Twin River Worldwide Holdings, Inc (NYSE:TRWH) Q3 2019 Earnings Conference Call - Final Transcript

Nov 14, 2019 • 05:00 pm ET

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Twin River Worldwide Holdings, Inc (NYSE:TRWH) Q3 2019 Earnings Conference Call - Final Transcript

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Presentation
Executive
Stephen H. Capp

perspective, I think we've made a lot of progress. I don't think these -- the largest shareholder in the company is a seller, so there's real progress and quite frankly we'll continue to do what we can, as necessary on a go-forward basis.

So look the summary of George's comments and mine are that we think the outlook for the company is robust. I do believe that as we get through Q3 and Q4 of this year and we continue what we believe will be a ramping at -- a recaptured market share at Lincoln particularly in table games. And as the Northeast market stabilizes, then we will continue to see lift there and a recovery of market share. In conjunction with that as we annualize Dover in our results and as Tiverton annualizes this quarter, we will fold in Black Hawk and then will fold in Kansas City and Vicksburg as the plan subject to regulatory approval. I anticipate that after we get through 2019, we will continue to back on the schedule of ramping by growing EBITDA quarter-to-quarter and that will be on a robust cash flow growth profile at that point. So essentially what we're doing is, look, given some of the competition that we've had at Lincoln set us back a quarter or two in terms of the growth trajectory and cash flow we had anticipated. But all this is kind of re-calendarization of the growth in cash flows that we expect to see starting early next year with Black Hawk and beyond and continued improvements at Dover. So the valuation program here is very much still in line. We are excited about the future and see growing cash flows into next year.

One final comment, I've said this before. I'm not sure it's entirely clear. So I'm going to try it again. In Delaware and Rhode Island, a lottery system of gaming requires that the state be the operator -- tech be through the operator of VLT machines. And as such, we don't own the machines and we don't purchase the machines and we don't actually maintain the machines. What that means is that we don't actually spend capex dollars for the machines in Rhode Island or Delaware. There are about 7,300 machines between the two states. We calculate that the avoided capital expenditure from that gaming structure in these two lottery states for us is worth approximately $28 million if based on a couple of assumptions, right. $25,000 purchase price of a new machine, seven year replacement cycle, you can play with those assumptions if you want to. But my point is, most of us use adjusted EBITDA in this industry as a proxy for free cash flow. That's great, we're doing it for years. It's easy, it's effective, it's efficient, but if you want apples-to-apples with our adjusted EBITDA to the rest of the industry, I think you have to add back $28 million per year because that's the translated difference from our