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Penn National Gaming (PENN)
Q1 2011 Earnings Call
April 21, 2011 10:00 am ET
Eric Schippers - Senior Vice President of Public Affairs
Jordan Savitch - Senior Vice President and General Counsel
Steve Ducharme - Chairman of Compliance Committee
William Clifford - Chief Financial Officer and Senior Vice President of Finance
Peter Carlino - Chairman of the Board and Chief Executive Officer
Joseph Jaffoni - Investor Relations, Jaffoni & Collins Incorporated
Timothy Wilmott - President and Chief Operating Officer
Anthony Powell - Lehman Brothers
Carlo Santarelli - Wells Fargo Securities, LLC
Dennis Forst - KeyBanc Capital Markets Inc.
Justin Sebastiano - Morgan Joseph TriArtisan LLC
David Katz - Jefferies & Company, Inc.
Lawrence Klatzkin - Jeffries & Co.
Amir Markowitz - Morgan Stanley
James Omstrom - JP Morgan Chase & Co
Felicia Hendrix - Barclays Capital
Brian Egger - Harris Nesbitt
Ryan Worst - Brean Murray, Carret & Co., LLC
Steven Ruggiero - CRT Capital Group LLC
Steven Wieczynski - Stifel, Nicolaus & Co., Inc.
Ladies and gentlemen, thank you for standing by. I would like to turn the call over to Joe Jaffoni with Investor Relations.
Previous Statements by PENN
» Penn National Gaming's CEO Discusses Q4 2010 Results - Earnings Call Transcript
» Penn National Gaming, Inc. CEO Discusses Q3 2010 Earnings - Call Transcript
» Penn National Gaming, Inc. Q2 2010 Earnings Call Transcript
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 10-Q. Penn National Gaming assumes no obligations to publicly update or revise any forward-looking statements. Today's call and webcast may include non-GAAP financial measures within the meaning of SEC Regulation G, and 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 news announcement as well as on the company's website.
With that, I'm pleased to turn the call over to Peter Carlino, the company's Chairman and CEO. Peter?
Well, thanks, Joe. Good morning, everyone. Well, despite some very difficult weather in this first quarter, we're happy to report very strong results with good performance from most of our properties. And while we're still not seeing robust top line growth, with the exceptions of that Charles Town and Penn National, I think it's pretty apparent that Tim with our regional managers, our general managers and their teams have done an extraordinary job of bringing costs out of our businesses. I can tell you and you'll certainly ask more about this, we're off to an excellent start in the second quarter, so we'll have to see how the year unfolds, but we're a bit more optimistic than you might have found us in the past.
I could tell you also that all of our new constructions in Kansas and in Ohio is going exceedingly well. And we expect to break ground, in fact, as planned in Columbus next week, so we're right on target, haven't lost a day with that project. So I think it's a lot of good news as we look ahead. As is our practice, I'm going to wrap up the summary with that and open the floor to questions. So, operator, go ahead, please?
[Operator Instructions] Our first question comes from the line Carlo Santarelli of Wells Fargo.
Carlo Santarelli - Wells Fargo Securities, LLC
Just while I'm looking at your guidance and kind of your Q2 guidance in the implied back half of the year, it looks like there might be a little bit left on the table. If I run kind of your current margins through, is there anything there that maybe we're missing as it relates to maybe some of the joint ventures and some of the losses that might come from them in the near term or through the back half?
Bill, you take better to blame for that.
I guess that would be my question. I think as we look out, certainly we are incorporating operations from Rosecroft [Rosecroft Raceway], as well as well as the Sam Houston Raceway Park into our EBITDA guidance. But some of the other components that are out there is that we're also moving up the date of which we expect the 10th license in Illinois to open up. And candidly, we've got where we're looking at it going forward and recognizing that our margin improvement has been a gradual process. I think certainly, on a year-over-year basis, we're ecstatic with how we've done this year. But as we went along last year, our margins were continually developing and improving throughout the year. So I don't know that we certainly can't take this year's or this quarter's margin improvement and extrapolate that out for the rest of the year. Certainly not the rate of improvement. We're certainly reflecting, I think, margin improvement in the next quarter. And the combination of all of those events together is kind of where we look at. We're also not -- candidly, we're not including a rebound in revenues going forward or some kind of improvement. We're assuming revenues are basically flat on a year-over-year basis. Other than the properties that have table games, obviously, in the second quarter, Charles Town and Penn National continue to see robust growth. And then going forward from that, we'll start to anniversary to the table games, so we would expect our year-over-year revenue improvement to basically come back in line. Not to say that we don't expect some growth in Charles Town, but once we get the year-over-year comparisons, our revenue growth will not be quite as strong as what you've seen here in the first quarter.