PENN(PENN) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - For Q4 2024, PENN Entertainment reported retail revenue of $1.4 billion and adjusted EBITDA of$461 million, both slightly above the high end of previously guided ranges [25][29] - The interactive segment had adjusted revenues of $142 million, with an adjusted EBITDA loss of$109.8 million, impacted by customer-friendly sports betting results [26][29] - Total liquidity at the end of Q4 was $1.7 billion, including$707 million in cash and cash equivalents [28] Business Line Data and Key Metrics Changes - The retail segment showed steady increases in demand throughout Q4, contributing to a strong finish for the year [25] - The interactive segment faced challenges, with a $44 million negative impact on revenues and a$32 million impact on EBITDA due to sports betting results [26] - The company anticipates a year-over-year EBITDA improvement of approximately $350 million in the digital segment for 2025 [23][33] Market Data and Key Metrics Changes - The theoretical growth from guests across Louisiana properties increased by 9$350 million of shares in 2025, reflecting confidence in its digital and retail outlook [6][40] - The company is focused on an omnichannel strategy to attract a younger audience and enhance cross-selling opportunities between online and retail [18][20] - Four retail growth projects are currently under construction, with expectations for attractive returns [9][31] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's positioning for a multiyear growth phase, with no significant new competitive supply anticipated in 2025 or 2026 [10][30] - The management team highlighted the importance of optimizing spending and resources in partnership with ESPN to improve results in the digital segment [16][17] - The company expects to approach break-even in the digital segment by 2025, with profitability anticipated in 2026 [22][24] Other Important Information - Total CapEx for 2025 is expected to be $730 million, including$490 million for project CapEx [38] - The company plans to continue its deleveraging trajectory throughout 2025, exiting covenant relief as planned [29] Q&A Session Summary Question: Thoughts on Illinois projects and financing timing - Management indicated that financing for the Illinois projects would likely occur close to opening to avoid incurring rent before generating EBITDA [45] Question: OSB business expectations for 2025 - Management expects improvements in market share throughout 2025, with operational levers available if targets are not met [48][52] Question: Ramp-up of land-based renovation projects - Management anticipates a quick ramp-up for new properties due to existing staff and strong databases [62] Question: Risks of gaming tax increases - Management emphasized the importance of engaging with states to find solutions rather than facing unexpected tax increases [66][74] Question: Market share assumptions for ESPN and iGaming - Management noted early progress in market share for iGaming, with expectations for continued growth [79][81] Question: Impact of ESPN-branded sportsbooks on customer signups - Management reported significant account signups and cross-play from properties during the Super Bowl [137]