Boyd Gaming Corp Q1 FY2020 Earnings Call

Good afternoon. And welcome to the Boyd Gaming First Quarter 2020 Conference Call. All participants will be in listen-only mode. The operator provided instructions. After today’s presentation, there will be an opportunity to ask questions. The operator provided instructions. Please note this event is being recorded. I would now like to turn the conference over to Josh Hirsberg, Executive Vice President and Chief Financial Officer. Please go ahead.

Thank you, Grant. Good afternoon, everyone. And welcome to our first quarter earnings conference call. First and most importantly, I hope each of you, your family and friends are all safe, doing well and staying healthy. 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 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 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, 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. 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. Before I turn the call over to Keith, I want to point out that the release we issued today reports our preliminary first quarter results, as our accounting team and external auditors are continuing to complete required impairment reviews. To the extent their work results in any impairment charges and associated tax implications, those will be reported in our 10-Q filing for the first quarter. It is important to note that continuing review for our potential impairments will not impact the operational results we are reporting today. So, with that, I would like now to turn the call over to Keith Smith. Keith?

Thanks, Josh. Good afternoon, everyone. I hope that everyone is staying safe during these extremely difficult times. It is times like these that do remind us what is truly important in life: our health, our families and our friends. The financial damage of COVID-19 can and will be repaired over time. The same cannot be said of lives lost to this tragedy. The human cost of COVID-19 has been terrible, but it could have been far worse. Over the last six weeks, the freezing of non-essential businesses across the country has helped many communities start flattening the curve, saving countless lives. While the mandated closure of our properties was a necessary part of the broader effort to stop COVID-19, the impact to our company, our team members and our communities has been significant. Before the crisis began in March, our company was on track to report strong first quarter results, opening the year with two consecutive months of solid growth across the country. Prior to the closures, our Las Vegas Locals segment was well on its way to posting its 20th straight quarter of EBITDAR growth with year-to-date revenue, EBITDAR and margin improvement across our Southern Nevada properties. Our Downtown Las Vegas business was poised for another record quarter and we saw strong performances across our Midwest and South properties with 13 of our 17 properties producing double-digit EBITDAR growth through the first two months of the year. During this period, all but one of our regional properties showed year-over-year growth in both revenue and EBITDAR. Then came March and the COVID-19 outbreak transformed our business and the communities we operate in. In response to state orders aimed at preventing the spread of COVID-19, Boyd Gaming closed every one of our 29 properties across the country over a six-day period from March 12th through March 18th. In the initial days following these closures, our first priority was providing support to our team members and our communities. Our properties donated tens of thousands of pounds of food in cities across the country and we contributed significant quantities of gloves and masks to first responders and hospitals. We also supported our team members across the country, providing a full month of pay and benefits while their properties were closed. The first closures were meant to be short-lived, but as the full extent of the crisis became apparent, stay-at-home orders were extended across the country. Today, six weeks after the closures began, all of our properties across the country remain closed to the public and reopening dates remain uncertain. The results we reported today show the significant impact of these closures on our business. In order to ensure that our company is able to navigate through this crisis and resume operations in a strong position, we have made some difficult but necessary decisions. Our executive and management teams have taken significant pay cuts and our Board of Directors agreed to suspend their compensation. We have halted all non-essential spending; all major capital projects have been suspended, as well as our quarterly dividend payments and share repurchase activities. But by far the most difficult decision was placing most of our team members on furlough status in mid-April. This was the hardest choice we have ever made as a company. We care deeply about the well-being of our team members and we postponed this decision as long as we could. But without any clear visibility on when we would be able to reopen our business, this was a decision we had to make. We recognize the impact that these furloughs have on our team members and we have tried to mitigate this impact by continuing to provide benefits coverage. All furloughed team members who are enrolled in our benefits program will remain covered through June 30th at no cost to the team member. And thanks to the approval of stimulus payments and enhanced unemployment benefits by Congress last month, our team members and our communities will receive much needed support to help them through these difficult times. As of today, we do not know when we will be permitted to resume operations and bring our team members back to work. It is likely that each of the 10 states where we operate will reopen on a different timeline, each with their own specific health and safety guidelines. We are currently working with state and local officials across the country to gain a better understanding of when we will be able to reopen and what reopening may look like. And while we do not have clear visibility regarding opening dates, based on the actions we have taken to reduce expenses and strengthen our cash reserves, as well as the work we have done in recent years to strengthen our balance sheet, we are confident we have sufficient liquidity to sustain our company until we can reopen our doors once again. Once the reopening process begins, protecting the health and safety of our team members and customers will be our utmost priority, and the safety protocols we put into place will meet or exceed the standards set forth by local, state and federal health officials. As we look ahead and prepare for a return to business, we believe we will benefit from a business model that is largely focused on local and regional visitation. Across our nationwide portfolio the majority of our business comes from local customers; we are not reliant on destination or convention business for success. As operations resume, we believe our local customer base will position us to lead the recovery of our industry. While these are certainly unprecedented times, we know that they will come to an end and we look forward to the start of the recovery. Before I turn the call over to Josh, I want to take a moment to recognize our team members who I know have been significantly impacted by this crisis. While our properties may be closed, you are still part of the Boyd team and we look forward to bringing you back to work as soon as we can. To those team members who have remained on the job throughout these closures, thank you for your hard work and keeping your property safe and secure. Your dedication and efforts will help us reopen quickly when the time comes. To our customers, we look forward to welcoming you back when it is safe to do so. I know that many of you will be looking for entertainment when stay-at-home orders finally end and we look forward to hosting you again as much as you look forward to visiting us. And finally, we want to recognize the first responders and medical personnel who have been on the frontlines of this fight. You have worked countless hours and put your health and well-being at risk to save lives and protect our communities during this pandemic. I know I speak for everyone at this company in thanking you for your incredible service; you are an inspiration to all of us. Thank you for your time. I will now turn the call over to Josh.

Thanks, Keith. Over the last several years, we have had a focused effort to strengthen our balance sheet through deleveraging and managing the company to achieve increased size, scale and geographic diversification. Thanks to these efforts, we have been able to respond to this crisis from a strong financial position. As we manage our business through these challenging times, we have taken several steps to ensure we are able to preserve the strength of our company throughout the closure period and during the reopening of our properties. Keith mentioned some of the important decisions we have made thus far. We have aggressively reduced expenses across the enterprise, including making the difficult decision to furlough most of our property and corporate team members in mid-April. Our executive leadership team and our remaining property and corporate management teams have often taken significant salary reductions and our Board has agreed to forego their compensation. In terms of capital expenditures, all major capital projects have been suspended and we have reduced our expected CapEx spend to approximately $45 million for the remaining nine months of the year. During the first quarter, prior to our closures, we purchased 693,000 shares for a total investment of about $11 million of our stock. Since those repurchases we have halted our capital return programs and in March suspended both our share repurchase program and our quarterly dividend. As a result of these combined efforts, we have significantly reduced our monthly cash requirements, positioning the company to successfully weather this crisis and be prepared for the resumption of our business. Our current monthly cash requirement is approximately $60 million per month. Our available cash at the end of March was $831 million, including $670 million we drew on our revolving credit facility in March. Based on our current cash requirements, our cash balances provide us sufficient resources during these challenging times. Now that we have reinforced our financial foundation, we have turned our focus on planning for reopening our business, reengaging our team members, and serving our customers and communities. We look forward to providing more details about our reopening plans in the weeks to come. Grant, that concludes our prepared remarks and we are now ready to take any questions from the participants.

The operator provided instructions. Our first question will come from Carlo Santarelli with Deutsche Bank. Please go ahead.

Hey, guys. Good afternoon and good evening. Thank you for the comments and your remarks. Acknowledging this is a fluid situation in terms of when things will open and how things will open, et cetera. To the best of your ability at this time and with respect to obviously to the fact that you just noted that you would kind of give us an outline in the next few weeks as you put plans in place: how do you guys foresee, maybe based on your conversations with regulators to date, what social distancing in indoor properties on a blanket perspective will look like? Obviously each state could be different and could look different. Maybe what some of the steps are that you guys will take to make your property as efficient as they can be with a likely hard-to-quantify demand curve, as we look out over the next few months and quarters?

Sure. Carlo, I will take a shot at that and see if I can address your question. I think each state will, as you said, handle it differently. But I think most of the conversations are centering around social distancing, limiting whether it’s a number of people in restaurants, whether it’s every other slot machine or every third slot machine, whether it’s the number of people at a 21 table or a craps table. I think you have to think of it as limited capacity or limited access into the building, social distancing at bars and anywhere else where people gather. And so we will have, I think initially, fewer people in the building, and I say initially because I think as time goes on and we see where this virus goes and what type of vaccines and other immunizations come forward, that will change. So we will open these properties, but they probably will not look like the long-term configuration; they will be restricted access or restricted capacity across the board. In terms of running an efficient business, I reflect back to the crisis in 2008. In 2008 and 2009, I think a lot of people forget that we didn’t have a real drop in demand; we had above 90% of the people in the building that we had prior to the crisis in 2008, they were spending about half as much money. So in 2008 and 2009 we had to re-engineer the business to deal with that. Today, we actually have a closed business and there’s nobody in it, so the ability to re-engineer it is much greater and much easier to do, and to start to figure out how do you run a business that maybe initially looks like 50% or 60% capacity with different staff, with different cleaning protocols, and how does all that work. So, we have worked through much of that, and we understand how we will kind of rebuild going forward when we are allowed to reopen, and it will look different. But I stress that we are, I think, all certainly hopeful that this isn’t a permanent situation as much as it is an evolving situation and that as the world gets our arms around this COVID-19 issue that we will return to normal whether that’s later this year or into next year.

That’s helpful, Keith. Thank you very much. And then, Josh, just one housekeeping item: you said $45 million of maintenance capital expenditures through year-end. I am assuming that number stays static regardless of when property is open, but also what was the 1Q spend?

The first quarter spend was about $48 million.

Great. Thank you very much.

Our next question will come from Joe Greff with JPMorgan. Please go ahead.

Good afternoon, guys. So following up on sort of 'how do you think about opening up' type of questions: in markets like Las Vegas Locals and Downtown Las Vegas where you guys have multiple properties, how are you thinking about the phasing of opening properties there? What types of properties do you open first, which later? And kind of what you said, Keith, about having maybe fewer people in the building and taking into account social distancing measures — does that suggest that because you have a hampering of revenue generating input that maybe it makes sense to open up multiple properties at once, or how are you thinking about it? I know it’s quite early at this juncture.

Right. So good question. As you think about our Las Vegas Local segment, each of the properties is in a very distinct part of town and has a very distinct customer base. I would see us opening most, if not all, of them as soon as we are allowed to open them because they largely have different customer bases. I don’t see a phasing there. Same thing out-of-state: they are all in different markets and so we would open those as we are allowed. Downtown, with the three properties Downtown dealing largely with the Hawaiian market and then the crowds on Fremont Street, I think that business is going to look different. We will have to wait and see how inbound tourism from Hawaii looks and we will have to see how the Fremont Street experience and how crowds on Fremont Street are allowed to develop. So that business is a little tougher to think through how it opens up.

Great and thank you very much, Keith. And then, Josh, you mentioned in your prepared comments that your monthly cash requirements are total about $60 million per month. I could do the math: $45 million divided by 9 for CapEx is $5 million. How do you allocate the other $55 million between property, corporate, cash interest and maybe other sources of cash use?

Yeah. So I guess about how to answer that: the operating expenses and corporate expense level when you combine all of those run probably around $20 million a month or so, maybe a little bit more than that. Rent is around $8.5 million to $9 million. Interest expense kind of is a little bit all over the place because of the timing associated with when we make payments, but it averages about $16 million to $17 million a month. And then the CapEx, and that’s really about it. I am doing this a little bit from memory, but those are generally the big picture numbers.

Excellent. That’s all from me. Thanks, guys.

Our next question will come from Steve Wieczynski with Stifel. Please go ahead.

Hey. Good afternoon, guys. So, Josh, obviously you gave the monthly cash burn number and we obviously appreciate that. But maybe a different way to ask that question is more around, have you guys thought about what your cost structure could look like as we get back into a normal operating environment, meaning some of the cuts that you have stripped out at this point so far — is there a way for us to understand how much of those costs could be permanent down the road?

Yeah, Steve. As I said earlier in response to Carlo, we are looking and have done a lot of work around re-engineering the business, knowing that when we reopen on day one it is simply not going to look like it did when we closed it down in March. I don’t think we are in a position to go into permanent cost reductions or exactly what that’s going to look like yet. But suffice to say, we have done a lot of work around that; we understand what that can look like and we will just have to see how we open and take it from there. Nothing really to report today.

Okay. Got you. And then can you help us think about the promotional environment once the assets eventually start to reopen? The question here is: how are you thinking about what it’s going to cost to get customers back in the door? And do you think you could have to enter some kind of promotional environment down the road in order to get customers back in your properties?

Well, I certainly hope not. I think as we ended and as we were shutting down the business, we generally had a fairly tamed promotional environment across the country and we certainly hope when we reopen that it remains the same. Having said that, I do believe there will be some level of pent-up demand once the stay-at-home orders are lifted and we are allowed to reopen and welcome customers back in the door. In some markets we may have more demand than we have capacity in the building or than we are allowed to have in the building. So it’s obviously hard to tell, but as a company we don’t plan on going out there and instituting large promotions simply to get people in the building. I think there will be good pent-up demand once we are able to reopen. People are at home; people need to get out. You see it across the country. People are looking for an escape and once again, I think, when we reopen, we will be part of that escape.

Okay. Great. Thanks, guys. Appreciate it.

Our next question will come from David Katz with Jefferies. Please go ahead.

Hi. Afternoon everyone. Thanks for taking my question and good to hear from you. I wanted to ask about the degree to which you might be opportunistic through all of this — and it may not be at the top of the list of thoughts — but could there be circumstances where there would be M&A opportunities that come about out of this and maybe that’s a bit later on. Have you given any thought to whether you would look to be opportunistic on the backend of this?

Okay. I think that’s not front of mind today. We are focused now on how we reopen. We are focused on health and safety and sanitation protocols and making sure we reopen with a very efficient business and produce as much EBITDA as we can. As always, if opportunities happen to present themselves, we will see where it goes, but that is not our focus right now. Our focus is on getting these businesses reopened, operating as efficiently as we can and maintaining the strength of the company that we have built over the last several years.

Got it. And if I can just follow up: with respect to when you think about the Vegas Valley in total and what you anticipate could be unevenness across the valley, and if we accept the notion that the Strip maybe ramps up more slowly than more localized properties, can the locals markets start to ramp without a productive Strip? How do those two function — how do you envision those rolling out as best as you can?

Well, roughly 20% of visitation coming into Las Vegas is international visitation, very little if any of that shows up in our buildings. So we don’t have to worry about that in terms of the type of visitation coming into our buildings. If you look back at 2008 and 2009, there was an expectation that the rebound on the Strip would fuel the rebound in the locals market and it really never did. We all kept waiting for the health of the Strip to trickle into the locals market and it took years for that to show up. I am not sure there’s a direct correlation like we thought there was back then. I do think the Las Vegas Locals market will be healthy. A large percentage of our business is retirees that live here; those retirees didn’t have a job before this and don’t have a job now, but they still have their income and so I think that segment will be stable. Because we will have reduced capacity there will be good demand for the product. It’s not going to look like it did when we closed in March, but we won’t be offering the same product that we closed with in March.

Got it. I appreciate that we are all answering questions with less complete sets of information than normal. Thanks for the answers.

Our next question will come from Harry Curtis with Instinet. Please go ahead.

Hi, Keith and Josh. I wanted to follow up on pace of openings or departmental openings. It would be useful to understand other than the casino floor what your most productive businesses are that you probably want to open up pretty early. Is it likely to be one or two restaurants? Are you going to the extent that you have salon or spa services and hotels? What sort of sense of urgency do you have to reopen those, and maybe I will start there?

I think you should think about reopening the locals property. Most of our customers are local and drive to us, so having restaurants and bars open will be important. Which restaurants — high-end versus mid-tier — will be capacity-driven and each property and operator will have different issues given what their buildings look like and the types of restaurants they have, but those will be important to service the customers. Hotels are profitable for us, but it will depend on demand and that is unknown. We have small hotels in most of our properties; we have a couple large hotels — 1,000 rooms at IP and 1,900 rooms at the Orleans. I don’t suspect we will be opening all those hotel rooms initially because I don’t think there will be that demand. We will take that on a case-by-case basis based on demand for the product.

Thank you. And Josh, I had a quick one for you: based on your cash burn, you have probably more liquidity than most of your peers even among larger cap names. I think it’s probably worth exploring what alternative sources of liquidity that you have if it’s needed — not that we hope it’s needed — other than the high-yield and equity markets. Maybe you could speak to the opportunity you have in the secured debt markets, and not that you need to look now but should the need arise?

Yeah. Harry, I think we do benefit from plenty of opportunity to explore different options to continue to strengthen our balance sheet and put more cash on the balance sheet if necessary. Our philosophy has been to maintain flexibility and optionality for the unknown and I think we are in a situation where optionality and flexibility make the company stronger. We have a supportive bank group and long-term investor relationships. We have relationships with both long-term equity and credit investors and we have seen interest come through with calls to consider alternatives. Without going into specifics, we have a lot of flexibility and optionality and we have room to make decisions without being pressured into something we might regret. We will use that flexibility during this period of uncertainty whether it’s with respect to reopenings or the duration or recurrence of the virus. That’s how I would think about it today.

All right. I will leave it at that and let’s hope it’s not needed. Thanks.

Our next question will come from Jared Shojaian with Wolfe Research. Please go ahead.

Hi. Good afternoon, everybody. Thanks for taking my question. Josh, I realize this is a tough question to answer, but I am going to hopefully get you to take a stab at it. Once casinos begin to reopen, can you just talk about what capacity level you think you need to be at in order to be cash flow neutral? And another way to ask that is: what percentage of your operating cost will be fixed once you open back up?

Yeah. So you are right, it’s a very hypothetical question. What we are working on now is fully understanding that the business is going to look a lot different in terms of all of the social distancing and the constraints we are put under to be responsible with respect to reopening. Also, the amenities we offer — whether it’s not offering the full amenities side, offering bonus credits, whether it’s a limited restaurant product or limited hotel product — will change. So the expense structure of the business is going to be very different than it was when fully operating prior to the virus. That could offset many of the extra costs we need to deploy for sanitizing buildings or other extra steps. I can’t say with confidence that day one we will be cash flow positive, but I do think it doesn't take much to be cash flow positive and you can bet we will be very focused on growing the business to get there as quickly as possible.

That’s helpful. Thank you. And then somewhat of a longer-term question on corporate expense: once you get back to 100% capacity at your casinos, do you think you need to go back to the $86 million level that you are guiding to this year on corporate expense, or do you think you have learned things through this crisis and ways to be more nimble on corporate costs going forward?

First, we are continuing to learn as a result of this crisis. As awful and terrible as it is, it gives us an opportunity to look at what is important for the business going forward, where our priorities need to be and where to put emphasis. I do think corporate expense will be less, but I don’t know how much less yet. We have multiple scenarios and as soon as we can get the business open and stabilized, we will be able to give some indication. We are not ready to do that now, but I do think corporate expense will be lower.

Okay. Thank you very much.

Our next question will come from Felicia Hendrix with Barclays. Please go ahead.

Hi. Thank you so much. Josh, just getting back to the liquidity questions, would you be willing to sell real estate if you got to that point?

I would say our philosophy on selling real estate is fairly well understood. That’s not our preference. One thing we have consistently said is that optionality is important to the company. Selling real estate would not be at the top of the list — it would be toward the bottom of the list. But we are nowhere near the situation where we have to consider something like that, to be clear.

Okay. Great. That’s helpful. I want to switch to an iGaming question, if that’s okay. In the first quarter, Valley Forge did have a strong first quarter with the iCasino up and running. Where do you think that business could eventually get to and would you expect more states to approve iGaming or maybe accelerate approval? I know a lot of people have talked about that to fill in the gaps from lost gaming revenues and to power the economics versus sports spending for you?

So I think you have seen a big increase in iGaming in Pennsylvania, both from our launch in late January to where it was in February to what it is in this post-COVID-19 environment with land-based casinos shut. The revenue run rate when the numbers come out will be about 60% higher today than it was when everything was open, and customer acquisitions are up significantly. I think you will see other states take a look at this. There were conversations happening prior to the shutdown and states facing budget deficits will likely take more serious looks, especially those that already adopted sports betting. iGaming is part of our digital strategy that we have been deploying over the last couple of years, starting with sports betting and now online casino gaming, and we expect to continue to participate as this rolls out across the country. The economics are different than sports betting — they are different — but it is a profitable business for us.

Okay. Thank you for that. And just one quick housekeeping: have you guys ever said or could you say now what percentage of your customer base is older than 60?

I don’t think we have disclosed that in the past.

We don’t have that readily available on this call, but it’s something we could compile and provide.

Okay. I mean you are obviously wondering for obvious reasons in terms of that class of folks being more vulnerable and just trying to extrapolate the kind of traffic that might be coming to the casinos in the future. Okay. Thank you.

Our next question will come from Barry Jonas with SunTrust. Please go ahead.

Thank you. There was a question on corporate cost, but other opportunities to permanently remove any operating costs once things go back to normal — is there an opportunity to accelerate any margin efficiency initiatives through all this?

I do think there are opportunities to restructure and re-engineer the business, more than we have done over the last several years. Knowing we will not be opening with a full complement of amenities and a full load of table games and slot machines, we have to be smart about how we open and be able to take cost out of the business. The teams have been hard at work since we shut down and I think we have made great progress in understanding how we can operate differently, at a lower cost structure and more efficiently going forward in this new world. We will have to wait and see when we open in terms of how successful we are and what it means to margins, but we are confident there can be some permanent shifts in the cost structure as we move forward.

Great. And then can you give a status on the Wilton Rancheria project? How quickly could that pick up again and what do you need to see?

I will defer to Josh for detail but basically nothing is happening at the moment because we need to arrange financing for the project. We had a GMP in place and bids and plans, and we were close to going to the market for financing right as the pandemic hit. There’s not much we can do until that market reopens, but it remains a very good project long-term for both us as manager and for the tribe.

Yes. Keith described it pretty well. We were getting closer to being able to go to the market for financing and were close to finalizing the GMP and some final details to start financing. This has all been put on hold for the time being. It remains an attractive project and we are interested in moving it forward once conditions allow.

Got it. And then last question: even if it’s qualitatively, what sort of things are embedded in that $45 million CapEx guidance for the remainder of the year?

It’s largely items that continue to break even though there’s nothing in the air. It’s basically an assumption of what’s needed to keep the buildings ready to go. No expansion or growth projects are included; it’s core base maintenance to have the buildings ready to go.

Yeah. I think mechanical, electrical and life-safety systems — all of which have lives and we are coming due for upgrades or replacements throughout the course of the year — those need to continue regardless of whether anybody is in the building. Elevators and other systems as well.

Understood. Thanks so much, guys.

Our next question will come from Thomas Allen with Morgan Stanley. Please go ahead.

Hey. Good afternoon. Just thinking specifically on the Midwest and the South region: are there certain properties or property types you expect to recover quicker and ones that you think will take longer? Thanks.

Well, there are certain properties that have more of a local market — for example, a property where the customer base is very close, like Treasure Chest, is a truly local market where people generally live within 10 or 15 minutes. Those will recover more quickly. On the other hand, properties with larger hotels that draw customers from farther away, like IP in Biloxi with a thousand rooms, or the Orleans with 1,900 rooms, those will probably recover a little slower because part of the success is filling those hotel rooms and attracting people from farther afield. So properties that are more drive-to, very local customer bases should recover quicker than destination-style properties with big hotels.

Helpful. Thanks, Keith. And on the Las Vegas Locals market: it was obviously significantly hit during the financial crisis more than most regional markets. Can you help compare and contrast how it is today?

I don’t think the comparison is directly analogous. In the prior recession, the Strip recovered more quickly than the locals business because it had a wider visitor pool to attract from and many amenities. That pattern of reliance is different today because people aren’t traveling in the same way. Our local and regional customers may be more comfortable initially returning. Non-gaming amenities will contribute less initially and we may not be allowed to offer many of them. People generally want to get back to a normal life and if we are prudent about how we open and how customers interact with our business, recovery can happen fairly quickly. Also, whereas in 2008 the issue was spending per customer, this time we are restarting from a place of no customers in the building and moving to limited customers, so the dynamics are different.

Okay, thank you.

We have time for one more question and it will come from Shaun Kelley with Bank of America. Please go ahead.

Hi. Good afternoon, everyone. Thank you for taking my question. Maybe just two quick ones. First, regarding reopenings: we understand clusters of states may work together to reopen given fluid movement across borders. Are there any particular markets or states you are watching that are particularly important for your portfolio? Do you think you will be among the first to go, or are you getting signals on what will be important to watch as reopenings begin?

We are having very good constructive dialogues with state leadership in each of the 10 states where we operate. A handful of those states are reopening other parts of their businesses and communities now, for example Mississippi and Ohio are opening some areas, but none of them have talked about opening casinos in the next couple of weeks. They are all talking about opening casinos at some point in the future, which is a good sign. We are in the dialogue; we are an important part of many of these economies — Nevada, Mississippi, Missouri, Kansas, Iowa, etc. I think they will open at their own pace. I am hopeful that many of them will be open by late May and more by early June. We are having good conversations; it is fluid, but late May or early June I am hopeful many of our properties will be open.

Great. Thanks for the clarity, Keith. And second question: it’s a bit specific — obviously we are focused on demand, but there is some supply growth in the downtown market slated for later this year and into the next. Can you give a quick update on how construction is proceeding on those projects? Are they postponed or what’s the activity level right now and any idea how those projects may be impacted?

Two projects come to mind Downtown. Downtown Grand, an addition of about 500 hotel rooms, was largely complete and was supposed to open in July — my guess is that construction continued because it was largely complete. Derek Stevens’ big project across from the cow on Fremont Street has topped off; they are continuing work and have made progress. I don’t know exact opening dates; some openings may be pushed into next year, but the projects are still moving forward. There are also other big projects in Las Vegas such as Resorts World and the convention center or Allegiant Stadium where activity continues. There is still economic activity across the valley and Downtown projects are progressing.

Great. Thanks a lot Keith. That’s all for me.

This concludes our question-and-answer session. I would like to turn the conference back over to Josh Hirsberg, Executive Vice President and Chief Financial Officer, for any closing remarks.

Thank you, Grant. And thank you everyone for joining the call today. Again from Boyd Gaming, we wish that you all remain healthy and stay safe. To the extent that you have more follow-up questions that you want to ask about the company or our results, please feel free to reach out to us. Thanks. Goodbye.

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