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Penn National Gaming, Inc. (PENN)
March 05, 2013 10:00 am ET
Previous Statements by PENN
» Penn National Gaming Management Discusses Q4 2012 Results - Earnings Call Transcript
» Penn National Gaming Management Discusses Q3 2012 Results - Earnings Call Transcript
» Penn National Gaming Management Discusses Q2 2012 Results - Earnings Call Transcript
But, Hayes, thanks again. So let's get started obviously big picture of topical. We've seen regional gaming go through kind of the hits and starts on a monthly basis but if you look over the longer-term, it's been an industry that kind of bottomed and never really saw that recovery that other retail industries have. Fast forward to the present, we've certainly seen some sluggish months here. Obviously weather is a difficult comparison. You have constrains on the consumer, whether it's the payroll tax, gasoline prices going up, later tax returns this year, et cetera. When you guys look across the broader landscape and you speak to your customers, what's kind of vested tone that resonates, I guess, most loudly for you?
Well, we're still trying to understand. There's, as you mentioned, there's a lot of factors that we'd like to know. Is the timing of tax returns -- clearly the weather is an issue. Last February was probably the best month on memory. So we knew this February would be a difficult comp for us.
March, is I think going to tell us a whole lot and if weather-related business, if tax return related business comes back in March, we have strong March then I think we'll feel better about the consumer. If March continues the trend that we've seen in January and February, then you have to wonder whether it's more related to the payroll tax. The dow, I think this morning is hitting an all-time interday high. So there's consumer confidence somewhere. And I think we have confidence that, that business will flow through to us. It's a matter of patience and like I said, I think we're going to wait and see how March goes.
Great. In terms of -- as you think about, obviously your outlook for this year and relative to the guidance that you guys set forth, have -- clearly it's been about a month since you guys have announced earnings, a little bit more. Has anything since then kind of surprised you guys one way or another with respect to the cadence of February albeit a shorter month and obviously not the greatest weather?
Our guidance essentially anticipated a flat consumer in markets where we didn't have any competitive impact, there's only a few for us. But we contemplate essentially a flat consumer and we planned for normalized weather. So to the extent that weather is worse than we expected or to the extent that there is a consumer impact, a longer-term in our business, then those will be factors in our forward-looking guidance. And I don't think at this point, we have any interest in changing our guidance, I don't think we have any motivation for that. We're going to wait and see how this quarter rounds out. There's a reason we report quarterly, right? It's so that we can allow some of these short-term trends to work their way through and try to report on a more longer-term impact.
So on a more Penn-specific topic, obviously, given your scope, as you mentioned, you're going to face some competition. And generally speaking, I mean, you guys seen more of it and have more experience in the competition than your peers just given your exposures. But in recent months, you've seen Louisiana, you've seen Indiana, you've seen properties -- your property in West Virginia all face pressures and maybe there's some incremental coming from different legislative changes too that will show up. I guess, how is the early experience at each of those places, on the aggregate, varied from your original expectations and what have you been doing to kind of minimize, not so much the top line impact more so the impact on the EBITDA line?
Our expectations internally were actually relatively close on the whole. We did miss the timing in Lawrenceburg. Scioto opened earlier and had a little more of an impact than we expected. But with Columbus open now, a combination of Columbus and Scioto competing with Lawrenceburg, we've been relatively close. In Baton Rouge, we were relatively close, same thing in Charles Town. Maybe Charles Town might be a little bit better than our expectations. But I think that our internal forecasting was on the whole, okay. And that's -- the challenge that we've had for the last few years is that we've had all these moving parts, we've had a lot of competition and a lot of new facilities opening that in the finance department we've worked hard to forecast. And really, we do our best to make educated guesses. We saw, years ago, sort of the writing on the wall that all these new markets were opening up, and I think we've successfully positioned ourselves to take advantage of the new markets. We knew that in Ohio that we were going to have an impact to Lawrenceberg and we knew in Kansas City we will have an impact to Riverside. And so we've been able to position ourselves to also take advantage of positives of those new states opening up.