Pinnacle Entertainment Management Discusses Q1 2014 Results - Earnings Call Transcript

| About: Pinnacle Entertainment, (PNK)

Pinnacle Entertainment (NYSE:PNK)

Q1 2014 Earnings Call

April 30, 2014 8:00 am ET

Executives

Vincent J. Zahn - Vice President of Finance & Investor Relations

Anthony M. Sanfilippo - Chief Executive Officer and Director

Virginia E. Shanks - Chief Administrative Officer and Executive Vice President

Carlos A. Ruisanchez - President and Chief Financial Officer

Analysts

Joseph Greff - JP Morgan Chase & Co, Research Division

Demetri Typadis - Barclays Capital, Research Division

Shaun C. Kelley - BofA Merrill Lynch, Research Division

Carlo Santarelli - Deutsche Bank AG, Research Division

Chad Beynon - Macquarie Research

Operator

Good day. My name is Bettina, and I will be your conference operator today. At this time, I would like to welcome everyone to the First Quarter 2014 Earnings Call. [Operator Instructions] Mr. Zahn, you may begin your conference.

Vincent J. Zahn

Good morning, everyone. My name is Vincent Zahn, Vice President of Finance and Investor Relations for Pinnacle Entertainment. Thank you for joining Pinnacle Entertainment's 2014 First Quarter Earnings Conference Call.

Earlier this morning, we released our first quarter financial results. If you don't have a copy of the announcement and would like one sent to you, please contact us by e-mailing investors@pnkmail.com.

On the call with us today are Pinnacle Entertainment's Chief Executive Officer, Anthony Sanfilippo; our Chief Administrative Officer, Ginny Shanks; and our President and Chief Financial Officer, Carlos Ruisanchez. We'll begin the call with prepared remarks from Anthony, Ginny and Carlos, and then we'll open up the call for your questions.

Before we get to that, we'd like to remind you that during the course of this conference call, management may state beliefs and make projections or other forward-looking statements regarding future events and future financial performance of the company. We wish to caution you that such statements are just projections and expectations, and that actual events or results may differ materially. We refer you to the Safe Harbor statement that's included in the press release and to our annual report on Form 10-K, quarterly reports on Form 10-Q and to our press releases and documents filed with the SEC.

In addition, today's call may include non-GAAP financial measures within the meaning of Regulation G. A reconciliation of all such non-GAAP financial measures to the most directly comparable financial measure calculated and presented in accordance with GAAP can be found in today's press release.

It's my pleasure to turn the call over to Pinnacle's Chief Executive Officer, Anthony Sanfilippo.

Anthony M. Sanfilippo

Thank you, Vincent, and good morning, everyone. Thank you for joining us for our first quarter earnings discussion. You're going to hear from Ginny Shanks, who's going to spend some time talking about our marketing and integration efforts. And you'll also here from Carlos, who will discuss a number of things, including our operational performance and our development activity.

Two things I'd like to touch on. One is that we are proud of the quarter. We believe that we had a very solid quarter, and that we continue to feel terrific about how we are integrating the businesses that we have, those that were legacy Pinnacle businesses and those are were legacy Ameristar businesses. And I am most proud, and I have this in our earnings release, of how well our collective teams are working together. We've made a statement early on that we were going to take best practices, that we were going to make sure that we selected the individuals that were right to have leadership roles. If you were to consider this as a family, which we do, it is truly a blended family. And the family is very functional, and that has helped us achieve the results that we are posting today. You'll hear more, as I said, from both Ginny and Carlos, and then we're going to be happy to take questions that you may have at the end of our comments.

The second thing is we are actually conducting this call from Belterra Resort. It's a beautiful facility that we have in Florence, Indiana. And we are up here because we are very much focused as a team on the opening of Belterra Park. Belterra Resort is one of the early properties that we have in our portfolio. And if you haven't seen it in a while, I think you would be very impressed with the changes that we have made here. We'd continue to improve this facility, and we have a focus of having this as a destination resort. We think there's a great opportunity for us to really treat this as a destination resort, and we are proud of the results that we've had here. As all of you know, this is a very competitive part of the country, and we have a lot to offer, with over 600 guestrooms and golf courses, spa, terrific restaurants over here. And we're a bit camped out here as we get ready to open up tomorrow Belterra Park. It is a pretty short drive. It is within 60 minutes with light traffic and just a few minutes longer if you have any sort of traffic. And we are very proud of Belterra Park. It's ready to go. We can actually -- Carlos opened it today, if we had wanted to, but we're giving today a day of sort of last-minute preparations for our team as we get ready to open it tomorrow afternoon, late evening. We conducted pep rallies last night. We have a very enthusiastic team at Belterra Park, who -- they're ready to go, ready to take great care of our guests. We have a wonderful location. And truly, we feel like we have achieved our goal of having an integrated, racing, gaming, food and beverage facility. We are getting a lot of positive comments from those who have seen it, who are outside of our company, and we think it's going to do very, very well.

I am going to now turn it over to Ginny, who is going to share some information with you, and then she'll turn it over to Carlos. Ginny?

Virginia E. Shanks

Thank you, Anthony, and good morning. I'm going to spend the next few minutes talking about key marketing and technology initiatives implemented during the quarter, trends we're seeing in the business, and then provide some additional information around specific property performance.

We had 2 primary goals going into the first quarter: first was to put the infrastructure in place to grow revenue synergies through our combined loyalty program and automated hotel yielding practices; and the second was to maintain our marketing expense discipline, given the challenging economic environment and an unprecedented bad weather in most of our markets.

On April 1, we launched and enhanced mychoice program at all of our properties. This program is built based on what our guests told us was important to them. With this feedback, we're able to take the best of Ameristar's Star Awards program, which guests told us was the Star Club Lounge and point multipliers. And then we took the best of Pinnacle's mychoice program, which were the aspirational benefits, such as the Mercedes, Pinnacle stock and trips to Las Vegas and the Caribbean. It combined all of the 2 boards [ph] into 1 even better loyalty program.

Initial response to the new mychoice program has been strong thus far. We had over 80% response to our Owner's Club events, with Ameristar guests showing an even greater response at 86%. Ameristar-branded properties are showing strong play improvement in April as compared to levels seen in March, before the mychoice program was launched. Our L'Auberge property in Lake Charles, where almost 40% of our Owner's Club members play, experienced the fifth best coin-in day in the property's history on April 12. That was the day of our Owner's Club event.

We are also pleased to offer our guests even more choices with the new MGM partnership in Las Vegas. Guests now have the choice to stay at Bellagio, Aria, MGM, Mandalay and the Mirage. Our partnerships with the Atlantis Paradise Island and Royal Caribbean continue, although it's important to note that these are new trip benefits to Ameristar guests.

Tied to the loyalty program is the ability for our guests to use their cards at all Pinnacle properties. Belterra Park will open tomorrow, with universal connectivity to Belterra Resort. Our 2 properties in St. Louis will be connected by the end of June, and we are on target to have all of our properties on a universal card system in 2015.

Now let me move into trends we saw during the first quarter. Similar to what we experienced throughout all of 2013, trip frequency continues to decline, with people visiting less often, while spend per trip actually increased 6% year-over-year. Trip declines were particularly pronounced at those properties where weather was a significant factor in January and February. Also impacting year-over-year comparisons, markets with new competition continued to see double-digit declines in trips and feel. We continue to stay focused on driving profitable revenue at every property but stay very true to this discipline at our properties in Bossier and Southern Indiana, given the competitive dynamics of both those markets.

Let me now move on to marketing expense. Reinvestment declined both in terms of dollars and as a percentage of gaming revenue, down 120 basis points year-over-year. These reductions were primarily driven by 3 things. First, an expanding database of L'Auberge Baton Rouge has allowed us to market more efficiently to our guests. Marketing reinvestment as a percentage of GGR declined 380 basis points versus quarter 1 2013. This marketing efficiency helped drive a 72% growth in EBITDA year-over-year. Also we have rightsized our media spend, given the maturity of most of the markets where we operate, fragmentation that exists in today's media world, and we moved out of the launch mode in Baton Rouge. Lastly, we evaluate every marketing dollar very carefully and have made reductions or eliminations to those programs where we saw low profitability margins.

I will now wrap up with some comments around notable property performance during the quarter. Start first with our Ameristar property in Black Hawk, Colorado. We made targeted adjustments to reinvestment that led to a 28% decline in marketing spend and an 11% EBITDA improvement year-over-year. We also implemented the hotel yield system earlier this month, allowing us to optimize our room base in advance of the busy summer season. In St. Louis, our River City property generated all-time high revenues in March, showing the value of the new hotel and the return of favorable weather. Ameristar St. Charles had the benefit of an entire quarter with the new hotel yield system. Early results are positive, with a 5% increase in RevPAR and healthy increases in hotel cash revenue. Combined, both properties increased market share by over 200 basis points during the quarter. Finishing up with our 2 Ameristar properties in East Chicago and Vicksburg. At East Chicago, this property experienced its highest table game share since 2011 with the increased programming. Our slot share also increased, driving the highest market share since quarter 3 2011. In Vicksburg, we hosted our well-known poker tournament brand, heartland Poker Tour. We did that last month, and it contributed to our highest table game share ever, at 65%.

In closing, we accomplished our 2 primary goals for the quarter. First, we put the infrastructure in place to generate revenue synergies with the launch of an enhanced mychoice program and the continued deployment of revenue-focused tools, such as the hotel yield system and national casino marketing. Secondly, we remain very focused on driving profitable revenue, with the expense discipline around our reinvestment. All in all, it was a very productive quarter.

I'll now turn the call over to Carlos.

Carlos A. Ruisanchez

Thank you, Ginny, and good morning to all on the call. You'll be hearing a similar message this morning, and it's important to note that we continue to make solid progress toward integration, and the first quarter was pivotable to that end.

While the overall operating environment has been challenging for our industry, we are focused on our long-term prospects and on implementing sustainable business improvements to drive shareholder value. We continue to be thoughtful about the use of our resources and keeping in front of us the things we believe we can control.

Today, I will talk about our operations, our integration progress, our development projects, our early thoughts on New York and the developments in progress.

Operationally, we are pleased with our execution across the company in the quarter. Our EBITDA margins increased by 130 basis points on a same-store basis year-over-year despite challenges we faced with a severe winter, particularly in the Midwest. On the days not affected by weather, we saw good results, particularly in response to some of the changes we have implemented across the portfolio.

Our Midwest segment's performed well in the face of a challenging environment. Our margins in the Midwest segment expanded despite a 7% year-over-year decrease in net revenues. We estimate the impact of winter weather on 2014 first quarter EBITDA was approximately $5 million. This is based on the incremental number of days in the first quarter that we -- that were impacted by weather on a year-over-year basis. Most of this impact was felt in the Midwest.

Generally, our South segment properties are seeing better demand trends than our properties in the Midwest, as we have noted for some time now. Our South segment enjoyed a solid performance from L'Auberge Lake Charles, and we achieved another record quarter in Baton Rouge in terms of cash flow in the first quarter.

As for demand trends so far in April, there has been some broad softness, however, we are encouraged by the early response from the rollout of our loyalty program on a company-wide basis. Though it will take some time to fully assess the impact, we believe it will be a key differentiator for our properties across the portfolio.

Among the topic of mychoice, we do expect to take a nonrecurring charge in the second quarter associated with the offering of the loyalty program tier benefits at the Ameristar properties. The charge is similar to the one we took in 2011 in connection with the relaunch of the program at the then Pinnacle properties. This charge will account for the total annual costs of the tier-related benefits given to the loyalty program members at the Ameristar properties for 2014 and for a portion of 2015's benefits. The entire cost of these benefits has been charged upfront in our second quarter this year and will have no impact on the actual cash expenditures related to the program and how the program is administered. We expect this nonrecurring accounting charge to be approximately $5 million in aggregate in the second quarter. We will specifically call out that charge when we report our second quarter earnings.

Turning to our integration efforts. As we noted in the release, we have implemented $53 million of annualized synergies through the end of the first quarter. This represents primarily cost-related synergies, and it does include about $11 million of cost avoidance. The cost avoidance is primarily driven by our healthcare benefit costs. We are pleased to have exceeded our original synergy target of $40 million so early in the integration process. We expect to generate meaningful synergies beyond that, of what has already been implemented. These can be categorized in the areas of marketing, revenue enhancements and scale benefits into the continued implementation of best practices across the enterprise. Overall, the integration plan has been in place, and the implementation is gaining momentum. We will further provide updates on synergies on our second quarter earnings call.

On our 2 development projects. Belterra Park is ready for prime time. The property looks great, and we expect it to become a meaningful contributor to our portfolio this year. The construction budget remains at $209 million, as we have noted in the past, and the property should have a great opening this weekend with the Kentucky Derby opening. Our New Orleans Hotel construction continues to make progress, and that project remains on budget and expected to open this summer.

Turning to New York. As the press has noted, we estimated a deposit to be considered for a license in the state. It has always been the case, we valued opportunities constantly. We believe that New York could offer a compelling opportunity to create long-term value that is consistent with our long-term plans. While it is too early to tell, if this is something that will meet the right criteria for us to pursue a project in the Empire State, we are studying the possibility. Clearly, the project needs to be very compelling in order for us to pursue it. If we do pursue it beyond this initial stage, we will provide additional detail on our plans.

Turning to our balance sheet. We continue to delever the company with cash flow from operations and asset sales. We closed the sale of Lumiere on April 1 and paid down another $260 million of term loans in the -- following the end of the quarter. We have completely paid off our term loan B1, and our term loan B2 is now under $1 billion. Since the close of the transaction, we have paid down more than $660 million in term loans. With the Belterra Park about to open, we will continue to pay down debt, as we produce meaningful cash flow and preserve the financial flexibility we enjoyed to support our business.

Overall, we are pleased with the progress we continue to make across our company. We have a great team and a solid path to continue to make the company a learning organization. We have a bright future ahead.

With that, I'll turn the call back to Anthony.

Anthony M. Sanfilippo

Carlos and Ginny, thank you. Very good reports. As they both noted, we had a very solid quarter. Before we ask you for the questions that you may have, I want to address some recent public feedback that we received from a shareholder relating to the possibility of us forming a REIT with our real estate assets. We greatly appreciate feedback from our shareholders, and we take it very seriously.

As many of our long-term shareholders know, and we have discussed in the past, we're constantly evaluating and pursuing opportunities to enhance shareholder value. This is no different, and the idea that's been presented is not a new idea. Currently, we're focused on the integration of the Ameristar transaction and delevering our balance sheet. We've made tremendous progress to both of these goals, as we've just discussed with you. We have a lot more work to get done. We are focused this whole year on the successful integration of all of our businesses. We're going to continue to evaluate ways to enhance shareholder value. We'll continue to talk with all shareholders and receive input. We'll evaluate whether or not a REIT today or long term in the future makes sense, but rest assured, our focus always is we are going to do what's in the best interest of the shareholders of Pinnacle Entertainment.

With that, Bettina, we are going to ask for those who may have any questions.

Question-and-Answer Session

Operator

[Operator Instructions] And your first question comes from the line of Joe Greff with JPMorgan.

Joseph Greff - JP Morgan Chase & Co, Research Division

You spent a good amount of time talking about integration and talking about the realized annualized run rate synergies. We noticed that the corporate expense line was a lot lower than what we and likely others have forecasted. Carlos, is that a good run rate to think about going forward? Or actually, does that come down as you kind of annualized some of the stuff that you have made partially achieved in the 1Q?

Carlos A. Ruisanchez

As I mentioned in the past, we thought that we would get the trent [ph] to around $20 million. Obviously, we got there in the first quarter. I think that that's a good run rate to assume for the rest of the year.

Anthony M. Sanfilippo

Joe, let me add on that too. We're a company that's doubled in size in every metric that we have. And we've -- we talk a lot about becoming, from a cultural standpoint, one company. We talk a lot about integrating the businesses, and that's mostly about people and what people do. And that is not a, hey, here's the plan, and we've got the plan, and we follow the plan. It's here's what we believe is the right way for us to bring the companies together, and then we adjust as it makes sense. So we think that the corporate expense -- we're always very much aware of the corporate expense. We're always very much aware of everything we do at a shared service level is bringing value to our organization. And it's going to take us through this year to get our feet firmly planted on what we believe the right structure, what we believe the right practices are for Pinnacle Entertainment going forward.

Joseph Greff - JP Morgan Chase & Co, Research Division

Okay, then -- and then one question on Belterra Park. Outside of gaming taxes, how do you think about the operating expense structure there, particularly given the proximity to the other Belterra property and maybe the prospects for shared expenses or shared resources? How do you think about that and what can you share with us on that front?

Anthony M. Sanfilippo

We do have some areas where we do share talent. And that is, on the marketing side, we share talent. Clearly, strategic sourcing, that is enterprise-wide, so that is not specific to any one location. We -- this is a facility, and we have a little bit more than 800 team members that are a part of this facility. And we, company-wide, not just Belterra Park, Belterra Resort, look at how can we be most efficient from a standpoint of how we're managing our businesses. So -- I mean, we'll see. We'll see, when we open up tomorrow, the kind of volume that we're going to have. We think that we have designed -- I couldn't be more pleased that we took the facility to the ground and then rebuilt it because we've been able to rebuild it and integrate it in a way that will allow for just facility efficiencies. And that's sort of the best way I can answer it for you is that we -- right now, if you were at Belterra Park, you would see a lot of team members from Pinnacle Entertainment. When we open up a property, we have a number of people there from all disciplines that's assisting in opening the property but also making sure that we're putting in the most efficient and practical methods to operate our facility.

Operator

Your next question comes from the line of Felicia Hendrix with Barclays.

Demetri Typadis - Barclays Capital, Research Division

This is actually Demetri for Felicia. I was just curious. You talked a little bit about some of the softness in visitation you're seeing -- or you saw in April. I was just wondering if you could give a little more color around what you think could be driving that.

Carlos A. Ruisanchez

On regards to April, it is hard to tally it specifically. Obviously, we're at the end of the month today. It's early. It is early, given some of the changes that we've made on the loyalty program, which were launched, really, through the first, call it, 10 days of the month. It broadly -- there -- it's been noted out there, there's been some softness since beginning of the month, but we are encouraged by what we've seen so far in the response to the relaunch of mychoice, particularly on the Ameristar side.

Anthony M. Sanfilippo

Yes, I'll add to that, too, that we don't focus on market share. As -- and I've said that before, we focused, and Ginny talked about it, on profitable revenue. And a lot of times, people get excited when they see the state market share reports come out, and they draw conclusions to the state market share report. I think you are seeing the earnings that we're posting today is what our investors are focused on is our ability to drive EBITDA or cash flow. That's what our investors are focused on, and that's what we're focused on. And so we do not get excited about what market share numbers are. We are focused on profitable revenue and taking care of our very best guests and having facilities that provide memorable experiences. So we just don't get excited about what specifically is happening in the market. We get excited about our ability to drive profitable revenue and focus on, mainly through service and through our loyalty program, the very best guests that are in each one of these markets.

Demetri Typadis - Barclays Capital, Research Division

That's helpful. And it actually segues into my next question. I'm excited to come see Belterra this week. Have you seen any promotional activity, though, in the Cincinnati market kind of pick up in anticipation or a little bit ahead of your opening? Do you expect there to be a competitive reaction, if you haven't seen one yet?

Anthony M. Sanfilippo

We have not seen any indication that there's increased promotional activity. And the second part of that question is we can't answer that. I don't know what others are thinking, but we have not -- there's not been any indication of additional promotional activity.

Operator

The next question comes from the line of Shaun Kelley with Bank of America.

Shaun C. Kelley - BofA Merrill Lynch, Research Division

So, Anthony, maybe just to follow up on that last question on promotional activity, I think we do know that one of the larger regional competitors has kind of discussed that they did get a little bit more promotional in the first quarter. But this is more broadly around the United States. Have you seen -- I think you were referring specifically to Ohio. So maybe just to broaden the question now a little bit, have you seen any kind of change in the promotional environment, more broadly, particularly, at maybe some of the legacy Ameristar properties than you have seen in the past or has that been pretty steady?

Virginia E. Shanks

No, it's -- this is Ginny. It's been pretty steady in terms of our promotional spend. We actually, as I mentioned in my remarks, made some adjustments on our reinvestment, largely in the area of media, as well as we looked at, as I said, low margin programs that we had. We have seen in some of our markets, with not specifically in the Cincinnati market but in some of our markets, increased promotional activity in the first quarter, and that kind of ebbs and flows, and we stay at the course with what we think is the best thing to do for our business and our guests. So as Anthony said, we're not chasing market share, we're going after profitable revenue. And given what we're able to generate in the first quarter, we believe that, that's a prudent course and a course that we're staying with in the second quarter.

Shaun C. Kelley - BofA Merrill Lynch, Research Division

And that kind of hits on my second question, which is given that some of the size of the marketing tweaks, and I think you gave us an example on Black Hawk that I thought was helpful, do you think that this level -- these levels of changes are sustainable? I guess, in terms of -- do think there may have been any near-term reductions or you actually have to go back and add in marketing costs down the road? Or are you guys pretty comfortable that you've researched or tested some of these processes at other properties and kind of are comfortable with the new or the current run rate of investment level?

Anthony M. Sanfilippo

Yes, Shaun, I'll take that, and I'll just give you our philosophy. We are very much focused on the experience that our guests have at the properties that we have. We have invested all the portfolio of -- our whole portfolio has been kept up from a maintenance standpoint. We -- if you go to any of our Pinnacle properties, and you're going to see well-kept properties, you're going to see a focus on guest service, you're going to see that we do things specifically for our most profitable guests. We think that, that is -- that's the right course for us to take. And there's a lot of guests that are out there, especially the profitable ones, who have so much time that they can spend with this activity, meaning it's got colors around it, they want great experiences. That's what we're focused on. We're focused on those guests, not -- we're not focused on the guests that you might mass-market to. That's just not who we're focused on. And we believe that when it's all said and done, having clean and well-kept facilities and executing terrific gaming and food and beverage and hotel and -- across the board, that is what's going to win the day, and that's what we're focused on. We do marketing extremely well, and Ginny explains it extremely well, but we are not in the mass marketing promotional business.

Shaun C. Kelley - BofA Merrill Lynch, Research Division

I think that's really helpful. My last question will just be on New York, just in terms of kind of strategy and the newbuild overall. Have you guys given a specific region or subregion in New York that you guys are targeting for that opportunity? Because I know there's some pretty large numbers being thrown around for some of the ones that are closest to New York City. If you could just give us a little bit of kind of sense around the guidepost under which kind of ROI you might be targeting out of that market and what you think is right, that would be kind of helpful.

Anthony M. Sanfilippo

Yes, Shaun, we don't have a specific region that we're focused on. We -- as you know, to continue in the process, you have to put down a $1 million fee that is mostly, if not fully, refundable up to a certain point in time. And so we believe that the risk with putting that fee in was really minimal. And so that's why we are one of the 22 companies that have put in the fee for the 4 licenses that are there. We think it's important, Carlos said in his comments, for us to continue to keep our options open, and we're doing that with New York. We have said in the past that we think, at a minimum, cash-on-cash return, we ought to see at least a 15% return on projects that we invest in. We have been a dog with a bone about delevering. And we understand the importance of continuing to take the cash that we have and both make sure we appropriately maintain our existing properties and continue to pay down our debt, we've continued to do that. Carlos talked about, it has to be compelling for us to be able to move forward with the process because it's not only the -- trying to get a license, it's just the amount of work that would go into putting in an application by June 30 and then competing for it. So we would have to have a very compelling project for us internally to say that we are going to go down that path and compete for a license. Again, I'll continue to say the importance of us having a successful integration of our businesses and really setting a new foundation for a bigger company, along with delevering our company or continuing to pay down debt, are our 2 top priorities. We're looking at New York because we want to keep that option open. And if we decide to move forward with an application by June 30, we'll explain to you all on our second quarter earnings call the reasons behind that. But we don't look -- lose sight of what we think is most important, and that is for us to continue to take our free cash flow and pay down debt for our company.

Operator

The next question comes from the line of Carlo Santarelli with Deutsche Bank.

Carlo Santarelli - Deutsche Bank AG, Research Division

Really quickly on the marketing expense. Ginny, I know you spent a lot of time in your prepared remarks kind of detailing where you've been able to trim expenses and the focus on kind of profitable guests. But when we think about that on a go-forward basis, how much do you think is left? And that might be hard to quantify, but when you think about the level of reinvestment in your customers, what you think is appropriate and where you are today, kind of where would you think we are along that curve?

Virginia E. Shanks

I would say we're early in the curve. As we mentioned, we just launched the mychoice program in April. We had just begun to really look at our advertising spend or branding across the company. We continue to evaluate the different programs that we implement at all of our properties, both legacy Pinnacle and understanding the Ameristar businesses better. So I won't predict it as a percentage, but I would tell you, I think we're early in the process of understanding exactly where that sweet spot of marketing reinvestment should be. And the loyalty program plays a big factor in that in terms of the traction that it generates, particularly at the Ameristar properties, where it is a very new program set [ph] with the guests.

Carlo Santarelli - Deutsche Bank AG, Research Division

That's helpful. And then if I could just go back to the comments you guys made -- Carlos made on April, specifically, the broad softness, Carlos, is that -- is anything in there contemplating kind of the Easter shift and maybe the tougher comparison? Or if you look kind of x the Easter period, are you seeing more that same broad-based softness?

Carlos A. Ruisanchez

Easter is generally a softer week, by and large, and that shift certainly would have some impact on that. But again, it's still early, especially given there were a lot of changes that were made in -- particularly, the Ameristar portfolio of properties, on the marketing side and, again, encouraged by what we've seen and certainly the feedback we've got so far but not enough to get to conclusions, as we're not out of the month yet.

Carlo Santarelli - Deutsche Bank AG, Research Division

Understood. I guess, the reason for my question is, obviously, you guys are the second large regional company who have reported, and both kind of highlighted that April hasn't been so great. I was just trying to understand if there's been any kind of change that's a little bit more than just a calendar, and it sounds like, from your response, the answer is yes?

Carlos A. Ruisanchez

Again, it's still early, but early in the month, it seems like it was a bit more pronounced. And as the month went on, that improved. But keep in mind, we made a lot of changes, so we'll see how it goes.

Anthony M. Sanfilippo

I wouldn't -- I think what we're telling you is, look, if we saw some softness, if it was around the holiday, it -- and there were a lot of spring breaks that occurred for those couple of weeks, too, so we sure aren't predicting that we think this quarter is soft. We think the rest of the year is going to be soft, we're not saying that. We're saying like you would typically expect around an Easter holiday and corresponding spring breaks that we saw a little bit of softness, and what we're saying is we've been more encouraged over the last week. We have seen our business picked up. We have no indicators from our guests that say that they're going to change how they spend their leisure time. And in fact, because of weather, it was just so tough in so many of our markets. The very first couple of months, we were -- I think we're seeing a lot of cabin fever, people wanting to get out and enjoy some leisure time and enjoy the -- sort of the thaw that's occurring. So we're optimistic. We're very bullish on our loyalty program. We think it is -- we think it's the best in the business, that it is a very compelling loyalty program and just keeps getting better.

Operator

And your final question comes from the line of Chad Beynon with Macquarie.

Chad Beynon - Macquarie Research

Anthony, you talked about exploring any opportunities out there in the market where the return on that investment would be sufficient for your shareholders. I was wondering if you could opine on a regional gaming opportunity that has come on recently in a market, such as Japan, I know it's early, but others -- your competitors are at least kicking the tires there. I was wondering if you could talk about the opportunity, if the government looks for assistance from U.S. gaming operators.

Anthony M. Sanfilippo

Japan has not been on our radar. We, again, have been focused on integrating the businesses that we have, and Japan has not been on our radar. As you know, we've had some experience and still have ownership and the right to operate a second facility in Vietnam. That has been an educational experience for myself and for Carlos and John Godfrey and others from the standpoint of the amount of time it takes to focus on something that is halfway around the world and the infrastructure you need to do that. And I do believe we're a company that has the ability to operate beyond the United States. I don't think it's in our best interest in the immediate term to focus outside of the United States. I do think, though, that we have the talent in-house to do that over time, but it's not a good use of our time today to do it. We've talked a lot about -- we've got to minimize our distractions because we think we have a wonderful opportunity in front of us to continue to provide value to our shareholders, and we want to stay focused on that and limit the amount of distraction there might be from looking at an opportunity, such as Japan.

[Technical Difficulty]

Anthony M. Sanfilippo

Chad, are you still there?

Operator

I think his line may have disconnected.

Anthony M. Sanfilippo

I sure hope he didn't like my -- wasn't because of my answer. That was the last question. And, Chad, sorry we lost you. I want to thank everybody. I know we have team members that listened to this. I'm going to start with you. Thank you for the terrific job that you continue to do every day. We very much appreciate it. Good luck to our newest team members at Belterra Park. I know, for the rest of our team, when you see that property, you're going to be as proud as the rest of us are at what's happened there and the new team members that are -- have joined us, so we are very excited about that. For all other shareholders, thank you for continuing to believe in Pinnacle Entertainment, and we look forward to the next time that we're together. Thank you, Bettina.

Operator

You're welcome. That concludes today's conference call. You may now all disconnect.

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