Q2 2025 Boyd Gaming Corp Earnings Call
Ladies and gentlemen, this is the operator.
Speaker Change: Today's conference is scheduled to begin momentarily until the time, your lines will remain on music called thank you.
Speaker Change: Good afternoon and welcome to the boy gaming, second quarter 2025 earnings conference call.
Speaker Change: Today's call, which we are hosting on Thursday, July 24th 2025.
Speaker Change: At this time, all lines are in listen-only mode. Following our remarks, we will conduct a question and answer session. If at any time during this, call, you require immediate assistance, please press star, then zero for the operator.
Speaker Change: Our speakers for today's call are Keith Smith president and chief executive officer and Josh herschberg. Executive Vice President and Chief Financial Officer.
Speaker Change: Our comments today will include statements that are forward-looking statements within the private Securities. Litigation Reform Act.
Speaker Change: All forward-looking statements in our comments are as of today's date. And we undertake no obligation to update or revise, the forward-looking statements.
Speaker Change: Actual results May differ materially from those projected in any forward-looking statement, there are certain risks and, 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 and both of which are available at investors. Boy gaming.com.
Speaker Change: We do not provide a Reconciliation of forward-looking non-gaap financial measures due to our inability to project special charges in certain expenses.
Speaker Change: Today's call is being webcast. Live at boy gaming.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
Keith Smith: Thanks, David and good afternoon everyone.
Keith Smith: Before discussing our second quarter results, let me first touch on a recent FanDuel announcement.
As we announced 2 weeks ago, we reached an agreement to sell our 5% Equity interest in FanDuel to flutter entertainment for 1.755 billion dollars in cash unlocking. The significant value that we have created through our partnership with FanDuel
Keith Smith: As part of this transaction, we extended our Market access agreements. With FanDuel through 2038 and adjusted our Market access rates.
We expect this transaction to close and to receive the proceeds in the next several weeks. The net proceeds will be used to pay down debt, reducing our leverage below 2 times.
Keith Smith: As a result of this transaction, our company is in an even stronger financial position to continue executing our strategy of investing in our properties pursuing attractive growth opportunities, returning Capital to shareholders and maintaining a strong balance sheet consistent with our Focus over the last several years.
Keith Smith: Now, moving on to second quarter results.
Keith Smith: We delivered a strong performance in the second quarter.
Keith Smith: For the quarter revenues, excluding tax pass. Through amounts grew 4%, while i-bidder also increased 4% to 358 million.
Keith Smith: These results were driven by broad-based growth across our operating segments, including both our online and managed segments. Demonstrating the value of our Diversified business model.
Keith Smith: On a property level basis, year-over-year, revenue, and even a dark growth, was the strongest in more than 3 years while property level margins. Once again exceeded, 40% the level, we have consistently delivered since 2021.
Keith Smith: Across the portfolio. Our results were supported by continued strength and play from our core customers, as well as improving Trends among retail customers.
Keith Smith: Turning the segment results, a Las Vegas, local segment had a strong quarter, delivering its first year-over-year Revenue in eidar. Growth in more than 2 years while maintaining a segment. Margins of nearly 50%.
Keith Smith: This performance was led by growth and play from our core customers as well as continued improvements in retail play.
Growth in play. Among our local guests, more than offset softness in play from our out of town customers.
Keith Smith: While the Las Vegas Strip has recently seen softer, demand Trends. There are signs of continued strength in the local economy.
In southern Nevada, employment continues to grow while local income is increasing with average weekly wages up more than 5% over the prior year. Well, above the national average,
Keith Smith: Southern Nevada's cost of living remains below. The national average ranking among the most affordable of the nation's 30, largest metropolitan areas.
Keith Smith: Las Vegas. Valley has nearly 11 billion dollars in construction activity. Currently underway, reflecting continued strength in this critical economic sector.
Keith Smith: In the recent tax bill passed by Congress, includes several Provisions that will benefit both our Southern Nevada operations, and our Midwest, and South operations.
Keith Smith: Time a new deduction for seniors and a larger standard deduction for taxpayers. Given these positive factors. We remain confident in the prospects for the Southern Nevada economy in the future of our local business.
Keith Smith: Next, our downtown Las Vegas segment. Delivered a solid quarterly performance against the challenging prior year comparison.
As you may recall last year's second quarter benefited from significant pain of demand from our Hawaiian customers, who did not visit in the first quarter of last year due to higher airfares related to Super Bowl.
Keith Smith: Importantly, the underlying performance of our downtown business remains stable.
Keith Smith: Did the first 6 Months of the Year, both revenue and i-bidder in the downtown segments were up more than 1% over the prior year.
Keith Smith: Next, our Midwest and South segment, which was impacted by both flood related closures and the shift of Easter into April delivered revenue and i-bidder gains of more than 3%. This marked, the segment's, highest quarterly Revenue in i-bidder in nearly 3 years.
Keith Smith: Growth in this segment was led by continued strong performance of treasure chest which marked its 1 year anniversary on June 6th.
Keith Smith: Similar to the Las Vegas local segment. We continue to see strength and play from our core customers during the second quarter, while play from retail, customers also improved
Keith Smith: Next in our online segment, both revenues and iPad are increased driven by Boyd interactive and modest growth from our Market access agreements.
Keith Smith: Finally, our managed business continues, its strong performance with ongoing growth and management fees from Sky River Casino.
Keith Smith: Given Sky Rivers, ongoing success. We remain optimistic about the future potential of the expansion currently underway at this property.
The first phase of this expansion set for completion early. Next year will address the need for more gaming capacity by adding 400 slot machines as well as a 1600 space parking garage.
The second phase will further diversify Sky Rivers offerings with a 300 room, Motel 3, new food, and beverage Outlets, a full service resort, spa, and an entertainment, and Event Center.
Keith Smith: Once complete in mid 2027, this expansion will further strengthen Sky River's position as 1 of Northern California's leading gaming entertainment, destinations.
Keith Smith: so in all we delivered strong results in the second quarter reflecting the customer base,
Quality of our property amenities in the benefits of our Diversified business.
Keith Smith: Moving next to our capital investment program.
Keith Smith: We continued our work in the second quarter, highlighted by Hotel Renovations at several of our properties, as well as the ongoing improvements of the Sun Coast.
During the quarter, we completed a hotel room, renovation at Valley, Forge, and continue to work on a room renovation project at the IP.
Keith Smith: And we plan to start Hotel, Renovations at The Orleans in the coming months.
Keith Smith: In addition, our property wide renovation of the Sun Coast is continuing. And is now in its most disruptive stage with large portions of the casino floor under renovation,
we are on track to complete the Sun Coast Renovations in the first quarter of next year.
Keith Smith: Given the strong response we've already seen to the new amenities. We recently added, we are confident in the long-term potential of this project.
Keith Smith: On property enhancements. We have several projects underway to strengthen the long-term growth profile of our business.
These Investments are part of our 100 million in annual, recurring growth capital.
In Missouri, we are on track for a late August completion. Of our meeting and Convention Center at Ameristar St. Charles
Keith Smith: We expect this project to drive, strong returns given the encouraging pre-bookings of the the property has already secured for the new space.
Keith Smith: Importantly, more than 90% of these pre-bookings are from entirely new customers, a strong indication that this project will further. Expand the mayor's customer base and drive incremental growth at the property.
Keith Smith: Also workers progressing on our Cadence Crossing Casino in southern Nevada.
Keith Smith: The adjacent community of cadence, is 1 of the fastest growing master plan communities in the nation.
Keith Smith: Creating a compelling, long-term growth opportunity for our company.
Keith Smith: On track to open in mid 2026, Cadence Crossing will replace our existing Joker's. Wild casino with a modern gaming entertainment facility designed to appeal to the thousands of new residents throughout the area.
Keith Smith: And we are well positioned to keep Pace with continued residential growth in the area with future plans for a hotel, additional Casino space and more non-gaming amenities.
Keith Smith: Beyond these Investments, we're developing plans for the next phase of projects to further. Strengthen our long-term growth profile.
Keith Smith: Process for a modern new entertainment facility, that will replace our existing riverboat casino of paradise.
Assuming regulatory approvals are received later this year, we expect this project to begin in 2026.
Keith Smith: And in Norfolk, we're on track to open our transitional Casino in November of this year, while construction is progressing on our 750 million permanent Resort, which is scheduled to open in late 2027 once complete, the resort will include a 65,000 square foot, Casino a 200 room Hotel, 8 food, and beverage, Outlets live entertainment and an outdoor. Amenity deck. In addition to being the leading gaming Resort in the market, our property will be the most convenient gaming destination for much of the Hampton Roads. Metropolitan Area. 1 of the largest underserved markets in the Mid-Atlantic region, with nearly 1.8 million people. We also expect to draw tourists from nearby. Virginia Beach, the destination that attracts nearly 15 million visitors each year,
By offering a best-in-market experience with compelling amenities and easy access. We believe our Norfolk Resort will deliver strong returns for our company in the coming years.
Keith Smith: You know, our capital investment program is an important part of driving growth in creating long-term shareholder value.
Keith Smith: At the same time, we are investing in our properties and developing projects to support our long-term growth. We remain committed to returning Capital to our shareholders.
Keith Smith: During the second quarter, we repurchased 105 million in stock and paid 15 million dollars in dividends.
Keith Smith: Since we began our Capital return program in 2021, we returned nearly 2.4 billion dollars to our shareholders.
And with the recent FanDuel transaction, we have increased flexibility to continue our Capital return program.
Keith Smith: As a result, we plan to increase our Target for share repurchases from 100 million per quarter to 150 million per quarter starting with the third quarter.
Keith Smith: And while the proceeds from this transaction will initially, be used to reduce debt or proven track record of making smart Capital, allocation decisions gives us confidence in our ability to deploy these proceeds toward attractive higher returning investments in the future.
Keith Smith: You're closing the combination of an attractive growth pipeline ongoing. Property Investments, a strong financial position, and our ability to deliver consistent results. All position, as well to continue creating long-term shareholder value.
Speaker Change: Before I turn the call over to Josh, I want to thank our team members, who are key to our ongoing success every day. They provide our guests with memorable and distinctive service, providing a unique experience that builds loyalty to our brand.
Thank you for your time today.
Speaker Change: Would now like to turn the call over to Josh.
Thanks Chief and good afternoon everyone.
In light of our, recently announced transaction to sell our 5% interest in FanDuel to flutter. I wanted to take a few moments to review the financial impacts for our company.
Speaker Change: This transaction further enhances our financial flexibility. Strengthens our already, strong balance sheet and is a creative to free cash flow.
As Keith noted we expect to receive 1.755 billion dollars in total proceeds in the next several weeks.
We estimate after tax proceeds of approximately 1.4 billion or more than 17 dollars per share.
Speaker Change: initially, we intend to use the proceeds to completely repay the debt outstanding, under our credit facility,
Speaker Change: Total leverage at the end of the second quarter was approximately 2.8 times our 3.2 times on a lease adjusted basis.
Speaker Change: Pro for this transaction, we estimate leverage will be reduced by approximately 1 turn.
Speaker Change: As a result of reduced debt balances we estimate interest expense Savings of approximately 85 million on an annualized basis.
as noted in our press release, announcing the FanDuel transaction, our future results will reflect the economics of the new market access agreements, which are effective July 1st pending regulatory approvals,
Speaker Change: We estimate our online segment will generate 50 to 55 million in i-bidder for the full year. 2025 followed by 30 million in i-bidder in 2026.
To summarize the impacts of this transaction, leverages lower our Market access agreements or extended through 2038 with a reduced fee structure.
Speaker Change: Free cash flow is increased and we are in an even stronger position to execute our strategy.
Let's take a few moments to review the second quarter.
Speaker Change: the results for the quarter were strong across the company, growing revenue and i-bidder while property level margins were once again, 40%
Speaker Change: Property level margins, have consistently remained at or above this level? A reflection of our continued focus on maintaining operating efficiencies
Speaker Change: During the quarter. We continue to see strength in play from our core customers and improving Trends in play from our retail customers.
The tax passed through amount for our online. Segment was 134 million during the second quarter.
Speaker Change: Compared to 104 million in the year ago. Period.
Speaker Change: Excluding the tax passed through amount for this quarter companywide. Margins for the second quarter. This year would have been 515 basis points above the margin. We reported
Speaker Change: With respect to Capital expenditures.
Speaker Change: We invested 124 million in capital during the second quarter.
Bringing year-to-date Capital expenditures to 251 million.
Speaker Change: We continue to project total Capital expenditures for the year for the full year of 600 million to 650 million.
Speaker Change: These Capital plans include approximately 250 million in maintenance capital.
100 million related to our hotel room projects at IP Valley Forge in the Orleans.
Speaker Change: A hundred million dollars in growth capital for the meeting and Convention space at Ameristar St. Charles, and the new Cadence Crossing development here in Las Vegas.
Speaker Change: And finally, 150 million to 200 million dollars for a casino development in Virginia.
Speaker Change: In terms of our shareholder Capital return program. We paid a regular quarterly dividend of 18 cents per share during the second quarter totaling 15 million. Also during the quarter, we repurchased 105 million in stock, acquiring 1.5 million shares at an average price of $70.94 per share.
Speaker Change: Actual shares outstanding at the end of the quarter were 80.5 million shares.
Keith Smith: Year to date. We have repurchased 5.9 million shares at an average price of 72.98 cents per share. As Keith noted earlier, we intend to increase our share repurchase program to 150 million dollars per quarter.
Keith Smith: Supplemented by our regular quarterly dividend.
Keith Smith: Considering this higher rate of repurchase activity in conjunction with our quarterly dividend going forward. Our annual run rate of capital returns to shareholders are expected to Total approximately 700 million.
Keith Smith: Or about $9 per share.
Keith Smith: Since we began our Capital return program in October 2021, we have returned nearly 2.4 billion dollars in the form of share repurchases and dividends by reducing our share count by 28%.
Keith Smith: Following the end of the second quarter, our board of directors approved an additional 500 million. Share repurchase authorization, providing the company, a total repurchase, authorization of 707 million.
Keith Smith: In conclusion with strong play from our core customer and improving Trends. Among our retail customers efficient operations, robust free cash flow and the strongest balance sheet in our company's history. We have outstanding flexibility to continue executing our strategy for creating long-term shareholder value.
David: With that, I will now turn it to David to open the call for questions.
Thank you Josh. We will now begin our question and answer session. If you'd like to ask a question please press star then 1 on your touchtone phone, you will hear a prompt that your hand has been raised.
Should you wish to withdraw your request? Please. Press star, then 2
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 questions.
Speaker Change: Our first question comes from Steve wisinski of stifel Steve, please go ahead.
Steve Wisinski: Yeah, hey guys, uh, good afternoon.
David: um,
David: what, you know, what does growth opportunities, you know, mean for you guys,
David: And sure, Steve. I'll uh, I'll take a shot at this.
David: We assume that there would be some discussion around the FanDuel transaction on this call. So let me provide some context for you first. I'll go ahead and say it up front. You know, this FanDuel transaction is not a precursor to another transaction.
David: Flutter and FanDuel have done a remarkable job over the last 7 years or so and become the industry leader in online sports betting and casino. They've created tremendous value, both for themselves and for us.
David: And over the last 7 years, our partnership with FanDuel has continued to grow in value and represents, you know, a significant asset for our company.
David: between our Market access fees over the last 7 years and our 5% Equity interest in FanDuel we've created nearly 2 billion dollars in value for our shareholders,
David: All from a 10 million dollar investment, a pretty fair return. I think
David: As we analyze our Equity value, Boyd's Equity value. It's our belief that our stock price doesn't properly reflect the True Value created by this investment.
David: And as a result, we determine that as we're approaching the end of this partnership. Now, as an appropriate time to monetize this investment into Focus the proceeds in future growth,
So now it's our turn to take advantage of the investment and invest in the future of our company.
David: And while we're initially reducing debt.
David: Our goal is to deploy this new capital and an attractive higher returning Investments to support the long-term growth of our company.
David: We commented on that in our prepared remarks in
David: confident in our ability to do so.
David: This transaction doesn't change our strategy of having a balanced approach to Capital allocation, that balanced approach includes investing in our business and pursuing attractive growth opportunities as well as returning Capital shareholders and maintaining strong balance sheet.
This transaction doesn't change the Cadence of our current investment strategy, or our views on capital deployment or potential m&a.
David: We have a successful track record of disciplined Capital allocation that has served us in our shareholders. Well, and we remain committed to this approach
David: This transaction, merely allows us to continue our strong track record of making Sound Capital allocation decisions from a stronger position.
Hope these comments answer some of the questions but I'm sure they don't answer all your questions. If you have additional questions, feel free to reach out to either Josh or a mirror after the call is over and uh we'd appreciate kind of staying focused on Q2 earnings for the rest of the questions.
Speaker Change: Our next question comes from Barry Jonas of truist Securities, Barry. Please go ahead.
Barry Jonas: Great. Thank you. I I appreciate all the comments there. Maybe. Just at a high level philosophically now. That Leverage is going to be around 2 times. What what do you think philosophically is the optimal level that leverage should be for Boyd.
Barry Jonas: So I think, uh, Barry before this transaction we would have said leverage was going to be. We were going to run our company at around 2 and a half times Leverage.
Barry Jonas: And I would say, uh,
Barry Jonas: He had always said if by chance, there was a transaction that calls us to leverage up. We would have the intention of coming back down to 2 and a half times.
Barry Jonas: so I'd say today, um, you know,
Barry Jonas: Our expectation is obviously leverage will be lower than 2 and a half times. We will probably run the company not necessarily with the objective of staying below 2 and a half times, but it's that's probably where we're going to kind of run the company for the time being as we figure out where best allocate the capital to get the returns, I don't
Barry Jonas: I don't think we're going to kind of uh go out of our way to do something just to get leverage back up to a level that uh where it where it should be. I think we're going to continue to be disciplined in terms of how we think about opportunities.
Barry Jonas: Continue to be disciplined in how we think about uh pursuing capital investment within within our own company. And um I I think 1 thing we we've said before and I'll reiterate it here is just because we have a ton of flexibility doesn't mean we're going to go out and try to do something.
Speaker Change: That doesn't make sense. Uh we've been really disciplined. Keep made that comment in his remarks. Um we think it's paid off for our shareholders and uh we'll continue to approach allocating capital in that way.
Speaker Change: In the high ones. But it's simply a point in time in the history of the company. We don't expect that. It's going to stay there. It's our job to take that and invest it in higher returning assets, simply higher, higher returning than paying down, you know, 6% debt and we understand that's our mission and our goal.
Um, and we'll Endeavor to do that. And so the sub 2 times Leverage is just once again. It's, it's a level we're at today. As a result of the transaction in longer term. I suspect is Josh indicated, will will be more in the 2 and a half range, long term.
That that's great. And then just as a follow-up. Um, any any comments you can give in terms of the promotional environment in in kind of your key markets we've certainly heard some chatter from uh some about ramping promos and some select markets are curious what you're seeing and how you're responding. If if if that's true thank you.
Speaker Change: Sure. You know, it, it sounds like this is simply on replay but
Speaker Change: You know, over the last several years, including in, you know, q1 and Q2. Um, the promotional environment has been relatively stable both here in Las Vegas as well, as in our Midwest and South markets. You know, I've said in the past and I'll say it again, those properties that have been emotional for the last couple of years, remain promotional, those properties that have been more disciplined have stayed more disciplined. And you know while some somebody some properties always stepping out
Speaker Change: Out a little bit, they do it for a you know a month or so and then you know it comes back to normal. So there's not a heightened promotional environment anywhere where we operate
Barry Jonas: And and Barry. The only thing I would add to that. You asked, you know, how are we responding? Um,
We're not, if you look at our reinvestment rate as a percent marketing, reinvestment rate as a percent of revenues, it's been very stable since we came out of Co so you can see that reflected in our overall dark margins for the company over the last 5 years as well.
Barry Jonas: Yeah, and I would say that includes.
Barry Jonas: You know, not getting into.
Barry Jonas: You know, room rate War here in Las Vegas. Where room rates are extremely low. We're not chasing room rates down or being disciplined and so we'll just continue to work our way through that.
Speaker Change: That's great. Thank you so much for all the colors.
Barry Jonas: You're welcome.
Barry Jonas: Thank you.
Speaker Change: Our next question comes from John decree of CB re John, please go ahead.
Speaker Change: Can you hear me John? Please go. Yes, we can hear you.
John: Fantastic. Hi Josh. Hi Keith. Um, I wanted to ask a question, uh, about the pickup in retail that you've seen, it sounded like, um, kind of on rate of play picked up in, in locals in regionally and curious. If you could give us any more color on that, I know that's a segment. That's a bit harder to track and I guess kind of Interest
John: Ed in um sustainability and kind of the trend over the last couple of quarters leading to, you know, what seemed like um some growth in that segment finally.
Um, yeah, John, it's a good question. I think that uh, first of all, when you think about
John: And I'll, I'll primarily touch on the Midwest and South and Las Vegas locals when I talk about the, the trends we're seeing, and, and unrated. Uh, so first starting with the Midwest and South, you know, we combine unrated in, in our, what we call our retail segments, uh, in the Midwest and South, I think, uh, retail as a whole, including the low end of our database, as well as retail has been pretty stable for, uh, well over a year. I will say, uh, you know, kind of not really growing but not declining starting in the second quarter, we we began to see a pickup in unrated play. Uh, we attribute that largely to customer. Staying closer to home IE Drive-In business and and truly local customers even in the regional business. Um, you know, kind of not not traveling or not, taking that extra trip. Uh, whether it's and this is a broader comment whether it's sustainable or not. I think we're going to
John: I need to see another quarter or 2. Uh, but there's no doubt uh that's what showed up and and and kind of pivoted retail to uh being a much more improved segment of our, our customer base.
John: Business. But that's been more than made up by retail and Drive-In business. And once again showing up in that unrated segment, uh, and you know, for our, our business to work, we've had a very consistent core customer. And we've been waiting for the retail customer to really kind of
John: Come back into The Fray and I would say the second quarter, largely driven by unrated business is where they showed up. Now, whether we, it's it'll continue or not, I think I do think we need another quarter or 2 before we can kind of
John: Say we're back to normal so to speak. Keith, I don't know. Is there anything you want to add to that? No, I think they're fairly summarized its kind of what we saw at the second quarter. So
Speaker Change: That's that's helpful. I appreciate the the color. Maybe a a quick follow-up on the online gaming strategy from here. Um, now that you've kind of sold your, your 5% stake in FanDuel is there. Um, you know, any change in how you approached online gaming um, kind of under under the new commercial agreement that you have with FanDuel is it is it an area that you might look to invest in more aggressively than you've had in the past or or any change in strategy on the digital front
John: Yeah, no real change in strategy. Um, you know, we bought
John: Pal interactive several years ago, now, known as Boyd interactive. Um, it has grown nicely over the last several years and we did a small bolt-on acquisition last year to bolster the New Jersey part of that business. Um, it's performing well, but when we bought Poe, we described what we called a regional strategy, we wanted to be able to make sure we had a compelling and competitive product in the markets where we operate. And in some of the important surrounding states, where we draw customers that we were not looking to have a national product or be a national leader in the online casino. Business That Remains the Same today. Uh, none. None of that changes with respect to the transaction with FanDuel
John: We'll continue to be focused on a regional online, casino strategy.
John: And, you know, while we're waiting for other states to legalize this product, we'll just continue to make sure that we improve our core product and that, it's it's ready when, uh, you know, various legislators around the country. Approve this
There we go. Thanks Kay.
Speaker Change: Thank you. Our next question comes from Sean Kelly of Bank of America. Sean, please go ahead.
Sean Kelly: Great, thank you, everyone. Um, Josh maybe to to switch gears again, on you, uh, a lot of the questions I had have been asked and answered, um, you know, the tax bill you highlighted, some of the, um, the, the implications here, but I was kind of curious more, uh, on the company level. There were some changes in everything from Bonus, depreciation interest deduction. Obviously, your delivering, so maybe the interest deduction thing is not as big, but sort of to your cash tax rate and your free cash flow conversion is, is there any impacts? Have you, have you kind of done your first take on what some of the legislative changes might might mean for you at the corporate level.
Yeah, so we we've I will tell you, we've gotten a preliminary estimate. I'm actually not that comfortable. Kind of telling you what it is just yet. I think we need to do a little bit more work around it, but the biggest impact or benefit to us will be from. And I think this is probably obvious the bonus depreciation, the 100% of of depreciation, that's placed in service. Um, I think that you're right. We won't get much in the way of benefit from further interest expense deductibility, because we already, uh, kind of qualify that and fully and many of the other things that we've evaluated really are either not Material or if they are, you know, kind of going or negative. They're pretty small but I'm hesitant
Sean Kelly: president to kind of give a number just yet until we
Sean Kelly: Go through fully, the bonus depreciation calculation, that'll be where we get the biggest benefit in.
Sean Kelly: We kind of rushed it to be ready for this call and I I just want to have time to kind of double check it, so but um, that's where the benefit will be.
Sean Kelly: On on this side, um, and kind of, how do you think about and really talking, kind of medium to long term, you know, that, you know, just just having something here as a bit of a hedge as it relates to kind of the, the, the broad brick and mortar, you know, piece of the business. Yeah. Look, we, we bought pal interactive a couple of years ago, to kind of stake out on our own, if you will, on the online casino side for that very intent, we thought having both an online product, as well as a brick and mortar product was important. I think we are articulated then and we continue to articulate that. Look, our customers go home at night, and they may want to still continue to gamble and, and enjoy this. And if it's legal in the state, we want to make sure we have a product that they can enjoy. When they're not on premise. We have that in New Jersey right now where it's both legal online and legal on premise. It's a great product because it um, is fully integrated with our land-based Rewards program and so the player gets all the benefits when they're playing online as they would as if
Sean Kelly: they were playing in the building and so we do want to be ready, we think it is important and we think there are clearly complimentary to each other and that
Sean Kelly: Long term. You need to have
Both products as part of your portfolio. Now having said that, you know online sports betting is a different Beast. Um, we we have a presence obviously here in Nevada, where we run, 10, sports books, ourselves and have for more than 40 years now and quite successful in doing that. Um as you may have noted in the pressure release, we'll begin to transition into running our own sports books. Outside of Nevada sometime next year and once again we have tremendous experience in doing that. Um and so once again that will that will not be a very heavy lift for us.
Sean Kelly: um, but
Sean Kelly: we don't think that's as important to us the sports betting side.
Sean Kelly: As in in front of our own books are having our own quote, unquote, National presence there as it is.
Sean Kelly: On the casino side for our customers, to be able to participate with us. So I think we're well, positioned, very happy with the product. We have happy with the growth of Boyd interactive and what it's doing. And and I think when other states start to approve this, that we will be in a very strong position to capture a big share of the market and the states where we do business.
Sean Kelly: Thank you, both.
Sean Kelly: Yep.
Speaker Change: Thank you. Our next question comes from David Katz of Jeffrey's David please. Go ahead
David Katz: Um, hi afternoon. Thanks for taking my question. So, a couple things have changed since the last
David Katz: Time. I've asked this question, which is probably 1 of many times. I've asked a question but you know, at the moment there seems to be a little bit better Outlook in Regional gaming, um, you know, stocks are just a bit better yours, you know, to, to some degree included. Um, you know, is there any update you can give us on the boundaries or the criteria that you're thinking about in terms of Acquisitions? You would consider um anything changing with respect to hurdles or size. Um um you know what what you might be seeing uh any update there would help. Thanks.
David Katz: Sure I would I would say nothing is really changed and how we View m&a and you know regional acquisitions the size and the scale is important. The quality of the asset will be important, obviously, given the size of our company in order to make a meaningful and move the needle and make it worth our time, it's got to be significant enough.
David Katz: We've said in the past, we continue to be somewhat agnostic on markets as long as it's a strong Market with you know stable regulatory environments and stable tax environments and you know there's a number of those out there. Um so those are all things we have talked about in the past is key to us as we look at Acquisitions and that all Remains the Same today and really don't have anything to update on.
Okie do.
Thanks David. Thank you.
Speaker Change: Our next question comes from Ben jenin of mizuho been, please. Go ahead.
Speaker Change: Hey good afternoon, thanks for taking my question. Um sure. You know, now that no tax on tips and overtime is official, is there any work? You've done trying to quantify the Tailwind, whether quantitative or even you know, anecdotal thanks and 1 follow up.
Speaker Change: So we have, we have done some work around this. I don't don't think we are, you know, in a position to go out and talk about what we think that that means to the company. But certainly it impacts.
Speaker Change: Um a lot of our customers here in Las Vegas as well as you know, customers are on the country um who visit our property. So it clearly is a positive for us.
Speaker Change: On tips, no tax on that were reduced tax on tips and reduced tax on overtime. Look as well as the deduction for seniors in a different in in new tax, brackets at all. Going to benefit us going forward. So we're just not sitting here today in a position to quantify that for you.
Sure understood. And you you may not um you know, want to answer the question but just like in this in the spirit of the conversation, any high-level thoughts on maybe like what percentage of the customer base might be subject to those including the seniors in their
Speaker Change: Well, look from from a senior standpoint kind of 65 and older.
Speaker Change: You know, roughly 40% of our customer base is in that age group. And you know, the good news for us there is they over index in terms of their spend or their
Speaker Change: Total value to us. And so, um, you know, we'll get, uh, we'll clearly derive some benefits from that group.
Got it and then just 1 quick on on on repurchases you know, your repurchased 105 million in the quarter. Um you know I guess you you clearly are signaling that you want to buy back more stock, the new run rates 150 of the increased authorization. I guess the question is you, you know you repurchase multiples of that in 1 Q, presumably at higher prices. So definitely not being critical here but just was there. Anything preventing you from buying more in the 2q. When I would, I would suspect your stock was
Speaker Change: Pretty depressed.
Yeah, look, I mean, there are times where in blackouts where we're not, you know, allowed to be in the Market, repurchasing Stock. And, you know, there's always a lot of just, you know, a lot of factors that go into those decisions as we sit and decide when and how much to buy back. So, it isn't, uh, you know, kind of a straightforward decision as we as we go through that process. But, you know, part of uh, part of Q2 was blackout, as it relates to the FanDuel transaction, quite frankly.
Speaker Change: Understood, thank you.
Speaker Change: Thank you.
Speaker Change: Our next question comes from Jordan Bender of citizens, Jordan, please go ahead.
Jordan Bender: Hey everyone. Good afternoon. Um, I want to double click on the room rate dipping in Las Vegas called you made earlier on the call, you know, we've heard this commentary or we've seen some of the data at a Las Vegas, so it might be good to just touch on the locals Market here, but is the dip that you're seeing a function of summer seasonality or, or is there really anything sticking out as to why? Um, maybe it's declining more than historical Summers. Thank you.
Speaker Change: Look, I I can't comment on how and why?
Speaker Change: You know, properties in Las Vegas, change a room rates. Some are room rates right now are lower than they were last year. Some are room, rates are always low compared to the, you know, the other Seasons. Um, this year the lower than last year,
In many cases by quite a bit. So I don't know why, you know, people are doing that. Obviously, it does impact properties like the Orleans who have nearly 1900 hotel rooms.
In terms of our ability. So we're not offering $19 hotel rooms and we're not going to offer 19 dollar hotel rooms. But I I don't I don't sit in their board rooms or their marketing meetings or the hotel meetings. So I actually can't tell you
Speaker Change: Uh, and then on the follow-up, I just want to Circle back on to share our purchases. So you update by 50 million a quarter. Um, I guess why did 150 make sense and does any of that play into kind of getting back within your historical, leverage targets, from kind of what you see in the business today. Thank you.
Speaker Change: Yeah, it's a good question. Jordan. I think you know, just as the 100 was a level that was set that you can expect from us. Uh sometimes we'll do more. Uh but you could expect the 100 in the past. I'd say that's that was the spirit in which we approached uh, setting the 150. It's a level that we're comfortable with setting the expectation from the market and people who follow us,
Speaker Change: And we feel comfortable doing that in the context of not uh putting any pressure on other decisions that we're trying to make or or influence our our balanced uh Capital allocation approach. So it's a level that we're comfortable with and feel comfortable that we'll be able to continue to kind of achieve without uh
people trying to get too far ahead of us basically.
Speaker Change: so,
Great, thank you very much.
Speaker Change: You're welcome. Thank you.
Speaker Change: Our next question comes from Brant Montour of Barclays Brandt, please go ahead.
Customer feeling better, staying close to home, doing a few less trips and showing up at at, in at your door. Um, help things clearly. Uh, you know, when you think of, when you look at that customer, I'm assuming a lot of those customers are, uh, unrated play. And if those folks are, are not going on trips, um, does that mean that they would have a, uh, higher than average spend versus your other average? Customer is that the way we could think about that customer or or, or not necessarily
Speaker Change: Yeah. So I first of all, I'm not sure that we I've since they're unrated, we don't know a lot about that.
Speaker Change: Uh bucket of customers. I would say that you shouldn't think of them in 1 light or the other. Meaning, they're not necessarily customers that are not worth a lot and they're not necessarily customers that are worth a lot. It's it's a, it's a portfolio of customers just like, maybe anything else that we talked about. So I I don't know that you can extrapolate anything from, uh, you know, that it's a higher quality. Customer spending more money in that segment or not. I think all we can say is is that the volume I the overall play that we received from that from our unrated customers.
Speaker Change: uh,
Speaker Change: has improved.
Speaker Change: Since Q2 last year and sequentially as well.
Speaker Change: Okay. Hopefully, that helps a little bit. That is helpful. Uh, and just, um, a follow-up on the locals Market. You know, I think heading into this this past quarter, you know, we were looking out of, uh, at the year, uh, for locals and sort of expecting, um, you know, less bad, uh, comps over time. You guys still had competitive pressure. You just did a pretty good quarter, um, but I don't know, I maybe you know what the broader Market grew and if you lost share in the second quarter or if if we're sort of past that promotional environment pressure with the uh caveat that we know that summer room rates are low and affecting Orleans maybe from a different side. Now, I wonder if you could Square those, those thoughts.
Speaker Change: Sure. So, as you look at the Las Vegas,
Speaker Change: Market and we only have data through May June data will come out I think next week in Las Vegas. But if you and we look at it in 3-month increments to take out, you know, some of the variations or movements over the last 3 months, we've performed either in line, or slightly better than the overall market. So, our market share is generally stayed the same maybe gone up, just a, just a, a smidge. Um, and so, we feel pretty good about the overall performance both of the market, as well as our own performance.
Speaker Change: The 1 Thing, Frank that I would ask to your question is is that you know, we talked about kind of the competitive pressures, just getting less bad throughout 2025 and obviously we don't give individual property level information but that is exactly what's continuing to happen. Uh, it's and there's a little, there's some push and pull based on our comments earlier, right? It we're talking about primarily The Orleans. So that's the property that ALS would be in fact, affected by, you know, a softer destination consumer but generally, it is trending in the direction that we talked about. And then overall, the entire segment was benefited by this pickup in unrated play. So the trends that we talked about before are continuing if not feel a little better with the support of unrated play uh with the exception of maybe a property, like the Orleans is to fill in this this right pressure. So
I, I know it's a, it's a lot of pieces, but just wanted you to know that like, the competitive environment from our perspective is is training along. Just like what we expected it it's just getting better and better with the passage of time.
That makes perfect sense. Thanks for that guys.
Thank you.
Speaker Change: Our next question comes from Steve pezzella of Deutsche Bank, Steve, please go ahead.
Speaker Change: Hey, good afternoon. Thank you for taking our questions on the cost side. Just curious about what you are seeing in terms of the operating expense environment. Currently in both the Midwest Midwest and South and local segments.
Speaker Change: Competitive issues and things of that nature are margins. Also are continuing to be very stable. So from my perspective, we always wring our hands around costs and are trying to manage them more efficiently and trying to offset increases but our guys are doing a really good job of doing that. And uh, so uh, that's what's, uh, showing up in the results quite honestly.
Speaker Change: okay, thanks and just
To look further into non-gaming spend. If we could have you seen any changes in spending your FNB and entertainment?
Speaker Change: Not really with the uh, I I would say the, if you look at our, uh, results, you'll see, uh, FNB was up. Uh, and that's reflective of not only our core customer continuing to be stable and growing. But also now the, the, the, uh, kind of the retail customer showing up in the second quarter. Um, and then on the hotel side that was largely Las Vegas through the destination related comments that we made earlier. So, um, there's not really a, I think the, the spending,
Speaker Change: From our customers is, is in in conjunction with what we're seeing for their demand on the gaming floor.
Speaker Change: Okay, great, appreciate it. Thanks
Speaker Change: Thank you. Our next question comes from Stephen Grambling of Morgan, Stanley, Steven. Please go ahead.
Speaker Change: Thanks, you touched on this a couple of different ways but putting together, your your commentary around investing into growth. Do any sub segments or regions stick out and offering potential for the best Returns on invested capital and this backdrop. And how might that rank order compared to investing in digital or Green Field markets?
Speaker Change: You know, any type of m&a investment, whether it be on the digital side, whether it be green field, or whether it be an actual acquisition of a existing asset. Obviously, you know, a lot of factors go into play here. We don't think about year, 1 or year, 2 return. We think about it, over a longer period of time, but it all depends on once again the price and the quality of the assets. So we don't necessarily Force rank them. We do have a hurdle rates that we look at. And we want to achieve um, in order to make an investment regardless of, you know, which of those buckets. We um,
Speaker Change: We're going to invest in but, um, yeah, the only thing I would add to that is it and you know, it's it's m&a is 1 alternative reinvesting in our portfolio. Is another, you've seen us do that quite successfully with treasure chest and uh and now with the own coming online with the meeting space at Ameris store St. Charles.
Speaker Change: Cadence Crossing. So it is really trying to find the best alternative among all the different choices that we have. I mean, Virginia's a kind of in the pipeline, but that's going to be a good investment as well. So, you know, we're really evaluating all the time, kind of emanate from a strategic perspective, but also a return perspective weighed against development opportunities, what wait against opportunities these to reinvest in our existing portfolio and then buying back our shares as well absent. Uh, higher returning Alternatives. So, uh, it's hopefully this starts to sound like a broken record because we, I, we, we we, we, we believe we're, you know, kind of adding the same or
Speaker Change: Executing on the same approach from our Capital allocation perspective that we've we've been doing for quite some time. So
Speaker Change: Um you know, hopefully this sounds familiar to people. Yeah, I guess I meant more around.
Speaker Change: Organic growth. Not m&a, you know, as you think about Renovations or where you're spending, whether I mean you gave the exam, a couple of different examples there, but are there more likely to be spent within locals the South and Midwest? Uh, you know, digital is another 1 of those is anything sticking out. As you look at these different markets based on either the trends, you're seeing or the competitive dynamic.
Speaker Change: Yeah, I mean I would just jump in and say not really. I mean we have a
You know, online is going to grow as opportunistically as maybe smaller acquisition opportunities come along or as it grows organically. I think from the perspective of reinvesting in different segments of our business, you know, it could be that the highest returning next opportunity is in the Midwest and South uh just because of you know whatever that particular opportunity is um I don't
Speaker Change: I think we purely do it based on an economic return of where we can get the best.
Speaker Change: Yeah, so that's how we think about it.
Speaker Change: Fair enough. Thank you.
Speaker Change: Yep. Our next question comes from Dan, Pulitzer of JP Morgan Dan. Please go ahead.
Hey, good afternoon and thanks for taking my question. Um I wanted to just focus on the Midwest and South for a bit. You know, this was the the highest quarter of of ggr growth at least from the publicly reported data we've seen in some time, despite starting to lap treasure chests. So you know, to the extent, it sounds like you're attributing this to unrated play, you know, what's should shouldn't that be showing up in the margin structure um or were there any other kind of 1 offs to think about in the quarter whether it's the promotional environment or or or mix of of revenues?
Speaker Change: Are you saying because it was unrated play? We should have a higher margin. Is that what you're saying?
Speaker Change: Well, yeah, I mean, I think that usually that does come with higher margin and it's, you know, the flow through on this quarter versus other quarters, just giving the revenue growth. Um you know, I I would I would think just giving that comment on the unrated play would have been a little bit higher but that's why I'm asking if maybe maybe there's something I'm I'm missing.
Speaker Change: Yeah, the only thing I would point out is the margins have been consistent number 1 and number 2 is we did have flooding that took 2 properties out of commission for basically each a week. And then the shift of Easter that's that's basically it. There's no, there's no uh, there's nothing else really going on in, in the segment.
Speaker Change: Got it and then just kind of 1 higher level 1 in terms of the quarter and the Cadence, you know, it seems like Trends did improve throughout the quarter. Um is there any kind of comment on what you're seeing quarter to date as we look into uh into July here?
Speaker Change: so I would say, uh, and keep jump in and add anything that I might leave out would be that, you know, first of all, you know, we we've been burned by trying to answer this question in the past because, uh, you know, it's a limited
Speaker Change: Snapshot of what's going on. It's literally been 3 weeks and 3 weeks. Don't make a, a trend or a quarter. But uh, so just note that disclaimer for if things were to change in the future but uh, basically uh, I would say the trends that we saw in Q2 are continuing into Q3 that being
Speaker Change: As has historically been the case. The core customer has continued to be uh, a consistent. Uh,
Speaker Change: Uh source of uh business for us. And has continued to grow on the uh and then on the retail side of things, we continue to see uh the unrated play, uh, contribute to that segment. So um,
Speaker Change: You know.
Speaker Change: The the first 3 weeks are just like this the quarter we just came out of yeah. And I do think you have to be careful and and look at this going to buy the segments that we operate in in Las Vegas, versus downtown versus MSR. And while I think the trends are generally consistent with what we saw in Q2 as it relates to corn. And unrated, you know, here in Las Vegas. We talked about the renovation project, the Sun Coast going on. It's being in its most disruptive phase. So we have to take that into account as we think about Q3 and Q4, you know, we've done a great job and our our, our customers have kind of hung with us. So far this year at the Sun Coast and Performing very well. But uh we are entering a very disruptive period of time and then you know, the softness on the Strip, which impacts The Orleans mainly, you know, we'll see how that continues to play out.
Um, you know, downtown some softness as it relates to just visitation to downtown because if the strip is soft and downtown tends to be a little soft also um, in the MSR more normal. I mean, once again, benefit of you know, trying to treasure chest is anniversary itself. But
Still performing well and as people are not traveling maybe as much, we're getting the benefit of them staying closer Home and visiting our properties in the Midwest and South regions. But
Speaker Change: Yeah, I think it's probably as much color as we have, but as Josh said, it's 3 weeks worth of data.
And so we're we're kind of cautious about talking about it.
Speaker Change: Got it makes sense. Thanks for the thanks for the detail.
Speaker Change: You're welcome.
Speaker Change: Our last question comes from Chad Bond of mccarry Chad. Please go ahead.
Change in terms of your spend. But um, I know you were talking about maybe mitigating some of the potential impacts that could happen. So can you help us? Think about maybe any, I don't know, guaranteed contracts, or are you more comfortable Now versus 3 months ago? When, when the news was, you know, just kind of coming across the desk, thanks.
Yeah, Chad thanks for the question I think. Um, you know, if you look back at our remarks in the first quarter uh we had done a lot of work around understanding what we could do to mitigate tariffs, well on operating expense side but also a capital expense side where there was Finding alternative sources pre-ordering stuff.
Ordering stuff from different countries. All that kind of, uh, you know, acrobatics, um, I think that now that we've been at it for another 3 months or so, we feel much more comfortable that we can kind of, uh, managed through it. Obviously, uh, you know, we we don't know the final picture with respect to tariffs, but I just think we've gotten better at it and we've gotten more comfortable, with how to kind of manage through it in q1. We said, you know, we're comfortable with the risk and, uh, our budgets are. We don't believe our budgets are at risk. Uh, from a capital perspective, um, and uh, we didn't, you know, well cost may go up. We felt like we had enough contingent.
Speaker Change: Seeing enough, uh flexibility with respect to timing where we were in those procurements processes where those projects were that we were going to be able to manage through it and I would say that that really hasn't changed if anything. We've just gotten more and more comfortable with our ability to manage through it. Um,
Speaker Change: And I think it's really important to say this as well is you know back then we were approaching a potentially uncertain environment at 2 and a half times leverage. Now it's 1.8 times leverage or whatever so you know, um,
We're probably in a much better position than the company has ever been in to deal with any kind of uncertainty. Uh, whether it's uh,
Speaker Change: Man-made or otherwise. So, um, we, you know, we come at it from a position of real real strength and I think that's what you know, we've tried to communicate to the investment community and the reason we want to run
At a lower Leverage is so that we have the flexibility to tell you, here's what we're going to do. And then most cases are a large number of cases, be able to execute that, um, and not change direction because of something that's going on out of our control. So, um, you know, the FanDuel transaction took us to a level, a lower level of leverage than maybe we thought we would be at, but the same philosophy applies. So, hopefully that gives you some help chat. Yep. Makes sense. Thank you very much. Appreciate it.
Speaker Change: Welcome.
Speaker Change: This concludes our question and answer session, I'd like to turn the call over to Josh for concluding remarks.
Thanks, David. And thanks to everyone for joining our call today. Uh, if you have any follow-up questions, including anyone's uh, related to the FanDuel transaction, please feel free to reach out to a mirror or myself and uh we'll be happy to try to help you out. Thank you.