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Edited Transcript of TRVW.PK earnings conference call or presentation 14-May-19 9:00pm GMT

Q1 2019 Twin River Worldwide Holdings Inc Earnings Call

LINCOLN May 15, 2019 (Thomson StreetEvents) -- Edited Transcript of Twin River Worldwide Holdings Inc earnings conference call or presentation Tuesday, May 14, 2019 at 9:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Joe McGrail

Twin River Worldwide Holdings Inc. - Executive Director of SEC Reporting

* George Papanier

Twin River Worldwide Holdings Inc. - President & CEO

* Jay Minas

Twin River Worldwide Holdings Inc. - VP of Finance

* Steve Capp

Twin River Worldwide Holdings Inc. - CFO

* Craig Eaton

Twin River Worldwide Holdings Inc. - EVP & General Counsel

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Conference Call Participants

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* Brad Boyer

Stifel Nicolaus - Analyst

* Eric Bourassa

Jefferies LLC - Analyst

* Rich DiMeo

- Private Investor

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Presentation

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Operator [1]

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Good afternoon. My name is Cheryl and I will be your conference operator today. At this time I would like to welcome everyone to the Twin River Worldwide Holdings first-quarter 2019 conference call. (Operator Instructions). Joe McGrail, Executive Director of SEC Reporting, you may begin your conference.

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Joe McGrail, Twin River Worldwide Holdings Inc. - Executive Director of SEC Reporting [2]

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Good afternoon, everyone. Thank you for joining us on today's call. By now you should have received a copy of our Q1 earnings release issued earlier today. If you haven't the earnings release is available in the Investor Relations section of our corporate website, WWW.twinriverwwholdings.com under the news tab.

With me on today's call our George Papanier, our President and Chief Executive Officer; Steve Capp, our Chief Financial Officer; Craig Eaton our Executive Vice President and General Counsel; and Jay Minas, our Vice President of Finance.

Before we begin we would like to remind everyone that comments made by management may contain forward-looking statements. These forward-looking statements include plans, expectations, estimates and projections that might involve significant risks and uncertainties. These risks are discussed in the Company's earnings release and SEC filings. Actual results may differ from the results discussed in these forward-looking statements.

We would also like to point out that, 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 the earnings release. With that I will now turn the call over to George.

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George Papanier, Twin River Worldwide Holdings Inc. - President & CEO [3]

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Thanks, Joe. Good afternoon and thank you for joining our first-quarter earnings call today. After I give my introductory comments I'm going to turn it over to Jay and Steve to give a little more detail about our financial and operational results. Before I discuss the results of the quarter I want to talk about the recent developments and our corporate strategy, as the first quarter saw us achieve some important milestone in our ongoing transformation.

As we closed our acquisition of Dover Downs on March 28 we began trading on the New York Stock Exchange on March 29 and we completed our debt financing this past Friday. Starting with our acquisition of Dover Downs we completed our previously announced acquisition four days prior to the end of our first quarter and have hit the ground running on our integration efforts.

This acquisition was and is all about being strategic in the way we create value for our shareholders. I'm happy to report that as we have begun to integrate, our outlook for the combination is as strong as ever. Based on the efforts completed thus far, we currently anticipate that the acquisition will result in net estimated annual cost synergies of approximately $3 million per year.

These net estimate cost synergies are approximately $2 million of legal, accounting and other expenses that we expect to incur as a public company. Cost synergies are expected to be driven by the elimination of certain corporate overhead redundancies and improved property level efficiencies with limited incremental costs required to scale operations and integrations.

What these identified synergies do not include is any estimated impact of changes in tax legislation that were enacted in Delaware on July 1, 2018, and which we also estimate will provide incremental EBITDA over what was already realized by Dover Downs in the second half of 2018, first quarter of 2019.

I along with the rest of the team at Twin River Worldwide Holdings have enjoyed getting to know our new colleagues at Dover Downs. Suffice to say there is a heightened level of excitement and energy now that we've combined the two organizations.

In conjunction with the acquisition of Dover Downs we've commenced trading on the New York Stock Exchange in the quarter. As previously noted, we feel this represents a major step in the evolution of the Company as we look to open our equity to a broader investor base.

We've also begun a process to refresh our Board of Directors as we seek to build a Board that has the right combination of skills and expertise of existing and new Board members to add value to the company for the integration and transformational growth ahead. As Steve will speak to in detail in a few minutes, I'm also very excited about the debt refinancing which closed this past Friday.

Now for the quarter, for the first quarter of 2019 we saw net revenue increase 15.1% with gross gaming revenue increasing 13.6%. Focusing on our Rhode Island segment, net gaming and racing revenue was up $9.5 million or 15.8% in the quarter compared to Q1 last year [and] gross gaming revenue were up 12.9% over the same periods.

In addition, non-gaming revenue was up $4.2 million or 35.1% as the Company continued to see a nice ramp in operations and revenue in both Tiverton and from the new hotel at Twin River.

We continue to focus our marketing efforts on certain geographic areas within our market in an effort to continue to grow our business. Considering the recent increased competition in our market, we continue to be pleased with the results from our meaningful investments in Rhode Island which we believe has been effective. We expect these investments to be particularly key as we anticipate increased competition in the region with Encore Boston Harbor.

While increased competition will likely have an impact on our Rhode Island operations, we believe that our focus on the local customer base, enhancing our marketing efforts including use of free slot play and guest complementaries, favorable legislation in Rhode Island versus Massachusetts includes a younger legal minimum gambling age and an ability to smoke in Rhode Island casinos, are designed to position us to respond to the opening of Encore Boston Harbor.

We also believe our properties have a significant drive time advantage for several large population sectors between our properties and Encore, and note that less than 20% of our Twin River casino hotels rated slot play originates from an area within a drive time closer to Encore Boston Harbor than Twin River.

In addition, the majority of our rated play at Twin River Casino Hotel comes from players within a 30-mile drive. As we have previously explained and I want to reiterate, our approach to marketing through a period of increased competition is to focus our efforts on retaining our existing customer base as opposed to subsequently recapturing it once the market stabilizes since our experience strongly suggests that the cost to retain a customer is lower than recovering one. Obviously we can't be sure what the impact will be, but we are sure they we are focused on doing what we can do to respond.

Jay will get into the details shortly, but Q1 once again saw meaningful growth in our market share and slots revenue. Rhode Island table games results were also strong. [As well as] Newport Grand operated with no table games, we had no table games database that we could transfer to Tiverton.

Since the opening of Tiverton we effectively established a new database of table games players while being sensitive to minimizing cannibalization of Twin River table games customers. We grew our combined table games by $8.1 million over the prior year period in our Rhode Island segment.

Looking beyond Rhode Island, our Hard Rock Casino in Biloxi, Mississippi continued to show steady results, but growth moderated with the top line increasing 3.4% year-over-year with gaming driving the majority of the increase.

Finally, I wanted to provide a quick update to our previously announced pending strategic acquisition of three casinos in Colorado. We continue to work through licensing and other regulatory requirements and that the transaction remains on track for an expected close later this year or by Q1 of 2020. We remain excited about the strategic opportunities associated with this anticipated transaction. Now I will turn it over to Jay.

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Jay Minas, Twin River Worldwide Holdings Inc. - VP of Finance [4]

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Thanks, George. Overall, net revenue for the first quarter was $120.6 million, an increase of 15.1% from the first quarter of 2018. In addition, gross gaming revenue was also up 13.6% versus Q1 2018. Income from operations was up 21.8% to $30.3 million in the current year compared to $24.9 million in the first quarter of 2018. And net income for the quarter was $17.6 million representing an increase of $5 million or 39.3% year-over-year. Adjusted EBITDA for the first quarter of 2019 was $43.9 million compared to $43 million in the first quarter of 2018.

Diving into the results a bit more, while we saw very strong top-line growth, increases in both gaming and advertising general and administrative expenses did impact the bottom line. Gaming expenses were up $4.4 million over the prior year. $3.4 million of this increase relates to the Rhode Island segment as the Tiverton operation has higher operating costs versus Newport Grand in the prior year.

Additionally, we had increases in gaming labor due to new gaming amenities in the current year such as sports betting and stadium gaming. Table game supervisory rates also increased over the prior year in a concerted effort to retain talent in the face of increased competition in the market.

Also within gaming expense, Biloxi saw an increase of $0.5 million partly due to higher gaming taxes associated with higher gaming revenues. And finally, we saw another $0.4 million of gaming expense related to Dover which closed on March 28 of this year.

Advertising general and administrative expenses increased by $7.3 million from $39.2 million in the first quarter of 2018 to $46.5 million in the current year's quarter. $4.6 million of this increase relates to the Rhode Island segment of which $2.6 million is from comparing Tiverton operations in the current year to Newport Grand last year and the remaining $2 million is from our Lincoln facility.

Focusing on Lincoln, the $2 million increase is due to $0.6 million in marketing costs excluding labor, $0.4 million in insurance and property taxes, and the remaining $1 million increase is partly due to the new hotel, sports book and stadium gaming operations as well as higher facility-related costs.

In addition to the increase in Rhode Island, we also saw increases in general and administrative expenses and corporate costs of $1.9 million mostly due to increased costs of becoming a public company. And we also had additional general and administrative costs for Dover Downs for the post close period.

Let's now review operational performance by reporting segment beginning with our largest segment, Rhode Island, which for the quarter consists of the Twin River Casino Hotel and Tiverton Casino Hotel and for the prior year Twin River Casino Hotel and Newport Grand Casino.

As George mentioned, our gaming revenues saw nice increases in the quarter as the momentum that started late last year from our Tiverton operation continues to build. Table games revenue, which generates a higher profit margin than slots in our Rhode Island segment, grew $8.1 million and slot revenue grew by $3 million.

This increase was partially offset by higher incentives offered to players in an effort to retain and grow market share primarily related to our new hotels at both Lincoln and Tiverton -- for an increase in net gaming revenue of $9.4 million or 15.8% over the prior year's first quarter.

We not only grew our gaming revenues but we continued to improve our market share. We define the market as slot win from all Connecticut, Rhode Island and Massachusetts casinos prior to any adjustments for guest incentives. Our market share increased by approximately 40 basis points over the prior year despite the addition of MGM Springfield to the competitive set.

Our total net revenues increased from $72.4 million to $86.1 million, up $13.7 million. A 15.8% increase in gaming revenue along with higher food and beverage revenue of $1.8 million, hotel revenue of $1.6 million and other revenues of $0.8 million helped to drive this 19% increase.

Income from operations grew by 23%, up $5.8 million to $31.3 million versus $25.5 million in the prior year's quarter. The increase in net revenue of $13.7 million was partially offset by higher expenses of $7.9 million. Included within these comparable results are current year increases in management fee of $1.9 million, depreciation and amortization for our new facilities of $1.5 million, and a prior-year charge of $5.9 million that did not reoccur relating to the disposal of Newport Grand.

Additionally, $6.3 million of the expense increase is from the costs of operating Tiverton this year versus Newport Grand last year. These are completely different operations and the cost structures are not similar. Newport Grand operated without table games, a hotel or other gaming amenities that Tiverton offers. An additional $1.6 million of the increase attributable to bringing revenue generating amenities online at Lincoln including our new sports book operation stadium, gaming and the new hotel.

At Lincoln the Company also saw increased expense of $0.3 million as a result of higher labor costs excluding food and beverage labor and labor related to the additional amenities, which amounted to a modest 1.9% increase over the prior year; $0.6 million increase of higher food and beverage expenses including related labor and $0.6 million of increased marketing.

We also experienced general increases and administrative costs as a result of higher property taxes and insurance premiums, other general price increases and higher maintenance costs. These additional costs amounted to an approximately $1 million increase year-over-year. The increase in food and beverage expenses are a direct result of the higher revenues which more than offset these costs.

The higher marketing costs are largely attributable to the comparable timing of recognizing the marketing reimbursement from Rhode Island as total spend on marketing was flat year-over-year excluding certain guest complementaries which are included in the gaming revenue line.

Turning now to the Biloxi segment, income from operations decreased by $0.3 million, but this was inclusive of higher management fees of $0.5 million. Revenue in Biloxi increased by $1 million driven by higher gaming revenue of $0.9 million which was attributed to higher slot win. The increase in revenue was offset in part by higher comparable payroll cost and to a lesser extent higher gaming win tax.

It should be noted that all management fees noted in the segments discussion are all between companies within our group and upon consolidation completely eliminate. And I'll now turn it over to Steve.

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Steve Capp, Twin River Worldwide Holdings Inc. - CFO [5]

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Thanks, Jay. Just a couple of brief notes from me. You may recall that we have had a very short balance sheet until last week. Our revolver matured in January of 2020 and our term loan matured in July of 2020. With the cooperation of the credit markets we've addressed those maturities as of last Friday.

On Friday we closed a new bank deal comprised of a $250 million five-year revolver maturing in 2024 and a $300 million seven-year Term Loan B maturing in 2026. We also priced $400 million of 8-year senior unsecured notes maturing in 2027. Bank deal priced at LIBOR plus 275 and the senior notes priced at 6.75%.

There were two principle uses of these proceeds. First and foremost to repay approximately $420 million of fundings under our prior bank deal consisting of a revolver and Term Loan B. The second use of proceeds is for general corporate purposes, including for working capital, capital expenditures, acquisitions or other transactions and also potentially the repurchase of our common stock.

Any stock repurchases may be affected through one or more private repurchase transactions, tender offers and/or market or accelerated stock repurchase programs. The amount, timing and terms of any of these returns of capital to shareholders will be determined as a function of prevailing market conditions, our financial condition and prospects, our debt and regulatory covenants as applicable, our long-term cash requirements and other factors.

Finally, on this topic I will say one thing. The potential for share repurchases or other avenue of liquidity for our shareholders and the introduction of new shareholders to this Company is important to us and we are considering these many issues on a real-time basis. That said, we won't address anymore specificity on this topic in the Q&A as we are working on this topic right now. So thank you and, George, back over to you.

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George Papanier, Twin River Worldwide Holdings Inc. - President & CEO [6]

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Thank you, Steve. Before we move on to the Q&A portion, I do want to take a moment to recognize the incredible work done by all the team members of the Twin River family. Their hard work and dedication, especially in times of rapid growth and change, is already paying dividends and all we have accomplished in a short period of time.

I am confident we will continue to work hard going forward in the best interest of the Company to drive and create shareholder value. With that I will open it up to your questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions). Brad Boyer, Stifel.

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Brad Boyer, Stifel Nicolaus - Analyst [2]

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First one probably for you, George. You touched on this a little bit in the prepared remarks, but I'm just curious. It sounds like we have a little bit more certainty around the Encore opening with Wynn targeting sort of an end of June timeframe.

That said just curious how you are envisioning Encore impacting your Rhode Island operations in the near-term. What steps you guys plan to take without revealing the whole playbook obviously. And then were there any warnings from the Plainridge opening that you guys think you can apply in this scenario to potentially mitigate any impact? Thanks.

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George Papanier, Twin River Worldwide Holdings Inc. - President & CEO [3]

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Thanks, Brad. I'll start with I guess your last question. Our approach to Encore will be consistent with how we approached the Plainridge opening, to a lesser extent the MGM opening, which effectively is as our database geographically gets closer to Encore we enhance our database incentive offerings to support and maintain our market share.

This approach started actually during the second quarter and we are going to continue to intensify this leading up to and even after the Encore opening. The other thing is we've created more awareness in the Boston area. But let me take a step back which I think answers the first part of your question.

Since the passage of mass gaming legislation we've been pretty much readying ourselves to compete with this new competition not just try and mitigate it. So we focused on legislative initiatives. We added a lot of marketing tools that we felt would be required to compete effectively and that included opening 24 hours, adding free play, marketing subsidies, table games.

And we also focused on creating an environment for our customer through some CapEx initiatives which included -- we built a non-smoking casino within our casino for those that would prefer that environment. Although we know a smoking environment is an advantage and we view it that way. But we wanted to not ignore the fact that there is a non-smoking segment in our customer base.

And we built a hotel at Tiverton. We opened that in the fourth quarter of last year. We were the first in New England to have sports book. We added stadium gaming and we also overtime created the right mix of F&B to accommodate our lower to mid-level worth customer based on the way -- based on what Encore has been representing out there is that they are going to be looking for a more affluent customer.

And I think that could be supported by the fact that the project includes a really high end ADR hotel. And it has only a little over 2,000 parking spaces which does support going after -- which does not support going after the masses. We have 5,700 parking spaces, which does support the clientele that we go after.

Additionally, my feeling is there's a significantly underpenetrated market from Boston North through New Hampshire which effectively is the size of our market. The market that twin River currently competes in and we compete in that market with Plainridge in the Connecticut casinos.

So I feel that they can target that untapped market to fill in their midweek business at much less cost than competing head-to-head with us. And the other thing I think that supports the fact that this market is still lucrative and underpenetrated is if you look at the gaming revenue per capita it's at $144. And if you look at other kind of comparative markets this just continues to support that there's room enough in this market to support an Encore type facility.

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Brad Boyer, Stifel Nicolaus - Analyst [4]

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Okay, that's helpful. And then second question is just around Dover. Obviously guys have been in there now operating that asset for a little over a month. Just curious, as you've gotten in and gotten a little bit more hands-on, if you have any updated thoughts around the property and maybe how you can grow EBITDA there from here. Thanks.

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George Papanier, Twin River Worldwide Holdings Inc. - President & CEO [5]

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Sure. So our approach initially was to take all the synergistic opportunities and I think we've done that very quickly. But there's still some opportunity for the continuation of creating efficiencies at the property. But we feel pretty comfortable that we'll be able to grow revenues in that facility with the help of reducing the tax rate.

Particularly in table games we feel that they've kind of stepped away from that market and we feel there's an opportunity to get back into the table games business. And we're going to do some other stuff that's going to enhance the facility that we think will create some tractions that they really don't have at this time.

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Brad Boyer, Stifel Nicolaus - Analyst [6]

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Okay helpful. And then lastly, maybe for you, Steve. Since coming public you guys have been fairly open about your desire to continue to grow and diversify the business. That said could you just provide us with some color, I think it would be helpful, in a public forum around what you guys look for in an asset? And then beyond valuation are there certain types of assets or market you prefer more than others?

And then lastly, obviously with -- there are three triple nets out there today that's resulted in a number of operating companies as opposed to holdcos? If you could just share your views with respect to potentially considering acquisitions of opcos as opposed to holdcos moving forward. And that's all from me, thanks.

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Steve Capp, Twin River Worldwide Holdings Inc. - CFO [7]

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Yes, thanks, Brad. So a three-part question. I will take them in that same order. On the M&A front, I think we like the position we are in, Brad, as call it a SMID cap regional gaming company. In this space, as you well know, there used to be a whole bunch of companies kind of like us, including the old Pinnacle in the old Ameristar and the old Aztar and the old Isle of Capri and then of course smaller companies were Penn and Boyd and the like.

And those companies have all either gone away or gotten really big. And so the three super regionals now are Boyd and El Dorado and Penn. But we've kind of floating up into the space in between one or two asset properties and those super regionals. And so we are kind of uniquely in that little SMID cap space. We kind of like that spot.

But what I'm getting at is from an M&A -- from a growth standpoint there are things out there that are maybe too small to be interesting to other companies that can still move the needle for us on a growth and on an accretion basis. And so, yes, so look, the mandate is to continue growing this business we kick a lot of tires, we bid on a few things here and there and you know how it is.

It is kind of a volume business. You have to sift through whole lot of things and do a lot of diligence and be smart about deployment of capital and the like. And every one in a while you get one that fits all of your criteria. But they're hard to come by and they're rate.

But look, would we prefer to make M&A trades that are kind of $20 million in EBITDA or north? Yes, that would be -- that's 10% of pro forma adjusted EBITDA for us. Did I say 10%? 10%, that's a pretty nice number for us. So yes, something in that ZIP Code, 20%, 25%, 30%, even upwards 40% or more from a sizing standpoint would be interesting for us.

If you take a look at our strategy historically, it's historically been a strategic component to where we've gotten involved in M&A as well as a cash flow accretion component. At Biloxi in 2014 it was about diversifying away from a single property which was Lincoln at that time. And we've also increased EBITDA there about 40% from where we picked it up. So both strategy and cash flow accretion.

Newport Grand we picked up and moved to the Massachusetts border. We see a significant cash flow accretion opportunity there and we like the synergies involved and having that asset interplay with Lincoln as well. And so there's been some strategy to that and some cash accretion.

Dover Downs is obviously about going public as well as taking a hard look at operations and making changes that have worked for us and accreting that cash flow as well. And Colorado has the same kind of a play with both strategy and we believe cash flow accretion potential there.

So that's the roadmap of where we've been on that question and, look, those are hard to find and take a lot of work, but that's where we start. You can't always get both of those -- you can't check both those boxes in every trade you make, but we do try and we focus on being very efficient and very disciplined with our use of capital in that regard.

As to markets, George may have a couple comments. You know, there's not a whole lot out West. There's a little bit down South, there's more in the Midwest. But I think I would tell you we are not afraid of any geography in this country. We've got a young -- a capable team and we are willing to travel and we've got a pretty good model of rolling out what it is we do well that does tend to work pretty well.

So we go where the opportunities are and we are pretty malleable and we think in tucking those in, integrating those and making those work. So we're pretty open on the question of markets.

And then lastly, Brad, on the REIT topic, we consider it an advantage to be an owner/operator of everything we currently have. There's option value we think in the future to being able to consider a REIT type transaction and so we will leave that for what it is.

Look, personally I'm not entirely convinced that the REIT structure is not a bit more of a flavor of the month from Wall Street. Maybe it's got more legs than that, not unlike the hotel industry. Maybe it doesn't, but we'll see.

And in terms of stepping into an opco position, look, I think opco by definition gives up a little flexibility given the nature of it, not only the asset. It's not like you own an asset and if you go put together a financing on it. In the future you've got flexibility about you can refinance it or unfinance it or sell the asset, whatever. Opco doesn't own the asset, so opco is a little constrained in what it can do both with the cash flow that manages and in terms of the asset and the associated liability.

So, you don't own the asset but you do own the liability, which is an interesting financial construct. So listen, we've studied those transactions quite a bit. We're open to things that make sense, but we are pretty aware of some of the limitations in that structure as well. So we just kind of take all of that under advisement and we will try to be smart as we proceed forward. Brad, thanks for the questions by the way.

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Brad Boyer, Stifel Nicolaus - Analyst [8]

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Thanks for all the color, guys, and good luck going forward.

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Operator [9]

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(Operator Instructions). Eric Bourassa, Jefferies.

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Eric Bourassa, Jefferies LLC - Analyst [10]

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So just the first one, I believe weather had a pretty big impact on some of your competitors within the region, specifically citing Mohegan. I was just wondering if you can kind of describe what if any weather impacted the quarter within the state of Rhode Island.

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George Papanier, Twin River Worldwide Holdings Inc. - President & CEO [11]

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Yes, weather did have an impact in the first quarter. But obviously weather in the first quarter historically and towards the end of the fourth quarter is always a little iffy, particularly in the Northeast.

The weather pattern was kind of odd this year where we've seen the snow only on the holiday weekends. So obviously we do a lot of business on the holidays, but we do a lot more business -- on the weekends, but we do a lot more business on the holidays. So it did impact us, but we were able to recover.

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Eric Bourassa, Jefferies LLC - Analyst [12]

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Understood. And number two, what type of impact do you think you guys are seeing from the MGM Springfield Casino? And how are you guys thinking about the new JV casino that's going to be going up in Windsor, CT? And ultimately it sounds like New Hampshire will probably likely open up commercial casinos sometime down the line. I was just wondering if you guys would have any interest in pursuing a casino within the state.

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George Papanier, Twin River Worldwide Holdings Inc. - President & CEO [13]

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So I'll answer the first question. MGM -- we always anticipated that MGM would have a minimal impact on us. It is a 110 minutes' drive time away, 75 miles distance away. So we never really anticipated any impact on us. We thought if we did have some erosion it might be in the Worcester area, but when we kind of reviewed our database from that market there was some trial. But we still maintain the level of visitation that we historically had had.

We are seeing a little bit of what I will call a ripple effect or domino effect as a result of MGM marketing aggressively primarily for the Mohican and to some extent the Foxwoods business. So as a result of that we feel Mohegan and to some extent the Foxwoods business. So as a result of that we feel Mohegan and Foxwoods may be marketing a little bit more aggressively in our traditional markets. Other than that there really hasn't been a direct impact from MGM.

As far as the JV casino for Mohegan and Foxwoods, I think they still have to go -- it's not approved jet, so they still have to go through some final steps there. The interesting thing will be to see whether they actually build it or not based on whether it will be able to get financing or not for it. It is going to be cited in the Hartford area and I don't know that -- I don't know what type of return they are anticipating on that. So I'll leave that there.

As far as New Hampshire, we can't -- technically we can't operate in New Hampshire, Connecticut or Massachusetts as a result of our contractual arrangement with the state of Rhode Island. So we would have no interest in (technical difficulty).

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Eric Bourassa, Jefferies LLC - Analyst [14]

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Okay understood. And then just kind of going to Rhode Island, with respect to the four times leverage test that Rhode Island has within the covenant, I was just wondering if you guys were to go over four times leverage what kind of amendments would you need with the state?

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Steve Capp, Twin River Worldwide Holdings Inc. - CFO [15]

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(Inaudible) it's just a simple amendment to our regulatory agreement with the state. It has been amended before and (multiple speakers).

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George Papanier, Twin River Worldwide Holdings Inc. - President & CEO [16]

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Eric, we should probably point out that back in 2010 on our emergence that number was 5.0 and that was reduced lower in 2014. We have not led the investment community towards that number because it is -- it has changed over the past, it could change in the future. So, it's an interesting guidepost, but it's perhaps somewhat malleable.

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Eric Bourassa, Jefferies LLC - Analyst [17]

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Okay, understood.

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Steve Capp, Twin River Worldwide Holdings Inc. - CFO [18]

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And (multiple speakers) I can confirm no legislation is needed. It's a simple agreement.

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Eric Bourassa, Jefferies LLC - Analyst [19]

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Okay, and then just lastly, moving to Colorado, I was hoping if you guys could talk about what the EBITDA is from that acquisition, what the purchase price is and how you guys expect to fund the transaction. Maybe if you could just discuss a little bit more about the strategic nature of the asset and that's all from me.

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Jay Minas, Twin River Worldwide Holdings Inc. - VP of Finance [20]

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Eric, I'll go first. Maybe George wants to talk about the strategy there. But we are held to a -- we are held to confidential terms as to that purchase sale agreement. And so, we have not disclosed the purchase price or the underlying trailing EBITDA.

Suffice it to say, again, we have mentioned to the Street a number of times that we do consider it to be financially immaterial in the aggregate. So it's a little bit of upside for us in terms of the tactical or the cash flow accretion opportunity, but those numbers are just not big enough to be material and they have not been disclosed.

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George Papanier, Twin River Worldwide Holdings Inc. - President & CEO [21]

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And I will just add to that. So the rational was both strategic in the respect that we do have an unrestricted sub, Arapahoe Park, it's a racetrack in Colorado. We have 13 OTV licenses associated with that. You might recall we ran a referendum two years back and one of the criticisms at the time was that we were an out-of-state company.

And we've always targeted the Colorado market strategically because we felt that it would be good to find a property that we felt had some upside to it and we focus only on the Black Hawk market because of the proximity to Denver. We feel that market is underpenetrated. So we found an asset there that was underperforming and only 53% of market share. And we felt there would be some upside associated with that.

But also in addition to that we felt we could maybe be more involved legislatively in some efforts associated with Arapahoe we feel have some option value or maybe the potential to do something there in the future that's more significant. And also we wanted to be a part of the Gaming Association just to understand globally what's going on in that market.

The last thing I'll point out is Monarch is slated to open maybe six months from now. And depending on how successful they are at expanding the market, there may be an opportunity for us to further develop the property we acquired. With the property we acquired do see opportunity to build hotel rooms on top of an existing parking structure.

They also have adjacent land that is vacant that we would be able to expand to also. So again, I feel that the Denver market is lucrative; there's 4 million people there, the population is growing, expected to be about 4.3 million within the next couple years. And I do believe it is underpenetrated. (technical difficulty) look for some upside opportunity there.

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Operator [22]

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[Rich DiMeo], Private Investor.

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Rich DiMeo, - Private Investor [23]

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Congratulations. Sounds like a good first quarter. I inherited this stock by being a Dover Downs shareholder and I'm [not] happy about that. I read a lot of online reviews and the Tiverton property does not get real good reviews. I know you haven't been open that long. Is there some growing pains there or what's the situation there?

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George Papanier, Twin River Worldwide Holdings Inc. - President & CEO [24]

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The Tiverton property opened during the fourth quarter of -- it actually opened September of 2018. We always anticipated there would be some ramping associated with that. It is a new facility, so obviously there's reviews on it and it always seems to be the individual that has something negative to say.

But we get a lot of positive customer comments. We have -- it's a smoking casino but we have a state-of-the-art HPA system there. So -- and we have all the amenities that we feel that market requires. And we're actually pretty pleasantly surprised with the outcome of the facility and the performance thus far.

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Rich DiMeo, - Private Investor [25]

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Okay, how about assuming they allow online and phone betting in Rhode Island, that sounds like a good opportunity. Because in New Jersey I think almost 80% comes from -- the betting comes from online and phone. Do you have a good plan if that's approved?

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George Papanier, Twin River Worldwide Holdings Inc. - President & CEO [26]

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I'm going to give you a comment on New Jersey. I think that's probably the best model out there for online gaming. But I'm going to give you kind of where we are legislatively in the online betting process.

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Craig Eaton, Twin River Worldwide Holdings Inc. - EVP & General Counsel [27]

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This is Craig. So online betting as you know -- or may not know -- has been approved legislatively. And I believe in the state of Rhode Island is in charge of getting that instituted. So I believe it's about four to six months away. There is a challenge in court to constitutionality of it, but at this point we don't see that as a material challenge.

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Operator [28]

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This completes the allotted time for questions. I would now like to turn the call over to George Papanier for closing remarks.

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George Papanier, Twin River Worldwide Holdings Inc. - President & CEO [29]

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Thank you, operator. I want to thank you all for joining our call today and for your interest in the Company.

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Operator [30]

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This concludes today's conference call.