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Twin River Worldwide Holdings, Inc. (TRWH) Q2 2019 Earnings Call Transcript


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Twin River Worldwide Holdings, Inc. (NYSE: TRWH)
Q2 2019 Earnings Call
Aug. 12, 2019, 8:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good morning. My name is Jack, and I will be your conference operator today. At this time, I would like to welcome everyone to the Twin River Worldwide Holdings second quarter 2019 earnings conference call . All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. I will now turn the call over to Joe McGrail, Executive Director of SEC Reporting. Mr. McGrail, you may begin your conference.

Joe McGrail -- Executive Director, SEC Reporting

Good morning everyone, and thank you for joining us on today's call. By now, you should have received a copy of our Q2 earnings release issued earlier today, but if you haven't, the earnings release is available in the Investor Relations section of our corporate website at www.TwinRiverWWHoldings.com under the New tab. With me on today's call are George Papanier, our President and Chief Executive Officer, Steve Capp, our Chief Financial Officer, Craig Eaton, our Executive Vice President and General Counsel, and Jay Minas, our Vice President of Finance.

Before we begin, we would like to remind everyone that comments made by management may contain forward-looking statements. These forward-looking statements include plans, expectations, estimates, and projections that might involve significant risks and uncertainties. These risks are discussed in the company's earnings release and SEC filings. Actual results may differ materially from the results discussed in these forward-looking statements. During today's call, management will refer to certain non-GAAP financial measures. Reconciliations to the most comparable GAAP financial measures are included in the schedules contained in our earnings release.

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Finally, it should be noted that during the completion of our financial close process and subsequent to the issuance of our pre-release on July 22nd, we discovered that certain customer complimentaries at Dover Downs which should have been reported as a reduction to revenue under the accounting rules, were preliminary reported as operating expenses, thus overstating preliminary revenue. As a result, the actual quarterly revenue we reported in our earnings release earlier today was approximately $3.3 million lower than the amount estimated at the bottom end of the preliminary range given in our pre-release. The adjustment resulting from this reclassification has no impact on net income or adjusted EBITDA reported in the preliminary earnings release. With that, I will now turn the call over to George.

George Papanier -- President and Chief Executive Officer

Thanks, Joe. Good morning, and thank you for joining us early on a Monday for our second quarter earnings call . After I give my introductory comments, I'm going to turn the call over to Jay, who will provide more detail about our financial and operational results, and then Steve, who will go into more details on a number of recent developments in our corporate strategy.

Overall, we were quite pleased with the company's results in the quarter. Our M&A strategy, where we have transformed from a single-property operator prior to 2014 to the multi-property public corporation we are today, has been further validated with Biloxi, Dover, and Tiverton all performing well in the quarter, now accounting for over 50% of our consolidated revenues.

Revenue for the quarter increased just under 30% year over year to $143.2 million. While net income was down $3.1 million in the quarter, driven primarily by increased interest expense from our recent global refinancing, our adjusted EBITDA was up $3.2 million or 7% compared to Q2 2018.

A key driver in the revenue and EBITDA improvement year over year was the performance of Dover in our first full quarter of ownership. For the second quarter, Dover contributed revenues of $25.8 million and adjusted EBITDA of approximately $5.2 million. This performance exceeded our already high expectations as our initial integration and optimization efforts are yielding immediate results.

In addition to realizing some immediate synergies expected from the transaction, we have already begun instituting several changes at Dover, which we expect will increase profitability. Work to date has included an initial reconfiguring of the gaming floor, with the relocation of the poker room to the first level. We have also begun to make changes to the food and beverage offerings, including the creation of a steakhouse lounge and a VIP room. Later this year, we expect to announce the addition of a nationally branded restaurant, along with other changes to food and beverage.

We are very early on in our Dover transformation and still anticipate substantial physical and operating changes to be implemented. We expect these changes will drive meaningful accretion. Based on the early results and expectation of improvements to come, we are optimistic that over time, the Dover adjusted EBITDA run rate could exceed our initial estimates by as much as a double-digit percentage.

Turning to Biloxi, we were pleased to see another quarter of solid performance at our Hard Rock Hotel and Casino. Revenues and adjusted EBITDA was consistent year over year, as profitability in the quarter was impacted by an unexpected increase in medical insurance expense, for which we are self-insured, but overall, our operations there are stable and performing well.

At the corporate level, we continue to make investments in order to prepare for further expanded gross, as evidenced by our recently announced planned acquisitions. Higher corporate costs in the second quarter reflect that investment.

Finally, in our Rhode Island segment, which Jay will provide details on in a few minutes, we felt our operations performed well despite some quarterly softness in the overall New England market. Although performance in this market was solid in the first quarter this year, we did see some softness beginning early in the second quarter, prior to the opening of the facility in Boston and extending through the end of that quarter. We attribute some of the softness to a challenging comparable period in 2018. This pent-up demand in the second quarter of 2018 resulted from poor weather in the first quarter that prior year. The decrease in the amount of tax return dollars is a result of the federal tax legislation at the end of 2017. They also played a role in the quarter.

We also saw unusual weather patterns in the quarter with the very late arrival of summer in the region, which may have negatively impacted performance. In addition, we did see increased marketing by our competitors in the market as the region geared up for the new competition. We believe that our emphasis of focusing on in-market and out-of-market accretive growth is also proving itself in the early goings as we continue to grow prudently into a multistate operator based in Rhode Island versus a single-asset regional operator. The overall effects of new competition in Boston in late June was generally in line with our expectations for the quarter. Part of our rationale for building the Tiverton Casino and Hotel was aimed at anticipated competition. The ramping of Tiverton is proceeding according to plan, and the new facility has shown resilience since the new competition opened.

Now, a few comments about the New England market in July 2019. The new competition in the region had a greater-than-expected negative impact on our table games at Twin River Casino and Hotel, although slots performance for the same period was in line with expectations given the seasonal weakness that we noted earlier that impacted the second quarter. We disclosed a preliminary view into 2019 gaming revenues in our earnings release, which reflects an approximate 17% decrease in slots volume and a 34% decrease in table games volume at our Twin River Casino and Hotel.

We are pleased with the lack of impact we have experienced at our Tiverton Casino and Hotel, where gaming volumes in July were relatively flat to our recent monthly run rate, which we view as positive. When we conceived the plan, the Tiverton property expectation was for it to offset the impact of new competition so that operating income in the market would be flat to Lincoln alone. We are revising our expectations for combined operating income to be lower by approximately 10% from those expectation levels.

It should be noted that these July figures are preliminary, as they represent gross amounts before the sharing of this revenue with the state of Rhode Island and any other county-related adjustments, and thus do not represent our expected revenues for July. We are providing this preliminary selected gaming volume data to provide insight into the impacts of recent competition. We do not plan to regularly release similar financial information, whether preliminary or not, on an ongoing basis.

We continue to be proactive, and have instituted and will continue to institute several new marketing programs, including several specifically targeted at our table games customers in an effort to retain our customers, and we welcome back our customers who partook in trial play. It is important to reiterate that we will fully anticipate the impact of the look-see effect and continue to expect this vision pattern will rebound and normalize as we move into the fall. Nonetheless, the impact of the competition also underscores the importance of our M&A strategy.

We feel our strategy of accretive growth and diversification continues to resonate in success as we continue to focus on creating a long-term shareholder value as we strive to develop our prior assets, which we believe will prove accretive to our earnings. We could not be more excited about the opportunities to further this strategy, with our recently announced agreements to purchase both the Isle of Capri Kansas City and Lady Luck Casino in Vicksburg.

We will get into specifics in a few minutes, but we feel these facilities expand our geographic footprint with assets in attractive markets. We believe these assets are a great fit for our portfolio. We see the opportunity to increase the net cash flow from these properties by our redevelopment and operating plans. We are currently working through the regulatory process and expect this deal to close in early 2020. We also continue to make progress on our previously announced strategic acquisition, Black Hawk Colorado, and note that the transaction remains on track for an expected close later this year in Q1 of 2020.

Beyond our recently announced acquisitions, the M&A pipeline remains strong. We are out looking at a lot of assets; however, we will continue to be very disciplined, with a focus on acquiring assets that we believe fit our strategy and provide the best opportunity for delivering enhanced shareholder returns. During the quarter, we also announced a capital return program, under which we may spend up to $250 million for stock repurchase program and payment o f dividends . Steve will speak more on this program in a minute.

Finally, I wanted to address the recent headlines around our vocal opposition to the proposed IGT contract extension. The proposed extension, which was negotiated privately, is a 20-year, no-bid extension of a contract that does not expire for four years. The contact requires legislation that may be taken up in a special legislative session in the fall, and we are working diligently to educate leaders on why the deal should not get approved and advocating for a competitive bid process.

We are opposing this legislation in part because IGT currently controls approximately 85% of the floor in Rhode Island, and the machines provided by IGT are significantly underperforming the machines provided by IGT's competitors in our Rhode Island facilities. We feel the ability to work with the state as operator to manage our gaming floor and ensure the best product mix on the casino floor will result in increased revenue for both the state and Twin River. We will continue to oppose this deal and have engaged in initial discussions to form a consortium of technology providers to compete should a competitive bid process occur. Now, I'll turn it over to Jay.

Jay Minas -- Vice President of Finance

Thank you, George, and good morning, everybody. So, let's dive into a bit more detail on operational performance by reporting segment in the second quarter, beginning with our largest segment, Rhode Island, which, for the quarter, consists of the Twin River Casino Hotel and Tiverton Casino Hotel, and for the prior year Q2, Twin River Casino Hotel and Newport Grand Casino. Please note that we will lap the opening of Tiverton in late Q3 2019, so until then, comparability is impacted by the Newport Grand-to-Tiverton transition.

Despite the softness that George noted in the New England market, our gaming revenues overall in the segment did see nice increases in the quarter, as the momentum that started late last year from our Tiverton operation continues to build. Gaming revenues excluding adjustments for guest complimentaries grew 7.3% in the second quarter of 2019 versus the prior year. Table games revenue, which generates a higher profit margin than slots, grew $2.7 million, and slot revenue grew by $1.3 million. Revenue from sports betting, which we began to offer during Q4 of 2018, was $0.9 million in the quarter.

These increases were partially offset by higher incentives offered to players in an effort to retain and grow market share, primarily related to our new hotels at both Lincoln and Tiverton, or a net gaming revenue increase of $3.7 million or 5.9% over the prior year. We performed well from a market-share perspective as well. On a like-for-like basis, or ignoring the revenues from new regional competition opened within the last year, our market share grew by 2.7% while our legacy competitors from Connecticut and Massachusetts were either flat or down. We define "market share" as slot win prior to any adjustments for guest incentives.

Our total revenues for the Rhode Island segment increased by $7 million to $82.9 million from $75.9 million. A $3.7 million increase in gaming revenues, along with higher food and beverage revenues of $0.9 million, hotel revenues of $1.7 million, and other revenues of $0.6 million, helped to drive this 9.1% increase.

Income from operations for the segment declined by 3.7% or $1.2 million, as increases in operating profit from revenue were more than offset by increased depreciation of $1.8 million as well as increased corporate costs of $0.5 million being allocated to the segment. Excluding these impacts and other adjustments described in the press release, our adjusted EBITDA for the Rhode Island segment for the quarter was relatively flat at $38.1 million in both Q2 2019 and '18, as the increase in revenue of $7 million was offset by a similar increase in expenses. This increase in operating expenses includes a $6.7 million increase in costs to operate Tiverton this year versus Newport Grand last year. These are completely different operations, and the cost structures are not similar. Newport Grand operated without table games, a hotel, or other gaming amenities that Tiverton offers.

Turning now to Lincoln, expenses increased $1.5 million year over year as a result of bringing revenue-generating amenities online, including our new Sportsbook operation, Stadium Gaming, and the new hotel. There were two main elements in the current period which partially offset these increases: A reduction in comparable labor, or labor excluding those associated with new amenities, of $0.3 million and a decline in marketing expense of $1.4 million.

But, it should be noted that marketing expenses included within operating costs only include a portion of what we consider marketing and advertising. Our electronic free play, which is not reflected in our financials, and player complimentaries increased by $3.9 million and $0.6 million year over year respectively, so the narrowly defined marketing expense decrease of $1.4 million is actually an all-encompassing marketing increase of $3.1 million. And, as we've noted previously, our approach to marketing during a period of expansion of competition is to retain our existing customer base as opposed to subsequently recapturing it once the market stabilizes, since our experience strongly suggests that the cost to retain a customer is lower than recovering one. This effort to retain our customer base is a short-term headwind to our adjusted EBITDA that we believe will be beneficial in the long term.

As George mentioned, our Delaware segment, consisting of just Dover Downs, had a very solid first full quarter of ownership, contributing revenue of $25.8 million in the quarter. It should be noted that the revenues at Dover are reported net of the state share of gaming revenues, which is consistent with our presentation of revenues in our Rhode Island segment and a departure from how Dover was reported pre-acquisition. Operating income for Delaware was $1.9 million, as the revenue generated in the quarter was offset by restructuring charges of $0.7 million and depreciation charges of $1.3 million. The resulting adjusted EBITDA was $5.2 million for the quarter.

Turning to our Biloxi segment, the Hard Rock Biloxi saw stable results year over year as revenue for the quarter increased $0.1 million, operating income decreased $0.3 million, and adjusted EBITDA was flat. As George mentioned, the profitability of Biloxi was impacted by an unexpected medical insurance charge of $0.3 million under our self-insurance policy.

Finally, I'll briefly comment on the operations reported as "other," which primarily consist of corporate costs and the operations of our Arapahoe Racetrack. When you exclude the impact of costs allocated under GAAP to our reportable segments, the adjusted EBITDA loss increased by $2.1 million, as the company saw increased professional fees and wages at corporate, as we continue to invest in operating as a public company and to prepare for future expected growth. I will now turn it over to Steve.

Stephen Capp -- Executive Vice President and Chief Financial Officer

Jay, thank you. Good morning, all. Thanks again for joining us so early on a summer Monday. My apologies for the nasal tone; I picked up a summer cold in Delaware last week, but I'll try to fight through it, hopefully clearly. As George mentioned, I wanted to make a few comments in different areas of what we're doing at a corporate level, and the first is regarding the acquisition of Isle Kansas City and Lady Luck Vicksburg. We announced in July the acquisition of these two properties from Eldorado for $230 million, and let me give a bit more detail about our plan here.

At the Kansas City property, our plan is to invest a maximum of $50 million capex -- that's 5-0. As shown in the various renderings that accompanied our July 11th press release, we intend to dramatically improve the external appearance of the existing boat through a lightweight structural and cladding system that will encompass the entire vessel. We think that change will improve the customer arrival experience markedly.

In addition, even more importantly, we also intend to construct a new land-based building adjacent to the existing boat and attached to the existing parking structure. This building will house food and bev, retail, and potentially other amenities. It will enable the relocation from the boat of certain F&B and amenities, freeing up valuable on-boat square footage for an improved customer gaming experience, and it will enable an indoor walking entrance directly from the parking garage to the second floor of the boat. Although we have not finalized these various plans, we continue making progress on them, and we have confidence that the maximum investment required is that $50 million that I mentioned.

Let me give you a sense of how Kansas City, Vicksburg, and Black Hawk fit into our overall investment thesis on M&A. In order to do that, I think it may be most illustrative if I just recap a couple data points that I think will shed some light on our intentions regarding the new acquisitions. For example, first, Hard Rock Biloxi -- George mentioned it was the first of our growth M&A actions way back in 2014, but remember, back in that day, that property was delivering $25 million of EBITDA, and we paid $250 million for it, so our purchase multiple was 10x.

We have a little less than $10 million of additional capex of HR Biloxi since we acquired it, so call our total investment to date about $260 million maximum. Today, that property is running approximately $37-37.5 million of run rate adjusted EBITDA, which means that although the purchase multiple was 10x, our ownership multiple today is a bit less than 7x.

Consider Dover Downs -- $97 million total price. That's total stock issued minus cash acquired. 2018 adjusted EBITDA of about $11 million gets you to a 9x purchase multiple. We initially indicated an expectation of about $20 million run rate EBITDA there. As George commented, we now believe that's conservative, and the ultimate annual cash flow should be somewhat above $20 million. But, just at $20 million, if we assume that, our ownership multiple will be 5x. That's a long way from the 9x purchase multiple we originally made. And finally, at Tiverton, with a $130 million construction price and an expectation of $18-20 million of EBITDA, we believe our ownership multiple will again be near or below 7x.

So, that's exactly what we intend to achieve at each of the three announced acquisitions -- Black Hawk, Kansas City, and Vicksburg. More specifically, we expect following the $50 million investment in Kansas City that our ownership multiple there will be below the 7x threshold that we typically target on these M&A opportunities.

Turning to the capital return program that George touched on, we did, in July, pay our first quarterly cash dividend of approximately $4 million, and our intention is to continue a quarterly return of capital to shareholders in this form. As to the tender offer, we did fund the $75 million offer in July. These stock purchases were made at $29.50 per share, and resulted in a repurchase of approximately 2.5 million shares and a reduction in shares outstanding of approximately 6.2%.

One other way to think about that tender offer is that of the 2.98 million shares of Twin River stock we issued in March for the Dover acquisition, we just basically repurchased 85% at $29.50 per share and simultaneously accomplished a return of capital to shareholders. Following the aforementioned dividend and tender offer, we still have $170 million available within our board-approved program for returns of capital to shareholders, and we also have both ample liquidity and very little leverage with which to continue this capital allocation program over time.

Two more quick notes: As mentioned in the release, we did complete a new debt financing back in May. Pretty big deal for us. $250 million, five-year revolver, unfunded at close, remains unfunded today, LIBOR plus 275, $300 million, seven-year term loan B, LIBOR plus 275, and a $400 million, eight-year, senior unsecured note with a 6.75% coupon. So, we quite successfully refinanced our then-short balance sheet, extended the maturity significantly, acquired the ability to return capital to shareholders over time, and increased our liquidity substantially for working capital, capex, investments, acquisitions, and returns to shareholders.

One more important balance sheet note: At end of Q2, our net debt leverage was below 2x, 2.0, and our credit agreement leverage was below 3.5x. And, lastly and importantly, I'd like to mention that we remain a capital-W Wholeco. We own virtually all of the assets that we utilize in generating cash flow. That means, of course, that a refinancing structure remains available to us.

So, let me be clear about one point that we made often in our recent equity roadshow. We are not opposed to the implementation of a refinancing -- or any other financing structure, for that matter -- that would enable us to continue the accomplishment of our ongoing long-term goal of creating shareholder value. As it turns out, so far, we've been able to accomplish every transaction on balance sheet, but if a future transaction is more optimally financed with a REIT structure, or some other financing structure, or combination thereof that's available to us, we would, of course, pursue one or more of those financial alternatives. We remain open-minded to the future. Those are my comments, and with that, George, back to you.

George Papanier -- President and Chief Executive Officer

Thanks, Steve. As I'm sure you can sense, it's once again been an extremely busy quarter, and we are not stopping here. We continue to work daily in the best interests of the company to drive and create shareholder value. With that, I'll ask the operator to open it up to our questions.

Questions and Answers:

Operator

Certainly. If you'd like to ask a question, please press *1 on your telephone keypad. To withdraw your question, press #. Brad Boyer with Stifel, your line is open.

Brad Boyer -- Stifel Financial -- Vice President

Yeah, thanks for taking the questions, guys. First one, probably best for you, George, just wanted to see if you could provide a little bit more granularity about what you're seeing from the Encore opening. Obviously, as articulated in the release today and on this call, the impact thus far is a little bit greater than what you were expecting. Can you just give us a sense of where the delta has come from and maybe what you're seeing in the market as a whole today, both with respect to the direct new competition and maybe some of the others operating in the market? Thanks.

George Papanier -- President and Chief Executive Officer

Sure. Certainly, the whole market's been impacted based on anecdotal as well as some information that has been shared with us. But, in my experience, where there's been new entrances into the marketplace, which more recently has included the opening of Scarlet Pearl in Biloxi, the opening of Plainridge MGM in Massachusetts, I've seen a defined trial period, and that's typically followed by a bounce-back, which gets you closer to over historical top-line trends for your property.

We're clearly experiencing a prolonged trial period. I think that's been facilitated by nicer weather patterns this summer to some degree in the Northeast, which actually helps to reduce normal traffic disruptions that we were expecting to see around Boston. I don't expect to return to normal typical disrupted traffic patterns in the Boston area until after Labor Day, which is when I feel we should start to see a typical bounce-back of the top-line revenues. As I stated earlier, we're seeing a little more of an impact on our table games business.

Brad Boyer -- Stifel Financial -- Vice President

If we dive a little deeper into that -- I don't want you to give away any deep, dark secrets here, but can you just give us a sense of if there's any areas within your database -- is this being driven more at the high end? Is it broad-based? Could you just give us a sense of what you're seeing there?

George Papanier -- President and Chief Executive Officer

We're actually doing a good job maintaining our mid-to-lower segments of our business across the board. We are seeing some of the database that we did have in and around the Boston area being influenced by way of visitation. We still get visitation from customers, but we're seeing a loss of trips as it relates to those customers. But, we also get a lot of information that's negative about Encore, but we have yet to see the return of the majority of the customers at this point. Again, that goes to what I concluded earlier, is that I think because of the nicer weather in the Boston market, Boston tends to clear out for the shore, and that's leaving less of a disruptive pattern in the Boston market. I think once Labor Day comes around, we'll really be able to gauge that much more effectively.

Brad Boyer -- Stifel Financial -- Vice President

Okay, that's helpful. And then, second question, for whoever wants to address it, is just around capital allocation. I think there's been some...I don't want to call it "mixed messaging," but obviously, you guys have the return of capital initiative out there. Also, by the way of the Isle KC and Lady Luck deal, you have shown that you are interested in growing and diversifying through acquisitions. With the stock trading where it is today and with the buyback out there, it would seem like buying back the stock presents perhaps the most optimal use of cash right now. How do you balance your desire to buy back the stock and where the valuation is today with your desire to also grow and diversify through M&A?

George Papanier -- President and Chief Executive Officer

Good question, Brad. Look, we kind of said from the get-go when the board approved this capital allocation program in the first place that we intend for a balanced program between these two somewhat different objectives, and I think actually, the activities that we announced recently and that we've addressed on this call are a really good example of that -- $230 million toward two acquisitions that we feel like -- two properties that don't have fair share, haven't for quite some time, in particular Kansas City -- terrific geography, we think the best in that marketplace, real upside there, and that's obviously on the growth side of the scale, balanced, as I said, by both the cash dividend, which we just finished the first one, and that'll be ongoing on the one hand, and then the tender offer on the other.

And then, look, the program approved by the board had no time limit on it, and it's an ongoing program, and we will tap into it and utilize it as the company sees best fit. Look, the analysis is ongoing in dynamic. As the stock price moves, the opportunity, the incentive to get into a buyback program per the board's approval changes versus other potential allocations of capital that would be clearly on the growth side of the business. So, you're right in suggesting that as stock price moves, our analysis moves and reflects that kind of change.

Look, we're interested in 1). Satisfying shareholders in their -- as they seek returns of capital. We're also very interested in maximizing shareholder returns, and we get into the analytics of where the returns are optimized, be those on the growth side of the business -- where I think, frankly, the team has done a pretty good job historically -- versus buyback program or some other form of return of capital to shareholders. So, there's no clear answer because the environment is so dynamic, but we pay a lot of attention to it. Your question is a really good one. We spend a lot of time talking about it on the management team and in the board room, and we intend to maintain the balance on a go-forward basis.

Brad Boyer -- Stifel Financial -- Vice President

Helpful. And then, the last one for me, Steve, could you just give us a sense of what type of return cash-on-cash you're expecting to get out of that $50 million investment at Kansas City? Thanks.

Stephen Capp -- Executive Vice President and Chief Financial Officer

Yeah, Brad. Thanks for being here this morning. Look, I don't think we look at it as a stand-alone $50 million investment, Brad. It's a $230 million investment plus $50 million, so, look, what I meant to imply in my comments was we're going to be $280 million all in in the Kansas City/Vicksburg assets.

We might spend a little bit of money in Vicksburg to make that right when we focus more on that and as time passes, but we're looking at a return on the entire $280 million, and that's where I -- and, I didn't want to get into too many details, Brad, but that's where I said -- look, we intend that even though the purchase multiple was 8.4x, obviously, the purchase multiple moves north of that if you include the $250 million capex investment in Kansas City, but as we've illustrated at the three other properties I mentioned, we intend to bring that down to 7x or better on a combined basis -- Kansas City/Vicksburg -- and a $280 million total investment. We expect to be at 7x or better. I'll let you do the math since you're so good at it. You obviously know at $230 million and 8.4x what the total cash flow is today, so that'll tell you where we expect to get it over time in terms of an ownership multiple.

Brad Boyer -- Stifel Financial -- Vice President

Sounds good. Thanks for all the answers.

George Papanier -- President and Chief Executive Officer

You bet, Brad. Thanks.

Operator

Barry Jonas with SunTrust, your line is open.

Barry Jonas -- SunTrust Robinson Humphrey -- Director

Great. Thanks so much. Good morning. I want to start in Rhode Island. You've taken up promotions as a response to the Encore opening. Do you think these costs normalize as revenue bounces back, or does it last a little longer just to be on the safer side?

George Papanier -- President and Chief Executive Officer

I think this trial period, as I said earlier, has been a prolonged trial period. Historically, we've been able to get more than our fair share of the table games business without a lot of promotional activity. We're certainly going to have to focus more on promotional aspects related to table games. We feel comfortable in what we're doing on the slots. We have some dry powder as it relates to free play. We're certainly going to have to use some of that. But yeah, I would say that you're going to start to see a little bit of a trend or increase in promotional activity, and that's really not just in response to Encore. It's going to be in response to what we're going to see from our competitors, mostly Foxwoods Mohegan, but also MGM.

Barry Jonas -- SunTrust Robinson Humphrey -- Director

Great. And then, I just wanted to touch upon the M&A environment. You mentioned it sounds pretty active. I'm just curious -- are there potentially more M&A opportunities as a product of the Caesar's/Eldorado merger? And then, maybe where does a Strip asset rank within your M&A strategy? Thanks.

Jay Minas -- Vice President of Finance

Barry, what was that last part? Where does the Strip fit in?

Barry Jonas -- SunTrust Robinson Humphrey -- Director

Yeah, where does a Strip asset rank within your M&A strategy?

Jay Minas -- Vice President of Finance

I'll say a couple things, and then George can pipe in also. I think we continue to see a pretty relatively robust M&A environment generally. There are single-asset sellers and multiple-asset sellers, and certain operators are culling through their portfolios and letting go of smaller or underprioritized types of assets that maybe are not core or don't fit, but that all kind of combines to make for a pretty busy environment. Our M&A team is awfully busy running around, kicking tires, and thinking through how we can find accretive opportunities in that group.

So, we actually like the timing, we like the environment. The fact that we came public in March, got our balance sheet refined, and work with Eldorado to grab those two assets and move this project forward as a growth strategy -- we like our timing in all of this pretty nicely, particularly given interest rate curve and the aggressive financing markets, generally speaking. Look, I'll tell you -- I think that the Strip is probably a ways away for us given the size of the Strip investment requirement on the one hand, our size as a regional player being relatively small on the other hand, but I'll let maybe George talk a little bit more about the Strip view, if you will.

George Papanier -- President and Chief Executive Officer

Sure. I'm sure you see us rumored on occasion to be in the hunt for a Strip asset. That actually ranks low on our priority list. I'll put Atlantic City in that category also. Outside of that, we're focused on regional markets -- the South, Midwest -- though we think there are some opportunities that are going to be coming out of the Eldorado/Caesar's deal, and we're going to be kicking a lot of tires.

Barry Jonas -- SunTrust Robinson Humphrey -- Director

Okay, great. And then, just last one for me, just a high-level question on sports betting. We see the numbers come in, but curious to get your sense of the importance of sports betting as a visitation driver and maybe how you see that business ramping going forward.

George Papanier -- President and Chief Executive Officer

I've commented on this a lot over the last few quarters, that we don't see this as a game-changer. It's certainly an amenity that you have to have. It'd be more interesting in bigger markets, but Rhode Island is not a really big market as it relates to that, as well as Delaware -- I'd put that in the same category. We think futuristically, once we close on the Colorado transaction, we think there's going to be some opportunity there, more as a driver as opposed to an amenity based on the assets we have there, and as you know, we still have some strategic interests because of our racetrack there. But, I think overall, sports betting is a bridge to potentially a next step, which involves iGaming. It could help you generate some database.

Barry Jonas -- SunTrust Robinson Humphrey -- Director

Great. Thanks so much, guys.

George Papanier -- President and Chief Executive Officer

Thank you.

Jay Minas -- Vice President of Finance

Thanks, Barry.

Operator

John DeCree with Union Gaming, your line is open.

John DeCree -- Union Gaming -- Analyst

Good morning, everyone. Thanks for taking my questions.

George Papanier -- President and Chief Executive Officer

Good morning, John.

John DeCree -- Union Gaming -- Analyst

Just wanted to circle back at least one more time to the table impact that you're seeing so far, and I realize with a holiday in July, it's probably difficult to get any more granular, but I figured I'd ask anyway. Is there any sense in the trend or cadence of the performance you've seen, whether on tables or slots, at Lincoln from late June/early July to the back half of July? Can't really talk into August, but I guess what I'm getting at is has that 30%-ish decline on tables been fairly consistent, or has it been kind of lumpy throughout the month?

George Papanier -- President and Chief Executive Officer

Let me just take a step back so you can understand seasonality in this market. We were never the top competitor in the market in the summer. So, once we hit June, July, and August... Foxwoods Mohegan, because with their amenities, the way they're structured, they always did better comparatively to us, and I'd put Encore in that category. Once the summer's over, then we were able to actually trade with Foxwoods our ability to beat them month to month. So, we're way more effective in the shoulder periods as opposed to the summer season in this market. We haven't gotten there yet.

So, what I'm saying is when you look at the disruption in the market because of the new entrant into the market in Boston, the traffic patterns aren't the normal traffic patterns in this market, so we really need to wait until after Labor Day to start to understand it, but to answer your question, we saw almost immediately it was probably in the mid-20% range, and then it floated between mid-20s to mid-30s, and that's been consistent. So, to answer your question, it's been relatively consistent from the table games perspective, and it seems to be the customers that are in the Boston market as opposed to customers that are in our Providence market.

John DeCree -- Union Gaming -- Analyst

That's helpful color. I appreciate that, George. And then, we spent some time on M&A, the big development opportunities around -- I guess as people look at Illinois, there's a couple new opportunities in what you guys have done, and Tiverton is obviously on its way to being quite successful from a return perspective, and a very rational development there. Just wanted to get your thoughts on Illinois and opportunities there, if that's something that new development would be a look for or fit into your M&A strategy.

George Papanier -- President and Chief Executive Officer

Sure. As we said earlier, we're going to look at everything. It's certainly something that we're looking at currently. There are some potential opportunities there. The only thing we're a little bit cautious about is Chicago itself. The licensing in Chicago itself still seems to be a little fluid, so we don't necessarily know if the way you see the legislation right now will be consistent or not, so that's probably the only area of caution, but we're certainly looking at potential opportunities in Illinois.

John DeCree -- Union Gaming -- Analyst

Thanks for the help, guys.

George Papanier -- President and Chief Executive Officer

Thanks, John.

Operator

As a reminder, if you'd like to ask a question, please press *1 on your telephone keypad. Lance Vitanza from Cowen, your line is open.

Lance Vitanza -- Cowen & Company -- Managing Director

Hi, guys. Thanks for taking the questions. I just had two. The first -- I think you mentioned that Dover did $5.2 million of adjusted EBITDA in the quarter. Can you tell us what that number was? I know obviously, you didn't own and operate it, but what that number was for the year-ago quarter?

Stephen Capp -- Executive Vice President and Chief Financial Officer

Lance, I know the year end was $10.8 million, Joe, if I'm right, and you can do the math on that quarterly. I don't think we have that number offhand, but we can...

Joe McGrail -- Executive Director, SEC Reporting

Yeah, it's right. It's pretty even throughout the year.

Stephen Capp -- Executive Vice President and Chief Financial Officer

Yeah, it's not highly seasonal, so it's $2.5 million, $2.675 million --

Lance Vitanza -- Cowen & Company -- Managing Director

So, you guys did a lot better operating the asset, is I guess what I'm trying to evaluate, and it sounds like you had a pretty healthy increase there.

Stephen Capp -- Executive Vice President and Chief Financial Officer

Agreed. As George commented, we've got an integration team on the ground, and really have only just gotten started with some of the physical changes -- some of the marketing programs -- and looking to impact the overall gaming customer experience, but we see a lot of opportunity to improve margins over time there, and we had a good shot at accomplishing some of that in our first quarter of full ownership.

Lance Vitanza -- Cowen & Company -- Managing Director

Okay. And then, my other question is on the tender, and forgive me if I'm getting this wrong, but I remember when the release came out -- I want to say that there were something like 35 million shares that were tendered, and you took out about 2.5 million of them. Is there an overhang issue in the stock, and if so, how do you intend to deal with that?

Stephen Capp -- Executive Vice President and Chief Financial Officer

Well, it's a good question, Lance. It's tough for us to deal with an overhang issue because it is what it is. We're a reorganized equity, obviously, from December 2010, and with that comes certain issues, and look, we have tried a couple things. We tried an organized secondary equity offering a little while ago; the tender helps a little bit. Solving that is not necessarily in our control, so what we're going to do is continue to think about how to create value here and how to move this company forward, both from a -- well, from a capital allocation standpoint, both in terms of finding and optimizing capital returns, both in terms of growing the company in an accretive fashion and shareholder returns over time as well. But, look, we're going to continue to think about it, and we're open to ideas and the like, but our job is to run this company and keep you in as good a job as we can with that, and we have to let some of the other things sort themselves out over time.

Lance Vitanza -- Cowen & Company -- Managing Director

Makes sense. Thanks, guys, for taking the questions.

Stephen Capp -- Executive Vice President and Chief Financial Officer

Thank you. Appreciate it.

Operator

There are no further questions at this time. I would now like to turn the call back over to George Papanier for closing remarks.

George Papanier -- President and Chief Executive Officer

Thank you, operator, and I want to thank you all for joining our call today and for your interest in Twin River, and I hope everyone enjoys the rest of their summer.

Operator

This concludes the Twin River Worldwide Holdings second quarter 2019 earnings conference call. We thank you for your participation. You may now disconnect.

Duration: 49 minutes

Call participants:

Joe McGrail -- Executive Director, SEC Reporting

George Papanier -- President and Chief Executive Officer

Stephen Capp -- Executive Vice President and Chief Financial Officer

Craig Eaton -- Executive Vice President, General Counsel, and Compliance Officer

Jay Minas -- Vice President of Finance

Brad Boyer -- Stifel Financial -- Vice President

Barry Jonas -- SunTrust Robinson Humphrey -- Director

John DeCree -- Union Gaming -- Analyst

Lance Vitanza -- Cowen & Company -- Managing Director

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Referenced Symbols: TRWH



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