Q1 2023 Boyd Gaming Corp Earnings Call
Hello, everyone.
You all for attending today's Boyd gaming first quarter 2023 conference call.
My name is Sierra and I'll be the moderator today.
All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end.
If you would like to ask a question press star one on your telephone keypad.
I would now like to pass the conference over to our host Josh first birth, CFO and treasurer of Boyd gaming. Please.
Please proceed.
Thank you operator, good afternoon, everyone and welcome to our first quarter earnings 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 those forward looking statements.
Actual results may differ materially from those projected in any forward looking statements.
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 stopped 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.
As noted in an 8-K filed earlier this month, we have recast our segments.
Online is now reported separately. Additionally, the results that include Wilsons management fee and Lattner Entertainment are recorded in a separate category.
Managed and other these.
These results were previously reported as part of our Midwest and South segment.
Additional information on these segments, including results recast for prior periods. Please refer to the form 8-K, we filed on April 11.
Today's call is 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 good afternoon, everyone.
First quarter of 2023 was an excellent start to the year for our company as we once again prove the strength of our business model and the resilience of our diversified portfolio.
Our strategy of focusing on growing play from our core customers and managing our business efficiently has delivered consistently higher levels of performance and record results over the last several years.
In the first quarter was no exception led by record performances in our Las Vegas locals and downtown segments as well as substantial growth in both our online operations and our management fees from Sky River Casino.
On a companywide basis revenues were $964 million and EBITDA was more than $367 million, both first quarter records as operating margins exceeded 38%.
And when excluding contributions from the online and managed segments. Our margins were 40% again consistent with our margins over the last several years.
During the quarter play from our core customers across the country rose more than 3% driven by increased spend per visit while our core customer counts also continued to grow our strategic.
Focus on growing core customer play is the foundation of our ongoing success by tailoring our business to our core customers. We've built a more efficient and profitable business model that exhibits both strength and resilience in today's economic environment.
Looking at segment results, our Las Vegas locals business had another strong quarter setting first quarter records for revenues EBITDAR and operating margins.
Revenues and EBITDAR each grew about 6% in the segment, while operating margins were 52, 5% once again exceeding 50% gain.
Gaming revenue was up in the local segment is core play increased 3% over the prior year, while unrated play also grew slightly.
Non gaming revenue growth was even stronger driven by demand from out of town guests hotel revenue in the segment rose nearly 30% year over year, driven by double digit gains in both occupied rooms and cash room rates. These trends should continue hotel reservations for the next 90 days at our locals properties are currently.
Only up more than 10% year over year.
We also drove solid gains in our food and beverage business that our locals properties.
Looking ahead, we expect to see continued benefit from the strong tourism trends across the Las Vegas Valley.
Over the trailing 12 months more than 40 million people visited Las Vegas up 16% from prior year, while traffic through the Las Vegas Airport reached $54 7 million passengers during that same timeframe and all time record.
In Las Vegas visitors are spending much more during their trips averaging over $100 per visit last year, an increase of nearly 35% over 2019 levels.
This resulted in annual visitor spend of approximately $45 billion in Las Vegas last year, an all time high.
Convention business is strengthening as well rising 86% over the trailing 12 months the entire market is benefiting from a strong lineup of entertainment and sporting events across the city within the first quarter and throughout 2023.
With more than 5000 hotel rooms in the market our locals properties are well positioned to capitalize on the strong visitation trends.
These trends are also helping to drive solid growth at our downtown Las Vegas business, which set first quarter records for EBITDAR and margins down.
Downtown revenues rose, 14% EBITDAR was up 22% and margins increased 240 basis points to 39, 5%.
With more people visiting Las Vegas more of them are stopping by downtown during their stay.
58% of Las Vegas visitors reported they visited downtown Las Vegas last year.
This increased visitation is benefiting all three of our downtown properties.
But our downtown growth story goes well beyond increased tourism in the Fremont Street area.
We continue to see strong trends in our core Hawaiian customer segments as well with play from these customers up more than 10% year over year at our downtown properties.
And our recent investments of the Fremont, including our new food Hall expanded slot offering and <unk> Sports book helped to drive significant revenue and EBITDAR gains with rated play up 20% year over year at that property.
Moving next to the Midwest and South revenues were in line with the prior year, while EBITDA declined due to softness in Louisiana and Mississippi.
However outside of these two states customer trends remained very stable across our Midwest and south portfolio with core customer play for the entire segment, increasing 2% through the quarter.
Excluding our Louisiana, and Mississippi properties core play grew 6% and unrated play also grew in our other regional properties.
And on a sequential basis results for the first quarter improved over the fourth quarter in the Midwest and South region.
Similar to the rest of our portfolio, we are seeing strong growth in non gaming revenues across the Midwest and South we have recently made investments to enhance our hotel and food and beverage offering across many of our regional properties and these investments are now contributing to solid non gaming revenue growth and core customer play.
Next our online segment achieved first quarter EBITDAR of nearly $21 million.
This was more than double our prior year results driven by the launch of online gaming in Ohio, and Kansas continue.
Continued growth in our existing markets and the addition of Boyd interactive.
Based on our strong start to the year and normal seasonality of the business. We estimate our online operations will generate approximately $50 million in EBITDAR in 2023.
This projection includes a full year of contribution from <unk> operations.
<unk> in Kansas as well as results from Boyd interactive.
We will soon be expanding Boyd interactive portfolio, we expect to transition subject to final regulatory approvals are started online casinos in Pennsylvania, and New Jersey to the Boyd interactive platform during the month of May.
Once complete this transition will be an important step forward in the execution of our online gaming strategy.
Beyond the increase in financial contributions of our online business. We've also created significant shareholder value as a result of our 5% equity stake in <unk> group, which has established itself as the nation's clear leader in sports betting.
West are managed and other business benefited from exceptional results at Sky River Sky.
Sky River continues to perform ahead of expectations generating $20 million of management fees for our company. During the quarter. We are proud to have achieved such strong results for the Wilton Rancheria tribe and given this early success and drive is now considering expanding the property, which could further enhance its long term potential.
Sky River is off to an excellent start and we look forward to continued success in the years ahead. So at all our nationwide operations had a great start to the year looking ahead, while the economic outlook remains uncertain, we remain optimistic regarding the direction of our business. Our core customer continues to perform well that we have.
<unk> not seen any meaningful change in consumer behavior.
In addition, our results will benefit from online and management fees from Sky River as we expect both to maintain strong year over year growth.
We also expect continued returns from the investments, we're making in our properties nationwide. In addition to driving non gaming revenue growth. These investments are essential to our strategy of attracting and retaining core customers.
Looking further ahead, we anticipate solid returns from our $100 million expansion of treasure chest casino, which is on track to open next spring.
This project will significantly improve our product with a land based single level casino facility and expanded array of non gaming amenities and much improved parking.
When complete we are confident this investment will allow us to improve the customer experience attract new customers and enhance the overall efficiency of operations at this property.
Thanks to our robust free cash flow, we are successfully balancing these investments in our portfolio with our capital return program.
We plan to continue our $100 million per quarter share repurchase program supplemented by our dividend distributions.
We are also creating value through our ESG initiatives as illustrated in our recently issued ESG report this.
This year's report we outlined our continued progress on many key initiatives, such as reducing carbon emissions conserving water diverting waste from landfills promoting diversity and inclusion and supporting our communities through contributions to nonprofit organizations nationwide.
Through these initiatives, we are fulfilling our long standing commitment to ensure that our company is having a positive and lasting impact on our communities.
In conclusion. This was another outstanding quarter for our company further demonstrating the resilience of our business and the strength of an efficient operating model built on driving play from our core customers.
As a result of our diversified portfolio record performances in Las Vegas, locals and downtown Las Vegas, and increased contributions from our online and managed operations, we delivered another quarter of record results.
Our core customer remains strong.
Both initiatives like Sky River online and property investments are delivering strong results.
And we are successfully maintaining strong efficiencies throughout our business remaining financially disciplined in the allocation of our free cash flow.
I'd like to thank every member of the <unk> team for their contributions to our success together, we are delivering great results for our shareholders and it is a privilege to be part of this talented and dedicated team.
Thank you for your time I would now like to turn the call over to Josh Josh.
Thanks, Keith this was another successful quarter for our company.
Our focus on our core customer and a disciplined approach to operating our business.
Revenues were $964 million on EBITDAR after corporate expense was $367 million both records.
Margins were 38% excluding.
Excluding contributions from online and management fees property level margins. After corporate expense were 40% consistent with the margins we have delivered over the last several years.
This quarter's performance stands out for its consistency and for our ability to continue to deliver these results in today's economic environment.
As I mentioned earlier, we are now reporting separately, our online operations and her managed operations.
The online segment consist of contributions from our partnership with <unk> and other market access agreements as well as results from Boyd Interactive our online casino business.
Revenues in this segment also include tax pass through amounts that were $96 million in the first quarter and $42 million last year during the same period.
Based on Keith's earlier comments, we expect this segment will generate about $50 million in EBITDA this year compared to $40 million last year.
This performance reflects the growth in our online business as well as a full year contribution from Boyd interactive.
The managed and other segment consist of fees generated by our management contracted Sky River casino as well as contributions from Latin or entertainment.
On our last call, we indicated we expected to generate about $50 million in management fees during 2023 from Sky River.
Given the ongoing success of this property. We now believe it is reasonable to expect that we will earn approximately $65 million to $70 million in management fees. This year.
And in addition to the management fees that we earned during the first quarter. The trial began repaying the $113 million, we advanced to the project.
We received $17 million during the quarter and based on current projections with ongoing quarterly payments, we expect alone will be fully repaid by early 2024.
As you can see from our results both of these segments were important contributors during the quarter for.
For the full year. These segments are expected to generate approximately $130 million of EBITDAR in 2023 compared to approximately $80 million in 2022 on a comparable basis.
During the first quarter capital expenditures were $96 million, including spend for Fremont and treasure chest.
For the full year, we expect total capital expenditures to be $350 million, including $250 million in maintenance capital and $100 million related to the treasure chest land based project and completing the renovation of the Fremont.
In terms of capital returns to shareholders, we repurchased $106 million in stock during the quarter, representing one 7 million shares at an average price of $61 59 per share.
The actual share count at the end of the quarter was 101 5 million shares we have approximately $133 million remaining under our current repurchase authorization.
During the first quarter, we also announced an increase in our quarterly dividend <unk> 16 per share which was paid on April 15.
Between our share repurchases and dividends, we have returned nearly $800 million to shareholders. Since late 2021, and we expect to surpass $1 billion in capital returns by the end of 2023.
We have a very strong balance sheet with low leverage no near term debt maturities and ample borrowing capacity under our credit agreement.
As of March 31, total leverage was two three times and lease adjusted leverage was two seven times.
With a robust free cash flow strong balance sheet, we have significant flexibility in today's uncertain economic environment to successfully balance our shareholder returns with capital investments.
So in all after another record first quarter, our company remains on very solid footing.
Our diversified operations continue to generate substantial free cash flow and combined with our strong balance sheet allow us to execute our capital return program, while reinvesting in our property portfolio.
As a result, our company is in the strongest position in our history.
With a proven business model focused on our most loyal customers robust and diversified free cash flow and a strong balance sheet.
That concludes our remarks, and we're now ready to take any questions.
If you would like to ask a question. Please press star followed by one on your account from Keybanc.
If you'd like to remove that question. Please press star followed by team.
Again to ask the question.
<unk>.
And as a reminder, if youre using a speakerphone today.
Please remember to pick up your handset before asking your question.
Our first question today comes from Steve <unk> with Stifel.
Please begin.
Yeah, Hey, guys. Good afternoon, so so Josh I wanted to ask.
About margins in the Midwest.
The South segment, which were down about 200 basis points and I'm just I'm. Just wondering if you could help us think about maybe what the drag was from <unk>.
Louisiana, Mississippi, and then maybe have you seen those markets improve.
Improve at all or at the very least are they are they are they weakening anymore or are they pretty stable at this point.
Yes, Steve So I think we've started to see stability in the mint.
And those two markets.
It's really hard for us to understand at this point totally whats going on some of it is related to one time events that happened in those markets, but it does seem to be a little bit more broader based and economically impacted.
Tom looked at margins when you.
If you kind of excluded Mississippi and Louisiana.
Out of the Midwest and South and looked at the margins.
Without those two as those two properties our margins would be down about 90 to 100 basis points or so so most of the decline in.
Those two assets make up.
How about a little bit more than half of the decline in margins excuse me.
[laughter].
So hopefully that gives you a sense of what's going on.
Yes, it does.
Thank you very much and then second question, Josh If we think about your guide for the online segment. I think you said you are still kind of expecting that $50 million ish for the year can you maybe just help us think about seasonality of that.
The last couple of quarters of the year given the fact that you guys did $21 million in the first quarter just trying to.
Kind of square away, how do you guys kind of think about the year, maybe some of the things we need to be locking forward.
The balance of the year.
Yes so.
When we think about first in the first quarter, we generated $21 million as you stated Steve part of that there were some there are some one time items, where we received one time fees related to some of our market access arrangements and then also.
And that number is obviously the first full quarter of Boyd interactive, which was formerly Paula.
As we think about the seasonality.
The business outside avoid interactive I think the first quarter is one of the better quarters in the fourth quarter will be one of the better quarters, and then second and third are much lighter in terms of performance just given the normal seasonality. So you can look back at.
Last year and get a sense of the level of magnitude of the business that we saw in the second and third quarter and get a sense of the difference in that and maybe the fourth quarter that you saw our performance as well as the first quarter this year.
Yes, Steve This is Keith it really is about the seasonality of the sports calendar.
College, and NFL football is what drives most of it in Q4, and then into Q1 as well as the college basketball playoffs in Q1, it gets pretty soft from a business standpoint in Q2 and Q3.
Okay, great. Thanks, guys appreciate it.
Okay.
Alright, I was having technical difficulties, but thank you Steve for your question.
Our next question comes from Joe <unk> with Jpmorgan. Please proceed.
Okay.
Good afternoon, guys I was hoping you could talk a little bit about what youre seeing on your land based casino side of things in April , particularly.
With maybe some of the lower tiers of your database as well as the 55 year old plus segment.
Yes. So Joe this is Keith I think the trends we're seeing in early April are not meaningfully different than what we saw in <unk>.
The first quarter in the first quarter, we saw.
Good growth from both our.
<unk> 45, and up customers as well as we call our core customers.
Through the kind of high end customers as you get lower in the database that didn't perform as well, but that is nothing new it's been going on for several years and so it's kind of an ongoing trend. Our focus is on the higher end of the database. So again strong growth both across.
Demographics age each.
<unk> as well as worth categories.
Great. Thank you.
Thank you for your question.
Our next question is from Carlo Santarelli with Deutsche Bank. Please proceed.
Hey, guys just wanted to follow up on I believe go with Steve's question. If I just look at kind of the the year over year performance in online for the balance of the year <unk> relative to the 50 million guidance in the first quarter. It looks like that you are.
We're effectively guiding to a flat result for the April through December period.
Could I read into that as a.
Conservative or be some spend associated with Boyd interactive customer acquisition et cetera.
That is more or less offset by the growth that youre seeing with the <unk> relationship and the online sports betting side.
Yes.
I'll try to help you Carlo a little bit I think that.
I don't.
We tend to be conservative and I don't think we're trying to go out of our way to be ultra conservative or anything like that I think part of it is going to be a shift between online and Boyd interactive number one all of it will show up in this same category. So you can kind of have to make sure you're grouping all of that together when we think about.
Got it but when you think about the revenue share component of our business.
Based on what I, just kind of the $21 million or so that we reported in Q1, you back out kind of the onetime payments and Boyd Interactive you got a run rate of about at least in Q1 of about $17 million of revenue share and that's the business. That's what we're saying is the seasonal aspect of the business.
Boyd interactive itself, which was obviously Fortunately Paula did about $5 million last year. So we expect it to do in that $5 million to $6 million again this year and so you just kind of build it on a full year basis. So.
Kind of $17 million Q1.
Factor in seasonality Q4 will be probably similar to a little bit better than that and then factor in Boyd interactive on a full year basis Thats generally how we came up with the numbers.
<unk>.
Yeah.
Got it that makes sense and then Josh.
<unk>, 90% sure on this but I just wanted to double check when you were discussing managed now that you were talking about the success at Wilton.
Your guide was $65 to 70, then you mentioned the $1 30 number the plug there between that and online is 10 is lattner contributing somewhere in the $10 million to $15 million range is that is that the piece that was missing there.
Yes, that's exactly right Carla.
Great. Okay, and then just lastly on the locals market.
Clearly top line remains strong you don't really have any sort of weather impacts in there, but it did look like there was an acceleration of revenue in the first quarter.
Benchmarked against the first quarter of 2019 relative to what you saw in the second half of last year is there anything noticeable that you guys are seeing in the locals market of late.
Uh huh.
Our.
Wouldn't call out anything noticeable I would just the only thing I could.
Two really Carlo to help you think through that is it.
We.
I think we do believe that the first quarter performance was generally a little bit better than the fourth quarter. So talking sequentially here now.
And we saw.
Better performance in the lower end and unrated segments of our database and good strength overall and I would say continued strength in our core customer.
An older demographic generally and so I think that's what we're seeing from the benefit of an.
Both Las Vegas locals and downtown quite honestly, so that might be playing into kind of what youre, what youre seeing when you look at kind of the.
Pick up in performance.
Carla I think overall Las Vegas had a very strong first quarter. When you think about convention business and hotel occupancy.
Absent the gaming numbers that came out today convention business was extremely strong grew from January to February into March Occupancies were high rates were high and so theres a lot of business in town in the first quarter.
This year. So I think you probably saw a little bit stronger performance, maybe in Q1 than you've seen in prior quarters.
Great Alright, Thank you guys I appreciate it.
Sure.
Thank you for your question.
Our next question is from Barry Jonas with Janney. Please proceed.
Hey, guys, maybe just at a high level you grew EBITDA over 8% year on year in Q1 consensus estimates right now assume EBITDA is going to contract 3% this year around there.
Is there anything youre seeing you expect to see which would warrant total EBITDAR to contract this year.
Yes, Barry I think the only thing that from where we sit today the consumer trends continue to look very stable consistent as I mentioned in the comment earlier to <unk> question I think we saw a.
A bit stronger business in the actually in the.
Not only among our core customers and higher work customers, but we got the benefit of some of the lower end play.
Certainly in January and February so.
Q1 was good I think we are looking at a little bit more difficult comps as we go into Q2.
And as we look at the rest of the year quite honestly what gives us some comfort.
Not only the stable customer trends that we're seeing but also we feel like we have a little bit off.
Insurance policy, if you will with the growth that we have an online.
And managed and other that we spoke about in our prepared remarks. So we feel like we have a little bit of cushion should our business get weaker.
Sure.
Obviously people are concerned about but.
Yes, that's all that's what we see.
Got it and then just as a follow up can you maybe comment a little bit more about the labor environment right now across your segments.
Do you expect that.
To hold.
Margins basically where they are at now.
To see any any further hits there just given the labor environment.
So Gary this is Keith I think from a margin standpoint.
Comfortable and are in the ZIP code that we're in today, we're competing or dealer should not competing with but dealing with cost pressures, whether they be wage pressures of utility cost increases or other cost increases across the board, but our teams are able to manage through them. So we're comfortable with the margins that we're producing whether it be in.
The Las Vegas locals region of the downtown region of the Midwest and South and expect to be able to kind of hold while not the exact number very close to that as we go forward.
Great. Thank you so much.
Yes.
Thank you for your question.
Our next question comes from Shaun Kelly with Bank of America. Please proceed.
Yes.
Hi, everyone. Thanks, most of my questions have been answered.
Just just two smaller ones first of all just to kind of go back to online and I apologize. If this has kind of given and just take a mile type detail, but Josh can you just remind US you mean, Ohio had a really big.
Gross gaming revenue number out of the box for your partner there.
When youre, receiving your fees or presumably you are paid off of.
The growth of that part of the kind of extra seasonality when eight when they see that that market there.
Yes, I would say we had a very strong start in Ohio and it is we do.
Their performance gets indirectly reflected in our performance based on our share of revenue, Yes. Sure. I think you have to remember I think Ohio was launched in January not everybody launched right away and so when you come around to the fourth quarter. This year Youll have more competition for.
For the gambling dollars. So we had a great <unk> had a great start in Q1, but there'll be more competition as you get around to Q4.
That's helpful and then yes.
Just wondering detailed one but you gave some color on the consumer side, particularly in the regional markets.
You mentioned the core customer spend.
Yes that was kind of with and without Louisiana, Louisiana, Mississippi, and just any quick highlight on kind of Hell unrated play looked in those markets was it was it down and are you seeing that subside at all or is it relatively stable or healthy.
Yeah.
I think if you look at the unrated play here in the Las Vegas market.
The locals market of the downtown markets, we continue to see growth in unrated play.
And if you exclude the south we continue to see growth in kind of the other parts of our Midwest region South is down.
For the reasons, we've talked about frankly over the last couple of calls.
Okay, but no real no real change in pattern there even on the even on the <unk> side.
No not at all.
Okay. Thank you very much.
Welcome.
Thank you for your question.
Our next question comes from David Katz with Jefferies.
Please proceed.
Hi afternoon, everyone. Thanks for taking my question.
Josh you commented earlier about <unk>.
Roughly $5 million last year, and $5 million to $6 million for Paula.
Could we maybe get a bit more specific about what's in that five or six or there are some extra costs I'm trying to get a sense for where that could go and what the earnings power might be so that we could venture our own forecast as we get out a little further.
Yes, David I think that the reason we've tried to focus people on what they have done historically and kind of think of that as what they will probably do this year is just because we look at that as a business that is.
Being aligned and being formulated.
Within the Boyd infrastructure now. So this is kind of a formative year for them, where they will invest in their existing business in terms of human capital as well as technology to enable them to kind of execute on the business. They were growing at some boyd and the business that way.
We are that we have acquired them, Florida help them grow longer term so.
I think it's right now at least we would view it is premature to kind of expect.
Growth until we've got made those investments and get into the new year next year. Some time, David and this is not a zero sum game. So as we take over the platforms in New Jersey, and Pennsylvania, hopefully during the month of May we will stop receiving the fees, we are receiving from <unk> and so simply to look at the growth in.
Sure.
The void interactive business without some offsets from other fees would be you'd be overestimated over forecasting the results overall.
Provided some level of guidance, which we just generally don't do is provide guidance and thats probably about as far as we're going to go.
Fair enough.
And if I can just ask one other qualitative follow up about it.
Maybe too early to tell but the degree to which you are seeing some.
Ross over slash cannibalization, one way or the other from land based to digital.
Is there anything thats discuss the ball there.
Okay.
No I would just say that it's been our experience thus far as we've ventured into the online space, whether it be in the sports betting space.
For the online space that we haven't seen any cannibalization.
We firmly believe that the two businesses are complementary.
Together.
It makes for a much stronger product overall so.
Okay fair enough thanks very much.
Thank you for your question.
Our next question comes from Dan Policy Alright.
Please proceed.
Hey, good afternoon, everyone and thanks for taking my questions.
So first on the local segment I think that revenues were up about 6% year over year.
In the press release, you called out double digit growth in non gaming. So one I wanted to ask is it can we presume that gaming revenues were up there as well and as far as it relates to margin.
To the extent that non gaming is a bigger part of the mix for this business right now and maybe in the next couple of quarters.
Should we kind of think about the margin structure there given given maybe the mix changes that are going on.
So I think it is fair to assume that gaming revenue did grow in the locals market during the quarter, we called out non gaming because we saw significant upside our uptick in the business both on the hotel side and the F&B side commented a little bit earlier about the growth in convention business during the first quarter.
That helped drive both meeting and convention business at the Orleans, where we have a bit of space as well as room rates throughout the Las Vegas portfolio.
Look it's still not a significant portion of the locals business. Our gaming revenue still is what drives our results here in Las Vegas, but in a quarter like this it was up significantly which is why we called it out.
I don't think Theres, a significant margin shift as a result of the growth in that business. So I wouldn't.
I wouldn't adjust your model for that.
No I don't think its significant enough of a contributor versus.
I don't think just one other comment I don't think it's significant relative to the gaming revenues, we generate but also we just improve the overall market in those segments as well as we sequentially go through our business also so.
We don't expect it to dilute our margins.
Got it and then for my follow up.
If flutter is exploring a secondary listing in the U S. It.
It seems like obviously the.
Here is the clear market leader, how do you think about the timeframe or ways to maybe unlock the 5% stake that you have in <unk> and <unk>.
With the listing possibly be a catalyst to get there. Thanks.
So look I think we're view, our 5% ownership stake.
In fact, <unk> is very strategic ownership stake it's been a great partnership over the years, obviously, it's created a very profitable online business for us there.
They are great partners and it's great to have partnered up with the market leader.
How and when we might monetize some of that or any of that.
TBD.
Haven't really kind of venture down that path. We're just focused on helping <unk> to the extent, we can continue to be a market leader in.
No.
That's about it.
Got it thank you.
Thank you for your question.
Our next question is from Brian <unk> with Barclays. Please proceed.
Hey, good evening everybody. Thanks for thanks for taking my question wondering if you'd be willing to.
Give us your thoughts about the setup for Las Vegas citywide convention calendar for the <unk> and <unk> and if you look out and.
So to see the activity and sort of think that can grow handily off of last year or if theres going to be any sort of pockets within that timeframe, where there is actually less activity. How do you think about that.
Yes, it's a good question, we are probably not the best suited to talk in detail about the convention business. We do have some space as I said at the Orleans, some limited space to other properties, but the convention business has rebounded once again the numbers in January and February and March of this year grew <unk>.
<unk>.
As each month went by I think we had over 700000.
Attendees in the month of March and the calendar I do know is strong the exact number of groups and where there may be a pocket of weakness.
Articulate sitting here today, but the calendar is strong in the commercial business is continuing to grow things a great sign for the overall city and a great sign for our portfolio.
Thanks.
Helpful. And then my second question is just on Sky River in the managed and other segment.
Just when you think about that property and what it did in the fourth quarter and the first quarter should we consider that sort of the <unk>.
Fully ramped.
And then.
You're expecting some seasonality in that property throughout the year.
Hello.
I think the best way I could answer it is that the business has been remarkably remarkably stable. Since we opened in August we haven't seen many peaks or valleys in so you could consider it fully ramped.
And we gave some indication of what we thought the full year management fee might be.
<unk> $65 million to $70 million. So it should be in that kind of an indication. We think it's a pretty stable business. It has proven to be in the first eight months that we've been open.
Haven't been through a full year. So I don't think we fully understand seasonality of that business.
Haven't seen any any true seasonality in the eight months, it's been opened.
Okay. Thanks for all the color.
Thank you for your question.
Our next question is from Edward Engel.
Please proceed.
Okay.
Hi, Thank you for taking my question was there any notable improvement from the 65 plus or retiree segment.
For the year with performance for that demographic generally in line with the rest of the core business.
I think that the 65 plus demographic.
<unk> performed extremely well probably stronger than many other parts of the database and so we're very pleased with how it performed so.
<unk>.
Yes.
Got it helpful and then it looks like.
Across the portfolio you are kind of core opex increased a bit Q over Q is that a fair run rate to kind of think about the rest of the year or are you still seeing some.
Placing aerie.
Impacts that might continue to try that higher.
No I think if youre, if youre projecting out thats, probably a fair run rate to use most of the cost of settled in as we look at the business, it's probably a good number to use going forward.
Great helpful. Thank you.
Welcome.
Okay.
Thank you for your question.
Our next question comes from Joe Stauff with Susquehanna. Please proceed.
Good afternoon, Josh good afternoon Keith.
I wanted to ask you your commentary Keith.
About core customers you had mentioned that average spend was up about 3%.
Yes.
But I wanted to know about just say volume you also mentioned that growed.
It grew sorry.
But I was curious to see.
Did it.
Im just learning English now.
Yes.
As a function of of customers kind of moving up and the loyalty database in terms of total spending or that it was just kind of new customers coming into the casino.
So I think depending on.
Which region, obviously the numbers move around but overall, yes.
We saw an increase in play from our core customers and we saw increased counts of core customers. So.
Total guest counts were up in and play was up.
So it was combination of okay.
And then Joe we are.
Joe just to add to that.
Please first I'm wondering just thinking as well so.
Hi, Thank you.
Let me know when you get there Josh.
Yes.
And I think from the perspective of.
We continue to see good health.
Not only Keith alluded to a growing customer counts, but adding to the overall database as well so sign ups are improving and the value of those sign ups has been improving really.
Since we reopened.
From Covid so.
Theme as well so we are.
The database overall is growing and the health of the database continues to be pretty good.
Sure.
Got you perfect and if I could I have a follow up.
I just wanted to figure out.
Maybe say an update and some of the competitive markets that you have.
Have you seen I guess in particular in those markets, one would think that promotional spending.
His hire say then certainly other markets without new supply, but if you can just comment maybe.
What youre, saying.
Sure. So I'd say all of our markets are competitive I don't think we have we don't have the good fortune of operating any parts that arent competitive I think when we look at marketing spend.
Kind of across the portfolio, whether it's here in Las Vegas, or downtown or across the Midwest and South I would describe.
Landscape is rational.
That most competitors have kind of fallen into.
Kind of a steady cadence when they came out of Covid in terms of how they were going to market some being much more aggressive operating.
Operating pre Covid something.
Much more disciplined and that Hasnt changed much in Q1, or frankly last year and so youll here in Las Vegas, the market remains rational those that have been disciplined in a disciplined and those that have been a little more aggressive continue to be more aggressive so nothing new there.
Same trend exists kind of across our portfolio of properties.
Thanks, a lot thanks a lot.
Thank you for your question.
Our next question comes from Chad Beynon with Macquarie.
Please proceed.
Afternoon, Thanks for taking my question.
Given some of the stats that you gave on the broader downtown visitation just in terms of overall engagement in that area. In addition to the strong growth that you've put up at the Fremont post. The December expansion. How are you thinking about additional opportunities down there I know you said the Hawaiian customers are coming back but are there opportunities.
<unk> for you to either.
Expand or renovate kind of similar to what you're what you did at Fremont given that it seems like a high return opportunity for the next several years.
Sure your question directly related to the assets downtown or across the portfolio.
Downtown.
Yes, so the Fremont has gone through a pretty full renovation will complete. It later this year with a remodel of our hotel rooms that was completed within the last 18 months the expansion of the new food Hall, and our new sports book and some additional casino space that opened in December and once again, we're just finishing.
The renovation of the rest of the casino space over the next several months.
So that property will be complete and there's really no additional square footage to expand into at that property, California Hotel and casino.
Which is just.
A block away from the Fremont was fully renovated about two years ago, and so whether its rooms of the casino floor. It's got a brand new fresh look.
The main street station, which is across the street from the California Hotel connected by a bridge.
Over the street is going through a room renovation and the very very near future.
And so the entire suite of assets downtown will be in a fully updated I'd say by the end of the year.
Okay, great. Thank you, Okay, and then in terms of how you're how you're thinking about the capital returns this $100 million quarterly repo number as kind of the bogie for several quarters you executed on that this quarter.
And in the fourth quarter, given that business sounds largely better kind of across the entire portfolio what would it take to get you to change.
Either overall capital allocation or just the repo number that youre thinking about here. Thank you.
Look I think we'd have to just have the passage of time and more certainty about kind of where the overall economies growing ready to think it is clearly still an uncertain economy out there we're being cautious we've done a great job managing through this we have a solid business model, but in terms of.
Taking the share repurchase number of higher I think we're comfortable in the $100 million a quarter in committing to that we've talked about that I think for more than a year now.
And I was just I don't see us kind of moving off of that anytime in the near future.
Just have to see business.
Improve significantly.
Have more comfort about.
The broader economy and what's going on.
Thank you.
Okay.
Thank you for your question.
Our next question comes from John Decree with CBRE E.
Please proceed.
Yeah.
Okay.
Hi, Josh Keith.
Yeah, Hey, John .
Hi, sorry, technical difficulty there I guess.
Thanks for taking my questions.
Wanted to follow up on Joe's question related to promotional activity I think you answered it pretty clearly, but maybe to try another angle as it relates to Louisiana, and Mississippi, where you've seen some softness in the last two quarters.
Have those markets.
Seeing an increase in promotional activity relative to some of your other markets have have competitors start to respond maybe a little more aggressively when there has been pockets of softness.
No nothing unusual once again I would have called it out, but so as we look at Louisiana, Mississippi.
You have once you can use that word very rational pretty stable from a marketing or promotional standpoint.
We're not jumping out and doing anything crazy.
We're not seeing competitors do anything that unusual nothing is consistent from month to month, but there is nothing unusual going on.
Thanks, Keith I appreciate the additional color and then.
Lastly, I don't think we could get you off the call without asking about M&A I know the environment, obviously, it's been.
No not that active in your capital allocation policy is pretty clear but.
I'm sure you guys get a good look at anything and everything that comes out there. So curious whether it it might be land based or digital if there is.
Any increase in activity or.
Things that you've seen over the last quarter or so any any change in the M&A environment or your thoughts as to how you might deploy capital.
Well I think.
I don't think we have a whole lot of comments look when we bought Palo Dow known as point Interactive I think we're pretty clear about that.
We view it as a complete platform that gave us what we needed to.
Heading into the online digital space and so there's really no additional acquisitions in that space.
Foresee.
And yes, we've grown a lot over the last 20 years through M&A, but.
Nothing interesting to talk of.
Yes.
Thanks, Keith I appreciate it thanks, Josh and congratulations again on another great quarter.
Okay.
Sure.
Thank you for your question.
Our final question will come from Steve <unk> with Morgan Stanley . Please proceed.
Yeah.
Hey, Thanks, a quick follow up on Brad's earlier question I think your comments about the events calendar and Las Vegas would love to hear any thoughts you have on how more convention center at events like Con AG typically impact our locals and downtown segments versus some of the upcoming events on the strip like Formula One are the Super Bowl, where perhaps you have more of a leisure oriented customers.
Look I think anything that draws people into Las Vegas, and fills up hotel rooms and creates demand.
On the strip, whether you're in the locals market, we all benefit.
And as they're able to price their rooms up we're able to price our rooms up as the town is full.
It gave us statistics during my prepared remarks, I talked about 58% of the people visiting Las Vegas visit downtown So more people visiting Las Vegas means more people visit downtown that supports our overall downtown business.
<unk>.
There's not a huge distinction whether it is a sports oriented crowd of leisure oriented crowd and event oriented in a crowd.
Whether it's focused on entertainment or something else.
It's.
Filling up the hotel rooms in Las Vegas was bringing people to town.
And we're going to do better.
Great. Thanks, that's helpful and maybe one other follow up on sandal or the license access fees set over a specific length of time or are these negotiable at various points or even if they they list. The U S entity does that trigger any changes in terms of the contract. Thank you.
Yes, Steve so basically.
Each agreement has.
Our life associated with it when it was originally approved in that state generally a decade or more and then there is no triggering event as a result of them choosing to lift either Florida or if they chose to list <unk> at some point that would trigger anything from our perspective either.
So it's all status quo.
Great Super helpful. Thanks, So much.
Sure.
Thank you for your question.
That will conclude the question and answer for this call. So I will pass the conference back over to the management team for any closing remarks.
Thank you Sarah and thank you everyone for spending time with US today, and if you have additional questions or follow up please feel free to reach out to the company. Thank you very much.
Yes.
That concludes the blade gaming first quarter 2023 conference call. Thank you all for your participation you may now disconnect your line.