Release Date: April 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: Tom, can you help me with some of the numbers that you listed out in your prepared remarks. I got somewhat confused. So -- and that's not difficult to do. But I thought you said $75 million kind of total in terms of weather-hold losses around North Carolina. But then I thought I heard you say Vegas was kind of tied to a $70 million hold the rest of the year. So just trying to reconcile what that -- make sure I have that $75 million total impact, right? And then maybe how that broke down a little more between Vegas-Regionals-Digital?
A: Yes. I told you the big ones. The three big ones. Hold Weather and North Carolina launch were more than $75 million. I mentioned other things like Adele moving that are smaller stuff that gets us to, if I'm looking at true non-onetime performance. I'm getting back to pretty close to even versus last year, which would include an increase in Digital if you're losing the $20 million North Carolina loss, an increase in Regional. But Vegas is probably still a little short to the record first quarter last year.
Q: Sticking with Las Vegas here, the Q has -- your table game drop was down 10% year-over-year. And slot handle down about 7% year-over-year. Last year's numbers include the Rio. What are those numbers, excluding the Rio? I'm presuming, I mean there wasn't that much net revenue from Rio last year. It was like $55 million in the first quarter. What's driving those declines excluding the Rio?
A: Slot handle was down 2%, Joe, net of the Rio and table drop was down 7%. So net revenue was down 4.5%. The bulk of everything that flowed through the quarter was table hold related. And recall, last year's first quarter was ginormous.
Q: Maybe over on Regionals looking at the margin performance that you guys reported in the 1Q. When I look at OpEx and imply it back on OpEx, it looks like OpEx actually was pretty similar to -- of 1Q '23 despite opening in two properties. I'm curious if there were onetime savings in there from the January weather or anything else that we can kind of think about to try and think about your operating OpEx per day going forward?
A: There was no -- there were no positives coming out of the weather. So there were no savings there. I mean you've known us long enough that we're constantly looking at how can we improve our margins. We're trying to not just be a cork in the ocean in terms of just being washed with where the economy goes. So we're always looking for efficiencies, and that's a testament to our team who has been together a very long time knowing we're in an environment that's generally inflationary, we're in both Vegas and Atlantic City, where our biggest union exposure is dealing with increased costs, and we don't tend to just eat that. We intend to improve the business from an operating perspective, become more efficient and deliver growth. And that's our expectation as we move forward.
Q: You mentioned a few times that looking across, whether it's the regions or Vegas, your expectations ex one-timers are effectively consistent. But what KPIs are you watching to assess whether it makes sense to perhaps start playing defense as it relates to costs? And as a related follow-up, what are the biggest levers if things were to erode and how should investors generally think about operating leverage as it seems like the market is back to worrying a little bit about the consumer here, and you've been able to be nimble in the past?
A: Yes, Stephen, I'd say we're always on defense on costs. And we are -- you should presume in a quarter like this, after the run that these businesses have had that we would be going to our local leaders and saying show me how we can tighten further, either by generating more revenue or more or fewer costs so that it's EBITDA additive. I'm not in the habit of coming up with a pithy name for that type of program. And laying out what those targets would be. But you should expect that we have initiatives in place that are well into 9 figures that we would anticipate flowing through the business by the end of this year. And that's partly just that's what we do, but it's also -- we recognized that growth is going to be not as easy to come by in the brick-and-mortar as it's been coming out of COVID. And we intend to continue to grow. So you should expect that's ongoing. I don't have a good acronym for it, but expect that you're going to see that flowing through in the coming quarters.
Q: On the Digital side, can you just remind us or kind of help us think about what's additive versus cannibalization after you launched your casino brand? And could this just be kind of a step forward for another thing? How many brands do you think makes the most sense in your consumer data?
A: Well, ultimately, you're limited by how many skins that you have. So you saw the transaction that we did with Wynn in Michigan that allows us hopefully, before too long to have another skin in that state. So we have two available in each iCasino jurisdiction and that should allow us to launch a second brand, and then we'll -- obviously, we'll see what happens after that and where we can get to from a skin perspective, it's different by state, but we have enough at this point to launch in every iCasino state.
Q: And then coming back to margins. I know before you've said in some of the markets you need to grow revs, I believe, 5% to hold margins. Does that broad statement hold true? Or could you grow slightly lower than that and still keep margins flat on a year-over-year basis?
A: Yes, I'd say yes to slightly lower, but I'd use 5% as a target.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
