Title

Presentation

Boyd Gaming Corporation misses on earnings expectations. Reported EPS is $1.6 EPS, expectations were $1.76.

David Strow: Good afternoon, and welcome to the Boyd Gaming First Quarter 2026 Earnings Conference Call. This is David Strow, Vice President of Corporate Communications for Boyd Gaming. I will be the moderator for today’s call, which we are hosting on Thursday, April 23, 2026. [Operator Instructions] Our speakers for today’s call are Keith Smith, President and Chief Executive Officer; and Josh Hirsberg, Chief Financial Officer. Comments today will include statements that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act. All forward-looking statements in our comments are as of today’s date, and we undertake no obligation to update or revise the forward-looking statements. Actual results may differ materially from those projected in any forward-looking statements.

There are certain risks and uncertainties, including those disclosed in our filings with the SEC that may impact our results. During our call today, we will make reference to non-GAAP financial measures. For a complete reconciliation of historical non-GAAP to GAAP financial measures, please refer to our earnings press release and our Form 8-K furnished to the SEC today and both of which are available at investors.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. Today’s call is being webcast live at boydgaming.com and will be available for replay in the Investor Relations section of our website shortly after the completion of this call.

With that, I would now like to turn the call over to Keith Smith. Keith?

Keith Smith: Thank you, David, and good afternoon, everyone. Our first quarter results once again demonstrated the benefits of our diversified business, our continued focus on operating efficiencies and our ongoing capital investment program. Overall, company-wide revenues reached nearly $1 billion, while EBITDAR was $317 million. On a property level basis, first quarter revenues and EBITDAR grew year-over-year, led by continued growth in gaming revenues. We successfully maintained operating efficiencies throughout our business with property margins again exceeding 39%. These results were driven by broad-based strength in our Midwest and South segment, partially offset by the continued impact of softer destination business in Las Vegas and construction disruption at Suncoast.

On a company-wide basis, play from both core customers and retail customers continued to grow during the first quarter, consistent with the trends we saw in 2025. And we are encouraged that the customer trends from the first quarter have continued into April. Now turning to segment results. Starting with our largest segment, our Midwest and South business achieved broad-based revenue and EBITDAR growth during the quarter. Overall, revenues grew 4% in the quarter, while EBITDAR grew 5% and margins improved to nearly 37%. We also delivered continued growth in gaming revenues in the quarter driven by increased play from both core and retail customers. These positive results were supported by the ongoing trend of customers staying closer to home as well as benefits from milder winter weather this year and strong returns from our capital investments throughout the segment.

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These investments included our recent hotel remodels at IP Biloxi and Valley Forge. Our new convention space at Ameristar St. Charles and additional food and beverage enhancements across the segment. In addition, our Treasure Chest property continues to deliver year-over-year growth. We plan to build on this strong performance with the addition of a new high-limit room, which we expect to open early next year. Moving to our Nevada operations. Results in our Las Vegas Locals segment reflected continued softness in destination business with the largest impact at the Orleans. We also experienced more significant construction disruption at the Suncoast during the quarter related to the modernization project currently underway. While the Suncoast management team has done a great job mitigating construction disruption thus far, our renovation work moved into the most popular part of our casino floor during the quarter, creating a more material impact from disruption.

We anticipate this disruption will continue until we complete our renovation project late in the third quarter. Excluding Orleans and Suncoast, revenues and EBITDAR for the remainder of the segment were in line with the prior year and operating margins exceeded 50%. And even with the impacts from Orleans and Suncoast, play from our core customers during the quarter was in line with the prior year in our Las Vegas Locals segment. Similar to our Midwest and South segment, we are actively investing in our Las Vegas Locals portfolio to drive continued growth. These investments include the recent opening of our newest Locals property, Cadence Crossing Casino on March 25. While it is still early, this property has received an enthusiastic response from our guests.

Another example of our investments is the modernization of our Suncoast property. This project includes a complete transformation of our casino floor, enhanced food and beverage offerings and updated meeting in public spaces and remains on track for completion towards the end of the third quarter. We’re also continuing to enhance our non-gaming amenities throughout the Las Vegas Valley. Our hotel room renovation at the Orleans is on track for completion later this year, and we plan to begin a similar project of the Suncoast hotel this summer. Additionally, we opened several new restaurant concepts at the Gold Coast during the first quarter with additional restaurant concepts now under development at Fremont, Aliante and Sam’s Town. And in 2027, we plan to begin a modernization project at the Orleans, similar to our current project at the Suncoast.

Given the strong response from our guests through our recent enhancements, we are confident these capital investments will contribute to long-term growth in our local segment. Additionally, we remain confident in the underlying strength of the Las Vegas economy. Last year, Southern Nevada’s population reached 2.4 million people, up 16% over the last decade, a growth rate of more than twice the national average. At the same time, the local economy is more diversified with approximately 90% of the jobs created in Southern Nevada over the last 10 years coming from outside the hospitality industry. And over the same 10-year period, per capita income has grown more than 5% on an average annual basis and total personal income in Southern Nevada has nearly doubled.

And Southern Nevada’s cost of living remains below the national average, ranking among the most affordable the nation’s 30 largest metro areas. All in all, the long-term fundamentals of the Southern Nevada economy remains strong. Moving next to Downtown Las Vegas. Trends were similar to recent quarters, with play from our Hawaiian guests and our core customers remaining stable during the quarter. Similar to the fourth quarter, these trends were offset by weaker business throughout Las Vegas as illustrated by an 11% year-over-year decline in pedestrian traffic on the Fremont Street Experience during the quarter. Next, in our online segment, Boyd Interactive continued to grow, while contribution from our third-party market access agreements were consistent with the second half of last year.

As a result, we reiterate our previous guidance of $30 million to $35 million in EBITDAR for the Online segment this year. Finally, our Managed & Other segment achieved another quarter of revenue and EBITDAR growth. Sky River Casino opened its casino floor expansion in late February, followed by the opening of a 1,600-space parking garage at the end of March, and we are encouraged by Sky River’s continued growth since the opening of this expansion. With the first phase now complete, we are underway with the development of a 300-room hotel, 3 new food and beverage outlets, a full-service spa, entertainment and event center. Once complete in early 2028, we are confident this expansion will further strengthen Sky River’s position as well as of Northern California’s most popular and successful gaming resorts.

With a solid start to the year, we continue to expect our Managed & Other business to generate $110 million to $114 million in EBITDAR for the full year. In all, our first quarter performance was driven by our diversified portfolio, our strong operating efficiencies and contributions from our capital investments throughout our portfolio. In addition to the property investments we are making to enhance our operations, we are continuing to build our development pipeline. Most significant of our development projects is our $750 million resort in Virginia remains on track for a late 2027 opening. The foundation work now complete, work has begun on the resort’s first floor and construction is starting to go vertical. Once complete, this upscale resort will be a true market leader to 65,000 square foot casino, 200 room hotel, 8 food and beverage outlets, live entertainment and an outdoor amenity deck.

We’ll also offer the most convenient gaming destination for much of the 1.8 million residents, the Hampton Roads region as well as 15 million tourists who visit nearby Virginia Beach each year. Next, in late February, we received final approval from the Illinois Gaming Board for our proposed expansion and modernization of the Par-A-Dice casino. Once complete in late 2028, this project will transform Par-A-Dice into a single-level entertainment facility with a modern casino floor and enhanced amenities, positioning this property for growth well into the future. And in Southern Nevada, we have additional growth opportunities at Cadence Crossing, where we have significant land still available for development. Directly adjacent to our property is the master planned community of Cadence, 1 of the fastest-growing master planned communities in the country with plans for more than 12,000 homes upon full build-out.

Our Cadence Crossing property is designed to capitalize on the growing demand in the area with plans for future hotel, additional casino space and more non-gaming amenities. As we continue to invest in our properties and build our development pipeline, we are successfully balancing these investments with a robust program of returning capital to our shareholders. We returned nearly $170 million to our shareholders during the first quarter, $155 million in share repurchases and $14 million in dividends. Going forward, we intend to continue repurchases at a $150 million per quarter pace supplemented by our quarterly dividend. So in all, with our strong balance sheet, diversified property portfolio, balanced approach to capital allocation and experienced management team, we remain confident in our ability to continue creating long-term value for our shareholders.

I would like to thank our team members for their contributions to our company. Their dedication to delivering memorable service is at the heart of our entertainment experience and drives our continued success. Thank you for your time this afternoon. I would now like to turn the call over to Josh.

Josh Hirsberg: Thank you, Keith. During the first quarter, we continued to deliver consistent results, supported by growth in property level revenues and EBITDAR. This growth, along with our continued focus on operating efficiencies and resulted in property level margins of more than 39%. Gaming revenue also continued to grow with increased play from both our core and retail customers. Strength in property results during the quarter was driven by our Midwest and South segment. And as Keith mentioned, our online and managed segments also contributed to our results during the quarter, with both segments continuing to show growth on a comparable year-over-year basis. We’re also maintaining a balanced approach to capital allocation as we invest in our properties, pursue attractive growth opportunities and return capital to shareholders, all while maintaining a very strong balance sheet.

In terms of capital expenditures, during the quarter, we invested $155 million and expect to spend $650 million to $700 million in capital expenditures for the full year. This amount includes approximately $250 million in recurring maintenance capital, $75 million in incremental hotel capital focused on the Orleans hotel remodel, which is expected to be completed by the end of this year, $50 million in growth capital primarily related to completing Cadence Crossing as well as the design and preconstruction activities for the Par-A-Dice modernization project. And finally, $300 million related to our Virginia project. We are continuing to balance our capital investments with returning substantial capital to our shareholders. During the first quarter, we paid $14 million in dividends and repurchased $155 million in stock representing 1.8 million shares at an average price of $83.94 per share.

Our actual share count at the end of the first quarter was 74.8 million shares. We currently have approximately $700 million under our share repurchase authorization, which includes an additional $500 million authorized by our Board earlier this month. Over the last 4.5 years, we have returned $2.9 billion to our shareholders while reducing our share count by more than 33%. We expect to maintain repurchases of $150 million per quarter, supplemented by our regular quarterly dividend. This equates to more than $650 million per year or approximately $9 per share in value for our shareholders in 2026. We have the strongest balance sheet in our company’s history. We finished the first quarter with traditional leverage of 1.8x and lease-adjusted leverage of 2.4x.

We also have ample available capacity under our credit facility. Our next debt maturity is in December 2027, which we intend to refinance later this year or in the first half of 2027. In terms of our debt balances, you may recall from our last earnings call that we had expected to pay approximately $340 million during the first quarter for tax credits related to the FanDuel transaction. We paid for a portion of these credits in the first quarter, and we now expect to pay the remaining $290 million during the second quarter. During the first quarter, corporate expense was higher than usual due to onetime items, including the timing of charitable contributions. In conclusion, our first quarter results demonstrated the benefits of our diversified business, our continued focus on operating efficiencies and our ongoing capital investment program.

We remain confident in our ability to drive growth in play from our core customers while making investments that elevate our product offerings and enhance our growth prospects. Our strong balance sheet, coupled with our consistent operating performance and robust free cash flow position us well to continue creating long-term value for our shareholders. This concludes our remarks, and we’re now ready to take any questions you may have.

David Strow: [Operator Instructions] Our first question comes from Steve Wieczynski of Stifel.

Steven Wieczynski: So Keith or Josh, I know this might be a tough question to answer, but with the destination traffic still somewhat soft in the Locals market as well as downtown, just wondering when you think that might inflect given we now have a pretty significant headwind as well with fuel prices, which obviously can impact whether that’s drive in traffic, whether that’s fly in traffic. So just maybe wondering how you guys are thinking about that the destination business and when we might see that start to bottom out?

Keith Smith: Sure. So look, as we think about the destination business, a couple of things. Well, the primary impact is that the Orleans where we have 1,800 of almost 1,900 hotel rooms. So that is kind of the single biggest impact in our Locals portfolio. Two, with respect to the increase in gas prices, the trends we saw in the first quarter, as we highlighted, were somewhat in line with last year. And so it’s hard to kind of discern the impact of gas prices when you’ve got higher tax refunds that are coming out through the last several months and probably over the next several months. And so when does it turn? The other thing I can say is, look, when we get to the second half of this year, we start to run into easier comparisons because this impact of destination travel to Las Vegas started to occur in the second half of last year in a big way.

So we get to easier comparisons. When is it fully turn back up? Hard to tell, but it’s kind of high-level comments on the topic. I’ll see if Josh has anything you’d like to add?

Josh Hirsberg: Yes. The only thing I would add is really, and as Keith alluded to, we started to see the visible impact of destination business on our performance in Q3 of last year. And really, since then, it’s been a pretty consistent level of impact. It’s been about $5 million, $6 million of EBITDAR each quarter since then. It was that way in Q3, Q4 and then again this quarter as well. So we’re expecting a similar impact in Q2. And then as we anniversary it, I don’t think we expect it to flip on a dime and start to become positive all of a sudden. But I think we would think it would be kind of continuing to be down less bad, but down year-over-year in Q3 and gradually improved Q4 and then maybe in the first half of next year, start to see some overall and growth out of that segment. But that’s just based on what we’re seeing today and the fact that it has been so consistent to date.

Steven Wieczynski: Okay. Got you. And then I guess, if we flip to the Midwest and South those results were, I mean, actually looked really solid, probably a good bit better than what we were kind of looking for. So if you think about that whole portfolio, I guess, Keith, for you, wondering if the trends that you witnessed were pretty much — were they broad-based or were there markets or pockets of strength versus other markets that you might call out?

Keith Smith: Generally were broad-based. We saw kind of across the Midwest as well as the South and the East. And so we’re very pleased with the level of performance, a level of growth in revenues, the level of flow-through and in particular, the margins. We had a very strong quarter there. We saw growth kind of across all the demographics and all the ADT segments. So yes, it was a very strong quarter in most places where numbers are published, and you can discern the numbers, we gained market share. And so I think that the business continues to grow. I think the capital investments we’re making are having an impact and providing a return to us. So you pull it all together. And yes, it was a very strong quarter in the Midwest and South for us.

David Strow: Our next question comes from Barry Jonas of Truist.

Barry Jonas: Josh, I think I missed this. Did you talk about why corporate was up so meaningfully? Anything you could isolate there if it was a one-timer? And then maybe just how to think about that line item going forward?

Josh Hirsberg: Yes. So there was about $6 million of onetime items and by their very nature in the description, they won’t continue going forward. One of them, the most prominent 1 had to do with charitable contributions. Last year — and it’s a timing difference in that case. Last year, we accounted for it basically spread it out over the entire year. This year, it was recorded in the period, we actually made the contribution. So that’s what the standout largely is.

Barry Jonas: Got it. And then just — you clearly have development projects in the pipeline, but I’m curious to get your thoughts on M&A here. Clearly, there’s plenty of speculation all around about M&A in the space. I’m just curious to get your thoughts on opportunities for Boyd.

Keith Smith: Okay. I think your comments on M&A are probably pretty consistent with what we’ve said in the past. We’ve grown a lot through M&A. We’re always looking at things. We have our eyes open and understand what is going on in the market and what’s available or what may be becoming available. Once again, we have a pretty disciplined process and disciplined set of filters to work through, and we’ll continue to look if the right opportunity presents itself, that’s strategic and has the right return profile, you would see us execute absent that. We’ve kind of got a great company. We’ve got a strong balance sheet and good earnings and producing great EBITDAR. We’ll just continue to stick to our knitting until we find that right opportunity.

Josh Hirsberg: And Barry, just jumping back to your first question. I looked at consensus real quick for corporate expense for Q2, Q3 and Q4, and that’s generally a good expectation of what to expect for the remaining quarters of the year.

David Strow: Our next question comes from Shaun Kelley of Bank of America.

Shaun Kelley: Josh or Keith, sort of to maybe slightly in the weeds, but on macro and then 1 detailed. On a detailed question, I think I caught it in the prepared remarks, you said traffic or foot traffic on the Fremont Street Experience was down 11%. If I caught that correctly, and if not, please correct it, but I feel like we saw a bit of an inflection on just strip visitation that we get from sort of just broader LVCVA data, and that actually looked a lot closer to flat, and it was down a lot last year, but in Q1, it looked a lot was reflect. Just kind of curious any thoughts or questions or concerns as to why that might be a slightly different pattern than the broader strip is seeing?

Keith Smith: Look, it was — we did quote that it was down 11%, and that number represents traffic what we call kind of under the canopy under the Fremont Street Experience itself. It was down a similar amount in Q4. I can’t comment on foot traffic on the strip. I think I do know the convention calendar was stronger in the first quarter with ConAg in town that wasn’t there last year. I’m sure that drove some of the increased traffic on the strip. We didn’t see it make its way downtown. I think the good news is the decline in visitation is similar, didn’t grow, it didn’t accelerate. It was stable. So no real other explanation or understanding as to why some of that increased visitation didn’t make its way downtown. Not overly concerned at this point. We have a long history of — Las Vegas has a long history of seeing roughly speaking, 50% to 55% of all visitors to Las Vegas making a way downtown. And I suspect that will continue over the course of time.

Shaun Kelley: Got it. And then maybe just another high-level one, but just if we zoom out, it feels like this macro backdrop in particular, you talked about plenty of the demographic tailwinds that Las Vegas has. But it feels like this macro backdrop plus tax refunds and some of the — and the no tax on tips should be sort of a great setup for Las Vegas locals. But even if we strip out a destination, which I appreciate is a little bit idiosyncratic. It feels like that’s flat and regionals are up. So sort of seem theory question a little bit, just conceptually, any reason or any KPI you’re thinking about or pointing to as to why the locals may not be participating quite the same way that the regions are or looking quite as healthy as the regions are just at this point in time?

Keith Smith: No, look, I think that when we think about the out-of-state or MSR properties, non-Nevada properties, we commented in our prepared remarks that what we’ve seen for several quarters now is that people are simply staying closer to home, and they’re spending their money closer to home, and we’re a beneficiary of that, having properties spread across 10 states. Here in Nevada, when we talk about our local properties, it’s not 100% local. There are a certain amount of destination and/or regional business that is part of that. We’ve commented in the past that our pure locals business that, i.e., people that have ZIP codes in and around our properties is actually quite good. Mostly for the same reason, they’re not — they’re staying close to home also and spending money closer to home. So when you dig deep into the weeds, the local locals are actually performing well.

David Strow: Next question comes from Ben Chaiken of Mizuho.

Benjamin Chaiken: Josh, maybe back to some of the earlier Q&A regarding your back half expectations, your 2H expectations in Vegas. I guess if the impact from the destination customer has been constant, which you quoted at around $5 million or $6 million, I know there’s probably some rounding there. How do I bridge that with your response to an earlier question that you — I think you were suggesting that 2H would be down, but then kind of like juxtaposed against Keith’s comments earlier where you said that ex Orleans and ex Suncoast things were flat. Maybe I misheard you, maybe I’m too in the weeds, but just maybe if you could clarify the moving parts in the back half and how you’re thinking about it? And if that doesn’t make sense, I can try and rephrase it in a simpler way.

Josh Hirsberg: Well, I’ll try to give you an answer, and hopefully, it will make sense. And if not, keep asking. I’d say, I think from the perspective of destination, I think you can — at least from where we sit today, assuming no change in the consumer behavior, we would expect the destination will continue to have a similar level of impact in the first half and then just get less bad. So if it was down 5%, maybe it was down a little bit less in Q3 and a little bit less in Q4, may be approaching flat. I think you have to recognize that then what starts to happen is the 2 other factors that we spoke about, and 1 is Suncoast disruption. We only had a partial first quarter impact from that disruption. So that will be a full quarter in Q2 and a full quarter in Q3 before that project is complete.

And so then you’ll start to see some benefit from Suncoast complete renovation and modernization of its floor beginning in Q4. And then the other element is Cadence, which we haven’t spoken a lot about just yet, but Cadence opened, have great top line performance like with any other new opening. We have to kind of let it settle in at a revenue level and start to adjust to just the expense structure. So Q1 was only a couple of days. We didn’t get any EBITDAR contribution, a lot of revenue from it. And we’re expecting it to kind of trend up and hit — start hitting full stride maybe later in Q3, certainly by Q4. So in the second half of the year, in Q3, you’re going to have 2 kind of pressures. You’re going to have destination and Suncoast disruption still going on with Cadence kind of not yet hitting full stride.

And then in Q4, you should have much less destination, Suncoast in the rearview mirror and Cadence hitting full stride. So hopefully, that triangulates to what you understood or interpreted from our comments.

Benjamin Chaiken: Yes. Very helpful. I appreciate it. And then just 1 other quick one. I think you guys have been in Virginia. You guys have been pretty clear that the temporary casino you have in Norfolk is more of a placeholder, if that’s an appropriate description with little or no expected profit currently for the time being. However, I’m sure you’ve seen there’s a temporary casino out there that recently opened that’s generating around $10 million or $15 million a month, which is kind of incredible. Is this something you’d ever consider doing, in other words, increasing the size and scale of your temp asset after seeing the response to that opening?

Keith Smith: Yes. And so the size and scale of our temporary asset is based on the limitations of the site that we’re building on. And so there’s actually no ability to make this any larger. We certainly would have done that from day 1. And so it wasn’t a cost issue. It wasn’t a capital allocation issue that we didn’t want to spend more to build a larger facility, it’s simply in order to build the permanent project on that site. We literally didn’t have the square footage to allow for anything larger on the site. And so it is a breakeven. It is what it is for the next 1.5 years until we open in November ’27. So it’s not about desire. It’s just about constraints.

Josh Hirsberg: You have to get the permit open in a certain time frame and we have limited space for a temporary.

David Strow: Our next question comes from Dan Politzer of JPMorgan.

Daniel Politzer: In terms of just the fundamentals and cadence of the quarter, can you maybe kind of talk about how you saw it come in because the beginning of the quarter looked very strong. March looked a little soft. It sounds like April has stabilized, but any kind of way to kind of unpack how the quarter progressed?

Keith Smith: In the Locals market or overall?

Daniel Politzer: Both, Mid Locals Midwest and South.

Keith Smith: Look, I think as it relates to Cadence, it opened March 25, and so it’s kind of a non-event.

Josh Hirsberg: Same cadence and the word cadence, not Cadence.

Keith Smith: Not the Cadence property, the cadence of the quarter.

Josh Hirsberg: I think.

Keith Smith: Maybe if you can reframe the question. Were you referring to Cadence the property we just open?

Daniel Politzer: So I was referring to the cadence in terms of how the quarter progressed, like January, February and March. Just in that March, it looks like it could step down quite a bit and the April seems more stable, but just trying to understand the nuances there.

Keith Smith: Yes. Look, as we think about the Midwest and South, January was milder weather this year versus last year as well as a better calendar. February was pretty normal, and March was a calendar issue. But nothing, I would say that unusual that we would call out. And in Nevada, it’s largely the same. You saw benefits from — we saw some benefits from the large convention in Las Vegas earlier in the quarter plus once in January had an extra weekend day that benefits at February pretty normal. March, maybe a little soft, but nothing once again unusual that we would call out.

Josh Hirsberg: I think what was unique for us in March was that’s when we started to see the largest impact on Suncoast from disruption, but that’s the only difference really.

Daniel Politzer: Got it. And just more of a housekeeping follow-up. In terms of cash taxes, can you just remind us what the expectation is there for ’26 if there’s a benefit from the One Big Beautiful Bill?

Josh Hirsberg: Yes. So I think we’re currently estimating a benefit of cash tax benefit of about $45 million to $50 million.

David Strow: Our next question comes from David Katz of Jefferies.

David Katz: I appreciate all the commentary so far. I wanted to ask a different question, not an M&A, are you or aren’t you, will you or won’t you, but can you just talk about the boundaries that you’ve set for yourself, which I imagine are likely the same. And are there any changes in the kinds of things you’re seeing or in the credit support of things for things that may come up? Or any difference in what that market brings in front of you on a regular basis?

Keith Smith: Well, look, I’ll try and answer it. I don’t know if I’ll be able to address your whole question. I think if you — if we think about how we view M&A over the last 3 to 5 years going to post-COVID. Look, we have a strong balance sheet. We have a strong business. We have a large business, and therefore, anything we look at has to be significant as to be able to move the needle has to be in stable tax and regulatory environments, and it’s got to be an asset that strategically makes sense to add to the portfolio. There are things out there that make sense. We’re not afraid because of our strong balance sheet and our strong cash flow profile to do larger transactions. And so we look at small, medium, large transactions.

And once again, we look at a lot of things over the course of a year, and we’ll continue to do that until something makes sense to us. But I think we’ve been fairly consistent. I don’t think much has changed over the last several years in terms of how we view it. But Josh, anything you’d like to add to the conversation?

Josh Hirsberg: I would just add a couple of thoughts. I think what Keith said is accurate. Certainly, we are in the best position ever to — that we’ve ever been in to make an acquisition, but that doesn’t mean that we’ll find 1 that makes sense for us to execute upon. And I think ultimately, it’s just basic capital allocation, where can we get the best returns versus buying back our own stock or making some of the investments we’re making internally to our own portfolio because that’s working quite well at this point. So I think we have to — whenever right or — I can’t say the right, whenever an opportunity comes along, we have to evaluate it in the context of what we’re doing today. And that’s a fundamental philosophy of how we think about transactions and growing the company.

David Katz: Perfect. And if I can lay out 1 more hypothetical that I hope is useful and interesting in some way. Virginia was gesturing at the notion of iGaming this year. And if we were to hypothesize that 1 day, maybe it gets there, how would you envision your participation in that? Or would you participate in that?

Keith Smith: Yes, I think you could envision us participating in it. Once again, through Boyd Interactive, we have a very small online gaming business that has grown nicely over the years. We’re live in New Jersey and Pennsylvania right now. And we’re supportive of the iGaming rollout across the U.S. And so if it happens in Virginia, we’ll be supportive over there, and you’ll see us participate. At the end of the day, we think it’s all additive to the business, complementary to what we do. And so we’d be supportive if and when that opportunity presents itself.

David Strow: Our next question comes from John DeCree of CBRE.

John DeCree: I know we didn’t talk too much about Cadence Crossing yet, it’s only been probably a little less than a month. But curious if you could give us any anecdotes from the opening the first couple of weeks, things in terms of visitation levels or new customer sign-ups? Anything that you know or could share with us would be interesting.

Keith Smith: I don’t have any specific data here in front of me, John. But we had a great opening. The place was full and continue to have great customer response through the first couple of weeks. I haven’t looked at the numbers in the last few days. I’m sure it’s leveled off a little bit. As Josh, I think, indicated in his comments, answering an earlier question, you open these buildings and you focus on driving revenues. And over the course of the next several months, we’ll focus on refining the cost structure. But we’re very happy with the opening. We’re happy with the level of participation and new customers and new customer sign-ups. But again, I just don’t have that data sitting here in front of me today.

John DeCree: That’s fair. And maybe broader promotional environment in Las Vegas whether you kind of look at locals like your true locals and then the Orleans, which kind of compete the destination market as that market remains lacking some visitation. Have you seen any material change in the promotional or competitiveness in the last quarter or so as it relates to locals — traditional locals and in the destination business, any shift there?

Keith Smith: I’d say in the traditional locals market, it remains fairly rational. Nobody — people who — and I’ve said this before, those properties or companies that have tended to be a little aggressive or continue to be aggressive, and those of us who have remained more, I don’t know, rational have maintained that profile. So nothing much has changed in the traditional locals environment. I think what you see at the Orleans destination market strip, if you will. Certainly, the strip is getting a little more aggressive, whether it be in terms of room pricing or room products, some all-inclusive packages trying to entice people into their buildings. I haven’t seen any impact from that. But I would say they’ve probably gotten a little more aggressive from our vantage point.

David Strow: Our next question comes from Brandt Montour of Barclays.

Brandt Montour: I think we’ve cured a lot of ground. I have 1 question. The Locals business, loud and clear, I think the — some of the things that you called out, Josh, and how to think about the impacts throughout the year. If we can just take those aside and look at the underlying business, I think the seasonality from the first quarter to second quarter has been a little bit different over the last couple of years. And I think if you look at consensus numbers, they’re looking for stronger 2Q versus 1Q seasonality. But if you kind of go back a couple of years, it was maybe more flat to down. So just maybe you can help us just think about before the impacts, what the underlying business sort of typically looks like from the first and second quarter, all else equal.

Josh Hirsberg: Yes. So Brandt, I think — I mean, you bring up a good point. I think kind of early coming out of 2020, there really was limited seasonality just given the strength of the consumer and the stimulus that was in the marketplace. And then as we move through time, and I don’t remember what year, it’s probably around 2023 or so, I would expect or believe that seasonality started to return to the business. And so I think Q2 can be or tends to be a little bit better than Q1 when you’re thinking about the Locals business. Obviously, the slowest part is Q3. And then Q4 really depends on how the holidays fall and all that in particular new years. But typically, that will be as strong, if not better than Q1. And I think just maybe taking your question to the next level, I think when we look at the business in Las Vegas, I think we feel despite the challenges that we’re facing with destination business or the disruption with Suncoast, we look through those to some extent.

Because the coast disruption, we could see the end, it’s coming. Destination is not always going to be a pressure point for us. So we kind of start to separate, like your question alluded to and look at the fundamental business for Las Vegas and Las Vegas Locals business. I think it continues to be a good business and is just temporarily affected by these themes.

Keith Smith: And important to note that the Suncoast renovation modernization projects has been going on for more than a year. Through the first year of that project, the management team did a great job managing through the disruption. It’s only in the last several months as we’ve moved into a more impactful area have we seen some real disruption.

David Strow: Our next question comes from Chad Beynon of Macquarie.

Chad Beynon: Really good results in the Midwest and South, your biggest business. I wanted to ask about the flow-through. So that was pretty strong, almost close to 50%. So good revenue growth and that led to the flow-through that we had seen in prior periods. Is this — if you’re generating the revenues that you put up in this quarter, can you continue to see flow through that high? Or is there anything else as we think about inflation on the OpEx side or expenses that would dampen that a little bit?

Josh Hirsberg: Yes. So I think the challenge for us last year was really driven by — we didn’t talk a lot about it at a time, but a lot about from benefits. And I think we’ve tried to address that coming into 2026. It’s still early. We think we have it under control, but we won’t know until we see participation and usage of the programs as we move throughout the year. So when we look at our expense structure last year and then look at it this year, we have reasonable — the biggest categories or were — just generally where you would expect some of the marketing is not changing. It’s as a percent of revenue is essentially the same, down a little bit, up a little bit, but nothing materially changing. Wages are going up, 2% to 2.5%.

But the bigger increases was around benefits last year. And so far this year, we really haven’t seen that level of increase. It’s early. And we’ve taken steps to mitigate it, and we’ll see how it goes. But this is kind of how the segment should perform generally.

Chad Beynon: Okay. And then on the downtown business, are there — can you talk about either forward bookings or what some of those longer-haul flight prices are looking like? I know you don’t have — you mentioned all-inclusive, but are there ways to kind of package in just more perks or reasons to pay a slightly higher flight price that could help in these times when flight prices are higher?

Keith Smith: Look, so what we’ve seen — first of all, the bulk of our — or a large part of our Hawaiian business comes through packages. It’s been a standard part of the kind of product downtown for decades. So they do come on packages. But we have seen recently, airline prices start to go up. Now through the first 3 weeks of April, Hawaiian business in the first quarter, it was stable. And the first couple of weeks of April remained stable. So we haven’t seen any impact. We are monitoring airfares coming out of Hawaii because we know that could have an impact on our customers. But to date, everything is stable. So we have obviously a 50-year history with our customers coming out of the Hawaiian Islands as well as local Hawaiians from California, and those who live here in Las Vegas. So we’ll continue to treat them right and do what we have to do to maintain their loyalty. I’m not sure I can answer the question any other way, Josh, any comments?

Josh Hirsberg: No. Keith, I think you covered it.

David Strow: Next question comes from Trey Bowers of Wells Fargo.

Raymond Bowers: A lot of what I would ask has already been asked. So I guess I’ll ask something kind of bigger picture. There’s lots of disruption right now between you guys and your peers in the Locals market. So once we kind of come out of that on the other side and we look out for the next few years, what would you guys deem what you would like to see as kind of a healthy level of Locals Vegas gaming revenue growth? And I guess I asked that on both a GGR and like a post-promotional level to think about continuing to add additional assets into the market as well.

Josh Hirsberg: Yes. So I think traditionally, we thought of kind of the Locals market. And if you look back over time, I think it’s grown at kind of 4% to 5%, maybe 3% to 5%, something like that level, a little bit higher than what we’ve seen in traditional regional riverboat markets or Midwest and South markets. So I think — but I do think that the — that coming out of COVID, the customer at least that we’re catering to, I can only speak from our perspective, we’re really focused on that core customer. It’s a much higher quality customer. And so there is the potential for kind of higher growth as we have invested more and upgraded our products. But I think that’s purely theoretical at this point. I would more — be more comfortable relying on kind of that 3% to 5% growth out of the Locals business and that’s what we would expect to occur.

Raymond Bowers: And would you say ’27 would be a good year to really look for that? Is that kind of a clearing event for the amount of disruption that’s happening in the market?

Josh Hirsberg: I think our disruption is really isolated. I think you’ll be able to see that. I think really what we need is destination business to come back, and that’s really it, because you’ve got a little bit of construction. For us, it’s more isolated as a single property. Maybe some of our peers have it more broad-based. And we’re kind of taking it 1 bite at a time. We’re not trying — we’re being thoughtful about trying not to have too many properties disrupted by our efforts to deploy capital into these markets. So I really think that, at least for us to hit those numbers, it’s more about having destination come back, more about maybe there’s a nuance with 1 property not being able to do it or whatever, but generally just getting into a more stable economic environment, largely similar to what you’re seeing in the Midwest and South.

You think about that demographic and that customers, that segment of our business it’s performing like we would expect it to perform. Now customers are staying close to home and not traveling. And so maybe that adjust their performance down the road. But I just think we need a clearing, kind of stable operating environment in Las Vegas. In our case, I don’t think it’s as much driven by our CapEx and disruption.

David Strow: Our next question comes from Jordan Bender of Citizens.

Jordan Bender: We haven’t seen a ton of M&A post COVID to kind of give us this evidence. But in a period where after where these properties have run much more efficient in general, when you look at M&A, are you finding it harder to underwrite synergies and deals with a lot of the costs stripped out of the businesses compared to kind of what you saw prior to 2020?

Keith Smith: I would say that post-COVID and as time has moved on, it’s probably more the expectation of the sellers than it is our ability to kind of underwrite synergies, and so the sellers now have a very high expectation of getting a part of those synergies as part of any sort of a purchase price even though we have to do all the work to achieve them and take the risk of actually achieving them. The seller wants a part of them. So that’s probably the bigger dynamic. It’s less about that these operations are more efficient today. So I guess that would be my answer to you.

Jordan Bender: Okay. And then Sam’s Town, understanding that it was a small property, kind of what was the rationale behind that sale? And as you look across more of your entire portfolio, are there assets in your portfolio that kind of fit similar criteria that you could look to divest?

Keith Smith: Are you referencing Sam’s Town Tunica or…

Jordan Bender: Yes, the sale of the [ Valleys ].

Keith Smith: Oh, Sam’s Town Shreveport property. Look, I think you can look at both Tunica and Shreveport and they’re in the same general category, which were — these are very small properties from a EBITDA production standpoint, no longer kind of critical to the success of the portfolio. There was a point in time when Sam’s Town Tunica being our very first property outside of Nevada and Shreveport being in the mix as we had our early growth spurt. But given the profile today, the competitive landscape, and just where we’re going as a company. They just didn’t make sense for us to continue. Are there more? I don’t think so. I think we’re pretty happy with the portfolio absent those 2 properties. But that’s how to think about that. There was a very small, not significant producers to the overall EBITDA of the company.

David Strow: Next question comes from James Hardiman of Citi.

James Hardiman: I was wondering if there’s any way to quantify the Suncoast disruption to the locals market in the first quarter and I guess for the year. I guess as I think about that $7 million shortfall versus a year ago in the Locals market, that was certainly bigger than where the Street was assuming. I didn’t know if you’ve called out the Suncoast disruption from a timing perspective. I didn’t know if that’s ultimately going to be bigger than you previously thought or just earlier than you previously thought, in which case maybe you get some of that back for the year. But ultimately, just trying to figure out what portion of that delta was just that piece versus the destination shortfall which you’ve outlined, I think, here pretty well, maybe $5 million to $6 million and then sort of the underlying Locals customer?

Josh Hirsberg: Yes. So I think if you look at the Locals business, it was off year-over-year by about $6.5 million. I would attribute probably $5 million to destination and about $1.5 million to Suncoast disruption, recognizing that it was — that wasn’t a full quarter. That was a partial quarter, and we’ll get a full quarter level of impact in Q2 and part of Q3 as well. The 1 thing I would say is that we’ve — as Keith alluded to earlier in his remarks and that we’ve commented on in the past is we have been very pleased with the management team at Suncoast in terms of how they’ve managed through the construction disruption to the point where we didn’t really even see it. The property was performing on par with prior year in many cases.

In some cases, it was exceeding prior year. And I think we basically — and you can look back at our comments and some of the things I’ve said as well, which was basically like we don’t they’re doing such a good job. Maybe we won’t see the impact of construction disruption. But ultimately, in the first quarter, and we said, we’ll let you know when we see it. And so we’re seeing it, and we’re letting you know. The — it was just became such a big bite in terms of the area of the casino that was being affected. So I would say we were pleased and kind of — they have performed well and raised our expectation that there wasn’t going to be any and then we’ve encountered it. And I think basically…

Keith Smith: We’ll continue to see this in Q2, as Josh said, and partway through Q3 until we get open. And just temporarily, it’s a combination once again of fewer slot devices on the floor as well as we just hit our kind of most popular area of the floor as part of the process. So yes.

James Hardiman: Got it. And then to that point, just a clarification. The $1.5 million impact in the first quarter, what’s the full quarter look like? Is that a $3 million impact if we’re thinking about both 2Q and 3Q? And maybe to just cut to the chase, I think the takeaway for a lot of people on this call is that whereas previously we were holding out hope that the Locals segment could ultimately peak out a little bit of growth this year, doesn’t sound like we should be assuming that anymore. And I know you talked a lot about the destination business, obviously, destination impacts both locals and downtown. But just to clarify, is it still possible, likely unlikely that locals can sort of eke out a little bit of growth based on that fourth quarter improvement?

Josh Hirsberg: Yes. I think we’ve given you enough information to be able to take your own projections and figure it out. Ultimately, when you think about — to your first part of your question, Suncoast is $1.5 million. So $2.5 million to $3 million for Q2 and $2.5 million or $2 million to $2.5million for Q3 is probably a reasonable expectation. But then Suncoast should start contributing to the results. And as I said earlier, you’ll get benefit from Cadence.

Keith Smith: Then some easier comparisons as we get through the second half of the year. So again, we don’t typically provide guidance. We’re getting pretty close to the line. So as Josh said, I think there’s enough information out there to figure it out from there.

David Strow: The last question comes from Steve Pizzella of Deutsche Bank.

Steven Pizzella: Just wanted to ask on Par-A-Dice post the approval to be in the expansion and modernization. Given the success you have had at Treasure Chest, how would you compare the build, the returns of this project compared to Treasure Chest?

Keith Smith: Yes, it’s probably not a — it’s not a fair comparison. First of all, we obviously are confident that we will get a return on the investment. Otherwise, we wouldn’t be proceeding with it. But Treasure Chest is a completely different market, the New Orleans market than it is East Peoria. East Peoria has a significant number of BGTs, which are legal in Illinois, 6 at every bar and tavern in the area. So a significant quantity of those that compete with our product. That isn’t the case in the New Orleans market. And so we’ll get a return. I would not be comparing it to Treasure Chest, but we will get a reasonable return on our investment.

Josh Hirsberg: Yes, you have to realize the Treasure Chest returns after tax, probably over 25%. So it was a good investment.

Steven Pizzella: Okay. And then I just want to make sure I heard you right on the cash taxes. Did you say a $45 million to $50 million refund for this year?

Josh Hirsberg: Not refund. It’s a timing difference, basically. We get accelerated depreciation that then just makes depreciation — you depreciate it quicker and then end up owing taxes on it 3 years from now instead of 5 years from now. So yes, so it’s about — the benefit of the accelerated depreciation yields about a $45 million to $50 million incremental tax benefit to us for this year.

David Strow: This concludes our question-and-answer session. I’d now like to turn over the call to Josh for closing remarks.

Josh Hirsberg: Thanks, Dave, and thanks to everyone joining the call today. Should you have any follow-up questions or need any clarifications, feel free to give us a call. Thank you.

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