PENN Entertainment, Inc.

Greetings and welcome to the Penn National Gaming first quarter conference call. During the presentation, all participants will be in a listen-only mode. Later, we will conduct a question and answer session. At that time, if you have a question, please press the one followed by the four on your telephone. If at any time during the conference you need to reach the operator, please press star zero. It is now my pleasure to turn the conference over to Joe Giafoni. Please go ahead.

Thank you, Tina. Good morning, everyone. And thank you again for joining Penn National Gaming's 2021 first quarter conference call. We'll get to management's presentation and comments momentarily, as well as your questions and answers. But first, I'll review the safe harbor disclosure. In addition to historical facts or statements of current conditions, today's conference call contains overlooking statements within the meaning of the Private Security Litigation Reform Act of 1995, which involved risks and uncertainties. These statements can be identified by the use of forward looking terminology, such as expect believes estimates projects and pens plan seeks may will should Or anticipates or the negative or other variations of these are similar words. Or by discussions of future events strategies or risks and uncertainties, including future plans strategies performance developments acquisitions capital expenditures and operating results. Such overlooking statements reflect the company's current expectations and beliefs that are not guarantees of future performance. As such, actual results may vary materially from expectations. The risks and uncertainties associated with the forward-looking statements are described in today's news announcement and in the company's filings with the Securities and Exchange Commission, including the company's reports on Form 10-K and Form 10-Q. Penn National Gaming assumes no obligation to publicly update or revise any forward-looking statements. Today's call and webcast will also include non-GAAP financial measures within the meaning of SEC Regulation G. and when required, a reconciliation of all non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP can be found in today's press release as well as on the company's website. Thank you for your patience with that, and it's now my pleasure to turn the call over to Penn National's CEO, Jay Snowden. Jay, please go ahead.

Thank you, Joe. Good morning, everyone, and thanks for joining us. Here with me and why I'm missing for her first official Penn earnings call, at least on this side, is our new CFO, Felicia Hendricks, so welcome, Felicia. We also have Todd George, our head of operations, here to help answer questions about our core business, as well as other members of my executive team who can help respond to your follow-up questions as needed. As you can see from our earnings release, our core business results are very strong and still ramping, actually, as we sit here in the second quarter. Meanwhile, our new online and retail barstool sportsbooks and iCasino offerings in Michigan and Pennsylvania continue to perform very well. Further, we managed to fully integrate our industry-leading My Choice Player loyalty program across all of our retail and digital offerings in time to take advantage of this momentum, which has significantly bolstered our unique omnichannel strategy and competitive advantages. At our land-based operations, the momentum has continued following the rollout of vaccines and the ongoing relaxation of COVID-19-related restrictions across the country. Our record first quarter results highlight the robust recovery in our land-based business, Benefiting from many actions taken in 2020, we generated adjusted EBITDA growth of 7% on a revenue decline of 6% over 1Q19, despite COVID-related property closures in January at a handful of our Midwest and Northeast properties, nearly a full closure of Zia Park in New Mexico, and some harsh winter weather in the South in February. More impressive is our performance in March and April. which reflects the additional easing of restrictions and an increase in the percentage of people vaccinated. Revenues grew 8% over the same two-month period in 2019, while adjusted EBITDA accelerated 29% to 410 million, and EBITDA margins increased 650 basis points to nearly 40%. We also note that spend per visit is much higher than it was pre-COVID. In fact, our visitation is now at or near 2019 levels in most of our markets. Importantly, the younger demographic continues to view gaming as a compelling entertainment option, while the 55 and over age group has been steadily returning to our casinos. We illustrate this point in our slide deck on page seven, where you can see that our 55 plus age segment continues to gain momentum, particularly in April, while growth from our younger age segments, 21 to 44, has accelerated since the beginning of the year. Further, unrated play is demonstrating unprecedented growth, which has provided us with the opportunity to convert these players to our My Choice Loyalty program through new member programs and incentives. Our rated play trends continue to accelerate. This strong top line demand, coupled with the structural changes we put in place at the start of the pandemic has resulted in remarkable and sustainable margin improvement even as our interactive business continues to scale. As it relates to our partners at Barstool Sports, they've been able to maintain their incredible momentum from 2020 into the new year with strong financial performance and audience growth. Barstool's promotion of Penn National's retail sports books has driven significant awareness and visitation to our land-based properties. This is especially true of those properties that have introduced Barstool branded sports books and we plan to open six more of them by the end of this year. In addition, progress continues on the development of several standalone Barstool branded sports bar locations. We're really excited about these projects and we're providing much more information along with our partners at Barstool in the next couple of months. On March 11th, we successfully launched the Barstool sports book app in Illinois ahead of the 2021 NCAA basketball tournament And just ahead of the return, thank goodness for us on timing, of the in-person registration requirement in the state. The initial results for the first 30 days of operations exceeded our expectations, thanks in large part to the loyal following of stoolies in the Chicagoland area, with better first-time deposit conversions relative to what we had generated in Pennsylvania or Michigan. During this period, we registered 54,700 new customers and generated total handle and gaming revenue of $67. the power of Barstool's social media reach was on full display upon the reinstatement of the in-person registration requirement in Illinois as they were able to help us drive an incredible 20,000 registrations during just a 36-hour period. Meanwhile, Barstool's creative promotions, exclusive vets, custom parlays have led to a leading position in Pennsylvania and Michigan based on handle, GGR, and NGR life-to-date market share despite limited external marketing spend. We expect our low customer acquisition costs, strong retention rates, unique promotions, exclusive betting features, and high adoption among casual bettors will drive outsized profitability over the long term. We continue to over-index a bit on GGR and NGR as compared to handle, and we anticipate this continuing to be a trend in the aggregate over the long term. The power of our MyChoice customer base combined with the fierce loyalty of Barstool's audience has allowed us to successfully cross sell our online offerings. In Michigan, for example, over 50% of our online sports betting monthly uniques place a wager on our iCasino product during the month of March, which was above our initial expectations. As we highlight on slide 17, our experience in Michigan has shown that a customer's value increases significantly when they play on multiple channels. which highlights the benefits of our 100% owned and controlled omnichannel strategy. With the introduction of online gaming, we have been able to generate twice as much combined revenue as we have traditionally generated at Greektown by engaging with consumers on our digital products in addition to the physical property. We are really excited about yesterday's launch of the Barstool iCasino product in Pennsylvania, which we believe will greatly expand our penetration and aggregate revenue in the state, particularly in the Philadelphia MSA where we currently do not have a land-based presence. Although we are pleased with the initial results of our first-generation Barstool iCasino product, we are really just scratching the surface of our potential in this space. Over the next few months, we will be adding significantly more third-party content to our Barstool Sportsbook app, which will help increase conversion of our My Choice database in both Michigan and Pennsylvania. In addition, we recently acquired Hit Point Studios, which will serve as the centerpiece of our newly formed Penn Game Studios and allow us to create customized barstool themed as well as casino branded content that we believe will lead to an even greater cross-sell opportunities. Before I hand it over to Felicia for a summary of our first quarter results and a review of our financials, I wanted to call special attention to the continued strides we're making on the ESG front. As you know, this is a topic that's very personal to me, and I know our board of directors and my executive team share my same level of commitment and enthusiasm on taking care of our people, our host communities, and our planet. Highlights from this quarter include the launch of a new $1 million annual diversity scholarship program. We're looking forward to providing up to 65 two- and four-year scholarships this year to the children of our team members, which reflects our commitment to equity in post-secondary education. In addition, We implemented a supplier diversity initiative with the goal of developing new opportunities for minority-owned businesses. And last month, we hosted company-wide Days of Learning, Days of Listening, excuse me, to gather feedback from our team members on all matters of diversity and inclusion. Finally, on May 15th, which is Armed Forces Day, we'll be launching a new initiative to honor our active-duty military, veterans, and first responders. We're calling it the My Heroes Program, which is an exclusive, fully integrated extension. of our My Choice Rewards program, and it's to provide our nation's heroes access to exclusive discounts and offers at all of our properties across the country. With that, I will pause and turn it over to Felicia.