Bally's - Earnings Call - Q3 2020
October 29, 2020
Transcript
Speaker 0
Good morning and welcome to the Twin River Worldwide Holdings Third Quarter twenty twenty Earnings Conference Call. All participant lines have been placed on listen only mode to prevent any background noise. After the speakers' remarks, there will be a question and answer session. Thank you. I would now like to turn the call over to Craig Eaton, Executive Vice President and General Counsel.
Please go ahead, sir.
Speaker 1
Good morning, everyone, and thank you for joining us on today's call. By now, you should have received a copy of our Q3 twenty twenty earnings release issued earlier this morning. If you haven't, the earnings release and presentation that accompanies this call are available in the Investor Relations section of our website at www.twinriverwwholdings.com under the News and Events and Presentations tabs. With me on today's call are George Papaneer, our President and Chief Executive Officer Steve Kao, our chief financial officer Mark Crisipoli, our executive vice president of strategy and operations, and he's also president of our Rhode Island operations Phil Giuliano, our chief marketing officer and Joe McGrail, our chief accounting officer. Before we begin, we would like to remind everyone that comments made by management today will contain forward looking statements.
These forward looking statements include plans, expectations, estimates, and projections that 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.
We do not provide a reconciliation of forward looking non GAAP financial measures due to our inability to project special charges within certain expenses. Today's call is also being broadcast live on our investor site and will be available for replay shortly after the completion of this call. I will now turn the call over to George. George? Thank you, Craig.
Good morning, everyone. We're extremely excited to take this time to provide some additional color on the multitude of recent announcements we made, and we appreciate you joining us. Since our last call, we have made significant progress on many of our strategic growth initiatives. There's a lot to cover, so we'll just get right into this. Dating back to our first acquisition of Hard Rock Blux in 02/2014, continuing to our NoverDowns merger and going public in early two thousand nineteen, Then through the strategic acquisitions that we have announced or consummated in just the last six months, we have been disciplined in our targeted growth initiatives.
We have transformed from a single property operator in Rhode Island to an increasing national player with soon to be 14 casino properties and more importantly, operating in 10 states. We have made significant progress towards our goal of becoming the industry leader for gaming, entertainment in America. There's still a lot of work to do, but we feel we reached a major milestone with yesterday's announcement that after acquiring the iconic Valleys brand from Caesars back on October 13, we will be rebranding the company as Valy's Corporation and begin trading on the New York Stock Exchange under the ticker symbol, v a l y, beginning November 9. Valy's is an iconic brand that's commensurate in premier properties and amenities that define our diversified portfolio. The brand has a rich history of gaming and entertainment that will provide immediate and enhanced nationwide brand recognition.
This is a significant part of our long term growth of strategy, and acquiring this brand now accelerates our ability to execute on it. We have begun the process of evaluating how we will best leverage this prestigious brand and look forward to talking more about our vision for the brand over the next several months. Since our last call, we've taken significant steps in our evolution of advancing our disciplined portfolio diversification strategy, opportunistically expanding our regional presence through accretive transactions in Illinois with just two days ago with the announcement of our latest acquisition, Tropicana Evansville properties from. Unlike our past acquisition in Indiana, we have partnered with a REIT to purchase the operations of Evansville with GLPI acquiring the real estate. This transaction, we will also be selling the real estate of Dover Downs to GLPI and entering into a long term master lease for both properties with rent totaling $40,000,000 per year.
Structuring the deal with GLPI allows us to acquire the operations in Evansville for a hundred and $40,000,000, which represents an adjusted EBITDA multiple of 4.4 times on pre COVID basis without using any cash, without increasing outstanding debt as a result of this
Speaker 2
transaction. Net of
Speaker 1
the master lease payments, we expect to pick up $20,000,000 of EBITDA as a result of this transaction. On top of that, we're also acquiring unencumbered rights to the sports betting, Nia Gaming Skins associated with the Evansville operations to access the growing Indiana market. This transaction represents our first foray into PropCo, OpCo structure. We look forward to partnering with GLPI on both the Evansville and Dover properties as well as our potential opportunities in the future. Steve will provide more detail on the transaction and specifically the refinancing aspect of this transaction in a few minutes.
In addition to this week's announcements, earlier this month, we announced our intention to acquire the Joomers Casino Hotel in Rock Island, Illinois from Delaware North. The purchase price for this acquisition is a hundred and $20,000,000, which represents a 7.4 time multiple based on Joomers adjusted EBITDA for the year ended 12/31/2019. Of note, we completed our offering of $125,000,000 additional senior notes on October 9. This will aid in the payment of the purchase price for Jumors. This acquisition is expected to be immediately accretive to earnings.
We are confident that both of these acquisitions represent value accretive multiples for bricks and mortar operations on a stand alone basis while further expanding our geographic reach into additional attractive markets. This transaction also provides access to growing gaming markets in Indiana and Illinois with the potential to capitalize on lucrative sports betting and iGaming opportunities. We look forward to the opportunity to leverage our operational expertise and proven integration approach to drive incremental revenues and cash flow improvements at both locations. We continue to be very active in the M and A market, taking a disciplined approach. Our pipeline is strong and the markets are seeing increased activity.
We will continue to be opportunistic in finding the right opportunities that align with our long range strategic goals. But M and A is not our only growth strategy. During the third quarter, anticipating the closing of Bally's and Atlantic City in q four, we announced several exciting strategic partnerships, both in sports betting and iGaming for several of the licenses we will be acquiring as part of the transaction. We remain enthusiastic about the proposed IGT joint venture in Rhode Island. We expect these partnerships to be accretive to earnings.
Mark will provide a further strategic update shortly. In addition to all these announcements, we reported strong third quarter financial results. We closed out the quarter with adjusted EBITDA of $38,000,000 up 2,400,000 or 6.8% in the same period in 2019. Most encouraging in these results was the improved margin performance, which when coupled with the incremental EBITDA provided by our newly acquired properties helped to offset the decrease in revenue we experienced as a result of COVID related capacity restrictions and ensured that operationally, we were cash flow positive for the quarter. Consistent with what we discussed in our last call about our operational performance in late q two and early q three, the segments where the company were able to operate at close to the normal capacity, we were with more amenities available for most of June, most notably in Southeast segment, which consists of Biloxi and Vicksburg, and the Mid Atlantic segment, which consists of Dover, we experienced strong demand and significantly improved margins.
For the second quarter in a row, the strongest individual performer in the portfolio was our Hard Rock, Cielo and Biloxi. Overall, the Southeast segment provided adjusted EBITDA of $16,400,000 for the quarter, but within that segment, Hard Rock accounted for $14,400,000 of adjusted EBITDA in q three, which represents an increase of 4,500,000.0 or 46% over the prior year. Vicksburg also outperformed our expectations for the quarter and contributed year over year adjusted EBITDA percentage growth consistent with that of Biloxi. Dover also shows strong adjusted EBITDA growth in the quarter, increasing 1,300,000 or 20.6%. While Dover revenue was down approximately 24%, adjusted EBITDA margin showed an almost 1,400 basis point improvement year over year.
We also saw a gradual lessening of restrictions in Rhode Island over the quarter. This could have impact results, especially compared to our initial year period in June. Although demand in Rhode Island has rebounded, it's still below pre COVID levels. Travel restrictions that went into place in Massachusetts in August, coupled with minimal food and beverage offerings, and the continued closure of hotels still remain headwinds. However, in spite of this, the Rhode Island segment still produced adjusted EBITDA of $15,100,000 as margin improvements of over 300 basis points somewhat mitigated the revenue reductions and helped ensure the segment generated positive cash flow.
On our last segment, and specifically some commentary on the performance of Casino KC, our first quarter of ownership. For the first quarter, the segment contributed approximately $19,000,000 of revenue and $4,700,000 in adjusted EBITDA. These results are extremely encouraging as not only do they represent a strong first quarter in Kansas City, which was relatively in line with the historical performance for the property, but they were also only recently allowed to open twenty four hours. We're still operating with limited food and beverage operations. Additionally, these strong results do not reflect any upside we might expect as a result of the planned $40,000,000 capital improvements, which will kick in or kick off next year.
Recurring theme of this quarter was robust margin improvements. Digging into the numbers a bit more since reopening, we have realized meaningful new efficiencies with reductions in labor expense and marketing spend, which have helped to drive operational free cash flow. We continue to be selective with our amenities in Q3, focusing on higher margin business. As a result of these expense reductions and new efficiencies, we are now operating at an even higher margin than prior to the pandemic. For the third quarter, on a same store basis, we noted an adjusted EBITDA margin increase of approximately six fifty basis points.
Labor savings accounted for approximately 270 basis points of the improvement. Our marketing savings led to another 60 basis points. The remainder of the increase can be attributed to lower cost of goods and the elimination of certain lower margin revenue offerings such as buffets. While the acquired properties were slightly dilutive to adjusted EBITDA margins for the third quarter, it should be noted that the same store margin is artificially high because revenue in Rhode Island and Dover is reported net of gaming taxes, which is atypical for the industry. Even with this impact, the overall adjusted EBITDA margins were up over 500 basis points.
While the margin results are very encouraging and we think there is certainly a component of best improvement that is likely to be more permanent in nature, the gaming environment continues to be very dynamic. We will remain adaptive and will continue to be willing to spend money to retain the captured market share and drive revenue. We believe many of the efficiencies we have realized are sustainable over the long term and will result in improved profitability for our properties going forward, even though increased sanitation and safety costs are likely to become the norm. Before I turn the call over to Mark, I also want to comment on exactly where we are from an operations perspective. As we go into q four, particularly given the ongoing pandemic, rather than going through the list line by line, I would refer you to slide five of the q three investor presentation we posted on our investor site this morning for current rundown of our operations in light of COVID restrictions at the property level.
Overall, we are operating with greater capacity and amenities versus the end of Q2. It seems as though we continue to get closer to full capacity. However, we are still somewhat limited. We're excited for the day when we can fully reopen and provide all amenities to our customers. In the meantime, we remain committed to meeting or exceeding all guidelines established by the CDC as well as our property specific comprehensive health and safety protocols that we have been developed in close consultation with state regulators, health officials, and local jurisdictions.
I'm very proud of how hard the teams at the property level are working to keep our customers and team members safe during this challenging environment. I will now turn it over to Mark.
Speaker 3
Thanks, George, and good morning, everyone. Let's focus first on Ballet's Atlantic City. We continue to work through the licensing process with the New Jersey Division of Gaming Enforcement, and we have our hearing with the Casino Control Commission next week. We are optimistic that we will obtain approval and take ownership in mid November. Concurrent with the licensing process, the team has worked diligently to develop a comprehensive and exciting integration and strategic initiative plan for Bally's AC.
We will launch that plan immediately after closing. On a targeted basis, we will greatly improve the property and customer experience, including a phased hotel room refurbishment and the addition of several new amenities. These CapEx projects will be spaced out over multiple years starting in early twenty twenty one to minimize any customer disruption. Sports betting is an important part of our plan for New Jersey. We are thrilled to announce that pending licensing and regulatory approvals, we have partnered with FanDuel to manage our sports book at Valleys AC.
FanDuel has been a great partner for us in Colorado, and we are very excited to expand our relationship with them by adding a robust market like Atlantic City. The permanent sportsbook location is going to be one of the many exciting changes we have in store for Valleys. It has a unique location just steps away from the center of the boardwalk where millions stroll by annually. We look forward to commencing construction on the permanent sports book, which will have a direct entrance from the boardwalk shortly after closing. We anticipate opening the permanent FanDuel sports book in the spring of twenty twenty one.
While construction is proceeding, we will open a temporary Sportsbook on the First Floor of the casino. This FanDuel partnership is the latest announcement involving sports betting and iGaming in New Jersey, where we stand to acquire three sports betting and five iGaming skins upon closing of the transaction. We have already announced strategic partnerships with PointsBet, Esports Entertainment, SportTrade, and theScore Bet. All of these agreements are accretive to earnings and bring something new and different to the expansive and cutting edge New Jersey mobile gaming market. We are also keeping one sports betting and one iGaming skin in New Jersey for our own future use.
Retaining skins for our use is an important part of our emerging national interactive strategy. As George mentioned, with our pending acquisitions, we will now operate in 10 states. The company's rapidly growing footprint will allow it to serve the over 80,000,000 customers that reside within the markets for these 14 premier casino properties. In addition, the customers in the company's database will increase to approximately 14,000,000. We intend to to continue to grow this great footprint with the same discipline that we have always extra exercised.
With the Bally brand and the unencumbered skins we have acquired and reserved in our portfolio, we can now unite our customer offerings across our various physical properties while having a singular online and mobile presence with a brand that is synonymous with gaming. We intend to be the first omnichannel gaming company operating both physical casinos as well as seamlessly integrated digital solutions. We will not be a land based operator that is afraid to lose the past. Instead, we will take advantage of our regulatory incumbency and the retail customer database to embrace the incredible growth potential that a digital future holds. This is all happening in real time.
And with each announcement we make, we are adding another piece of the puzzle. We look forward to unveiling our rebranding rollout strategy that George previewed in the first half of twenty twenty one. Please let me take a minute to update you on the status of our other pending transactions. We continue to make progress on regulatory approval in both Louisiana and Nevada and believe we are on track to close those acquisitions in the in late q one. We currently believe Jumors Illinois will close in q two of twenty twenty one, and we are aiming for Indiana to close in the first half of twenty twenty one.
We look forward to working with the local regulatory authorities to receive all the necessary approvals and complete these acquisitions. Let's now turn to the status of the IGT joint venture, which George mentioned. As we noted on our last call, the proposed legislation that would enable this joint venture has the full support of leadership in both chambers of the general assembly as well as the governor and her administration. We are hopeful that the assembly will come back after the election in November to address and pass this legislation. In the event it does, we remain committed to proceeding with the expansion of our Twin River property in Lincoln quickly.
We are close to completing the design and receiving the necessary permits and approvals. Essentially, project is shovel ready right now. With respect to the other terms of the legislation, we expect to assume management of a portion of the VLTs on the floor in early twenty twenty one, and we expect the joint venture with IGT to commence on 01/01/2022 as we have previously announced. We will provide a further update as this develops. The final item I would like to cover with you this morning is CapEx.
The Lincoln expansion project will occur over eighteen months commencing shortly after passage of the legislation. We expect that CapEx to hit both 2021 and 2022. We have also resumed some of the projects we had previously placed on hold. The Sugar Factory in Dover is now under construction. We just completed the development of a new restaurant at Twin River in Lincoln, Jerry Longo's Meatballs And Martinis, and that is expected to open as early as next week.
We are also moving forward on our redevelopment plan at Casino KC for approximately 40,000,000. That project should greatly enhance the property and guest experience driving growth and a nice return for us on our investment. The Kansas City the Casino KC project is largely a 2021 event, but we expect it will finish sometime in early twenty twenty two. More broadly, we continue to plan, scope, and position ourselves for a full return to normal activity levels. At this point, there have been no material changes to the project CapEx plans we discussed last quarter.
I will now turn it over to Steve.
Speaker 4
Thank you, Mark. First, I'd like to address cash, liquidity, and our recent financing transactions. As George mentioned, on October 9, we closed on an incremental $125,000,000 in aggregate principal amount of six and three quarters senior unsecured notes due 2027. The new notes were a tack on to our existing six and three quarters senior notes due 2027. We had pretty good timing to take advantage of a robust high yield market and, in essence, pre fund our acquisition of tumors while preserving our strong liquidity position.
Speaking of liquidity, at September 30, we had cash on hand of approximately $115,000,000. Pro form pro form a for the hundred $25,000,000 bond offering we just closed and taking into consideration $250,000,000 of available borrowing under our revolving credit facility, our current total liquidity is right about $490,000,000. If you compare that to the outlays we expect from committed acquisitions now under contract in the next twelve months, which is comprised of $25,000,000 for Bally's, a hundred and $40,000,000 for Shreveport and Montblood Lake Tahoe, and $120,000,000 for Jumer's, one, by the way, zero for Evansville, we have pro form a liquidity of approximately 200,000,000. In addition, we expect to continue to be generating free cash flow from operations much like we did this quarter, as George mentioned. We feel this is a very comfortable position, and with all the EBITDA we've picked up, still a very attractive and conservative leverage neighborhood with plenty of dry powder to continue to be an opportunistic player in the M and A market.
Regarding the Indiana acquisition and the GLPI, we often get asked the question on the REIT structure and why we had not participated in such a structure to date. So what makes this transaction different? Essentially, it's a debt free means of significant growth with no cash out of pocket. Plus, we're picking up the iSkins and the excite in the exciting Indiana market. We're doing this now because, as usual, we're being opportunistic.
We like the Evansville market and this particular asset quite a lot. There's limited potential for incoming competition. The skins for Indiana are extremely attractive, and we feel the property will fit into our growth strategy very well. In addition to all the details that George mentioned regarding the transaction with GLPI, let me let me tell you about another angle of of thought as we approached this combination of transactions. In essence, we merged with Dover Downs for $97,000,000 of equity in March of last year.
We're retaining approximately $12,000,000 of that EBITDA net of the annual lease payment. So what we're doing is trading the real estate there for an incremental 32,000,000 of EBITDA. So net net, we're out $97,000,000 of original purchase price in return for $44,000,000 of total EBITDA or an ownership multiple of 2.2 times. Oh, and by the way, as as Mark mentioned, we pick up the very important Indian skins to supplement our emerging interactive strategy. So we're thrilled about our new partnership with GLPI and those transactions overall.
Quick mention on segment reporting, a little bit of housecleaning on our q three financials. As you will notice in our release and what George alluded to earlier, beginning in the third quarter of twenty twenty, we changed our reportable segments to better align with our strategic growth initiatives in light of recent and pending acquisitions. We will now report four segments: the Rhode Island segment, which is comprised of the Lincoln and Tiverton properties the Southeast segment, which is the Hard Rock, Biloxi and Vicksburg properties the Mid Atlantic segment, which for the moment is only Dover Downs, and the West segment comprised of the Kansas City and Blackhawk properties. We are still evaluating how we will integrate Illinois and Indiana, and so you may see a fifth Midwest type segment in the near future. Stay tuned.
Regarding taxes, as we noted last quarter, there are certain aspects of the CARES Act that will benefit us. We continue to benefit from the employee retention credit, which helped the company by $1,200,000 in the third quarter. In addition, we are exploring other aspects of the act, including maximizing NOL carrybacks through tax planning initiatives and taking advantage of the relaxing of the interest deduction limitation. We believe the overall cash, positive cash flow to the company over the next year could well exceed the 25 or $30,000,000 we mentioned on our last earnings call. As for guidance, consistent with what we noted last quarter, we continue to live in uncertain times, especially in the short term.
And while we do not currently anticipate any significant operational interruptions, near term outcomes are heavily dependent upon COVID nineteen and our country's response to it. As such, we're not able to accurately project results in the short term and therefore continue to refrain from providing specific guidance at this time. And one final remark. As evidenced by our new relationship with GLPI, which we're quite pleased with, we will continue to be situationally opportunistic in expanding this company and delivering accretive growth for our shareholders and other stakeholders. Our leverage remains moderate.
Our liquidity profile is very strong, and we have considerable unencumbered real estate. That combination is foundational for our ongoing growth ambitions as an omnichannel provider of brick and mortar and interactive gaming entertainment to a large and growing customer base. And with that, I'll turn it back over to George.
Speaker 1
Thank you, Steve. That concludes the prepared remarks section of the call. I will now ask the operator to open it up to questions.
Speaker 5
We remind you to please unmute your line when introduced. We will now take our first question from the line of Barry Jones with Truist Securities.
Speaker 6
Good morning. So maybe just to start, you've obviously been very opportunistic in M and A at very attractive prices. But going forward, what would you want to see from a strategic perspective as you start thinking about really amassing a portfolio here? Just what would you want to see in future M and A? What are you looking for?
Speaker 2
So thanks for your question, Barry. This is George. So obviously, we've been pretty effective in the execution of what I'll call a disciplined growth strategy, and quite frankly, we've been acquiring properties at reasonable and, in some cases, immediately accretive low multiples. And these properties that we are acquiring, we know based on our operation style that we'll be able to improve on that from a bricks and mortar perspective. But following on to that, we we've assembled property now in 10 states and have positioned ourselves as what I believe is the most important regional portfolio in states where we have unencumbered sports and sports betting licenses and what we feel is the future potential for legislation that's gonna make us well positioned for iGaming licenses, and we're gonna continue to add more states as the opportunities present themselves.
So so where we are now is is is we feel we're in a great position to take advantage of the transformative opportunity presented by sports betting and iGaming given the access we have to capital and now the broad market access and databases we possess, and the newly announced brand that we just acquired on October 13 that we'll be rolling out. So, you know, we're exploring next steps really to deliver what we consider to be the best omnichannel in gaming. And again, you know, under the radar, we've built the foundation to take advantage of this, what we feel is a really incredible opportunity.
Speaker 6
Great. Great. And then, Steve, I think in the past, you've talked about some sort of a normalized pro form a run rate EBITDA for the portfolio. Could you give us an updated number there, I guess, factoring the M and A? But also, if you can give us anything on sports betting synergies?
Curious if if there's an updated number there.
Speaker 4
Yeah. You know, Barry, we we are we're we're constructing a portfolio that's got a lot of potential, put it put it that way. But we are let me let me give you kind of a general ballpark for now because as as Mark mentioned, our interactive strategy is emerging, we're we're quite focused on that. And we're not in a position to quantify that for for the street at this point, Barry. But, you know, brick and mortar brick and mortar basis of the various properties under under contract and existing properties on a, call it, a pre COVID run rate basis.
We now view this portfolio in the in the in the low $300,000,000 EBITDA neighborhood. And that's, quite frankly very before we are, able to implement, for example, CapEx at Kansas City, the new casino floor in Rhode Island, a rolling CapEx program in Atlantic City that Mark went through. So there's upside to that number, but that's kind of the baseline figure we're using at this time.
Speaker 6
Got it. Then just maybe I missed this, but your in terms of what your in terms of leverage metrics, know, recognizing your comments about still having some dry powder, where where where are you or how do you think about where your leverage metric pro pro form a is around now?
Speaker 4
You know, we we think about the world, Barry, you know, mostly in in kind of pre COVID cash flow terms because we believe that that's that will return, and, and we actually think the post COVID potential is even higher given the margin experience that we're all seeing cross regional, gaming industry, particularly this week, that that that George walked through. So yeah. Yeah. So that that that number is currently I I would tell you on on that basis in the in the in the low fours neighborhood, that's where we like it. Historically, we've been low fours, mid threes, quite frankly.
I think mid threes may be a little bit low as we think about proper shareholder return parameters. But, I I think you're gonna expect to see us in a, you know, kind of mid mid to low fours neighborhood as a desired kind of long run target. That's where we're comfortable. And and supplemented, of course, by high levels of liquidity, which is a strong preference for us for obvious reasons.
Speaker 6
Great, great. And recognizing you're still developing that interactive strategy with the Bally's brand addition, but anything you can share about the opportunity balanced by the investment required? I mean I think there are some competitors, pure plays out there who are putting up pretty substantial losses in the near term. So curious if you can share anything early on, on on how you're thinking about the opportunity.
Speaker 4
Well, I'll and I'll let Mark or or George pipe in as well. But, yeah, we we are, at at this time, pulling together the various pieces of a of a of an of an elaborate puzzle. And we've been in a bit of a land grab mode, and and you can see that from the various headlines in our our acquisitions under contract. That's a big that's a big piece of it. As George mentioned, we intend to be, you know, one of the premier operators nationally of both brick and mortar and interactive gaming strategies across sports betting and and iGaming as that becomes more more available across the country.
Look. We have the we have the balance sheet and the liquidity to sustain customer acquisition costs as we go forward and whatever whatever form those might take across the portfolio. Those, you know, the the those those issues were were were were well educated on and and building into our portfolio. We do believe longer term, as that as that interactive market if those interactive markets start to mature, it's gonna be important to be, you know, nimble around technology and the ability to to to have them one of you know, the most competitive offering. And, that's also part of our strategy.
So, you know, we're we're we're gonna we're we're entering this game for the long run, and, we we we we factor those costs into, into our modeling along the way.
Speaker 2
Yeah. Let me just let me just add to that, Steve. So, you know, Barry, you know, at the end of the day, it's the customer acquisition game. And, we feel because of the, portfolio that we've built, we have significant database, and it gives us the ability now to integrate land based database and interactive platforms. So, you know, with our physical property database, we have the ability now to drive down customer acquisition costs.
We think that's a that's a metric that's gonna be beneficial in the long term. You know, this is and this is a significant part of building the the omnichannel that we're talking about, which I mentioned earlier.
Speaker 6
Great. Thank you so much. Really helpful.
Speaker 2
Thanks for the questions. Very appreciated.
Speaker 5
Your next question comes from the line of John DeCree with Union Gaming.
Speaker 4
Hey, John. You might be on mute.
Speaker 7
Can you hear me now?
Speaker 4
Yeah, John. We can hear you. Yeah. We got you. Great.
Speaker 7
Sorry about that. Thanks for all the color so far, and congratulations on the recent acquisition announcements. Perhaps let's start there. You know, I guess, you know, we kind of look the news every kind of Monday morning. Seems like Twin River has another interesting and strategic announcement to make.
And I've got to imagine there's some competition for, the acquisitions that you guys have successfully announced and, yet the two and every continues to kind of get ink on the paper and and still, pay with some pretty attractive entry multiples on the surface and then with, you know, even improved to some of the, you know, financial moves you've made. So I I guess my question, George or Steve, is what do you attribute to your success in, you know, this environment over the last six or ten months to kind of continue to find deals to do and and grow at reasonable prices?
Speaker 2
So I'll take the I'll take the first crack at that, Steve. So, you know, a
Speaker 1
big part of this has to
Speaker 2
do with kinda how we were prepared pre COVID. You know, we we tended to have a, you know, a favor of a lowly levered low low leverage and high levels of liquidity. That put us in a really great position when opportunities arose. And then and then as a result of the consolidation well, I mean, the acquisition of Caesars with with, Eldorado, that just provided us with, with opportunities. And, you know, since we we were embarking on our strategy of accumulating states primarily for our interactive strategy, it just put us in the right position to to get deals done.
And and now they know that
Speaker 1
we have the ability to bring these deals across
Speaker 2
the finish line. You know, we have more opportunity or access to these types of arrangements. Steve, I don't know if you wanna add anything to that.
Speaker 4
Well, that's exactly right, George. John, the other the other thing I would I would mention is, you know, we're we're I I think we're harvesting some of the fruit of a strategy that the that the board intended to implement going a a couple few years back. I I think we said this before, but but listen. I I I think we're I think we're I think we find ourselves in the sweet spot, and and and we're and we're there deliberately. What I mean by that is, you know, back in the day, as you well know, John, there were lots of, kind of mid cap regional players.
There was Aztara and Ameristar and Pinnacle and, Columbia, Sussex, and, you know, all those all those names. And, you know, this industry is consolidated, and and those those names are gone. And so the regional players are are are are big players and, you know, somewhat less interested in some of the properties that we've had an opportunity to pick up. The other players tend to be much, much smaller than that, perhaps private, less access to capital, depending. So we've kind of floated right up into that, what I think of as a sweet spot, able to move the needle on growth with properties that some players are less interested in and other players can't get access to, And and and all the while building the size and the financial wherewithal to play the game at a at a bigger level, which is where kind of where we find ourselves now.
So I I think, John, it's a combination of we're in the right place at the right time the one hand and then what George said, which is kind of preparedness and leaving no stone unturned on M and A opportunity on the other hand. But it's a very good question, John. Thanks.
Speaker 7
Okay. Thank you, guys, and congratulations on the the success so far. Maybe to switch gears to the kind of budding sports and NI gaming strategy. And, you know, I realize there's probably not a ton you guys can say on this one, but but I'll try to ask it anyway. When we look at some of the agreements you've reached with third parties like FanDuel and and Points that, you know, we kind of look at these types of agreements as kind of rev share to the license provider, in this case, you guys.
Wondering if you could give us any kind of high level general color across your kind of portfolio of third party agreements. Is is it a revenue share? Are you guys getting kind of fees upfront? How do we think about, in general, your kind of partnerships with with those third parties in the sports and on gaming space and how that kind of accretes your financials?
Speaker 1
Sure, John. I'm going turn this over to Mark to answer.
Speaker 3
Thanks, John. So obviously, we don't go into details with any one of the specific contracts, but it has been our strategy to try and partner with the likes of DraftKings and FanDuel wherever we can and then other players, and then also retain a skin for ourselves. Generally speaking, those deals are on market type terms, so you should think about it in terms of, you know, rev shares with some minimum annual guarantees, some other considerations market by market. It is accretive day one. There's very little investment required by us other than in some of the hard costs when we're doing the sports books.
And we're gonna continue to do deals like that, but we don't really get into the specifics of any one deal.
Speaker 7
Yes. That's fair enough. One last housekeeping item, perhaps, Steve, for you. You give us a sense of what kind of run rate maintenance CapEx might look like on the kind of portfolio that's that's being acquired today and a lot of those buildings haven't closed yet. But, I think you've mentioned it to Barry's question, maybe about $300 of EBITDA.
What what would have be a good range for maintenance CapEx, if you could take a guess now?
Speaker 4
Well, John, that's a that's a good question. That that's that's a pretty long list of of new properties trying to be so rather than go through that with you online, let me let me take you offline. We'll talk about that post facto, if you don't mind.
Speaker 7
Sure. Thanks. Appreciate all the additional color. Thanks for you guys.
Speaker 1
Thanks, John.
Speaker 5
Your next question comes from the line of Chris Sinnott with Cowen.
Speaker 4
A question and congrats on
Speaker 8
a great quarter here, all circumstances considered. My one question has to do with the difference between margins, this this great margin performance we got at the consolidated company level versus margins just looking at the gaming floor itself? Because when I look at the $26,000,000 or so in in gaming and racing expenses for three q twenty, that's about the same as the 26,000,000 that we got in 03/2019. But it's, you know, it's on
Speaker 4
a lower sales amount. So it almost looks as if the margin got worse just optically. I'm curious if that's if that's something going on at the gaming level or maybe that just reflects the inclusion of of new acquired properties with the with a different margin structure. So if you could talk about, those dynamics, that'd be helpful. Thanks.
Speaker 2
I don't, I don't know exactly what you're looking at, but, certainly, we've added more more properties to our portfolio so that would have an impact. We do know in in Rhode Island, which which is taking down the margins because of the the existing protocol for for COVID, that that's having a little bit of an impact. But same store margins are up six I believe they're up about six and
Speaker 1
a half percent. Six and a
Speaker 2
half 650 6,500 basis points 650 basis points. I'm sorry. And, you know, that and that net of the new properties that we've added, I
Speaker 1
think we're up about 500 basis points. So, yeah, we're certainly seeing a flow through from margin improvements. And, you know, we could get into what we see,
Speaker 2
but I'd I'd have to I'd have to see kinda what you're looking at. But Rhode Island and Delaware, for the
Speaker 6
most part, are are a
Speaker 2
little bit of a I'll
Speaker 1
call them outliers when you look at
Speaker 2
when you compare them to the industry because the you you don't use GGR. You use you use net of the net of the tax impact. So the net revenues are way way lower for comparative purposes. So that would have some impact or to skew that that margin.
Speaker 4
Sorry. That's helpful. Thank you.
Speaker 5
And your next question comes from the line of Adam Seifelt with Gravity.
Speaker 1
I have a two part question. I wonder, about your 14,000,000 customers pro form a and, your database. Where are you, in organizing, the database now, the existing program? Do you have a loyalty program? Will you get a loyalty program?
And how long will it take to get that database in order to, you know, go after the customer acquisition for sports betting, iGaming, and also for a loyalty program? Sure. So I'll take I'll take the first crack at that.
Speaker 2
Excuse me. So we do have loyalty programs at every one of our every one of our properties that are maintained, but it's not a one brand or a national brand at this point. That's part of the reason why we went out and acquired the Valley's brand. So, yeah, we're gonna be going through a process to develop the plan that will fully fully integrate that the brand in all our properties as well as all our interactive technologies for sports betting and iGaming. So that brand will be across all those, platforms.
You know? But we're not gonna just be clapping a name on a building per se. You know? We're gonna we wanna be in a position to deliver the promise of the Valley's brand. So, you know, we're gonna roll out property standards, services, one card systems product, and, we'll launch that at each of the properties when we're sure we can deliver on that promise.
Speaker 1
Do you have a sense of how long it will take and what it will cost to get it done?
Speaker 2
We yeah. We've we've explored opportunities in the past to to incorporate this. So we we understand from a tech technology perspective how to handle it. But this is something that's gonna probably be rolled out over the next, twelve months to, maybe even eighteen months in a period of time.
Speaker 1
Excellent. And, in terms of, once you get this, National Valley's brand, established and the database up and the loyalty program up, What what are the chances you could do a deal with Bally's Las Vegas to sort of, you know, create a synthetic hub and spoke even though they're under different ownership? They sit on the same you know, they have the same brand, and no one will know the difference. Is that something that could potentially be in the cards between you and Caesars?
Speaker 2
That would be I would say that that would be situational in nature. I mean, ultimately, we would be creating our own our own brand, one brand. And and as far as Vegas is concerned, they have the rights to that name only through the period of time where they where they dispose of that that asset or sell that asset.
Speaker 1
So Right. I'm talking about, you know, the the Eldorado made a big deal about saying that when they did the deal with Caesars that they could use loyalty points to drive or to, you know, the enticing of trips to Vegas to to drive casino visits at at the regionals. Is there something you could do with that with Valley's Vegas?
Speaker 2
Yeah. I mean, it so listen. Again, it's situational in nature. We're not we're not exploring those types of relationships. And, you know, we feel from a portfolio perspective that we have more destination type markets than we have had historically with the adding of AC, with the adding of Lake Tahoe, and and we've utilized it in the past with our Hard Rock property in Biloxi.
So we think we have more than enough cross opportunities, cross marketing opportunities. So we we're not gonna get into that type of relationship.
Speaker 1
Thanks a lot.
Speaker 5
And at this time, there are no questions. I'll turn the call back over to George Papinir for additional closing remarks.
Speaker 2
Okay. Well, thank you, operator. And I wanna thank you all for joining our call today, And I hope you have a good good day and weekend. Thank you.
Speaker 5
This does conclude the TwinWaver Worldwide Holdings third quarter two thousand twenty earnings call. Please disconnect your lines at this time, and have a wonderful day.