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Edited Transcript of GC.TO earnings conference call or presentation 13-Aug-19 9:00pm GMT

Q2 2019 Great Canadian Gaming Corp Earnings Call

Richmond Sep 18, 2019 (Thomson StreetEvents) -- Edited Transcript of Great Canadian Gaming Corp earnings conference call or presentation Tuesday, August 13, 2019 at 9:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Rodney N. Baker

Great Canadian Gaming Corporation - President, CEO & Director

* Terrance M. Doyle

Great Canadian Gaming Corporation - President of Strategic Growth & Chief Compliance Officer

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Conference Call Participants

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* David John McFadgen

Cormark Securities Inc., Research Division - Director of Institutional Equity Research

* George Doumet

Scotiabank Global Banking and Markets, Research Division - Analyst

* Sabahat Khan

RBC Capital Markets, LLC, Research Division - Analyst

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Presentation

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Operator [1]

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Good afternoon, ladies and gentlemen, and welcome to Great Canadian Gaming Corporation Second Quarter 2019 Results Conference Call. (Operator Instructions) This call is being recorded on Tuesday, August 13, 2019.

I would now like to turn the conference over to Mr. Terrance Doyle. Please go ahead.

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Terrance M. Doyle, Great Canadian Gaming Corporation - President of Strategic Growth & Chief Compliance Officer [2]

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Thank you, Leoni. Good afternoon, everyone, and welcome to Great Canadian Gaming Corporation's conference call to review the company's financial results for the second quarter ending June 30, 2019. Joining me on the call this afternoon is Rod Baker, the company's Chief Executive Officer; and John Russo, the company's General Counsel and Chief Privacy Officer. We also have several members of our executive finance team with us Matt Newsome, our VP of Financial Reporting; [Dean Abramsom], our VP for the GTA Bundle; and Darren Gwozd, our VP of Operations Finance for Great Canadian Gaming. I would like to remind listeners that the latter portion of this call is reserved for institutional investors and analysts. Any media-related inquiries can be directed towards Chuck Keeling, Vice President, Stakeholder Relations and Responsible Gaming. He can be reached at (604) 247-4197.

Before we begin the call, I must caution listeners that this conference call may contain forward-looking statements that reflect management's expectations regarding the company's future. These statements, which will be identified by words such as anticipate, believe, expect or similar expressions, are based on information currently available to the company. Investors should not place undue reliance upon these statements, which involve significant risks, uncertainties and assumptions. These statements are made as of the date of this call, and the company assumes no obligation to update or revise them to reflect the new events or circumstances.

Unless otherwise indicated, all financial information in this call is presented in Canadian dollars and in accordance with International Financial Reporting Standards or IFRS, except for adjusted EBITDA, which is a non-IFRS term defined in the company's MD&A. Unless otherwise noted, all financial information for the current comparative period excludes the financial results of the U.S. region as they have been presented as discontinued operations after Great Canadian Gaming Corporation was sold on June 27, 2019.

I will now pass the call to Rod for a review of Great Canadian's financial results for this quarter. He will then provide commentary on the company's overall operation and strategic outlook. Rod?

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Rodney N. Baker, Great Canadian Gaming Corporation - President, CEO & Director [3]

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Thank you, Terrance. Good afternoon, everyone, and thank you for joining us today. Today, I'd like to go over the key highlights at Great Canadian this quarter followed by an overview of the company's second quarter financial results and future outlook.

As previously mentioned, the company sold all its shares of Great American for proceeds of CAD 73.4 million, resulting in a gain of $47 million net of associated income taxes, which represents $0.80 per common share in the second quarter. Successful completion of the sale of Great American now allows the company to focus on its short- and medium-term development plan within its core growth markets, particularly in Ontario. This includes the upcoming launch of the new world-class casino resort in Pickering, Ontario, which will be called Pickering Casino Resort. The casino portion of the property and the related food and beverage amenities are expected to be complete by the end of the first quarter of 2020.

During the second quarter, we also successfully completed the gaming expansion at Elements Casino Mohawk, which now features approximately 1,500 slot machines and 60 table games. We continue to work on the creation of additional nongaming amenities, which we expect to complete by the end of the third quarter of 2019 and will assist in growing visitation and revenues.

On April 24, 2019, we announced that the company completed agreements with the Ontario Lottery and Gaming Corporation and the owners of Ajax Downs to extend operations at Casino Ajax beyond the opening of the company's new Pickering Casino Resort to March 31, 2026, plus an extension at the company's option for an additional 12-year term.

I'm now going to comment on the financial highlights for the second quarter of 2019. Great Canadian's revenues have increased by 20% or $59.2 million from $295.2 million to $354.4 million during the second quarter of 2019 when compared to the same quarter in 2018. The increase in revenues was attributable to 1 additional month of operations from the West GTA Gaming Bundle when compared to the same prior year period as well as new revenues from the introduction of table games at Woodbine and expanded gaming capacity at Elements Casino Mohawk.

Revenues also increased from the East Gaming Bundles due to the additional revenues from Shorelines Casino Peterborough, which opened on October 15, 2018, and Shorelines Slots at Kawartha Downs which reopened under agreed terms on December 19, 2018.

During the second quarter of 2019, we recognized $23.6 million in revenues related to permitted capital expenditures, or PCE, for the Ontario Gaming Bundles compared to $12.7 million of PCE received in the same quarter in the prior year. Revenues increased in the B.C. region for the quarter ended June 30, 2019, when compared to the same prior year period, primarily from Hard Rock Casino Vancouver, which experienced a labor disruption in the prior year that resulted in limited gaming and hospitality offerings for a portion of 2018.

Adjusted EBITDA was $153.7 million for the second quarter of 2019, which included a $20.5 million positive impact from IFRS 16, the new lease accounting standard adopted on January 1, 2019.

Adjusted EBITDA was $122.7 million in the same prior year period. The increase in adjusted EBITDA was also attributable to the above-mentioned increase in revenues in the Ontario region, partially offset by increased operating costs related to expanded gaming in Ontario. Readers are cautioned that the financial results for the comparative period 2018 have not been adjusted for IFRS 16.

Shareholders' net earnings from continuing operations was $48 million or $0.81 per common share for the second quarter of 2019, which increased by $7.4 million or $0.15 per common share when compared to the same period in the prior year due to an increased adjusted EBITDA and decreases in share-based compensation and business acquisition, restructuring and other costs partially offset by increased income taxes and a $2.2 million or $0.04 per common share negative impact from IFRS 16 adoption. Shareholders net earnings from continuing operations was $40.6 million or $0.66 per common share in the same period of 2018.

2019 is a year of significant capital expenditures as we build our infrastructure in Ontario to execute our strategic plan. We have already accomplished several major milestones in the first half of the year including the new building addition at Great Blue Heron Casino and the gaming expansion at Elements Casino Mohawk. For the remainder of 2019, we continue to work towards completing several developments in Ontario, particularly at Elements Casino Flamboro and Elements Casino Grand River, which will include expanded gaming and new food and beverage offerings that we expect to complete by the end of 2019. Pickering Casino Resort is projected to open in 2 phases. The first phase will feature a number of gaming and dining options and is expected to complete by the end of the first quarter of 2020. The second phase will include other premium nongaming amenities such as the hotel, retail offerings, restaurants and a multipurpose entertainment venue.

Great Canadian continues to apply a disciplined approach to use of capital and to explore opportunities that will improve our business and increase value to our shareholders. As at June 30, 2019, the company remains in a strong financial position with cash of $407.6 million, available capacity of $397 million on the senior secured credit facilities, available capacity of $859.8 million on Ontario Gaming bundles -- sorry, the GTA Gaming Bundles revolving and capital expenditures credit facilities and $137.5 million on the revolving credit facility of the West GTA Gaming Bundle subject to compliance with the related financial covenants.

Terrance, you can now invite questions. Thank you.

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Terrance M. Doyle, Great Canadian Gaming Corporation - President of Strategic Growth & Chief Compliance Officer [4]

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Thanks, Rod. Before we begin today's question-and-answer session, I would like to remind everyone that questions will be reserved for institutional investors and analysts. I would also like to reiterate the company's Investor Relations philosophy, which encourages investors and analysts to utilize this public conference call as their principal medium for speaking to Great Canadian senior management.

Leoni, we can now go to the Q&A. Thank you.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Your first question is from George Doumet from Scotiabank.

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George Doumet, Scotiabank Global Banking and Markets, Research Division - Analyst [2]

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Rod, I'd just like to focus on ancillary revenues. It looks like they account for 15% of revenues today. There's a lot of initiatives that you've spoken about in your prepared remarks that point to that. So looking after Pickering maybe after it opens in 2020 and maybe after Woodbine a year later, where do you kind of see that mix? Where would you like to see that mix? And can you maybe tell us what you're thinking in terms of margin profile for that category of revenues?

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Rodney N. Baker, Great Canadian Gaming Corporation - President, CEO & Director [3]

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So George, I don't think I'm organized enough or prepared at this point in time to talk to you about the mix. I would say and I was trying to be very clear even in terms of our Pickering Casino Resort, which we're very excited about, the end of Q1 2020 opening up the casino portion and related F&B offering, that's going to be very heavily skewed to gaming revenues, frankly, through that year. It will be a ramp-up phase, and it will be a relatively modest amount of ancillary or nongaming revenues. And then only once we open up the remainder of the resort toward the end of 2020 will we see a much healthier and broader mix and, frankly, one that we believe will also give us extra catalysts to continue to grow gaming revenues on a go-forward basis.

So I think at this stage, we need to do more work, and I'm not prepared to throw any sort of metrics out at this point in time, but we're clearly looking quite a ways down the road. So I'm not going to be helpful with your modeling. I think Woodbine is even further down the road at this point in time, and we have a very extensive program and obviously, we're underway there. But we are -- even internally, a long way away from scoping out the nongaming amenities and the strategies that we're going to employ once those open in order to drive revenues. As you can appreciate in an underserviced market, this is going to be somewhat of an iterative process as well. I think we have expectations in terms of that that we would like to accomplish.

That being said, depending on the continuum of build it and they will come versus rounding out and growing GGR incrementally through a much different managed basket of opportunities, both gaming and nongaming and how they're going to work together, I think it's difficult today right now to understand how that's all going to come together. And I think a couple great examples that we have in hand in our early years of learning, if you look at opening tables at Woodbine, we did that, and we had tremendous traction on the gaming revenue side with literally opening no nongaming ancillary amenities and opportunities that point in time. And we've seen a little bit of the reverse, frankly, at our table offering opening out in places like Mohawk and Flamboro, whereby in order to assist the growth and traction on the GGR side, a much healthier amount and an intertwined food and beverage and entertainment offering is something that's going to assist in driving that.

So I think even for management, not to scare you too much, I think it's something that we're not going to get out there and throw very confident numbers down. We have a lot more work to do internally to figure out the mix, the starting mix, and then the evolutionary mix over time. So I wouldn't want to commit to anything at this point in time. And frankly, internally, we're not prepared to commit to it even if I was prepared to do that externally right now.

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George Doumet, Scotiabank Global Banking and Markets, Research Division - Analyst [4]

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Fair enough. I think in your answer, you had alluded that Phase 2 is supposed to open end of 2020? Is that right?

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Rodney N. Baker, Great Canadian Gaming Corporation - President, CEO & Director [5]

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Correct. Yes.

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George Doumet, Scotiabank Global Banking and Markets, Research Division - Analyst [6]

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Okay. Great. And just kind of switching gears to Woodbine, last call, you mentioned that we're not really there in terms of VIP business at this point. Do we -- can we get there with the initiatives underway? Or is it something that we can only get to once, I guess, Woodbine gets its full expansion?

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Rodney N. Baker, Great Canadian Gaming Corporation - President, CEO & Director [7]

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So I mean Woodbine does a very healthy amount of business right now. And when you talk about VIP in the truest sense, you really do have to offer up the totality of the experience. And you're kidding yourself if you talk about a VIP experience when you're offering up tables and, frankly, a just very recently introduced noodle bar in a common space. Like that is -- that really isn't a VIP experience. And so I think we do get some high-value play, but we really don't have the opportunity to create a VIP experience in what we would look at a traditional sense. I do think we will have that opportunity in Pickering when we open up there, and we're very excited and encouraged about that. How much business and how far the catchment area will be, I think will be interesting to determine and realize over time.

We do believe with the highway system and with the -- with what that facility is going to represent and bring to the marketplace that we will have an opportunity to reach fairly far west with the GTA to offer up a different product than that that we have currently at Woodbine that we believe will be attractive to VIPs all over the GTA. So I mean when I look at the VIP experience, we're not too far off of offering up a suite of amenities and a product that will resonate with that marketplace. But today, it really is difficult to truly talk about delivering that kind of experience at Woodbine.

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George Doumet, Scotiabank Global Banking and Markets, Research Division - Analyst [8]

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Okay. No, that's helpful. And just one last one, if I may, Rod, on the B.C. properties, the table hold percentage is quite high. I mean, if you look at the last 8 quarters, I mean it's the highest number we've seen. I'm just wondering if there's anything deliberate or anything happening from a table mix perspective that you'd like to call out for that.

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Rodney N. Baker, Great Canadian Gaming Corporation - President, CEO & Director [9]

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So look, I think there's a few things happening, and we've lived an evolution there over many years whereby some of our higher-value play has been reduced down. I think one of the implications of that when you have folks that are playing at more modest levels, they spend more time, they show up with less money and thankfully for us with house advantage -- if you spend more time, you usually leave with less money as well, which means you leave more money behind. So I think you'll find that as you go and you create gaming revenues over more people playing smaller dollars for incrementally longer amounts of time, that hold will change to the positive for the house. I think that's one of the things that is probably borne out and maybe is one of the positives out of some of the other changes that we've had to address out in that marketplace.

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Operator [10]

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Your next question is from Sabahat Khan from RBC Capital Markets.

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Sabahat Khan, RBC Capital Markets, LLC, Research Division - Analyst [11]

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Just one on the Woodbine facility in terms of the table pickup there, just the activity on the tables. This was, I guess, the first quarter of like, I guess, Q2 with the additional tables, can you talk about how the trends were during the quarter? How did it compare to your expectations? And are -- is the overall, I guess, the productivity along the lines of what you were expecting?

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Rodney N. Baker, Great Canadian Gaming Corporation - President, CEO & Director [12]

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So I would say -- I mean depending on -- if you're talking about this quarter, going back over time, the productivity out of the shoot was much better than we were expecting, and it continues to perform well on the table side. And I think there is still incremental, not exponential growth on the table side that's available. So I think things are well from that perspective.

The slots has flattened out, and that's a little bit more of a challenge there, but I also think there's another piece, as you talk about table performance at Woodbine, and you mentioned late August of last year. So Q3 is now an opportunity where we are lapping the introduction of tables at Woodbine, which as I mentioned it was a "build it and they will come" type scenario with a step function increase in revenues. And so when you're looking at Q1 and Q2 of this year, we had an apples to orange comparison whereby in the GTA Bundle, we did not have the benefit of the tables in 2018 whereas we had them in 2019. And now we're obviously faced starting in -- partway through Q3 2019 and fully into 2019 Q4, we've got a lapping of the Woodbine table production from last year. So that's obviously going to have an implication on our math going forward.

So the tables continue to do well, but they haven't done so well that when we lap, they're going to more than make up for the increase in threshold, for instance, that we have in 2019 versus 2018. I think that's an important takeaway if you look at your numbers.

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Sabahat Khan, RBC Capital Markets, LLC, Research Division - Analyst [13]

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Okay. And then when you talk about the ramp-up of the facilities at the West GTA and you indicated that you're a bit slower to get going down the build-out. I guess how is that coming along? And based on your expectations, I guess, when do you expect those facilities to be performing at, I guess, peak productivity or when will they catch up to your expectations?

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Rodney N. Baker, Great Canadian Gaming Corporation - President, CEO & Director [14]

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Well, first, my expectations are so high. I think none of our assets will ever catch up to it, but that's a separate issue altogether. But seriously, for a moment, those markets -- I think the team, from a development perspective, has been doing a very excellent job in improving the facilities and building them out despite the challenges that we've had and also from an operating perspective. Now that being said, it's a microcosm of what I just mentioned in terms of VIP and the expectations. It's not just VIP. People expect to come to a casino, they have an impression of what a casino means, feels, looks like and the things that they'd like to do when they come to our properties and so we've been quite limited by a gaming-centric experience exclusively, and the introduction of additional nongaming amenities are a very exciting future and not too far, months, not years, down the road, they're going to help us move those businesses forward and grow them.

That being said, realistically, the growth is going to be percentage-based versus exponential. I don't think we're going to see, in most of these markets, all of a sudden, a sea change when we open restaurants and buffets that gross gaming revenues are going to go up by 20%, 30%, 40%, 50%. I don't think that, that's the environment that we're in. I think we need to be looking at our operating agreements as multiyear, and we're very focused on growing our business over multiyear periods. That being said, every day, it's important to continue to move it forward. So I think you need to look at them like being in business and growing with good growth rates, but not crazy growth rates in the month and years ahead.

So that being said, the West GTAs, as we were clear last quarter, we have had some delays, and things are behind. And our math is not what we'd like it to be. And I think our math is going to continue to not be what we would like it to be for an extended period of time. And I would also remind you last year 2018 when we had an early day -- basically May 1 launch, we did turn on some incremental spot revenues, and we had a different threshold profile in 2019 that the West GTA from a financial perspective in those early quarters produced fairly well for us as well. So the business continues to move forward, which is great, but we do have this extra hurdle this year that we're dealing with that we didn't have last year, which compounds the problem from a financial perspective. Obviously, from an operating perspective, we continue to move the business forward, and we're more pleased with that part of it.

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Sabahat Khan, RBC Capital Markets, LLC, Research Division - Analyst [15]

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Okay. And then on the B.C. segment, as you lap the regulatory headwind from last year, is the business there at both your larger facilities progressing this year, the way you thought it would versus those comps? Or do you still see there's some runway for improvement in terms of traffic or table drop and so forth?

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Rodney N. Baker, Great Canadian Gaming Corporation - President, CEO & Director [16]

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So look, just because I don't have a filter, I'm not at all happy with our B.C. operations. And to be honest, they're down this quarter and they're frankly down even more than you see. And we've been clear, last year, we had our Hard Rock labor disruption that was partly in this Q2 period, which was difficult for our team members there and certainly, our guests and our math. The good news is when you come out of that a year later, it added to our results. And so -- but what it's also done is it's camouflaged even poorer results throughout the rest of our system there. So we have some real -- you could call them opportunities, but there are challenges as well both on the revenue side as well as the cost side out in B.C. that needs some significant focus and attention, which, believe me, it's getting now.

So what you see there, things you're -- I'll mention Hard Rock is a different beast because we had the labor disruption and, as you know, we talked about the re-ramping up after that dislocation in the business. The slot side has done better ramping back up. The table side was much, much slower as we messaged each quarter going forward. So that's -- of the 2 bigger facilities, that's the one. I would say to give you some transparency on River Rock, it actually was doing pretty well up until this quarter. The slot business had -- not massive, but it had fairly good growth this quarter. It actually gave a bunch of that back, which is very disappointing and needs some extra focus and attention there. So those are the 2 big facilities. The other implication in our math here evolved from a couple of marketing initiatives at Elements Victoria and Elements Surrey wherein the teams tried to create some new marketing programs and drive GGR.

Unfortunately, as the math will show you here, despite a relatively modest lift in GGR, there was a significant incremental cost in non-HR cost lines and, therefore, those businesses didn't contribute as much EBITDA as the same quarter last year. So we have some more work to do to figure out the appropriate marketing approach there to make sure that we're not overspending for the incremental GGR that we feel we can grow to those properties. So a lot of work to do there. It's obviously a big focus from a management perspective, but also all of you on Ontario and what we're doing there. B.C. continues to be a core important region that we're focused on, and we're equally focused on improving our financial results there in the quarters and years ahead.

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Sabahat Khan, RBC Capital Markets, LLC, Research Division - Analyst [17]

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Okay. And then just one last one from me, more of a clarification item, I guess. You called the Pickering facility, I think you're indicating today will be called the Pickering Casino Resort, and I believe the larger complex is Durham Live. Is this a name change for the facility? Or is this your facility within that larger complex? I'm just trying to understand...

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Rodney N. Baker, Great Canadian Gaming Corporation - President, CEO & Director [18]

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So this is the name that we've chosen, the larger "complex." We're a tenant in a proposal by the landlord to do a whole bunch of other things, and I think it's important that there's clarity that -- that is our postal code, but none of those other activities have anything to do with our partnership or Great Canadian.

So we put a name down that it's very simplistic. We're very proud of being in Pickering. And frankly, we think there's a bunch of value, not only simplicity, but reinforce where it's located so people can find it as opposed to doing something where they need to go through extra steps to zone in on where it actually is because we want to drive traffic from everywhere. So that's what we came up with, and I believe the landlord has other initiatives to do other things on other lands that are approximate to ours, but that's his own business and initiatives, and we certainly hope that it works well and it's symbiotic in terms of what we're doing, but we're just focused on our own activity.

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Operator [19]

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(Operator Instructions) Your next question is from David McFadgen from Cormark Securities.

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David John McFadgen, Cormark Securities Inc., Research Division - Director of Institutional Equity Research [20]

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I have a number of questions so I'll just start off with the PCE revenue first. So in Q2 '19, you said it was $23.6 million and Q2 '18, it was $12.7 million, is that correct?

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Rodney N. Baker, Great Canadian Gaming Corporation - President, CEO & Director [21]

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Yes, so there's an incremental $10.9 million this year over last year in the quarter.

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David John McFadgen, Cormark Securities Inc., Research Division - Director of Institutional Equity Research [22]

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Okay. Is there any reason why you don't just disclose that in the MD&A? I'm just curious.

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Rodney N. Baker, Great Canadian Gaming Corporation - President, CEO & Director [23]

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I can't answer that. I don't think there's any particular answer, but we wanted to make sure that we disclose it, and we've disclosed it every quarter. So -- and the other thing that we disclose every quarter is now that we've lapped in all of the partnerships, where this will no longer be an issue for the foreseeable future, this is a Q2 recognition of the $22.6 million plus CPI going forward. So...

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David John McFadgen, Cormark Securities Inc., Research Division - Director of Institutional Equity Research [24]

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Okay. Can you tell us what it was in Q1 '19 if there was any?

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Rodney N. Baker, Great Canadian Gaming Corporation - President, CEO & Director [25]

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Q1 '19, I don't remember how much there was. I don't believe there was very much. I think the thing that you -- if you don't remember, I'll give it to you now. Q3 of '18 is what you'll want to dig out of your files and if you wanted to ask that question but if you don't I'll give you the answer in any event. So Q3 2018 was $4.4 million, and we disclosed that, I believe, last year. So that's obviously gone away as an opportunity in Q3 because we've got the full benefit recognized in Q2 this year. And we mentioned, I think Q4 was -- de minimis in Q4 2018. It was -- so relatively, it was an immaterial amount, a small amount. So because it was a small amount, I believe that Q4 -- sorry, Q1 2019 was 0. I'm getting all the finance heads nodding at me here. So I think I got it right.

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David John McFadgen, Cormark Securities Inc., Research Division - Director of Institutional Equity Research [26]

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Okay. And the margin on that towards the EBITDA is 100%, right? There's no cost, right?

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Rodney N. Baker, Great Canadian Gaming Corporation - President, CEO & Director [27]

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Yes, there's no operating cost or differences due to the recognition of that. That's correct.

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David John McFadgen, Cormark Securities Inc., Research Division - Director of Institutional Equity Research [28]

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Okay. I just wanted to clarify that. So I'll just go on to the Ontario business. So just looking at the table drop just comparing Q2 '19 with Q1 '19, it was up about 5%. I thought it would have been up a little stronger given Q1 was negatively impacted by some severe weather. I was just wondering if you had any comments on why it wouldn't have been up stronger than 5% sequentially.

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Rodney N. Baker, Great Canadian Gaming Corporation - President, CEO & Director [29]

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No. I have no comments on that.

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David John McFadgen, Cormark Securities Inc., Research Division - Director of Institutional Equity Research [30]

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No. Okay. And I think you disclosed on the last conference call that the GTA revenue threshold went up as of April 1. It appears as though it didn't go up by much, and I was just wondering if you could confirm that or provide any comments.

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Rodney N. Baker, Great Canadian Gaming Corporation - President, CEO & Director [31]

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So any changes that there would be in threshold happen on April 1 of every year.

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David John McFadgen, Cormark Securities Inc., Research Division - Director of Institutional Equity Research [32]

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Okay. And that's the only time it changes?

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Rodney N. Baker, Great Canadian Gaming Corporation - President, CEO & Director [33]

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Correct.

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David John McFadgen, Cormark Securities Inc., Research Division - Director of Institutional Equity Research [34]

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Okay. And it appears as though there wasn't a big change at least for April 1, 2019. I was just wondering if you could confirm that or not.

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Rodney N. Baker, Great Canadian Gaming Corporation - President, CEO & Director [35]

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Well, I don't know what a big change is. I know there was a change, but I'm not going to confirm what the change was. And you have to remember that there are also -- there's 3 partnerships with thresholds and they're all grouped as well, right? And you mentioned just the GTA, so I think you have to look at all of them.

The only thing I would say, which I think we sort of talked about and evolutionary, it should be understood. The East Bundle, where we've now basically gone through our step function changes in our asset base that the threshold increases obviously should be much more modest in nature because they're not event driven in terms of changing materially the profile of the asset base wherein, in the GTA and the West GTA, they're earlier in their life cycles of building out their assets. So when you look at the overall implied threshold change that you're backing out, you might look at the East Bundle a little bit differently than the other 2 bundles.

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David John McFadgen, Cormark Securities Inc., Research Division - Director of Institutional Equity Research [36]

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Right. So it's my impression that the GTA, maybe the West GTA Bundle was -- sorry, it's my impression that the GTA and West GTA revenue threshold should step up fairly materially in 2020 and 2021. And I was wondering if you could provide any commentary on that.

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Rodney N. Baker, Great Canadian Gaming Corporation - President, CEO & Director [37]

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Well, I don't know where your impression comes from, but I did mention that we expect to continue to grow these asset bases, and we're changing them. The West GTA, significant changes, but they're incremental in nature. Obviously, the GTA was opening a brand-new massive full-service resort destination casino. We think changes will be more than incremental out of that, and I think it's not an unfair assumption to believe that the government is going to get their fair share of it through a threshold arrangement and participating above this threshold as well. So I think -- I think it's -- you said it's your impression. Yes, I mean that's your impression. I think it could be maybe right, maybe wrong, maybe right and wrong. Dave, it depends what you mean by a material, too, right? So it's difficult.

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David John McFadgen, Cormark Securities Inc., Research Division - Director of Institutional Equity Research [38]

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Yes, okay. Well, when I say material, I'm talking 20% plus. I don't know if you can provide any commentary on that.

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Rodney N. Baker, Great Canadian Gaming Corporation - President, CEO & Director [39]

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Do you have another question?

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David John McFadgen, Cormark Securities Inc., Research Division - Director of Institutional Equity Research [40]

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No. I was just wondering when I was thinking material, I was thinking over 20% increase. Any comment on that?

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Rodney N. Baker, Great Canadian Gaming Corporation - President, CEO & Director [41]

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I'm not going to start commenting on percentage increases at this point.

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Operator [42]

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(Operator Instructions) There are no further questions at this time. Please proceed.

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Terrance M. Doyle, Great Canadian Gaming Corporation - President of Strategic Growth & Chief Compliance Officer [43]

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Thank you, Leoni. And thanks, everyone, for participating this afternoon. Before we conclude, I would like to remind listeners that forward-looking statements were made during this call. For those who joined midway, I encourage you to listen to the replay of this call to hear my earlier comments regarding these forward-looking statements. This replay will be available through the Investor Relations sections of our website at www.gcgaming.com. This now concludes our call. Thank you, Leoni.

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Operator [44]

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Thank you. Ladies and gentlemen, we thank you for participating and ask that you please disconnect your lines.