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Churchill Downs, Inc. (NASDAQ:CHDN)

Q4 2013 Earnings Conference Call

February 27, 2014 09:00 AM ET

Executives

Courtney Norris - Director of Corporate Communications

Bob Evans - Chairman and CEO

Alan Tse - General Counsel

Bill Carstanjen - President and COO

Bill Mudd - CFO

Analysts

Cameron McKnight - Wells Fargo

Amit Kapoor - Gabelli & Company

Justin Sebastiano - Brean Capital

Steve Altebrando - Sidoti

Operator

Good day, ladies and gentlemen and welcome to the Churchill Downs’ Incorporated, Year-end Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session with instructions will be given at the time. (Operator Instructions)

I would now like to turn the call over to Ms. Courtney Norris, Director of Corporate Communications. Please go ahead.

Courtney Norris

Thank you operator. Good morning and welcome to the Churchill Downs Incorporated conference call to review the company’s business results for the fourth quarter and full-year ended December 31, 2013. The company’s fourth quarter business results were released yesterday afternoon in a news release that has been covered by the financial media. A copy of this release announcing results and any other financial and statistical information about the period to be presented in this conference call, including any information required by Regulation G, is available at the section of the company’s website titled News located at churchilldownsincorporated.com as well as in the website’s Inventors section. Let me also note that a news release was issued advising of the accessibility of this conference call on a listen-only basis via phone and over the Internet.

As we begin, let me express that some statements made during this call will be forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that include projections, expectations or beliefs about future events or results, or otherwise are not statements of historical facts. The actual performance of the company may differ materially from what is projected in such forward-looking statements. Investors should refer to statements included in reports filed by the company with the Securities and Exchange Commission for a discussion of additional information concerning factors that could cause our actual results of operations to differ materially from the forward-looking statements made in this call.

The information being provided today is of this date only and Churchill Downs Incorporated expressly disclaims any obligation to release publicly any updates or revisions to these forward-looking statements to reflect any changes and expectations.

I will now turn the call over to our Chairman and CEO, Mr. Bob Evans.

Bob Evans

Thanks, Courtney. Good morning everyone. Thanks for joining us. With me today are Alan Tse, our General Counsel; Bill Carstanjen our President and COO; and Bill Mudd our CFO.

I am going to turn this over to Bill Mudd. He is going to make a few prepared comments and then we will come back to take your questions, Bill?

Bill Mudd

Thanks Bob. Good morning everyone. After I will make a few comments about our fourth quarter and full-year results, we will be happy to answer any questions. We made a few changes to our press release to make it easier to understand the operational drivers of our financial results of our segment, hope you like the new format.

Overall, it was a good year with record net revenues of $779 million, up 7% over 2012 and a relatively tough fourth quarter with net revenues up 3%. For the year, our gaming business revenues increased 33% reflecting revenues generated by Oxford which was acquired in July of 2013 and Riverwalk which was acquired in October 2012. Our Calder Casino revenues increased 1% during the year on the closure of Internet cafes and direct marketing efforts partially offset by new competition.

Our Louisiana operations were roughly even with 2012, with gains in the first half of the year, but lost in a very soft fourth quarter. Our Fair Grounds Slots business also had significant road construction disruption on Gentilly Avenue for an extended period of time which impacted our customers’ ability to access the facility.

Our Harlow’s property revenues were down $4.2 million or 7% despite new amenities coming online in early January, we believe these losses are primarily from continued economic weakness in the region, due to improvements at a competitors and limited incremental revenue associated with free play offers.

For the fourth quarter our gaming business revenues increased by 25% as incremental revenues from Riverwalk and Oxford acquisitions were partially offset by weakness in our Louisiana operations in Harlow’s Casino. Our Fair Grounds Slots revenue declined 10% and our video poker operations declined 5% in the quarter against a very tough prior year comparable.

Last year we reported fourth-quarter revenue games of 11% in our slot business and 6% in our video poker business driven by State and Federal stimulus, post hurricane Issac. While we performed better than the market as a whole, our fourth-quarter 2013 results gave back those gains.

Our Harlow’s property suffered the largest year-over-year declines in the fourth quarter with revenues down 12%. Visits and spend per visit have been down particularly with low and mid tier customers despite aggressive free play marketing promotions to drive guest counts. Our Riverwalk property also saw a decline of 6% including a full quarter of revenues in the prior year; we believe both properties results were impacted by the continuous tough regional economic environments as well as the unseasonably volatile weather.

Our Calder casino revenue growth slowed in the fourth quarter posting a 1% decrease versus the prior year, growth from the closure of Internet cafes in April was offset by a weaker overall market. This trend continued in at January but appears to start growing again in early part of February. We have been pleased with our new Oxford property despite one of the highest snowfalls on record in December 26.2 inches and with precipitation on 22 of 31 days; the property was still able to report a 1% increase over the fourth quarter of 2012.

Moving onto our online business. Our online business had a decent year all things considered, posting a 1% revenue improvement by the lack of wagering by Illinois residents for five months and Texas resident wagering ceasing in late September. Total year handle on TwinSpires increased 1% with an 18% increase in unique players to $869 million, excluding wagering by Illinois and Texas residents in both years wagering improved by 6.2% compared to U.S. industry handle that was flat to 2012 as players continue to shift our wagering activity to the online channel.

Our fourth quarter online results were similar with revenues down 1% and a 2.5% decline in handle with a loss of Texas wagering. Including Texas from both periods handle growth was 3.7%. We made our oral arguments against the Texas law banning Internet wagering on horse racing in front of three judge panel of the U.S. circuit court of appeals for the fifth circuit on February 4th. We believe we have a strong argument and hope to receive a verdict allowing us to resume wagering prior to this year’s Kentucky Derby.

A bit of good news for our online business is that the Illinois legislature authorized an extension of ADW regulations through January 2017.

Finally, let’s look at our racing operations. Our racing operations net revenues declined by $27.8 million for the full year, the primary driver of this decline was a $28.3 million decrease in our Calder operations from the hosting revenue dispute and live racing overlap with Gulfstream Park. That led to a 13% reduction in live race days at our Calder facility during the year. The good news is that the four department fair mutual wagering issued a notice on November 7th that the permit holders must conduct three days of live racing per week, qualifies the host track. Consistent with the language of the statutes and is schedule to hearing on March 6th to promulgate the rule.

During much of the 2013, Gulfstream Park contentment’s (Ph) pay downs, the other two thoroughbred race tracks in Florida by hosting revenues despite running fewer and three live race days. As mentioned on the last earnings call, we will pursue the recovery of these loss hosting revenues, using all means available to us. As far as a continuing overlap of Gulfstream Park we have had many discussions of the strike group over the past few months to resolve the issue which has led to a diminished product at both the facilities.

We have not been able to agree or compromise that both parties can live with. We will continue to work on our agreement and will do the best -- do what is best for the racing and for our shareholders. The silver lining for now is that we will conduct 39 live race days in the first quarter qualifying as a host race track where we have not traditionally ran those dates. In addition, most of the economic damage from these issues was inflicted in 2013 and thus going forward we will see some improvement to our financials as we run Gulfstream Park’s traditional dates, and if we reach a compromise it should improve the company’s results.

Arlington Park revenues declined 7% during the year, on 18 fewer host days temporary [indiscernible] ADW wagering, resulting in lower source market fees and handle the clients driven by poor weather and smaller field sizes. The good news is that there are no material changes to our racing and host day schedule in 2014, and with the passage of new ADW legislation by the Illinois legislature in January; this should be no disruption to ADW operations for the next three years.

Also in the racing segment, increment weather conditions effected racing and jazzfest at our Fair Grounds property which experienced a decline in revenues of 8% for the year. Churchill Downs was our only racing property that grew year-over-year with revenues up 7%, another record Kentucky Oaks and Derby week and the introduction of a 12-day September meet. Total company racing operations had a rough fourth quarter with revenues down 21% primary driver of the decline was an $8.8 million reduction in our Calder property. $6.8 million of this decline was from lost hosting revenues, remaining $2 million is from running 22% fewer races on 7% fewer race days. Churchill Downs came in slightly below last year’s fourth quarter with revenues down 4% driven by night racing events that overlapped with University of Louisville home football game, affecting attendance and on track wagering. Finally, our Fair Grounds property revenues declined 12% from lower wagering driven by a bad weather and increased competition. Excessive rain forced us to take races off the turf impacting starters to race, a key indicator of product quality.

Since I know you will ask how this year’s derby is shaping up, I will go ahead make a few comments. With the caveats that are cascade and mission revenues depend on the day of the event which is very much driven by weather and then our pari-mutuel revenues are driven by the still to be determined size and competitiveness of the Oaks & Derby races and that we are still 66 days out from the event. Our premium missions’ revenues are very strong compared to last year. Sales of personal seat licenses are significantly ahead of last year, sponsorship sales are on track to outpace last year. We have a new NBC agreement going out to 2025. Our new 2400 seat rooftop garden and liquor garden areas of the renovated grandstand are sold out.

Our new 15,000 square foot video board is on track for its debut on opening weekend and handle in future wager pools are 5% ahead of last year. Based on what we have seen so far, we expect this year’s Oaks & Derby weeks financial performance will be very strong.

Now let’s take a look at EBITDA performance by segment. For the year, our gaming adjusted EBITDA increased $16.2 million primarily due to the addition of Riverwalk of $30 million and Oxford of $9.2 million partially offsetting these increases was a decline in Harlows of $3.6 million driven by general economic weakness and lower discretionary spending in the region.

In addition, Harlows experienced temporary disruptions from modifying its casino floor to create a better gaming experience. Fair Grounds slots and video poker adjusted EBITDA increased by $1.9 million, decreased I am sorry by $1.9 million, a softness in Louisiana market more than offset the opening of the new video poker facility. Finally, the $0.8 million impact of the prior year recovery of slot referendum expenses, Calder adjusted EBITDA grew by $0.3 million due to the closure of internet cafes and improved marketing efforts. For the fourth quarter, our gaming adjusted EBITDA increased 10% to $18.5 million, improvement is driven by the Oxford acquisition partially offset by a $1.2 million decline in part of Louisiana properties and a $0.9 million decline in our Harlows property on lower revenues.

Our total year online business adjusted EBITDA increased $4.5 million reflecting a 1% increase in our pari-mutuel handle, improvements in our velocity high volume business and a favorable settlement of litigation partially offset by higher pari-mutuel taxes in certain states. For the year, the temporary loss in Illinois, ADW wagering and then exit of Texas reduced adjusted EBITDA by approximately $2.7 million. Expenditures related to the launch of Luckity totaled $2.2 million in the year, an improvement of $0.4 million compared to 2012, we started marketing Luckity in earnest in mid-January of 2014 as a real money gaming bingo site. We are still very early in the process but we are starting to show that we can attract and retain customers.

By early next quarter we should be able to determine if we want to continue investing in this product. For the fourth quarter, our online business adjusted EBITDA improved $1.4 million as a result of favorable litigation settlement, was partially offset by the loss of wagering, tight Texas residents and higher pari-mutuel taxes in certain states. In addition, we spent $0.4 million less on the development of our Luckity platform and Velocity earnings improved by $0.3 million. A total year racing operations adjusted EBITDA decreased $4.1 million primarily due to a $9 million decline in adjusted EBITDA corner of which $6.3 million is associated with the loss of Florida hosting revenues and $1.8 million was associated with fewer live race days.

Arlington Park adjusted EBITDA declined by $2.3 million due to 18 fewer host days, the impact of inclement weather during the racing season and lower fees from ADW operators. Fair Grounds adjusted EBITDA decreased $1.4 million primarily due to inclement weather partially offsetting these declines was an increase in adjusted EBITDA of $5.8 million from a record setting Kentucky Oaks & Derby week as well as an increase related to our new September meet of Churchill Downs. In fourth quarter, our racing operations EBITDA loss was $8.1 million, $4 million worse than the fourth quarter of 2012. The higher loss was primarily driven by Calder which was down $3 million on lower hosting revenues as well as a 22% reduction in the number of live races. Fair Grounds was down $0.3 million on fewer starters per race and two fewer live race days and Arlington was down $0.7 million on higher general liability interims losses.

As I’ve said earlier, the headwinds we experienced in Florida and Illinois during 2013 are now behind us and we shouldn’t see any additional impact going forward.

For the year our investments in adjusted EBITDA increased by $1.1 million primarily due to incremental equipment sales at United Tote and $800,000 increase in share of operating income from our Ohio joint venture partially offset by $1.1 million in cost associated with developing our Internet gaming platform.

In the fourth quarter, our share of the Miami Valley Gaming facility which opened December 12 approximately three months ahead of schedule and well below budget added $0.5 million through our other investment segment adjusted EBITDA. We were reporting our 50% share of EBIT earnings before interest and taxes in our adjusted EBITDA metric. Note that this includes depreciation and amortization which is lower than the adjusted EBITDA amount due in report if we were a consolidated entity. A more detailed P&L can be found in the 10-K filings.

While the ramp up has been slower than we would like we’ve been pleased with the performance to-date considering the weather we have been experiencing. We are near capacity in the weekends and weekdays have been improving. Weekly gross win per unit has improved each of the last four weeks from $181 of gross month per unit to $256 last week as we focus our mid-week database marketing efforts.

Offsetting the games from Miami Valley in the fourth quarter were $1 million in expenses to continue development of our Internet gaming platform in poker side. Overall, total year adjusted EBITDA set a record at $176.2 million, up 11% over the prior year. Fourth quarter adjusted EBITDA declined slightly to $19.3 million.

Now let’s take a look at a few items below adjusted EBITDA that affected earnings from continuing operations for the year. Insurance recoveries net of losses decreased $6.6 million primarily due to the prior year recognition of insurance recoveries associated with the 2011 flood and wind damage at Harlow’s. Horse Racing Equity Trust Fund proceeds of $4.5 million were recognized in 2013 reflecting Arlington’s final share of the Riverwalk Casino license surcharge.

Shared based compensation expenses increased $7.5 million due to expense associated with brands under the company’s new long term incentive plan that took effect March 21, 2013. As discussed in our second quarter earnings call last year, the majority of this expanse will be recognized during the first 14 months of the plan. As such the amount of expense associated with the plan will be greatly reduced starting in June of this year.

Preopening cost of $3.6 million were incurred during the year and $2.4 million in the fourth quarter associated with our Ohio joint venture. Other charges in recoveries were $2.5 million loss in the fourth quarter and year as a result of reserving receivable related to acquiring a New Jersey Internet Gaming license. We are pursuing recovery this receivable to the legal system we were currently are unsure of the [indiscernible] pay.

Now please turn your attention to the consolidated statements of comprehensive income for the years ended December 31st. For the full year total net revenues grew 7% over 2012 to $779 million. In the fourth quarter net revenues increased 3% to $152 million. For the year, net earnings from continuing operations were $55 million, down from $58.2 million in 2012.

With that I’ll turn it over to Bob who will open the call for questions. Bob?

Bob Evans

Thanks Bill. That was one of the longer ones that we’ve done. We’ve spent some time as Bill mentioned on our press release and in our prepared comments here trying to make better disclosure of the information that we think is of interest the if you’ve got any thoughts or questions or suggestions let us know and we’ll try to improve it further as we go forward.

With that we’ll take some questions. Destiny (Ph) if you could open up the line for questions please.

Question-and-Answer Session

Operator

(Operator Instructions) Our first question comes from the line of Cameron McKnight of Wells Fargo. Your line is open.

Cameron McKnight - Wells Fargo

Questions for Bill or Bob, TV and radio deals are roughly 11% or so of total revenues and you’ve announced that you’ve renegotiated the NBC deal. Could you give us some more color around the renegotiation given that we’ve seen a lot of sports media rights being renewed at in crisis of anything from 30% to 200%? And as a follow up do you plan on renewing any of your sponsorship deals early?

Bob Evans

Well, on the first point I can’t really disclose the details of our arrangement with NBC but I can share sort of two thoughts with you one though as you know the market for sports media rights is extremely strong right now and this new deal reflects those market forces, exactly how I don’t want to disclose. And secondly the improved economics kick in with this year 2014 Oaks and Derby and we’ll then increase further in future year, that’s as far as I really want to go disclosing any of the details on that on. In terms of sponsorships, I’m now aware of any of that we renewed early but we have picked up a significant and still unmanned and unannounced sponsor for this Oaks and Derby in 2014 and will get back to you later.

Cameron McKnight - Wells Fargo

Okay great thanks and then just to follow-up. Given the recent debt raise, several investors are asking about the potential acquisition strategy and use of proceeds, could you give us some just general thoughts on what you’re seeing out there in terms of landscape for acquisition?

Bob Evans

Nothing has really changed. We are still looking for attractive regional gaming properties. Our selection criteria hasn’t changed, if we could do the same deal as we’ve previously done again over the next year or so, we’d be happy to do them assuming the valuation with the same. So we’re still out there looking at everything. I think we see the entire deal flow and if we find an attractive property to right valuation, we’ve got the financial resources to act.

Operator

Thank you. Our next question comes from the line of Amit Kapoor of Gabelli & Company. Your line is open.

Amit Kapoor - Gabelli & Company

Could you provide us with an update on Illinois specifically the Senate deal that might see some light this year business sessions in house? And then any updates on Kentucky would be great? Thank you.

Bill Carstanjen

Hi Amit, it’s Bill Carstanjen. It’s always mistake it’s not a handicap, how a legislature will behave over a session but I would say both in the case with Kentucky and Illinois, we’re getting now towards the crunch time of the session. So I think as we try to read our cards as we head into this portion of both legislative sessions, we have some talk to be optimistic but as always as case our issues are wrapped up with other issues that are going on in the legislature that can affect us in ways that that are hard to predict right now. So out team is fully engaged, heavily engaged, optimistic and working hard in both those jurisdiction and that’s probably the best I could say about where we’re right now.

Amit Kapoor - Gabelli & Company

Thank you. And as it’s the collation in Kentucky, is that gaining greater traction from the advantage frontiers? Do you think that’s taking place?

Bob Evans

Amit, this is Bob. I would say that’s been a very pleasant area of success. The folks are leading that are doing a terrific job. It has over 71,000 followers on Facebook and just in the last couple of weeks it was directed in the orders 6000 emails and 1700 phone calls to Kentucky legislators. I think that’s been a very effective tool for us and the one that really coordinate or communicate the key issue in Kentucky at least which is the expanded gaming is something that good for all of Kentucky, not just the horseracing industry. I think that point has been made and has been driven home and the support we’ve got around in Kentucky when I think validates that.

Amit Kapoor - Gabelli & Company

Thank you. And just on a separate note, can you talk about potential positive implications of the new video board in terms visitation, visibility and just attraction you expect on the tract from this new addition? Thanks that’s all.

Bob Evans

Well, we’re pretty excited about this addition. It will be the first race tract anywhere that’s done anything similar to this; it will also be the largest 4K resolution video board anywhere in the world as far as we know. We’ve been working pretty diligently on the programming for the four initial points of use which will be our opening night that’s the Saturday before the Kentucky Derby we can which is one willing to do with the new video board which is we didn’t actually name at this and this become known as the big board. It also be used the rest of Oaks and Derby week and obviously on Oaks and Derby days themselves.

And it will be used in a more traditional way thereafter. We’ve engaged in outside company. They’re helping us with programming. We have hours of programming here to provide and we work pretty diligently on the effort to attract sponsors. We’ve got one so far and we probably will end up with the couple of others. My guess is it will be 2015 before we see a real pick up and sponsorship because, but I want about sponsors as they want see what they’re buying before they buy it. And at the moment, the video board consists of four or three 70 foot high metal towers. The board itself won’t be installed for about another month. So it’s kind of hard to show with people at this point, you can sort of point this and instruction and say that’s where it’s going to be. But I think once people see and how big it is, what impacted it on the last crow, I think that will be a lot of general interest in it’s going forward.

Operator

Our next question comes from the line of Justin Sebastiano of Brean Capital; your line is open.

Justin Sebastiano - Brean Capital

As far as the renewal with MBC, did this happen sooner than expected, and if so what made you pull a trigger now?

Bob Evans

I do know that we have specific expectation or goal to get it done in 2014. It was just an opportunity that presented itself. We had a great relationship with MBC. There was sort of a lot of open communication that’s going on between us. And the opportunity just presented itself so we decided to go ahead and act on it, and like a good thing to do.

Justin Sebastiano - Brean Capital

Okay and as far as Illinois expansion, it seems like the gaining factor for the governor was pension reforms; seems like that has been cleared away. Are there any other issues that are in front of him or anything else he is reading now that would perhaps be a roadblock to the gaming expansion in Illinois?

Bill Carstanjen

It’s Bill Carstanjen to begin. With respect to the governor we are not aware of any new significant issues that are at the rear of the head, but that doesn’t mean that there won’t be some that we haven’t heard about all that just haven’t surfaced yet or that will come up later. I think one thing everybody will be watching during the remainder of the legislative cycle this time is just the Chicago Mayor Rahm Emanuel and his pension concerns for the City of Chicago. That might affect us in ways that are good and or bad, it remains to be seen.

Justin Sebastiano - Brean Capital

Okay and as far as Kentucky, can you give us your thoughts or update on the instant racing, There is a recent development there. Can you maybe talk about that and also give us your thoughts on all those games that you would place at Churchill Downs.

Bill Carstanjen

The couple of ideas on responding to that question and if I don’t quite give what you’re after, just clarify further. There has been a legal process going on with respect to instant racing machines, or historical racing machines. They’re still winding their way through the court system, and there hasn’t been sort of a definitive ruling yet on legality, it has been pushed back down to the lower court to take another look at and review of whether these machines are a legal form of gambling in the State. So what we said, for our company is, we want all of the ambiguities resolved by the courts before we would even seriously look at it. But we have also said in the past, and we remain firmly of the belief based on what we have seen in the performance of these machines where they have been deployed down in the southern portion of the State and also at Ellis Park to the West. These machines may do okay in markets where there isn’t slot machine competition nearby. But we are very concerned and we remain concerned that in a competitive market like Louisville where Churchill Downs racetrack is located. These machines are likely to fare well compared to full casino offerings including slot machines like we see lining our borders around near the Louisville market. So we are following the issues pretty closely, but it is hard to imagine at this point based on what we’ve seen that these issues or these machines are a real interest to us.

Justin Sebastiano - Brean Capital

Okay that did answer the question. Is there any, as far as timing as to when the lower court will render decision?

Bill Carstanjen

Not this far, as I’m aware.

Justin Sebastiano - Brean Capital

Okay, and then just lastly, you mentioned that MVG, though the ramp up is slower than you would like, but last week it seems like you had pretty good wind for the unit. How far of your initial expectations did it perform and then how is it performing now compared to what you thought it would be before it opened?

Bill Carstanjen

It’s Bill Carstanjen to begin. We’re really excited to get this opened three months earlier than we originally planned and to get it opened up below our original expected budget. On the other hand it didn’t turn out to be a great thing to open it up in the middle of the weather cycle that we have been enduring. That affected us as we got it opened around little late December. Every week, it’s been on improving, Bill cited some of the factors, some of the data. Every week it’s getting significantly better. In terms of where it is now compared to our internal projections, I’m not sure we disclose those or do disclose those. But we are increasingly optimistic, week to week, and this isn’t an improvement cycle that’s tapered off yet. Every week it seems to be moving significantly better.

Operator, any other questions?

Operator

We do have one more question from Steve Altebrando of Sidoti and Company, your line is open.

Steve Altebrando - Sidoti

I think you’ve mentioned in the script, some free play promotions not being that effective; wondering if you since dialed back at all now?

Bill Mudd

Yes that’s correct, and it’s predominantly on our Mississippi properties Steve, and we have dialed those back pretty dramatically at the beginning of the year.

Steve Altebrando - Sidoti

Okay and then in terms of again touching on the M&A environment, have you seen any change or multiples rising since the GLPI REIT has been out in the market.

Bob Evans

I think there’s been a lot of discussion in the M&A circles about the REIT driving up evaluations. I don’t know that we’ve really seen that yet, that there’s been transaction, maybe two that’s been done out there, but there’s a lot of talk that over time they might drive up the acquisition prices, we’ll have to see, not so sure that, that’ll turn out to be the case but there isn’t really enough data yet to be particularly worried about that. We’re not particularly worried about it at the moment.

Steve Altebrando - Sidoti

Okay and then, have you guys repurchased a share since the authorization has been in effect.

Bob Evans

Not yet, Steve.

Steve Altebrando - Sidoti

Okay, and then, just last question is, assuming Kentucky is not, legislation is not passed for gaming. Just wanted to get your, your kind of thoughts on capital deployment, obviously with the high yield note being in place, seems like you have very significant liquidity and pretty over capitalized at this point, just wanted to get your updated thoughts on capital allocation.

Bob Evans

Yes, thanks Steve, we’re obviously pushing to get gaming in both Kentucky and Illinois and that’s our primary objective, if we don’t get those obviously we’re continuing to look for opportunities to grow the company via acquisition but we also have the ability to buy back shares and pay dividend, so, we look at all different ways to return capital to our shareholders.

Operator

Thank you. I’m showing no further questions at this time, I’d like it turn it back over to Mr. Bob Evans.

Bob Evans

Okay thanks, good job, and thanks everyone for joining us, hopefully you found the time together productive, hopefully the weather improves dramatically over the next few weeks and months and we look forward to talking to you in another quarter, thanks again.

Operator

Ladies and gentlemen, thank you for participating in today’s conference, this does conclude the program and you may all disconnect, everyone have a great day.

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