Jeffrey Stantial

Jeffrey Stantial asked for details on the financial impact of the Mexico tax hike on guidance, including gross impact and mitigation assumptions. He also questioned competitor reactions to the tax hike, such as exits or adjustments in marketing, and how this might evolve before the World Cup. Finally, he asked how changes in Mexican player values influence the prioritization of geographic expansion in Latin America.

Answer

CFO Marcus Arildsson explained that the tax increase is negative, but the 2026 outlook reflects a net effect of various issues, with mitigation measures in Mexico focusing on marketing, supplier terms, and operational efficiencies. CEO Aviv Sher confirmed no revenue risk, maintaining marketing investment levels for the World Cup, and stated that while there's an EBITDA effect, it's largely mitigated and not a danger to the business. Sher noted that two major competitors are shut down in Mexico, with no new big-budget entrants yet, and that the improved ROI in Mexico (lower CPA, stable player value) means continued investment there, with no plans for new market entry in the near future.

Jeffrey Stantial asked for clarification on the financial impact of the Mexico tax hike, including gross impact and mitigation strategies, as contemplated in the 2026 guidance. He also questioned competitor reactions to the tax hike, such as market exits or adjustments in promotional and marketing behavior, especially heading into the World Cup. Finally, he inquired how changes in Mexican player values influence Codere Online's prioritization of geographic expansion and investment in other Latin American markets.

Answer

CFO Marcus Arildsson explained that the tax increase is a negative but the 2026 outlook reflects a net effect of various issues, including mitigation measures in Mexico such as marketing adjustments and operational efficiencies. CEO Aviv Sher added that while there's an EBITDA effect, it's not a danger to the business, and the company expects to deliver on its conservative guidance. Sher noted that two major competitors are currently shut down in Mexico, with no significant new entrants yet, and that lower CPAs and improved ROI in Mexico mean continued investment there, with no immediate plans for new market expansion in Latin America.

Jeffrey Stantial inquired about the competitive environment in Spain, the impact of sports seasonality from the Euros and Club World Cup, the strategy behind targeting lower LTV players in Mexico, and the drivers for expected profitability improvement in the second half of the year.

Answer

CEO Aviv Sher stated that while Spain's competitive landscape is challenging, it has stabilized, and the company has found a successful formula. CFO Oscar Iglesias noted the Club World Cup helped offset a seasonally slow sports period. Regarding Mexico, Sher explained that a marketing test targeting lower-cost players proved to have low LTV and was discontinued. Iglesias attributed the expected H2 profitability improvement to the roll-off of a sponsorship in Argentina, cost mitigation in Colombia, strong unit economics in Mexico, and a strengthening Mexican peso.

Jeffrey Stantial asked about the drivers behind the lower customer acquisition costs despite increased user acquisition, the reasons for flat revenue in Spain, and the decline in average revenue per active user.

Answer

CEO Aviv Sher explained that a test of new traffic sources resulted in more users at a lower cost, but these users had lower lifetime value, and the company will revert to its previous strategy. CFO Oscar Iglesias attributed Spain's flat revenue to a difficult year-over-year comparison and increased competition following the reintroduction of welcome bonuses. Iglesias also noted the decline in average revenue per active was due to the lower-value customer test in Mexico and a more competitive promotional environment in Spain.

Jeffrey Stantial inquired about the specific Mexican peso to euro exchange rate assumption embedded in the 2025 guidance, the drivers of the implied EBITDA flow-through, and the reasons for the improvement in Customer Acquisition Cost (CAC) during the quarter.

Answer

CFO Oscar Iglesias stated he would provide the specific FX forecast figures offline but noted the guidance's conservatism is influenced by opportunistic marketing planning for the Club World Cup and uncertainty around a new tax on deposits in Colombia. CEO Aviv Sher added that the Colombian tax is substantial and could push players to unregulated markets. Regarding the lower CAC, CEO Aviv Sher attributed it to a combination of competitors reducing their marketing spend in Mexico and Codere Online resolving internal technical tracking issues, which improved marketing investment efficiency.

Jeffrey Stantial asked for an update on the 20-F filing process ahead of the Nasdaq hearing, the P&L impact of increased competition in Spain and Mexico, the gross profit payback period for new customers, and if there was a significant sports betting hold impact in Q3.

Answer

CFO Oscar Iglesias stated that while the company is working diligently to complete the audit for the 20-F filing, no specific timeline can be provided. CEO Aviv Sher and CFO Oscar Iglesias addressed competition, noting that while it drives up customer acquisition costs, this is offset by improved customer retention and higher player value. Iglesias confirmed that payback periods in Spain remain well within a year but did not provide specifics for other markets. He also acknowledged a minor negative hold impact in Q3 due to sports results in Spain, particularly during the Euro Cup final.

Jeffrey Stantial inquired about the EBITDA contribution from acquisitions within the 2030 long-term targets and the confidence in materializing these based on the current pipeline. He also asked for clarification on the sub-7x blended multiple for the $200 million committed project spend, comparing it to the historical 6x average, and sought to understand if this implied conservatism or structural differences. Additionally, he requested clarification on whether the mid-single-digit baseline growth mentioned on Slide 18 referred to revenue or EBITDA growth.

Answer

President and CEO David Barry explained the challenges of precisely timing M&A but emphasized a balanced vision between organic and inorganic growth. CFO Bo Heitz clarified that the majority of growth is expected from the organic side, with acquisitions remaining a key component consistent with past strategy. Regarding the project spend multiple, Bo Heitz stated it's a target, not a gap, expressing confidence in achieving or exceeding it given the similarity of projects to historically successful deployments. He confirmed that the mid-single-digit baseline growth applies to both revenue and EBITDA, representing organic growth before growth capital investments.

Jeffrey Stantial asked about Pursuit's 2030 long-term targets, specifically inquiring about the assumed EBITDA contribution from acquisitions within the 'buy' category and the confidence in its materialization based on the current pipeline. He also sought clarification on the expected blended multiple for the $200 million committed project spend, comparing it to the historical average, and asked whether the mid-single-digit baseline growth mentioned on Slide 18 referred to revenue or EBITDA.

Answer

David Barry and Bo Heitz, CFO, explained that while the exact timing of acquisitions is challenging, the 2030 vision balances organic and inorganic growth, with the majority of growth still expected from the organic side (double-digit CAGR). Bo Heitz clarified that the sub-7x multiple target for committed projects is appropriate and not a significant gap from the historical 6x, as these projects are similar to past successful deployments. He also confirmed that the mid-single-digit baseline growth refers to both revenue and EBITDA, representing organic growth before growth capital investments.

Jeffrey Stantial of Stifel Institutional asked for clarification on the Q2 2025 guidance revision, the rationale behind the new share buyback program, and the company's pro forma effective tax rate.

Answer

CFO Bo Heitz explained the $10M guidance increase was driven by $7M in favorable FX and a $3M contribution from the Tabacon acquisition, confirming operating trends were in line with strong expectations. President & CEO David Barry and CFO Bo Heitz clarified the share repurchase program is an opportunistic tool to be used if the stock remains undervalued and not a pivot from their core 'Refresh, Build, Buy' strategy. Bo Heitz also detailed the effective tax rate, expecting it to be 31-35% for FY2025, influenced by the jurisdictional mix of income and losses.

Jeffrey Stantial of Stifel Institutional asked for clarification on the Q2 2025 guidance revision, questioning the split between foreign exchange benefits and core operational performance. He also inquired about the strategic rationale behind the new share repurchase authorization and how it compares to the 'Refresh, Build, Buy' strategy, and requested details on the company's pro forma effective tax rate.

Answer

CFO Bo Heitz explained the $10 million guidance increase was driven by approximately $7 million from favorable FX and $3 million from the Tabacon acquisition, confirming that core operating trends were in line with strong internal expectations. President & CEO David Barry, along with CFO Bo Heitz, clarified that the new share buyback program is an opportunistic tool to be used if the stock is undervalued and not a strategic pivot away from their primary 'Refresh, Build, Buy' growth levers. Heitz also provided an expected GAAP effective tax rate of 31% to 35% for FY2025, explaining the structural reasons for the rate being above statutory levels.

Jeffrey Stantial asked about the consolidated EBITDA margin trajectory into 2026 and the expected quarterly cadence, considering seasonality and various puts and takes.

Answer

Oliver Chow, CFO, noted a 500 basis point increase in Q4 consolidated EBITDA margin year-over-year, driven by recurring revenue scaling in gaming operations (install base, RPDs, Grover). He expects combined gaming and Grover margins to be around 50%, subject to mix and tariff impacts (mid to high single-digit millions per quarter). SciPlay's margin expansion was attributed to DTC growth and prudent UA spend, with expectations to maintain these levels. iGaming's record margins were due to a favorable shift to higher-margin first-party content, though U.K. tax increases starting Q2 2026 will be a headwind. He anticipates quarterly fluctuations but an efficient baseline for the business.

Jeffrey Stantial asked about the consolidated EBITDA margin trajectory into 2026, given better-than-expected margins across all three businesses in Q4, and sought insight into the quarterly cadence.

Answer

CFO Oliver Chow attributed Q4's 500 basis point margin increase to recurring revenue scaling in gaming (Grover, gaming operations installs, RPDs), DTC growth and prudent UA spend in SciPlay, and a favorable shift to higher-margin first-party content in iGaming. He projected gaming margins around 50% with tariff impacts, continued DTC progress and scaled UA in SciPlay, and noted potential headwinds from UK tax increases in iGaming from Q2 2026, expecting quarterly fluctuations but a generally efficient baseline.

Jeffrey Stantial asked if the 30% one-month advance discount is a unique, one-off initiative or a transition towards a broader suite of advanced lift ticket discounts and yield management, including the role of AI, and if similar dynamic pricing initiatives could be applied to lodging.

Answer

Rob Katz, CEO of Vail Resorts, clarified that the 30% one-month advance discount is unique for Vail but not anticipated to lead to multiple tiered advance products. He affirmed that AI is used to synthesize data for insights across resorts and products, aiding in pricing and approach assessment, but ultimate strategy and pricing remain business judgments. Mr. Katz explained that lodging already operates under a highly dynamic pricing system, making it a very different ecosystem from lift tickets and passes, and thus, he does not foresee applying the current lift access strategies to lodging.

Jeff Stantial from Stifel inquired about the initial fiscal 2026 guidance, seeking clarity on expectations for lift ticket unit sales—whether they are projected to stabilize or continue declining—and how blended price growth or decline is anticipated, considering changes to the Buddy Pass system and dynamic pricing strategies. He also asked for historical context on the materiality of Buddy Passes in terms of unit and revenue contribution, and whether the Epic Friend Tickets change is expected to yield immediate returns through higher volume or primarily serve as a longer-term investment for pass conversion.

Answer

CFO Angela Korch stated that while total visitation is expected to be down due to pass sales, lift ticket visitation is anticipated to grow, partially offsetting this decline, with lift ticket revenue expected to be slightly positive due to pricing actions and new products like Epic Friend Tickets. She detailed the EBITDA guidance bridge, highlighting positive contributions from the Resource Transformation Plan, normalized Australia conditions, pass price growth, lift ticket prices, and improved ancillary, offset by lower pass unit sales and cost inflation. CEO Rob Katz added that Buddy tickets historically represent a material portion of lift ticket sales (20% of paid lift ticket revenue). He expects Epic Friend Tickets to be a positive contributor to the current year's revenue, driving more visits due to increased promotion, a consistent 50% discount, and clearer conversion pathways, with additional benefits expected in future years.

Jeffrey Stantial asked for clarification on the initial fiscal 2026 guidance, specifically how the company is thinking about lift ticket or window ticket sales, and if unit sales are expected to stabilize or decline. He also inquired about the blended price growth or decline given changes to the Buddy Pass system and dynamic pricing, net of typical price actions. Additionally, he asked about the historical materiality of Buddy tickets in terms of unit or revenue contribution and whether the Epic Friend Tickets change is expected to be a net positive in year one or a longer-term investment for pass conversion.

Answer

CFO Angela Korch stated that while pass visitation is expected to decline, lift ticket visitation is anticipated to grow, leading to slightly positive lift ticket revenue. She outlined that the guidance midpoint reflects a $26 million increase, driven by the Resource Efficiency Transformation Plan ($38 million), normalized Australian conditions ($9 million), pass price growth, lift ticket prices, and improved ancillary, offset by lower pass unit sales and inflation. CEO Rob Katz confirmed Buddy tickets are material, representing about 7% of total lift revenue and 20% of paid lift ticket revenue. He expects Epic Friend Tickets to be a net positive for the year, contributing to lift ticket growth, with further benefits in future years.

Jeffrey Stantial inquired about the initial fiscal 2026 guidance, specifically asking for expectations on lift ticket unit sales (stabilization or decline) and blended price growth given changes to the Buddy Pass system and dynamic pricing. He also asked about the historical materiality of Buddy Passes and the expected return on the Epic Friend Tickets change.

Answer

CFO Angela Korch stated that some offset to pass visitation is expected from lift ticket visitation growth, with lift ticket revenue anticipated to be slightly positive. She detailed the EBITDA bridge, highlighting contributions from the Resource Efficiency Transformation Plan, normalized Australian conditions, pass/lift ticket price growth, and improved ancillary, offset by lower pass units and cost inflation. CEO Rob Katz confirmed Buddy tickets are material, representing 7% of total lift revenue and 20% of paid lift ticket revenue. He expects Epic Friend Tickets to be a positive contributor for the year, growing over time, by driving more visits through increased promotion, a universal 50% discount, and a clearer path to future pass conversion.

Jeff Stantial asked for clarification on the initial fiscal year 2026 guidance, specifically how the company anticipates lift ticket or window ticket sales to perform (stabilize, decline, or grow) and the expected blended price growth or decline given changes to the Buddy Pass system and dynamic pricing. He also inquired about the historical materiality of Buddy passes and whether the Epic Friends change is expected to yield a positive return in the current year or is a longer-term investment for pass conversion.

Answer

CFO Angela Korch stated that the company expects lift ticket visitation growth to partially offset the decline in pass visitation, with pricing actions, including Epic Friends, contributing to slightly positive lift ticket revenue. She detailed the fiscal year 2026 EBITDA guidance, highlighting contributions from the Resource Transformation Plan, normalized Australia conditions, pass price growth, lift ticket prices, and improved ancillary revenue, offset by lower pass unit sales and inflation. CEO Rob Katz confirmed that Buddy tickets are a material component of lift ticket sales (7% of total lift revenue, 20% of paid lift ticket revenue) and that Epic Friends is expected to be a positive contributor to the current year's results, growing over time, by driving increased visits.

Jeffrey Stantial from Stifel Institutional asked for perspective on the recent decline in lift ticket sales, questioning if the trend is structural and whether it requires operational tweaks or a deeper pricing strategy review. He also inquired about the company's exposure to potential tariffs.

Answer

CEO & Chair Rob Katz stated that while converting guests to pass products is the goal, the company must provide paths for lift ticket buyers to visit, which requires new approaches to the pass and pricing strategy. EVP & CFO Angela Korch added that as a service business, direct tariff exposure is low, but the company monitors the indirect impact on consumer spending.

Jeffrey Stantial asked about recent demand trends, particularly any observed softening at resorts near the Canadian border and the behavior of the broader international guest segment. He also questioned if the company expects pass sales in units to return to growth in the upcoming season.

Answer

CEO Kirsten Lynch stated that while the company is monitoring the situation, it has not seen an overt reaction to tariff rhetoric. She noted Whistler Blackcomb's performance is similar to other resorts, with strong local visitation but lagging destination guest bookings. Lynch expressed a belief that the pass program has ample room for growth, assuming the prior sales cycle absorbed the post-COVID normalization impact.

Jeffrey Stantial from Stifel asked for specific details on lodging booking trends for the peak holiday season and whether favorable early snow has accelerated booking pace. He also questioned the company's capital allocation strategy, particularly the dividend payout ratio and willingness to leverage the balance sheet.

Answer

CEO Kirsten Lynch confirmed that booking patterns are strengthening closer to the season, especially in markets with good snow, with U.S. resort market data showing bookings consistent with the prior year. CFO Angela Korch addressed capital allocation, stating the company prioritizes the dividend, felt comfortable with its ability to cover it even in a challenging year, and will formally reevaluate it in the March quarter as is typical.

Jeffrey Stantial of Stifel sought to reconcile the expectation for stable pass sale trends with commentary suggesting spring headwinds might ease later in the selling season. He also asked for more details on the specific challenges and underperformance at Whistler Blackcomb.

Answer

CEO Kirsten Lynch clarified that while some less-tenured passholders might delay purchasing, the overall reduced pool of potential new passholders (due to an 8% industry-wide visit decline) will likely impact the full selling cycle, leading them to project stable trends. Regarding Whistler Blackcomb, she attributed its significant lift ticket weakness to a longer period of challenging weather conditions, its high dependence on destination visitation, and potential normalization impacts following prior border restrictions.

Jeff Stantial asked for a detailed breakdown of the assumptions underpinning Brightstar's new financial targets for core growth, iLottery, Italy B2C expansion, and other revenue streams, seeking clarity on specific drivers like same-store sales, new state launches, market share, and iCasino/sports capture.

Answer

CEO Vince Sadusky explained that core retail growth is based on recent history, iLottery growth is primarily organic with realistic assumptions for incremental markets and secured platform/content deals. For Italy B2C, he highlighted the potential for significant share increase from the new app and reasonable share gains in iCasino/sports betting, with the most exciting growth expected beyond 2028. He also noted 'all other' growth is driven by instant ticket share gains, investments in the print facility, and competitive new hardware products. CFO Max Chiara added that the first $250 million ASR tranche is expected to complete by year-end or early January, with future plans for the second tranche to be discussed later.

Jeff Stantial inquired about the status of the $250 million accelerated share repurchase (ASR) and the expected timing and mechanism for the second $250 million tranche.

Answer

CFO Max Chiara confirmed that the first $250 million ASR tranche is proceeding as anticipated and is expected to be completed by the end of the year or early January. He requested patience regarding the second tranche, indicating further details would be provided later.

Jeff Stantial posed a high-level strategic question about the Kentucky Derby, asking what 'inning' the company is in regarding substantial projects like Victory Run, and if the current product sufficiently covers the full consumer lifecycle or if there are opportunities to bridge ticket price gaps.

Answer

CEO Bill Carstanjen used a baseball analogy, stating the Derby is in the 'third inning' of its development, with significant future opportunities. He emphasized the importance of a breadth of offerings and that Victory Run is the next major project to upgrade a 'tired old section' to meet modern consumer expectations for premium experiences, while carefully managing capacity.

Jeff Stantial posed a high-level strategic question regarding the Kentucky Derby, asking what 'inning' Churchill Downs is in with substantial projects like Victory Run, and if the current product diversification covers the full consumer lifecycle or if opportunities remain to bridge ticket price gaps.

Answer

CEO Bill Carstanjen used a 'third inning' analogy for the Derby's long-term opportunity, emphasizing its dynamic evolution and future potential. He described Victory Run as a significant upgrade to meet modern consumer expectations for premium experiences, noting careful capacity layering to enhance quality and segmentation rather than just increasing seat numbers.

Jeffrey Stantial of Stifel Institutional inquired about the specific strategies being used to ramp up The Rose HRM in Virginia and whether its current cost structure is optimized for margin expansion.

Answer

CEO William Carstanjen expressed strong optimism for The Rose, stating that the current focus is a multi-year investment in building the brand, driving customer trials, and growing the database in a large, competitive market. He clarified that the immediate goal is not to maximize quarterly margins but to make the necessary investments for long-term success, which he believes will lead to consistent improvement over time.

Jeffrey Stantial asked about the maturity of existing Virginia HRM assets (excluding The Rose), now that the removal of skill games has been anniversaried, and what stage of the ramp-up cycle these properties are in.

Answer

CEO William C. Carstanjen expressed strong confidence in the Virginia market, stating it is still 'very early' in the maturity cycle for these assets. He acknowledged the first quarter was 'noisy' due to severe weather, tax rate fluctuations, and some consumer softness, but he remains very bullish on the long-term growth opportunity in the state and is pleased with the team's performance.

Jeffrey Stantial of Stifel asked about reports of California racetracks pursuing historical horse racing (HRM) expansion, inquiring about its legal viability and how Churchill Downs might participate, whether via its Exacta system or M&A.

Answer

CEO William C. Carstanjen stated that since Churchill Downs does not operate a track in California, its most likely path for participation would be providing its Exacta HRM system and services on a B2B basis. While declining to speculate on California politics, he expressed readiness to assist if HRMs are approved and noted his belief that other jurisdictions will legalize the product in the future.

Jeffrey Stantial asked for insights into the expected ramp-up cadence for the new Dumfries property and how it might compare to previous openings, with a specific focus on Q4 expectations.

Answer

CEO William C. Carstanjen stated that the immediate priority for Dumfries is ensuring a great customer experience, which requires carefully ramping up a large new team. He noted that larger properties generally ramp more slowly than smaller ones. Consequently, success is defined by long-term, quarter-over-quarter growth, not just the results of Q4 2024. He is highly optimistic about the market but stressed a long-term approach focused on operational excellence.

Jeffrey Stantial of Stifel Institutional inquired about the financial metrics of the Spotlight Vegas acquisition's earn-out and the strategic rationale for entering the live events space. He also asked about AI's impact on search click-through rates and the potential for market share consolidation.

Answer

CFO Elias Mark detailed the Spotlight Vegas deal structure, including an $8 million upfront payment and a performance-based earn-out capped at $22 million. Co-Founder and CEO Charles Gillespie explained the acquisition leverages their audience and digital marketing skills for a gaming-adjacent market. Regarding AI, Gillespie stated that while AI overviews reduce clicks, Gambling.com Group's high-authority brands are well-positioned to be the primary sources cited by AI tools.

Jeffrey Stantial asked if Penn National Gaming's recent return to performance marketing has been a material growth driver and sought commentary on the potential for other operators to increase affiliate spending. He also requested clarification on the currency impact on guidance, asking if the reiterated guidance implies weaker underlying performance offset by favorable FX.

Answer

CEO Charles Gillespie explained that operators turning to the affiliate channel after exhausting cheaper acquisition methods is a typical, expected industry pattern, and the company welcomes any increased demand from partners like Penn. CFO Elias Mark clarified that while the assumed EUR/USD rate was moved to 1.10, the impact is not large enough to move the needle, as a higher proportion of revenue and expenses are now in USD. He confirmed that underlying business expectations for the year have not fundamentally changed.

Jeffrey Stantial requested details on the regional growth drivers and quarterly cadence embedded in the 2025 guidance, and asked about the company's capital allocation strategy, specifically weighing share repurchases against debt paydown.

Answer

CEO Charles Gillespie clarified that 2025 growth will be driven by subscriptions accounting for over 20% of revenue and a return to growth in North America, making it the fastest-growing region. He noted that lower revenue from media partnerships is a headwind to top-line growth but improves margins. On capital allocation, Gillespie confirmed they received a waiver from lenders to resume buybacks in 2025 and will be 'smart and tactical' in deploying the existing $10 million authorization when the stock appears mispriced.

On behalf of Jeff Stantial, an analyst asked for an update on Google's enforcement of its media partner restrictions and whether the raised cost of sales guidance reflected uncertainty or actual policy changes. A follow-up question asked for thoughts on the potential for iCasino legislation in France.

Answer

CEO Charles Gillespie stated that the 'dust has settled' on Google's May policy change and the impact was not as severe as initially feared, though he does not expect media partnership revenue to return to its Q4 2023 peak. Regarding France, Gillespie noted that iGaming legislation is 'on ice' due to opposition from land-based casinos. He reiterated the company's strategy of not targeting sports-betting-only markets but confirmed they would enter France on 'day 1' if iGaming were to be regulated.

Jeffrey Stantial asked about the strong margin performance at the Rocky Gap property despite weather disruptions and questioned the capital allocation strategy, specifically the amount of share repurchases versus prior indications and the balance between buybacks and debt paydown.

Answer

Erwin Haitzmann, Chairman & Co-CEO, attributed Rocky Gap's margin strength to the return of lower-end customers and a more granular, fine-tuned marketing strategy. Peter Hoetzinger, Vice Chairman, Co-CEO & President, explained that share repurchases were limited by the structure of the 10b5-1 plan and that future capital allocation will balance limited buybacks with debt refinancing, noting a significant debt paydown would likely await proceeds from the Poland divestment.

Jeffrey Stantial asked what drove the outperformance at Caruthersville, whether the $3-4M incremental EBITDA target is still valid, how the company balances share repurchases versus debt paydown, and why non-carded play weakness at Mountaineer is concentrated midweek.

Answer

Co-CEO Erwin Haitzmann said Caruthersville's performance met, rather than exceeded, expectations for expanding its market reach. Co-CEO Peter Hoetzinger confirmed the EBITDA target is still valid but delayed by about a year due to consumer weakness. On capital allocation, Peter Hoetzinger prioritized refinancing or paying down debt due to market uncertainty. Erwin Haitzmann attributed Mountaineer's midweek weakness to established customer behavior patterns.

Jeffrey Stantial asked for details on the month-over-month performance of the Nugget Casino during Q3 and into October, as well as the remaining operational levers to drive future growth. He also questioned the cause of the year-over-year revenue decline in the Canadian assets.

Answer

Executive Co-CEO Erwin Haitzmann explained that the Nugget's weak Q3 performance was concentrated in July, with August and September showing strong improvement that continued into October. Future growth levers include optimizing concert selections and pursuing more group business. Regarding Canada, he attributed the revenue dip primarily to discontinuing an unprofitable event and increased competition at one property, but noted that cost efficiencies led to an overall EBITDAR increase for the segment.

Jeffrey Stantial of Stifel Institutional asked for insights on the contributions from new board members to the interactive strategy and questioned the reasons for lower promotional spending on sports betting in Q2.

Answer

CEO Jay Snowden spoke positively about the fresh perspectives from the new, highly engaged board members but did not disclose specific discussions. Regarding promotions, he reiterated the company's disciplined strategy to keep reinvestment around 3% of handle. CTO Aaron LaBerge added that marketing resources were shifted efficiently during the slow sports season, which also contributed to the lower Q2 promotional spend for OSB.

Jeffrey Stantial asked where PENN sees room to close product gaps with iCasino competitors. He also followed up on the Council Bluffs project, asking how the company plans to mitigate tariff exposure on steel.

Answer

CEO Jay Snowden and CTO Aaron LaBerge identified live betting as the biggest area for improvement in sports betting. For iCasino, they said the focus is on enhancing CRM, personalization, and reducing friction to get players into games faster, rather than on product mix. Regarding tariffs, Head of Operations Todd George explained that the project's design requires less steel than a high-rise, and the procurement team is actively working to manage costs and can 'spot the market' to lock in prices at an opportune time.

Jeffrey Stantial of Stifel asked if strong early iCasino returns are causing a strategic rethink of resource allocation between sports and casino, and requested more detail on the behavior and value of younger, cross-sold guests.

Answer

CEO Jay Snowden responded that while they constantly re-evaluate, the strong, high-retention performance of the iCasino app has prompted them to allocate incremental spend to support it in 2025. Head of Operations Todd George added that these new cross-sold guests surprisingly play slots, show higher frequency and visitation than typical new retail customers, and progress well through the loyalty program.

Asked for details on the strategic shift from aggregated to first-party content, including the future mix, key drivers, and potential margin impact. Also inquired about the addressable market and adoption drivers for the Fuze engagement platform.

Answer

The company stated that while aggregation remains an entry point, the focus is on proprietary content to drive margins towards a 20%+ EBITDA goal at scale. The Fuze platform is aimed at Tier 2/3 operators, serving as a key part of their ecosystem to promote content and enhance operator KPIs.

Jeffrey Stantial from Stifel sought more detail on the timing for when current tariff policies would begin to impact the company's input costs, net of any mitigation efforts.

Answer

CEO Matt Wilson explained that the company acted quickly to pull forward "multiple quarters of inventory" that is unaffected by tariffs, which will buffer the immediate impact on cash flows. He also noted ongoing mitigation efforts, like reconfiguring the supply chain through Mexico. CFO Oliver Chow added that this is part of a long-term diversification strategy and they are avoiding "knee-jerk" reactions.

Jeff Stantial asked about competitive intensity in social casino, including from new verticals like sweepstakes, and whether L&W would consider entering that space.

Answer

CEO Matt Wilson attributed SciPlay's growth to live ops and monetization of the existing player base. He transparently noted a temporary monetization issue with Jackpot Party in H2 2024 that has since been resolved. Regarding sweepstakes, he stated L&W is pro-regulated gaming and views the vertical as currently unregulated and against their strategy. They would only consider it if the regulatory landscape changes, which they do not foresee.

Jeff Stantial of Stifel asked how promotional reinvestment improved year-over-year, even as both the volume of new users and the signup offer per user reportedly increased.

Answer

CEO Jason Robins explained the improvement was driven by better retention bonusing and a mix shift towards a more mature, existing customer base. He clarified that the overall new user promotion rate has not gone up; rather, they are constantly experimenting with different offers, and any 'higher offer' was likely a specific, temporary test.

Jeffrey Stantial from Stifel asked for a quantification of the EBITDAR impact from headwinds in Rhode Island and Atlantic City, and sought more color on the performance drivers and challenges within the International Interactive segment, specifically in Japan and the UK.

Answer

CFO Marcus Glover and President George Papanier quantified the Rhode Island traffic impact at 12-15% and a quarterly EBITDAR impact of about $2 million, while also noting a ~$4 million EBITDAR impact from the Tropicana wind-down. CEO Robeson Reeves explained that Japan's softness is due to weaker player sentiment and yen devaluation, while the UK is seeing strong growth from brand investment, improved apps, and advanced player management systems.

Inquired about quantifying the financial impact of headwinds in the Casinos and Resorts segment (Rhode Island, Massachusetts, Atlantic City) and asked for details on the performance of the International Interactive business, specifically the challenges in Japan and the growth drivers in the UK.

Answer

The company quantified the Rhode Island traffic impact at 12-15% and noted a ~$4M EBITDAR impact from the Tropicana wind-down. Atlantic City is impacted by VIP team turnover. In Japan, challenges are driven by lower player demand due to sentiment and a weaker yen, not payment processing. In the UK, growth is being driven by increased brand investment, improved native apps, and advanced real-time player management, leading to sustainable growth.

Jeffrey Stantial from Stifel asked for a quantification of the financial impact from headwinds in Rhode Island and Atlantic City on the Casinos & Resorts segment. He also sought more color on the International Interactive business, particularly the drivers of weakness in Japan and the performance of the UK market.

Answer

CFO Marcus Glover estimated the Rhode Island traffic impact at 12-15% and noted competitive pressures. President George Papanier added a ~$4 million year-over-year EBITDAR impact from the Tropicana wind-down. CEO Robeson Reeves attributed the challenges in Japan to weaker player demand and sentiment due to the yen's devaluation, not payment processing issues. He highlighted strong performance in the UK, driven by brand investment, an improved native app, and advanced player management systems.

Asked for a breakdown of the impact of January weather on Casinos and Resorts margins and the cost outlook for the rest of the year. Also inquired about the cost-side drivers for the North America Interactive business's path to profitability, including marketing rationalization and duplicative tech costs.

Answer

Executives explained that adverse weather significantly impacted January margins, dropping them to 24% from 30% the prior year. The main ongoing cost pressure is from union wage increases. For North America Interactive, profitability improvement is driven by revenue gains, cost structure improvements, and the eventual elimination of duplicative tech costs from running two platforms, which will be resolved by year-end.

Jeffrey Stantial asked for a breakdown of the Casinos and Resorts segment's 35% margin figure, questioning the specific impact from adverse weather in January. He also followed up on the North America Interactive business, asking about the cost-side drivers for the guided reduction in losses for 2024.

Answer

President George Papanier clarified that weather significantly impacted January margins (24% vs. 30% prior year) and that underlying margins were also affected by union wage increases. For North America Interactive, CFO Marcus Glover cited rightsized labor and strong revenue gains as key drivers for improving profitability. CEO Robeson Reeves added that the company is still running two technology stacks, and eliminating this duplication by year-end will further reduce costs.

Jeffrey Stantial from Stifel questioned the margin impact from weather on the Casinos and Resorts segment and the cost outlook for 2024. He also asked about the cost-side drivers for the projected improvement in North America Interactive's performance.

Answer

President George Papanier detailed the weather's impact, noting January margins dropped to 24% from 30% year-over-year, with union wage increases being the primary other headwind. CFO Marcus Glover added that low hold also modestly impacted Q1. For North America Interactive, Glover cited rightsized labor, the shift of retail sports betting into the segment, and significant revenue gains as drivers of improvement. CEO Robeson Reeves confirmed that duplicative tech costs still exist but will be eliminated by year-end, simplifying operations.

Inquired about the U.K. regulatory overhaul's impact on the International Interactive business, the nature of stabilization in the Asian market, and whether the $50 million EBITDAR target for the Chicago temporary casino is still intact for 2024.

Answer

The U.K. regulatory changes are viewed as rational and creating a better market, with expected stake limits not being a major concern. The Asian B2B market is seeing sentiment build back and is expected to provide consistent revenue. The $50 million EBITDAR run-rate target for the Chicago temp casino is still expected to be hit by the end of Q3 and is factored into the 2024 guidance.

Asked for an update on the performance of the new 49C cabinet and requested more detail on international EGM sales opportunities.

Answer

The 49C cabinet is performing fantastically, and the Spectra 43 also continues to perform very well, supported by strong core content and brand extensions like Rakin' Bacon. On international opportunities, the company is planning to expand beyond its historical focus on Mexico into the broader Latin American market (Central and South America) and the Caribbean, which they see as a significant area of 'white space' for growth with their newer cabinets.

Asked about the drivers for flat domestic game installs in Q3, the outlook for net installed base growth, and the company's capital allocation strategy regarding minimum cash levels and debt paydown.

Answer

The flat domestic installs in Q3 were primarily due to opportunistic "convert-to-sale" transactions by customers, not just optimization. The company will continue its optimization strategy consistently. Regarding capital, they are comfortable with current cash levels and are focused on building cash, with a potential debt refinancing being a more exciting near-term opportunity than immediate term loan paydown.