Boyd Gaming Corp (BYD) 2018 Q1 法說會逐字稿

Good afternoon, and welcome to the Boyd Gaming First Quarter 2018 Conference Call. (Operator Instructions) Please note, today's event is being recorded. With that, I'd like to turn the conference over to Josh Hirsberg, Executive Vice President and CFO. Please go ahead.

Thank you, Brian. Good afternoon, everyone, and welcome to our first quarter earnings conference call. Joining me on the call this afternoon is Keith Smith, our President and Chief Executive Officer.

Our comments today will include statements that are forward-looking statements within the Private Securities Litigation Reform Act. All forward-looking statements and our comments are as of today's date, and we undertake no obligation to update or revise the forward-looking statements. Actual results may differ materially from those projected in any forward-looking statement. There are certain risks and uncertainties, including those disclosed in our filings with the SEC, that may impact our results.

During our call today, we will make reference to non-GAAP financial measures. For a complete reconciliation of historical non-GAAP to GAAP financial measures, please refer to our earnings press release and our Form 8-K furnished to the SEC today and both of which are available in the Investors section of our website at boydgaming.com. We do not provide a reconciliation of forward-looking non-GAAP financial measures due to our inability to project special charges and certain expenses.

Finally, today's call is also being webcast live at boydgaming.com and will be available for replay in the Investor Relations section of our website shortly after the completion of this call.

I'd now like to turn the call over to Keith.

Thanks, Josh. Good afternoon, everyone, and thank you for joining us today. During the first quarter, our company continued to deliver strong results for our shareholders. We generated year-over-year EBITDA growth for the 12th time in the last 14 quarters. We further refined the business and our cost structure, resulting in our highest first quarter margin since 2006. And thanks to our growing free cash flow from operations, we have the flexibility to continue executing our strategy of driving long-term value through growth, return of capital and deleveraging.

In line with this strategy, we paid down $85 million in debt and returned more than $25 million in capital to shareholders in the first quarter. At the same time, we are actively laying the foundation for future growth through strategic acquisitions and reinvestments in our existing portfolio.

During the quarter, we continued to make progress toward the close of our acquisitions of Ameristar St. Charles, Ameristar Kansas City, Belterra Resort, Belterra Park and Valley Forge. We are on track to add all 5 properties to our portfolio later this year. I will provide a brief update on these transactions in a moment. But first, let's review the performance of our current portfolio in the first quarter.

Starting in Las Vegas. Our Locals segment achieved its 12th consecutive quarter of EBITDA growth. The amenity investments we made over the last several years, combined with ongoing refinements to our marketing programs and our operations, continue to drive growth and profitable revenues and contributed to a 230 basis point improvement in operating margins in our Locals segment. While we continue to see revenue growth at a number of our properties in this region, overall revenues for the segment were even with the prior year as a result of our focus on growing the most profitable segments of our business. However, our bottom line performance speaks for itself. Our operating margin of 32% is the highest it has been in a decade.

EBITDA growth on our Locals portfolio is widespread, including continued strong performances in our 3 newest properties: Aliante, Cannery and Eastside Cannery. We have grown EBITDA at each of these properties every quarter since we acquired them in late 2016, another example of our proven ability to deliver on the full growth potential of our acquisitions.

As we look ahead, a solid regional economy gives us reason for continued optimism across the Locals segment. Southern Nevada is the second fastest growing metropolitan area in the United States, adding more than 47,000 residents last year. Employment is up 2.4% over the trailing 12 months with growth in almost every job sector. Nearly $12 billion in construction activity is now underway across the valley, setting the stage for continued job gains. And total wages have risen nearly 4% over the last year, driving similar gains in consumer spending. Southern Nevada's economy is growing and diversifying, giving us confidence that the long-term growth trajectory of our Locals business will continue.

The fundamentals of our Downtown Las Vegas business are solid as well. As we've noted before, Downtown Las Vegas is a growing and thriving market. Pedestrian traffic continues to increase throughout the area as new projects and new amenities draw more visitors to the Fremont Street area. In fact, the most recent LVCVA visitor profile reported that the number of visitors to Las Vegas who made a trip to Downtown grew to 57% last year.

We are benefiting from these positive trends and from the investments we have recently made at our downtown properties. During the first quarter, the Fremont achieved record revenue and EBITDA, while the Cal delivered its strongest EBITDA performance in nearly 10 years. While our operations remain solid, overall segment EBITDA was impacted by a 20% increase in fuel costs at our Hawaiian charter service as well as road work on the freeways that feed into the downtown area. This roadwork, which is expected to continue into next year, is part of a larger freeway expansion and improvement initiative called Project Neon. Despite these challenges, Downtown Las Vegas remains a healthy market, and we remain optimistic about the long-term direction of this business.

Moving outside of Nevada. Positive growth trends remain firmly in place in our regional markets as well. These trends were masked in the first quarter by unusually severe winter weather throughout the Midwest. Absent weather, the current trends in our regional operations are quite encouraging. Economic conditions are solid, and we continue to successfully drive increased profitability and margin improvement through refinements to our marketing programs and cost structure.

In Indiana, Blue Chip was impacted not only by new competition but by severe winter weather as well. As expected, we have seen a decline in visitation from the markets where we are now competing for customers with the new South Bend property. However, our management team has done a great job in partially offsetting these losses with growth from some of our other feeder markets.

In Louisiana, we saw excellent results at Delta Downs with solid revenue gains, double-digit EBITDA growth and a record EBITDA performance from March as we continue to generate strong returns from our recent investments in a new hotel tower at this property. We also delivered good performances throughout Southern Louisiana and Mississippi, with strong flow-through and growing margins throughout the Gulf region. We were particularly encouraged by continued strength at Treasure Chest, which produced its highest first quarter EBITDA in nearly 10 years. Into the west, our Kansas Star Casino continues to perform well, posting solid revenue and EBITDA growth for the quarter.

Overall, it was another strong quarter for our operations across the country. This ongoing strength in our operating results, combined with lower capital spend across the portfolio, is driving strong growth in our free cash flow. And we are putting this free cash flow to work for our shareholders. We paid down $85 million in debt during the first quarter, positioning us to achieve our long-term leverage target in the next several months. We returned more than $25 million in capital to shareholders through dividend payments and share repurchases.

We are making good progress toward completing our acquisition of the 4 Pinnacle properties as we work with the Federal Trade Commission and state gaming regulators to secure all required approvals for this transaction. And just a few weeks ago, the Pennsylvania Gaming Control Board granted us preliminary approval to acquire Valley Forge following the FTC's early termination of the Hart-Scott-Rodino waiting period for this acquisition. These acquisitions will clearly position us for future growth as we strategically expand and diversify our nationwide portfolio. Both transactions are on track to close during the second half of the year, and once complete, we expect these 5 new assets will expand our free cash flow by approximately $60 million a year. With each of our previous acquisitions over the last 7 years, IP, Peninsula, Aliante and Cannery, we unlocked significant value and growth for our shareholders. And we are confident we will do so again with the Ameristar properties, the Belterra properties and Valley Forge.

Looking ahead, thanks to our substantial and growing free cash flow and strong balance sheet, we have the flexibility to continue a well-balanced strategy to create long-term shareholder value. This is a strategy that includes new acquisitions, new developments and investments in our existing properties balanced with a continued focus on deleveraging and returning capital to our shareholders. As our industry continues through its current period of consolidation, there will be numerous opportunities for us to participate. In addition, there will be new opportunities in nontraditional areas like online gaming and expanded sports betting. Regardless, not every opportunity will make sense for us, and we will remain prudent and selective in our approach to growth, staying focused on maintaining our balanced, sustainable approach to creating shareholder value.

Thank you for your time today. I'll now turn the call over to Josh. Josh?

Thanks, Keith. As mentioned in our earnings release, our first quarter results reflect the adoption of new revenue recognition standards that became effective as of January 1 of this year. Our prior year first quarter results were also presented in our earnings release, reflecting the new accounting standard.

We have also provided, as additional information in the 8-K we filed accompanying our earnings release today adjusted income statements for each of the quarters and the full year of 2017. Our quarter-end debt and cash balances were provided in our earnings release.

During the quarter, we reduced our debt balances by approximately $85 million, and our leverage, excluding cash on the balance sheet, was slightly more than 5x. As we have previously discussed, our target leverage is a range between 4 to 5x EBITDA. We expect to achieve that goal during this year leading up to the acquisitions of the 4 Pinnacle assets and Valley Forge. Upon consummating these transactions, we expect our leverage to return to approximately current levels. We expect to enhance our free cash flow by more than $60 million as a result of these acquisitions, further building on our already robust free cash flow.

We returned over $25 million to shareholders during the quarter, paying our quarterly dividend of $0.05 per share and repurchasing approximately $20 million of stock at an average price of $35.32. We had 112.7 million actual shares outstanding as of March 31.

We have approximately $40 million remaining under our share repurchase authorization and expect to utilize this authorization over the remainder of the year. We will continue to be measured in the execution of our share repurchase program as we balance opportunities to grow through new developments and acquisitions while continuing to deleverage our balance sheet to achieve our target leverage range.

Capital expenditures during the quarter were approximately $26 million. As noted in our release, we are reaffirming our previously provided EBITDA guidance of $600 million to $620 million. This guidance does not include any expected contributions from the acquisitions of the 4 Pinnacle assets or Valley Forge.

The first quarter once again demonstrated the strength of our business, driven by growth in our Las Vegas Locals business and positive operating trends in our Downtown and Midwest and South segments, generating significant free cash flow, allowing us to pursue a balanced approach of capital allocation and deleveraging.

Brian, that concludes our remarks, and we are now ready to take any questions.

(Operator Instructions) Our first question today comes from Carlo Santarelli with Deutsche Bank.

Keith, Josh, when you look at, obviously, the Locals business in the quarter. Clearly, I think most people understand that your reporting and the Nevada Gaming Commission statistics that we see are 2 very different things. But clearly, the EBITDA performance speaks to itself with the 8% growth in the period. How much of the flat year-over-year comparable net revenue relates to a more difficult comparison? And how much would you say relates to kind of the concerted efforts? Because without really knowing what market growth is or was for the quarter on our end, it's just interesting to see kind of the flat net revenue with obviously the continued strength in the EBITDA.

So as I indicated in my prepared remarks that we are seeing revenue growth at a number of our properties and for our larger properties, and these are properties that have already been through the refining process. Some of the other properties that haven't been through the refining process -- or I should say are just in the beginning of the refining process are seeing some declines in revenues. So I'd say most of this is a concerted effort. It is not a tough comparison. It really is a result of the process that we are going through, and I think we'll kind of continue to see what I will call muted or limited revenue growth while we'll see good EBITDA growth for the remainder of the year.

Great. That's helpful. And then, obviously, when you guys last spoke on a public conference call, the situation weather-wise, most notably in the Midwest and South, was a lot more difficult. You obviously provided guidance, which you reaffirmed today, and at the time, you spoke about being a Blue Chip, kind of hindering your year-over-year comparisons to the tune of $10 million to $15 million, where weather days were -- obviously, you were seeing a significant impact there, and non-weather days, you're not. You've now had more time to digest, more time without weather days. I'm just wondering, relative to that point in time and within the spectrum of your guidance range, do feel considerably more comfortable with your range and maybe towards the middle to higher end of that range, just given the experience of Blue Chip thus far and kind of getting removed from the weather and seeing some of the pent-up demand?

Look, with respect to Blue Chip, while -- let's say the last 5 or 6 weeks clearly have seen much better weather and therefore we're able to start to understand some trends, it's still early. When you think about a new competitor who's been open for maybe 60 or 90 days and they haven't started to ramp up their marketing just yet, they haven't fully built a database yet, they haven't refined the operation yet, I think there's more to come. And so we're not willing I guess at this point to kind of call a trend. I think that the team has done a great job in managing the business and preparing for the property to come online or this new competitor to come online. They've done a great job in being able to grow some of the other feeder markets where we get business from. You saw in March some good revenue out of Blue Chip. Some of that, I think, was pent-up demand. Some of that was calendar because we picked up a Saturday versus a weekday. But are we feeling good about our guidance? Yes, I think we are feeling good about our guidance. That's why we reaffirmed it. I don't know that we're going to provide any additional color beyond that, but let's see if Josh has any comments.

No, I think you nailed it, Keith. I think right now our guidance reflects our best thinking, and we're comfortable in that range.

Next question comes from Joe Greff with JPMorgan.

Keith, is the 8% year-over-year growth in the Locals market sustainable for the balance of the year?

Yes. So Joe, I think, to answer that question, you'd have to just refer back to our overall guidance for the company. But we don't -- I think what's evident, both in Las Vegas as well as outside of Las Vegas, is that we're -- we've been able to grow profitable revenues, and to the extent that we don't have revenues or we're trying to be more pragmatic about how we grow our business, we're able to grow EBITDA without the revenue -- without the benefit of that revenue. So I think that's what we're willing to say. Some guys take out the guidance that we have and kind of backed into a Las Vegas Locals number. And then that kind of reflects continued EBITDA growth at this level. And I think that's something we're fine with for now.

Yes. I'm one of those guys. If you can -- maybe you mentioned this and I didn't catch it since it's been a crazy busy day. Did you try to detail what the weather impact was on the 1Q EBITDA, particularly, obviously, Midwest, South obviously? And maybe a way to answer it is what kind of growth would you otherwise have seen in the Midwest and South were it not for this god-awful weather?

Yes. So we didn't detail out or quantify the impact of -- on the EBITDA of the winter weather. It really was in the Midwest, not so much in the South, and places like Indiana and Illinois and Iowa and Kansas really wasn't too bad of an impact in the South. It really was up there. Through mostly the first 8 weeks of the year, although we did have a lot -- we did have some significant snow in Iowa in March, as you see -- as you look at the EBITDA for the quarter in the Midwest and South, it's down slightly. I think safe to say, it would be on the positive side if not for the winter weather, but we're not going to quantify it any further than that.

Okay. And Josh, on the corporate expense line, you did [$18 million] in the 1Q. What does that moderate to throughout the course of the year?

Yes, we've given guidance of kind of -- I think it was to kind of be around the $19 million run rate level, and so we probably came in a little bit light in Q1. I wouldn't take that to mean the rest of the quarters are going to be at the $18 million level just yet. I think let's see how Q2 turns out. But for right now our guidance was generally around -- I think it was $76 million to $78 million, and the $19 million run rate feels comfortable for now.

Okay. And just lastly, CapEx in the 1Q and if there's any change to the full year CapEx side.

Yes. We gave guidance of $150 million, and I think that's generally where we're at for the full year for our total CapEx spend. Q1 came in lighter than we would have expected. And we'll kind of see how that trends kind of into the second quarter, and then we may be able to kind of update you if that looks like it's trending differently. But -- so that's where we are right now.

Next question comes from Shaun Kelley with Bank of America.

Josh or Keith, could you just talk a little bit about sort of the overall promotional environment in the Las Vegas Locals market in particular? I mean, clearly you guys have a very distinct operating strategy in that market. Have you seen trends be relatively stable there? Any -- kind of anything you could update us on here?

I think that for the last several quarters, we've generally seen a fairly stable operating environment. There was nothing unusual in Q1. As I always say, people -- operators from time to time step out and do something a little odd, but it is generally a very stable operating environment.

And are you expecting any impact or change from some of the large renovation activity that's going on out there? There's 2 properties in particular from your largest competitor that are under renovation? As you look at submarkets and whatnot, any expectation or thought that, that could have an impact? Or how are you underwriting that?

Sure. So look, as we look at those renovations and those operations, especially the one across from the Gold Coast, I think actually we're looking forward to them completing that because as they do better, we'll do better. It's going to be very much a differentiated product from what we have at the Gold Coast. And Gold Coast has always done well as business at the 2 competitors next door to it was good. We have I think a very solid product, and so we will drive more business inside that building when they start driving more business into their building. So I think we're going to do fine and looking forward to them completing it.

Great. Last question for me would just be as you look out to '19 and kind of beyond, again, I think you were pretty clear that we sort of expect some of the kind of top line for margin swap that you're making or that you're making in Locals to continue for the balance of this year. Did things revert or sort of normalize back to maybe more market-level growth next year? Or do you think some of the initiatives you have are continuous improvement type things and may continue on even beyond '18?

Well, as I look at some of the properties who are a little more mature in this refinement process here, we've been at it for a little longer, we see more normal revenue growth or revenue growth more like what we see in the markets. I would -- as we enter '19 and some of more -- or some of these properties kind of get past this initial phase of this refinement, I think we will see revenue growth more like the markets. I don't know that we'll ever be at the market because we'll continue to refine this process, but it will return to normal probably sometime next year.

Next question comes from David Katz with Jefferies.

I wanted to ask about capital allocation. It's -- I think it's unusual in general and maybe unusual for Boyd where there's a pending acquisition of some size. There's some delevering going on, and there's stock repurchase going on all at the same time. And I just wondered how you -- sort of what your updated thoughts are about how you're allocating between leverage and stock buybacks on a sort of weekly basis, right? Not that I think about those or you think about those in a short-term focus but if you could just give us your updated philosophy about how you're choosing between those, particularly the latter 2 at the moment.

Well, I think you're right. This is certainly not a short-term focus. It's not a day-to-day or a week-to-week conversation. I think it's reflective of a stronger company and a larger company. I think it's reflective of just the more mature view of how to allocate capital. I think continued deleverage is a priority for us as we want to get to our leverage targets of between 4 and 5x as quickly as possible. We balance that with the importance of returning capital to shareholders through 2 methods, dividends as well as share repurchases, and continuing to reinvest in our existing assets as well as take advantage of growth. And so we do have a longer-term view. It is a balance. I don't know that I have a lot else to say. It is to something that we think about, but it isn't a day-to-day conversation or we're not kind of deciding this week how do we [allocate] $10 million of capital. It's a longer-term view. But Josh, anything to add?

I suppose...

Yes, go ahead, Dave, ask your question. I'll add at the end.

Well, I suppose what I'm really asking is have you thought about the focus of maybe bringing leverage down, focusing on that for the moment and just bringing leverage down to 4x or lower or -- and then starting to focus on your stock rather than doing both at the same time?

Yes. I think what we're trying to -- part of what we're looking at is not just this year. We're looking out a couple of years or even next year and seeing where our leverage is going to end up. And so we can see that we have the flexibility to do other things with our cash flow than other -- free cash flow other than just to pay down leverage or look to pay down debt rather than improve our leverage. So we can see that we can do both. We feel like the use of free cash flow for paying down debt is actually not the most economic use, but it is the most strategic use from our perspective in terms of we recognize the world's not always going to be like it is today. And so we are trying to conscientiously balance where we want to be from a leverage perspective for the day when there -- the economy may be a little softer and at the same time understand that because of the robust nature of the company, the robust nature of its cash flow and the other opportunities that are out there, it just presents the opportunity for us to be balancing all of these things. And we feel comfortable doing that where we are today. And so it's a little bit about the efficiency of paying down debt and getting to where you want to be while at the same time understanding where we can pursue opportunities, whether that is share repurchases, whether it's acquisitions, whether it's reinvesting in our businesses to kind of get the best returns. And so that all is getting -- get -- puts in the blender, and we look at kind of the next year or 2 and kind of make our decisions as best we can. And that's, in a fundamental nutshell, how we can describe what we're doing.

Okay, perfect. And just one more, which is that we continue to hear that there's a lot out there for sale. And without asking you whether you're going to buy anything else, it -- is the pile starting to look a bit less attractive than it would have a year ago? Or is it still -- do you think there are still compelling opportunities out there for somebody versus entities that may just be looking for a number?

Well, maybe a couple of comments. One, I think the M&A activity in the first 4 months of this year has been about as active as I've seen it in a while as this industry, I think, goes through kind of another round of consolidation. There are a lot of opportunities out there. There's a lot of things to look at. Look, a lot of things to look at. The prices are high. Sellers have high expectations. Whether or not there's opportunities and whether or not those opportunities are compelling, I think, just is dependent upon an individual company's viewpoints. We have a strict kind of set of guidelines we look at as we look at assets. We know where we want our leverage to be. We know where we'll let it go to for an acquisition and how quickly we want it to come down. We look for strategic assets. They need to be of certain size, a certain quality and strong markets. And if we can find something that meets those criteria, you'll see us execute on it. And if you -- we can't find something that meet those criteria, we won't execute on it. We don't feel like we have to do a deal. We have a lot in our plate, a lot to execute on and will keep us plenty busy. But at the same time, if there's a great opportunity for us, we don't want to see it pass us by, either. But we've always been prudent and very selective, and we'll continue to be prudent and selective in the face of just a lot of M&A that's out there.

Next question comes from Steve Wieczynski with Stifel.

So Josh or Keith, I guess, if you looked at your player database with B Connected, can you -- and I apologize if you talked about this in your prepared remarks. But if you looked across, whether it's a Sapphire Member, whether it's an Emerald Member, can you give us a little bit of color in terms of what you saw in the quarter in terms of visits, number of visits, spend per visit? And maybe kind of compare and contrast what you saw in the Locals market versus what you saw in some of the regional markets?

So look, at a high level, what -- we're seeing visitation kind of frequency up in almost all of our markets. We're seeing spend up across the board, more so at the higher level, our Emerald and Sapphire levels, good increases in spend or worth or ADT, depending on your term of art. We're also seeing very good and continued good growth in unrated coin-in, something that's been this way for -- depending on whether you're looking at the Midwest market or the Locals market or the Downtown market, it's been going on for -- whether it's 4 quarters or 8 quarters or 12 quarters, but some long period of time. So in the Locals market, unrated coin has been up for 10 quarters. And again, we've seen good growth in spend and good growth in visitation. Same thing Downtown. So consumer is healthy. As we've seen in prior quarters, those trends are stronger at our upper levels, our Sapphire level and our Emerald level, but not strong at the lower levels. But part of that is our focus in how we're spending our dollars in terms of marketing.

Okay, got you. That's great color. Appreciate it. And then just one quick housekeeping question for, I guess, for Josh. Josh, you gave D&A guidance in -- back in February of $220 million. Is that still a pretty good range given just kind of where it came in, in the first quarter?

Yes. I think when I looked at the guidance that we'd given versus where our models are today, I believe it is maybe just a little bit high, but I mean, it's only a couple million dollars high. It's not significantly different. So I would say it's kind of still in that range of $215 million to $220 million at this point. And so that's kind of where we're at for now.

Next question comes from Harry Curtis with Nomura Instinet.

Just one quick question. Many of your competitors and peers are reassessing just how they spend their marketing dollars and how much is the right level of promotional spend. Can you just give us an update of how you're reassessing that process? And how aggressive do you think you can be before you -- with reducing promotional spend before you really cut into profitability?

Well, it's an effort that's been underway for more than a year now. We've been talking about it. It was a portfolio of 24 properties. It doesn't happen all at once on all properties, so it's an evolutionary process. And we're still in the process of going through it at some of our properties, so we're not 100% done. I think this is a -- on a continuous improvement process, where once you're through it, you continue to look at it. You continue to refine it, continue to find ways to speak to the higher-end players or the higher-worth players more frequently and better. Yes, I don't know that you're ever done. I think we're getting smarter about it all the time, and we continue to study it and continue to deploy new technology. Obviously, we're taking -- we've probably taken more costs out through -- and up to today than we will going forward. There's a law of diminishing returns here, but it's something that we will continue to focus on. We're cognizant of the fact you can go too far. You can hold back too far and begin to impact the customer. I think you see that in customer surveys. You see that in just talking to customers and being cognizant of customers. You see that in talking to your team members and team member opinion surveys on what they hear from customers. So we have a number of listening posts to ensure we're not going too far. We have an awful lot of data, an awful lot of trending and an awful lot of metrics we can monitor to make sure we're not going too far. I don't believe we're near that point in our company yet, but once again, this is kind of an evolutionary process.

And I think a certain aspect of it is -- may not be cutting back in the sense of lower dollars, it's how you allocate those dollars. And some segments may be getting less allocation and others more where it warrants it. So I think there -- I get a sense when we talk about more refined marketing, sometimes folks just look at it as reduced overall expenditures. I think we look at it as potentially reduced expenditures but also the effectiveness of those dollars. And so I think that has to be part of the conversation as well.

Yes, I think Josh brings up a good point. When we talk about refining, it isn't always about reducing, it's about reallocating and spending those dollars differently and make sure that those dollars are going to the right customers.

Next question comes from Chad Beynon with Macquarie Research.

Just wanted to ask one more just on the guidance, understanding that it's really early in the year, and as you talked about, it's still a little undetermined what the full impact is going to be out of Blue Chip. But it does sound like the first quarter did come in slightly above I guess your full year EBITDA growth rate despite kind of the negative January, February. So as we kind of think about you maintaining the guidance, is it really that it's early in the year and you just don't know what's going to happen at Blue Chip and kind of the overall impact there?

I do think that's the right way to look about it, is early in the year. The guidance was only issued 60 days ago, and it is -- we don't know that we've seen the full impact of Blue Chip as you said and as I said earlier. So look, we feel good about the business. We feel good about the trends. There's nothing in there that dissuades us from our current guidance, but we want another quarter before we make any changes.

And then can you just provide us an update on the land-based bill in Louisiana, kind of how that's tracked along? I believe there's 2 bill -- 2 separate bills there. Just any update there and if that is passed, if that's something that you'd be interested in given your presence in the market.

Sure. Well, it is obviously very important to us. We have 5 assets in the state of Louisiana. Now 2 of them are already land based as racetracks, so -- but we have opportunities, if those bills are passed, to have more robust operations there. There are a number of bills that are floating around, and one of them passed last night. So we're optimistic that it will pass but unwilling to kind of make an exact judgment as to when and how they're going to pass. Things could always change. But we're optimistic that they will pass, and I think we have some great opportunities to take advantage of them, especially at some place like Treasure Chest where we have a very strong business. It's been growing for 10 or 12 quarters in a row now. And we've just got a very strong business that's on a 3-story riverboat, and the ability then to do something much more compelling there and take advantage of that market is very significant. So there's an example where passage of that bill, we're watching it closely, could really benefit us in the long run.

Next question comes from Kelvin Wong with Barclays.

I have a question on Locals, and I got a follow-up. I think flow-through was the strongest there. How much of that was due to your margin improvement program?

Kelvin, it's Josh. I would say that, really, as we look across our portfolio, we did a really good job of driving margin relative to, in some cases, the lack of revenue. Even outside of Las Vegas when we had weather impacts, we were facing issues with cost, and we did a really good job on margins. So I wouldn't -- I know it was really strong and visible in Las Vegas, but really, throughout our portfolio, we're seeing the results of not only what's happening in terms of our focus on operating more efficiently from some of the things we've got going on at corporate, but I would say the operations teams are doing a really good job as well, and it's really difficult to kind of distinguish between what's attributable to what. I think I generally think of it is as we're all working together to improve the margins of the company overall. That's what you're seeing the results of, everyone cumulatively working together to make that happen. And that's what you saw come together in this quarter. I think, as you look longer term -- I mean, this was a good quarter for us in a lot of metrics, including margins, but we've been delivering margin improvement for quite some time. Over the last 2.5 to 3 years, our margins have improved something like 300 basis points, and so we're going to continue to focus on that as an opportunity.

I just got one more follow-up. And I think -- it's regarding guidance. I think last quarter, you said you'd be disappointed with the low end. But it sounds like things are a little bit better than you expected. Like I'm just curious why the low end of the guidance range is still on the table.

Well, it's because it's early in the year, Kelvin. So that's it.

Yes, fair enough.

We're going to conclude the question-and-answer session, so I'd like turn it back to Josh Hirsberg for any closing remarks.

Brian, thank you, and everyone, thank you for participating in the call today. If you have any other questions, please feel free to follow up with us, and we'll try to help you out.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.