Q4 2020 Boyd Gaming Corp Earnings Call
Good afternoon, and welcome to the Boyd gaming fourth quarter, 'twenty and 'twenty conference call.
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Please note. This event is being recorded I would now like to turn the conference over to Josh Hirschberg Executive Vice President and CFO. Please go ahead.
Thank you operator, good afternoon, everyone and welcome to our fourth quarter Conference call.
Joining me on the call. This afternoon is Keith Smith, our President and Chief Executive Officer.
Our comments today will include statements that are forward looking statements within the private Securities Litigation Reform Act all forward looking statements and our comments or as of today's date and we undertake no obligation to update or revise forward looking statements.
Actual results may differ materially from those projected and any forward looking statement there are certain risks and uncertainties, including those disclosed in our filings with the SEC that may impact our results.
During our call today, we'll make reference to non-GAAP financial measures for a complete reconciliation of historical non-GAAP to GAAP financial measures. Please refer to our earnings press release, and our form 8-K furnished to the SEC today and both of which are available and the investors section of our website and Boyd gaming dotcom.
We do not provide a reconciliation of forward looking non-GAAP financial measures due to our inability to project special charges and certain expenses.
Today's call is also being webcast live and Boyd gaming Dot com and will be available for replay and the Investor Relations section of our website. Shortly after the completion of this call.
So with that I would now like to turn the call over to Keith Smith Keith.
Thanks, Josh and good afternoon, everyone. Thank you for joining us.
Our fourth quarter was another display for more efficient and focused operating model, we have established across our nationwide operations as we set a new fourth quarter margin record of 33, 1%.
This is the second consecutive quarter and we've achieved record margins across our business clearly demonstrating the sustainability of this more efficient operating model.
Our fourth quarter results also demonstrate the continued strength of our core locals customers' business from our local customers remain resilient and our Las Vegas local segment and across the Midwest and south as well.
Same time, we continued to make great progress and realizing the growth potential of online gaming.
Our EBITDAR for mobile sports betting continues to grow and we expect to see further gains this year as we prepare to launch our first line casino offering.
And we will discuss our online progress and <unk>.
For detailed a few minutes, but first let's review our operating performance.
Nationwide. The majority of our properties that were opened for the entire fourth quarter delivered EBITDAR growth with nine property setting and fourth quarter EBITDAR Records and.
And the Midwest and South we again achieved record EBITDA and margin despite temporary closures of Paradise and mid November Valley Forge and early December and increased operating restrictions in many markets.
Excluding these two closed properties and EBITDAR and our other Midwest and South properties rose, 10% from last year with combined operating margins, increasing over 650 basis points.
Results were particularly strong and the south.
Our seven properties in Louisiana, and Mississippi grew EBITDAR by more than 19% and improved margins by more than 1100 basis points and a remarkable performance considering the impacts of two hurricanes and our Gulf coast properties in October.
For the Western Nevada, Las Vegas local segment also delivered exceptional margin improvement, increasing almost 1100 basis points to a record 43, 5%.
While local zebra <unk> was down slightly from last year's record levels. This was due entirely to softness at the Orleans.
And unlike the rest of our locals portfolio, New Orleans is heavily dependent on destination and group business generated by its 1900 room hotel and it's meeting and event space. As a result, this property has been more significantly impacted by declines and tourism to Las Vegas.
Excluding the Orleans, and our closed properties and our core locals portfolio achieved EBITDAR growth of nearly 13% and the fourth quarter, while margins improved nearly 3500 basis points to 46, 3%.
Performance illustrates the continued strength of our core local customers as well as the increased profitability of that business segment, even if the Orleans gaming revenues from our local players were up 14% during the quarter capped by record results over the new years holiday weekend.
As we move into the new year, we are increasingly optimistic about the prospects for our business starting in late December and continuing over the first six weeks of the new year, we have seen encouraging trends and both Las Vegas, and the Midwest and south at.
At the same time operating restrictions are being eased across the country and the deployment of vaccines is accelerating.
All of this bodes well for our future outlook. Additionally, we expect to see increasing benefits from our ongoing marketing analytical and technology initiatives.
While we are very pleased with the results from these initiatives so far our work is continuing.
We are currently partnering with aristocrat technologies to rollout a new cashless digital wallet called Boyd day.
After launches and Indiana, and Ohio, we have begun a field trial, and Nevada, and anticipate adding locations and Kansas, Louisiana, and Pennsylvania by the end of the first quarter subject to regulatory approvals.
Over the course of this year Boyd pay will become a true digital experience for cashless wallet available and smartphones used to pay for everything we offer and our properties nationwide.
Longer term this digital wallet will have functionality beyond the walls of our properties as we work to integrate the Boyd pages digital wallet into our online products.
This integration will allow us to create a seamless experience for our guests between digital gaming experiences and our traditional properties, creating the opportunity to stay engaged with our customers wherever they choose to play with us.
The integration of our traditional and digital products is one of the many reasons. We're excited about the long term growth potential for online gaming business.
While it is still early we are already generating solid returns from our online business for the full year 2020.
Online gaming contributed more than $10 million and EBITDAR to our companywide results predominantly from our share of <unk> mobile sports operational and Pennsylvania, Illinois, Indiana and Iowa.
This year, we anticipate our online business will generate over $20 million and EBITDA for the full year, including expected contributions from our soon to be launched startup I casino and Pennsylvania.
Looking beyond this year, we see further potential from online gaming with lawmakers and Louisiana, Kansas, Missouri, and Ohio, all expected to consider retail and mobile sports betting legislation and their upcoming sessions.
Online gaming is clearly a compelling growth opportunity for our industry and our company.
By partnering with a proven market leader like <unk> to pursue these opportunities we are generating immediate and growing profits from digital gaming today, while maintaining flexibility to explore the many opportunities available to us to ensure that we are well positioned for the future.
Next I am pleased to report and we're making good progress towards the expansion of our geographic presence and the northern California, as we prepare to break ground on the Wilton Rancheria resorts and the next several weeks.
Dislocation off a major highway just south of Sacramento. This resort will be the closest class III casino to downtown Sacramento, and the South Bay area positioning us for a strong start after its scheduled opening and the second half from 2022.
We are excited for the opportunity to start bringing the tribe's vision to life, allowing our partners and friends to finally realize their long awaited goal for self sufficiency.
Across the country for our company is making great progress, but we know that many are still struggling as a result of the COVID-19 pandemic and we're doing our part to help when the pandemic Force Paradise and Valley Forge the closed their doors, we did not want these temporary closures to cause financial hardship for our team members during the holiday season.
And so we extended full pay and benefits to every Illinois, and Pennsylvania team member for the duration of the closures just as we did for our Delta Downs team members. After hurricane Lora temporarily closed that property last summer.
At the same time, we continue to assist our communities through our supportive charities that are helping vulnerable populations severely impacted by the pandemic.
These COVID-19 relief initiatives continue to be a priority for our company.
We know these are difficult times for many and we remain committed as ever to supporting our communities and our team members.
So in conclusion as we begin a new year I am pleased with what our teams have been able to accomplish during 2020 and and extremely challenging environment and I am confident about what lies ahead.
We are demonstrating the sustainability of a more efficient operating model consistently delivering record margins across our business.
Our core customers remain resilient and Las Vegas and across our regional operations and we are seeing encouraging trends across the country over the first six weeks of the new year.
And we continue to make excellent progress capitalizing on the digital future of our industry building, a robust and growing mobile sports and that gaming presence across the country.
2020 was a challenging year, but also one of significant progress for our company and.
And we know that this would not have impossible without the hard work from our team members across the country.
Over the last several calls I've spoken frequently about a more efficient and focused operating model.
And as our team members, who make this model work.
Throughout the country. They have successfully adapted to a more efficient way of doing business, while continuing to deliver exceptional and memorable guest service.
Want to thank every member of the Boyd gaming team for all that they do for our company and for our customers each and every day together I am confident that we will achieve continued success in 2021 as we apply the lessons and experiences of the past year to drive continued growth.
Thank you for your time today I'll now turn the call over to Josh Josh.
Thanks, Keith for.
For obvious reasons, we are happy to close the books and move beyond 2020.
On the other hand, 2020 has created exciting opportunities for our company for this year and the future.
Our operating teams are focused on delivering higher margins utilizing a more efficient business model.
Leveraging many of the initiatives technologies and capabilities that were started pre COVID-19 and combination with our marketing philosophy focused on higher value customers will continue to lead to improved profitability and cash flow for our company.
EBITDAR and the second half of 2020 actually increased from the second half of 2019.
And despite a revenue decline of more than 20%.
The hesitancy on behalf of some of our better customers to return.
EBITDAR contribution from our downtown business.
Closed properties and operating restrictions throughout the portfolio.
Pretty remarkable and.
And combining our success of driving improved margins with the recent trends and our customer base. We are encouraged for 2021.
As Keith mentioned, we believe our ability to deliver higher margins and sustainable.
And our operating teams are committed to the continued achievement of this throughout our company.
We're also well positioned to take advantage of online sports betting and I gaming generating profits today, what is and will likely continue to be a highly promotional capital intensive and competitive landscape.
Our 5% equity ownership and <unk> also provides participation and the broader rollout for sports betting.
As more states legalize and <unk> leads the way as one of the long term winners and online sports our equity stake will only continue to grow and value for our shareholders.
And separately, we are excited to introduce our own <unk> branded I casino product this coming April.
As we move forward, we will continue to evolve our own line strategy to ensure that we are well positioned for the long term opportunity and as represented by sports betting and I gaming and our industry.
Finally, we also emerge from 2020 with a strong balance sheet, we have no debt maturities until 2023.
No outstandings under our $1 billion credit facility and a cash balance of over $500 million.
Since we began 2021, we are confident and our ability to continue to deliver improved margins and we are encouraged by recent consumer trends. Our online business will continue to be a focus for us growing and creating value for our shareholders as more market share legalized and we introduce our startup I casino.
Product.
Operator that concludes our remarks, and we're now ready to take any questions from the audience.
We will now begin the question and answer session to ask a question you May Press Star then one on your telephone keypad.
If you are using a speakerphone please pick up your handset before pressing the keys.
To withdraw your question. Please press Star then two.
At this time, we will pause momentarily to assemble our roster.
And our first question comes from Carlo Santarelli of Deutsche Bank. Please go ahead.
Hey, Keith and Josh Thanks for taking my questions.
For starters guys Keith.
You talked about.
Remarks.
As of December through the present really seeing things starting to pick up not only and the locals market about your regional markets. As you think about whats driving that outside of kind of the confidence around.
Vaccine progress or probably specifically starting to see some of the numbers.
Mrs and things kind of go.
Go down thanks Lee.
And as well as kind of stimulus and stuff Rolling out have you guys got and a sense based on who that customer and it's coming in the door. Maybe what is what is specifically driving that and how youre thinking about.
For the year, we should expect to see.
For benefits from obviously less less cases and at older customer come back or if it's more based on Nielsen debt kind of younger demographic or what is it exactly you started to see in December.
Sure. Good question and I think you've summarized summarized it well in terms of today, what is driving those customers and the door I think it is the rollout of the vaccine and.
And your confidence that there is light at the end of the tunnel and there is a certain amount of weariness with the shutdowns and the increased cases that occurred later in the fourth quarter and people wanting to get out and start starting to live life normally again clearly there is some stimulus in.
And the results that we're seeing as we move into the new year, but basically it's the same customer it's the younger demographic, it's the higher worth segments and others.
Nature of the nature of the customers coming and the door hasnt changed much over the last six months.
For more.
And our more senior population still hasnt shown up yet and so that's a great benefit for the future once they get vaccinated and are more comfortable coming out and participating and joining us and our operation and so not much change and the overall kind of nature of the customer.
And the types of the customer younger still spending at a higher level.
And just.
Greater frequency and Q4 and moving into January and February frankly than we saw in Q3.
Thank you Keith that that's helpful. And then just this one's a little bit more specifics I guess, but.
If I look at your results.
Kind of the income statement categorization of revenue and expenses.
The other revenue line was up significantly year over year.
And as well as the other expansion at both for Us.
And fleet on a sequential level.
Other profit line was kind of down I believe that line is price.
Retail other entertainment offerings at the properties.
Is there anything else that's running through there.
Well I think that I guess I guess, the 57 million of revenue is up significantly year over year, which.
You know unusual given some of the restrictions that are in place and everything else at this point. So I was just wondering if theres something in that bucket thats debt that is driving kind of the outperformance.
Sure It is and the other revenue line item and the 57 million. You mentioned included in that is online gaming revenue and Thats.
And what's driving it higher with without that that number would be down much like the other numbers and gaming and rooms, and food and beverage. So that's that's what's driving that number.
Yes, so just to add a little bit of detail Carlo is.
We also and that number basically our relationship with fan dual requires us to be obligated for the taxes associated with the revenues. So we get the <unk>.
Tax payment from fan dual accounts as revenue for US and then shows up as expense and Thats, what Youre seeing also and other.
Other is the effectively the taxes a portion of the taxes that we're paying on behalf of our relationship with <unk> and then and the other expense line item there is the.
The offset to that revenue and a form of the tax expense on online.
You took all that out it would look very similar to Q3 of prior year.
And Josh sorry.
And just are you then just recording that on and on an annual basis and getting through it up and the fourth quarter for the for the entirety of the year because the jump from <unk> to four can you just from a revenue perspective implies bundles revenues and assets and the fourth quarter, and that's where I was going with it.
Yeah, no, it's not and it's not.
Catch up it's basically a reflection of kind of.
The business is picking up and that and that time period. It career effectively a pass through carload is kind of the peak sports season, with NFL and college football and and you're right and those revenues were massive [laughter].
And with the benefit of that.
Okay got it thanks, that's super helpful. I appreciate it thank you both.
The next question comes from Steve <unk> of Stifel. Please go ahead.
Hey, guys. Good afternoon, so so Josh or Keith I don't know if we can keep going with the Carlos line of question there, but so if we're kind of thinking about that line moving forward is.
He is the fourth quarter run rate.
Pretty good run rate there or are you kind of say and given obviously all the other high profile sporting events, we should bring that number down a little bit if that makes sense.
Yeah, I think the way to think about it first of all as we all know sports betting is extremely seasonal with.
Q4, and early Q1, probably being the bulk of it.
And we focus and on frankly EBITDA. So when you think about trying to think about our online business. As we said, we generated north of $10 million and EBITDAR in 2020 and will generate north of 20 and the year were in today.
But it is lumpy and yes. It does not it is not.
And consistent or.
Even throughout the year, it's based on the sports season, Yes, I don't think you can take Q4, and otherwise and say what Keith just said you can't take Q4 and annualize it.
Okay, that's what I was getting at and it makes sense.
And then Josh normally this would be a call where you guys are are giving guidance for the year and obviously we understand.
While you're not providing guidance at this point given the current backdrop, but is there a way for us to understand how you're thinking about the business. This year without explicitly giving guidance and I guess you know what I mean is.
I would assume at this point you guys have modeled out multiple scenarios in terms of what 'twenty, one could look like and just wondering what are the some of the key items that you guys are watching and I would assume most of it is tied to the virus and vaccinations and stuff like that but any other color that would help us kind of think about what could get you to you all.
Higher and are a lower and of those potential ranges would would be helpful.
Yeah. So I don't know if I'm going to be able to help you much because you're right. We don't feel comfortable giving much guidance at this point.
And I'll ask Keith to jump in if he has any other views on this I generally think of it as you know the customers that we have been seeing and Keith described this early on and really going from Q3 to Q4 and into the first six weeks of 2021.
The cadre of customers has been largely the same and I think to the upside would be just a larger participation from that.
Older demographic that we really haven't seen.
We have a higher value demographics across all ages, but certainly among the older age group, we have less participation and we have had historically and so I think with the passage of time people feeling more comfortable it's certainly understandable that we're not seeing that today, but we expect that will.
And grow over time, and anybody's guess as to when that will happen.
Is anybody's guess, but the reality is as we expect that to improve over time.
And get the benefit of that I think.
To some of the earlier points people were making and asking questions about we have a healthy younger demographic as well and we understand that there is limited and entertainment options and some of it may be driven by.
Some of the.
And the payments that are being made from the government at this point, but that and our mine is largely the unrated segment.
And so from our perspective, it's a continued focus on that rated customer that higher value customer that higher work customer to us and just continuing to grow that business over time as they feel more and more comfortable to come out.
It's how we I think big picture think about our business and.
If you're asking about kind of how we view the drivers of the business over the next.
12 months or so it really is.
The passage of time and.
And the success of the rollout of the vaccine and how quickly.
Customers get comfortable with that and start to come out and bigger numbers the easing of restrictions throughout the U S and throughout the portfolio.
The lowering of case counts generally once again and each of the markets, where we operate because they.
Case counts themselves get widely reported and it's a psychological impact on people.
And then you know here in Nevada, the overall recovery on the strip, which will really impact our downtown business and as we talked about will help support the.
The strength of our locals business at the Orleans. So those are the drivers exactly the timing of all of those and how they roll out and how quickly people respond to them. Obviously is the big unknown, but those are the key things we think about because we think about 2021.
And the and then the last piece I think I would add to it is I think more about it is I think we feel really good about the core business that we have today and the core set of customers that we have we have a good a good business today, they can potentially get better as we're both Keith and I are alluding to as with the passage of <unk>.
And the improvement of overall conditions and confidence.
Okay. That's great color. Thanks, guys appreciate it.
Sure.
The next question comes from Barry Jonas of Truth Securities. Please go ahead.
Hey, guys.
Wanted to ask about Boyd pay can you talk a little bit about the capex requirements and how do you think about ROI here.
Yeah.
So with respect to avoid pay.
I would say that on the from the Capex standpoint, it was not a significant lift it's nothing that would you would hear us call out if we were detailing out capex and a given quarter, we're leveraging up some technology that exists with products, we've already bought from ATI.
And simply deploying them and so the ROI will be you know very strong because there is very little invested and a lot of sweat equity a lot of efforts by the two teams and by our property peoples to roll it out and it is early I mean, we're we don't have a lot of data under our belt at this point, but we think it'll be a <unk>.
In addition to kind of the overall suite of offerings, we have and are another way for us to stay engaged with our customers.
Got it and is the <unk>.
And to link the stuff with Vandals offerings at some point or with this more just be your youre start offs offerings.
Well, we haven't engaged and that conversation with our partners and <unk>, but that's certainly something that is an opportunity for us to.
And to engage in that conversation with them. We're focused on today's rollout, but we certainly have great hopes for expanding it.
So far and wide as I say.
The product has the capability to include <unk>.
Suite of products and what could include Fandel, if thats, how each party wanted to move forward.
Great and then just wanted to ask about Nevada in terms of any views on.
The state potentially moving to remote registration for sports betting and then also any thoughts on gaming at some point getting legalized and the state.
No no real specific.
And Terry and I think either of those topics. It is.
Part of the <unk>.
Online World, which is I think is important to our industry. It's part of.
Something that we embrace as a company remote registration and sports betting is important and and other states and.
And online casino Ism is important and is a growing part of the business. So I think overall, we're supportive of the online business and each state operating differently. Each state has its own dynamics early here in Nevada.
The strip operators differently from the local operators. So we all have slightly different interest and this but overall for.
The growth of online is important as a way for us to leverage up a new customer and introduce new customer and of our business. So we're supportive.
Great. Thank you so much.
Yeah.
And next question comes from Joe Greff of Jpmorgan. Please go ahead.
And good afternoon guys.
Keith it's been a decent and talking about the sustainability of some of the margin and.
<unk> initiatives you undertook last year.
I guess as we're thinking about sort of the near term and and this year.
And given I guess, the encouraging comments you made about the first six weeks of this year and sort of maybe a consumer or customer mix is not dissimilar from what you saw and the <unk> and <unk> would you say near term and the property level margins and the locals and Midwest and south or.
This quarter or more akin to the three keys and a for Kim.
And it has to be Directionally that just because you don't have a.
Property debt workflows that are open, but I'd love to hear your thoughts on that.
So when you look at the Q3 margins and you'll know from Q4 margin was clearly Q4 margins across the board while records.
And many cases.
And were not as strong as Q3 that was purely a revenue issue. So if you kind of look at look at the detail expenses actually went down and so the margins and Q4 were driven down a little bit by declines in revenues to the extent, we see a rebound and revenues in Q1 and throughout the year, we're very comfortable with our expense structure and the level of.
And the level of expenses and the control we have over them and so yes, we would expect margins to be whether it's Q3 levels are between Q4 and Q3, but clearly as revenues go up.
Expect to see them exceed Q4 levels as.
As we move throughout the year and one of the things I, probably should've said when I was talking about the first six weeks for the year. Because we are very excited about the trends through the first six weeks until this last weekend, where the bulk of the country is frozen.
And the grip of this ice storm, so that's going to take a little steam off of it but other than that we're still pretty excited about the first six weeks for the year.
Great and.
And Josh.
You May have said this and I missed it but did you talk about where you think corporate expense and Capex for 'twenty one.
Shakes out for you guys and if you can give us for acute capex that would help thanks.
Sure you didn't miss it I didn't say it.
So I'd say for.
Fourth quarter fourth quarter Capex had a few one time items and it related to Wilton and as well as kind of the.
The.
The repair work related to the hurricane that impacted Delta downs that we havent been fully reimbursed for from the insurance company. So if you kind of take those items out.
And our kind of run rate maintenance capital or capital and Q4 was about 33 $34 million.
All those other items, you add back and our total capex in Q4 would've been about $70 million. So there was quite a bit related to delta downs and that number and.
So for the full year wound up at $175 million.
I'd say for 2021, and we're gonna be especially careful carefully deploying capital just given the environment that we're in a I would say assuming that things stay good and they're really kind of no issues as we move throughout the year people can generally think of us as spend and a hunter.
Third $50 million to $170 million.
Capital.
But again all of that is really dependent on kind of how the year kind of progresses as we go through the go through month by month and I would say you know kind of this will tend to be a little bit more backend loaded and.
Kind of spread evenly.
And.
I think from a capital corporate expense perspective.
I think we are comfortable kind of talking about that for 2021.
At this point.
And let me just kind of look through something real quick here.
We I think we're kind of and this kind of 70.
$3 million to $75 million range for 2021 is a good place to be for corporate expense.
Based on what we know today.
Great and then just a follow up to that Delta dam commentary what's the.
Anticipated or the amount that you would get back under insurance receivable.
Yes, we will be getting it all back it's just a delay between when we submitted and the insurance companies.
Uh huh.
Reimburse us for it so it's just a timing issue really well and mortgage okay.
Got it and the amount and this is how much at Delta downs related to that.
It's about.
It's about.
I don't have the exact number in front of me, but it's like $15 million to $20 million and Q4.
And for just.
For Q4 amount.
Okay, and then there was about $20 million and then the rest was low.
Related to Wilton.
Got it so $15 million to $20 million and the four Q adult and you said that $20 million.
And and.
And related to Wilton, or I think I will.
Yes, I'm, sorry, I don't.
Yeah, you got it it's great.
Great. Thanks, guys just to repeat the okay. Thank you.
The next question comes from Shaun Kelley of Bank of America. Please go ahead.
Hi, good afternoon everybody.
Josh maybe just to stick with the the last line and sort of working through some of the corporate items could you just remind us all and.
As we move through 'twenty, one on sort of leverage targets and maybe cash flow prioritization as well as any.
And any related NOL balance and you guys have at this stage and just how should we think about kind of what you're targeting and what it will be because I imagine and especially with this higher margin profile the business should be throwing off a quite a substantial amount of cash.
That's right Sean.
So first the easier one and the NOL balance.
At year end is estimated at 2020 was estimated to be about $560 million or so.
Given the uncertainty and the business I don't think we're comfortable kind of giving leverage guidance per se, but of course if.
If I give you a leveraged and you'll know EBITDA generally, but what I would say is is that and kind of leading in towards.
And towards the end of 2019.
Our leverage targets work toward the low end of cash.
And a four times leverage for years to four five times and closer to the four times leverage and I would say.
If the business were to stay at these current levels will essentially be at those levels by the end of this year.
And again I'm, not trying to provide guidance or anything like that but I'm, saying that we need the business to kind of stick to stay its current course and if it does we would be on track to be at the leverage levels of.
Very near four times debt, we had set for ourselves in 2019.
So hopefully that helps people think about the business.
That's great and then moving to change gears and go back to the kind of the customer profile for a moment.
A lot of discussion and kind of wondering about when debt older demographic is going to cut back but I'm wondering if just over the last few months, Josh you had a chance to do any bigger deeper digging on this younger demographic that we've seen because I think there's also this question about when other entertainment alternatives present themselves like how sticky that customer and maybe it.
What are your insights or any thoughts from any customer work that you've got.
Yeah, Shaun this is Keith.
And it's always a difficult question to answer is how sticky is that customer going to be I think the good news is as we've had that younger customer visiting us now for six or eight months through the course of this pandemic that they've been coming out and participating and so we've had quite a while to secure their loyalty and have them get comfortable with us. So I think we are.
We feel very good and are confident about the ability to maintain a good share of their wallet, while we maintained 100% share of their wallet that we have today once other entertainment options open and probably not anything that would.
Gotta be foolish to expect we would maintain a 100%, but we feel good about maintaining that customer and having them to continue to participate with us and when you think about <unk>.
Continuing to get that new customer that younger demographic and then we get the older customer that comes out as the vaccines rollout and they become more comfortable.
The setup for 2021 could be quite nice as we move through the course of the year, assuming vaccines rollout as expected and case accounts continued to decline.
2021 could look very good Sean the other thing that I would add to that is I think you really the question around the younger demographic I think has to be looked at really with the perspective of.
We have the rated younger demographic, who has really been a segment and our business has been growing for really in 2019.
Pre COVID-19 so that trend largely continued once we reopened that's a rated customer that's a customer we know as a result of them being rated and they're really not for.
Spending are behaving any differently than they did kind of pre COVID-19 I think the and.
Known as the unrated segment and that's the ones, we're trying to sign up and build more loyalty with the Keith spoke about and those problems Theres a segment of those that are probably and are building because of the stimulus payments or because they don't have anything else to do because of limited entertainment options and those would be the slice of our younger demographic.
That might be at risk, but there's a slice of the younger demographic that we that is right that we know well and that is not performing any differently than they did pre COVID-19. So we would expect them to continue to perform at these levels and continue to be loyal customers of ours, even when stimulus goes away or other entertainment options.
<unk> themselves.
Really helpful. Thank you Beth.
Sure.
The next question comes from Chad Beynon of Macquarie. Please go ahead.
Hi afternoon, and thanks for taking my question.
Josh and Keith wanted to ask about the cow.
Downtown properties understanding that it's difficult for Hawaiian customers to get there now and most people don't want to travel, but do you have any sense of how the back half bookings.
They look or if it's just going to be a short booking window and then a similar question on the Orleans, if you have a sense of what the the future.
I guess sports or events schedule could look like given that that's a big driver of that property. Thanks.
Sure. So when you think about downtown properties and the downtown properties generally whether it be ours or just the downtown market generally is really driven by visitation in Las Vegas, and so for decades.
And the statistic is generally have the people visiting Las Vegas visit downtown and so we need the overall visitation to Las Vegas to recover and.
And I think and the fourth quarter visitation in Las Vegas was less than half of what it was in the prior year. So that's kind of the first driver for the Cal and the Fremont and main street. The second driver is the Hawaiian market unique to our properties and.
And up until probably know Hawaii has been and a pretty tight locked down.
And I don't see that changing and the near term we're not currently flying our charter.
And it will be a number of months before we start that back up so clearly I think the rebound in Hawaii business will be second half of the year and.
And the rebound and just general visitation to Las Vegas, I think is also a second half of the year the cadence of that.
And is unknown, but but I don't see much of a change and the trajectory of that business over the next.
Three to six months.
As it relates to the Orleans.
Restrictions and the Governor announced last week the easing of some restrictions. Those did include restrictions for properties like the Orleans Arena, where we can now have up to.
20% of our capacity and attendance for sporting events and so we're working on that as we sit here today.
To get approvals to be able to do that they eased meeting and event.
Restrictions and so now we can start to expand that business that will take a little while to come back because everything has been canceled but the signals are good and we're able to start rebuilding that business because of those in terms of booking windows I mean, the booking windows frankly today are anywhere from zero to a couple of days.
And historically they have been.
Two weeks to a month or better and so I don't see that booking window, expanding and the near future occupancies across the portfolio and not just here in Nevada, but generally across the business or half or so of what they were last year. So.
On the hotel side of the business is still a tough tough business.
Great. Thanks.
And then regarding traditional U S bricks and mortar M&A has your appetite changed lately just given the improvement in and your core business given that you might be and a better position than some of your regional peers and if so what's your latest thinking in terms of on balance sheet vs incorporate.
And our right to help the financing thanks.
Yeah look I think as we sit here today that we are very much focused on sustaining the positive momentum, we've built and our operations over the last six months and sustaining this new operating model.
And as Josh alluded to and he talked about Capex, we're committed to maintaining financial flexibility while we're in this period of uncertainty.
It was only a month or so ago, both our Paradise Valley Forge properties were closed and we certainly don't expect that to happen going forward.
But you know sitting here a year ago or so we didn't expect to have a number of properties closed up either and so I think we're being cautious.
And and watching the landscape, but once again, we're focused on our existing model and focused on remaining flexible with respect to our financial capabilities and we'll just see where we go from there.
Thanks, Keith I appreciate it.
Sure.
The next question comes from David Katz of Jefferies. Please go ahead.
Hi afternoon, and thanks for taking my question you've covered a lot of detail I wanted to just go back and look at the digital strategy Holistically.
Between our relationship with fan dual I gaming et cetera.
Is there anything that you can share data wise in terms of its impact benefit.
Or you know positive or negative on the land based business as you can see it so far it's a question that comes up a lot as to whether it's a substitute a benefit for generally neutral.
And I don't think we are and are positioned today to go into any specific detail with respect to that we don't see the online betting the mobile betting or the other casino and as a detriment or cannibalizing the business at all it is.
I think at worst neutral based on some of the high level information, we have but overall, we believe it's additive in terms of creating new customers and having those customers visit our properties and just having other people to speak to to try and generate new business from.
But we don't have any specific data here with us today to to speak to that.
And with respect to defend all the structure that you have.
And place obviously, it's no different from what most others have.
It appears to be sort of working for you at least economically at this stage can you see yourself evolving that strategy at some point, where you own more assets control more technology et cetera.
It is it is.
Great relationship handles did a great partner and obviously, it's been a very successful relationship as noted in our comments about producing $10 million and EBITDA last year and north of 20. This year, probably one of the few.
Company is actually making money and sports betting today.
We do have the flexibility to kind of evolve our overall online strategy.
And we will see where it goes and the future, but we certainly have the ability to determine whether we continue to.
And you know operate through fandom, and once again, they've been a great partner and and everything's wonderful or whether how it evolves and the future so really nothing else to comment on.
Got it okay. Thank you very much I appreciate it.
We have time for one more question and that will come from David Hargreaves of Stifel. Please go ahead.
Alright, Thank you very much for taking my question.
So Wilson is going to break ground shortly and I'm just wondering what.
And what the financing plans look like for that I haven't seen anything announced will this be done with and events.
I'm sorry, what.
Dave Your last part of your question broke out and we will just be done with what.
I'm wondering if you'll.
You'll be working initially with just capital advances from Boyd or whether we should be looking for financing and the market too.
Okay.
We would expect to have third party financing in place when we start to build the project.
Okay, and then you have a couple of bond issues that are going to be callable and 'twenty 'twenty, one and the market is white hot right now.
So I'm just wondering how youre thinking about the puts and takes as.
And doing those possibly possibly calling some of the bonds and doing resize. It looks like your arithmetic is very favorable.
Yeah I think.
For some other bonds, it's favorable for some it's a push but I think from our perspective.
We will be opportunistic with respect to refinancing those bonds.
They become callable I think the benefit that our capital structure has us over the next this year and next year over the next basically two years, we have the ability to refinance our balance sheet and that gives us a lot of flexibility and optionality to kind of create the optimal structure that we want and a <unk>.
Favorable current environment. So we're going to weigh all of that and kind of figure out where we want and up.
And I squeeze and one last one did you pay down any debt free and record.
Other ear.
Leverage targets factor and a rent adjustment.
Oh, Yeah, we've been we've we're generating a lot of free cash flow I don't know how much I don't have it in front of me and how much we actually paid down in Q4, but.
Well I shouldn't say, we haven't been paying down debt, we've been building cash rather.
And so.
That's basically what's happened.
And I would say that.
Secondly, we have less debt today.
And then we did at the as of June 30, and I think even as of year end 2019, when you kind of factor and all that cash but.
I don't have all of that in front of me, but basically we've been deleveraging generating free cash flow from.
Round June 1st win all of our properties reopened and we've been that debt amount of cash has been accelerating over the second half of the year. So.
And the leverage target and the low force was that was that lease adjusted or was that just conventional.
Oh, that's conventional that's a good point and it's not meant to be guidance, because we're not giving guidance, but I just said in the context of where we were kind of coming and until the end of 2019.
For the extent that the business day like it was today, we would be at a very similar point and time for very similar point of leverage sorry.
Thanks, very much for school.
Yep, Thanks day, Okay.
This concludes our question and answer session I would like to turn the conference back over to Josh Herzberg for any closing remarks.
Thank you Andrea.
And thank everyone for joining today and if you have any further questions feel free to reach out to the company.
Yeah.
The conference has now concluded. Thank you for attending today's presentation and you may now disconnect.