Q2 2021 Boyd Gaming Corp Earnings Call
Pardon me, ladies and gentlemen, this should be conference operator, the conference for Boyd gaming will begin in just a moment. Thank you for standing by.
[music].
Good day, and welcome to Boyd gaming second quarter 2021 earnings conference call. All participants will be in a listen only mode should you need assistance. Please signal a conference specialist by pressing Star then zero after.
After todays presentation, there will be an opportunity to ask questions to ask a question Press Star then 1.
1 of your Touchtone phone to withdraw your question Press Star then 2 please note. This event is being recorded I would now like to turn the conference over to Josh Hirschberg. Please go ahead.
Thank you Tom Good afternoon, everyone and welcome to our second 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 profit forward looking statements within the private Securities Litigation Reform Act.
All forward looking statements in our comments are as of today's date and we undertake no obligation to update or revise the forward looking statements actual.
Results may differ materially from those projected in 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.
The natural measures. Please refer to our earnings press release, and our form 8-K furnished to the SEC today and both of which are available in the investors section of our website at Boyd gaming Dot com.
We do not provide a reconciliation of forward looking non-GAAP financial measures due to our inability to project special charges and certain expenses.
Expenses today's call is also being webcast live at Boyd gaming Dot com and will be available for replay in the Investor Relations section of our website. Shortly after the completion of this call.
So with that I'd now like to turn the call over to Keith Smith Keith.
Thanks, Josh and good afternoon, everyone. The second quarter was another.
Another outstanding performance by our company and our entire team our.
Our transformed operating model and enhanced capabilities delivered record results as our business continues to strengthen on a company wide basis, we achieved record EBITDAR of more than $385 million of 66% from the second quarter of 2019.
And record EBITDAR margins of just over 43% and for the first time since the pandemic began gaming revenue surpassed 2019 levels.
In our Las Vegas local segment, EBITDA rose, 87% over 2019 levels as margins approached 57%.
And in our core locals business, which excludes our closed properties and the tourism dependent Orleans, we grew EBITDAR by nearly 107% over 2019 levels with an operating margin of more than 58%.
Downtown Las Vegas, our 2 open properties, the California, and the Fremont each.
<unk> for all time record for EBITDAR and operating margins during the quarter combined the grew EBITDAR by 24% over 2019 with margins exceeding 45%.
And in the Midwest and South segment, EBITDAR top 2019 levels by nearly 58% with margins of 42%.
All of <unk> 26 of our open properties achieved EBITDAR growth over the second quarter of 2019 with 25 properties growing EBITDAR at double digit rates.
While our second quarter results were strengthened by the impact of government stimulus improving vaccination rates and the easing of Covid restrictions.
The strong operating performance from the first half of the year has continued into July.
Today, our cost structure is more streamlined our marketing investments more targeted and we are successfully driving play for from our most valuable customers.
And while there is a bit more uncertainty today surrounding the direction of the pandemic.
We are confident in our ability to continue performing well.
Above our pre COVID-19 levels as we continue to successfully execute our operating philosophy.
This operating philosophy has continued to deliver significant results since we reopened last year, but the real planning and implementation of many of these initiatives began.
Before the pandemic.
We have been investing in new technology capabilities and the analytics for several years now all aimed at gaining a better understanding of our customer base building stronger customer relationships with our best guests and creating a more efficient operation.
Prior to Covid, we were seeing encouraging results from these investments.
With solid growth in EBITDAR and margins across our operations.
These positive results continued to accelerate as we reopened our business last year.
Since reopening we have delivered consistent sequential growth in play in visitation from our core customers as we realize enhanced operating efficiencies throughout our business.
Moving success of this business model is why we are optimistic we can maintain much of our region margin improvements in the long term.
Beyond the ongoing growth we are delivering from our core operations, we continue to pursue initiatives to further expand and enhance our business.
1 area of focus is the continued.
Implementation of new technology to improve the customer experience Boyd pay our cashless digital wallet is an example of that technology.
We are making good progress rolling out Boyd pay which is now active at 5 properties and should be live at 21 properties by year end pending regulatory approvals.
After successfully.
Really connecting the Boyd pay wallet to our slot floors. We're now focused on expanding its capabilities, we will be launching of test program for non gaming amenities in Nevada. This week, followed by table games later this year.
The customer response to Boyd pay has been encouraging with our core customers recognize the inconvenience of of cashless gaming experience.
<unk> as a result, we believe that Boyd pay will be another key enhancement to our ongoing focus on building stronger relationships with our guests.
Turning to the digital gaming space.
<unk> branded online casinos are off to an excellent start in Pennsylvania, and New Jersey exceeding our expectations for player volumes and revenues.
Since our launch in mid April.
Our sports betting partnership with fans will also continues to perform well after successfully establishing partnerships with Fandel in Pennsylvania, Indiana, Iowa, Illinois, and Mississippi, We are now setting our sights of new opportunities in Louisiana, and we are optimistic we will be able to launch <unk> retail.
And mobile sports books in that state before the end of the year.
Our relationship with the <unk> continues to generate value for our shareholders. Both through our revenue sharing arrangements as well as of the significant value over 5% equity stake in <unk> group.
Based on our strong performance so far this year, we remain firmly on track.
To generate more than $20 million in EBITDAR from sports betting and interactive gaming this year.
Well the digital gaming as an attractive growth opportunity for our company. We're also pursuing strategic opportunities to expand our traditional gaming operations.
Our partnership with the Wilton Rancheria tribe near Sacramento, California is.
Example, Steve.
The steel is in the ground of the Sky River Casino site team member recruitment is underway and we are on time and on budget with the construction of this resort, which will include 2000 slot machines 80 table games, and 12 food and beverage offerings.
We share the drives excitement for the tremendous potential of this resort and look.
Just wanted to opening Sky rivers doors early in the fourth quarter of next year.
As construction on Sky River continues we're also evaluating opportunities to reinvest in our existing operations 1.
1 of these opportunities of this treasure chest, which has long been a strong performer in a regional portfolio. We are currently in the planning phase.
Phase of developing of land based facility of treasure chest, which will significantly enhance the guest experience of this property.
Finally, before concluding I want to provide an update on the company's ongoing ESG initiatives.
Sharing our success with others and investing in stronger communities have always been our core values of our company.
And those tenants remain as important to US is the day, we were founded we.
We've been fortunate as company to recover so quickly after last year's closures.
But we're also well aware that there are many of our communities who are still struggling with the economic and social impacts of the pandemic and we stand ready to help during.
During the second quarter Boyd.
Provided nearly $1 million in cash donations to charities in the communities, we serve across the Midwest and south.
Majority of these donations went toward organizations focused on food and security, which is of strategic priority of our ESG efforts. These.
Of these contributions follow a similar campaign, we undertook in support of the southern Nevada.
Community last year.
We are proud to work with our nonprofit partners across the country to assist our neighbors in need and we will continue to step for step up for our communities in the months and years ahead.
So in conclusion, the second quarter was another remarkable performance for our company and our entire team.
Our nationwide portfolio continues to generate robust levels of EBITDAR and our operating strategy and tight focus on the right customer of producing the highest margins in our history.
And we believe that our strong performances since reopening are largely sustainable.
These achievements would not of impossible.
The dedication and hard work of the entire Boyd gaming team.
It would be difficult to overstate, what a great job of thousands of team members have done over these past 12 months. They have helped take our company to new heights of performance and to think of them in a meaningful way Boyd gaming awarded more than $10 million in 1 time cash bonuses to.
Was that line team members in late June.
We have the best team members in the business dedicated hard working.
And the committed to providing memorable service to our guests.
The privilege to be part of such an incredible team and look forward to achieving continued success together.
Thank you for your time this afternoon I'd now.
I'll turn the call over to Josh Josh.
Thanks Keith.
The second quarter was obviously an outstanding 1 for our company Keith noted the company EBITDAR and margin records as well as the all time individual property records that were established during the quarter.
But we know the key question is whether the strong performance.
I'd like to us that we have been delivering are sustainable.
And we believe the answer is yes, we can maintain much of the margin in EBITDAR performance that we have been we have achieved since reopening our properties.
This confidence stems from the fundamental and recurring drivers of these results over the last 12 months.
That is.
<unk> more efficient business model, our ability to more effectively target our core customer and.
And the consistency we have seen in our customer base.
While Q2 was strengthened in part by government stimulus the easing of restrictions and progress made rolling out vaccines are fundamental customer trends.
His arm consistent since we reopened last year and these trends have continued into July.
As a result of our strong operating performance and careful management of capital expenditures, we are in a much stronger financial position today and pre Covid, we have less debt more free cash flow and lower.
Have the bridge.
Our leverage at the end of the second quarter was 3.1 times and lease adjusted leverage was 3.6 times.
During the quarter, we refinanced nearly $1.5 billion of senior notes with the combination of new notes and excess cash, allowing us to reduce interest expense on an annualized.
<unk> lab basis by nearly $50 million.
We generated over $160 million of free cash flow during the second quarter after capital expenditures of $52 million.
We expect capital expenditures for the year to be approximately $200 million.
Due to continued.
<unk> the pandemic in the near term, we will remain prudent with respect to our capital plans and the use of our free cash flow, while maintaining a strong flexible balance sheet as the result.
We expect our leverage to continue to strengthen through the remainder of this year.
So with the completion of the first half of the year and initial.
With the <unk> into Q3, we believe we have established the new normal for operating our business going forward, we expect EBITDAR margins to be higher than pre COVID-19 levels, resulting in a much stronger balance sheet, providing enhanced flexibility to grow our company and create long term value for our shareholders.
<unk> insight concludes our prepared remarks, and we're now ready to take any questions.
We will now begin the question and answer session to ask a question Press Star then 1 on your Touchtone phone.
If you are using a speakerphone please pick up of your handset before pressing the keys.
Tom draw your question Press Star then Kim.
And the first question comes from Joe Greff with Jpmorgan. Please go ahead.
Good afternoon, Keith the afternoon, Josh Thanks for taking my answer the question.
I hear you on July.
Yes.
2 and a lot of late June.
If you look at your older demographic, maybe more recently this month of.
Delta variant Keith.
<unk> had spike from.
Net older demographic are you seeing any diminishing visitation of immigrant Shang.
The spend.
And then just the AUM.
1 I guess.
That of where employees are wearing masks for the.
The short wildly given the mandate the effective last Thursday.
The diminished.
Anything when you look at it.
In the short term here.
I think as we look at the customer demographics, we haven't seen.
Overall.
Significant or meaningful changes in trends from from the older demographic. They were continuing to kind of tools of that group was continuing to come out in larger numbers, we were continuing to see more and more customers. We haven't seen for a while I think it's still a little early but we'll obviously pay attention.
The annual but nothing nothing meaningful in terms of trends in terms of the masks, we implemented it last week.
With without any reaction I mean team members accepted it customers have only the team member of mask mandate and so the team members accepted it it's fine hasnt created any issues pretty much business as usual.
Tension right and.
Josh you spent a lot of your time talking about.
The improvement in the balance sheet lower debt more free cash flow from a leverage couldn't agree with you more.
King debt continuing to improve based on any scenario.
Whether the sell or not.
When you think about the use of the free cash flow.
Or are you with share repurchases line that.
And here at these levels, particularly given just the strength in the business and where your share price is right now.
Yeah, I think that from our perspective, we still want to be a little cautious around the pandemic.
Mick.
And get that clearly in our rearview mirror.
And so that's really the pacing item for US I think we continue to as we've talked about historically have kind of 1 off projects that are that we believe will generate the returns we need the warrant and investment.
And then beyond.
And that we will consider returning capital to shareholders as we have done in the past.
At the end of the day, it's a board decision and we have to defer to for that entity or group.
But the reality is is that we will consider it and we have done it historically in the form of dividends and share repurchases.
Got it and just a quick follow.
Hope on that.
Comment Josh you brought up the yes.
Some capex of the treasure chest could you sort of give us the rough size for that and would that be included within a $200 million of annual maintenance Capex budget next year year after that.
Yeah, So right now.
Still in the planning stages for treasure chest.
And.
You kind of have to make sure that it kind of pencils out from a return perspective for US then and get in and.
And consistent with what I said previously I think we want to make sure we understand where we are in the cycle of the pandemic as well, but setting though.
The items aside.
The project would probably be.
Say, an $85 million to $100 million type size project. It would at least contemplated day, probably take 18 to 24 months of construction.
And.
I would say the earliest they could star would be toward.
Some of this year may be first of next year.
Thank you very much guys appreciate your thoughts.
Thank you Jeff.
The next question comes from Carlo Santarelli with Deutsche Bank. Please go ahead.
Hey.
Hey, guys good afternoon.
Josh just kind of dating back to I believe it was your fourth quarter call you guys kind of put some parameters around what you thought was reached reasonable for margin expansion and I thought at the time you talked about range is that kind of.
The end of the locals in the plus 800 versus 2019 range in Midwest and South maybe in the 5 to 600 basis point range. Obviously, what you are delivering is considerably higher than that.
Has that expectation changed over the long term I understand over the medium term.
Let the levels of demand and stuff has the has that target kind of risen since the end based on what you've seen on the cost side of the efficiency of the cost savings.
Yes, the Carlo I think it's a good good.
Observation in question.
I do think that with the passage of time with.
Given the consistent execution of a very high level, we've gotten more and more comfortable with our businesses.
Quite honestly shifted to a higher margin business I think.
We were cautious coming out of the.
When we were reopening in and dealing with the pandemic and some of the.
Our actually but with the passage of time, we've got not only more and more comfortable with the business model, but also more and more comfortable with the underlying customer trends debt that give us that that higher level of confidence in where we're operating the business today.
Yeah.
Okay. That's fair and helpful. Thank you and then if I could just.
Certainty of 1 follow up on the locals market if I do some simple math it kind of appears as though there is about 200 million of.
Opex taken out of the business on an annual run rate basis.
If you guys blast that number or.
Just want to talk about it as whats out today versus what needs to come back from kind of <unk> levels, how much how much incremental head count and or other expense do you believe come back into the system over the next 18 months.
Yes, Carlos this is Keith.
Just think that the level of.
Operating expense that we're seeing today, while I think it will go up marginally from here. It won't go up significantly and so I don't think there is significant.
1 of the bigger challenges, we face is simply hiring team members and so.
Are we truly fully staffed today to deliver the level of service we want to the work guys. The answer that question no. So it will be some few incremental bodies here and there of the come back to simply take care of the guests at the proper level, but there will not be significant if there are in command of bodies of come back with you could.
The non gaming side of it will be because of increased hours.
And that will come with increased revenue and increased profits. So overall don't see anything any meaningful change.
Great. Thanks, Keith Thank you Bob.
Thank you.
B on the the next question comes from Barry Jonas with true Securities. Please go ahead.
Great. Thank you so much kind of just I just wanted to be clear on this is there any reason not to just simply multiply the Q2 number by 4 or even the <unk> number by 2 with some adjustment for seasonality to think of.
Forward annualized run rate at a high level of here.
Well I think we as we said in our prepared remarks Q2 was certainly benefited by things like the stimulus that was out there as well as the easing of Covid restrictions and the initial rollout of vaccines and so Q.
The going to there's probably a little peaky.
But.
Sure.
So it's probably not fair to take Q2 times for.
We do think that long term the business will continue to build and grow in the strong fashion, but I think Q2.
It was a little aggressive to take that and multiply by 4.
Yes, we have.
<unk> said that Barry.
I think the way we look at it is Q2s of little picky in terms of the things that Keith alluded to in his script book, but we're continuing our business is continuing to recover if you will are continuing to improve we still have.
Cute rated business Thats coming back we have more and more confidence in the level of unrated business that we're seeing we of midweek and destination business and so as you know quite.
Quite honestly, we have the downtown business that has yet to recover fully so I think when we think about kind of the mix of the business, what we're seeing on the customer.
Have for side and the opportunities that we have we feel very comfortable with kind of the fundamental level of business I cant tell you of kind of where off of Q2 it is but.
That's the best we know today.
Got it understood.
I appreciate the.
For the commentary on.
Customer pay just curious if you could give any color on who is actually using the product so far and if you think they see it as just the substitution for cash or if it's actually driving increased play levels.
Yeah. So.
It's a little early I don't have all of the statistics in front of me, but.
Boyd the type of customer I would say is is our core customers the higher end customer they do see it as a substitute for cash it's much more convenient I don't know of any commentary sitting here today Im play levels, whether or not is increased.
Play levels or not so I can't answer that question, but.
But it clearly.
We've gotten positive feedback and it is continuing to gain more and more acceptance as we continue to roll it out so we feel pretty good about it.
Perfect. Thanks, so much guys and congratulations.
Thanks.
Okay.
The next question comes from Steve with Shinskie with Stifel. Please go ahead.
Hey, guys how are you doing.
I don't know if you talked about this and maybe I missed it in your prepared remarks, but did you call out what unrated play look like in the quarter and if I remember correctly it was <unk>.
Moving close to 50.
Per cent of volume is back in the first quarter, just trying to figure out what that looked like in the second quarter and then maybe also help us. The you know what kind of changes you've seen within your database.
So the states. This this is Keith so from the run rate of play perspective.
It is in the 45 minute of low to mid 40% rate.
<unk> is there.
Q1.
And that's where it is in Q2, it seems to be fairly stable in that low to mid 40% range. It is not it has not been at the 50% level. So in the savings would be fairly stable there.
At least over the last 6 months or so and we haven't seen any real changes.
Range. It would look at the early July results. So that's.
It seems to be of good stable number of good stable result of <unk>.
Good customer coming in the door and playing with us so.
That's.
That's where the unrated businesses.
I'm sorry.
<unk> is without question yes.
Like what are you guys witnessed with your database over the last couple of months as well.
So look the database continues to perform as we saw it perform in Q1 of our core customer of the higher worth customer continues to play at strong levels as higher levels.
The levels are higher than 2019, we continued to see new sign ups be of at a higher worth.
So the value of the new sign ups today are higher than they were in 2019.
All of the database frankly is continuing to perform as it was in Q1 with good growth.
It was our share in tears and the lower end tiers, which frankly, we're really not marketing too we're seeing that fall away, but that's to be expected, there's nothing nothing new there.
Okay, and then if I if I flip that question around it and we look at the the rated side of the play.
How.
How much of that range.
It has not come back to the properties at this point and hopefully that question makes sense.
Yeah. So I would say that if you were to look at all of the customers of played at 19 and you know how many are back today. Once again of I don't have that information in front of me are they all back the answer of that.
No we still have a group of some of our older demographics that haven't come back yet although once again, it's been building since the April may timeframe, and so we would expect that to continue to build.
But we always see some turnover in that.
And that customer base right, we always.
Gain new customers and lose customers. So there's always a certain amount of churn there and so I don't think it's ultimately will look significantly different going forward, but have we seen them all come back the answer's no do we expect that the majority of them will outside of the normal churn, yes, yes.
Yeah, I would just add to that that really.
The way I when we look at the.
I'd say a couple of things have changed since.
That is really kind of a reflection of the business recovering that is more and more customers really across all segments are coming back we still have opportunities up and down the age age segmentation. If you will that are still opportunities to come back.
Non really outsized relative to the others. Its just kind of of continual improvement across those 8 segments and I think in the unrated segment side of things, we've just gotten more and more comfortable that the level of business that we're seeing some of these customers were unrated customers pre COVID-19 in the coming back consistently.
Some are customers are.
Kind of debt were rated before now unrated and so we've just got more comfortable with the level of unrated customer and who that customer largely is to the extent, we can understand that and the rate of business is just continuing to continuing to improve.
And come back really.
Okay, great. Thanks, guys. Thanks for the color I appreciate it.
The next question comes from Shaun Kelly with Bank of America. Please go ahead.
Hi, good afternoon, everyone.
Josh I wanted to drill in a little bit more into the Las Vegas locals.
Segment, and I was just sort of hoping if you could give us a little color I mean, obviously the the the margin performance itself on an absolute basis as you know beyond kind of parallel. So I'm wondering you know was mix shift of factor in the quarter. When you saw the hotel coming back gaming coming back relative to maybe some of the.
<unk> Ming amenities and the question really becomes like as we move through the year.
Certain lower margin of entities start to come back just given the nature of the more tourist centric or group centric piece of the business or.
Is this really like the the new norm, even even within local and it's just a lower cost structure there as well.
Yeah.
So the Sean this is Keith I think.
Your last comment is probably the most true which is it is just a lower cost structure. Overall now once again do we continue to run 57 or 58% in the locals market.
Non-GAAP structure.
Our locals business is largely a gaming centric we have minority of our revenue coming from non gaming amenities and many of those are open.
As I said earlier, they're not functioning fully or not running maybe 5 or 6 days of week in terms of restaurants are full capacity. So that will continue to grow but it should grow in a profitable.
Cautionary, albeit maybe lower margins on the hotel side as that continues to grow and meetings and conventions. When the midweek business comes back that will be incrementally profitable and that is good margin business as we can continue to fill up our hotels.
And have good room rates that is high margin business. So I think.
<unk> well not specifically sustainable in the mid to high Fifty's are largely sustainable based on the current cost structures that I really don't anticipate changing dramatically.
Thanks for that Keith and maybe the follow up would be.
Obviously, some of the restrictions, particularly on some of the like larger.
The group and meeting capacities Werent lifted until June.
But can you talk about how much of that either held you back at the Orleans and I believe you.
The 1 property being still offline downtown can you just give us sort of across the portfolio of little bit of a sense of what was still actually not fully back to back to normal if not at this point well above normal.
The merger so what's the other 2 closed properties main street station downtown and the Eastside Cannery out next of Sam's town in the locals market.
The main street's future is all about downtown business in the Hawaiian business returning.
And these side will just depend on volumes.
But in terms of.
For the midweek business meeting of conventions. It really is about the Orleans that they have the most significant portion of that we do get a little bit of that business at our other properties of <unk>.
Sun Coast and the Sam's town, but it is not significant once again. So it really is about the Orleans now the Orleans posted very strong results.
Even without that business.
Kind of largely on the back of local play play from people living here in the city not from destination destination was up in Q2 over Q1, it was building, but not back to where it was pre COVID-19. So I think there's great upside at the Orleans as meeting conventions return and we're able to utilize.
<unk> you know that.
The meeting and convention space that we have plus the arena remember we have of 9000 seat arena in the back that was largely occupied.
Most days of the year, So I think theres still great upside of the Orleans, but that is where most of the upside of occurs it won't be you won't see anything significant at the other Las Vegas properties.
Understood and if I could sneak 1 last 1 and it would be just to follow up on that last point Keith could you give us any color on maybe on that meeting and convention segment I mean, I know, it's small in the Grand scheme of things to you, but it's pretty important across the broader strip and broader Las Vegas market. So what are you kind of seeing as it relates to.
Either.
The willingness to return the beginning to fill in the midweek just how does your book of business look as you move into the second half.
The forward bookings when we look at both the hotel and how the phones are ringing for hotel reservations as well as median conventions clearly are growing I don't have.
Meeting the meeting statistics in front of me to be able to say kind of what our occupancy may be going forward, but I do know that in the month of June as restrictions were lifted the the phones are ringing a lot and that we were beginning to book a lot of business I. Just don't have the data Josh may have some data so I'll defer to Josh the Cfe has anything.
Anything additional.
1 thing I would say Sean is obviously, we are not a big meeting and convention kind of portfolio. We do have isolated properties such as you guys are already speaking about the Orleans, but anyone in the Midwest and south of IP and some of our Missouri assets in and Blue Chip in particular, all drive significant.
<unk> kind of meeting and in destination business and all can benefit from the lifting of restrictions. There I think 1 thing we have seen that may be applicable to other of our peers is.
That our forward bookings and from of the hotel of largely started to match 2019 levels. So we've gradually seen.
Those forward booking channels kind of start to book up and look more like 2019 and hotel has been much more of a demand driver for us.
Meetings are starting to pick up and so given just the relative contribution and that is just starting to pick up we have limited information.
All of that at this point.
Thank you all.
Yep Yep.
The next question comes from Thomas Allen with Morgan Stanley.
Please go ahead.
Hi, good afternoon I'm curious.
Get into a little bit more detail on what youre seeing on the labor side.
Are the shortages driving cost creep how.
How are you dealing with with labor shortage of it. Thank you.
Sure. So once again it is 1 of our bigger challenges is being able to.
Fully staff these operations to provide the right level.
Customer service line.
We're fighting for team members like everybody else in our industry and frankly like everybody else in the hospitality and food and beverage industry and other industries around the country.
There is a little bit of of of wage inflation, but it's not significant if I look at the average hourly wage.
You know back.
Level of current quarter and look at it today, it's not significantly different so it's really not impacting margins. We're doing all of the things that we need to do to try to incent people to join us, but we're not able to fully staff certain restaurants are of being able to open 5 days of week, where we would like.
But we continue to work on it but it's true.
And the for driving significant cost increases at this point.
Alright, Thanks, and just as my follow up you know the 2 properties are still closed when it makes sense to sell them.
[laughter].
Yeah.
I guess Keith wants me to answer that question.
I would say.
No.
Our philosophy to this point and our approach to this point has been too.
Believe that demand will catch up and that is what will the.
We will open them in response to the man I think that continues to be our point of view I think we are in the process.
Question on plans to potentially reopen main street station downtown.
Just on growing demand for our product there and we would expect the same thing to happen over time.
In the locals market with Eastside cannery.
So.
I think consistent with what we've been saying so far we still have work.
We're still in this mode of recovery from our perspective, and we still have demand thats 1 of the come so to speak and all of the different areas that we've spoken about and quite honestly that not only gives us confidence in kind of the level of business that we're seeing and being able to sustain that level of business, but.
That will potentially eventually need the supply as well.
Thanks.
Yes.
As we have no further questions. This concludes our question and answer session I would now like to turn the conference back over to Josh <unk> for any closing remarks.
Thanks, Tom and thanks for everyone. Joining since there is no. Other questions. We'll go ahead and call call. The end of the of the call, but if anyone should have any follow up questions or anything to follow up with the company pills. Please feel free to reach out to us and again, thanks for your participation.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
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Okay.
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Yes.
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