Q3 2021 Boyd Gaming Corp Earnings Call
[music].
Good afternoon, ladies and gentlemen.
Thank you for to make the Boyd gaming third quarter 2021 conference call.
Likely be muted during the presentation pushing up the call with an opportunity for questions and answers at the end.
I will now pass the conference over to your host Joshua She Burke Executive Vice President and Chief Financial Officer. Boyd Gaming. You May proceed. Thank you operator, good afternoon, everyone and welcome to our third 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 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 will 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 at investors Dock 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. 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 would now like to turn the call over to Keith Smith Keith.
Thanks, Josh and good afternoon, everyone.
The third quarter was another outstanding quarter for our company as we achieved our fifth straight quarter of exceptional results since reopening our properties last spring.
This sustained level of strong performance is the direct result of the fundamental changes we made to our operating philosophy last year.
Upon reopening we sharpen our focus on driving play from our most loyal guests, we streamlined our cost structure and we adopted a more efficient approach to doing business that touched every part of our operations.
Our record third quarter performance and our results over each of the last five quarters attributes to the transformation of our business model and the disciplined approach we have taken to operating our business. These exceptional results have significantly enhanced our free cash flow and strengthen our balance sheet with our leverage declining to 275 times at the end of the third quarter.
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As a result of our strong financial position and our prospects for continued growth. Our board of directors has authorized a share repurchase program of $300 million, allowing.
Allowing us to return a portion of our robust free cash flow to our shareholders.
So let's review the operating performance that helped make this possible.
For the second straight quarter revenues exceeded both 2019, and 2020 levels setting a new third quarter record strong flow through resulted in an adjusted EBITDAR of more than $340 million also a third quarter record our quarterly EBITDA was 42% higher than the third quarter of 2000.
20, and 60% higher than the third quarter of 2019, and our company wide operating margins exceeded 40% for the second straight quarter. Our third quarter margin grew nearly 400 basis points over last year's record and is up more than 4500 basis points from 2019.
Every segment of our business contributed to this outstanding performance as we set new third quarter EBITDA records in each of our three operating segments.
In our Las Vegas local segment revenues grew 35% over last year, and EBITDA was up almost 60% operating margins exceeded 54% and have been at or above the 50% Mark every quarter. This year.
In downtown Las Vegas, we posted record third quarter EBITDA of $13 $2 million on margins of 31%.
This is a substantial improvement over the EBITDAR loss, we reported a year ago and is up double digits over our record third quarter 2019 results.
And in our Midwest and South segment, we set new third quarter records for both revenues and EBITDA as EBITDA grew 22% over prior year and 42% from 2019.
This strong performance was broad based as 11 of our 17 regional properties set new EBITDA records for the third quarter nationwide of the 26 properties that were open the entire quarter 21 grew EBITDAR by double digits over last year with 18, setting new third quarter EBITDA Records.
As I mentioned earlier the record levels of revenues EBITDA and margins. We have produced throughout 2021 are the result of deliberate actions, we have taken since reopening last year, including focusing on the right customer transforming our operating model and implementing new capabilities and refinements throughout our business.
And we are continuing to implement initiatives and technologies to enhance customer convenience build loyalty streamline processes and reinforce our operating efficiency and example of this is our Boyd pay cashless technology, which is now live at 11 properties in four states. While initially Boyd pay was focused on our slot product where quickly.
<unk> Boyd based capabilities to other areas, both gaming and non gaming.
In the next several weeks, we will be expanding Boyd pay to the majority of our restaurants in Las Vegas in.
In addition, we recently launched a field trial for Boyd pay at table games in Nevada, with Pennsylvania soon to follow.
<unk> created a tool that will make it easier for our guests to make wagers and pay for non gaming amenities right from their smartphones, we are making excellent progress towards this objective and expect Boyd pay will become available at every Boyd gaming property next year pending regulatory approvals.
We're also using technology to create new revenue opportunities and enhance the guest experience in other ways as well.
For example, in Nevada, we recently relaunched sports offering an unmatched selection of vetting opportunities through the most expansive wagering menu in the state. We are pleased with the customer reception, so far with strong increases in activity from both new and reactivated guests behind these new initiatives. We also have additional organic.
Growth opportunities available throughout our operations.
Cross the country many of our hotels have been running below capacity since reopening due to a tight labor market. As a result, we have not been able to accommodate and many rated customers who have established gaming histories with us as the labor market.
That normalizes, we will be able to bring more hotel rooms online driving gaming revenue growth from these customer segments.
In downtown Las Vegas, we anticipate continued growth as tourism throughout the city recovers and Hawaiian visitation improves.
And we also have opportunities for future growth in our mid week business and our meeting and convention business overall.
Overall, we expect to see further recovery in visitation throughout our portfolio as restrictions are lifted COVID-19 numbers improve and travel resumes.
On top of our organic growth opportunities, we are well positioned for further gains in the digital space, We view online gaming and online casinos in particular as a strategic growth opportunity for our company with gaming operations across 10 States and a strong player loyalty program. We have the foundation to build a robust digital complement to.
Our land based casino operations, our I gaming operations are off to a good start in both Pennsylvania, and New Jersey, where our startup branded online casinos have delivered strong results since launching in April.
Expanding our I gaming operations is a strategic priority for our company and we will look to further build our online casino capabilities and geographic presence over time.
And sports betting our partnership with <unk> continues to grow our current focus is Louisiana, where we're preparing to launch sports betting at our five properties in that state by year end pending regulatory approval. Once live this will extend our partnership with <unk>. The six of our nine regional states.
In all we expect our digital operations, including sports Casino and social casino will generate more than $20 million in EBITDA. This calendar year does.
Digital is a profitable business for us today, and there will be an increasingly important part of our overall strategy in the years ahead generating incremental revenue and EBITDA for our company expanding our customer base and importantly building loyalty among our guests by providing us another opportunity to engage with them.
We also continue to benefit as a 5% equity partner and Vandals accelerating expansion across the country and their position as one of the leading online sports and casino operators in the country.
Since our last call <unk> launched new sports betting operations in Arizona, Connecticut, and expects to go live in Maryland, Washington State and Wyoming by the end of the year.
Sports betting operations in 15 states by year end <unk> is a clear leader in the expansion of digital gaming and we are participating in its success as an equity owner and partner.
While the opportunity in digital is substantial we also have strategic opportunities to further expand our traditional gaming operations in northern California construction on the Wilton Rancheria tribe Sky River Casino is progressing well and.
The steel structure was topped off last month, and we are quickly moving forward with both exterior and interior construction. This project remains on time and on budget and we are on track to open Sky River early in the fourth quarter of next year and in Louisiana, We continue to make progress on development plans for a new land based facility at treasure chest Casino feature.
<unk> expanded gaming space and significantly upgraded non gaming amenities treasure chest has been a strong performer for years and this project will allow us to further enhance the property that is already producing strong results.
Before turning it over to Josh I want to provide an update on our ESG initiatives.
Since issuing our first ESG report earlier this year, we have convene teams of corporate and property executives to focus on a number of strategic ESG initiatives, including reducing our water and energy consumption lowering our carbon footprint encouraging employee volunteerism and workplace, giving enhancing the diversity of our workforce and refining our responses.
Gaming efforts we.
We look forward to providing you with an update on our progress in next year's ESG report.
We also continue to support our communities during times of need as we did after hurricane either struck south Louisiana in late August.
To assist our south Louisiana communities with a recovery effort Boyd gaming made a significant contribution to our partners at second harvest food bank, helping them provide much needed food and water to thousands of local residents in the immediate aftermath of the storm.
At the same time, we extended full pay and benefits to our team members a treasure chest and Amelia Belle while those properties were closed following the storm. We also provided immediate cash benefits to all of these employees and we are providing additional relief as needed through the Boyd gaming team member crisis Fund.
Giving back to our communities and being a responsible corporate citizen have always been core tenants of our company. We are proud to uphold our commitment after hurricane Ida and we will continue to honor that commitment is a central part of our company's ESG philosophy in summary, after our fifth strong quarterly performance in a row we have.
Great confidence in our future and our ability to grow our business, our restructured operating model and our tight focus on the right customer are delivering exceptional results.
Companywide EBITDAR has exceeded the $1 billion Mark in just nine months with margins significantly higher than pre closure levels. We are confident that this level of performance is sustainable and that we will maintain much of the margin improvements we have achieved over the last 18 months.
Our free cash flow has more than doubled and our balance sheet is the strongest it has ever been given our board the confidence to authorize a new share repurchase program and we have opportunities for incremental growth ahead.
As the pandemic fades additional visitors will return to our properties as the labor market normalizes, we will be able to bring more hotel rooms online increasing our capacity to host profitable customers.
And we will further leverage our nationwide portfolio, our extensive customer database and our partnership with <unk> to continue expanding our digital business, we are well positioned for the future and while our recent success is a result of our transformed operating strategy is also attributed to the strength of the entire Boyd gaming team our team members our success.
Fully executing the strategy that is creating these exceptional results I cannot say enough about their dedication and effort over these past 15 months in dealing with the Covid pandemic in an uncertain environment. It is an honor to lead this team and we look forward to continued growth and success in the months and years ahead. Thank you for your time this afternoon and now.
I'd like to turn the call over to Josh Josh.
Thanks Keith.
Results for the third quarter and year to date have been truly outstanding our performance reflects a transformed operating philosophy that we implemented after reopening our properties in the third quarter of last year.
Focus on building loyalty and efficiently serving our core customer.
This operating philosophy structurally changed how we execute our business, including reevaluating our approach to marketing as well as scrutinizing every other facet of our operation.
And as you have seen in our results. We have consistently executed this strategy for five quarters generating revenues that are now surpassing 2019 levels with significantly higher EBITDA across our business.
And as Keith mentioned, we are optimistic about our future as we have multiple avenues for continued growth as well as confidence that we will continue to operate at higher levels of margin.
Today, we are financially a much stronger company than at any point in our history.
Total EBITDAR over the last 12 months surpasses $1 2 billion and leverage at the end of the third quarter was 275 times and expect it to further decline by year end.
As a result of our strong operational performance, we are now generating robust levels of free cash flow approaching $700 million over the past 12 months.
To reflect our confidence in the company's future our board authorized a $300 million share repurchase program. This amount is in addition to $61 million remaining from our prior approval.
Given our sizable and growing free cash flow. We will also continue to invest in opportunities to generate high returns for our company.
These growth opportunities will be balanced with returning capital to shareholders and maintaining current levels of leverage over the long term.
Operator that concludes our remarks, and we're now ready to take any questions.
Absolutely.
We will now begin the Q&A session.
I would like to ask a question. Please press star followed by one of you touched on it.
If for any reason you would like to remove that question. Please press star followed by team again to ask a question star one.
As a reminder, you can.
Speakerphone, please pick up your handset before asking your question.
We will pause briefly to allow questions to generate in Q.
Our first question is from the line of Carlo Santarelli Deutsche Bank You May proceed.
Hey, Keith and Josh Thank you.
Josh maybe this one's best for you as you kind of think about an IL Keith alluded to it in terms of bringing staffing back on to kind of better optimize the hotels and bring some of your rooms online.
In your assets when you think about kind of the magnitude of labor that returns.
Relative to kind of what was what was extracted during the obviously during the pandemic.
I think you guys had problems in the past something about potentially bringing back about 20%.
That cohort.
Is that thinking changed at all as you guys have gone through and gotten more accustomed to operating with current levels and things like that or is that number perhaps exactly what you thought it would be.
Yes, Carlos so thank you for the question I think ultimately our labor has been significantly reduced from a pre COVID-19 level and I don't think that we've ever suggested that we're going to bring about 20% back I think it was more in line with as we introduce amenities we expect.
To bring some labor back within the.
Within the operating environment.
Think on the order of magnitude pre Covid, we had something like 24% to 25000 team members today, we are operating at around 14000 team members.
It is the general expectation that we will add back team members over time, but nowhere near the order of magnitude of the amount of.
Staffing thats been reduced as a result of coming out of Covid. So we do expect some labor.
Not on the order of magnitude of adding back 20%. However.
Yeah.
Yeah, I guess I was referring to 20% of the 10000, so it's a kind of a $14 <unk> number.
Okay does that sound roughly appropriate.
Yes, I believe Thats remains in line with how we're thinking about our business going forward over the next several quarters.
Carla just importantly, and I think you alluded to this that will come along with increased revenues as we are able to staff and occupy or open up more hotel rooms, and open up more shifts at our restaurants and other things and so it's not just a labor increase it will come associated with revenues and profit.
Yes, Thank you Keith and for sure I get that part I guess, just a quick follow up.
Pertains to the buyback authorization and you guys have certainly done buybacks in the past as.
As you think about the growth opportunities that you outlined obviously that.
That are within the planning right now, including including treasure chest and some things that you mentioned.
How are you kind of balancing the buyback decision versus some of those ROI opportunities versus perhaps something outside of kind of the realm of Boyd.
That would be you think would be additive to the future of the company and how aggressive should we necessarily anticipate you will be with that authorization.
So I think the way we think about it is the $300 million was sized based on all the other things you've mentioned, we took a look at the.
The investments we need to make in our properties things like treasure chest. We took a look at as Josh indicated maintaining leverage at around current levels or slightly lower we expect to be closer to two and a half at the end of the year and I think that is.
Where we want to run the business long term and then that's basically putting all of that in the Hopper is how we size of $300 million. So you should expect that we will execute on the $300 million.
And that when we're done with that we'll take a look and see where we're at and two on our next step is but we can continue to invest in our business.
Keep our leverage where it is and execute on the $300 million. It is a balanced approach.
Great. Thank you. Thank you very much guys.
You're welcome Thanks Carla.
Thank you Mr internally.
The next question is from the line of Barry Jonas.
We truly you May proceed.
Hey, maybe just following up on the return of capital question. How are you thinking about resuming the dividend here what would you like to see first.
Well, obviously, our board as we just announced authorized the share repurchase we believe that that is the most efficient and flexible way to return capital to our shareholders.
And that was a decision that was made of some others decision is made in the future. Then we will certainly report on it but that's all we have to report for now.
Got it Okay, and then can you talk a little bit about the promotional environment and how that's been trending across your markets and maybe specific to the Las Vegas locals market I believe some competitors have talked more about targeting that customer. So curious what your forward expectations might be there.
Sure. It's a good question so as we think about Las Vegas locals specifically.
I'd say that it hasnt significantly changed over the last quarter or two that.
Our main competitor in the larger operators are being disciplined.
And kind of maintaining their focus some of the smaller operators frankly, several quarters ago had fallen back to what I will call kind of pre COVID-19 levels of marketing.
And being aggressive so we haven't seen the landscape change those that got more aggressive several quarters ago, a state aggressive those that remain disciplined to stay disciplined.
And I expect that will continue as we as we think about 2022, we expect that will continue through 2022, as we think about or as we look at I should say, our Midwest and south properties largely the same those people that have.
Stuck to and remain disciplined with respect to marketing spend have generally stayed there there are a number of properties in the Midwest and south once again that went back to pre COVID-19 levels of spend and have gotten very aggressive.
Haven't changed they are continuing to be aggressive we monitor we watch it we try not to react to it.
We have.
We have remained disciplined throughout it and once again, we expect through 2022 that those that our discipline will stay that way and those that have already gotten aggressive we're going to stay aggressive we don't expect a significant change in the promotional landscape, whether it be here in Nevada or outside of Nevada.
Perfect. Thanks, so much guys.
Sure.
Thank you Mr. Jonas.
The next question is from the line of David Katz with Jefferies. You May proceed.
Hi, good evening, everyone. Thanks for taking my questions.
I appreciate all the color and information, but I wanted to just ask about updated boundaries around M&A company has had a history of being opportunistic and certain situations and I'd love some color on whether court.
Corporate would be inbounds are out of bounds opco propco, we'd be inbounds are out of bounds or how youre thinking about all of that in terms of a very attractive leverage profile at this point.
Yeah.
I'll start and then obviously Keith can jump in I think.
When we look about when we think about M&A in and Opco Propco I think we do it in the context of the same way we have done historically.
That is we view owning real estate is important to the company.
It gives us optionality with respect to.
Flexibility down the road should we ever feel like we need to execute on that but as you mentioned our balance sheet is significantly stronger today and our cash flow generation capabilities are significantly stronger so.
I'm not sure how that makes sense for us in the current environment.
I think more broadly in terms of M&A.
I don't we're not going to do a deal just because we're low levered lowly levered and generating free cash flow. It's still we will retain the same discipline that we have had throughout the history of the company even though.
The company has a long history of making acquisitions I think we believe we have been disciplined strategic and value oriented in terms of <unk>.
Pursuing those acquisitions and that will not change.
So.
Just as we have a.
What I would call a refined our our transform view of how we're executing our business.
Thing applies to our balance sheet, but it does not mean that we're changing our philosophy about how we are pursuing growth in terms of acquisitions.
Keith I don't know if theres anything you'll add to that no.
Josh just summarized it well we've grown historically through M&A and I think we've done a good job as you said, we've been very disciplined and we will remain disciplined in the acquisitions need to be strategic and priced right but.
Other than that Josh summarized it well.
Perfect. Thank you very much.
Sure.
Thank you Mr Katz.
The next question is from the line of Joe Greff with Jpmorgan you May proceed.
Hello, everyone.
I mean this is a question for you Josh was there a big Delta and property level EBITDA margins.
At the end of the quarter versus how the quarter started I guess, how to exit rates compare versus June July levels.
And then when you think about Midwest SaaS deal, excluding any kind of bad weather impact in Louisiana and Mississippi.
Yes.
Not not really I would say that.
We were able to maintain our margins really throughout the quarter. We did have challenges with periods of softness kind of towards the middle of the quarter, but.
And related to the factors you mentioned, primarily hurricanes, but also.
Obviously the <unk>.
Increased awareness around the Delta variant as well played a role in it but.
Our guys did a really good job of managing expense levels. During those periods of time, we adjusted accordingly so.
It was unlike margins fell off the chart as a result of softness in revenues or anything of that during that period of time.
I would rather say that the margins were fairly consistent throughout the entire each month throughout the quarter.
Great.
And I guess, where are you in terms of the NOL balance and when do you start becoming a cash taxpayer.
Yes, so we still have an NOL balance left it's one of the things I probably should have checked before this call that I typically do and just didn't do this time, but I think.
It will most likely run out some time in 2022.
And obviously that depends on the performance of the properties and our company.
Through next year, but.
We will have it in about NOL balance I expect coming into year end.
Great. Thank you guys.
Sure.
Thank you Mr Grant.
The next question is from the Mylan.
Steve <unk> with Stifel. You May proceed.
Steve.
Hey, guys good afternoon.
So so Josh.
I guess the next time you report, it's obviously going to be your your year end report in the past it would be a time where you.
Gave us guidance for the upcoming year.
Who knows if you will or will not give guidance for next year and that's not really my question here, but Josh if you. If you had to theoretically kind of give us a view of what the next 12 months would look like today and I guess, what I'm trying to get out here is maybe maybe some high level thoughts as to some of the potential headwinds or even tailwind. If there are any that you would be looking.
And if you were trying to model your business out today.
So you are asking for guidance for next year.
I do that's where you're going to you know.
No I was just more kind of some high level thoughts maybe around whether it's margin pressures are opportunities even on the revenue side I mean anything that you could kind of give us from a high level perspective that you might be kind of.
Watching at this point.
So Steve I think as we think about 2022, and we think about the business.
We tried to allude to this in our comments that we believe there is still a number of revenue opportunities for us as we move into 2022 as the labor market recovers and we're able to rent all of our hotel rooms, as we're able to open up more of our more of our amenities. If you will.
We believe there is revenue opportunities and as Covid restrictions begin to get lifted as an example walking into this meeting I got a note that in Louisiana that lift from the masked mandate tomorrow here in Nevada, we still have a mask mandate and hopefully by mid November that will run its course.
But we think we still have the opportunity to grow the business kind of across the U S out of town travel will continue to grow here in Nevada meeting and convention business will continue to grow across the U S.
So there are still I think very good revenue opportunities for us look on the flip side.
We will be adding back some labor as we talked about it and we've talked over the prior quarters that over the course of time that some marketing will come back into the system. It's why we talk about maintaining much of the margin improvement, we've seen but not all of it but much of it because we know that there'll be some incremental expense flow into the.
Business. The team today is doing a great job dealing with inflationary pressures, whether it be on cost of goods or other products or wage inflation and were not seeing it really have an impact on the margins because of the work. The team is doing so as we think about 'twenty two.
Net net see continued upside.
The one thing I would add to it two I think is the underlying underlies. This thought process is that when we look at what's happened so far in 2021.
It really only been one quarter that we would feel like had some outsized really tailwind to it and that was Q2.
Underlying Q1, even Q3 and the greater.
Performance of Q2 is.
I think our level of business that we think is sustainable.
Based on the customer trends that we're seeing both among our Louisville RV connected customers as well as our unrated customers and so we expect those trends to underlie our business as we go into 2022 with the added benefits of what Keith mentioned, and maybe a little pressure here or there but.
Not really outweighing the opportunity we see for our business.
Okay got you that's perfect color I appreciate all of that and then.
Real quick question, Joshua Keith maybe I missed this in your prepared remarks, but your older older.
Older demographic in terms of your database just trying to gauge.
What that demographic look like during the quarter and if there was any material improvement.
From those folks.
Yes, so that as we think about our 55, plus 65, plus customer continued to grow in the third quarter, whether you look at visitation of trips our guest counts.
They all continued to grow in the quarter. So those customers continue to return to us in good numbers and we continue to see good results of them, especially through our core customer base and particularly at the high end.
Okay, great. Thanks, guys appreciate it.
Youre welcome.
Thank you Mr Weinstein scheme.
And next question is from the line of Shaun Kelley with Bank of America. You May proceed.
Hi, everyone. Good afternoon.
Keith maybe just to stick with the last area you were just talking about the COO.
Color you gave on the over 65 is Super helpful have you seen any change in the unrated play behavior I mean, there's obviously a profitable segment one that we've asked about pretty much every quarter for the last five yes, just any change on that pattern as the quarter progressed.
No. The short answer is no change has been remarkably consistent and stable since reopening last year and so no change in trends during the quarter.
Great and then just maybe as my follow up I didn't change directions, a little bit Keith I feel like in each one of these calls you gave us a little bit more on digital every kind of every quarter and I'm just kind of curious if you could either remind us of what it would take to either increase your own direct kind of online casino presence.
Through startup or take back over some of the responsibility for that from Andrew I think you have that optionality, but also I know you are more than pleased with your relationships. So if you could just talk about sort of where do you want to take that maybe medium term in terms of your own control versus obviously, having a very strong partner that would be helpful.
Yeah. So I think in the in the longer term that we believe it is important that you know.
We control a little more of that as we move forward and Youre right. We.
Have a great relationship with <unk>, it's been a very profitable relationship and continues to work very well for us we're able to leverage their technical expertise not only from a software and product standpoint from a marketing standpoint, as they understand the business very well. So we're learning we're getting educated and longer term.
We'll take more control of that product, but in the short term, we're very pleased with how it's going and where we're at so I don't think you'd expect to see any real change here in the short term.
Thank you very much.
Thank you Mr. Kelly.
The next question is from the line of Thomas Allen with Morgan Stanley You May proceed.
Yes.
Thanks.
In your prepared remarks can you highlight how are you.
Sports in Nevada, and you have the largest bedding menu in the market.
Just talk about how you put that together and the importance of that thank you.
So we've had an online sports product here for years, and we took the opportunity and working with our partners at fan dual and what some upgraded technology switch providers to simply re launch it as a much more.
Having a much more fulsome betting menu.
We've once again seen what <unk> been able to provide out of state and so we took some learnings from that and leveraged off of them and we're just able to.
Have a better selection of.
Not games, but have options than other people in the state and its just a learning from our partner.
That's helpful color and then just.
This has been asked a few different ways.
CRO level as you got into October we are nearing the end of the month.
<unk> revenue and demand trends has been relatively consistent with what you saw in the third quarter of the spine with accelerated thank you.
You cut out for a second there Thomas I think you were asking our trends the same in October as we saw through Q3 is that the question.
Exactly did accelerate decelerate or the same.
Yes, I would say that as Josh mentioned, there was a little bit of softness kind of in mid Q3 with the Delta Varian, but as we exited the quarter. The last several weeks of September were back to normal and the trends. We are seeing thus far in October are very much similar to what we saw.
At the end of Q3.
Helpful. Thank you.
Youre welcome.
Thank you Mr. Allen. The next question is from the line and wells.
Wells Fargo you May proceed.
Hey, good afternoon, everyone and thanks for taking my questions.
Wanted to follow up on the.
Increasing labor that you guys expect to bring back along with the rated player base given the margin expansion that you've seen in the local segment versus the Midwest through how should we think about you bringing back the non gaming.
Amenities and increasing your labor expenses.
Yes, so Dan. Thank you for the question I think.
From the perspective of amenities the way, we think about it is.
Our approach was perhaps different than some of our peers, where we slowly reintegrated non.
Non gaming amenities in particular, and then started to expand hours and offerings in that way I think other than ours, we've largely gotten gotten to the place where our amenities are largely open so labor on the F&B side as I think about it and Keith obviously jump in if you disagree is it's more about finding people to.
Phil open positions, which has been difficult.
On the hotel side of things, it's about finding people to fill open positions us well to backfill as kind of.
Kind of the level of employment that we want but associated with that particular staffing will be obviously occupancy thats from known kind of gaming customers that we know their work. So I think it's a little bit of filling open positions across the board, but as Keith mentioned earlier in <unk>.
Boston earlier question, it's generally associated with revenue either expanding hours on the F&B side are hosting gaming customers that have some work that we know that we're that we can't serve today.
So we feel like in each of these cases, we will be able to kind of staff and backfill, where we need to relieve some of the pressures in our existing workforce.
And Sir and serve more customers and drive incremental revenue not so much just adding labor back that's an incremental expense without any kind of offset associated with it.
Got it thank you.
A follow up on Europe.
Our share repurchase definitely nice to see but I guess as you think you think through that you think longer term, even with that share repurchase.
Exhausting the digital portion youre going to be well below your historical target, 4% to five times leverage range. So has there been.
A fundamental shift in that target range or I guess, how should we think about getting back there over time, what would be the key levers.
Yes, so I think there has been a fundamental shift where pre COVID-19.
We were comfortable running the business in the four to five range I think quite frankly.
Towards the rate before Covid, we were talking about being comfortable in the low fours and Thats, where we wanted to run the business today too.
275 times, now and likely two and a half at the end of the year. We think that is the new range.
For us that is where we will continue to target over the long term running the company, obviously being flexible in any given quarter or any given year, but that is long term, where we want to see the leverage for our company be in that kind of two five ish range.
Got it and then if I could just squeeze in one housekeeping question.
Capex for the quarter and any guidance for Capex for next year.
Yes, no guidance, yet FERC capex for next year, because we're kind of in the middle of that process.
But for this year, we're still pretty much on track for about $200 million, we spent about $40 million in Q3.
Got it thanks, so much everyone.
Sure.
Thank you Mr Pollack Sir.
There are no additional questions at this time I will now pass it back to Josh Kristian Berg for any further remarks.
Thank you Tia and thanks for everyone joining today and if anyone has any follow up questions. Please feel free to reach out to the company.
And we will try to answer those questions for you everybody stay well. Thank you again.
That concludes today's conference call. Thank you and have a great day.
Okay.
Okay.