every single day, and the churn has been low. So we feel really good about the products. We're obviously live on our own player account management and bonus engine already.

So we're halfway there on the tech stack, and we'll be live on the remainder of the Managed Trading Services platform this summer before football season. So far, so good. We'll share a lot more detail about Ontario in the future.

I don't want to speak much more about the details of our numbers only because we don't know what everyone else's looks like at this point. The last part of your question around it being a gray market. We didn't really know what to expect because people have been playing with gray market operators and apps for many years in Canada.

But given our ability to quickly penetrate and convert people from the media app to the betting app and to grab people through our other relationships throughout Ontario. We've been very pleased.

I don't -- I can't really compare it to anything within market because we don't know how everyone else is doing other than you can -- there's been some publicly reported number of downloads of the app and things of that nature, which we obviously have scored very well.

And I would tell you all the other metrics are consistent with what's been reported publicly..

Thanks, Jay.

Thank you. The next question comes from Shaun Kelley, Bank of America. Please go ahead. .

Good morning, everyone.

Jay, a lot of ground's already been covered, but -- and I don't know if this is for you or maybe for Todd, but if we can go back to a couple of the comments on the core consumer, if I was going to kind of summarize what we've heard from other operators, I think some have hinted there could be some softness at the very low end of the database amongst the consumer.

Others have largely said there's really nothing to see here.

Could you just really summarize that for us? And then maybe take us through a slight walk around a handful of regions where you might be seeing some regional differences, particularly in the South, maybe out west where it actually sounds like trends really good in the local market, but maybe just a couple of highlights there would be really helpful for everyone..

Yes, I'll let Todd answer that one as well..

Thanks, Sean. So I'd put us in the camp with really nothing to see here. Even going into April and now into May, just based on where our properties are, and I guess, to give a little more color to what Joe asked as well, that lower end, so look at it kind of that 0 to 49, that's really down less than 0.5%, 0.3%.

But really, we're making that up on the 50 to 99, which is up 3.7%, the unrated, which is up 5.4%. We're seeing really positive visitation. When we kind of slice and dice our database and look at not only the work segments, but also kind of the geolocation.

We are seeing anybody that most of our customer base is within 50 miles just based on where our properties are located. So -- everything in there is actually trending very well. We also are seeing a little bit more growth at some of our more destination-type properties.

So I think you start looking at the Midwest, the South and we're seeing really decent growth in across all segments. And now that we're getting into those summer months where we're increasing the entertainment options, we're located next to some bigger entertainment and sports options and everybody going back out to these events.

So again, we're seeing different growth patterns than what some of the industry has seen. But really, we couldn't be happier with what we've seen right up into May..

Super, very clear. And then maybe as my follow-up. Felicia, one of the highlights, you called out was around the stock repurchase. Obviously, we knew the authorization was out there, but you put some of it to work.

Can you just help us think about parameters around that? I think a lot of this should be self-funding out of free cash flow, but maybe just help us think about the balance and sort of programmatic versus opportunistic the sort of operative words for us on Wall Street..

Yes. Thanks Shaun. Yes, I think that we're going to continue to be opportunistic. So, as you know, we've already repurchased 175.1 million shares. And if you go back to the K, I think we reported that we did about $107 million.

So, we were obviously active in March for as long as we could be, which got us to that average price of roughly $46 with our stock where it is now, I think it's fair to say that if we thought our stock was undervalued at $46, we think it's undervalued in the high $30s. And so we'll be in the market again, but it's going to be opportunistic.

And I talked about our strong balance sheet and our liquidity. And so we're just in a really fortunate place to be able to be nimble and take advantage of the dislocation that we see..

Thank you very much..

Thank you. The next question comes from Barry Jonas, Truist Securities. Please go ahead..

Great. Thank you.

Jay, can you maybe give some more color about how you plan to reimagine your properties for that younger demographic? And I'm kind of interested in how you think about balancing that with retaining interest from the older demographic?.

Todd, do you want to tackle that one as well?.

Thanks Jay. And thanks for the question, Barry. So, you see that we touched on a lot of this in the slide presentation. Really, a lot of this is being done through technology, our food and beverage offering, the design of our hotel rooms.

And as we start to get into this year, you look at Greektown, Laberge, Lake Charles, and the new hotel offerings that we're putting out there, I think, are going to be best-in-class, best-in-market. We've all been extremely fortunate.

We've talked about this on numerous calls doing away with the dated completely dated buffet concept, which is very fortuitous now, obviously, with rising prices, but using that space in a much better way creating more interactive venues, venues that can kind of change with the seasons, venues that can kind of change a lot easier than a buffet that had been around for decades.

But the real big impact for us is trying to look at the guest experience, the consumer experience and remove friction.

A lot of that being done again through technologies with the three Cs that Jay mentioned -- but just kind of imagine the process in going through the casino from just five years ago and thinking about the queuing and the lines and what we've done is try to move away from that.

So, for all consumers, and that's not something that just the younger demographics like, it's really something that applies to everyone coming into a casino. We want to make it easier for everyone coming in to really start enjoying their experience and enjoying their visit..

I was just going to add one thing. I agree with everything Todd said. When I'm highly encouraged, we were just looking at our age trends, age segment trends and the database for April, for example. And last year, at this time, there was a lot of stimulus money rolling through the economy.

There were still very few things for people to be able to do for fund to go out. There was no concerts, restaurants had restrictions, you couldn't go to bars or if you did, they were closed early, you couldn't go to the movies. You can do all of that now.

I was actually reading an article this morning that talks about how customer behavior has so quickly return back to 2019 in like the last couple of months.

And you consider that all of those options are now available to people who love all of those options and have been a part of those options for many, many years, and yet what we're seeing is that, that younger demo that we were able to bring into our ecosystem over the course of the last couple of years when there was less to do, but our buildings were open, our offerings were up and we're still seeing sizable growth, as you saw in the Q1 results.

April looks just as good on a year-over-year basis off of a very, very large base of growth over 2019 last year. So – it's not as though we brought these younger demos in and they didn't like the experience, but it was the only thing to do.

And then it was mass exodus as soon as they can go back to concerts and sporting events, we're growing on top of significant growth from last year. And as you look at Q1 of this year versus Q1 of 2019, the growth in those younger segments is super robust..

Yeah. To Jay's point, that 21 to 34, Barry, is up 83% compared to 2019. So the big problem that everybody was trying to solve pre-pandemic was how do we attract the younger demos, how will they engage with us, what games will they play.

And again, this created that unique opportunity at this moment in time where they came in, looked around and found something that they liked and we're continuing to evolve as they are but we're holding on that and a lot of that is kind of incorporating the entertainment that they're looking for..

That's really helpful. And then just a question on the guidance raise.

Can you maybe talk a little bit about what underscores the raise? Is it kind of less concern about the macro economy and inflation, maybe less concerned about new supply cannibalizing you in the back half of the year? And I would just add, I think the implied margin actually went down at the midpoint. So any color there would be helpful..

If it did, that's not intended. I mean we've committed to what we can do, Barry, on the land-based side at 37%. We said that the last quarter, we obviously delivered on that this quarter.

Look, -- this is – it's delicate, right? I mean, we put ourselves out there a little bit doing guidance at the beginning of the year when most of our competitors chose not to.

And I wasn't sure if that was the right decision or not when we did it, but we felt like we had enough visibility and we felt confident that what we were able to do in the second half of last year from a land-based perspective, we'd be able to take into 2022. And so we've done that.

And I mentioned at the beginning of the call when I highlighted a couple of our properties and markets where we have seen that new competition. And of course, you're impacted by that in Black Hawk, Colorado, our Ameristar property there and our Ameristar property in Chicago with the new hard rock opening.

But our properties have made quick adjustments, our leadership teams, Todd and Aaron Chamberlain and Rafael Verde and our GMs and our property teams there have made adjustments. And so we're able to raise guidance because we feel like we have visibility into our business at this point in time.

We feel like we understand the competitive impacts from the new supply in some key markets. And the only other market where we know there's new supply coming is Nebraska, which will have some impact on Council Bluffs, but that is looking like it's a ways off. There's going to be temporary casinos for a while before permanent.

And so we're – if you look at the guidance raise, we're taking every – all of the consensus beat for the first quarter. We're sticking to what we had said at the beginning of the year for the remainder of the year and if trends that we're seeing today continues, and that's likely a conservative position to take..

Yeah. I would only add, Jay, and Jay, you talked about this, that 55-plus to 65-plus definitely. They have been lagging behind. You heard others in the industry talk a little bit about the coronavirus impact in January. So that has kind of kept them a little behind, and we feel there's upside definitely there.

And then with some of the capital projects that Felicia has mentioned, as those come online, we feel that there's really good momentum at a lot of our properties..

Okay. Thanks guys and congrats on a great quarter..

Thanks, Barry..

Thank you. The next question comes from Thomas Allen of Morgan Stanley. Please go ahead..

Thanks. Just a follow-up on the guidance. Super encouraging that you guys increased it. I did think it was interesting that we're now one quarter into the year, and you widened the range. Is that being the macro uncertainty or something else? Thanks..

It's not really due to anything. We just tried to provide a guidance range that took into account the beat for I wouldn't read into it widening. And I wouldn't read into that, Thomas. We feel obviously good about the midpoint of that new range, which is higher than what we had out there at the beginning of the year.

And look, the only thing we don't know is macro impacts of things. There's a lot going on in the world today. But I would also add that we haven't seen impacts from higher gas prices, but we've also been down this road before. I mean, our regional businesses, you look at the catchment areas, you're talking about 20-minute drive.

This is not going to break the bank. You're not going to be spending a lot of money on gas to go to a casino once a week or a couple of times a month, whatever your habits are. And -- so we feel good based on what we see, what we have visibility of.

The trends as recent as today, I mean, yesterday's results, I mean we're looking at this every day, and we feel good about the guidance we had out there. We feel good about the guidance we just raised, but I wouldn't read into the range, meaning anything..

Perfect.

And then just on the interactive side, could you give us how much revenue you expect to generate this year? And if you're not comfortable with that, just like qualitative commentary, are you more optimistic than you were last quarter around the amount you can generate this year?.

Yes. We haven't given that number, but I would say our optimism continues to grow. Ontario is off to a great start. I had high expectations. We're doing better than I thought we would do in Ontario, which is -- it feels great to say.

And we're continuing to grow our online casino business, I think, football season, it's going to be our second real full season of football at scale. We learn every month, every quarter what works, what doesn't.

I think our partnership with Barstool just gets stronger in terms of how we communicate and what we do promotionally and through events and live streams and all that. So yes, momentum is good, and our confidence continues to grow in terms of the future prospects..

All right. Thank you..

Thank you. The next question comes from Ryan Sigdahl of Craig-Hallum Capital. Please go ahead..

Good morning. Thanks for taking my questions..

Hey, Ryan..

Curious on -- so you talked a lot about revenue kind of the demand side, but curious if you're willing to break out the cadence of property level EBITDAR margin by month in the quarter, kind of January versus March? And then if you're willing to comment on April has trended?.

You should just assume for Q1 that it got sequentially better. Omicron impacted January to some extent. February was really good. March was better and April was very good. Remember, and I just try to be transparent about these things. There were five full weekends in April. So you should expect April's margins to be really good.

But any time historically that your April margins or anything like March, that's very rare, even when you have calendar benefit. March is typically the best month of the year and momentum in the business right now is very good.

Todd, I don't know if you want to add anything to that?.

Well said, Jay. The only thing I would add. Jay and I were talking about this. March is always one of the best months traditionally. April is always one of the tougher months based on holidays and taxes and everything else. But the actual growth from 2019 to 2022, April to date has been one of our strongest months from a margin standpoint.

So really, really happy with where we're trending..

Great. And then if you add up where you've launched CCC and then the coming properties over the next few quarters, you have 23.

How many total properties do you anticipate today will be allowed by regulations? And then, secondly, on that, you gave some good qualitative metrics, but anything you can share about the financial impact, thinking revenue uplift, margin impact, et cetera?.

So the regulatory meetings we've had have gone great. Rich Primus, who heads up our tech team and a bunch of his folks have done a great job working with the properties and the regulators. And every time the regulators see what our offerings are, there is this kind of, oh, we get it and we see it.

So I think our goal is to be at, say, 30 properties depending on regulatory schedules, but that -- not all of that will arguably happen this year, just based on getting in front of regulators, making sure that we can roll everything out.

But the impact you've -- you're looking at very much in its infancy, as we move across states, but we are seeing a good lift that, as we get more people into the ecosystem, we should be able to share some really good data points, but I think we're probably a few quarters away on that..

Great. One last one for me. Just MGM went through a rebrand, expanded their loyalty rewards program earlier this year.

How do you feel about the breadth, depth and really brand of your mychoice program?.

I would say, stay tuned..

Great. Thanks, guys. Good luck..

Thanks, Ryan..

Thank you. The next question comes from Bernie McTernan of Needham & Co. Please, go ahead..

Great. Good morning. Thanks for taking the questions. Jay, I was hoping you can just zooming on the tech stack launch in Ontario with your PAM and bonus engine.

How is that experience? And maybe if you can compare it to the launch in some of the US states where you're using someone else's technology, anything that you could call out that, that you were able to do that, you had in other state launches? And then, just, you talked about a little bit, but just the road map from here in terms of the 3Q rollout of your tech and trading platforms and then it's just kind of a test period in Canada until the launch in the US next year.

I just want to make sure we have it right and anything else to think about the tech stack. Thanks..

Yes. The second one is easy, Bernie. The road map hasn't changed. Our plans haven't changed. We actually have a slide.

I believe it might be in the appendix of the presentation if you haven't seen it, which just reinforces what we said day one, when we announced we were acquiring theScore in terms of key quarterly milestone dates and what we plan to do in those quarters that it takes you out through the end of 2023. So that one is status quo, which is great.

Everything is as planned. Our engineering teams are working great together between Penn Interactive and theScore and product design people. We're really excited. It's -- these are fun days. And I would say on the launch on our own PAM and bonus engine in Ontario, it's obviously early days.

I was thrilled that we really knocking on way we didn't have a hiccup. I mean, it was so smooth and seamless. We handled it under a tremendous volume and stress at the launch with -- in Ontario was the NCAA National Championship game was the first day of launch. There was a lot of volume and handled it great.

The team at theScore Bet, the Levy Family everybody there. We just -- we're really happy with how that's gone so far. And I think the -- probably the biggest things that are noteworthy, and we highlighted these, Bernie.

But for us, being able to have your sports betting offerings fully embedded and integrated into your sports media offering is super powerful, especially given how popular theScore media app is throughout Canada. And it's probably worth a trip for some of you guys on the sell side to get up there and actually try it out. It's really amazing.

You can populate your bet slip, do everything within the media app. And then when you're ready, it just seamlessly takes you over to the betting app, you deposit, you bet and off you go.

So owning your own PAM allows that to happen and allows it to happen in the exact way that you want it to happen, which is sometimes challenging when you're working with third parties because the third parties are always going to look at least common denominator of what all of their B2B clients are looking for.

And in this case, we get to control the entirety of that product experience and road map And on the bonus engine side, again, still very early, but you should think about the benefits really being that we can personalize and customize offers, so when you're thinking about CRM opportunities and I think the industry -- online industry in the US and Canada is still so new.

And I don't think any of us currently are doing that well. I think mostly the marketing efforts, whether it's promotional or media, it's kind of a shot yen approach and everybody gets whatever the offer is. And what we're able to do now that we have our own promotional engine as customized offers based on individual behavior.

And that's obviously super powerful. I think we've become quite sophisticated at being able to do that in our land-based businesses. And so to be able to apply that same science and knowledge and know-how and apply it to our online business is it's going to be really powerful. So yeah, we're feeling really good.

And then managed trading services, as you'll see on that time line that I referenced earlier in the slide deck, that's still planning to be launched before football season this year in Ontario.

Obviously, what comes with that is just an expanded library of betting markets when you think about same-game parlays, and all sorts of different parlay options, we can be a lot more flexible on pricing and how we think about exclusive bets, whether just in Canada or Canada and the US with our friends at Barstool.

And there's meaningful cost savings with all of this because today or up until recently, the score had third-party providers for their PAM as well as manage trading services, much like we currently do in the US.

And as those costs roll off and you're on your own technology, there's real meaningful cost synergies to go along with the revenue synergies that I referenced..

Understood. And Jay, maybe just one follow-up because admittedly, I haven't taken the field trip up to Canada yet, but how does the -- if you were to isolate competition to just product. And so you're obviously competing against a whole bunch of new operators with the great market operators are in the US.

How does the just competitive landscape feel from a pure product standpoint relative to the US? Do you think the US operators are ahead of maybe those gray market operators? Obviously, there's about 365 there, too, which is generally considered to be one of the better operators globally?.

Yes, it's a great question, and I think it really evolves down to the individual end user and what are they looking for? What are they accustomed to? There's going to be some people in Ontario that have been betting with that 365 in the gray market for a long time, and that's what they're just going to continue to do, because that's what they've been doing.

And so I'm confident that, people who have been betting with gray market operators, they take the opportunity to download our app and to register and deposit.

We're very confident that they're going to continue to come back to us at least as one of their options as we move forward because the player experience and how seamless everything is integrated between media and sports betting makes what we're doing there and obviously, here very, very unique.

Our plan – and again, I mentioned in the slide that 80% or 79% gets rounding up of our users on the score bet in Ontario were known on the Score media app.

And so there's obviously a lot of value in being able to convert and being able to make this seamless on the media applications, and we're going to be doing the same thing here in the US and bringing the Barstool Sportsbook offering and fully integrating that into the Score Media app throughout the United States, second half of this year.

Not sure if that will be beginning or middle of football season, but sometime during football season. And given what we're seeing in Ontario, we think that will be another nice shot in the arm for our business here in the US..

Okay. Thanks, Jay..

Thank you. The next question comes from Chad Beynon of Macquarie. Please go ahead..

Hi. Good morning. Thanks for taking my question. Jay, I wanted to ask about California. I think there's been some confusion from investors this week because there's two separate measures on the ballot in November.

Do you have a sense of where California support is on the build that you're supporting, understanding that there will be a lot of communication on the airwaves and in person between now and the election? And then secondarily, on California, is your database proportional in California to the US population, or do you have a higher percentage of stoolies in California? Thanks..

I'll tackle the second one first, Chad, and then I'm going to ask Eric Schippers, who heads Govt. Relations and Public Relations for us, so he's super close to what's going on in California and can tackle some of the more detailed parts of the question that you had.

In terms of database and popularity, if you look at it across the country, the Northeast, obviously, Barstool is strongest because that's where it started. But it's now such a national brand, very strong in the Midwest. We can't wait to get launched in Ohio.

It's one of the most popular states in the country for Barstool Sports, and we obviously have four great casinos in Ohio as well. Down South, very, very strong and less strong, and Dave actually spent quite a bit of time out in California for a variety of business things.

So yeah, you should assume that what we've been able to do in some of the larger population states that would be our expectation for what we can deliver in California as well..

And then in terms of the pooling, there has been some competing poles out there, but we're pretty confident and the strength of our pooling, which shows that 59% of respondents support our ballot initiative, which would open up the market to mobile gaming. The other initiative, which is on the ballot would be for retail only.

And so they're not really competing. They're actually complementary. And if both were to be approved, we can go down the road and be very successful there. If only ours is approved, the tribes still have an opportunity through partnerships with us to participate.

And I think the key thing here and what is driving the popularity of our initiative is the fact that 85% of the revenues are going to go to support mental health issues, and that is wildly popular in California..

That's great. Thanks for that detail. And then I just wanted to ask the question you get from time to time on the strip. It appears that there's still a few assets for sale out there.

What's your appetite for looking at properties on the Strip at this time?.

Not much interest. We're not kicking the tires right now on anything, Chad. Occasionally, -- we have in the past, if it's a really unique opportunity and a really unique asset, great location and we just -- we're not looking at anything currently..

Thank you very much. Congrats on the results..

Thanks, Chad. We'll take one more question, Tina. .

Thank you. The final question comes from David Katz of Jefferies. Please go ahead. .

Hi. Good morning. Thanks for working into the wire.

If you could just share some thoughts on how we look at the score in conjunction with Barstool? And the degree to which those customer populations overlap -- don't overlap, fit together, where the opportunities are? If there are any sort of crossover between those two?.

Yes. Happy too, David. I would tell you that the demographics are a bit different. If you look at Barstool, it definitely skews mostly people in their 20s into their 30s. And if you look at the score, it's more in your 30s and 40s. There's obviously -- it runs the gamut.

But in terms of if you're looking at like the core demo, that's what it would look like. There is obviously some crossover here in the US as well as in Ontario.

But what we've seen is that when we have activated Barstool effort, we tend to get a different response than when we activate the Score efforts, which tells you that there's a lot -- that's incremental between the two customer bases.

And I think when you think about the opportunities from a pure media perspective, we're already starting to dabble and we're seeing that there's a lot of opportunity as you think about advertising partnerships and partners that we have at Barstool that have never been introduced to the score and vice versa.

Both have many Fortune 100 companies as advertising partners who maybe weren't familiar -- hadn't been made the introduction to the other media company that we have in our portfolio. So I think, we're already starting to see that there's a lot of upside in thinking about sales and revenue management and advertising partnerships differently.

There's obviously a lot we can do on the commerce and merchandise side. The score is just starting to dabble now and we're encouraged by what we're seeing there. So I think you should expect to hear more from us. There's a number of things that we're looking at right now.

Chris Rogers, and I were just on a call yesterday about some ideas that we have with our media partners that is new different verticals, but really exciting as you think about the loyalty of the audiences we have in our ecosystem and products and services that they're maybe using today outside of our ecosystem that they're not really excited about, but they would love to be more involved in our ecosystem.

So, I would just say stay tuned, particularly when we close on full ownership of Barstool Sports in Q1 of 2023, I think it will probably become a bigger part of our messaging from there going forward..

Got it. That's great. And in the context of all of the information we have and there's so much water under the bridge since we started this discussion.

How should we -- or should we at all think about market share or market share targets for what you have today?.

Yeah. We talk about this a lot internally. And we've talked about our feelings on handle market share versus NGR market share. I wish every state shared NGR market share because the ones that do, we not surprisingly score a lot higher in terms of market share overall. So, NGR is where you start to pay the bills.

Handle doesn't pay bills, GGR does not pay bills. NGR, you can start to pay the bills. And so that's all we care about is NGR market share.

And you should expect that when the market becomes more rational and you don't have as much discounting and buying of the business, which we do not participate in, to the extent that most of the rest of the competition does today, if you look at what we invest promos as a percentage of handle, promos as a percentage of revenue, paid media, those spend levels from the competition have to come down or else, no one will ever make money.

And I think everyone's been very clear about that. As those spend levels from the competition come down, I think that whoever has the best product, the best brand, the best relationship with the end users is going to continue to grow their market share, and we feel very good about our positioning in all those areas..

Got it. Thanks very much. Appreciate it..

Thanks, David..

And thank you, everybody, for dialing in and joining us this morning. We went a little bit over, but hopefully, that was a value. We look forward to speaking with all of you again next quarter..

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