Daniel Politzer

Daniel Politzer asked for a high-level perspective on how Churchill Downs views itself as a sum of parts, the benefits of vertical integration, how different portfolio elements fit together, and if any might not be natural fits long-term.

Answer

CEO Bill Carstanjen described building a collection of businesses focused on growth margins, improving them through vertical integration like Exacta. He emphasized constant evaluation of improvements and synergistic fit, acknowledging it's an evolving landscape with opportunities.

Daniel Brian Politzer asked for a broad overview of the M&A environment, including the level of activity and interest, especially in light of recent transactions and Churchill Downs' acquisition of Casino Salem.

Answer

CEO Bill Carstanjen acknowledged a recent pickup in M&A activity in the brick-and-mortar space, which provides clarity on property valuations. He stated that Churchill Downs is an opportunistic acquirer and seller, remaining a flexible participant in the market.

Daniel Politzer asked about the impact of stimulus benefits and tax refunds on regional casino volumes, especially after Q1 weather impacts, and the historical relationship. He also inquired about the capital allocation strategy, specifically the full-year repurchase number for 2025, and the balance between capital return, debt reduction, and growth investments.

Answer

CEO Jay Snowden stated it's hard to pinpoint the exact impact but they are seeing some of all factors (weather breaks, tax refunds), noting strong volumes and spend per customer when weather permits. He mentioned an unfavorable Q1 calendar but expects stronger performance throughout the year. EVP and CFO Felicia Hendrix confirmed $354 million in repurchases for 2025 (14% of shares outstanding), totaling $1.1 billion since 2022, emphasizing balancing buybacks, delevering, and investing in growth projects.

Daniel Politzer asked about the impact of tax refunds and stimulus benefits on regional casino volumes, especially after the Q1 weather impacts, and the historical relationship between these factors and property uplift. He also inquired about PENN's capital allocation strategy, specifically the full-year share repurchases for 2025, and the balance between capital return, debt reduction, and growth investments.

Answer

CEO Jay Snowden stated it's difficult to precisely quantify the impact of tax refunds but noted strong volumes and spend per customer when weather permits. He anticipates a strong finish to February and a good March, despite a Q1 calendar disadvantage. For capital allocation, EVP and CFO Felicia Hendrix confirmed $354 million in share repurchases in 2025 (14% of shares outstanding) and $1.1 billion since 2022 (25%). She emphasized that share repurchases, delevering, and investing in development projects with 15%+ cash-on-cash returns are all crucial components of PENN's balanced capital allocation strategy, supported by expected $3+ FCF per share in 2026 and GLPI funding.

Daniel Politzer asked about the leisure outlook, specifically for Nashville, given it was a headwind in 2025. He also sought clarification on the 2027 guidance from January 2024, asking if it now includes Desert Ridge.

Answer

Patrick Chaffin, Chief Operating Officer, stated that Gaylord Opryland has a solid book of business and is in a better position than last year, with flattish leisure due to group demand pushing out leisure opportunities. Mark Fioravanti, President and Chief Executive Officer, explained that while Desert Ridge wasn't in the original 2024 projections, the plan assumed a Rockies rooms addition, and trading one for the other keeps them well within the guidance range.

Dan Politzer asked about the expected RevPAR cadence for 2026, considering potential stimulus, and whether the process of removing lower-performing properties from the platform is largely complete or if more exits are anticipated.

Answer

Patrick Pacious (CEO) highlighted positive occupancy index in 2025 as a green shoot, noting that occupancy recovery typically precedes rate recovery. He pointed to improved performance in the economy segment in Q4 2025 and a 1.7% RevPAR increase year-to-date in international markets (excluding hurricane impact), driven by occupancy gains. He expects RevPAR to improve as the year progresses, aligning with tax relief and gas prices. Scott Oaksmith (CFO) confirmed Q1 RevPAR would be negative due to hurricane comps, with an inflection expected in Q2. Patrick Pacious (CEO) clarified that while portfolio optimization is ongoing, the accelerated, targeted exits in Q4 2025 (approximately 20 hotels, impacting 30-40 basis points of NUG) were an outsized number, and the company expects to return to a normal 3-4% churn rate.

Dan Politzer asked about the current state of the Las Vegas leisure customer, including booking windows, near-term trends, and potential strategies for promotion or value proposition to attract this segment. He also inquired about the potential legalization of iGaming in Maine and Virginia, the expected lift, and the regulatory proximity of these initiatives.

Answer

CEO Tom Reeg characterized the leisure customer situation in Las Vegas as a normal economic cycle, noting that while leisure remains soft year-over-year, it's less pronounced than in the summer. He highlighted strong performance during peak events like F1 and the Super Bowl, with challenges in shoulder periods. Reeg stated that Las Vegas occupancy was 92.5% for the quarter, marking one of the best fourth quarters historically, and emphasized that pricing is not the primary driver of current trends. Regarding iGaming, Reeg indicated that Maine is highly likely to launch, potentially contributing significant EBITDA at maturity. He also noted positive progress for a bill in Virginia, which includes make-whole payments beneficial to brick-and-mortar operators, attributing legislative movement to states seeking new revenue sources.

Daniel Politzer asked about Hyatt's net unit growth outlook of 6%-7%, inquiring if the 'glass half full' sentiment remains, the key drivers for this growth (conversions, midscale brands), and the company's appetite for larger partnership deals within this guidance.

Answer

Mark Hoplamazian, President and CEO, confirmed the 'glass half full' sentiment, citing strong momentum in newly launched brands like Hyatt Select, Hyatt Studios, Unscripted by Hyatt, and UrCove, with many projects advancing from design to construction. He noted that 70% of the pipeline is luxury and upper upscale, and 70% is outside the U.S., where new builds are less sensitive. Despite U.S. financing challenges, Hyatt is exploring alternative funding. He also confirmed an openness to larger portfolio deals that involve deeper management or franchise relationships, particularly to expand full-service offerings in Europe.

Daniel Politzer asked about Hyatt's net unit growth outlook of 6%-7%, inquiring whether the glass is still half full, the key drivers like conversions and midscale brands, and the company's appetite for larger partnership deals.

Answer

President and CEO Mark Hoplamazian confirmed the 'glass is still half full' regarding net unit growth, citing significant signing momentum in Q4 2025 and strong advancement of new upper-midscale brands like Hyatt Select, Hyatt Studios, and Unscripted by Hyatt. He noted that 70% of the pipeline is luxury/upper upscale and 70% is outside the U.S., where new builds are less sensitive. Hoplamazian also affirmed continued interest in larger portfolio deals focused on deeper relationships and full management or franchise agreements, particularly to expand reach in Europe and new markets.

Daniel Politzer followed up on Macau's hold-adjusted EBITDA margin decline quarter-over-quarter, seeking clarity on the impact of OpEx, any one-off factors, and the effectiveness of the current promotional strategy.

Answer

Grant Chum, CEO and President of Sands China, explained that the decline was primarily due to higher reinvestment, a shift in segment mix towards more rolling and premium mass business, increased OpEx from event costs and payroll for expanded table capacity, and a lower non-rolling hold percentage.

Daniel Politzer from JPMorgan Chase & Co. asked for a breakdown of the moving pieces for Q4, including the impact of the Tunica closure, the Norfolk temporary casino opening, an update on the managed and other segment, and any effects from the cybersecurity incident. He also inquired about the expected payment timing for taxes on the FanDuel stake sale and any potential offsets from the new tax bill.

Answer

Keith Smith, President and CEO, stated that the Tunica closure and Norfolk temporary casino opening would have negligible impact on models, with Norfolk expected to be break-even. He confirmed the cybersecurity incident had no impact on business operations, with cyber insurance providing backstop. Josh Hirsberg, CFO, added that the managed and other segment is expected to be stable in Q4, similar to earlier quarters, with benefits from Sky River's expansion expected in Q1 next year and mid-2027. Regarding FanDuel taxes, Josh Hirsberg indicated payment would likely occur in Q1 next year, with no significant offset from the new tax bill.

Daniel Politzer asked about several Q4 moving pieces: the Tunica closure, the Norfolk temporary casino opening, an update on the managed and other segment, and any impact from the cybersecurity incident. He also inquired about the timing of the FanDuel stake sale tax payment and potential offsets.

Answer

President and CEO Keith Smith stated that the Tunica closure and Norfolk temporary casino would have a negligible impact, with Norfolk expected to be break-even. He confirmed no business operation impact from the cybersecurity incident, which is covered by insurance. CFO Josh Hirsberg added that the managed and other segment is expected to be stable in Q4, with benefits from expansion later, and the FanDuel tax payment is likely in Q1 next year with no significant offsets.