PENN Entertainment, Inc.

Please continue to stand by. Your conference will begin momentarily. We thank you for your patience. Greetings and welcome to the Penn Entertainment fourth quarter results conference call. During the presentation, all participants will be in the listen-only mode. Afterwards, 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 an operator, please press star zero. I would now like to turn the conference over to Mr. Joe Giaffone, head of investor relations. Please go ahead.

Thanks, Frank, and good morning, everyone, and thank you for joining Penn Entertainment's 2022 fourth quarter conference call. We'll get to management's presentation and comments momentarily, as well as your questions and answers. During the question and answer session, we ask that everyone please limit themselves to one question and one follow-up. Now I'll review the safe harbor disclosure. Please note that today's discussion contains forward-looking statements. Forward-looking statements involve risks, assumptions, and uncertainties that could cause actual results to differ materially. For more information, please see our press release for details on specific risk factors. It's now my pleasure to turn the call over to the company's CEO, Jay Snowden. Jay, please go ahead.

Thanks, Joe. Good morning, everyone. I'm here in Wyoming with our CFO, Felicia Hendricks, and our head of operations, Todd George, as well as other members of my executive team who can help answer questions during Q&A. As you can see from our earnings release and corresponding investor presentation, We wrapped up another solid year at Penn, despite ongoing macroeconomic headwinds throughout the year and severe weather in certain parts of the country in December. Revenues for the fourth quarter were $1.59 billion, and we generated $468.3 million in adjusted EBITDA. For the year, our results were slightly above the midpoint of our revenue and EBITDA guidance ranges. We also ended the quarter on a high note with strong performance across the portfolio between Christmas and New Year's, which has continued into January. Slide six in our earnings deck illustrates our year-over-year revenue growth was driven by our interactive segment, which despite the Mattress Mac $10 million winning bet on the Astros in the World Series, was profitable in the fourth quarter with several successful state launches and impressive growth in Ontario. On slide seven, you'll see for 2023, we are guiding to a revenue range of $6.15 billion to $6.58 billion and an adjusted EBITDA range of 1.875 billion to 2 billion. This guidance includes our new growth opportunities, including the transition of Barstool Sportsbook to our own proprietary technology platform in the U.S. this summer. It does not reflect our acquisition of 100% of Barstool Sports, which we plan to close on later this month and will update in our guidance next quarter. Notably, we're anticipating a roughly $100 million swing in profitability in our interactive segment in 2023, as we are just beginning to scratch the surface of what we believe will be a tremendous long-term growth opportunity for us. On the retail side, we felt it was prudent to build into our guidance some element of conservatism, given the relatively uncertain economic times and increased supply in some of our key markets, including Council Bluffs, Lake Charles, and Chicagoland. Nevertheless, as we sit here today, we are not seeing a slowdown in business volumes, as January was actually a very strong month for us. Turning to slide nine, Our focused marketing strategy and new technology enhancements generated approximately 1.3 million new rated customers last year in our My Choice database. Approximately 300,000 of these guests signed up in the fourth quarter, representing a 15% year-over-year increase. Notably, over 50% of our database growth in the fourth quarter came from our online offerings. On slide 10, we show the steady annual increase in play from our younger demo with the 21 to 44-year-old segment growing from 10.8% of total retail theoretical in 2017 to 18.5% in 2022. To further capture and retain this group, we're continuing to reimagine our properties with best-in-class retail sportsbooks, new games, greatly enhanced technology, refreshed hotel offerings, and new third-party restaurant concepts. During the quarter, we also saw a meaningful increase in our My Choice app downloads and the adoption of our industry-leading cashless, cardless, and contactless technologies, which we call 3Cs, and is highlighted on slide 11. With the launch of Missouri last week, the 3Cs are now active in 21 properties, representing approximately 70% of our total retail company-wide EBITDA. As a result of the continued rollout of this technology at new properties, as well as increased engagement in our current 3Cs properties. We had 136,000 MyWallet customers and received $80 million in total MyWallet deposits as of year end, which represents significant sequential growth. As we've emphasized in the past, those guests who use the digital wallet demonstrate superior loyalty through increased visitation, time on device, and total theoretical. And our effective cross-marketing efforts, combined with our ability to deliver a seamless, best-in-class customer experience, has led to a 25% increase in guests who engage with us across multiple channels. On the retail sportsbook side, we recently opened temporary sportsbooks at our four casinos in Ohio. Based on the results to date, we're anticipating our permanent Barstool sportsbooks, which are on track for Q1, will perform very well in a state with such passionate and knowledgeable sports fans. With the addition of Massachusetts this week, the birthplace of Barstool Sports, we now operate 31 retail sportsbooks across 14 states, with market share of approximately 18% excluding Nevada. This obviously positions us well for the upcoming Super Bowl, March Madness, and beyond. As I mentioned, our interactive segment generated positive EBITDA, adjusted EBITDA in the fourth quarter, inclusive of expenses related to our online sports betting launches in Maryland and Ohio, and an unfavorable sports betting outcome in the World Series. Following our successful playbook in Kansas and Maryland, as you'll see on slide 13, our omnichannel marketing approach in Ohio led to Barstool Sportsbook's strongest launch to date. Our deep customer database, retail footprint, and powerful Barstool Sports marketing engine contributed to a record number of first-time depositors at launch, despite minimal external marketing expense. Importantly, more than 50% of our online handle came from our existing database. As highlighted on slides 14 and 15, we are seeing improved iCasino results thanks to our strong performance in Ontario, with our iCasino GGR and Penn Game Studios handle experiencing significant year-over-year growth. Our ability to continually introduce new games, including proprietary content from Penn Game Studios, sets the stage nicely for future growth. For example, we've got the Scorebet branded blackjack game set to launch in the first quarter of this year. Ontario is now our top market in North America for both sports betting and iCasino, with strong growth and positive trends through our first NFL season, including record growth and net revenues in December. We were able to maintain our market share in Ontario this quarter despite a 50% increase in the number of operators in the province, which I think really speaks to the quality of our products, and the stickiness of the ScoreMedia ecosystem. Turning to slide 16, the transition of the ScoreBet to our fully-owned tech platform last summer has provided us with advanced trading and promotional tools that have led to impressive metrics relative to our performance in the U.S., including an approximately 85% increase in three-month retention, an almost 20% improvement in our cross-sale rates to iCasino, and a 114 basis point increase in our hold rates. Our success in Ontario is very promising in terms of the upcoming migration of the Barstool Sportsbook and Casino to this tech platform later this summer. Despite well-known headwinds currently in the digital media and advertising space, as you'll see on slides 17 and 18, the scores media business and Barstool Sports continue to produce impressive revenue and engagement results driven by compelling content and an exceptional product experience. In October, we completed the initial integration of the Barstool Sportsbook into the Score Media app. This was great timing considering the Score's mobile media audience is more engaged than ever with a 35% year-over-year increase in sessions during the fourth quarter and meaningful annual user session growth. Meanwhile, Barstool Sports achieved record revenues in 2022 while investing in and expanding into new verticals, including producing and broadcasting live sporting events such as the Barstool Invitational College Basketball Tournament on November 11th and the Arizona Bowl on December 30th. We are excited about the upcoming acquisition of the remainder of Barstool Sports in February, later this month, and look forward to welcoming them to the Penn Entertainment family. As you've often heard us say, the combination of Barstool's vast loyal audience with the score's fully integrated media and betting platform will provide us a powerful top of funnel for new customer acquisition and organic cross-selling opportunities like those that we're seeing in Ontario today. Finally, before turning it over to Felicia, I want to take a moment to congratulate our entire team for the significant progress we made last year on our ESG journey. We have come a long way in a relatively short amount of time in partnership with our board's nominating and corporate governance committee, as well as our internal ESG and diversity committees. I'm particularly proud of Penn being named by Forbes Magazine last year as the top publicly traded gaming company on their list of America's best employers for diversity. In addition, Penn was once again named an employer of first choice in the annual Bristol Associates Spectrum Gaming Executive Satisfaction Survey, and Penn Interactive came in first place in their iGaming and mobile sports betting category as well. As it relates specifically to the fourth quarter, we finalized our Scope 1 and 2 Greenhouse Gas Emissions Assessment and plan to publish it in April along with our inaugural SASB Disclosure as part of our 2022 Corporate Social Responsibility Report. In addition, we completed our mandatory company-wide diversity, equity, and inclusion training and will soon begin a second phase of training focused on our leadership teams. Finally, I'm proud to report that Penn Interactive received RG Check iGaming accreditation from the responsible gambling council for its online gaming operations. Penn Interactive is the first U.S. operator to undergo this accreditation process. which is widely regarded as one of the most comprehensive responsible gaming accreditation programs in the world. Felicia, with that, I'll hand it over to you.