PENN Entertainment, Inc. (PENN) Earnings Call Transcript & Summary

Good morning, and welcome to the Penn National Gaming, Inc. 2020 Annual Meeting of Stockholders. I would now like to turn the conference over to Carl Sottosanti. Please go ahead, sir.

Thank you, Chuck. Good morning, ladies and gentlemen, and welcome to the 2020 Annual Meeting of the Shareholders of Penn National Gaming, Inc. My name is Carl Sottosanti, I am the Executive Vice President, General Counsel and Secretary for the company. During this meeting, there may be statements, comments or responses to questions that may include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which involve risks and uncertainties. These forward-looking statements reflect the company's current expectations and beliefs but are not guarantees of future performance. For a discussion regarding the risks and uncertainties associated with these forward-looking statements, please review our filings with the SEC, including our reports on Form 10-K and 10-Q. With that, I will now turn the meeting over to David Handler, our Chairman.

Thank you, Carl. Good morning, everyone, and thank you for attending the annual meeting. I will now call the meeting to order. I'll act as Chairman of the meeting today and Carl Sottosanti will act as Secretary of the meeting. This year, due to the ongoing public health impact of the coronavirus pandemic, the annual meeting is being conducted online and by telephone as a virtual meeting of shareholders. I would like to begin the meeting by introducing the directors attending with us today: John Jacquemin; Barbara Shattuck Kohn; Ron Naples; Saul Reibstein, Jane Scaccetti; and Jay Snowden, our President and Chief Executive Officer. We are also pleased to have with us today our Founder and Chairman Emeritus, Peter Carlino. If there is no objection, we'll waive the reading of the notice of the meeting. The Secretary has delivered the affidavit of distribution from a representative of Broadridge Financial Solutions, affirming the mailing of the notice and if applicable, the proxy statement and the proxy card to each shareholder of record as of April 6, 2020, the date the Board of Directors set as the date for determining the shareholders entitled to notice of and to vote at this meeting. Justin Klein of Ballard Spahr has been appointed as the judge of election and has presented his oath as judge of election. I ask the judge of election to report as to whether a quorum is present.

Thank you, Mr. Chairman. As of April 6, 2020, the record date set for this annual meeting of shareholders, 117,004,099 shares of common stock were outstanding. Majority of the company's shares of common stock have been voted or are otherwise represented at this meeting virtually or by proxy.

On the basis of the report of the judge of election, I declare that a quorum is present. The voting polls are open, and we will consider and take action upon the following matters: the election of 2 Class III directors to serve until the 2023 Annual Meeting of Shareholders, for which positions the Board has nominated Jane Scaccetti and Jay Snowden; the ratification of the selection of Deloitte & Touche as the company's independent registered public accounting firm for 2020; and an advisory vote to approve the compensation paid to the company's named executive officers. These are all items to be acted upon at the meeting and are hereby placed before the meeting before any voting takes place. No other proposals for business were properly submitted, and therefore, the proposals presented are the only ones before the meeting. Mr. Secretary, have we received any questions specifically on these proposals?

Mr. Chairman, there are no questions.

There being no further business to properly come before the meeting, if anyone wishes to vote who hasn't already done so by casting his or her vote virtually, please do so now. If you have already sent in your proxy card, you may, but do not have to vote virtually, in which case, your previous vote will be superseded. We will also allow an additional minute for votes to be cast. [Voting]

I hereby declare that the polls are now closed. We have present with us today, Jonathan Rothman from Deloitte & Touche, the company's independent registered public accounting firm. If you wish to make any -- wish to make a statement?

No.

Thank you. Mr. Secretary, are there any questions for Mr. Rothman?

Mr. Chairman, there are no questions for Mr. Rothman.

Thank you. Judge of election, may I have your report?

Yes. Mr. Chairman, the shareholders of the company have elected Jane Scaccetti and Jay A. Snowden to serve as Class III directors until the annual meeting of shareholders to be held in 2023; ratified the selection of Deloitte & Touche LLP as the company's independent registered public accounting firm for 2020; and approved on an advisory basis, the compensation paid to the company's named executive officers. That concludes my report.

Thank you. Mr. Secretary, please file copies of the notice of meeting and the report of the judge of election with the company's records. I'm now pleased to turn it over to Jay Snowden.

Thanks, David. Good morning, fellow shareholders, and thanks for joining us for our first ever virtual annual shareholders meeting. We hope you find you and your families healthy and safe this morning. I want to begin by sending our collective condolences and prayers to all those who have lost loved ones from the ongoing pandemic, and we certainly applaud the selfless efforts of all the first responders, health care workers, volunteers, essential personnel on the front lines of this public health crisis. I also want to speak briefly to the recent protest taking place in many of our communities across the country over social injustice. As we've stated publicly, we at Penn National stand united against hate, racism, violence and intolerance of any sort and salute all the peaceful protesters making their voices heard. These are obviously very challenging times, and I want to speak to the things that we at Penn National Gaming are doing to ensure, as a company, we come through this stronger than ever. Over the past 2 months, through our press releases, SEC filings, stakeholder letters, and first quarter earnings announcement, we have provided an exhaustive report on all the successful mitigation measures we've undertaken enterprise-wide to maximize and preserve our liquidity in response to the COVID-19 outbreak. Those steps allowed us to focus on positioning the company for long-term success, and we have thoroughly reevaluated our corporate and property operating practices and structures in order to improve efficiencies and to reimagine our casinos in a way that will enhance the guest experience. We are also in the process of making meaningful upgrades to expand the reach of our industry-leading mychoice loyalty program. In addition, we have been able to continue the development of our Barstool Sports book app and products, while we -- while the live sports world has been on extended hiatus. We anticipate this will allow us to launch on schedule in the third quarter of this year on the more level playing field as sports are likely to be ramping back up around that time. We continue to believe the Barstool brand and marketing engine will help drive meaningful market share, as the product is introduced across our database of 20 million casino customers and Barstool's audience of over 66 million loyal fans. Also on the interactive front, our real money online experience and early results from iCasino in Pennsylvania has reinforced our view that our operating capabilities and significant casino database will be a true competitive advantage as additional state authorize online gaming, which is something we expect to see accelerate as states seek new revenues to help offset the fallout from the coronavirus. When you combine this casino database monetization opportunity, along with the ability to cross-sell the Barstool Sports database of sports bettors to online casino products like BlackJack and states where it is legalized, this omnichannel strategy is very powerful and is what will continue to separate us from our peers now and in the future. In the meantime, our operations teams at the corporate and property levels have been busy implementing comprehensive new social distancing and safety protocols for all of our brick-and-mortar facilities, which were developed in close consultation with state regulators and public health officials. Today, I'm happy to report that 17 of our properties have been able to reopen on a limited basis in Louisiana, Mississippi, Iowa, Missouri, Kansas, Nevada, West Virginia and as of yesterday, Pennsylvania, representing more than 40% of our company's gaming portfolio. And we have 8 properties in Ohio, Indiana and the St. Louis, Missouri market that are projected to reopen the week of June 15. Although these have been extremely challenging times, both on a personal and professional level for all of us, our Board and senior management team continue to be extremely excited about our company's long-term prospects. I want to thank all our shareholders for their patience and support over the last several months. And as I said on our earnings call, it's times like these that often accelerate innovation and reward disruptors. And we have historically proven that it's a comfortable place for us at Penn National Gaming, and we will again thrive in an environment like this. Thank you.

Thank you, Jay. Those words were well said and on behalf of the Board, really a great acknowledgment of the tremendous job you've done leading the company and our entire team at Penn in navigating through this very challenging period and positioning the company the way you have. I'm open -- I'm pleased to open the floor to a brief period for shareholder questions in accordance with the rules of conduct posted on the meeting web page. Mr. Secretary, are there any questions submitted by shareholders?

Mr. Chairman, there were no shareholder questions.

Well, in that case, we've reached the conclusion of our question-and-answer session. I want to thank you all for attending this meeting. There being no further business, I will entertain a motion for adjournment.

So moved.

Is there a second?

I second that, Chairman.

All in favor, say aye. Opposed?

Aye.

Aye.

I declare this meeting adjourned.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.