Good day and welcome to the Boyd Gaming Second Quarter 2020 Earnings Conference Call. All participants will be in listen-only mode. 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, sir.

Thank you, operator. Good afternoon, everyone, and welcome to our second quarter conference call. Joining me on the call this afternoon is Keith Smith, our President and Chief Executive Officer. Our comments today will include statements that are forward-looking statements within the Private Securities Litigation Reform Act. All forward-looking statements 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. So, with that, I would like now to turn the call over to Keith Smith. Keith?

Thanks, Josh. Good afternoon, everyone. Thanks for joining us today. A lot has changed for our company since our last call in April. It’s only 90 days ago that all of our properties across the country were closed, and we did not have good visibility as to when we could reopen. But here we are 90 days later; we have returned to business across the country. Over the course of six weeks starting in late May, we successfully and safely reopened 26 properties in 10 states. This is a real tribute to the skill and leadership of our management teams across the country. I'm grateful to them for all their hard work and dedication in getting our properties reopened in a safe manner. I also want to thank all of our team members who stuck with us through these very difficult times. When the time came to return to work, our team members were ready to answer the call. They worked hard to get our properties reopened in just a matter of days, dealing with many new safety and sanitation procedures, and they greeted our guests with as much enthusiasm and friendliness as ever. Thanks to the efforts of the entire Boyd team, reopening of our properties has been a remarkable success. Since reopening, every one of our properties except for the California property and Downtown Las Vegas have produced positive EBITDAR and free cash flow. And overall, we delivered gaming revenues within 11% of prior year levels for the month of June. We achieved these results while operating with significantly reduced casino capacities and limited amenities. As highlighted in our press release, our Midwest and South region achieved double-digit gains in EBITDAR and significant margin improvement even in the face of declining revenues. In Las Vegas, our Locals business was also able to grow EBITDAR and greatly enhance margins despite declining revenues. The performance of our Las Vegas Locals business was actually much stronger than the reported numbers show. Both the Orleans and Gold Coast generated a considerable amount of business from out-of-state visitors. And with tourism to Las Vegas remaining below pre-pandemic levels, it had an impact on the overall results of these two properties. When you factor out the softness in that segment of the business, our locals customers, including at the Orleans and Gold Coast, perform similar to our Midwest and South customers with strong visitation trends from our higher-worth customers and increased spend patterns across the valley. In Downtown Las Vegas, the business model that has sustained us for over 40 years is presenting a temporary challenge. With the ongoing pandemic, many of our Hawaiian customers are hesitant to fly, particularly with a mandatory quarantine required upon their return. Combined with reductions in overall tourism to Las Vegas, we are seeing lower traffic counts throughout the Downtown market. As a result, our Downtown business is not performing at the same level as our other two segments right now. While the California property was the only one of our 26 reopened properties that was not EBITDAR positive during the reopening period, thanks to stronger results at the Fremont, our overall downtown operations were still breakeven on an EBITDAR basis. Overall, we're off to a great start since reopening, thanks to a focused effort by the entire Boyd team and our ability to successfully adapt to the environment around us. And importantly, the solid trends we have seen across the country in May and June have continued into July. Beyond these positive financial trends, there are also encouraging dynamics within our customer base. While overall revenues are down, we are driving strong visitation among our high-value players and the average spend per visit is up significantly. In general, our core customers have not been deterred by social distancing measures, limited amenities, or the masking requirements. While we have seen a slight decrease in the percentage of customers from the 65-plus age segment as a result of the pandemic, there has been an increase in higher-worth customers from our younger customer segments. In addition, we are seeing healthy growth in repeat play since reopening. Based on the trends we have seen since our properties have reopened, including trends in July, we believe that these levels of gaming activity are sustainable. While we are successfully driving profitable revenues throughout our operations, we're also successfully controlling expenses, building upon the significant long-term progress we had made prior to the pandemic. Since reopening, we have realized substantial new efficiencies in both marketing programs and SG&A. We have also been selective with our amenities, staying focused on high-margin business to support higher-worth play. As a result of these expense reductions and new efficiencies, we are now operating at significantly higher margins than we were before. We understand this is a fluid environment, and that we will need to adapt as necessary, but we will not simply return to the old way of doing business. We have created a more efficient, highly focused, higher-margin business and we intend to keep that philosophy in place after this crisis is over. Just as we established a new model for our traditional business, we're also positioning ourselves for the interactive future of our industry. We do not see interactive gaming as a separate opportunity from our traditional business. Rather, we see it as another way to engage with our customers. By focusing on the convergence of all guest experiences—gaming and non-gaming, digital and traditional casinos—we are seeking to create a seamless, high-quality entertainment experience that stands out from the competition. The growth potential of this segment of the industry has been illustrated during the recent closures. Interactive gaming revenues have more than doubled in New Jersey so far this year, surpassing the $500 million mark year-to-date. And in Pennsylvania, they have approached $250 million over the same period. By some industry estimates, interactive gaming could become a $10 billion industry over the next five years. And thanks to our strategic partnership with FanDuel Group, we are confident in our ability to emerge as a leader in the industry. Today, our partnership with FanDuel includes retail sportsbooks at seven Boyd properties, mobile sports betting apps in Pennsylvania and Indiana, and the real-money online gaming site in Pennsylvania. But this partnership will continue to grow as new opportunities become available in states such as Illinois. FanDuel currently operates in 47 states, is the nation's leader in both mobile sports betting and online casino gaming, and generates significantly more revenues than its closest competitor. And considering FanDuel's dominant position in this space, our strong strategic partnership and our 5% equity stake in FanDuel, we are quite bullish on the value they have created with this partnership and future growth opportunities available to us. In addition to this growing partnership with FanDuel, we took another step forward in our iGaming strategy last week with the launch of Stardust, a social casino, a free-play online casino app. Stardust is the first of more iGaming ventures to come, as we establish Stardust as a leading interactive gaming brand. In closing, there's no question that these are the most challenging times we have ever faced, but we have made exceptional progress over the last three months due to the incredible efforts of our team. While uncertainty clearly persists in today's environment, we are encouraged by the initial response to the reopening of our properties across the country. Customers have been very receptive to the new operating environment at our properties and the new safety protocols, and we are seeing strong visitation and spend by our core customer segments. By reinventing how we do business in this new environment, we have established a new operating model capable of delivering higher margins. And through the expansion of our highly successful partnership with FanDuel Group and the launch of our Stardust brand and social casino, we're taking steps towards establishing our company as a market leader in interactive gaming. These are extraordinary times, but we've been through crisis before and each time we have emerged stronger and smarter. And I have no doubt we will do so again. Thank you. Now, I'll turn the call over to Josh. Josh?

Thanks, Keith. As evidenced by the margins that Keith spoke about in his remarks, we are executing a more focused and efficient operating strategy—one that reflects many of the philosophies we have been developing and implementing over the last several years. Our improved margins are the direct result of many factors, including the continuation of our strategy to focus on high-worth customers. These customers have been at the very core of our efforts over the last several years to drive profitable revenue. In addition, we have taken this opportunity to reduce a wide range of marketing expenses, including lower overall levels of reinvestment. We have been selective in the products and amenities that we offer, focusing only on high-margin components of our business and deliberately avoiding reopening amenities that dilute our profitability. We have repriced our products to reflect customer demand, limited amenities and operating restrictions. And finally, we have aggressively reduced SG&A, including corporate expense and other overhead-related items. As a reflection of these changes, corporate expense is expected to be approximately $60 million this year, about 70% of 2019 levels. Our discipline around capital spending will also remain in place. We expect to spend about $115 million of capital this year, including $48 million in the pre-COVID first quarter and $20 million of non-recurring items throughout the year. With the exception of the California hotel, every property has generated positive EBITDA as well as positive free cash flow since the reopening. And as of the first week of June, the company as a whole began generating positive free cash flow and continues to grow cash balances as a result of our operations. As of the end of the second quarter, we had approximately $1.3 billion of cash on our balance sheet, creating a net debt balance of $3.7 billion. In a completely closed scenario, our current liquidity provides 19 months of operating cushion in a zero revenue environment. Since our last call, we amended our credit agreement to waive covenants until June of 2021. And we issued $600 million of senior notes to provide additional incremental liquidity that is included in the $1.3 billion cash balance I just mentioned. We expect to use a portion of our cash to repay the balances currently outstanding under our credit facility. Discussions are currently underway with our bank group to extend our credit facility and Term Loan A maturities of September 2021. While the crisis and interrelated challenges are not behind us, we're off to a strong start, and we're focused as a company on ensuring we maintain discipline throughout our business, not allowing unnecessary costs and inefficient practices to creep back into our business. That concludes our remarks and we are now prepared to take any questions from participants on the call.

We will now begin the question-and-answer session. Our first question today will come from Joe Greff with JPMorgan. Please go ahead.

Good afternoon, everybody and congratulations on the results. When we look back at the second quarter, I was hoping you could parse out what EBITDAR looked like in June so we can have a sense of the run rate post-reopening. Specifically, I was hoping you could separate the first two months of the quarter, when you were largely closed and results were negative to some degree, and then what it was in the last month of the quarter so we can get a sense of the run rate after reopening.

Hey Joe, this is Josh. We're having a lot of—you're breaking up pretty significantly. Try again.

Okay. I was trying to get at the same thing.

That’s better.

Great. What I was trying to get at was if you could work out in the second quarter what EBITDAR was in the first two months of the quarter, because to some degree it was negative, and then what it was in the last month of the quarter to get a sense of the run rate post-reopening as well. And then along those lines, how should we think about the operating expense run rate?

So, Joe—operator, Joe's question isn't clear to us; we can't understand it fully, so probably best to move onto the next person. If someone else could hear Joe's question, maybe they could ask it on his behalf.

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

Hi there. Joe, I apologize. I think I heard what you said and it's part of my question too, so I'll help out here. I think what Joe is first trying to ask is if you could parse through the quarter and help us understand what June looked like versus the earlier months and the EBITDA, so we could calculate the OpEx per day. That leads to my question: Keith, you mentioned that the operating cost in Las Vegas Locals, if you make the adjustments for the Orleans and Gold Coast, is similar to the regional markets. Can you help us understand what the ongoing or current level of operating costs per day are so we can calculate appropriately going forward? And then, with this whole cost structure, does this really apply when you're fully up and running? I know you've pulled out a lot of costs from your business, but logically there are some costs that will come back. Maybe you can help us understand what's permanently gone versus what's likely to come back—for example, back-office costs versus other things—and what might return?

Sure. Felicia, this is Keith. A number of questions there—let me start at the end on the cost structure and then I'll let Josh take the first part of your question. We have carved a lot of costs out of the business; they're down significantly. Those cost reductions are across the board from corporate expense to marketing costs to labor costs, and the result partly comes from having fewer amenities open as well as just having a smaller footprint with generally about 50% of the casino open. We feel like, as I said in my prepared remarks, we have built a new structure for the business and while admittedly some costs will come back in over time as the business grows, we think largely that many of these costs will stay out of the business and that we won't have to bring them back in. Whether that be labor or not bringing back all the amenities—buffets are a great example. I'm finding it hard to envision how buffets come back into the picture going forward in the environment we're in today. So, we believe the structure we have is applicable going forward. One of the things you have to remember is that we're only operating at 50% capacity; that's generally all we need on weekdays. It's weekends where we feel the pinch a little bit where we can use more capacity and pick up more demand. But as we have focused on a higher-worth customer right now, the capacity that we have is suiting; it's just fine. Josh, I'll let you pick up the first part of Felicia's question.

Yeah. So, Felicia—and for Joe as well—the difficulty in trying to answer the question about a run rate of expenses is that we have to look at the specific period of time that we were open. We had increased expenses through most of April when we were still paying wages and had team members employed before moving into a furlough status. I don't have a simple June-only reopen period breakdown available on this call that would be fully comparable, because each month was very different. We did continue to have properties open throughout June, but it's hard to compare month to month. If either of you want to call separately, I'm glad to give you more color or help you work through it. It's just really difficult to compare individual months given how different every month really was. The other thing I'd say generally about sustainability is we're trying to build discipline and a thought process around starting from a clean sheet of paper coming out of being closed. As we incrementally add amenities or marketing, we have a much clearer picture of the actual impact on profitability and can make those decisions about whether to go to the next step or pull back. So, I think a lot of this is sustainable—a lot is philosophical around how we choose to run the business going forward—but it also depends on customer demand and competition as well.

Yeah. Thanks. And just in terms of trying to back into the number, could you do something like use the fully-shutdown period as a baseline and then look at the reopen period to back into the third month's run rate as a back-of-the-envelope approach?

I'd really have to sit back and think about it. Maybe you can call me after this and we can walk through it.

Okay. And just as a follow-up—you're not the first casino operator saying you're seeing more younger players, not only in numbers but spending more. What gives you confidence that's sustainable and how much of that might be driven by fiscal stimulus?

You're right. It is really hard to parse through why customers are walking through the door. The good news is they are coming in and participating. The good news is many of these younger customers are in higher-worth segments. We have their information and therefore we're able not just to track them, but to market to them going forward and bring them back to the building. We may be getting a larger share of their wallet today, but the point is they're coming into the building, they're participating with us, they're enjoying the product, and we'll be able to continue to talk to them going forward. So, I think it's very positive that we're seeing growth in the younger demographic. When the pandemic finally runs its course, the older customer will come back and then we'll end up with a more robust database of higher-worth customers. So, we feel really good about the direction of the business right now and the customer traffic and demographics we're seeing.

Just to add to Keith's comments, the decline in older customers has not been as dramatic as some might have thought; the decline exists, but it's not massive. We do have an opportunity to build increased loyalty from the younger demographic as they're coming through the door. We are seeing increased levels of that younger demographic in our tracked play. Some of this behavior is likely influenced by government stimulus and other unique circumstances, but the reality is the younger demographic is gaming and coming to participate in what we offer. The alternative entertainment options they might have had are less compelling right now, and that gives us an opportunity to build loyalty and a relationship with that customer. So, while some of this may be driven by the current circumstances, part of it is also that the younger demographic is participating more in gaming.

Great. Thank you. Appreciate your comments.

Sure.

Our next question will come from Carlo Santarelli with Deutsche Bank. Please go ahead.

Hey, guys. Thank you for taking my question. Keith, Josh—this may be similar to Joe's and Felicia's questions. If I look at the data you provided—the revenue contractions in the Midwest and South segments and in the Locals market—coupled with the margin growth you reported, it implies maybe about $64 million of EBITDA for the Midwest and $22 million in the Locals market for the period that was open. If I think about those results relative to the period where you were closed, that gives a sense of the burn rate during that period. I was getting to roughly a 41% margin for Midwest and South and 45% for Locals. Is that consistent?

I think that's about right, Carlo.

Okay. If I think about those margins, clearly the Locals market is perhaps advantaged because your competition is in a similar operating environment. But in the Midwest and South you may be competing with a broader array of competitors who might react differently. So my question is about sustainability of these margins—how much of that is predicated on how competitors react moving forward?

Clearly part of it is related to competitors, but it's not the majority. As Josh indicated, we took a fresh look at the business coming out of the closure and have rebuilt segments of the business. We're being deliberate about marketing programs and more efficient processes. As we did before the pandemic, we aren't chasing revenues or simply copying the competitor next door. We're paying attention and may react where necessary, but we're being very disciplined before layering programs back in. Our focus remains on higher-worth customers—it's not about volume right now, it's about quality.

One thing that may help is the difference between trying to change an operating business while it's running versus starting from a closed position and building back. Starting from being closed allowed us to eliminate some things more quickly that might have taken longer to change otherwise. How far we go back to where we were is yet to be determined; we'll be disciplined about it.

Great. And one follow-up on July—are you seeing any material difference between the Midwest and South or northern versus southern regions, or is performance pretty uniform?

Think of it less as North versus South and more that July trends have been similar to June. The business has been very stable since we reopened—June trends are similar to July across the board. Margins and visitation patterns have been relatively consistent region by region.

That's helpful, Keith. Thank you very much.

Sure.

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

Hey guys. Just to start, I believe there are still three properties that remain closed. What are your plans there? Have you been able to shift any play from those three to other properties?

There are no current plans to reopen those three properties. One of them is in Downtown Las Vegas, which is currently our most challenged segment due to restrictions affecting Hawaiian visitors and lower Las Vegas tourism overall. The other two are smaller properties and reopening them is a demand-based decision. Once demand picks up, both downtown and the two smaller properties would be candidates to reopen, but we don't have dates right now.

Okay. Great. It’s striking that trends in July remain strong despite some second waves of cases. Why hasn't that impacted you? And how should we think about reclosure risk?

Thus far, our customers have not overreacted to the safety and sanitation protocols we put in place. In many cases, they're very happy with the measures—wearing masks and increased sanitation. In many places we moved from no mask requirement to mask requirements, and we didn't see meaningful deviation in customer behavior. Customers seem accepting of the product and pleased with the safe, clean environment. From discussions with regulators around the country, the steps we've taken are above and beyond most, if not all, of our competitors. With respect to future closures, regulators and state officials are focused on enforcement of existing guidelines, not on wholesale closures. Conversations are about compliance and enforcement of mask and CDC requirements. So far, we are not seeing conversations about new closures; it's mostly enforcement of rules and compliance.

Great. And then just a quick one—did you receive any proceeds from the CARES Act?

We didn't take any loans. We did receive a partial benefit related to payroll costs for team members we kept on staff for a longer period, so there was some partial benefit that offset some expenses we incurred.

Got it. Thank you.

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

Can you hear me now?

Perfect.

Perfect, Joe. You can't ask the same question again, however.

A lot of my previous questions were answered through the call, so I won't waste anybody's time. Have you noticed any Las Vegas Strip operators trying to encroach on the Las Vegas Locals customer? If you anticipate that happening, how do you compete?

We really haven't seen that. In prior times you've seen big ads and offerings to attract locals, usually focused on dining and retail. We're not seeing those moves now, which is a positive from a competitive standpoint.

Great. And going back to the daily run-rate OpEx—sitting here at the end of July, looking at your portfolio and corporate, are your fixed or semi-fixed expenses the same or lower than the run rate at the end of the quarter? In other words, how much margin opportunity is left, or conversely, how much are you adding back given revenue recovery?

As you think about July, it's very consistent with June—margins are consistent. We haven't added meaningful costs back, and the business has been remarkably stable through late June and the first four weeks of July.

Great. That's perfect. Appreciate it.

Thanks, Joe.

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

Good afternoon, guys. If we go back to what you've seen so far in July, have you seen any of your competitors across the country become more promotional over the last couple of weeks?

Whether here in Las Vegas or across the country, the promotional environment remains rational. You may see a one-off here or there that adds some promotional activity, but for the most part it's stable and rational—nobody's broadly adding back layers of marketing.

Are there any markets you would call out as overly promotional right now?

No. Not at all.

Josh, a hypothetical question—if a year from now the world is back to normal, casinos full capacity, all non-gaming amenities fully operational, what's your view on potential EBITDA flow-through compared with pre-virus? Could flow-through be significantly higher than before?

I don't like hypotheticals in the middle of a pandemic, but here's how I would frame it. We have accomplished things that are sustainable in taking costs out of the business, and by nature of that our flow-through can be better going forward—depending on customer health and where revenue is coming from. Right now, the operating environment is unique: limited amenities, a greater share of slot play which is less labor-intensive, and customers who want to be there without aggressive marketing to attract them. If that quality of customer persists a year from now, flow-through could be significant. But there is uncertainty around which amenities are added back, the quality of customers over time, and how much further down in the database we need to market. We'll be disciplined and try to retain as much of the cost improvements as possible.

Okay. Thanks, Josh. Appreciate it. Sorry about the hypothetical.

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

Hi. Good afternoon, everyone. In the month of July, with three properties still closed, should we think companywide EBITDA could be higher year-over-year for the month? Is that how we should be thinking about July?

Higher than prior year? All I want to do is reiterate what Keith said: what we've seen in late May and June is continuing in July. If that leads to being ahead of prior year, so be it. But I don't want to project individual months; we're giving a framework—trends in customers, expenses and everything else are consistent with June.

We are not providing guidance on month-to-month comparisons. We've highlighted trends, but there are calendar and other factors that make those comparisons complex.

Okay. Thank you. Josh, you mentioned you turned free cash flow positive in early June. What's the plan for the cash if these trends continue? Are you hoarding cash, paying down debt, what's the priority given you have about 19 months of liquidity?

Once we have the extension of the credit agreement and Term Loan A maturities in place—expected in the next couple of weeks—we would use cash to pay down balances currently outstanding under the revolver. That will leave extra cash beyond that. Going forward, liquidity will be our availability under the revolver plus cash balances, and we'll manage liquidity based on what's happening in the world.

Okay. Thank you very much.

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

Thanks. Two clarifying questions. First, when you say business has continued into July, are you saying week by week it has been stable, or that the month of July overall is in line with June? Second, did you book CARES Act benefits in the second quarter, and should we take those out when thinking about forward numbers?

When we look at daily reports, performance looks consistent with what we saw in June and the month-to-date in July. It's not one specific weekend driving the pattern. On CARES Act benefits, we didn't take loans; we had partial benefits related to payroll during the period we carried staff. You'd have to consider incremental labor we carried in April that is no longer in the business—CARES Act benefits partially offset those labor costs. If anything, adjusting out the incremental labor would make results appear better.

Okay. Helpful. Thank you.

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

Afternoon, everyone. When we look at gaming floors today—which we haven't had much chance to visit—are you generally running every other slot machine turned off and table games separated with barriers? Are there any markets where that's not the case? Is this spacing the new normal?

Across our portfolio of 29 properties, generally we are at about 50% capacity. Generally it's every other slot machine. There are unique state- and property-specific issues, but we generally have barriers at table games that allow four at a blackjack table with social distancing instead of three, and similar spacing at craps tables. The easiest way to think about it is roughly 50% capacity on the casino floors. Whether that's the future of the business depends on how the pandemic evolves and how customers feel about being in larger groups a year from now; that's uncertain. Our focus now is running the business today and adapting as the environment evolves.

Fair enough. One follow-up: you've said the Strip is largely decoupled from Locals. Is that sustainable or ongoing?

You have to think about how the Strip's model is built. Historically, when the Strip markets to locals it's been more on F&B and non-gaming amenities rather than gaming. Right now there are very limited non-gaming amenities on the Strip. Unless there's a wholesale change in how the Strip markets gaming, I don't see locals gravitating to the Strip in big numbers.

Okay. I appreciate the detail. Thanks very much.

Our next question will come from Shaun Kelley with Bank of America. Please go ahead.

Hi. Just wanted to dig into the revenue side a bit. You're running down high-teens type revenue declines in regional markets. How much of that is due to capacity constraints versus reduced marketing? And is there a piece of unprofitable, heavily-discounted revenue that might not come back? How do you weigh those factors?

Those are all factors in revenue decline—capacity, marketing, customer disposable income and comfort with coming out. It's not really possible to parse each driver's exact contribution. Midweek we don't have capacity issues; it's a weekend phenomenon. We can't provide a precise breakdown of how much is attributable to each factor.

Without quantifying it, do you think there's a material piece of unprofitable revenue—customers coming on heavily discounted promotions—that is clearly gone and won't return as you remove marketing?

I don't know if it's material, but it's certainly part of the decline. The lowest end of the database has continued to shrink—more than higher-worth segments. Our highest-worth segment has grown, which is very positive. The lower-worth customer segment has declined the most, and that business has gone away and contributes to the revenue decline.

That's helpful. One last question on CapEx—you mentioned $115 million expected for the year, $48 million pre-COVID in Q1, and $20 million of non-recurring items. Can you help us get to an ongoing run rate for maintenance CapEx in a stabilized environment on an annual or quarterly basis?

The reason I gave the components was so people could estimate a core maintenance run rate if needed. If we had to be in a minimal maintenance environment, that would be in the $50 million to $70 million range. In a more typical environment with rooms and restaurants fully operational and more maintenance required, think more like $115 million to $120 million a year. We’ll evaluate over the next several months and update if needed, but roughly $120 million is a normalized run rate and $50 million to $70 million is a minimal run rate.

Perfect. Thank you very much.

We have time for one last question and that will come from John DeCree with Union Gaming. Please go ahead.

Hi, Keith. Hi, Josh. Josh, I'll build on the CapEx question and tie it to parts of the business that may have changed for the foreseeable future—buffets and potentially rooms not coming back fully. When you pick up CapEx spending again or think about maintenance budgets, what types of things are you spending on as the mix potentially shifts away from some restaurants and F&B? Where do the dollars go?

I don't think it's fundamentally different from today. If the business gets more use, buildings require more maintenance and CapEx. Otherwise, it's the similar mix of capital—maintenance and refresh. The allocation doesn't change materially other than due to usage and needs of the properties.

Fair enough. And on M&A—unusual market, some assets may be for sale. Does your new operating model change how you look at M&A, and are you active or looking at opportunities?

Given the environment and everything going on, it's hard to think about M&A and purchasing assets right now. Our focus today is running the business, continuing the momentum from the last several weeks, adapting as the situation evolves, and maintaining discipline so costs don't creep back in. That's our priority; we'll adapt over time and consider opportunities when the time is right.

Thanks, Keith. That makes sense. Appreciate it.

This concludes our question-and-answer session. I'd like to turn the conference back over to Josh Hirsberg for any closing remarks.

Thanks for all the good questions today. We've been able to provide some valuable insight into what's going on in our business, and we appreciate your time today. If you have any follow-up questions that you'd like to dig into, please feel free to reach out to the company. Thanks again, and everybody stay healthy.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect your lines at this time.