Q3 2023 Boyd Gaming Corp Earnings Call

Ladies and gentlemen, this is the operator todays conference is scheduled to begin momentarily.

Until that time your lines will remain on music hold thank you for your patience.

[music].

Good afternoon, and welcome to the Boyd Gaming third quarter 2023 conference call.

My name is David Strauss, Vice President of corporate Communications for Boyd gaming I will be the moderator for today's call, which is being recorded on Tuesday October 24th 2023.

At this time all lines are in listen only mode. Following our remarks, we will conduct a question and answer session.

If at any time during this call you require immediate assistance. Please press Star then zero for the operator.

Our speakers for today's call are Keith Smith, President and Chief Executive Officer, and Josh Hirschberg, Executive Vice President and Chief Financial 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 statements.

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 Dot Boyd gaming Dotcom, we do.

Not provide a reconciliation of forward looking non-GAAP financial measures due to our inability to project special charges and certain expenses.

Today's call is being webcast live at Boyd gaming Dot com and will be available for replay in the Investor Relations section of our web site. Shortly after the completion of this call.

So with that I would now like to turn the call over to Keith Smith Keith.

Thanks, David and good afternoon, everyone.

Our results for the third quarter reflect the value of our strategic focus on our core customers the benefits of our growth initiatives and our diversified business model.

For the quarter companywide revenues grew 3% to $903 million.

During the quarter, we continued to see growth in play from our core customers increasing 1%. This is on top of last year's strong growth of 5% from this segment.

This increase in play from our core customer segment was offset by a 4% year over year decline in retail play during the quarter.

Importantly, total play from our retail customer segment has remained at consistent levels since late last year, reflecting a stable retail consumer.

We also produced growth in non gaming revenue during the quarter with hotel revenue, increasing more than 4% and food and beverage revenue growing nearly 5% in both cases driven by strong cash business.

And with respect to our growth initiatives. We once again delivered strong results from Sky River and our online gaming segments.

On a companywide basis, EBITDAR decreased 5% to 321 million, while property level operating margins were 40%, reflecting ongoing cost pressures and a return to normal seasonality.

Now moving to segment results.

Vegas local segment operating performance on a year over year basis was similar to our performance in the second quarter of this year and consistent with the expectations, we outlined on our last call.

During the quarter, we continued to drive solid growth in core customer place, which increased 2% placed.

Play from our retail customers was down approximately 4% year over year. However performance from this customer group has remained stable in the local segment since late last year.

We also saw a nearly 6% increase in non gaming revenue with both hotel and food and beverage revenues growing during the quarter.

With respect to our EBITDAR and margin performance, our local results continued to be impacted by ongoing cost pressures on our business.

Looking ahead to the fourth quarter, we expect that trends among both core customers and retail players will remain consistent with the last several quarters.

We also expect the current cost pressures will continue into the fourth quarter. The overall expenses should be sequentially consistent with the levels. We saw in the third quarter.

Also in the fourth quarter, we anticipate there will be some impact from the opening of a new competitor as we've seen with previous openings of new properties. We expect some initial trial visitation from our customers to this new property. However, after this initial trial was over we expect this impact will fade, our customers will return and long term.

Growth will continue as Las Vegas markets absorb this new capacity.

Next in downtown Las Vegas underlying business trends remain healthy consistent with the second quarter segment results were impacted by an ongoing room remodel project at main Street station as well as the final stages of the Fremont renovation.

The California, which benefits remain Street station hotel rooms was also impacted during the quarter from the ongoing work at main Street.

Main Street's room remodel project is in its final stages, and we expect it to be complete by year end, allowing both the California and main street to return to growth.

At the framework, we are driving strong results from the comprehensive remodel and expansion of our casino and non gaming amenities, which we completed in October.

Even with disruption during the third quarter Fremont achieved strong revenue growth and record third quarter EBITDAR as our renovations drove increased traffic and visitation to the property.

The strong performance of the Fremont comes against the backdrop of a thriving downtown Las Vegas market.

Pedestrian traffic remained strong along Fremont Street, and we continue to benefit from solid visitation from our core Hawaiian customer segment.

Thanks to these healthy trends and our recent investments we expect improved results in downtown Las Vegas in 2024.

Looking at our southern Nevada operations as a whole the continued growth of our core customer the stability of the retail customer and the strength of the Las Vegas economy, all give us optimism for the future.

Visitation to Las Vegas is up nearly 8% year to date convention and meeting business is up 30%. This year average daily room rates are up more than 10% across the market. This year.

Airport traffic is at all time highs on a trailing 12 month basis.

And with upcoming events with Formula one and the Super Bowl.

The convention calendar. The recent debut of the sphere and the fourth quarter openings of two new resorts with nearly 4000 hotel rooms. The stage is set for continued growth in the southern Nevada market.

Local economic indicators remain positive as well.

Employment in southern Nevada is up nearly 5% over the last 12 months and a local population continues to grow.

The development pipeline remains robust with $6 billion in project currently under construction in southern Nevada, and with billions of dollars in additional projects now in the planning phase the Las Vegas economy has a firm foundation for continued economic growth well into the future.

Moving to the Midwest and South region customer trends remained stable during the quarter.

We continued to see broad based growth in poor customer volumes offset by year over year declines in retail play.

Two other segments volume from retail customers has remained a consistent levels in the Midwest and south since the fourth quarter of last year.

Overall, our customer trends have been consistent across the Midwest and South segment in recent quarters and we believe these trends will continue in the fourth quarter.

And much like Las Vegas cost pressures impacted the performance of the Midwest and South region. During the quarter. We expect this will continue overall expenses in the fourth quarter running at similar levels to the third quarter.

Next in our online segment EBITDAR continue to grow versus prior year. In this segment is now on track to achieve $60 million to $65 million in EBITDAR for the full year.

Similar to the second quarter, we benefited from strong results from <unk> operations as well as contributions from Boyd Interactive, which we acquired last November.

And finally, our managed and other business produced $19 million in EBITDA during the quarter.

Management fees from Sky River Casino in Northern California represented $17 million of this performance as this property has consistently exceeded our expectations since opening in August of last year.

As a result of Sky River strong performance performance, our Companys loan to the tribes was effectively repaid earlier this month.

And based on the property strong start the tribe is actively working on plans to expand Sky River by adding additional casino square footage hotel rooms, and meeting and convention space. While these plans are still preliminary the driving our company are optimistic about the potential of an expansion project given sky river's performance to date.

As a result of Sky River strong results, we expect our managed and other business to maintain a pace of about $19 million in EBITDA during the fourth quarter and into next year.

Call that during last year's fourth quarter, we received a onetime development fee of $5 million related to the Scott River project.

So when all on a company wide basis, we continued to deliver solid results.

Given our company's continued operating strength low leverage and strong free cash flow, we're able to execute a balanced capital allocation program that includes reinvesting in our properties and returning capital to our shareholders over the past two years, we have returned over $1 billion to our shareholders, while maintaining a strong balance sheet.

Going forward, we remain committed to our $100 million per quarter share repurchase program and our regular dividend program in.

In addition to this ongoing capital return program, we remain focused on investing in our core operating properties.

Our recently completed renovation of the Fremont and a project to move our treasure chest operation onto land to improve the customer experience are just two examples of this initiative.

The strong results, we're achieving at the Fremont represent the potential of these types of investments with.

With Fremont now complete and treasure chest nearing its final stages, we expect to announce additional project sometime next year.

Beyond these capital projects and as part of our ongoing maintenance capital plan. We're also making investments in many of our hotel food and beverage facilities to ensure we offer a fresh and relevant offering for our customers. This is not a new initiative, but rather part of an ongoing focus to ensure our properties amenities remain competitive and meet.

Customer demand is.

As an example, we recently introduced a new high limit.

Room at the Suncoast, and we'll be opening seven new restaurant concepts nationwide during the fourth quarter with more to come next year.

We also have several hotel renovations starting in the fourth quarter and continuing into next year as we look to ensure our hotel product remains relevant for our customers.

So in all this was another solid quarter for our company.

Once again, we proved the effectiveness and the resiliency of our diversified business model led by our focus on our core customer and strong performance from our growth initiatives. While we are not immune to cost pressures. Our operating teams continue to manage the business efficiently.

And going forward, we will continue to utilize our free cash flow to create shareholder value through a property or invest property reinvestments are ongoing capital return programs and strategic acquisitions.

I would like to thank our entire team for their dedication their contribution to another solid quarter of performance. It is an honor to be part of such a great group of team members.

Thank you for your time today I would now like to turn the call over to Josh.

Thank you Keith.

This was another solid quarter for our company our core customers are continuing to perform well even growing in this challenging environment.

In terms of our retail customers consistent with recent quarters, we experienced softness on a year over year basis during the quarter.

Retail customer volumes took a step down beginning in the fourth quarter of last year.

However sequentially. These volumes have remained consistent since then.

As we experienced experienced year over year operating trends in the third quarter, sorry, as we expected year over year operating trends in the third quarter were very similar to those in the second quarter.

We face more difficult comparisons and experienced a continued return of seasonality to our business.

Our operating teams have continued to deliver at a very high level of efficiency.

Property level margins were 40%, our companywide margins were 36%.

Consistent with what we experienced during the second quarter major expense categories that increased year over year during the third quarter wages utilities and property insurance.

Moving to our online segment, we expect this part of our business to generate $60 to $65 million in EBITDA. This year.

During the third quarter, the tax pass through them out related to our online partnerships was $71 million.

This year versus $45 million last year in the third quarter. These amounts were recorded as both revenue and expense in this segment and impacted overall corporate wide margins by more than 300 basis points this quarter compared to 200 basis points last year in the third quarter.

Capital expenditures were $108 million during Q3, including span for both Fremont and treasure chest.

Year to date capital expenditures have been $280 million.

We continue to project total capital expenditures for the year, approximately $350 million, including $250 million of maintenance capital.

A $100 million related to treasure chest in Fremont.

Now that Fremont is complete and as we anticipate opening treasure chest mid next year, we expect to announce additional growth projects during the upcoming year.

As Keith already mentioned as part of our annual maintenance capital spend this year and next year, we have planned several restaurant upgrades and hotel room Remodels.

In terms of our capital return program, we have repurchased $106 million in stock during the quarter, representing one 6 million shares at an average price of $65 30 per share. This.

This resulted in an actual share count at the end of the quarter of 98 4 million shares.

Additionally, we paid a quarterly dividend of <unk> 16 per share on October 15th.

Between share repurchases and dividends, we have returned more than $1 billion to shareholders Central resuming our capital return program two years ago and by year end, we will have returned over $1 billion through our share repurchase program alone.

As of September 30, we have approximately $426 million remaining under our current repurchase authorization.

Thanks to our substantial free cash flow, we have balanced our capital return program and our property reinvestments or maintain a strong balance sheet. Our total leverage at the end of the quarter was two three times our lease adjusted leverage was two seven times, we have no near term maturities.

And ample borrowing capacity under our credit agreement.

Our balance sheet is the strongest in the company's history, providing us the confidence in our ability to reinvest in our portfolio.

And return capital to shareholders, while pursuing opportunities to further grow our company.

David that concludes our remarks, and we're now ready to take any questions.

Thank you Josh we will now begin our question and answer session. If you would like to ask a question. Please press Star then one on your Touchtone phone you will hear at three tone prompt acknowledging your request should.

Should you wish to withdraw your request. Please press Star then two.

If you are using a speaker phone. Please use your handset when asking your question, we will pause for a moment, while we compile our list of questionnaires.

Our first question comes from Joe Greff of J P. Morgan Joe. Please go ahead.

Thank you everybody.

Afternoon, Josh Keith.

Okay.

Circling back on the topic of Opex pressures.

You look at.

Opex pressures by reportable geographic segments is there much of a difference in cost pressures in Las Vegas versus the Midwest and south.

It looks like in the quarter the sequential changes in margins and expenses was more acute.

In the regionals versus the locals I don't know if thats a fair way of looking at it on a sequential quarter over quarter machines. This year versus last year, but if you could help us understand that that would be great.

Yes, so Joe I'll try to answer I'll give you a sense of that I think.

First of all there is some seasonality related to expenses right, so utilities, which were a large.

Part of the increases when you look quarter over quarter has to do primarily are in this <unk> are entirely impacting nevada's operations.

On the other hand, when you look at increases in like property taxes, our property insurance that is.

More a lot more weighted toward although it did impact Nevada, but are definitely more impacted.

The Midwest and south assets and that can be kind of a one off news, especially when youre looking year over year has to be a little careful because there are just kind of one off change.

Changes that may not be impacting the business going forward.

The bigger component of when you look year over year is definitely labor.

And.

And and there's really not anything unique regionally about that other than just the company's practices to give wages two raises to its hourly team members on our July one basis I don't think that's applied in the Midwest and south.

But that's the only nuance there.

I generally think of the impact. These are nuances that you can point to as differences between the segments.

But largely those.

The spread of cost are pretty even across all the segments of our business.

I hope that helps you a little bit.

That is helpful. Thanks, Josh.

This is more of a specific question too.

Las Vegas locals and downtown.

With Durango and fountain Bleu opening up over the next two months here.

Are you experiencing above average employee departures turnover and with presumably higher wages on a strip associated with this new union contract.

You see labor pressures incrementally worsening in the fourth quarter and early next year.

And if so could you help quantify that amount.

Yes, so with respect to kind of talent wars, if you will and what we're experiencing on that front.

We've seen a little bit of additional turnover as people are looking at some of these new positions, but it is not significant.

We obviously have known these properties were going to be opening.

These timelines for a while now and so we've been able to prepare for it. So it's nothing significant nothing that is impacting the business Joe <unk>.

In terms of additional turnover or employees kind of moving on to the next opportunity in.

In terms of wages.

Hard to tell where they're going to land on the strip.

Rates will be higher than they are today.

Do I think it will impact once again will people migrate to the strip for those higher wages I don't think so they're already stripped already pays generally more than we're paying in the locals market and people could already make that decision today, if they wanted to.

We've raised wages here over the course of last year or two and feel like we're in a good place, but it is a competitive marketplace and I think we'll just have to see what happens on the strip and deal with it as it comes I don't have any prediction as to when it will happen on the strip how much of an increase it will be and what the ripple effect could end up being but well.

Obviously pay close attention.

Operator: Ladies and gentlemen, this is the operator today's conference is scheduled to begin momentarily. Until that time, your lines will remain on musical. Thank you for your patience.

So I think I think one.

Yes.

Thought I would add to your question is as you know.

I think as we look at expenses.

Q3, and think about how they relate to what what they may imply going forward I think generally we think our fill like the order of magnitude of expenses that we incurred in Q3. When you look at them by segment Thats. What you largely can expect going forward at least from what we know today.

In other words, we don't expect our overall expense structure to be increasing.

Disproportionately going forward, we expect kind of the level of expenses that we're seeing in terms of total dollars to be largely the same.

Got it thank you very much.

Yes.

Thank you our.

Our next question comes from Steve <unk> of Stifel. Please go ahead.

Yeah, Hey, guys good afternoon.

<unk>.

Im not sure. If this is a fair statement or not and correct me if I'm wrong, but.

As we kind of think about moving forward is it going to be tougher for you guys to cut operating expenses from here.

If your revenue stream your topline.

Continues to be a little bit softer.

And if that's the case.

Is there anything you can do on the Capex.

On the Capex side of your business to offset some of those higher operating expenses I mean do you go down the path of cutting slot budget or other things like that to potentially offset your higher operating expenses.

David Strow: Good afternoon and welcome to the Boyd Gaming third quarter 2023 conference call. My name is David Strow, Vice President of Corporate Communications for Boyd Gaming. I will be the moderator for today's call, which is being recorded on Tuesday, October 24, 2023.

So because we think about total operating expenses given our margins today, we are running a very efficient business and so I think it's a fair statement to say that we don't have as much room to fine tune the business as we did let's say pre COVID-19.

David Strow: At this time, all lines are in listen only mode. Following our remarks, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star than zero for the operator.

And so we have to be very careful going forward in terms of how we adjust what we adjust to make sure it doesn't impact the topline.

Having said that do we have flexibility on the Capex side I think absolutely I think we have a very robust maintenance capital budget that we're comfortable with I think over the years, we've always been able to use that as a lever to.

David Strow: Our speakers for today's call are Keith Smith, President and Chief Executive Officer, and Josh Hirsberg, Executive Vice President and Chief Financial Officer. Our comments today will include statements that are forward looking statements within the Private Security's 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.

Balance any declines in the business or declines in overall free cash flow that we see.

And when times are good spend a little more times or maybe a little tougher we can always pull back we're very careful about it because we don't want to impact the overall condition of our properties in what is a very competitive market not just here in Las Vegas, but across the country.

Okay.

Got you. Thanks for that guys and then the second question wondering if you could give any update in terms of changes to the promotional environment around you know the majority of our operating markets meaning.

David Strow: 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-gap financial measures. For a complete reconciliation of historical non-gap to gap financial measures, please refer to our earnings press release in our form 8K, furnished to the SEC today in both of which are available at investors.boygaming.com. We do not provide a reconciliation of forward looking non-gap financial measures due to our inability to project special charges in certain expense.

Are you seeing any changes from your competitors.

To offset any type of slowdown they might be encountering from a visitation standpoint or expense standpoint, and again, you've got two pretty big properties coming into Las Vegas locals market and do you change the way you think about your promotional spending.

For that market specifically.

Yes, I think look as you.

As you look across I think the country globally.

David Strow: Today's call is being Webcast Live at BoydGaming.com and will be available for replay in the Investor Relations section of our website shortly after the completion of this call.

The <unk>.

Promotional environment has been fairly stable irrational here in Las Vegas.

The major operators have been very.

Keith Smith: So with that, I would now like to turn the call over to Keith Smith. Keith. Thanks David and good afternoon everyone. Our results for the third quarter reflect the value of our strategic focus on our core customers, the benefits of our growth initiatives and our diversified business model. For the quarter, company-wide revenues grew 3% to $903 million. During the quarter, we continue to see growth in play from our core customers increasing 1%.

Very stable.

And it.

It has not been highly promotional it's been stable the people, who got aggressive or the individual properties, maybe who got more aggressive coming out of Covid have stayed aggressive.

The other operators have stayed very disciplined.

Through through Q3, and I would expect that to be continuing into Q4 as.

As we look at our regional markets.

Largely the same those players that got aggressive post COVID-19 have stayed aggressive.

Keith Smith: This is on top of last year's strong growth of 5% from this segment. This increase in play from our core customer segment was offset by 4% year over year decline in retail play during the quarter. Importantly, total play from our retail customer segment has remained at consistent levels since late last year, reflecting a stable retail consumer. We also produce growth in non-gaming revenue during the quarter with hotel revenue increasing more than 4% and food and beverage revenue growing nearly 5% in both cases driven by strong cash business.

And those players that have remained disciplined.

After COVID-19 are still being disciplined and were not seeing much in the way people stepping out and getting aggressive our customers have the opportunity today to participate in those more aggressive programs. They don't they stay with us.

So I don't see much change in that landscape, even with <unk>.

Two new openings here in Las Vegas.

Got you. Thanks, Keith Thanks, guys I appreciate it.

Thank you. Our next question comes from Barry Jonas of Truest Securities Berry. Please go ahead.

Keith Smith: And with respect to our growth initiatives, we once again delivered strong results from Sky River and our online gaming segments. On a company-wide basis, EBITDAR decreased 5% to 321 million while property level operating margins were 40% reflecting ongoing cost pressures and a return to normal seasonality.

Hey, guys I wanted to dig in a little bit more into the retail softness you've noted any specific geography or segment of the database.

You highlight and if possible can you maybe help frame the size and importance of retail versus core segments to any extent you're comfortable with.

Keith Smith: Now moving to segment results. In a Las Vegas local segment, operating performance on a year over year basis was similar to our performance in the second quarter of this year and consistent with the expectations we outlined on our last call. During the quarter, we continued to drive solid growth in core customer play which increased 2%. Play from our retail customers was down approximately 4% year over year. However, performance from this customer group has remained stable in the local segment since late last year.

Yes.

Okay.

So I think.

When we think about the retail business.

Okay.

I mean, it's an impact.

I mean, we saw similar impacts in Las Vegas that we saw in the Midwest and south so it's not to the extent geographic in any sense or property specific it's across all segments.

Keith Smith: We also saw a nearly 6% increase in non-gaming revenue with both hotel and food and beverage revenues growing during the quarter. With respect to our EBITDAR and margin performance, our local results continued to be impacted by ongoing cost pressures in our business.

And so it is not.

Isolated or unique to any any one set of properties I think as we think about kind of the overall impact of.

Keith Smith: Looking ahead to the fourth quarter, we expect that trends among both core customers and retail players will remain consistent with the last several quarters. We also expect the current cost pressures will continue into the fourth quarter. The overall expenses should be sequentially consistent with the levels we saw in the third quarter. Also in the fourth quarter, we anticipate there will be some impact from the opening of a new competitor. As we have seen with previous openings of new properties, we expect some initial trial visitation from our customers to this new property. However, after this initial trial is over, we expect this impact will fade, our customers will return and long-term growth will continue as Las Vegas market absorbs this new capacity.

Retail too to kind of the core business first think about retail.

In two categories, one being the unrated segment.

And the second component of retail being the lower end rated segments.

And.

Within our rated database generally the trend is pretty.

Consistent so that rated.

Core customer growth is offsetting any softness in.

The lower part of that.

Database it falls into the retail category.

Where we're seeing kind of where we don't have the ability to kind of offset.

Keith Smith: Next, in downtown Las Vegas, underlying business trends remain healthy. Consistent with the second quarter, segment results were impacted by an ongoing rumor model project at Main Street Station, as well as the final stages of the Fremont renovations. The California, which benefits from Main Street Station's hotel rooms, was also impacted during the quarter from the ongoing work at Main Street. Main Street Room Remodel project is in its final stages, and we expect it to be complete by year end, allowing both the California and Main Street to return to growth.

Through the growth in the core customers as the softness in the unrated segment.

Certainly not.

The entire segment because some of those customers, obviously goods, but but we are seeing softness in the unrated segment.

And for that.

Yes.

And that's definitely related to the to the economic.

Impact.

We track about 60% of our business overall.

Keith Smith: At the Fremont, we are driving strong results from the comprehensive remodel and expansion of our casino and gaming amenities, which we completed in October. Even with disruption during the third quarter, Fremont achieved strong revenue growth and record third quarter EBITDA, as our renovations drove increased traffic and visitation to the property. This strong performance of the Fremont comes against the backdrop of a thriving downtown Las Vegas market. But history and traffic remains strong along Fremont Street, and we continue to benefit from solid visitation from our core Hawaiian customer segments.

And so the rated business the unrated business as a category.

Is about 40% of our business.

So and that's on the.

The slot side of things.

So I don't know if that helps you understand kind of the customer trends that we're dealing with or not.

But hopefully that puts it in some sort of perspective for you Barry.

Yes, Josh that's helpful. And then just as a follow up.

I appreciate the commentary on the Durango opening, but I guess I had a longer term question around the Vegas locals market in your capital allocation strategy in a red rock has been talking about ultimately doubling its footprint in the market. So I was just curious if you could talk about how you're thinking about further investment or even expansion into the March.

Keith Smith: Thanks to these healthy trends in our recent investments, we expect improved results in downtown Las Vegas in 2024. Looking at our Southern Nevada operations as a whole, the continued growth of our core customer, the stability of the retail customer, and the strength of a Las Vegas economy we all give us optimism for the future. Visitation to Las Vegas is up nearly 8% year to date. Convention of meeting business is up 30% this year. Average daily room rates are up more than 10% across the market this year. Airport traffic is at all time highs on a trail in 12 month basis.

Place over time.

Sure. So one of the things that I mentioned, we are doing is upgrading many of our hotel rooms in many of our restaurants and so that is to make sure that it's going to be a a very current relevant product for our customers.

Keith Smith: And with upcoming events, like Formula One and the Super Bowl, a busy convention calendar, the recent debut of the sphere and the fourth quarter openings of two new resorts with nearly 4,000 hotel rooms, the stage is set for continued growth in the Southern Nevada market. Local economic indicators remain positive as well. Total employment in Southern Nevada is up nearly 5% over the last 12 months, and our local population continues to grow. The development pipeline remains robust with $6 billion in project currently under construction in Southern Nevada.

We do have significant acreage of many of our properties here locally at the Orleans at the Suncoast at the Gulf Coast.

Leon.

To be able to grow these businesses, we've talked in the past about trying to invest in and leverage up strong existing businesses, where we believe we can continue to grow them and get a good return on our investment. The first two were Fremont and treasure chest and we'll be announcing a few more next year.

Keith Smith: And with billions of dollars in additional projects now in the planning phase, the Las Vegas economy has a firm foundation for continued economic growth well into the future.

But certainly our locals properties have some of those dynamics, where we have very very strong performers that we think can continue to grow their business with some additional capital investment we're not ready to describe exactly what those are that will be middle of next year, but we do have those opportunities we are looking at them and reviewing them well.

Keith Smith: Moving to the Midwest and South region, customer trends remain stable during the quarter. We continue to see broad-based growth in poor customer volumes offset by year over year declines in retail play. Similar to other segments, volume from retail customers has remained at consistent levels in the Midwest and South since the fourth quarter of last year. Overall, our customer trends have been consistent across the Midwest and South segment in recent quarters, and we believe these trends will continue in the fourth quarter.

I'll be in a place to talk about them sometime middle of next year.

Great. Thanks, Keith Thanks, Josh.

Barry.

You are.

Our next question comes from Carlo Santarelli of Deutsche Bank Carlo. Please go ahead.

Hey, guys. Thanks.

You guys, obviously talked a little bit about the competitor opening in the fourth quarter and just to kind of put into context I would imagine it would be Orleans, where you feel a little bit of impact and I know you guys don't provide.

Keith Smith: And much like Las Vegas, cost pressures impact to the performance of the Midwest and South region during the quarter. We expect this will continue overall expenses in the fourth quarter, running at similar levels to the third quarter.

Any kind of real property level, but just more or less looking to frame like what you're saying from our Las Vegas locals impact.

Keith Smith: Next, in our online segment, EBITDAW continue to grow versus prior year, and this segment is now on track to achieve 60-65 million in EBITDAW for the full year. Similar to the second quarter, we've benefited from strong results, from Fandall's operations, as well as contributions from Boyd Interactive, which we acquired last November. And finally, our managed another business produced $19 million in EBITDA during the court. Management fees from Sky River Casino in Northern California represent $17 million of this performance, as this property has consistently exceeded our expectations since opening in August of last year.

Perspective that that opening could have on <unk>.

Leans or the broader portfolio in an otherwise safe flattish environment in 2024, just kind of thinking about the magnitude of what you see in that impact or do you see any kind of lasting impact you believe it will just be trial and dry up fairly quickly.

Yes Carlo so it's a good question I think look I don't think we feel like we're going to have the direct impact as a result of the new competitor coming into the marketplace and I think we believe that.

Keith Smith: As a result of Sky River's strong performance, our company's loan to the tribe was effectively repaid earlier this month. And based on the property's strong start, the tribe is actively working on plans to expand Sky River by adding additional casino square footage, hotel rooms, and meeting in convention space. While these plans are still preliminary, the tribe and our company are optimistic about the potential of an expansion project given Sky River's performance to date.

Over time, the market will absorb the new supply.

And kind of all.

Boats will benefit from a rising tide.

So.

Big picture, how we think about what's going on so there'll be some kind of short to intermediate term pressure on our business.

The direct impact of it and then over time the market just kind of grows through all of that and I think thats consistent with what we said in our market and our comment prepared comments when.

Keith Smith: As a result of Sky River's strong results, we expect our manage and other business to maintain a pace of $19 million in EBITDA during the fourth quarter and into next year. Recall that during last year's fourth quarter, we received a one-time development fee of $5 million related to the Sky River project.

When we think about the impacts to our business.

I think we think of it primarily as or lanes, which is.

Is shortest by distance, but not necessarily a direct and easy drive from that asset to the property. So that's a consideration and then suncoast on the other side of it.

Keith Smith: So when all, on a company-wide basis, we continue to deliver solid results. Given our company's continued operating strength, low leverage and strong free cash flow, we're able to execute a balanced capital allocation program that includes reinvesting in our properties and returning capital to our shareholders. Over the past two years, we have returned over $1 billion to our shareholders while maintaining a strong balance sheet. Going forward, we remain committed to our $100 million per quarter share repurchase program and our regular dividend program.

Our major competitor here in Las Vegas So.

I think if we think about kind of generally the impact to the business overall, it's got to be kind of load.

Mid single digits at most of the overall.

<unk>.

Las Vegas local segment, so we generate $450 million to $500 million of EBITDA.

Keith Smith: In addition to the song going capital return program, we remain focused on investing in our core operating properties. Our recently completed renovation of the Fremont and our project to move our treasure chest operation onto land to improve the customer experience are just two examples of this initiative. In the strong results, we're achieving at the Fremont represents the potential of these types of investments. With Fremont now complete in treasure chest nearing its final stages, we expect to announce additional projects sometime next year.

Kind of five 5% would be up to $25 million EBITDA impact for all of next year.

And I think that would be pretty conservative from our perspective.

Okay, Great and then Josh if I could just kind of a follow up on some of the comments you made earlier.

You talked obviously about the cost increases you guys walk through kind of the buckets, where they were coming.

Keith Smith: Beyond these capital projects, and part of our ongoing maintenance capital plan, we're also making investment in many of our hotel food and beverage facilities to ensure we offer a fresh and relevant offering for our customers. This is not a new initiative, but rather part of an ongoing focus to ensure our properties amenities remain competitive and meet customer demands. As an example, we recently introduced a new high-limit room at the Sun Coast, and we'll be opening seven new restaurant concepts nationwide during the fourth quarter with more to come next year. We also have several hotel renovations starting in the fourth quarter and continuing into next year as we look to ensure our hotel product remains relevant for our customers.

You also made a point of kind of saying that.

<unk>.

Stability relative to <unk> as you look out to 2024, and we think about those various buckets, obviously labor will be something that likely persists.

But how much of a headwind are you thinking about for 2024 as it pertains to kind of the cost side and some of the buckets that you mentioned.

Yes so.

I think what we're actually seeing as we kind of saw a P.

Pretty dramatic impact from expenses.

2022.

And.

And into 2023, and I think we're starting to see a leveling off of those expenses to some degree not to say that there's not going to increase or theyre not going away, but I.

Keith Smith: So in all this was another solid quarter for our company. Once again, we prove the effectiveness and resiliency of our diversified business model led by our focus on our core customer and strong performance from our growth initiatives. While we are not immune to cost pressures, our operating teams continue to manage the business efficiently. Going forward, we will continue to utilize our free cash flow to create shareholder value through our property reinvestments, our ongoing capital return programs, and strategic I would like to thank our entire team for their dedication, their contributions to another solid quarter of performance. It's an honor to be part of such a great group of team members.

I think about the expenses.

Like for instance, we've talked a lot about the minimum wage program, we rolled out.

Next year, we will anniversary that.

Utilities that have been going up double digits really.

When you look at two.

2022 versus 2021 are now mid to high single digits and starting to be in the low single digits. So.

Keith Smith: Thank you for your time today.

Josh Hirsberg: I'd now like to turn the call over to Josh. Thank you, Keith. This was another solid quarter for our company. Our core customers are continuing to perform well, even growing in this challenging environment. In terms of our retail customers, consistent with recent quarters, we experience experienced softness on a year-over-year basis during the quarter. Retail customer volumes took a step down, beginning in the fourth quarter of last year. However, sequentially, these volumes have remained consistent since then.

We're starting to get to the point where they.

At least when we think about the major categories of expenses they are.

Like their lane theyre, starting to level off to some degree and a lot of the some of this has to do with kind of how we think about managing the business going forward. Some of these things we don't have much control over like proper.

Property insurance rates or property taxes to some degree, but I think as we evaluate where the expenses.

Josh Hirsberg: As we experienced year-over-year operating trends in the third quarter, sorry, as we expected year-over-year operating trends in the third quarter, very similar to those in the second quarter. As we face more difficult comparisons and experience the continued return of seasonality to our business, our operating teams have continued to deliver at a very high level of efficiency. Property level marks were 40% while company-wide margins were 36%. Consistent with what we experienced during the second quarter, major expense categories that increased year-over-year during the third quarter were wages, utilities, and property insurance.

Kind of year over year are trending and we look at where we think in the near term those expenses are going which arent. We don't believe are changing materially.

I think we feel like we're moving into a period of expenses that are that will grow but just be more stable overall for us and we will be able to manage through it I think what gets more difficult is the is the question of if the consumer continues to get weaker and we haven't seen that.

We're not seeing it at the retail level, we've seen strength in the core customer.

But I.

I think what we're trying to paint a picture off from what we see today.

Josh Hirsberg: Moving to our online segment, we expect this part of our business to generate $60 to $65 million in EBITDA this year. During the third quarter, the tax pass-through amount, related to our online partnerships, was $71 million. This year, versus $45 million, last year, in the third quarter. These amounts are recorded as both revenue and expense in this segment, and impacted overall corporate-wide margins by more than $1 million. 300 basis points this quarter compared to 200 basis points last year in the third quarter.

A fairly stable expense environment.

Theres going to be nuances and seasonality.

Today currently at least a stable.

Consumer environment.

We're going to have disruption with respect to main street hotel that will continue into Q4 once that's all done.

<unk> should be.

Ready to run for 2024.

Have some disruption related to.

The introduction of the competitor and we will have to work through that in Las Vegas locals through a period of 2024 or 2024, but absent that if you were able to kind of remove that impact in some way I think you would have a have a business that has.

Josh Hirsberg: Capital expenditures were $108 million during Q3, including span for both Fremont and Treasure Chest. Year-to-date capital expenditures have been $280 million. We continue to project total capital expenditures for the year, approximately $350 million, including $250 million in maintenance capital, and $100 million related to Treasure Chest and Fremont. Now that Fremont is complete, and as we anticipate opening Treasure Chest mid next year, we expect to announce additional growth projects during the upcoming year.

Kind of very consistent performance with what we're seeing today.

And then the Midwest and South.

Also.

Stable core customer.

Hopefully a retail customer that doesn't show any further weakness going into 2024.

And we kind of get beyond some of the <unk>.

Construction that we felt.

Josh Hirsberg: And as Keith already mentioned, as part of our annual maintenance capital spend this year and next year, we have planned several restaurant upgrades and hotel room remodels. In terms of our capital return program, we have repurchased $106 million in stock during the quarter, representing $1.6 million shares, and an average price of $65.30 per share. This resulted in an actual share count at the end of the quarter of 98.4 million shares. Additionally, we paid a quarterly dividend of $0.16 per share on October 15.

At some of our assets in this quarter and so 2024 looks to be a stable year for us.

In the Midwest and South, but I don't know if Keith you want to add anything to that because I've tried to kind of.

Give it a big broad brush.

Carlo I hope that helps.

Absolutely. Thank you.

Yes.

Thank you. Our next question comes from David Katz of Jefferies. David. Please go ahead.

Hi afternoon.

Thanks for taking my question, if we could go in another direction just talk online for a minute.

Josh Hirsberg: Between share repurchases and dividends, we have returned more than $1 billion to shareholder centers, assuming our capital return program two years ago. And by year end, we will have returned over $1 billion through our share repurchase program alone. As of September 30th, we have approximately $426 million remaining under our current repurchase authorization. Thanks to our substantial free cash flow, we have balanced our capital return program and our property reinvestments while maintaining a strong balance sheet.

Obviously progressing nicely there.

Recalling what you spent.

On the acquisition I believe it was about 125 and then some other investments.

Any color you can give us on where you think that might go or could go or payback period or.

Roy or any of that sort of vision would be helpful.

Yes.

The acquisition of then was pallet interactive, which is now avoided interactive is moving along well we relaunched the startup platform in Pennsylvania, and New Jersey earlier this year kind of beginning of May.

Josh Hirsberg: Our total leverage at the end of the quarter was 2.3 times, while least adjusted leverage was 2.7 times. We have no near-term maturities and ample borrowing capacity under our credit agreement. Our balance sheet is the strongest in the company's history, providing us the confidence and our ability to reinvest in our portfolio and return capital to shareholders while pursuing opportunities to further grow our company.

And thus far I am very pleased with its performance, we bought the business and we chose to get more directly or directly involved in the online gaming business.

Because it's a we view it as a long term play this wasn't about a short term kind of IRR or ROI. This is really about kind of long term controlling the journey of the customer having a holistic view of that customer and wanting to help build kind of another.

David Strow: David, I conclude our remarks and we're now ready to take any questions. Thank you, Josh.

David Strow: We will now begin our question and answer session. If you would like to ask a question, please press star then one on your touch tone phone. You will hear a three-tone prompt acknowledging your request. Should you wish to withdraw your request, please press star then two. If you are using a speaker phone, please use your hand that one asking your question. We will pause for a moment while we compile our list of questioners.

The database and somebody we can market to so we're very happy with the early launches in Pennsylvania in the month of August after just 90 days of being operating on the <unk> platform.

We've exceeded the highest.

Josh Hirsberg: Our first question comes from Joe Graff of J.P. Morgan. Joe, please go ahead. Thank you everybody. Afternoon, Josh Keith. Just circling back on the topic of op-x pressures, when you look at op-x pressures by your reportable geographic segments, is there much of a difference in cost pressures in Las Vegas versus the Midwest and South? It looks like in the quarter, the sequential changes in margins and expenses was more acute in the regionals versus the locals.

Gaming or casino levels that <unk> had done when they were running it for us. So we're very happy with the performance and it's growing.

But it's early and we're not at a point of talking about returns on investment at this point, but it is a long term play and something where once again, we view it as an important part of our long term strategy.

And both are online business as well as a strong plant based business to compete effectively.

Understood and with respect to the capital decisions you are making for next year I just wanted to get a sense for where the boundaries are.

Josh Hirsberg: I don't know if that's a fair way of looking at it on the sequential quarter of a quarter of a changes this year versus last year. But if you could help us understand that, that would be great. Yeah, so Joe, I'll try to answer or give you a sense of that. I think, you know, first of all, there is some seasonality related to expenses, right? So utilities, which were a large part of the increases when you look quarter over quarter have to do primarily or in this sense are entirely impacting Nevada's operations.

Yes.

There are things that are more.

Larger more transformative I know of one company that's up for sale.

That we've read about.

Josh Hirsberg: On the other hand, when you look at increases in like property taxes or property insurance, that is more weighted toward, although it did impact Nevada, but it definitely more impacted the Midwest and South assets. And that can be kind of a one-off, especially when you're looking year-over-year, have to be a little careful because there are just kind of one-off changes that may not be impacting the business going forward. I think the bigger component of when you look year-over-year is definitely labor.

Or <unk>.

Strict investments and things like that I, just wanted to get a sense for how big we should think or should we just look at your portfolio and think about properties that may need some expansion or upgrade.

Yes, I think when we're talking about capital investments it was as I think I.

As discussed in my prepared remarks, it's more about our maintenance capital budget and improving existing facilities number one so we're going to open seven new restaurants in the fourth quarter. This year across the country as a way to make sure that we have a fresh product for our customers.

We've got several room remodels, starting just because you need to do that we will continue to through those types of programs through 2024 will be opening another seven to eight new restaurants next year and have some more room Remodels, we will look at and we will announce later in the year kind of our next phase of.

I do want to call it expansion or growth capital programs like the Fremont like treasure chest, we're not ready to discuss those yet.

Josh Hirsberg: And there's really not anything unique regionally about that other than, you know, just the company's practices to give wages to raises to its hourly team members on a July 1 basis. I don't think that's applied in the Midwest and South. But that's the only nuance there. I generally think of the impact. These are nuances that you can point to as differences between the segments, but largely, you know, the spread of costs are pretty even across all the segments of our business.

As I said it'll be an existing property thats a strong high performer that is in a strong market, where we think we can continue to grow the business.

We have <unk>.

Several of those that fit that profile, we're just trying to decide what the priority is.

And when to get those projects started but not prepared to talk about it now, but certainly by the middle of next year, we'll be prepared to.

Discuss what what is next for us in terms of critical approach as opposed to maintenance.

Got it understood. Thank.

Thank you.

Josh Hirsberg: I hope that helps you a little bit. That is helpful. Thanks, Josh. And this is more of a specific question to Las Vegas locals in downtown with Durango and fountain blue opening up over the next two months here. Are you experiencing above average employee departures turnover and with presumably higher wages on the strip associated with this new union contract? Do you see labor pressures incrementally worsening in the fourth quarter and early next year?

Thank you. Our next question comes from Shaun Kelley of Bank of America, Sean. Please go ahead.

Hi, good afternoon, and thanks for taking my questions.

Josh just going back to the cost environment, I think thats clearly the incremental part.

Kind of what's going on here I just wanted to ask sort of as you look forward. What do you think the right leverage point for the businesses. So to see margin expansion from here what level of revenue do you think you would need as we start to get out until a little bit more steady states, let's look out 24 or 25 is it.

Josh Hirsberg: And so could you help quantify that amount? So with respect to talent wars, if you will, and what we're experiencing on that front, we've seen a little bit of additional turnover as people are looking at some of these new positions, but it is not significant. We obviously have known these properties. We're going to be opening on these timelines for a while now, and so we've been able to prepare for it. So it's nothing significant.

Josh Hirsberg: Nothing that is impacting the business, Joe, in terms of additional turnover or employees kind of moving on to the next opportunity. In terms of wages, you know, hard to tell where they're going to land on the strip except rates will be higher than they are today. Do I think it will impact once again will people migrate to the strip for those higher wages? I don't think so. The already strip already pays generally more than we're paying in the locals market and people could already make that decision today if they wanted to.

Can you do so on a very low single digit number I E <unk>.

102% or does it need to be a little higher than that where maybe some of these costs, while coming down look a lot more like prevailing inflation that might be 3% to 5%, whereas historically it was it was maybe a little bit lower than that.

Sean It's a good question I think ultimately the way we think about it is.

I think.

It's kind of like.

Costs that are piggybacking off of one another so at some point, we're able to kind of manage through those cost and we were able to do that over time.

And then as utilities picked up our property taxes and property insurance picked up became just a little much relative to the soft knit with softness with the retail customer.

Really don't think it takes a lot to turn that to kind of turn it back around so to speak so to the extent we started to see.

Josh Hirsberg: We've raised wages here over the course of last year or two and feel like we're in a good place, but it is a competitive marketplace. And I think we'll just have to see what happens on the strip and deal with those outcomes. I don't have any prediction as to what will happen on the strip, how much of an increase it will be and what the ripple effect could end up being, but we'll obviously pay close attention.

Growth off of that base.

So I think thats, when we would be able to kind of outpace.

We will be able to manage through the cost pressures and so.

I think you know.

It's really difficult right now because I think part of what's going on in the business is a normalization. It is like if you think about and I know, it's hard to think about when we had stimulus in the business, but stimulus really just came out of the business in in 'twenty, one and 'twenty two.

Josh Hirsberg: Joe, I think one thought I would add to your question is, you know, I think as we look at expenses for Q3 and think about how they relate to what they may imply going forward. I think generally we think or feel like the order of magnitude of expenses that we incur in Q3, when you look at them by segment, that's what you largely can expect going forward, at least from what we know today.

And we're kind of getting beyond that in 23 at the same time some of the decline in revenues related to what's going on in the economy.

So and it's hard to figure out how much of that is attributable to each one of those factors at the same time that all of that's going on.

Josh Hirsberg: In other words, we don't expect our overall expense structure to be increasing disproportionately going forward. We expect kind of the level of expenses that we're seeing in terms of total dollars to be largely designed. Got it. Thank you very much. Thank you.

We're dealing with and working through the expense side of things and so ultimately I think once the business normalizes, which I think is part of what's going on it's now not all economic that we will be able to kind of grow beyond that and that's when you'll see us start to have.

Steve Wieczynski: Our next question comes from Steve with Zinsky of Steve, please go ahead. Yeah, hey guys. Good afternoon.

Flow through on that incremental revenue.

That could happen in 2024, even with the soft retail consumer as long as at retail consumer were to remain consistent in not continually.

Josh Hirsberg: So, you know, I'm not sure if this is a fair statement or not incorrectly if I'm wrong, but you know, if we kind of think about moving forward, is it going to be tougher for you guys to cut operating expenses from here? If your revenue screen, your top line, you know, continues to be a little bit softer. And if that's the case, you know, is there anything you can do on the capex on the capex out of your business to offset some of those higher operating expenses? I mean, do you go down the path of cutting slot budgets or other things like that could potentially offset your higher operating expenses?

A decline so.

I hope that gives you a sense of.

Our perspective for that.

Yes. Thank you and then maybe just to clarify to make sure. We're all kind of clear on the modeling side.

Comments as it relates to sort of.

Flattish operating expenses from here I mean, this is all like dollars comment right. So to the extent, we saw opex dollars up quarter over quarter. This quarter. This feels like a good run rate or base of expense, even despite some seasonality utilities et cetera. This is sort of the right expense dollar base to kind of think about the business.

Josh Hirsberg: Look, as we think about total operating expenses, given our margins today, we are running a very efficient business, and so I think it's a fair statement to say that we don't have as much room to fine tune the business as we did, let's say pre-COVID. And so we have to be very careful going forward in terms of how we adjust what we adjust to make sure it doesn't impact the top line.

Moving forward is that is that right.

Yes, that's the point I was trying to make I think there will be seasonality, but that'll give you the the offset that some other cost will go up and it will all kind of.

Come out in the wash so to speak so.

That's our expectation today, we don't have any reason to think that theres going to be kind of outsized continued increases in costs and <unk>.

Josh Hirsberg: Having said that, do we have flexibility in the CAPX? I think absolutely. I think we have a very robust maintenance capital budget that we're comfortable with. I think over the years we've always been able to use that as a lever to balance any declines in the business or declines in overall free cash flow that we see. And you know, when times are good, spend a little more. And times are maybe a little tougher. We can always pull back.

Earlier question further evidence of that is the costs seem to be leveling out at the same time so.

Yes that was clear thank you very much I appreciate the color.

Thank you. Our next question comes from Brent mature of Barclays.

Josh Hirsberg: We're very careful about it because we don't want to impact the overall condition of our properties in what is a very competitive market, not just here in Las Vegas, but across the country. Gotcha, thanks for that guys.

Please go ahead.

Hey, good evening, everybody. Thanks for taking my questions I.

I wanted to focus in on the Las Vegas locals topline environment demand environment.

Josh Hirsberg: And then the second question, wondering if you could give any update in terms of changes to the promotional environment around the majority of your operating market, meaning, you know, have you seen any changes from your competitors? You know, to offset any type of slow down, they might be encountering from a visitation standpoint or spend standpoint. And, you know, again, you've got two pretty big properties coming into Las Vegas local market. And, you know, do you change the way you think about your promotional spending, you know, for that market specifically?

And we only have a couple months out of the quarter from the state of Nevada, but it did look like the first two months of the quarter. The locals market overall grew a little bit.

Last quarter, you guys tracked with that market down.

Modestly, but this quarter it looks like for the quarter Youre down a little bit in that market was up but again, we don't have September. So I guess the first question is how did maybe you could give us September in terms of just the cadence relative to the early two months of the quarter and then the follow up would be if you think you're tracking below the market.

Josh Hirsberg: Yeah, I think look as you look across, I think the country globally, the promotional environment has been fairly stable or rational here in Las Vegas. You know, the major operators have been very, you know, very stable. And it has not been highly promotional. It's been stable. The people who got aggressive or the individual properties, maybe who got more aggressive coming out of COVID of state aggressive. The other operators of state kind of very disciplined.

At all why is that is it a customer mix is it is it sort of the segmentation for your unrated play versus the market and any other thoughts on that dynamic would be helpful. Thank you.

So if youre looking at the statistics that are put out by the gaming control Board part of this is.

Is how you put those together for the last three months period of the last quarter.

You said, it's kind of August because they haven't issued September yet.

Our market share is pretty much right on top of last year definitely lost I mean, maybe down a 10th or something but that's about it and so we feel pretty good about how we're performing in terms of the Las Vegas locals market.

Josh Hirsberg: You know, through Q3, I'd expect that to be continuing into Q4. As we look at our regional markets, you know, it's largely the same. Those players that got aggressive post COVID have stayed aggressive. And those players that have remained disciplined after COVID are still being disciplined. We're not seeing much in the way people stepping out and getting aggressive. You know, our customers have the opportunity today to participate in those more aggressive programs. They don't they stay with us. And so I don't seem much changing in that landscape, even with, you know, two new openings here in Las Vegas. Gotcha. Thanks. Thanks, Josh. Appreciate it. Thank you.

So.

Yeah.

The numbers in Nevada are hard to put together because they don't break them out specifically, so aggregating them as more of an art.

But the way we do it the way we've consistently done it we're pretty much right on top of last year like I said, maybe off attempts.

Okay. That's helpful and would you care to comment on how September cadence looked versus July and August.

I really can't because I don't know how the market is going to perform and so.

<unk>.

What's going to reporting of Nevada is unique and so we will not provide any comment on September until we sell everybody else did.

Barry Jonas: Our next question comes from Barry Jonas of Truist Securities. Barry, please go ahead. Hey, guys. I wanted to dig in a little bit more into the retail softness that you've noted. Any specific geography or segment of the database. You highlight and if possible, can you maybe help frame the size and say importance of retail versus course segments to any extent you're comfortable with. Thanks.

Okay, Alright, that's it from me Thanks a lot.

Yes.

Thank you. Our next question comes from John Decree of CB R. E. John Please go ahead.

Good afternoon, Keith and Josh Thanks for taking my question.

Maybe on the demand side the core customer play I think in your markets, you've kind of mentioned that play was up low single digits.

I'm curious if you could give us maybe a little bit more color there.

As Youre seeing your number of core customers grow or are they spending more and then I guess the broader follow up.

Josh Hirsberg: So, I think, you know, when we think about the retail business, I mean, it's an impact, I mean, we saw similar impacts in Las Vegas that we saw in the Midwest and South, so it's not to the extent geographic in any sense or property specific, it's across all segments. And so it's not, you know, isolated or unique to any one set of properties. I think as we think about kind of the overall impact of retail to kind of the core business, first think about retail in the, in two categories.

I don't think <unk> been asked yet is.

More broadly speaking are you seeing spend per trip.

About the same or the number of trips down or kind of how are you. How are you thinking about that broadly and then kind of on your core customer growth.

Yes, so as we look at our core customers. It is a little bit of a mixed bag around the country right. We do see good growth in.

Guests and visitation in certain age.

Graphics, frankly at the at the higher end of the age demographics, a little less so at the lower end, it's different by region. We're seeing good growth frankly across all the segments in Las Vegas.

Josh Hirsberg: One, being the unrated segment, and the second component of retail being the lower end rated segments. And within our rated database, generally, the trend is pretty consistent, so that rated core customer growth is offsetting any softness in the lower end part of the database that falls into the retail category, where we're seeing kind of, where we don't have the ability to kind of offset through the growth and the core customer is the softness in the unrated segment.

<unk>.

Once again, a mixed bag across the age segments in the MSR remember.

Remember as we came out of Covid, we're really more focused on the quality of the customers and the value that theyre generating then we are absolute numbers, we're seeing larger increases in.

The daily spend and.

How much we are earning from those customers than we are in the actual growth of those customers. So we're very happy with both increases in volumes.

Customers, but more increases in volumes of play.

Understood. That's helpful color Keith. Thank you maybe one more on the consumer side, you may have touched on it a little bit earlier, but on the hotel and F&B business.

Josh Hirsberg: It's certainly not the entire segment, because some of those customers are obviously good, but we are seeing softness in the unrated segment, and for that, you know, and that's definitely related to the economic impact. You know, we track about 60% of our business overall, and so the rated business, the unrated business, as a category, is about 40% of our business. So, and that's on the slot side of things. So, I don't know if that helps you understand kind of the customer trends that we're dealing with or not, but, you know, hopefully that puts it in some sort of perspective for you, Barry.

Sounds like it's it's price.

Cash rates and cash covers but.

Is that is that fair are you also seeing an uptick in occupancy in the number of covers across the restaurants and F&B outlets as well.

Yes, So I think as you as you think about the hotel it really is more occupied rooms at.

Generally speaking across the portfolio kind of a flattish average cash rates up a little bit in some markets flat than others, but generally think of it as more cash occupied rooms on the food and beverage side, it's more of increase in pricing than it is increase in covers.

Understood. Thanks, Keith Thanks, Josh I appreciate all the questions and commentary.

Okay.

Thank you.

Josh Hirsberg: Yeah, Josh, that's helpful. Then just as a follow-up, you know, I appreciate the commentary on the Durango opening, but I guess I had a longer-term question around the Vegas local's market and your capital allocation strategy. You know, Red Rock's been talking about ultimately doubling its footprint in the market, so I was just curious if you could talk about how you think about further investment or even expansion into the marketplace over time.

Our next question comes from Dan <unk> of Wells Fargo. Dan. Please go ahead.

Hey, good afternoon, everyone. Thanks for taking my questions.

Just want to hit on Midwest, and South a bit revenue there has been down the past.

Four quarters in a row and I know you guys don't have a crystal ball, but I guess as you look at your portfolio you think about the dynamics of core versus retail impact from new competition, maybe lapping some of those easier comparisons in Louisiana and Mississippi, How do you think about revenue the possibility of this starting to lap easier comps and maybe being flatter or even up.

Josh Hirsberg: Sure. So, you know, one of the things that I mentioned we're doing is upgrading many of our hotel rooms and many of our restaurants, and so that is to make sure that we have a very current relevant product for our customers. We do have significant acreage of many of our properties here locally at the Orleans, at the Sun Coast, at the Gold Coast, at Alliante, to be able to grow these businesses.

Modestly going forward.

Yes, Dan I think whats driven the softness in the Midwest and South has really been I.

I guess two things that we've talked about one is.

For the last couple of calls, we talked about Mississippi and Louisiana.

They just have progressed progressively.

Josh Hirsberg: You know, we've talked in the past about trying to invest in and leverage up strong existing businesses where we believe we can continue to grow them and get a good return on our investment. The first two were Fremont and Treasure Chest, and we'll be announcing a few more next year, but certainly our local's properties have some of those dynamics where we have very, very strong performers that we think can continue to grow their business with some additional capital investment.

Kind of year year over year variances have continued to kind of improve they are still down but down less sequentially each quarter, if that makes sense and even for Q3, they're down but just down less.

And so that's becoming less and less of a topic for us. The other thing that was a step.

The Midwest and South was a step down in the retail consumer.

Josh Hirsberg: We're not ready to describe exactly what those are. That'll be, you know, middle of next year, but we do have those opportunities where we're looking at them and reviewing them, and we'll be in a place to talk about them sometime middle of next year.

Early started late last year I think in order for us to kind of.

Josh Hirsberg: Great. Thanks, Keith. Thanks, Josh. Yep, Barry.

Either.

The state.

The flat or just start to see some growth is as we need to make sure that that retail consumer wallet has been <unk>.

<unk> since Q4 of last year need to make sure it's not stepping down further in Q4 of 2012 2023.

Carlo Santarelli: Thank you. Our next question comes from Carlo Santarelli of Deutsche Bank. Carlo, please go ahead. Hey guys, thanks. But just more or less looking to frame, like what you think from a Las Vegas Locals impact perspective that that opening, you know, could have on Orleans or the broader portfolio in an otherwise safe, flatish environment in 2024, just kind of thinking about the magnitude of what you see in that impact. And do you see any kind of lasting impact, do you believe it'll just be trial and dry up fairly quickly?

It doesn't feel like it is.

But at that point once we know that and we think we can be comfortable with saying the business should begin to start to stabilize.

Sure.

Right.

And so and then the other thing is just to note and these are kind of.

Not meant to be.

Justification for the point I mean, we do have one off kind of impacts.

Throughout the portfolio in the Midwest and South in particular.

In Q3, we had issues with the.

Room supply at <unk>, St. Charles because we were starting the room construction there.

And that required us actually unexpectedly takeout more rooms than we had expected created kind of a ripple effect in terms of how we manage those rooms and who we are in the in the rooms during the third quarter, which will fix our has been fixed going forward.

Carlo Santarelli: Yeah, Carlo. So it's a good question. I think, look, I don't think we feel like we're going to have the direct impact as a result of the new competitor coming into the marketplace. And I think we believe that over time, the market will absorb the new supply and kind of all boats will benefit from a rising tide. So I think that that's big picture how we think about what's going on. So there'll be some kind of short to intermediate term pressure on our business.

Carlo Santarelli: We're not the direct impact of it. And then over time, the market just kind of grows through all of that. And I think that's consistent with what we said in our market in our comment prepared comments. When we think about the impact star business, I think we think of it primarily as or lanes, which is is shortest by distance, but a not necessarily a direct and easy drive from that asset to to the property.

So there are some one off.

<unk> kind of things that are happening in the quarter, just like with anything else, but I think to directly answer your question as I think we really need to see the retail consumer just.

Confirm on a year over year annualized basis, once we kind of <unk>.

Get to Q4 of this year that that is in fact continues to be stable and then I think you are in a point to say the Midwest and south should continue to be stable. I don't think you are at a point to say it should grow at this point.

Got it and then just for my follow up quickly in terms of the Capex, how should we kind of think about that project capex is it going to be similar to the $100 million you're spending in 2023.

Given that youre kind of talking high level about the projects there.

Yes, I think as you as we're thinking about it today is probably the right way to think about it until.

We're able to talk more about it at the same size projects as we've announced in the past with Fremont and treasure chest. Those are each in the $100 million range. Yes. So Fremont was a $50 million project treasure chest was $100 million project. The obviously, all werent done within a one year timeframe.

Carlo Santarelli: So that's the consideration. And then some coast on the other side of a major competitor here in Las Vegas. So I think if we think about kind of generally the impact to the business overall, it's got to be kind of low to mid single digits at most of the overall Las Vegas local segment. So, you know, we generate $450 to $500 million of EBITDAW, you know, kind of 5 or 8%, 5% would be up to $25 million EBITDAW impact for all of next year.

So the whole concept has been as those kind of come off the conveyor belt to take similar sized projects at our own the conveyor belt and are put those on the conveyor about whatever the analogy is.

<unk>.

And end up in about the same place.

And the projects will be kind of 12 months to 18 months and life. So that it kind of ends up to be about a similar amount.

Going to be a ballpark.

Carlo Santarelli: And I think that would be pretty conservative from our perspective. Okay, great.

In the same range.

Sometimes you are little bit got it some time ago.

Yes.

Thanks, so much.

Josh Hirsberg: And then Josh, if I could just kind of a follow up on some of the comments you made earlier, you know, you talked obviously about the cost increases. You guys walk through kind of the buckets where they were coming. You also made a point of kind of saying that that 4Q, a lot of stability relative to 3Q, as you look out to 2024 and we think about those various buckets, obviously labor will be something that likely persists.

Yes.

Thank you.

Our next question comes from Stephen Grambling of Morgan Stanley Steven. Please go ahead.

Hey, Thanks, I'll sneak one more in which is we look at the retail weakness or the unrated play weakness when you look back over time.

<unk> tended to lead.

The other segments of the consumer or is there any protocol that you look at to say theres been a window, where you can see sustained strength in your rated play while the unrated play has been weak for a prolonged period.

Josh Hirsberg: But you know, how much kind of of a headwind are you thinking about for 2024 as it pertains to kind of the cost side and some of the buckets that you meant. Yeah, so I think what we're actually seeing is, you know, we kind of saw a pretty dramatic impact from expenses in 2022 and into 2023. I think we're starting to see a leveling off of those expenses to some degree, not to say that there's not going to increase or they're not going away.

Yes, I would say, we haven't we haven't seen that I would not say.

That weakness that we're seeing in the retail customer at this point or the unrated play as a precursor to anything it's again for the last four quarters, we've seen a little bit of weakness in retail, but we've seen continued growth in our rate and our core customers. So yes. There is.

<unk> World post COVID-19 not much of a correlation going on yes, and I'd say, it's really hard to harken back to any period of time, just given how different the business is today than it was say pre 2019, even in 2008.

Josh Hirsberg: But, you know, as I think about the expenses, you know, like for instance, we've talked a lot about the minimum wage program we rolled out. You know, middle of next year, we'll anniversary that. Utilities that have been going up double digits really when you look at 2022 versus 2021. So, you know, we're starting to get to the point where they, at least when we think about the major categories of expenses, they are, they're feeling like they're starting to level off to some degree.

Where you had obviously both segments of the business core retail core continued.

Was stable and strong even in that environment. It was just the retail consumer wasn't spending at the levels that they had historically.

And ultimately that's what will persisted during that period of time. So it definitely was not a precursor to what was going on but ultimately we do have to recognize the business is very different today than it was.

Sure.

Got it and you also mentioned the normalization.

Josh Hirsberg: And a lot of this, some of this has to do with, you know, kind of how we think about managing the business going forward. Some of these things, we don't have much control over like property insurance rights or property taxes to some degree. But, I think as we evaluate where the expenses kind of year over year are trending and we look at where we think in the near term those expenses are going, which aren't we don't believe are changing materially.

I guess I was trying to kind of get at this but as we look at normalization in margins is there any thought about what kind of structural changes that you do feel like you've been made to kind of bracket.

Where margins could end up in a normalization if that continues in the direction that you are alluding to.

Ultimately I think the margins that youre seeing today, while still very respectful and strong for the company I think do have the inefficiency if a retailer of a weaker retail consumer and.

Josh Hirsberg: I think we feel like we're moving into a period of expenses that are, that will grow, but just be more stable overall for us and we'll be able to manage through it. I think what gets more difficult is the, is the question of if the consumer continues to get weaker and we haven't seen that. We're not seeing it at the retail level. We've seen strength in the core customer. But I think what we're trying to paint a picture of from what we see today is a fairly stable expense environment. There's going to be nuances and seasonality and today currently at least a stable consumer environment.

Some cost that I hope are not representative of the long term cost structure of the business.

But we'll have to see how that plays and ultimately I think.

We would expect to see growth in revenue.

On the gaming side of things and so all of those things would suggest that margins. We have today are.

Our.

Well really good an enviable.

Can be better.

In an environment, where you don't have as much economic impact.

Fair enough. Thanks, so much.

Josh Hirsberg: You know, we're going to have disruption with respect to Main Street Hotel that will continue in the Q4. Once that's all done, Mainst, downtown should be ready to run for 2024. We'll have some disruption related to the introduction of the competitor and we'll have to work through that in Las Vegas locals through a period of 2024 or 2024. But absent that if you were able to kind of remove that impact in some way, I think you would have a, have a business that has, you know, kind of very consistent performance with what we're seeing today. And then the Midwest and South also, you know, stable core customer. Hopefully a retail customer that doesn't show any further weakness going into 2024.

Yes.

Thank you our last question today comes from Chad Beynon of Macquarie Chad. Please go ahead.

Evening, Thanks for taking my question.

Josh in terms of the buyback you've been pretty consistent over the past I guess four or five quarters repurchasing a 100 million about 1% of the shares outstanding and the stock has kind of been in the 60 to $67 levels.

Is there a level, where you would consider increasing that amount on a quarterly basis, just given some dislocation in the market you've talked about the sandal steak and <unk>.

Stability in the business just wondering if theres, a number where you would kind of step up that $100 million.

Repo number thanks.

Josh Hirsberg: And, you know, we kind of get beyond some of the Construction that we felt at some of our assets in this quarter and so 2024 looked to be a stable year for us in the Midwest and South, but I don't know if Keith, you want to add anything to that because I've tried to give it a big, broad brush, but Carlo, I hope that helps. Absolutely. Thank you.

Yes, I think the way, we think about it in today's environment at least as we've probably we may.

Accelerate within a quarter the amount that we were going to spend if it if there was an opportunity to do that or.

But I think overall, we're comfortable with the level that we're spending today.

We would just end up buying more shares because the price was lower I think we would change the amount.

Material like Bud.

It's going to be done on a case by case basis.

David Katz: Our next question comes from David Katz of Jeff Rees. David, please go ahead. Hi afternoon. If we, thanks for taking my question. We could go in another direction, just talk online for a minute. Obviously progressing nicely there. Just for calling what you spent on the acquisition, I believe it was about 125 and then some other investments.

Not in any hurry, we want to be able to.

Use our balance sheet.

In good times and bad so.

Today when there is concern about the economy, we're very comfortable with our ability to continue to do what we're doing today, even look for ways to continue to grow the company.

And if we were in a different leverage point, we wouldn't be able to do those kinds of things.

Josh Hirsberg: Any color you can give us on where you think that might go or could go or pay back period or ROI or any of that sort of vision would be helpful. Yeah, so the acquisition of what then was Palo Interactive, which is now Boyd Interactive, was moving along well. We relaunched the Stardust platform in Pennsylvania and New Jersey earlier this year kind of beginning of May and thus far I'm very pleased with its performance.

I think in the environment.

These are really good obviously the strength of the balance sheet becomes even more powerful so.

I don't think we want to get too far ahead of ourselves.

We want to maintain that optionality.

And we want to maintain the flexibility that comes with it.

Yes, it's not simply about how much we want to spend on share repurchases. We do have this view of a balanced program. It depends where we are at in the Capex cycle, where the leverages the strength of the business as well as our desire to want to buyback shares and continue that program. So we do have flexibility around it but there's a lot that goes.

Josh Hirsberg: We bought the business and we chose to get more directly or directly involved in the online game business because we've viewed as a long-term play. This wasn't about a short-term kind of IRR or ROI. This is really about long-term controlling the journey of the customer having a holistic view of that customer. And wanting to help build another growth database and somebody we can market to. So we're very happy with the early launches in Pennsylvania in the month of August after just 90 days of being operating on the Stardust platform. We've exceeded the highest eye gaming or I could see no levels that the Fandall had done when they were running a forest so we're very happy with the performance and it's growing.

And to that particular decision as to when we would increase it and how much would increase it.

Thanks, Keith and Josh I appreciate it.

Thank you.

This concludes our question and answer session I would now like to turn the call back over to Josh for concluding remarks.

Thanks, David and we appreciate everyone dialing in today and the questions. You guys are asking to the extent there is any follow up or additional questions feel free to reach out to the company. Thanks again.

Thanks, Josh.

This concludes today's call you may now disconnect.

Josh Hirsberg: But it's early and we're not at a point of talking about returns on investment at this point but it is a long-term play and something where once again we view it as an important part of a long-term strategy having both an online business as well as a strong land-based business to compete effectively. Understood.

Josh Hirsberg: And with respect to the capital decisions you're making for next year, I just wanted to get a sense for where the boundaries are. You know, our, you know, things that are more, you know, larger or more transformative. I know of one company that's, you know, up for sale that we've read about, you know, or strip investments and things like that. I just wanted to get a sense for how big we should think or should we just, you know, look at your portfolio and think about properties that may need some expansion or upgrade.

Josh Hirsberg: I think when we were talking about capital investments it was, as I think I discussed in my prepared remarks, it's more about our maintenance capital budget and improving existing facilities number one. So, you know, we're going to open 70 restaurants in the fourth quarter this year across the country as a way to make sure that we have a fresh product for our customers. We've got several room remodels starting just because, you know, you need to do that. We'll continue to do those types of programs through 2024. We'll be opening, you know, another seven, eight new restaurants next year and have some more room remodels.

Josh Hirsberg: We will look at and we will announce later in the year kind of our next phase of What do you want to call it expansion or growth capital programs, like the free, like treasure chest, we're not ready to discuss those yet, but as I said it will be an existing property that's a strong high performer that's in a strong market where we think we can continue to grow the business and you know we have several of those that fit that profile we're just trying to decide what the priority is and when to get those projects started but we're not prepared to talk about it now but by certainly by the middle of the next year we'll be prepared to kind of discuss what what is next for us in terms of quote unquote growth as opposed to maintenance. Got it, understood.

Josh Hirsberg: Thank you.

Shaun Kelley: Our next question comes from Shaun Kelley of Bank of America. Shaun please go ahead. Hi, good afternoon and thanks for taking my questions. Josh just going back to the cost environment. I think that's clearly the incremental part of kind of what's going on here. I just wanted to ask sort of as you look forward, what do you think the right leverage point for the businesses? So to see, you know, more than expansion from here, what level of revenue do you think you would need as we start to get out into a little bit more, you know, steady states.

Shaun Kelley: Let's look out 24 or 25. Is it, you know, can you do so on a very low single digit number? IE, you know, 012% or does need to be a little higher than that where maybe some of these costs while coming down look a lot more like prevailing inflation that might be 3 to 5% whereas historically it was maybe a little bit lower than that.

Josh Hirsberg: Shaun, it's a good question. I think ultimately the way we think about it is, I think, you know, it's kind of like cost that are piggybacking off of one another. So at some point, we're able to kind of manage through those costs and we were able to do that over time. And then as, you know, utilities picked up or property taxes and property insurance picked up became just a little much relative to softness with the retail customer.

Josh Hirsberg: I really don't think it takes a lot to turn it to kind of turn it back around so to speak. So to the extent we started to see growth off of a base, I think that's when we would be able to kind of outpace. We would be able to manage through the cost pressures. And so I think, you know, it's really difficult right now because I think part of what's going on in the business is a normalization.

Josh Hirsberg: It is like if you think about, and I know it's hard to think about when we had stimulus in the business, but, you know, stimulus really just came out of the business in 21 and 22. And we're kind of getting beyond that in 23. At the same time, some of the decline in revenue is related to what's going on in the economy. So, and it's hard to figure out how much of that is attributable to each one of those factors.

Josh Hirsberg: At the same time that all of that's going on, we're dealing with and working through the expense side of things. And so ultimately, I think once the business normalizes, which I think is part of what's going on, it's not not all economic that we will be able to kind of grow beyond that. And that's when you'll see us, you know, start to have flow through on that incremental revenue. That could happen in 2024, even with a soft retail consumer, as long as that retail consumer were to remain consistent and not continually decline. So, I hope that gives you a sense of.., of our perspective for that. Yeah, thank you.

Josh Hirsberg: And then maybe just to clarify, to make sure we're all kind of clear on the modeling side. Your comments are really sort of flatish operating expenses from here. I mean, this is all a dollar's comment, right? So the extent we saw op-ax dollars up a bit quarter over quarter this quarter, this feels like a good run rate or base of expense even despite some seasonality, utilities, et cetera. This is sort of the right expense dollar base to kind of think about the business moving forward.

Josh Hirsberg: Is that right? Yeah, that's the point I was trying to make. I think there will be seasonality, but that'll give you the offset that some other costs will go up and it'll all kind of come out in the wash, so to speak. So, that's our expectation today. We don't have any reason to think that there's going to be kind of outsized, continued increases in costs. And to an earlier question, further evidence of that is the cost thing to be leveling out at the same time. So yeah, that was clear.

Josh Hirsberg: Thank you very much. Appreciate a color.

Josh Hirsberg: Thank you.

Brant Montour: Our next question comes to Brant Montour of Barclays. Brant, please go ahead. Hey, good evening, everybody. Thanks for taking my questions. I wanted to focus in on the last Vegas local's top line environment, demand environment. And we only have a couple months out of the quarter from this from the city of Nevada, but it did look like the first two months, the quarter, the locals market overall grew a little bit. Last quarter, you guys tracked with that market down modestly, but this quarter looks like for the quarter, you're down a little bit and the market was up.

Brant Montour: But again, we don't have September. So I guess the first question is, you know, how, maybe you could give us September in terms of just the cadence relative to the early two months of the quarter. And then the follow up would be if you think you're tracking below the market at all, why is that is it a customer mix? Is it is it sort of the segmentation for your unrated play versus the market and any other thoughts on that dynamic would be helpful.

Brant Montour: Thank you. So if you're looking at the statistics that are put up by the game and control board, part of this is how you put those together, you know, for the last three months, period of the last quarter. As you said, it's kind of logist because they haven't issued September yet. You know, our market share is pretty much right on top of last year. Absolutely lost. I mean, maybe down to 10th or something, but that's about it.

Brant Montour: And so, you know, we feel pretty good about how we're performing in terms of the Las Vegas locals market. So, you know, just the numbers in Nevada are hard to put together because they don't break them out specifically. So aggregating them as more of an art. But the way we do it, the way we've consistently done it, we're pretty much right on top of last year, like so maybe off the 10th.

Brant Montour: Okay, that's helpful. And would you care to comment on how September cadence looks versus July and August? I really can because I don't know how the market's going to perform. And so, you know, it's what's going to be reporting in Nevada as unique. And so we'll not provide any comment on September until we see everybody else. Joseph. All right, that's it for me. Thanks a lot. Thank you.

John Tree: Our next question comes from John Tree of C-B-R-E. John, please go ahead. Good afternoon, Keith and Josh. Thanks for taking my question. Maybe on the demand side of the core customer play, I think in your market, you've kind of mentioned that play was up low single digits. I'm curious if you could give us maybe a little bit more color there. Are you seeing your number of core customers grow or are they spending more?

John Tree: And then I guess the broader follow up. I don't think you've been asked yet is more broadly speaking. Are you seeing spend per trip about the same or up a number of trips down or kind of how are you thinking about that broadly and then kind of on your core customer growth? Yes, so as we look at our core customers, it is a little bit of a mixed bag around the country, right?

John Tree: We do see good growth in guests and visitation in certain age demographics frankly at the higher end of the age demographics, little less so at the lower end. It's different by region. We're seeing good growth, frankly, across all the age segments in Las Vegas. And it's going to mix back across the age segments in the MSR. Remember as we came out of COVID, we're really more focused on the quality of the customers and the value that they're generating than we are absolute numbers.

John Tree: And we're seeing larger increases in the daily spend and how much we are earning from those customers than we are in the actual growth of those customers. So we're very happy with both increases in volumes of customers but more increases in volumes of play. I'll understand. That's helpful color key thank you.

Keith Smith: Maybe one more on the consumer side. You may have touched on it a little bit earlier, but on the hotel and SMB business, it sounds like it's price, cash rates and cash covers. But is that fair? Are you also seeing an uptick in occupancy and the number of covers across the restaurant and effort be out with as well? Yeah, so I think as you think about the hotel, it really is more occupied rooms that generally speaking across the portfolio, kind of a flatish average cash rate up a little bit in some markets, flat and others, but generally think of it as more cash occupied rooms. On the Understood. Thanks, Keith. Thanks, Joshua. Appreciate all the questions and commentary. Thank you.

Dan Politzer: Our next question comes from Dan, sir of Wells Fargo. Dan, please go ahead. Hey, good afternoon, everyone. Thanks for taking my questions. I just want to hit on Midwest and South a bit. Revenue there has been down the past four quarters in a row. And I know you guys don't have a crystal ball, but I guess if you look at your portfolio, you think about the dynamics of corvus retail impacts of new competition and maybe lapping some of those easy comparisons in Louisiana, Mississippi.

Dan Politzer: How do you think about revenue, you know, the possibility of this, you know, starting to laugh some of these easier comps and maybe being flat or even up, you know, modestly going forward. Yeah, Dan, I think what's driven the softness in the Midwest and South has really been two things that we've talked about. One is, for the last couple of calls we've talked about Mississippi and Louisiana, and they just have progressively year-over-year variances have continued to kind of improve.

Dan Politzer: They're still down but down less sequentially each quarter of that makes sense, and even for Q3 they're down but just down less, and so that's becoming less and less of a topic for us. The other kind of theme that was a step for the West and South was a step down in the retail consumer, which really started late last year. I think in order for us to either be flat or to start to see some growth is we need to make sure that that retail consumer, while it's been system since Q4 of last year, need to make sure it's not stepping down further in Q4 of 2023.

Dan Politzer: It doesn't feel like it is, but at that point once we know that, then I think we can be comfortable with saying the business should begin to start to stabilize. Then the other thing is just to note, and these are kind of not meant to be justifications for the point. We do have one of the impacts throughout the portfolio in the Midwest and South, in particular in Q3, we had issues with the room supply of the Maristar St. Charles because we were starting the room construction there, and that required us actually unexpectedly to take out more rooms and we had expected created kind of a ripple effect in terms of how we managed those rooms and who were in the rooms during the third quarter, which will fix or has been fixed going forward.

Dan Politzer: So there are some kind of things that are happening in the quarter just like with anything else, but I think to directly answer your question is I think we really need to see the retail consumer just confirm on a year-over-year annualized basis once we kind of get to Q4 of this year that is in fact continues to be stable, and then I think you're in a point to say the Midwest and South should continue to be stable.

Josh Hirsberg: I don't think you're at a point to say it should grow at this point. Got it, and then just for my follow-up quickly, in terms of the CAPEX, how should we kind of think about that project CAPEX? Is it going to be similar to the 100 million you're spending in 2023 given you're kind of talking high level about the projects there? I think as we're thinking about it today, it's probably the right way to think about it until we're able to talk more about it the same size projects as we've announced in the past with Fremont and treasure chest, those were each in the 100 million dollar range.

Josh Hirsberg: Yes, so Fremont was a 50 million dollar project, treasure chest was a 100 million dollar project. They obviously all weren't done within a one-year time frame. So the whole concept has been as those kind of come off the conveyor belt to take similar size projects that are only conveyor belt or put those on the conveyor belt, whatever the analogy is, and end up in about the same place, and the projects will be kind of 12, 18 months in life so that it kind of ends up to be about a similar amount. It's going to be a ballpark Thanks so much.

Josh Hirsberg: Thank you.

Stephen Grambling: Our next question comes from Stephen Grambling of Morgan Stanley. Stephen, please go ahead. Hey, thanks. I'll sneak one more in which is we look at the retail weakness or the unrated play weakness. When you look back over time, has that tended to lead any other segments of the consumer? Is there any, you know, protocol that you look at to say there's been a window where you can see sustained strength in your rated play while the unrated play has been weak for a prolonged period.

Stephen Grambling: Thanks. Yeah, I would say we haven't we haven't seen that. I would not say that weakness that we're seeing in the retail customer at this point or the unrated play as a precursor to anything. Again, for the last four quarters, we've seen a little bit of weakness in retail, but we've seen continued growth in our rated in our core customers. So yeah, there's today's world post-COVID not much of a correlation going on.

Stephen Grambling: Yeah, and I'd say it's really hard to harken back to any period of time, just given how different the business is today than it was say pre-2019. Even in 2008, you know, where you had actually both segments of the business core retail, core continued, you know, was stable and strong even in that environment. It was just the retail consumer wasn't spending at the levels that they had historically. And ultimately, that's what was persisted during that period of time.

Stephen Grambling: So it definitely was not a precursor to what was going on. But ultimately, we do have to recognize the business is very different today than it was. Got it, and you also mentioned the normalization and I realize everyone's trying to kind of get at this. But as we look at normalization in margins, is there any thought about, you know, what kind of structural changes then you do feel like have been made to kind of bracket, you know, where margins could end up in a normalization if that continues in the direction that you're alluding to?

Stephen Grambling: Yeah, ultimately, I think, you know, the margins that you're seeing today, while still very respectful and strong for the company, I think do have the inefficiency of a retail consumer and some costs that I hope are not representative of the long term cost structure of the business. But we'll have to see how that plays. And ultimately, I think we would expect to see growth in revenue on the gaming side of things.

Stephen Grambling: And so all of those things would suggest that margins we have today are really good and viable can be better in an environment where you don't have as much economic impact. Fair enough, thank you so much. Thank you.

Josh Hirsberg: Our last question today comes from Chad Bannon of McCory. Chad, please go ahead. Evening, thanks for taking my question. Josh, in terms of the buyback, you've been pretty consistent over the past, I guess, four or five quarters, repurchasing 100 million, about 1% of the shares outstanding, and the stock has kind of been in the 60 to $67 levels. Is there a level where you would consider increasing that amount on kind of a quarterly basis, just given some dislocation in the market, you've talked about the fandall stake and stability in the business, just wondering if there's a number where you would kind of step up that 100 million repot number.

Josh Hirsberg: Thanks. Yeah, I think the way we think about it in today's environment at least is that we've probably, we may accelerate within a quarter, the amount that we were going to spend if there was an opportunity to do that or, but I think overall we're comfortable with the level that we're spending today, and we would just end up buying more shares because the price was lower. I think we would change the amount materially, but you know, it's going to be done on a case-by-case basis.

Josh Hirsberg: Not in any hurry, we want to be able to use our balance sheet in good times and bad. So, you know, today when there's concern about the economy, we're very comfortable with our ability to continue to do what we're doing today, even look for ways to continue to grow the company, and if we were to a different leverage point, we wouldn't be able to do those kinds of things. I think in the environment where things are really good, obviously the strength of the balance sheet becomes even more powerful.

Josh Hirsberg: So I don't think we want to get too far ahead of ourselves, we want to maintain that optionality, and we want to maintain the flexibility it comes with it. Yeah, it's not simply about how much we want to spend on share repurchases. We do have this view of a balance program, it depends where we're at in the CapEx cycle, where the leverage is, for the strength of the business as well as our desire to want to buy back shares and continue that program. So we do have flexibility around it, but there's a lot that goes into that particular decision as to when we'd increase it, and how much we'd increase it. Thanks, Keith and Josh, appreciate it. Thank you.

David Strow: This concludes our question and answer session. I'd now like to turn the call back over to Josh for concluding remarks. Thanks, David, and we appreciate everyone dialing in today and the questions you guys have asked and to the extent there's any follow-up or additional questions, feel free to reach out to the company. Thanks again. Thanks, Josh.

David Strow: This concludes today's call.

Operator: You may now disconnect.