Q1 2024 Boyd Gaming Corp Earnings Call

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David Strow: Good afternoon, and welcome to the Boyd Gaming first quarter 2024 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 Thursday, April 25th, 2024. At this time, all lines are in listen-only mode.

David Strow: Good afternoon, and welcome to the Boyd gaming first quarter 'twenty 'twenty four conference call. My name is David Straube, Vice President of corporate Communications for Boyd gaming I'll be the moderator for today's call, which is being recorded on Thursday April 25th 2024.

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

David Strow: 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 Hirsberg, 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 such forward-looking statements. Actual results may differ materially from those projected in any forward-looking statement.

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.

David Strow: All forward looking statements in our comments are as areas of today's date, we undertake no obligation to update or revise the forward looking statements actual results may differ materially from those projected in any forward looking statement there are certain risks and uncertainties, including those disclosed in our filings with the SEC that may impact our results.

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-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 8K furnished to the SEC today, both of which are available at investors.boydgaming.com. We do not provide a reconciliation of forward-looking non-GAAP financial measures due to our inability to project special charges and certain expenses.

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David Strow: 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, both of which are available at investors Dot Boyd gaming dotcom we.

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

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. So with that, I would now like to turn the call over to Keith Smith. Keith? Thanks, Dave.

David Strow: Today's call is being webcast live at Boyd gaming Dot com and will be available for replay at 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.

Keith E. Smith: Thanks, David. And good afternoon, everyone.

Keith E. Smith: Thanks, David and good afternoon, everyone.

Keith E. Smith: Following a record 2023 performance, the first quarter of 2024 was a challenging start to the new year. While we knew our first quarter results in Nevada were compared to a record first quarter in 2023, our results for the quarter were also impacted by January's severe winter weather in the Midwest and South, and a softer Las Vegas locals market in the first quarter. However, beyond these challenges, there were encouraging trends during the first quarter, both in Nevada and across the Midwest and South; play from our core customers improved as we moved through the quarter.

Keith E. Smith: Following a record 2023 performance the first quarter of 2024 was a challenging start to the new year.

Keith E. Smith: Well, we knew our first quarter results in Nevada, We're comping to a record first quarter of 2023, our results for the quarter were also impacted by January severe winter weather in the Midwest and south and a softer Las Vegas locals market in the first quarter.

However, beyond these challenges there were encouraging trends during the first quarter.

Keith E. Smith: Well, it's in Nevada and across the Midwest himself play from our core customers improved as we moved through the quarter.

Keith E. Smith: In our Midwest and South segment, once January's severe winter weather passed, the revenue growth trends that began in the fourth quarter returned in February and March. In addition, both our online and managed businesses continued to produce strong results. And importantly, our management team stayed focused on maintaining operating efficiencies and a disciplined marketing approach as we achieved property level margins of 40% during the quarter, proving once again our ability to maintain a high level of efficiency.

Keith E. Smith: In our Midwest and South segment once January severe winter weather past the revenue growth trends that began in the fourth quarter returned in February and March.

Both are online and managed businesses continued to produce strong results.

Keith E. Smith: And importantly, our management team stayed focused on maintaining operating efficiencies.

And a disciplined marketing approach as we achieve property level margins of 40% during the quarter proving once again, our ability to maintain a high level of efficiency.

Keith E. Smith: So now let's review each of our operating segments in more detail. In the Las Vegas local segment, the EBITDA shortfall to the prior year was a result of three main issues, each accounting for roughly one-third of the decline.

Keith E. Smith: So now let's review each of our operating segments in more detail.

Keith E. Smith: In our Las Vegas local segment EBITDA shortfall to prior year was a result of three main issues each accounting for roughly one third of the decline.

Keith E. Smith: First, as I mentioned a moment ago, and as we discussed in our last call, our local segment compared to a record performance last year. While January was a particularly strong month last year, both February and March were also record months for the segment. Second, as expected, we also felt the impact of competitive pressures related to the opening of a new property in the market.

Keith E. Smith: First as I mentioned, a moment ago and as we discussed on our last call. Our local segment was comparing to our record performance last year.

January was particularly strong months last year, both February and March were also record months for the segment.

Keith E. Smith: Second as expected. We also felt the impact of competitive pressures related to the opening of a new property in the market.

Keith E. Smith: The overall impact of these competitive pressures during the quarter was in line with our previously stated expectations of $20-25 million in EBITDAR for the full year. And finally, on a same-store basis, the overall Las Vegas locals market was softer than expected during the quarter. However, despite these issues, the fundamentals of our locals business remain intact.

The overall impact of these competitive pressures during the quarter was in line with our previously stated expectations of 20 to 25 million in EBITDAR for the full year.

Keith E. Smith: And finally on a same store basis, the overall Las Vegas locals market was softer than expected during the quarter.

Keith E. Smith: Despite these issues the fundamentals of our locals business remain intact.

Keith E. Smith: During the quarter, play from our core customers grew each month, and when excluding January, play-from-court customers increased on a year-over-year basis. Non-gaming revenues also grew in the local segment during the quarter, even with a substantial number of hotel rooms out of service for a room remodel project at the Gold Coast. And finally, we remain disciplined in our marketing strategies and focused on operating efficiency. Even with lower revenues, we maintained margins of nearly 50% in our local segment during the quarter, consistent with our performance over the last several years. Looking ahead,

During the quarter play from our core customers grew each month.

Keith E. Smith: And when excluding January play from core customers increased on a year over year basis.

Non gaming revenues also grew in the local segment during the quarter, even with a substantial number of hotel rooms out of service for our room remodel project at the Gulf Coast.

And finally, we remain disciplined in our marketing strategies and focused on operating efficiencies, even with lower revenues, we maintain margins of nearly 50% in our local segment during the quarter consistent with our performance over the last several years.

Looking ahead.

Keith E. Smith: While we expect competitive pressures and market softness to continue into the second quarter, we remain encouraged by continued strength in play from our core customers. I'm confident in our management team's ability to achieve efficiencies throughout our operations and maintain a disciplined approach to the marketplace. Next, in downtown Las Vegas...

Keith E. Smith: While we expect competitive pressures and market softness to continue into the second quarter. We remain encouraged by continued strength in play from our core customers and confident in our management team's ability to achieve efficiencies throughout our operations and maintain a disciplined approach to marketing.

Next in downtown Las Vegas, similar to our local segment some of the shortfall to prior year was the result of comparisons to our record first quarter of 2023.

Keith E. Smith: Similar to our local segment, some of the shortfall to the prior year was the result of comparisons to a record first quarter of 2023. Much of our strong performance in the first quarter of 23 was driven by pent-up demand from our Hawaiian guests. While we expected some normalization from last year's elevated levels, high airfares during much of the quarter of this year kept more Hawaiians away than we had anticipated. In addition, gaming revenues in the downtown market declined during the quarter, with overall pedestrian traffic trending lower along Fremont Street.

Keith E. Smith: Much of our strong performance in the first quarter of 'twenty three was driven by pent up demand from our Hawaiian guests.

While we expected some normalization from last year's elevated levels high airfares during much of the quarter.

Keith E. Smith: Much of the quarter of this year kept more hawaiians away than we had anticipated.

Keith E. Smith: In addition gaming revenues in the downtown market declined during the quarter with overall pedestrian traffic trending lower along Fremont Street.

Keith E. Smith: Looking at more recent trends, we are encouraged that Hawaiian visitation has improved over the last 30 days, as airfares from Hawaii have started to decline from the elevated levels we saw earlier in the first quarter. While our two Nevada segments face comparisons to prior-year record results and market softness, we continue to have long-term confidence in the Southern Nevada market. On an overall basis, visitation to Las Vegas continues to grow, led by increases in convention business over the last 12 months.

Keith E. Smith: Looking at more recent trends, we are encouraged that Hawaiian visitation has improved over the last 30 days as airfares from Hawaii have started to decline from the elevated levels. We saw earlier in the first quarter.

Keith E. Smith: While our two Nevada segments face comparisons to prior year record results and market softness we continue to have long term confidence in the southern Nevada market.

Keith E. Smith: On an overall basis visitation to Las Vegas continues to grow led by increases in convention business over the last 12 months.

Keith E. Smith: Employment remains a positive story as well, increasing 3.3% over the last 12 months, the strongest growth rate of any major metropolitan area in the U.S. This employment growth continues to be broad-based, with gains across most employment sectors.

Keith E. Smith: Employment remains a positive story as well increasing three 3% over the last 12 months the strongest growth rate of any major metropolitan area in the U S.

Keith E. Smith: This employment growth continues to be broad based with gains across most employment sectors.

Keith E. Smith: The ongoing growth trends we see in visitation, conventional business, and employment all bode well for the future health of the Southern Nevada economy. Moving to our Midwest and South segment, we saw encouraging trends during the first quarter. However, results were down year over year, and this was primarily due to severe winter weather impacting January.

Keith E. Smith: The ongoing growth trends, we see in visitation and convention business and employment, all bode well for the future health of the southern Nevada economy.

Keith E. Smith: Moving to our Midwest and South segment, we saw encouraging trends during the first quarter.

Keith E. Smith: Results were down year over year. This was primarily due to severe winter weather impacting January.

Keith E. Smith: Beyond January, gaming volumes from our core customers grew, continuing the trends from the fourth quarter, and Retail Play in February and March was also encouraging, coming in nearly flat to the prior year, the best year-over-year performance we have seen in almost two years. We also saw growth elsewhere in the business. Adjusting for rooms out of service related to a hotel renovation project at our Ameristar St. Charles property, non-gaming revenues grew 4% in February and March, and our management team successfully maintained their focus on operating efficiently. Excluding the weather impact of the month of January, margins were 39% for the quarter, similar to our recent performance for this segment.

Keith E. Smith: Beyond January gaming volumes from our core customers grew continuing the trends from the fourth quarter.

Keith E. Smith: And retail play in February and March was also encouraging coming in nearly flat to the prior year the best year over year performance, we've seen in almost two years.

We also saw growth elsewhere in the business adjusting for rooms out of service related to our hotel renovation project at our <unk> St. Charles property non gaming revenues grew 4% in February and March.

Keith E. Smith: And our management team successfully maintained their focus on operating efficiently. Excluding the weather impacted month of January margins were 39% for the quarter similar to our recent performance for this segment.

Keith E. Smith: As we look ahead, we are encouraged by the improving customer trends over the last several quarters, and those trends have continued across our Midwest and South segment in April. Next, our online segment maintained a strong level of performance. With $20 million in EBITDA in the first quarter, the segment matched last year's exceptional results, and a tribute to FanDuel's industry-leading position in online sports betting across the country.

Keith E. Smith: As we look ahead, we are encouraged by the improving customer trends over the last several quarters and those trends have continued across our Midwest and south segment in.

Keith E. Smith: April.

Keith E. Smith: Next our online segment maintained its strong level of performance.

Keith E. Smith: $20 million in EBITDAR in the first quarter the segment matched last year's exceptional results.

Keith E. Smith: <unk> industry, leading position in online sports betting across the country.

Keith E. Smith: We are pleased with our online segment's strong start to the year, and looking ahead, we continue to project the segment will generate $60 to $65 million in EBITDA for the full year. In addition to these financial contributions, we also continue to benefit from our 5% equity interest in FanDuel Group. This investment is growing in value with the success of FanDuel across the country, and it remains a valuable strategic and financial asset for our company.

Keith E. Smith: We are pleased with our online segment strong start to the year and looking ahead. We continue to project. This segment will generate $60 million to $65 million in EBITDAR for the full year.

In addition to these financial contributions we also continue to benefit from our 5% equity interest in <unk> group.

Keith E. Smith: This investment is growing in value with the success of <unk> across the country and it remains a valuable strategic and financial asset for our company.

Keith E. Smith: Finally, our managing other business benefited from another strong quarter at Sky River Casino, which we manage on behalf of the Wilton Rancheria Tribe. Well into its second year of operations, demand at Sky River remains healthy. Thanks to Sky River's excellent performance since opening, the Wilton Rancheria Tribe is now finalizing plans for a major expansion of the property that will include additional casino space, a hotel tower, and meeting and convention facilities. As a result of Sky River's continued strong performance, we now expect our managed and other business to generate approximately $86 to $88 million in EBITDA this year.

Finally, our managing other business benefited from another strong quarter at Sky River Casino, which we manage on behalf of the Wilton Rancheria tribe well.

Keith E. Smith: Well into its second year of operations demanded Sky River remains healthy.

Keith E. Smith: Thanks to Sky rivers excellent performance since opening the Wilton Rancheria tribe is now finalizing plans for a major expansion of the property that will include additional casino space Hotel tower and meeting and convention facilities.

Keith E. Smith: As a result of Sky Rivers continued strong performance, we now expect our managed and other business to generate approximately $86 million to $88 million in EBITDA. This year.

Keith E. Smith: While company-wide results were below the prior year during the first quarter, we continue to generate significant free cash flow, allowing us to execute on our balanced approach to capital allocation. First, we are investing in our nationwide portfolio with the objective of driving long-term growth while enhancing the competitiveness and appeal of our properties. We are repositioning or upgrading many of our food and beverage outlets, with nearly a dozen projects planned throughout the year.

Keith E. Smith: While company wide results were below prior year during the first quarter, we continue to generate significant free cash flow, allowing us to execute on our balanced approach to capital allocation.

Keith E. Smith: First we are investing in our nationwide portfolio with the objective of driving long term growth, while enhancing the competitiveness and appeal of our properties.

Keith E. Smith: We are repositioning our upgrading many of our food and beverage outlets with nearly a dozen projects planned throughout the year.

Keith E. Smith: We're also refreshing and updating our hotel products. Currently, we are in the process of renovating rooms at Gold Coast, Ameristar St. Charles, and Blue Chip. And we are set to begin similar projects at the Orleans, IP, and Valley Forge later this year. Beyond upgrading our property amenities, we are also nearing completion of our land-based project at Treasure Chest Casino. This project will transition the property from a three-level riverboat to a spacious, single-level, land-based facility, adding significantly enhanced non-gaming amenities, expanded gaming options, and convenient parking for our guests.

Were also refreshing and updating our hotel product currently.

Keith E. Smith: Currently we are in renovating rooms at Gulf Coast <unk>, St Charles and Blue Chip.

Keith E. Smith: And we are set to begin similar projects at the Orleans IP and Valley Forge later this year.

Keith E. Smith: We are in upgrading our property amenities. We are also nearing completion of our land based project a treasure chest casino.

David Strow: This project will transition the property from a three level riverboat to a spacious single level land based facility, adding significantly enhance non gaming amenities expanded gaming options and convenient parking for our guests.

Keith E. Smith: Once complete in June, we are confident this investment will significantly enhance the treasure chest experience and position the property for long-term growth. However, while investing in our portfolio is a key part of our approach to capital allocation, we are also committed to returning capital to our shareholders. During the quarter, we repurchased $105 million in company stock while increasing our dividend for the third consecutive year. We intend to continue returning capital to our shareholders with $100 million in share repurchases and quarterly dividend payments.

David Strow: Once complete in June we are confident this investment will significantly enhance the treasure chest experience and position the property for long term growth.

David Strow: While investing in our portfolio is a key part of our approach to capital allocation. We're also committed to returning capital to our shareholders during.

David Strow: During the quarter, we repurchased $105 million in company stock, while increasing our dividend for the third consecutive year.

David Strow: We intend to continue returning capital to our shareholders with $100 million per quarter in share repurchases and quarterly dividend payments.

David Strow: And finally, we remain committed to maintaining a strong balance sheet, which provides us with significant flexibility to navigate the current environment execute a balanced approach to capital allocation and pursue opportunities.

Keith E. Smith: And finally, we remain committed to maintaining a strong balance sheet, which provides us with significant flexibility to navigate the current environment, execute a balanced approach to capital allocation, and pursue opportunity. In summary, while this was a challenging quarter, there were many encouraging trends in the business, including continued growth in play from our core customers. We remain diligently focused on our disciplined marketing and operating strategies and our commitment to operating efficiently. And thanks to our significant free cash flow and strong balance sheet, we continue investing in our properties while returning substantial capital to our shareholders. Thank you for your time today. I would now like to turn the call over to John.

David Strow: In summary, while this was a challenging quarter there were many encouraging trends in the business, including continued growth in play from our core customers.

David Strow: We remain diligently focused on our disciplined marketing and operating strategies and our commitment to operating efficiently.

David Strow: And thanks to our significant free cash flow and strong balance sheet, we continue investing in our properties, while returning substantial capital to our shareholders.

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

Josh Hirschberg: Thank you Keith I'm going to provide a few additional details on the quarter.

Josh Hirschberg: With the current trends in our business. We have remained disciplined in our expense management, resulting in property level margins of 40%.

Josh Hirsberg: Thank you, Keith. I'm going to provide a few additional details on the quarter. With the current trends in our business, we have remained disciplined in our expense management, resulting in property level margins of 40 percent. We have also remained focused on our core customer strategy and disciplined in our marketing efforts, which has been one of the keys to our success over the last several years.

Josh Hirschberg: Also remain focused on our core customer strategy and disciplined in our marketing efforts, which has been one of the keys to our success over the last several years.

Josh Hirschberg: Our online segment. Our results include tax pass through amounts related to our online partnerships. These amounts are recorded as both revenue and expense during.

Josh Hirschberg: During the quarter the tax pass through amount was $116 million compared to $96 million last year in the first quarter.

Josh Hirschberg: In terms of capital expenditures, we invested $90 million in the first quarter, including investments in the treasure chest land based project.

Josh Hirsberg: For our online segment, our results include tax pass-through amounts related to our online partnerships. These amounts are recorded as both revenue and expense. During the quarter, the tax pass-through amount was $116 million, compared to $96 million last year in the first quarter. In terms of capital expenditures, we invested $90 million in the first quarter, including investments in the Treasure Chest land-based project. We remain on track to spend $200 to $250 million in maintenance capital in 2024 and $100 million in growth projects that you should think of as recurring.

Josh Hirschberg: We remain on track to spend $200 million to $250 million in maintenance capital during 2024 and $100 million in growth projects that you should think of as recurring.

David Strow: We also expect to invest an additional $100 million during the year and room renovation projects that Keith mentioned, bringing our total capital expenditures in 2024 to $400 million to $450 million.

David Strow: With respect to our program to return capital to shareholders during the quarter, we repurchased $105 million in stock acquiring one 7 million shares at an average price of $63 62 per share.

David Strow: We also increased our quarterly dividend to <unk> 17 per share during the quarter, starting with the dividend that was paid on April 15.

Josh Hirsberg: We also expect to invest an additional $100 million during the year in the room renovation projects that Keith mentioned, bringing our total capital expenditures in 2024 to $400 to $450 million. With respect to our program to return capital to shareholders, during the quarter, we repurchased $105 million in stock, acquiring 1.7 million shares at an average price of $63.62 per share. We also increased our quarterly dividend to $0.17 per share during the quarter, starting with the dividend that was paid on April 15.

David Strow: Since resuming our capital return program in late 2021, we've returned approximately $1 $3 billion to shareholders in the form of dividends and share repurchases and reduced our actual share count by 15% to $95 4 million shares.

David Strow: At the end of the first quarter, we had approximately $221 million remaining under our current repurchase authorization.

David Strow: Our capital return program is an important part of our capital allocation philosophy, and we are committed to $100 million per quarter in share repurchases.

David Strow: We finished the quarter with total leverage of two three times and lease adjusted leverage of two seven times consistent with year end levels with low leverage no near term maturities and ample borrowing capacity under our credit agreement, we have created the strongest balance sheet in our company's history.

Josh Hirsberg: Since resuming our capital return program in late 2021, we've returned approximately $1.3 billion to shareholders in the form of dividends and share repurchases and reduced our actual share count by 15% to 95.4 million shares. At the end of the first quarter, we had approximately $221 million remaining under our current repurchase authorization. Our capital return program is an important part of our capital allocation philosophy, and we are committed to $100 million in share repurchases per quarter.

David Strow: As a result of our strong balance sheet and significant free cash flow, we have created significant financial flexibility to maintain a balanced approach to capital allocation, providing our company the ability to continue reinvesting in our portfolio and returning substantial capital to our shareholders while pursuing growth opportunities.

David Strow: These.

David Strow: That concludes our remarks and David we're now ready to take any questions. Thank you Josh we will now begin our question and answer session.

David: I'd like to ask a question. Please press Star then one on your Touchtone phone will hear at three town prompt acknowledging your request.

Josh Hirsberg: We finished the quarter with total leverage of 2.3 times and least adjusted leverage of 2.7 times, consistent with year-end levels. With low leverage, no near-term maturities, and ample borrowing capacity under our credit agreement, we have created the strongest balance sheet in our company's history. As a result of our strong balance sheet and significant free cash flow, we have created significant financial flexibility to maintain a balanced approach to capital allocation, providing our company the ability to continue reinvesting in our portfolio and returning substantial capital to our shareholders while pursuing growth opportunities. That concludes our remarks, and David, we're now ready to take any questions.

David: You wish to withdraw your request. Please press Star then two.

David: If you are using a speaker phone. Please use your handset when asking your question.

David: We will pause for a moment, while we compile our list of questionnaires.

David: Our first question comes from Steve <unk> of Stifel. Steve. Please go ahead.

Steve: Hey, guys good afternoon.

Steve: So I just want I, just want to ask a little bit maybe about the overall Las Vegas market I mean, it seems like there is.

Steve: What we would call I guess kind of mixed messages out there.

Steve: Unemployment as you mentioned looks looks good it's low housing market still seems relatively strong. So just just to try to just wondering here. What you guys think is maybe causing some of that market market softness.

David Strow: Thank you, Josh. We will now begin our question and answer session. If you would like to ask a question, please press star then 1 on your touchtone phone. You will hear a three-tone prompt acknowledging your request. Should you wish to withdraw your request, please press star then 2. If you are using a speakerphone, please use your handset when asking your questions. We will pause for a moment while we compile our list of questionnaires. Our first question comes from Steve Wieczynski of Stiefel. Steve, please go ahead. Here you go.

Steve: It just seems to be a bit confusing as to what's going on out there.

Speaker Change: Yes, so in terms of whats, causing the softness is always hard to kind of unpack and understand exactly what's driving the.

Speaker Change: The Nevada numbers came out earlier today and if you look at the locals market on a kind of a last three months basis adjusting.

Speaker Change: For a new competitor.

Speaker Change: It is.

Speaker Change: Has declined mid single digits, and so and even if you look back to January and February there were some small declines on a trailing three month basis. So the market has been soft for a couple of months it's.

Steven Moyer Wieczynski: Hey guys, good afternoon. So I just want to ask you a little bit, maybe about the overall Las Vegas market. I mean, it seems like there's, you know, what we would call, I guess, kind of mixed messages out there. I mean, unemployment, as you mentioned, looks good. It's low, but the housing market still seems relatively strong. So, you know, just try to, you know, just wondering here what you guys think is maybe causing some of that market softness as it, you know, it just seems to be a bit confusing as to what's going on out there.

Speaker Change: It's not just March.

Speaker Change: So as we talked in our prepared remarks, our core customer is actually performing well, we continue to see growth from that core customer. It is more of the retail customer.

Speaker Change: Where we're seeing the softness.

Speaker Change: Retail customers more economically sensitive.

Speaker Change: Inflation and other changes the economy and so my guess is it's that customer that is simply.

Speaker Change: Being more cautious about how they're spending their discretionary dollars.

Keith E. Smith: Yeah, so in terms of what's causing the soft, it's always hard to kind of unpack and understand exactly what's driving the Nevada numbers that came out earlier today. And if you look at the local market on a kind of last three months basis, adjusting for a new competitor, you know, it is, you know, it has declined out of mid single digits. And so, and even if you look back to January and February, there were some small declines on a trailing three-month basis. So the market has been soft for a couple of months. It's not just March.

Speaker Change: Okay. Thanks for that Keith and then second question I guess in terms of staying in Las Vegas around the promotional environment. Obviously Durango is open I assume there they're out there promoting and it seems like you guys are obviously kind of drilling somewhat of a line here and not going to go down that path too much but I guess I guess the question is.

Speaker Change: At what point do you maybe start to thaw.

Speaker Change: Think about promoting or are you guys just going to kind of hold the line here.

Speaker Change: And again, not go down and kind of chase the dollars.

Speaker Change: Dollars right now.

Keith E. Smith: You know, as we talked in our prepared remarks, our core customer is actually performing well. We continue to see growth from that core customer. It is more the retail customer, where we're seeing the softness. That retail customer is more economically sensitive to, you know, inflation and other changes in the economy. And so my guess is it's that customer that is simply being more cautious about how they're spending their discretionary dollars.

Speaker Change: And maybe a couple of comments one is we think about getting more promotional each and every day, we don't do it because we have a strong discipline to not do it.

Speaker Change: The good news is that our major competitor.

Speaker Change: Even with the opening of a new property really has not elevated the level of promotions.

Speaker Change: It is some of the other smaller operators independent operators kind of around town.

Speaker Change: There are some properties around New Orleans, and the Gulf Coast that have gotten more promotional late in 2023, and then into 2024 that I think are impacting the market. So.

Steven Moyer Wieczynski: Okay, thanks for that, Keith. And then the second question, I guess, in terms of staying in Las Vegas around the promotional environment, obviously Durango is open, I assume they're out there promoting.

Speaker Change: We are very disciplined it's not that we don't trial things, it's not that we don't test.

Steven Moyer Wieczynski: And it seems like you guys are obviously kind of drawing somewhat of a line here and not going to go down that path too much. But I guess, you know, I guess the question is, you know, at what point do you maybe start to think about promoting? Or are you guys just going to kind of hold the line here and again not go down and kind of chase the, you know,

Speaker Change: Different programs, we simply don't stick to the same playbook.

Speaker Change: But we're just trying to stick to a reinvestment level that doesn't increase our overall cost. So we'll continue to monitor we'll continue to test the market, we'll continue to try new programs.

Speaker Change: And monitor the market.

Speaker Change: But look today the team is doing a great job managing through it generating nearly 50% margins, which significantly elevated than anything we've seen.

Keith E. Smith: And make a couple of comments. One is, we think about getting more promotional each and every day. We don't do it because we have a strong discipline to not do it. You know, the good news is that our major competitor, even with the opening of a new property, really has not elevated their level of promotions. You know, it's some of the other smaller operators and dependent operators kind of around town.

Speaker Change: To the last several years and so I think the team is doing a great job Josh if you want to add anything I think you did it.

Josh Hirschberg: Okay, guys I really appreciate the color. Thank you very much.

Josh Hirschberg: Sure.

Speaker Change: Thank you.

Speaker Change: Our next question comes from Joe Greff of J P. Morgan Joe. Please go ahead.

Speaker Change: Yeah.

Joseph Richard Greff: Afternoon, guys.

Joseph Richard Greff: Also wanted to touch on the Las Vegas locals market here and just.

Keith E. Smith: There are some properties around the Orleans and the Gold Coast that have gotten more promotional late in 2023 and into 2024 that I think are impacting the market. So, you know, we are very disciplined. It's not that we don't trial things. It's not that we don't test, you know, different programs. We simply don't stick to the same playbook.

Joseph Richard Greff: Keith just so we're crystal clear understanding.

Joseph Richard Greff: How youre thinking about that market. You said there were three reasons each with about a one third weight in terms of performance local customer.

Speaker Change: Garrison.

Speaker Change: Last year's record monthly results Durango, and then same store softness so.

Speaker Change: That means each of those things contributed about $5 million in terms of year over year EBITDA decline correct.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Right and then Durango in same store.

Keith E. Smith: But we're just trying to stick to a reinvestment level that doesn't increase our overall costs, so we'll continue to monitor. We'll continue to test the market. We'll continue to try new programs and monitor the market. But look, today, the team's doing a great job managing through it, generating nearly 50% margins, which is significantly higher than anything we've seen prior to the last several years. And so I think the team is doing a great job. Josh, if you want to add anything,

Speaker Change: That more pronounced.

Speaker Change: Towards the end of the quarter versus the beginning can you comment a little bit different than what you guys indicated three months ago on our fourth quarter call is that a fair deduction.

Speaker Change: So yes the market.

Speaker Change: Softened.

Speaker Change: Or the softness in the market I think increased as you went through the quarter. So if you look at once again, the Las Vegas gaming numbers that come out at a monthly basis. When we last updated at the end of January 1st of March.

Steven Moyer Wieczynski: Okay, guys. I really appreciate the color. Thank you very much.

Speaker Change: We didn't have the full January numbers at that point, we were looking at the end of the year. When you look at January February and March came out this morning, Youll see on a trailing three month basis for each of those months the softness in the market accelerating and once again when I talk about this it is making an adjustment for the new competitor.

Joseph Richard Greff: Our next question comes from Joe Greff of JP Morgan. Joe, please go ahead.

Joseph Richard Greff: Afternoon, guys. I also want to touch on the Las Vegas locals market here. Keith, just so we're crystal clear in understanding how you're thinking about that market, you said there were three reasons, each with about a one-third weight in terms of the performance of locals. Tough Comparisons, last year's record monthly results, Durango, and then SameSource Softness. So that means each of those things contributed about $5 million in terms of a year-over-year EBITDA decline, correct?

Speaker Change: Make whatever calculation you want us to the revenue you think that new competitors doing but regardless of what level you pick.

Speaker Change: Assuming any reasonable level of revenue the market has declined once again, it's increased as you've gone through January February March.

Joseph Richard Greff: Yes. Okay, and then, right, and then Durango and the same sort of stuff, and so it was that more pronounced towards the end of the quarter versus the beginning, because your comments are a little bit different than what you guys indicated three months ago on the fourth quarter call. Is that fair?

Speaker Change: I think the thing I would add.

Speaker Change: Okay, I'm sorry, but.

Speaker Change: Do you follow up and then I'll ask go ahead.

Keith E. Smith: On that point, Keith So just when we look at and isolating for the impact.

Joseph Richard Greff: Heck of a competitor and Durango youre seeing that the impact worsened.

Keith E. Smith: More pronounced in March versus February January debt there.

Keith E. Smith: So yeah, the market softened, or the softness in the market, I think, increased as you went through the quarter. So if you look at, once again, the Las Vegas gaming numbers that come out on a monthly basis, when we last updated at the end of January, the 1st of March, you know, we didn't have the full January numbers at that point. We were looking at the end of the year.

Keith E. Smith: Yes.

Keith E. Smith: Okay.

Keith E. Smith: And what are you seeing in so far this quarter or is it consistent is it is it worse.

Keith E. Smith: What we're seeing within our numbers I would say it's fairly consistent.

Keith E. Smith: With what we saw in February and March were not seeing an acceleration of the softness.

Keith E. Smith: Not seeing a reversal of the softness.

Keith E. Smith: When you look at January, February, and March, which came out this morning, you'll see on a trailing three-month basis for each of those months, the softness in the market is increasing. And once again, when I talk about this, it is making an adjustment for the new competitor. And you can, you know, make whatever calculation you want as to the revenue you think that new competitor is making, but regardless of what level you pick, assuming any reasonable level of revenue, the market has declined.

Speaker Change: Got it and then okay.

Speaker Change: And then Josh you were going to say something that I think.

Keith E. Smith: Let me ask Nicole I'll add a couple of things. So first of all I think Keith.

Speaker Change: Keith's remarks, he reiterated kind of.

Speaker Change: Our expectation that the impact would be 20% to $25 million. This year. So I think we are.

Speaker Change: <unk> really changed we're not changing our view with respect to that expectation I think the other thing to understand is.

Joseph Richard Greff: And once again, it's increased as you've gone through the January, February market. I think the thing I would add to it, Joe, and I'm sorry, go ahead and do your follow-up, and then I'll add it. Go ahead. No, I was going to say on that point, Keith, so just we look at it isolated for the impact of a competitor in Durango, and you're saying that the impact worsened or was more pronounced in March versus February and January. Is that fair? Yes.

Speaker Change: While we are focused on the newest competitor in the marketplace.

Joseph Richard Greff: What we are seeing is maybe.

Speaker Change: The impact from other smaller competitors that are more responsive to it than we are.

Speaker Change: So you can focus on Durango is the newest operator in the marketplace. They are a great facility note facility everybody knows how well it's doing but there are other <unk>.

Speaker Change: <unk> in the marketplace other than ourselves and our largest competitor here that are reacting differently to that new competition and we are and what we're trying to say is those are the folks that are having an impact on our business and Durango was maybe.

Joseph Richard Greff: Okay. And what are you seeing so far this quarter? Is it consistent? Is it worse?

Keith E. Smith: What we're seeing within our numbers, I would say, is fairly consistent with what we saw in February and March. We're not seeing an acceleration of the softness, and we're not seeing a reversal of...

Speaker Change: Lesser of an impact.

Speaker Change: Just so just so you can kind of understand the dynamics of the marketplace.

Keith E. Smith: So first of all, I think in Keith's remarks, he reiterated our expectation that the impact would be $20 to $25 million this year. So I think we are not changing our view with respect to that expectation.

Speaker Change: Got it and then Keith one of your final prepared comments, you talked about seeing growth in your core players.

Keith: Can you talk about that in some greater detail.

Keith: Yes.

Keith: As a way to interpret your comment that it is growing but at a decelerating pace is still positive or is it growth.

Keith E. Smith: I think the other thing to understand is while we are focused on the newest competitor in the marketplace, what we are seeing is maybe an impact from other smaller competitors that are more responsive to it than we are. And so you can focus on Durango as the newest operator in the marketplace. They have a great facility, a new facility. Everybody knows how well it's doing.

Keith: And is it slightly accelerating.

Keith: And if you can share us what exactly you mean by that.

Keith: Growth in core players.

Keith: We're from the core players.

Keith: Talk about growth in core play it is revenue from that core group.

Keith: And the revenue has and continues to grow from that core group.

Keith E. Smith: But there are other competitors in the marketplace other than ourselves and our largest competitor here that are reacting differently to that new competition than we are. And what we're trying to say is, those are the folks that are having an impact on our business. And Durango, maybe...

Keith E. Smith: Have the <unk> statistics in front of me to tell you, whether it's accelerating or decelerating.

Keith: Sensus is relatively stable in terms of the growth rate.

Keith: Josh may have something to add but.

Joseph Richard Greff: Less of an impact. Just so you know, just so you can kind of understand the dynamics of the market. Got it.

Keith E. Smith: Steve.

Keith: Revenue from that group of customers on a year over year basis is continuing to grow.

Keith E. Smith: And then, Keith, in one of your final prepared comments, you talked about seeing growth in your core players. Can you talk about that in some greater detail? Is there a way to interpret your comments that it's growing but at a decelerating pace is still positive, or is it growth and is it slightly accelerated? And if you can share with us what exactly you mean by that, growth and core players from the core players.

Keith: And Josh you have some while I was just going to say you have to remember part of what we're talking about is a comparison to record results last year. So when you start thinking about what is happening with core customer growth you have to do it in the context of putting that on a relative basis. So excluding.

Keith: Excluding January core customer growth.

Josh Hirschberg: Core customers grew in both February and March.

Keith: And so that's what's skewing these results as well as that comparison to prior record year results.

Keith E. Smith: So when we talk about growth in core play, it is, you know, revenue from that core group. And the revenue has grown and continues to grow from that core group. I don't have the statistics in front of me to tell you whether it's accelerating or decelerating, but my sense is it's relatively stable in terms of the growth rate. Josh may have something to add, but the revenue from that group of customers on a year-over-year basis is continuing to grow. And Josh, you have some... Well, I was just going to say, you have to...

Keith: It was.

Speaker Change: Let me just add a little bit more color around that if you look at Las Vegas locals or.

Speaker Change: Our performance last year.

Speaker Change: As we mentioned in our remarks were record results every month was a record.

Speaker Change: But.

Josh Hirsberg: 75% of the year over year performance.

Speaker Change: Gain that happened last year all happened in January so you have to kind of be sure you got.

Speaker Change: Got to keep all this in perspective, as you think about what's happening and as we move through the quarter because a lot of it has to do with just a comparison related issue and then a soft market, where we've had competitive a new competitor.

Keith E. Smith: I was just going to say, you have to remember part of what we're talking about is a comparison to record results last year. So when you start thinking about what is happening with core customer growth, you have to do it in the context of putting that on a relative basis, excluding January core customer growth core customers grew in both February and March. And so that's what's skewing these results as well, is that comparison to prior record year results. It was the, and let me just add a little bit more color around that.

Speaker Change: And incremental competition responding to that new competitor.

Speaker Change: Thanks, guys.

Speaker Change: Okay.

Speaker Change: Thanks.

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

Carlo Santarelli: Afternoon, Keith afternoon, Josh.

Keith E. Smith: I think mine is involves the fourth quarter, a little bit as well, but if I look at Midwest and south historically speaking <unk> tended to be larger than <unk> and I know with year end, sometimes there's accruals that true up in your favor and whatnot.

Keith E. Smith: If you look at Las Vegas locals, our performance last year, as we mentioned in our remarks, was record results. Every month was a record, but, you know, 75% of the year-over-year performance gain that happened last year all happened in January. So you have to kind of keep all this in perspective as you think about what's happening and as we move through the quarter, because a lot of it has to do with just a comparison-related issue. And then a soft market where we've had competition, a new competitor, and incremental competition responding to that new competitor.

Keith: Fourth quarter margin was surprisingly stronger than expected if I recall.

Keith: This one a little bit weaker than expected was there anything one time in there that may be caused cost to look a little bit.

Keith: Maybe overstated for the period and should we expect.

Carlo Santarelli: Our next question comes from Carlo Santarelli of Deutsche Bank. Carlo, please go ahead.

Keith E. Smith: Similar kind of seasonal run rate on the expense side moving forward this year.

Carlo Santarelli: Afternoon, Keith. Afternoon, Josh.

Speaker Change: Yes, Thanks Carlo I think.

Carlo Santarelli: Guys, I think mine involves the fourth quarter a little bit as well. But if I look at the Midwest and South, historically speaking, 1Q tended to be a larger period than 4Q. And I know with year-end, sometimes there's accruals that come out in your favor and whatnot. And the fourth quarter margin was surprisingly stronger than expected, if I recall. This one was a little bit weaker than expected. Was there anything once in there that maybe caused costs to look a little bit maybe overstated for the period? And should we expect a similar kind of seasonal run rate on the expense side moving forward?

Speaker Change: Really what you have to remember when you look at the quarter for the Midwest and South it's all about weather and its all about January I mean January was essentially wiped out because of the weather influence so.

Carlo: If you really want to kind of see what was going on I think the easiest way to do that you obviously can't do it but we can we can look at February and March of this year I understand it's two thirds of the quarter, but January was essential effective significantly by weather and you look at February and March of last year, and say what was going on.

Josh Hirsberg: Yeah. Thanks, Carlo.

Josh Hirsberg: I think really what you have to remember when you look at the quarter for the Midwest and South, it's all about weather and it's all about January. I mean, January was essentially wiped out because of the weather influence. So, you know, if you really want to kind of see what was going on, I think the easiest way to do that, and you obviously can't do it, but we can, we can look at February and March of this year.

Josh Hirsberg: Margins in February and March of this year were 39%.

Josh Hirsberg: Margins last year in February and March were 40%.

Carlo: So I don't look at that quite honestly as any really change in direction of expenses or anything else around the Midwest and south other than really taking into account what we talked about all last year round property.

Josh Hirsberg: I understand it's two-thirds of the quarter, but January was essentially affected significantly by weather. And you look at February and March of last year and say, "What was going on?". Margins in February and March of this year were 39%, and margins last year in February and March were 40%. So I don't look at that, quite honestly, as any real change in direction of expenses or anything else around the Midwest and South, other than really taking into account what we talked about all last year around property, insurance, and labor-related costs that are going to kind of bleed through the first half and maybe a little bit into the third quarter of So hopefully that helps kind of. I mean, all of the declines that happened in the Midwest and South with respect to revenues happened in January, February, and March.

Josh Hirsberg: Insurance and labor related costs that are going to kind of bleed through the first half and maybe a little bit into the third quarter of this year, especially when youre looking at the Midwest and south.

Josh Hirsberg: So hopefully that helps kind of.

Carlo: I mean, all of the declines that happened in the Midwest and South with respect to revenues happened in January February and March growth.

Speaker Change: Understood on that front and then.

Carlo: I guess, along those lines Josh from an EBITDA margin perspective are you, saying margins were up in February and March as well.

Josh Hirschberg: I'm, saying February and March when you look at February and March margins were on a combined basis, 39%. When you look at February and March versus last year combined basis again, just trying to get the weather out of the conversation they were about 40%.

Carlo Santarelli: understood on that front. And then, well, I guess along those lines, Josh, from an EBITDA margin perspective, are you saying margins were up in February and March?

Josh Hirschberg: If you look at them on an individual month, they were a little bit less but not materially less and that's reflective of what the <unk>.

Josh Hirsberg: I'm saying February and March. When you look at February and March, margins were, on a combined basis, 39%. When you look at February and March versus last year, on a combined basis, again, just trying to get the weather out of the conversation, they were about 40%. If you look at them individually, they were a little bit less, but not materially less. And that's reflective of the expenses that we talked about last year that still have to kind of work their way through the system, if you will, labor, property taxes. I got it.

Josh Hirschberg: <unk> that we've talked about last year that it still has to kind of work their way through the system. If you will labor operating taxes, Okay got it.

Josh Hirsberg: When you anniversary the bigger stuff I E. When on a static kind of revenue environment.

Speaker Change: Should we be looking for kind of margins in that segment to flatten out.

Speaker Change: Yes so.

Josh Hirschberg: <unk>.

Josh Hirsberg: The biggest impact has come from introduction of the minimum wage and that was rolled out throughout it began and if I remember correctly in the Midwest and South late 2022, and the last vestiges of the increases happened somewhere around mid year of last year.

Carlo Santarelli: And when do you anniversary the bigger stuff, i.e., when in a static kind of revenue environment? Should we be looking for the kind of margins in that segment to flatten out? Yeah, so the biggest impact has come from the introduction of the minimum wage. And that was rolled out throughout. It began in, if I remember correctly, the Midwest and South in late 2022. And the last vestiges of the increases happened somewhere around mid-year of last year. Around mid-year of last year is also when most of the increases in Las Vegas also went into effect around the minimum wage. So, you know, you can expect, first half of this year, we'll mainly get most of the increases in labor through both Midwest and South and LVL.

Carlo Santarelli: Around midyear of last year is also when most of the increases in Las Vegas also went into effect around the minimum wage.

Carlo Santarelli: So.

Josh Hirschberg: The first half of this year will mainly get most of the increases in labor through both Midwest and south.

Josh Hirschberg: <unk>.

Carlo Santarelli: <unk> LVL.

Josh Hirschberg: Said another way Carlos second half of the year, we should be on it.

Speaker Change: Yes, yes, okay. Thank you very much guys I appreciate it.

Josh Hirsberg: Set it another way, Carlo. By the second half of the year, we should be on an equal footing.

Carlo Santarelli: Yes.

Josh Hirschberg: Our next question comes from Barry Jonas of Truth Securities Berry. Please go ahead.

Carlo Santarelli: Yeah. Okay. Thank you very much, guys. Appreciate it. Our next question comes from Barry Jonas of Truist Securities. Barry, please go ahead.

Barry Jonathan Jonas: Barry Please go ahead.

Barry Jonathan Jonas: Alright, sorry can you hear me now.

Barry Jonathan Jonas: All right, sorry. Can you hear me now?

Josh Hirsberg: Yes, we can.

Carlo Santarelli: Yes.

Barry Jonathan Jonas: Yes, we can.

Barry Jonathan Jonas: So just following up on the last question, I just want to make sure I'm clear, in terms of the negative flow through that you saw this quarter in each of the land-based segments, is your expectation that there's another quarter of sort of constrained flow through, but you should sort of get back to more normalized in the second half of the year, obviously assuming sort of a normal top-line environment?

Barry Jonathan Jonas: So just following up on the last question I, just want to make sure I'm clear in terms of the negative flow through that you saw this quarter in each of the lab based segments is your expectation that theres another quarter.

Barry Jonathan Jonas: Ill sort of constrained flow through but you can sort of get back to more normalized in the second half of the year, obviously, assuming sort of a normal top line environment.

Josh Hirsberg: Yeah, so look, I think we were pretty, or at least I thought we were pretty transparent when we talked about expenses in 2023. So I'll try to remember what we communicated then.

Barry Jonathan Jonas: Yes. So look I think we were pretty at least I thought we were pretty transparent when we talked about expenses in 2023.

Josh Hirsberg: So I'll try to remember what we communicated them, but there were around obviously, we had labor pressures that as Keith succinctly described recently just now.

Josh Hirsberg: But there were around, obviously, we had labor pressures that, as Keith succinctly described recently, just now, we'll kind of anniversary those in the second half of this year. Secondly, there were property taxes and property insurance. Those largely went up in the middle of the year and to a lesser, smaller degree in September. So labor, we're going to largely get through by the second half of the year. Property taxes and property insurance, we're assuming not the same level of increases. So that should be kind of a third quarter kind of event also. And then we should be on a level playing field, I hope, you know, hopefully that helps, Barry. Yeah.

Josh Hirsberg: <unk> will kind of anniversary those in the second half of this year.

Josh Hirsberg: Secondly were property taxes and property insurance those largely went up in middle of the year.

Josh Hirsberg: And to a lesser versus current.

Josh Hirsberg: Mahler degree in September so labor, we're going to largely get through by the second half of the year property taxes and property insurance, we're assuming not the same level of increases so.

Josh Hirsberg: That should be kind of a third quarter kind of event also.

Josh Hirsberg: And then we should be on a level playing field.

Josh Hirsberg: I hope.

Barry: Hopefully that helps Barry.

Barry: Alright, Thank you for that clarification, and then just one other.

Barry Jonathan Jonas: Yeah, sorry. Thank you for that clarification. And then just one other question talking about the locals and what you're seeing there. As you think about the new competition impacting your local segment, I'm just curious, is it more specific to any properties or fairly spaced out across all the locals' properties in your portfolio?

Josh Hirsberg: A question talking about locals and what Youre seeing there.

Barry Jonathan Jonas: You think about the new competition.

Barry Jonathan Jonas: Impacting.

Barry: Your local segment I'm, just curious is it.

Barry Jonathan Jonas: More specific to any properties are fairly spaced out across all the locals properties in your portfolio.

Josh Hirsberg: I'll take it real quick, Barry. And if, Keith, you want to add anything, jump in.

Speaker Change: I'll take it real quick Berry and <unk>.

Speaker Change: Keith you want to add anything jump in but it's primarily it's concentrated in a couple of properties.

Josh Hirsberg: But, you know, it's primarily concentrated in a couple of properties. You know, I think one of the benefits we obviously have is we have some property; we own more than one property in the Las Vegas locals market. We can see properties that are being impacted by competition, and we can see those that aren't being impacted by competition, and that helps us identify what is going on in the market more broadly, and then what the effect of competition is. That's how we can kind of quantify the one-third, one-third, one-third numbers that we've cited in our comments. So it is a subset of our properties that are being impacted by competition.

Josh Hirsberg: I think one of the benefits. We obviously have as we have some property we have we own more than one property in the Las Vegas locals market, we can see markets that are <unk>.

Josh Hirsberg: <unk> that are being impacted by competition and we can see those that are being impacted by competition and that helps us identify what is going on in the market more broadly and then what is the effect of competition Thats, how we can kind of.

Josh Hirsberg: Quantify the one third one third one third numbers that we cited in our in.

Josh Hirsberg: Our comments so it is a subset of our properties that are being impacted by competition.

Josh Hirsberg: Just geographically closer to the new property or any, you know, assume that's the common denominator.

Josh Hirsberg: Just geographically closer to the new property or.

Josh Hirsberg: I assume that's the <unk>.

Barry: Denominator.

Keith E. Smith: Now, look, I think we've, um... The new competitor that has been launched is having a direct impact on our properties, but to a lesser extent than we had predicted. It is the ripple effect or the trickle-down effect that happens in the market when everybody starts to lose customers and compete for those customers. As I said in answer to an earlier question, what we're really seeing is some heightened competition in properties directly around Gold Coast and Orleans that have started to increase, and frankly, it goes back to the end of Q4 when they enhanced their level of spend and have kept it at those levels.

Josh Hirsberg: No look I think we've.

Keith E. Smith: The new competitor that launched.

Keith E. Smith: Having an impact on a direct impact on our properties, but at a lesser extent than we had.

Barry: Addicted it is the ripple effect of the trickle down effect that happens in the market. When everybody starts then to lose customers and compete for those customers I said in answer to an earlier question. We're really seeing is some heightened competition and properties directly around Gulf coast, nor liens that have <unk>.

Keith E. Smith: Started to increase and frankly goes back to the end of Q4 with ne.

Keith E. Smith: Hence there kind of level of spend.

Keith E. Smith: And have kept it at those levels and so.

Keith E. Smith: I wouldn't think of it as really the new competitor. Durango, I would think of it as just, there's a little bit of that, and there are just others that are competing more aggressively surrounding some of our other properties.

Barry: I wouldn't think of it as really the new competitor.

Keith E. Smith: Durango I would think of it as just there is a little bit of that and there are just others that are competing more aggressively surrounding some of our other properties.

Barry Jonathan Jonas: Great. Thank you for all the clarification, Nicole.

Speaker Change: Great. Thank you for all the clarification of the call.

Nicole: Yes, yes.

Daniel Brian Politzer: Our next question comes from Dan Politzer of Wells Fargo. Dan, please go ahead.

Barry: Our next question comes from Dan Pulitzer of Wells Fargo. Dan. Please go ahead.

Daniel Brian Politzer: Hey, good afternoon. Josh, you talked about February and March and, you know, juxtaposing that versus January. Have you seen that strength, you know, or the relative strength continue into April, maybe as comparisons get easier and have the margins kind of, you know, still tracked along that, you know, 1% lower level that you called out in February and March?

Daniel Brian Politzer: Hey, good afternoon.

Daniel Brian Politzer: Josh you talked about February and March.

Daniel Brian Politzer: Supposing that versus January have you seen that strength are.

Daniel Brian Politzer: The relative strength continue into April maybe as comparisons get easier and have the margins kind of still tracking along that 1% lower level that you called out in February and March.

Josh Hirsberg: Yeah, let me, uh... I haven't really looked at it. April Margins, to be honest, but, uh... Look, I know that the trends with respect to the customers and the performance of the assets going into April are consistent with what we've made in terms of comments around February and March. So I feel good about kind of answering that question. And I would say that I'm just doing some math real quick, which I'm not very good at. Yeah, so April is about a percentage point behind April of last year. So it seems like it's generally kind of headed in the same direction as February and March.

Speaker Change: Yes, let me.

Josh Hirsberg: Haven't really looked at.

Josh Hirsberg: April margins to be honest, but.

Josh Hirsberg: Look I know that the.

Josh Hirsberg: Trends with respect to the customers and the performance of the assets going into April is consistent with what we've made in terms of comments around February and March So I feel good about kind of answering that question.

Josh Hirsberg: And I would say that.

Josh Hirsberg: Sure.

Josh Hirsberg: Just doing some math real quick.

Josh Hirsberg: Which I'm not very good at.

Josh Hirsberg: Yes.

Josh Hirsberg: Yes. So April was about a percentage point behind April of last year.

Josh Hirsberg: So it seems like it's generally kind of headed in the right direct same direction as February and March.

Daniel Brian Politzer: And then just to make sure we're on the same page about the locals. So the 20 to 25 million, that just is basically a little, you know, that's Durango being a little less worse, but also it's more the knock-on effect is worse. But that doesn't include any of the market softness impact that you've seen thus far this year. Is that fair?

Speaker Change: At this point got it thanks.

Daniel Brian Politzer: And then just to make sure we're almost a page on the locals.

Daniel Brian Politzer: The $20 million to $25 million that just is basically a little Durango.

Daniel Brian Politzer: <unk> being a little less worse, but also its more the knock on effect is worse, but that doesn't include any of the market softness impact that you've seen thus far this year is that fair.

Josh Hirsberg: That is fair. As I described in my comments, it's a third, a third, a third. And so the $20 to $25 million is one of the thirds. The market softness is the other third. Yeah, the comparison to last year, which was just a very, very strong first quarter, is the other third. So yeah, they're all, they're all separate and distinct.

Speaker Change: That is fair. It's so described in my comments its a third a third a third and so the $20 million to $25 million is one of the thirds the market softness is the other third.

Josh Hirsberg: Yes, the comparison to last year, which was just a very very strong first quarter as the other third so yes, they're all they're all separate and distinct.

Josh Hirsberg: <unk>.

Josh Hirsberg: Yes.

Daniel Brian Politzer: based on how we could evaluate what happened in the quarter.

Josh Hirsberg: Just on how we could evaluate what happened in the quarter.

Shaun Clisby Kelley: Got it. Thanks. That's it for me.

Speaker Change: Got it thanks, that's it for me.

Shaun Clisby Kelley: Our next question comes from Shaun Kelley, from Bank of America. Shaun, please go ahead.

Shaun Clisby Kelley: Our next question comes from Shaun Kelly of Bank of America, Sean. Please go ahead.

Shaun Clisby Kelley: Hi, everyone, and thanks for taking my question. I think we've covered a lot of different angles on locals and regionals, so maybe I'll just tackle downtown briefly. You called out pedestrian and foot traffic there. Obviously, Keith, some specifics around the Hawaiian segment too, but just any theories on the pedestrian levels there, just given that you did have the Super Bowl in the market. In general, traffic levels across the Strip have been pretty good, and we think they should be decently correlated. It's not a market that we get quite as much information on. Any thoughts from your operators about what's going on there?

Shaun Clisby Kelley: Hi, everyone and thanks for taking my question.

Shaun Clisby Kelley: Covered a lot.

Shaun Clisby Kelley: Different angles on.

Shaun Clisby Kelley: Locals and.

Shaun Clisby Kelley: And regional so maybe I'll, just just tackle downtown briefly.

Shaun Clisby Kelley: You called out pedestrian in foot traffic.

Shaun Clisby Kelley: Obviously, some specifics around the Hawaiian segment, too, but just kind of any theories on the pedestrian level. There just given that you did have super Bowl and market in general traffic levels across the strip has been pretty good and we kind of think they should be decently correlated to.

Keith: It's not a market that we get quite as much information on just any thoughts about from your operators about.

Keith E. Smith: Now, I think we were surprised by the slowness, if you will, of traffic on Fremont Street and the overall declines in traffic downtown generally as we watched the numbers. You know, outside, obviously.

Shaun Clisby Kelley: What's going on there.

Speaker Change: No I think we were surprised by the <unk>.

Keith E. Smith: Slowness, if you will of traffic on Fremont Street, the overall declines in traffic downtown generally as we watch the numbers.

Keith E. Smith: Outside obviously.

Shaun Clisby Kelley: The Hawaiian business for us is a large chunk of our overall revenue stream, gaming revenues for downtown, so that had an impact, but really no theories around the specific slowdown of retail customers downtown. It was just soft for a few months. Now, again, as we said, Hawaiians are picking back up. Feels like general traffic downtown is picking back up, but no, can't put my finger on an explanation.

Keith E. Smith: The Hawaii business for US is a large chunk of our overall revenue stream gaming revenues for downtown so that had that had an impact but really no theories around those.

Shaun Clisby Kelley: Those specific slowdown.

Shaun Clisby Kelley: Kind of retail customers downtown just it was just soft for a few months now it's again as we said Hawaiians are picking back up it feels like general traffic downtown is picking back up but.

Shaun Clisby Kelley: No.

Shaun Clisby Kelley: I can't put my finger on an explanation.

Shaun Clisby Kelley: Got it. And then just the same for locals. I think this is a repeat, so apologies for making you do it.

Shaun Clisby Kelley: Got it and then just on.

Shaun Clisby Kelley: Same for local I think this is a repeat so I apologize for making you do it but we just disaggregate that locals market softness that component of the third.

Shaun Clisby Kelley: But when we just disaggregate that local market softness, that component of the third, is that a traffic problem? I hear these people going somewhere else and being attracted by those promotions. Or is it, you know, just like a CEO problem? They're not quite spending as much.

Shaun Clisby Kelley: Is that a traffic problem.

Shaun Clisby Kelley: These people going somewhere else and being attracted by those promotions or is it.

Shaun Clisby Kelley: Just like a CLO problem, there's not quite spending as much.

Keith E. Smith: Well, once again, we break it down into kind of our core customers, which, as I've said a few times here in the local market, continue to grow. And just to make sure Josh was trying to ensure people kept this in context.

Shaun Clisby Kelley: Well it is can we break it into kind of our core customers, which as I've said, a few times here in the locals market continue to grow.

Keith E. Smith: And they continue to grow just to make sure Josh is trying to ensure people kept us in context. They continue to grow in the first quarter over a very strong first quarter of last year. So it's really a very good sign that our core customers are continuing to show up and spend more money.

Keith E. Smith: They continued to grow in the first quarter over a very strong first quarter of last year. So it's really a very good sign that our core customers are continuing to show up and spend more money. It is the retail side, the lower end customer, where we're seeing the shortfall in the lack of spend, you know, and is it the economy? Is it that they're going to a competitor? Is it because they're sharing their wallet?

Keith E. Smith: It is the retail side, the lower end customer.

Keith E. Smith: We're seeing the shortfall.

Keith E. Smith: And the lack of spend and is it the economy is that theyre going to have competitors, they're sharing their wallet. So a lot of these are unrated players. So we actually don't know exactly what the how they're how they're spending their dollars, whether theyre not spending them, whether they're sharing them with another <unk>.

Keith E. Smith: You know, a lot of these are unrated players. So we actually don't know exactly what they are, how they're spending their dollars, whether they're not spending them, whether they're sharing them with another property, we just don't have the visibility because they're not rated. So, Okay.

Keith E. Smith: <unk>, we just don't have the visibility because youre not rated so.

Shaun Clisby Kelley: Got it. Thanks. I know that was a repeat. I appreciate it, Keith.

Speaker Change: Got it got it. Thanks, I know that was repeat I appreciate it Keith.

Shaun Clisby Kelley: Alright.

Chad C. Beynon: Our next question comes from Chad Beynon of Macquarie. Chad, please go ahead.

Shaun Clisby Kelley: Our next question comes from Chad Beynon of Macquarie Chad. Please go ahead.

Chad C. Beynon: Afternoon, thanks for taking my question. Josh, if I got this right, based on the pass-through revenues for Interactive, it looks like Boyd Interactive, I believe, year-over-year, may have grown double digits. Also, sequentially, it looked like it probably grew double digits as well. Can you just kind of give us an update in terms of how that product is being received by customers and any plans to kind of ramp up marketing or drive at least revenue higher in the next couple quarters? Thanks.

Chad C. Beynon: Afternoon, Thanks for taking my question.

Chad C. Beynon: Josh if I got this right based on the pass through revenues for interactive it looks like Boyd interactive.

Chad C. Beynon: I believe year over year may have grown double digits also sequentially. It looked like it probably grew double digits as well can you just kind of give us an update in terms of how that product is being received by customers and any plans to kind of ramp up marketing or drive.

Chad C. Beynon: At least revenue.

Chad C. Beynon: And the next couple of quarters. Thanks.

Josh Hirsberg: So Chad, I presume you're talking about the Stardust online casino product when you reference Boyd Interactive? Yes, please.

Chad C. Beynon: So John I presume Youre talking about.

Chad: <unk> online casino product when you referenced Boyd interactive yes. Please yes.

Chad C. Beynon: Yeah, I just want to make sure that I was going to answer the right question. So we're very pleased with the kind of steady roll out of that product and where it's at. So we're less than a year into the market with our own product, because it launched in May of last year. We were live in Pennsylvania and New Jersey.

Chad: Yes, I just wanted to make sure that.

Chad C. Beynon: I was going to ancillary question.

Chad C. Beynon: Yes.

Chad C. Beynon: So.

Chad C. Beynon: We're very pleased with the kind of a steady rollout of that product and where it's at so we're less than a year into market with our own product because it is launched.

Chad C. Beynon: May of last year were live in Pennsylvania, and New Jersey, Pennsylvania revenue numbers.

Josh Hirsberg: You know, the Pennsylvania revenue numbers are, frankly, about double where they were when we took it over. New Jersey hasn't grown quite as robustly as Pennsylvania, but they're both still ahead of where they were when we launched those businesses. There's also the start of a social product that we're running out of Boyd Interactive. So, look, overall, it is a small business, as we continue to say. It is a growing business. And remember, we have described this as taking a regional approach, not a national approach.

Josh Hirsberg: Frankly are about double where they were when we took it over new Jersey, not hasn't grown quite as robustly as Pennsylvania, but they're both still ahead of where they were when we launch those businesses.

Josh Hirsberg: Also to start a social product that we're running out of avoid interactive. So overall it is a small business as we continue to say it is a growing business and remember we have described this as we're taking a regional approach not a national approach. So we want to launch in the states, where we do business in a few surrounding states that are important to us but the biz.

Josh Hirsberg: So we want to launch in the states where we do business and a few surrounding states that are important to us. But the business does continue to grow and is ahead of our expectations for where we thought it would be.

Josh Hirsberg: This does continue to grow.

Josh Hirsberg: And is ahead of our expectations for where we thought it would be.

Speaker Change: Great. Thank you.

Chad C. Beynon: And then you always get the question, sometimes even a few times on these calls about M&A, has anything changed really in the last two months as you've seen more properties or portfolios come across your desk now that some of the sugar high revenues have worn off and I think we have a better path towards interest rate declines? Any update there? Thanks.

Josh Hirsberg: And then you always get the question, sometimes even a few times on these calls about M&A anything changed really in the last two months as you've seen.

Chad C. Beynon: More.

Chad C. Beynon: Our properties or portfolios come across your desk now that some of the sugar high revenues have worn off and I think we have a better path towards <unk>.

Chad C. Beynon: Interest rate declines any update there. Thanks.

Josh Hirsberg: Yeah, really not. I would say that, you know, we continue to evaluate opportunities. I would say that we're going to continue to be disciplined in how we evaluate those opportunities. There are a lot of things that are for sale that don't meet the criteria that we kind of put forth for ourselves in making a decision. So, you know, we're going to continue to be disciplined in how we think about acquisitions, continue to be disciplined in terms of our capital allocation strategy, continue to stay committed to reinvesting in our business and our return of capital to shareholders, and then to the extent something were to come along that was kind of strategic for us, generated the free cash flow that we wanted to and could create value for our shareholders, then that's when we'll kind Otherwise, we'll continue to be a spectator to that sport.

Chad C. Beynon: Yes.

Josh Hirsberg: Really not I would say that we continue to evaluate opportunities I would say that we're going to continue to be disciplined in how we evaluate those opportunities.

Josh Hirsberg: There are a lot of things that are for.

Josh Hirsberg: For sale that don't meet the criteria that we.

Josh Hirsberg: Kind of put forward for ourselves and make decisions. So.

Josh Hirsberg: We're going to continue to be disciplined in how we think about acquisitions continue to be disciplined in terms of our capital allocation strategy.

Josh Hirsberg: We continue to stay committed and reinvesting in our business and in our return of capital to shareholders and then to the extent something were to come along that path.

Josh Hirsberg: Kind of where strategic for us generated a free cash flow that we wanted to.

Josh Hirsberg: Could create value for our shareholders. Then that's what will kind of be aggressive around it otherwise we will continue to be a spectator to that sport.

Chad C. Beynon: Thank you very much; I appreciate it.

Chad C. Beynon: Thank you very much I appreciate it.

David Brian Katz: Our next question comes from David Katz of Jeffries. David, please go ahead.

Chad C. Beynon: Yes.

David Brian Katz: Our next question comes from David Katz of Jefferies. David. Please go ahead.

David Brian Katz: Afternoon, everyone. Thanks for taking my question. I wanted to go back downtown just one more time, if that's okay. Some of the dynamics, Keith, that you described in the prepared remarks about, you know, flight costs, et cetera, can you just give us a sense of whether those are continuing into the second quarter or what your expectation is as to how long that particular market's going to be impacted?

David Brian Katz: Afternoon, everyone. Thanks for taking my question I wanted to go back to downtown just one more time, if that's okay.

David Brian Katz: Some of the dynamics Keith that you described in the prepared remarks.

David Brian Katz: About flight.

David Brian Katz: Flight cost et cetera.

Speaker Change: Can you just.

David Brian Katz: Give us a sense of whether those are continuing into the second quarter or what your expectation is as to how long.

David Brian Katz: That particular market is going to be impacted.

Keith E. Smith: And during the last 30 days, we've seen a decline in airfares coming out of Hawaii, and conversely or directly correlated to that, we've seen a pickup in our Hawaiian business. And so it looks like rates are starting to decline from their highs earlier in the year. Look, rates into Las Vegas across the board were extremely elevated in late January and February because of the Super Bowl. And so we just know by looking at our database.

Speaker Change: During the last 30 days we've seen.

Keith E. Smith: A decline in airfares coming out of Hawaii, and Conversely are directly correlated to that we've seen a pickup in our Hawaii business and so it looks like it is starting to.

Keith E. Smith: The rates are starting to decline from their highs earlier in the year look rates into Las Vegas across the board. We're extremely elevated in late January and February because of the Super Bowl and so we just know by looking at our database.

David Brian Katz: You know, many of our Hawaiian customers stayed away because they simply weren't going to pay the higher airfares, and now they're starting to make their trips, and so there is a direct correlation there. Best as I can tell, I don't control airfares, but it looks like the airfares inbound from Hawaii seem to be normalizing or continuing to become less than they were earlier in the year. So, yeah, we expect that that will continue and that we'll continue to see a rebound in our Hawaiian business.

Keith E. Smith: Many of our Hawaiian customer stayed away because they simply we're going to pay the higher airfares and now they are starting to make their trips and so there is a direct correlation there.

David Brian Katz: As best as I can tell.

David Brian Katz: Control airfares, but it looks like the airfares in inbound from Hawaii seem to be normalizing or continuing to become less than they were earlier in the year.

David Brian Katz: So we expect that that will continue and we'll continue to see a rebound in our Hawaii business.

David Brian Katz: Got it. And if I can just sort of, I know we've sort of discussed this pretty thoroughly, but just come at it one slightly different way. You know, I think we were sort of hearing commentary about Las Vegas locals since, you know, the new property opened late last year, and it seemed to have a relatively benign impact, or at least that's what the commentary was. Did we sort of misinterpret what we were hearing? Did it turn out to be just a little worse? Or did it, you know, accelerate at some point? How would you sort of look back and characterize it?

Speaker Change: Got it.

Speaker Change: If I can just sort of I know, we've sort of discussed this pretty thoroughly, but but just come at it one slightly different way.

David Brian Katz: Think we were sort of hearing commentary about Las Vegas locals since then.

David Brian Katz: The new property opened late last year and it seemed to be relatively benign.

David Brian Katz: Impact or at least that's what the commentary was did did we sort of misinterpret. What we were hearing did it turn out to be just a little worst stood it did it accelerate.

David Brian Katz: At some point.

David Brian Katz: How would you sort of look back and characterize.

Josh Hirsberg: I think, first of all, we were able to talk about what was going on during our fourth quarter call. So we were consistent with that. I think the second thing is it did accelerate as we moved through the quarter, not so much from the new competitor getting more aggressive from a promotional perspective, but from others in the marketplace, as Keith has tried to describe, getting more promotional, some advocating they have the most generous loyalty program in the Las Vegas locals market.

Speaker Change: I think first of all we can all what we are able to talk about what was going on through the first.

Josh Hirsberg: At our fourth quarter call. So.

Josh Hirsberg: We were consistent with that I think the second thing is it did accelerate as we move through the quarter not so much from the new competitor getting more aggressive from approach from a promotional perspective, but from others in the marketplace as key strides described getting more promotional.

Josh Hirsberg: Advocating they have the most.

Josh Hirsberg: Generous loyalty program and the Las Vegas locals market. So we're contending with those type of pressures on our on.

Josh Hirsberg: So we're contending with those types of pressures on our properties without being aggressive in responding promotionally because we don't think that is a profitable way to run our business. So I think you had a soft market, you had a new competitor come in, everything was kind of stable and getting slowly absorbed, and then you had some competitors, again, not us and not our major competitor in the market, start to get significantly more aggressive, and that started to influence our performance. OK.

Josh Hirsberg: On our properties without.

Josh Hirsberg: <unk> been aggressive in responding promotional because we don't think that is a profitable way to run our business. So.

Josh Hirsberg: Thank you had a soft market you had a new competitive or come and everything was kind of stable and getting sold slowly absorbed and then you had.

Josh Hirsberg: Some competitors again, not us and not our major competitor in the market get start to get significantly more aggressive.

Josh Hirsberg: And that started in.

Josh Hirsberg: Influence our performance.

David Brian Katz: Okay. Helpful. I appreciate it. Thank you.

Josh Hirsberg: Okay.

Speaker Change: Helpful. I appreciate it thank you.

David Brian Katz: Yes.

Brandt Antoine Montour: Our next question comes from Brandt Montour of Barclays. Brandt, please go ahead.

David Brian Katz: Our next question comes from Brent <unk> of Barclays. Brent. Please go ahead.

Brandt Antoine Montour: Hey, everybody. Good evening.

Brandt Antoine Montour: Hey, everybody good evening, thanks for taking my questions.

Keith E. Smith: Thanks for taking my questions. So, Josh, you mentioned or reiterated the $100 million in growth projects to think about that as recurring. And, you know, the project you're working on right now ends in June. And I know this isn't going to be the big unveil, right, on the next one you're thinking about, but maybe just, you know, scope or type or anything maybe you want to tease out there in terms of what we could hear about in a couple months.

Brandt Antoine Montour: Josh You mentioned you reiterated the $100 million in growth projects to think about that is occurring and.

Keith E. Smith: We did the project you are working on right now in June.

Keith E. Smith: And I know this isn't going to be the big unveil right on the next one youre thinking about maybe just.

Keith E. Smith: Maybe just.

Keith E. Smith: Scope or type or anything maybe you want to tease out there in terms of what we could hear about in a couple of months here.

Brandt Antoine Montour: Yeah, Brandt, this is Keith. I think we're, you're right. There is no big unveil today. We'll leave that probably for our next call.

Keith E. Smith: Yes, Brent this is Keith I think you are right. There is no big unveil today.

Keith: Leave that probably for our next call we have several.

Keith E. Smith: We have several projects. We have a pipeline of projects that we're getting ready to embark on, but we're not prepared to describe any of them yet. Many of them are still in the planning and design phases, still finalizing budgets and timeframes for them. But there's a pipeline of them, and we'll be prepared to talk about them in the very near future, but nothing today. No teasing out, no potential this or potential

Keith: So we have a pipeline of projects that we're getting ready to embark on but not prepared to describe any of them. Yet many of them are in the still in the planning and design phases still finalizing budgets and time frames for them.

Keith E. Smith: But there is a there's a pipeline of them will be fair to talk about them in the very near future, but nothing nothing today no teasing out no.

Keith E. Smith: Potential this potential.

Brandt Antoine Montour: Okay, thought I'd give it a shot. And then over at Sky River, obviously, great results there so far, and thanks for the updated guidance. The expansion of that, could you maybe give us a sense of timing and scope, what we can sort of think about for that?

Keith E. Smith: Okay got it give it a shot and then over at Sky River obviously.

Brandt Antoine Montour: Results there so far.

Brandt Antoine Montour: Thanks for the updated guidance.

Brandt Antoine Montour: Spansion of that could you maybe give us a sense of timing and scope.

Brandt Antoine Montour: Can sort of think about for that.

Keith E. Smith: Yeah, look, in terms of scope, you know, once again, expanded casino, hotel, meeting convention space, probably a few additional restaurants is the, you know, the general scope. It's not to the point where the tribe has announced, we're not going to announce on their behalf, the exact number of slots we'll be adding or tables or anything else at this point. Timing, we're waiting for final regulatory approval. There are a number of regulatory approvals, including from the NAGC.

Speaker Change: Yes look in terms of scope once again, expanding casino hotel meeting convention space, probably a few additional restaurants.

Keith E. Smith: Is the general scope.

Keith E. Smith: It's.

Keith E. Smith: It's not to the point, where the tribe as of now we're not going to have on their behalf kind of the exact number of slots will be adding or tables or anything else. At this point timing. We're waiting for final regulatory approval. There is a number of regulatory approvals, including <unk>.

Keith E. Smith: And so we're awaiting those. Once we get all of those approvals, which we certainly hope is in the very near term, I think the tribe is ready for a groundbreaking. But we have to wait for all the final approvals before we can go any further.

Keith E. Smith: So we're awaiting those.

Keith E. Smith: Once we get all of those approvals, which we certainly hope is in the very near term I think the tribe is written for <unk>.

Keith E. Smith: Groundbreaking, but we have to wait for all the final approvals before we can go any further.

Brandt Antoine Montour: Great. Thanks for the additional color.

Speaker Change: Great. Thanks for the additional color.

Brandt Antoine Montour: Okay.

Ben Chaykin: Our next question comes from Ben Chaykin of Mizzouho. Ben, please go ahead.

Brandt Antoine Montour: Our next question comes from Ben Chaiken of Mizuho Ben. Please go ahead.

Ben Chaykin: Hey, how's it going? Just one very quick clarification downtown. The comment about the last 30 days kind of improving, was that a reference to airfare and Hawaiian vegetation, or did that also encompass the kind of like broader Fremont visitation demand as well?

Ben Chaykin: Hey, How's it going.

Ben Chaykin: Just one very quick clarification in downtown.

Ben Chaykin: The comment about the last 30 days kind of improving was that.

Ben Chaykin: A reference to the airfare and Hawaiian visitation or would that also is that also encompass the kind of like broader.

Ben Chaykin: Fremont visitation demand as well.

Keith E. Smith: It was more specific to Hawaiian business, which we obviously have very, very good visibility into. We don't have great visibility on a weekly basis to overall counts downtown, but so it really was specific to Hawaiian traffic.

Ben Chaykin: It was more specific to the Hawaii business, which we are obviously very very good visibility into.

Keith E. Smith: We don't have great visibility on a weekly basis to overall counts downtown.

Keith E. Smith: It really was specific to the <unk> traffic.

Ben Chaykin: Understandable. And then for Treasure Chest, any color on how you're thinking about that opening from both the demand standpoint and timing, is this the same customer you expect to return, or someone else? And then should we expect any disruption as that development transitions over the next couple of months?

Keith E. Smith: Understood and then on for treasure chest any color on how youre thinking about that opening from both a demand standpoint and.

Ben Chaykin: Timing is this the same customer you expect to return or someone else and then should.

Ben Chaykin: Should we expect any disruption as development transitions over the next couple of months.

Ben Chaykin: So I think the way to think about it as you know this is a significantly enhanced facility moving from a three story riverboat too.

Keith E. Smith: So I think the way to think about it is this is a significantly enhanced facility moving from a three-story riverboat on the water to the dry side of the levee, and land-based, and much more convenient parking, and many more food and beverage amenities, and just an overall better environment. So we expect a good uplift on the whole. You know, EBITDAR from that property, both revenue and EBITDAR. We expect to get a good return on our investment there. It is, yes, an existing customer, and yes, it is a new customer.

Keith E. Smith: On water to the dry side of the levee and land based and much more convenient parking and much many more.

Keith E. Smith: Food and beverage amenities and just an overall better environment. So we expect.

Keith E. Smith: Good uplift on the overall.

Keith E. Smith: EBITDAR from that property revenue and EBITDAR, we expect to get a good return on our investment there.

Keith E. Smith: It is yes, the existing customer and yes. It is a new customer we're confident that we can grow the market there.

Keith E. Smith: We're confident that we can grow the market there and, obviously, build that business. That's why we did it. We spent a lot of time studying this.

Keith E. Smith: Obviously build that business is why we did it we spent a lot of time studying this.

Keith E. Smith: You know, overall, the casino floor will not be larger than it is today, but it will be more efficient because it's not spread over three floors. It's all on one floor. So, it's not like we're going to have three times as many slots. As a matter of fact, we'll have a similar number of slots. They'll just be more efficient because it's all on one floor. Same with table games. But it will be, you know, much more attractive assets, much more inviting assets, and we're confident that it will draw in significantly more customers.

Keith E. Smith: Overall, the casino floor will not to be larger than it is today, but it will be more efficient because it's not spread over three floors. It's all on one floor. So it's not like we're going to have three times as many slots as a matter of fact with a similar number of slots. They will just be more efficient because it's all on one floor soon with table games.

Keith E. Smith: But it will be.

Keith E. Smith: Much more attractive assets much more inviting asset.

Keith E. Smith: And we're confident that it will draw significantly more customers.

Keith E. Smith: And in terms of disruption. You know, they'll be minor. We'll have to likely, and this will be based on requirements of the Louisiana regulatory authorities and state police, we'll likely have to shut for a few days while we transition some items, but outside of, you know, maybe being shut for a couple of days, midweek, I would not anticipate any disruption.

Keith E. Smith: And in terms of disruption.

Keith E. Smith: So there'll be.

Keith E. Smith: Minor will have to likely and this will be based on requirements of the Louisiana regulatory authorities and state police will likely have to shut for a few days, while we transitioned some items, but outside of maybe being shut for a couple of days mid week I would not anticipate any disruption.

Speaker Change: Thanks I appreciate it.

Jordan Maxwell Bender: Our next question comes from Jordan Bender of Citizen JMP. Jordan, please go ahead.

Keith E. Smith: Our next question comes from Jordan Bender of citizen JMP Jordan. Please go ahead.

Jordan Maxwell Bender: Great, good afternoon. I want to touch on the cadence of your online EBITDA. So backing out the one-time item in the prior year, I think EBITDA was up about $3 million or so in the quarter. You know, and your guidance kind of implies the remainder of the year has a flattish outlook. I guess it might be a call on the growth of FanDuel, but can you maybe unpack how you're thinking about, you know, the outlook for that segment for the rest of the year?

Jordan Maxwell Bender: Great. Good afternoon, I wanted to touch on the cadence of your online EBITDA. So backing out the one time item in the prior year I think EBITDA was up about $3 million or so in quarter.

Jordan Maxwell Bender: Your guidance kind of implies for the remainder of the year of a flattish outlook I guess it might be a call on the growth of <unk>, but can you maybe unpack how youre thinking about.

Jordan Maxwell Bender: The outlook for that segment for the rest of the year.

Josh Hirsberg: Yeah, I think that, you know, we've, we've been pretty consistent since Q4 that, you know, we kind of expect this range of 60 to 65. And, you know, obviously, we have some of the one-time items that were in there in our numbers last year from some of the skins we sold and things of that nature. And so there's actually growth in the business if we can continue to hit in the 60 to 65 million dollar range.

Jordan Maxwell Bender: Yes, I think that.

Josh Hirsberg: We've been pretty.

Josh Hirsberg: Well since Q4, we've been pretty consistent that we.

Josh Hirsberg: We kind of expect this range of 60 to 65.

Josh Hirsberg: And we're obviously we have.

Josh Hirsberg: We know some of the onetime items that were in there.

Josh Hirsberg: And our numbers last year from some of the scans, we sold and things of that nature and so there is actually growth in the business. If we can continue to hit in the $60 to $65 million range.

Josh Hirsberg: I guess there's the potential that we do better. Obviously, this is very seasonal; we're out of the, you know, the best quarter of the year. And, you know, we'll get another look toward the end of the year when football season starts back up. So everything between now and then is going to be more modest, we expect. So we'll just have to wait and see. I think we'll know more as we get to the fourth quarter if it's going to be better or not.

Josh Hirsberg: I guess there is a potential we do better obviously this is very seasonal were out of the <unk>.

Josh Hirsberg: Best quarter of the year and we'll get another look toward the end of the year when football season starts back up so everything between now and then it's going to be more modest we expect.

Josh Hirsberg: So we'll just have to.

Josh Hirsberg: I think we'll know more as we get to the fourth quarter of it is going to be better or not but.

Josh Hirsberg: From where we sit today, and factoring in some of the one-time items that occurred last year and building on a little bit of growth, you know, that's kind of where it plays out. So, that's the best we can do right now.

Josh Hirsberg: From where we sit today and factoring in some of the one time items that occurred last year and building on a little bit of growth.

Josh Hirsberg: That's kind of where it plays out.

Josh Hirsberg: Especially we can do right now at least our view.

Jordan Maxwell Bender: And then within the Midwest and South segment, I guess more in the South, you know, is there any change to that lower tier customer, either positive or negative, from what we saw in the back half of last year? Not really, I would say.

Speaker Change: Understood. Thanks.

Jordan Maxwell Bender: Then within the Midwest and South segment, I guess more in the cell.

Jordan Maxwell Bender: Any change to that lower tier customer either positive or negative from what we saw in the back half of last year.

Jordan Maxwell Bender: Not really I would say that.

Josh Hirsberg: Not really, I would say that, you know, in the late part of 2022 is when we saw the South get softer than the rest of the region. I would say as we've moved through, the region has started to perform more similarly in line, and that's what happened, you know, in Q4 of last year and in Q1 this year. All of the customer trends are kind of headed in the same direction, regardless of the region of the Midwest and South or the customer core or retail.

Jordan Maxwell Bender: In the late part of 2022 is when we saw the south.

Josh Hirsberg: Yet softer than the rest of the region I would say as we've moved through.

Josh Hirsberg: The region has started to more perform all similarly in line and that's what's happening.

Josh Hirsberg: In Q4 of last year and in Q1 this year.

Josh Hirsberg: All of the customer trends are kind of headed in the same direction, whether youre talking about regardless of the region of the Midwest and south or the customer.

Josh Hirsberg: For our retail.

Speaker Change: Great. Thank you.

Jordan Maxwell Bender: Our next question comes from Joe Stauff of SIG. Joe, please go ahead. Thanks.

Speaker Change: Sure. Thank you.

Jordan Maxwell Bender: Our next question comes from Joe Stauff of S. G. Joe. Please go ahead.

Joseph Robert Stauff: Thanks. Hi Keith. Hi Josh. Just one more back on the Las Vegas locals. I'm just curious to see if, you know, whether it be new competition or even growth in the market, especially over the past couple years and the outlook, has that at all changed the way that you think about, you know, the required level of capital reinvestment? And I know, you know, you're not going to reinvest specifically say you're not going to compete on a promotional level but more on any larger capital projects you think you need in your portfolio, whether it be in response to the competition or for the longer term.

Joseph Robert Stauff: Hi, Keith Hi, Josh.

Joseph Robert Stauff: Just one more back on Las Vegas locals.

Speaker Change: Just curious to see if.

Joseph Robert Stauff: Whether it be the new competition or even the growth in the market, especially over the past couple of years and the outlook is that at all change the way that you think about the required level.

Joseph Robert Stauff: Of capital reinvestment in.

Joseph Robert Stauff: No.

Joseph Robert Stauff: Youre not going to be.

Joseph Robert Stauff: Reinvestment, specifically, you say youre not going to compete on promotional level, but more on any larger capital projects do you think you need in your portfolio.

Joseph Robert Stauff: Whether it be in response to competition and or for the longer term.

Keith E. Smith: Yeah, we think of the, you know, capital program that we have going on in terms of upgrading many of our food and beverage amenities and upgrading our hotel rooms as a form of maintenance. Look, it's a very highly competitive business, whether it's here in Las Vegas or it's across the country. We operate in local markets, frankly, everywhere we operate outside of Las Vegas.

Joseph Robert Stauff: Okay.

Keith E. Smith: Yes.

Keith E. Smith: We think of the capital program that we have going on in terms of upgrading many of our food and beverage amenities and upgrading our hotel rooms.

Keith E. Smith: As a form of maintenance look it's a very highly competitive business, whether it's here in Las Vegas search across across the country. We operate in local markets frankly everywhere, we operate outside of Las Vegas. So do we need to continually refresh those customers want to see new and different food and beverage offerings on a frequent basis.

Joseph Robert Stauff: So we need to continually refresh those. Customers want to see new and different food and beverage offerings on a, you know, frequent basis. And so these really are not defensive. They're just kind of required to, we think, to maintain our level of business, to maintain our focus on our core customers, and to ensure our core customers continue to come back and visit us. And so it's not in response to anything in particular.

Joseph Robert Stauff: And so these really are not defensive there just kind of required to we think to maintain our level of business to maintain our focus on our core customers ensure our core customers continue to come back and visit us.

Joseph Robert Stauff: And so it is not in response to anything in particular.

Joseph Robert Stauff: There is some of the work that we have going on at the Suncoast property was opened in 2000, and therefore is now 24 years old.

Keith E. Smith: You know, there's some of the work that we have going on at the Suncoast. That property was opened in 2000, and therefore, you know, it's now 24 years old. And, you know, every 24 years, you have to refresh things.

Keith E. Smith: Over 24 years, you have to refresh things and so that's what we're in the process of doing.

Speaker Change: Thanks very much.

Keith E. Smith: Yes.

Keith E. Smith: Our final question comes from John Decree of CB R. E. John Please go ahead.

Speaker Change: Thanks, Josh Thanks, Keith I'll make it quick you may have touched on it already but not sure if I missed it.

Joseph Robert Stauff: And so, you know, that's what we're in the process of doing. Thanks very much. Our final question comes from John DeCree of CBRE. John, please go ahead. Thanks.

John G. DeCree: A lot of a lot of talk about promotional environment locals, but if you had any color or commentary.

John G. DeCree: On the Midwest and South segment, maybe broadly competitive promotional environment and then if theres any.

John G. DeCree: Our final question comes from John DeCree of CBRE. John, please go ahead. Thanks, Josh. Thanks, Keith.

John G. DeCree: Specific areas, where you see any different or change in behavior on the competitive or promotional front would be helpful.

Keith E. Smith: Yeah, John, as I just reflect on your question quickly, no real significant changes in any of our Midwest and South operating markets from a promotional environment. Nobody is, you know, all of a sudden doing anything crazy in the last quarter or stepping out and being ultra aggressive. I'm stepping back for a moment and thinking, but no, nothing to report.

John G. DeCree: Yes, Jonathan.

Keith E. Smith: As we reflect on your question quickly.

Keith E. Smith: No real significant changes.

Keith E. Smith: We have our Midwest and south operating markets from a promotional environment nobody is.

Keith E. Smith: Sudden doing anything crazy in the last quarter, we're stepping out and being ultra aggressive.

Keith E. Smith: Just stepping back for a moment I'm thinking, but but no nothing nothing to report.

John G. DeCree: It's all fairly stable, once again, as we've talked about over the quarters. Some of our competitors got aggressive several years ago, and they've stayed aggressive. Others have remained more disciplined, like us, and they've remained more disciplined. Really, there were really no material changes in any of our markets outside of Nevada from a promotional spend or aggressiveness of the promotional environment standpoint.

Keith E. Smith: It's all fairly stable once again as we've talked over the quarters. Some of our competitors got aggressive several years ago and they've stayed aggressive others have remained more disciplined like us and they've remained more discipline is really no no material changes in any of our.

John G. DeCree: Markets outside of Nevada promotional spend or aggressiveness of the promotional environment standpoint.

Josh Hirsberg: This concludes our question and answer session. I'd now like to turn the call over to Josh for his concluding remarks.

Speaker Change: Great. That's it for me Thanks Keith.

Josh Hirsberg: Thanks, John.

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

Josh Hirsberg: Thanks David. Thanks to everyone for joining the call today. If you have any follow-up questions, feel free to reach out to the company, and we'll make ourselves available. Thank you again and have a good rest of your day.

Josh Hirsberg: Thanks, David Thanks to everyone for joining the call today. If you have any follow up questions feel free to reach out to the company and we will make ourselves available. Thank you again have a good rest of your day.

David Strow: Thanks, Josh. This concludes today's call. You may now disconnect.

Speaker Change: Josh. This concludes today's call you may now disconnect.

David Strow: Yes.

David Strow: Okay.

David Strow: Okay.

David Strow: Okay.

David Strow: Okay.

David Strow: Yes.

David Strow: Okay.

David Strow: Sure.

David Strow: Okay.

David Strow: Yes.

David Strow: Sure.

David Strow: No.

David Strow: Yes.

David Strow: [music].