Boyd Gaming Corp (BYD) 2007 Q1 法說會逐字稿

Welcome to the first quarter 2007 Boyd Gaming earnings conference call. My name is Sherrell, and I will be your facilitator for today. At this time, all participants are in a listen-only mode. However, we will conduct a question-and-answer session towards the end of this conference (OPERATOR INSTRUCTIONS). As a reminder, this conference is being recorded for replay purposes.

I would now like to turn your presentation over to your host, Keith Smith, president and Chief Operating Officer. You may proceed, sir.

Thank you, operator. Good morning, everyone. Welcome to our first quarter conference call. Joining me on the call is Paul Chakmak, our Executive Vice President, Chief Financial Officer and Treasurer. Before we begin, I need to remind you that our comments today will include statements relating to our future results including the financial outlook and expectations for our second quarter 2007, our expansion and development projects and other market, business and property trends that are forward-looking statements within the Private Securities Litigation Reform Act. The company undertakes no obligation to update or revise the forward-looking statements whether as a result of new information, future events or otherwise.

Actual results may differ materially from those projected in any forward-looking statements as a result of certain risks and uncertainties including but not limited to those noted in our earnings release, our periodic reports and our other filings with the SEC. I would also like to remind everyone that during our call today, we will make reference to non-GAAP financial measures. For 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 in the Investor section of our web site at BoydGaming.com. We do not provide a reconciliation of forward-looking measures due to our inability to project special charges and certain expenses including pre opening expenses. Finally, as a reminder, we are broadcasting this call on our web site at BoydGaming.com and StreetEvents.com.

Earlier this morning, we released our first quarter results reflecting a solid performance which was a few cents or a couple of million dollars below the consensus estimates. However, the quarter was in line with our expectations and in line with our earnings guidance we gave you on our last call. After a full year of grand openings, expansion announcements, property divestitures and market turbulence, the first quarter of 2007 provides us an opportunity to refocus attention on the performance of our core operating properties on our current slate of development projects that are key to our continued growth. With respect to the performance of our core properties, our downtown Las Vegas locals properties produced strong results, meeting our expectations.

In the Las Vegas Locals market, three of our four properties matched results from the first quarter of the prior year. This is a significant achievement considering the first quarter of this year had a major new competitor that did not exist in the prior year. In our Downtown properties, we continue to generate outstanding results, nearly achieving the same EBITDA as last year's record setting first quarter performance. At our Midwest and South properties, results declined from the first quarter of the prior year, but this was expected due to extremely tough comparisons. However, the performance of these properties was in line with our expectations. And at the Borgata, while we face increasing competition and an aggressive promotional environment, we believe the overall gaming and entertainment experience we offer reaches far beyond what our regional competitors can offer. With the addition of the Water Club early next year, the Borgata will enhance its position as the premiere gaming resort on the East Coast.

We're also making progress with the implementation of our branding initiative and are finalizing our plans for each of the regions. As you may remember from our last call, the main goals of the branding initiative are to increase customer loyalty, increase cross property visitation and grow our customer database. The foundation of this program will be a nationwide player loyalty program which is built on three regional reward cards. Once introduced, members of these reward programs will have the ability to transfer and redeem points at any Boyd Gaming property, regardless of where they've been earned. In addition, the program will feature a system of tiered benefits available at all Boyd properties designed to reward customers based on the play level. We remain on schedule for a phased roll-out in the second half of 2007.

With respect to our development projects, we've made significant progress in each of them during the quarter. At the Borgata, the Water Club is proceeding on schedule with plans to top off the tower in June and open in early '08. With an additional 800 rooms and suites, Borgata will be complete, allowing us to realize the full benefit of last year's public space expansion. We're excited to integrate the Water Club into our operation giving us the added capacity needed to allow more guests than ever to experience the upscale lifestyle that the Borgata defines.

At Blue Chip, we started construction last month on the $130 million hotel project. With the early success of last year's expansion project, guest rooms have become an increasingly important aspect to this operation. Our expansion appropriately includes a second hotel with 300 Borgata style guest rooms, as well as a spa and fitness center, additional meeting and event space, new dining and nightlife experiences and a new entrance and portico [share]. This expansion will provide us the opportunity to extend our draw both geographically and demographically.

In Florida, we completed our acquisition of Dania Jai Alai in March. Management continues to work diligently on the design and development phase to ensure we deliver a product that can effectively compete in the Florida market and provide a proper return on our investment. We anticipate beginning construction later this year with an expected opening of the casino operation around the end of 2008.

At Echelon, we're winding down the demolition phase and clearing the site in anticipation of our groundbreaking on June 19.

And lastly, in North Las Vegas, we are continuing to monitor this market to determine the appropriate timing to move forward. Our North Las Vegas site provides an excellent opportunity to expand our Las Vegas Locals franchise into a market where we do not currently have a presence.

As we move through this year, our efforts will be focused on improving our operating performance, rolling out our new branding initiative for each of our regions, executing on our existing growth initiatives and continuing to look for strategic opportunities that meet our criteria. The execution of this strategy will allow us to continue to expand the company's already strong foundation and enable us to drive greater shareholder value. Now, I'd like to turn the call over to Paul Chakmak, our Chief Financial Officer. Paul?

Thanks, Keith. Hello, everybody. As you are all aware, last year's first quarter was one of our best ever and offers a tough comp for this year's quarter. In order to get a clear picture of how our business units are performing, it is important to look at long-term trending and current market conditions.

In our Las Vegas Locals segment, the first quarter was highlighted by the market's continued growth and resiliency to increases competition. In December 2005, before the addition of any new competitors, the Las Vegas Locals market offered 44,000 gaming positions and generated approximately $1.9 billion of annualized gaming revenue. Twelve months later, there were a total of roughly 50,000 gaming positions in the market generating approximately $2.3 billion in annualized gaming revenue. If you were to work through those numbers, you'll see a 14% increase in gaming capacity and a 20% increase in gaming revenue.

The market has more than absorbed one of the largest ever increases in gaming capacity, much faster than anyone could have reasonably expected. While EBITDA recovery lags slightly behind revenues, we believe that it is unquestionably heading in the right direction. For these reasons, we remain very optimistic as we enter a period where population continues to grow and capacity remains stable.

The first quarter in the Midwest and South also provided a tough comparison to Q1 2006 due to a number of unusual factors, and I'd like to take a little more time than usual to help you sort through the results. The region's Q1 2007 EBITDA fell shy of last year's record quarter by over $26 million. Nearly 2/3 of that difference is due to our Gulf Coast properties normalizing business. The remaining $9 million difference is related to higher gaming taxes in Illinois, as well as higher than normal gaming volume last year at Blue Chip, as that property attracted significant customer trial during the grand opening of its new casino. Furthermore, the Midwest properties also suffered low visitation due to extreme winter weather in January and February. Due to these factors, we feel that Q1 2005 offers a more reasonable comparison for the region. Excluding our Illinois operation, which is not comparable due to the changes in gaming tax structure, the Midwest and South region grew EBITDA by an annualized rate of about 6.6% from Q1 2005 to Q1 2007. There is a strong demand for our product in these regional markets and our experience and scale keeps us positioned as one of the market leaders.

Downtown Las Vegas continues to serve as the example of how good management and great customer service can earn returns in the face of tough market conditions. Q1 2007 EBITDA for our Downtown properties came within $100,000 of our record-setting first quarter in 2006. We're able to maintain these strong levels in spite of a down market.

In Atlantic City, Borgata achieved 7.5% growth in gaming revenue in the first quarter despite competitive pressure from both Atlantic City properties and the new Pennsylvania casinos. Additionally, Borgata grew non-gaming revenue by about 19% over Q1 2006 fueled largely by the public space expansion. Nonetheless, the current promotional environment and higher fixed costs related to the recent expansion remain a challenge. So, in the interim, our focus will continue to be on refining our marketing and operating strategies and properly positioning Borgata for the opening of the Water Club in early 2008.

Now, let's talk a little bit about where we stand on the financing front. We recently began the process of raising capital for the projects we have in our development pipeline. During the quarter, we have made significant progress on the largest portion of that financing by launching the syndication of our new $4 billion revolving credit facility. This new facility would not only provide the majority of the capital funding needed for our development but will also do so at better pricing than we currently have while relaxing certain limitations imposed by our existing facility. We anticipate having the credit facility wrapped up in the current quarter.

On April 16, we called our 8.75% senior-subordinated notes. These bonds were our most expensive piece of debt and represented about 11% of our total borrowings. We're able to achieve significant interest savings as a result of calling these bonds. The continued strength of the cash flows from our existing business and available capital in the debt markets had given us the confidence to once again increase our dividends. The quarterly rate was increased by over 11% from $0.135 per share to $0.15 per share.

Now, let's review guidance for the second quarter. We're estimating adjusted EPS to range between $0.44 and $0.49 and the comparable adjusted EBITDA to be between $145 million and $155 million for the quarter. Now, at this time, we'll turn it back to the operator and we'll be happy to take some questions. Operator?

Thank you. (OPERATOR INSTRUCTIONS) First question comes from Larry Klatzkin of Jeffries. You may proceed.

Morning, Larry. Larry?

Hello.

Hi, Larry.

Can you hear me now?

Yes, we can hear you now.

Okay, that option -- that guidance, does that include option expense taken out of both earnings per share and EBITDA or just out of earnings per share?

It's just in the EPS as is typical.

Okay, good. Some companies do it the other way. Second, as far as corporate expense, it was a little higher. Any reason why and should we use that going forward?

I think on our last call, Larry, we talked about kind of where the full year would be from a corporate expense standpoint. And we're really continuing to trend to that number. And I think this quarter reflected that.

All right. Now, you guys got the extra four -- 24 mill -- 24 acres of land around Echelon Place. Is there anything you're doing with that or working on that right now? Is it -- how are you fitting that into the project?

Well, I think when we -- Larry, this is Keith. When we acquires that acreage, we took a step back to take a look at the entire site that was now 87 acres instead of 63 acres to see how we properly integrated it. So, we're currently going through that process. There will be about 22 acres left at the end of the day that will be undeveloped, that will be left for future development, although we have realigned some of the property to use some of that acreage we just reorient to the property.

I think specifically, Larry, as the way Echelon lays out today, there are two parcels that have been created for future development. A 16-acre parcel on the Strip and six acres in the rear of the site for future expansion. Those could take many different forms and we'll evaluate those and how we proceed with those in the future.

So you now have a block of 16 acres on the Strip, would that possibly be -- would you be interested in maybe selling that, putting it into a JV or some kind of exchange for that in the future?

I think our focus right now is on developing Echelon and we'll take a look at those options in the future. Right now, we're just focused on developing our Echelon project. So haven't gone down those paths yet.

All right. How's the smoking effect in Atlantic City going?

The smoking impact or the smoking law has only been in effect for a week or so now. It's a little too early to tell. We really haven't seen anything in the first week one way or the other.

All right. That's -- I guess the -- on the Water Club, is that -- is there a -- is there going to be any phasing of that? Will there be any disruption from the work on that?

No, there shouldn't. It's all being done outside the building. We will have to pull down a wall to obviously connect the two, but there should be no disruption. And once again, it is on schedule and on budget and we're looking forward to an early '08 opening.

Thanks, guys.

Thanks, Larry.

Next question, Joseph Greff of Bear Stearns. You may proceed.

Good morning, guys.

Good morning.

Paul, within your Q2 guidance, it sounds like you're expecting Borgata to be similarly challenged, so we should imply from that that you're not expecting the promotional environment to improve. And could you just talk about the promotional environment, Keith or anybody, in Atlantic City right now relative to the 1Q?

The promotional -- this is Keith. The promotional environment continues to be aggressive as we saw late in '06 and throughout the first quarter of '07. And at this point, we look into April, we haven't seen that abate much. We have not participated in that to any large extent. We stood down almost completely in January and February. We ratcheted up some promotional activity on our own in March, but targeted specifically at our players, not targeted at a kind of a broad-based approach. So, we see it continue in April; we've backed off a little bit trying to watch our expenses, but we expect it to continue.

I mean, Joe, to your first question, I mean we can obviously only guide and forecast based on what we know are going on in markets today. And so, I think your comment's appropriate.

Great. Thanks, guys.

Next question comes from Celeste Brown of Morgan Stanley. You may proceed.

Hi, guys, good morning.

Good morning.

Could you give us a little more color on what you expect to see happen in the Locals market as you anniversary a competitive opening later this month. Should we start to see same store sales pick up a bit more? Also, can you also comment on Treasure Chest? Paul, I think you've commented in past quarters that you expect it to stabilize. Has it -- has it stabilized at the levels you thought or has it gotten a little worse from an EBITDA perspective?

I think as it relates to Treasure Chest, I'd say we believe it has stabilized, and it's stabilized where we saw it and where we expected it. So, we feel very comfortable about its operation for the remainder of the year.

As you look at the Las Vegas Locals market, when we looked back a year and we had these conversations a year ago with the added capacity, we thought it would take in the 12 to 18 month category to absorb that capacity. That's pretty much what we're seeing. The capacity is getting absorbed fairly quickly when you look at the amount of capacity that was added. We think it will continue to be absorbed. We'll continue to see revenues grow. We like the trends we've seen over the last two quarters and would expect that to continue.

To your question on same store sales, if you will, I mean, as we've pointed out, I mean, three of the four major Las Vegas Local properties are basically at where they were last year with that tough comp. So, as we obviously get now past the opening of really all of the competition in mid April, the comparable becomes frankly much easier. And so we would certainly expect based on that trending growth to continue.

All right. Thank you.

Next questioner, Dennis Forst of Key Banc. You may proceed.

Yes, that was a perfect segue. I wanted to ask Paul about the Locals market, and you were talking about three or four properties, obviously it is the Suncoast that you're leaving out, were flat on sales. Were they also pretty flat on an EBITDA basis in the quarter?

I think we've made -- made certainly great progress on EBITDA, as I've said in my comments, Dennis. EBITDA is trailing a little bit because, obviously, as you know, the marketing side of the business is a bit higher today certainly than it was over a year ago before the opening of Red Rock. And so you have that variable cost impact for the number given where the revenues are.

Okay. But given now that we've lapped that Red Rock opening, maybe by the third quarter, we may see something positive in terms of sales and EBITDA?

As we've said, we feel very comfortable and very good about where the Las Vegas Locals business is going.

Okay. Can I ask, were there any properties in the Midwest that were up year over year?

We don't usually, as you know, break -- break those -- break those down. There were certainly a couple of properties that were up year over year within the overall group. But clearly the impact on the Gulf Coast properties more than offset that.

Okay. And capitalized interest was $1.7 in the first quarter, clearly it is going to be going up as you progress. Can you give us maybe some trend to help us on our modeling of cap interest?

I think on the last call, I gave you a number that I would have to refresh my memory on, Dennis. We can pull it up on total interest for the year. I think it has to be very similar to what it was in 2006. And that --

I think it was like 20 -- somehow I remember $21 million as a cap interest.

I don't think I gave necessarily a cap interest number. But from a GAAP ---

Oh, total interest?

Yes, from a total interest, a GAAP interest standpoint will had run similar to 2006. Obviously off your model, you can forecast where the cash interest number, the difference obviously being capitalized.

Okay, so wait. So, the net interest number will be similar to last year's number.

That is correct.

And then lastly, capital expenditures for the -- for the year. Some guidance on that?

I don't think we've provided that yet, Dennis. But we'll be sure to do that on the next call.

Okay. Thanks.

David Katz of Boyd, you may proceed.

I think that was probably David Katz, CIBC. Mine have been asked and answered. Thanks, very much.

Thank you.

Thanks, David.

Next question is from Harry Curtis of JP Morgan. You may proceed.

Good morning. A quick question. Do you have any appetite for making acquisitions given your launch into developing Echelon at this point?

As I said in my commentary, that we're always on the lookout for good acquisitions. We've grown over the years quite successfully by making good, solid acquisitions at the right price. Some of the acquisitions out there currently are fairly steep prices so we'll be selective looking for those opportunities that meet our criteria. One of the criteria is to buy them right. So, yes, we're still out there looking.

Okay. Very good. Thank you.

Next question, J. Cogan of Banc of America. You may proceed.

Yes, hi. Couple of questions. One as it relates to Borgata, Paul, I was wondering if you could give us an update as to should we expect some kind of refinancing with that asset over time near term, maybe a little bit longer term and maybe if so, how would you do that. And then second, I know it is awhile until you open up your Florida casino operations, but what do you think about the numbers that we've been seeing recently down there relative to maybe your expectations going into that deal?

Let me take the Florida question first. Our focus in Florida right now really is on the designing and developing of product that can be competitive in that market. It's an interesting marketplace in Fort Lauderdale, because you've got a very large locals market, but you've also got a very large tourist market with the number of snowbirds that are in that area. We've also got a very high cost structure, a very high tax rate. So, you've got to design and develop a project that can allow for all of those to work together. And it is a competitive environment, competitive from an entertainment dollar standpoint. So, the numbers down there, we're certainly watching them. We've seen the recent numbers come out for Isle in their opening. But I think one of the things you have to keep in mind as you look at the numbers is we have got several different types of operations. Isle has just opened. I don't believe they've probably quote unquote launched their product yet. I don't know how big their database was when they opened their doors just ten days or two weeks ago. Mardi Gras is a renovated facility that they're doing pretty well with given what they had to work with. Gulf Stream is a horse track that's a wonderful horse track but it has slots on two different levels. So, kind of got a mixed bag down there. We're continuing to watch it and monitor it. But our real focus is on developing a project that is right for us and right for the market.

On the question about Borgata, just recently, we, as an interim step, we increased its revolving credit facility from $750 million to $850 million. That was really as a response to a much earlier announcement that we made about the cost of the Water Club to its current level of $400 million and our desire at a minimum to keep dividends at 100% of net income. And so that has been completed and is in place. As far as future additional dividends out of Borgata, I think as we all know, there is significant capacity to take additional dollars out of dividend that would benefit both Boyd and MGM on a very tax efficient basis, and we continue to be positioned to do that over, I would view the near term. We just have a number of things going on and you pick them off one at a time, and we move forward. Obviously both parent companies are in a great position from a capital standpoint today.

Okay. Thanks.

Next question, Charlie Jobson of Delta Partners. You may proceed.

Hi, there. Just a further question on the Florida market. It was kind of a conundrum that the new openings have opened so weak, although Seminole is doing really well. Any further intelligence that you can share with us on why those casinos are just doing so poorly because really, the density of population, everyone was expecting they should have done better. So, any thoughts there beyond what you said?

Nope. Really not. I've had the opportunity to visit that market a couple of different times, as recently as a weekend ago and taking a look at the operations there. And like I said, you've got three different types of operations that are going on down there. No real insight or intelligence as to why they look or act the way they do. I think it is a new market for all of us, and Seminole is doing very well. But you have to remember the Seminole has much bigger scope than any of the other operations down there and much more throughput going through that building. So, I think time will tell. We'll watch the market carefully as we continue to design and develop our product.

Okay. Thanks.

You're welcome.

Next question comes from Larry Haverty of GAMCO. You may proceed.

Yes, hi. Where is your net debt currently at the end of the first quarter?

About $2.1 billion, Larry. I think there's a number of stats in the back of the press release that give you outstandings.

I'll take a look at that. This credit line, I'm hearing that the folks that were buying Stratosphere think they can do 7% on a CMBS with almost ten times leverage. So, the rates are just extraordinary for some of these financings. What does it look like you're going to be getting in terms of terms on this revolver that's in the market right now? Are you going to be fixing that? For a few years, or?

As is typical, it'll float off of LIBOR because that's where the bank market is. The opening pricing is LIBOR plus one, so that takes you to about 6.3% initially. There is a grid-based pricing matrix that moves with leverage. The highest it could be is LIBOR plus 1 and 5/8.

As it relates to fixed and floating, we tend to balance fixed and floating in two ways. One is between the relative floating basis of the bank financing and obviously our bonds outstanding and certainly future bond transactions we might do in the future. The other way we do that since we would naturally skew higher to floating given the size of the bank credit facility is through various interest rate management products, typically pretty vanilla interest rate swaps, that we have on the books today and we will continue to look at. And you can see the details of that in our financial statements.

And last question, some of these land transactions in Las Vegas or alleged land transactions are pretty extraordinary in value. Has this made you, in any way, shape or form, change the idea of magnitude or time with what you're looking at on Echelon?

No. We're proceeding on schedule and on our plan for Echelon and moving forward. None of the transactions that are taking place around us have changed our view on anything.

Are you still comfortable with the construction cost inflation issue?

Yes. As we get further and further into the project, we're very comfortable with where we're at from a budget standpoint in the project and the availability of contractors and workers and pricing. So, obviously it is something we'll monitor very carefully and something we knew was out there when we started the project. But we're comfortable.

Ok, great. Thanks a lot.

Next question, Bill Lerner of Deutsche Bank. You may proceed.

Thanks. Just a question on some of the gaming expansion referendum type prospect. What are your thoughts or kind of appetite for Central Region expansion at this point given what you have in the pipeline elsewhere?

Well, once again, it is hard to -- that's a fairly broad question. It may be tough to answer. As we look at development, we have several criteria that we look at. We look at moving into markets with stable tax and regulatory environments, we look at moving into projects that have larger cash flows that are more meaningful to the company. And we look at expanding areas that we're already successful in. So, we, given our parameters or criteria that we use as we look at development, it starts to focus us in on certain areas. We're keeping an eye on some of the areas that are opening up but they have got to be the right opportunity.

All right. Thanks, guys.

(OPERATOR INSTRUCTIONS) Next question comes from John Maxwell of Merrill Lynch. You may proceed.

Hi, Keith, just another question on Florida. How do you view the potential for further expansion of gaming in Florida particularly as you look to put your property together? Do you get comfortable that there won't be a widespread expansion in Florida?

I presume you may be referring to the fact that they're considering VLTs at a number of the parimutuels throughout Florida?

Right or just anything down the road, there is always -- you have a governor who supposedly is more gaming friendly. Does he look to do anything more aggressively with gaming?

We've considered that. Given the population density in that area, certainly, it's our belief it can certainly accept many more units down there. And so we're not overly concerned about potential future expansion. If there is expansion, if there are such things as VLTs at the various parimutuels, we will also get them. So, we'll be able to expand our operation. So, it's really a game of numbers, and it is confusing to look at the current results and try and understand them in the face of what the population is and what the market looks like but again, I think time will tell on that. So, we're watching it. We're monitoring it. But if it happens, we'll be looking to take advantage of it.

But, as you start building, you're really not changing the size of the scope of what you are originally planning on building at the property.

No. With all properties, we build in this day and age, they're master planned to expand so that as new opportunities come along, we can expand them in a manner so that it doesn't look like an expansion, it looks like it fits in. So the project will be built with the ability to expand it in a very logical fashion so that it looks like it's all one unit. Just in case that happens, if a bill passes through the legislature that does increase the number of units that we're able to open with, if VLTs are passed or something else happens, we want to be able to take advantage in a very efficient manner. So all of that's being taken into account as we design this product.

Okay, great. Thank you.

You're welcome.

Next question as a follow up. Dennis Forst of Key Banc. You may proceed.

Yes, if I could ask another thing about Florida. Should there be this VLT expansion throughout Florida, do you understand whether that entitles you to 1500 VLTs at Dania?

Currently, as I understand the legislation, as we've all been through this many times, you never know until the session's over exactly how things are going to turn out. But as I understand the way the legislation is currently drafted, yes, we would be able to, as a parimutuel facility, get 1500 VLTs in addition to the 1500 Class-Three slot machines we are allowed under the law today.

Okay. And none of that would come onstream until you opened your new property.

Well, I don't know the answer to that. I mean, is it possible that we could put 1500 VLTs in the existing highlife facility today? We'd have to look at the infrastructure. We've chosen obviously to build a new property as it relates to slots. That's a tough question to answer right now.

Okay. And then on a totally separate matter, if I could ask one more about your branding initiative. You'll have three separate brands, one for the Midwest or what you now call Midwest and South, a separate one for Las Vegas and a separate one for Atlantic City?

Well, I think what we're describing is three separate cards to take advantage of the uniqueness of the markets that we operate in. That's not to say it will be three separate brands but three separate cards so that those cards, the values of those cards relate to the players in those markets, all of which who look for something different out of the property, out of the club, out of the value of the card. So, we're attempting to target this card to the individual markets.

Okay. But there'd be no consolidation. If I live in Las Vegas and play at Suncoast, and I go to Atlantic City, I will not accumulate points at Borgata?

No. You will accumulate points wherever you play within the system. You'll be able to redeem points wherever you play within the system. Whether it's -- any one of our 18 properties. It's just that you will have certain benefits kind of given your home region or your home area that you play in. If you're coming from the Central Region to Las Vegas, you'll be able to use your points at any one of our properties here in Las Vegas. You'll be able to earn points here in Las Vegas, and you'll be able to transport those back to your home property in the Central Region and utilize those back there.

Okay. That's much more clear. Thanks a lot.

You're welcome.

Next question as a follow-up from Larry Klatzkin of Jeffries. You may proceed.

Hi, guys. Harrah's with their program, actually tries to take in account the value of points in each market and a point earned in one market may not be worth as much as a point earned in another market. And it's true. I mean, you're in various markets where there's definitely different earning powers. Are you going to be able to take that into account?

It is a complicated answer. The short answer is that each of the cards will be unique to those markets. We'll take into account reinvestment rates and percentages and all of the appropriate dynamics that go into those decisions, Larry. It's really a very complicated answer.

So, a point earned in Delta Downs may not be worth the same weight as a dollar spent at Echelon Place. Effectively.

Well, at the end of the day, a point's a point's a point. It is how you earn the point.

Okay. That's fair.

So, it will be how that point is earned but at the end of the day, once you have a point in the system, you can redeem that point for the same value everywhere.

Okay. That makes sense.

Okay.

There are no further questions at this time. I would now like to turn the call over to Keith Smith for any closing comments.

All right. Thank you for joining us on the call this morning or this afternoon depending on where you're at. And we look forward to speaking to you next quarter. Thank you. Have a good day.

Ladies and gentlemen, this concludes the presentation. You may now disconnect, and have a wonderful day.