Boyd Gaming Corp Q1 FY2021 Earnings Call

Good day, and welcome to the Boyd Gaming First Quarter 2021 Conference Call. All participants will be in listen-only mode. After today’s presentation, there will be an opportunity to ask questions. 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, Matt. Good afternoon, everyone. And welcome to our first 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; we undertake no obligation to update or revise forward-looking statements. Actual results may differ materially from those projected in 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'll 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, 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 now like to turn the call over to Keith Smith. Keith?

Thanks, Josh, and good afternoon, everyone. Thank you for joining us. Our first quarter results reflect an exceptional performance by our company and our entire team as the momentum that began in the third quarter of last year continued throughout our business. On a company-wide basis, we achieved an all-time EBITDAR record of $292.6 million. While this is up considerably from the prior year, we also exceeded our first quarter 2019 performance by more than 30% and surpassed our previous record by over 20%. Company-wide margins for the quarter were 38.8%. This is nearly 1,200 basis points better than the first quarter of 2019 and 220 basis points higher than the previous record we set in the third quarter of 2020. We also achieved new EBITDAR records in each of our two largest operating segments. In the Las Vegas Locals segment EBITDAR exceeded our previous record by 11% and was up 22% over 2019. And when excluding The Orleans, which is heavily reliant on destination business, our same-store locals EBITDAR was up 46% from 2019 levels. Operating margins in our Las Vegas Locals segment were nearly 50% for the quarter, 360 basis points higher than the record we set just two quarters ago. In our Midwest and South region, EBITDAR grew nearly 40% over 2019 beating the previous record by almost 20%. Segment margins were nearly 40% this quarter and overall gaming revenues were up more than 2% from 2019 levels. Most important, this operating strength was broad-based as 15 of our 17 properties in this segment grew EBITDAR at a double-digit pace over their 2019 performance. Throughout the quarter, strengthening consumer confidence, limited entertainment options and our disciplined operating strategy all contributed to produce record results across our portfolio. Starting in January and February, business returned to the levels we saw in the third quarter. But it was March where we really benefited from improving trends. From February to March, daily rated play increased over 18% across all age and worth segments and was up nearly 25% in our 65 and up segment. As vaccinations continue to roll out, customers are clearly growing more comfortable with resuming their pre-pandemic activities including regular visits to our properties. We also experienced an impressive increase in unrated play, which grew more than 33% on a comparable basis from February to March, a reflection of strengthening consumer confidence across the country. This strong unrated play is providing us the opportunity to grow our database as we leverage our enhanced tools and capabilities to identify high-value unrated players on our gaming floors and then enroll them into our B Connected loyalty program. In the first quarter, new player sign-ups rose 35% over the fourth quarter. But beyond the sheer increase in quantity, it is the quality of these guests that is far more impressive. On an overall basis, the worth of our first quarter sign-ups was over 50% higher than the first quarter of 2019. Across the business, the strong trends of March are continuing into April. Rated guest counts are running well ahead of the third and fourth quarters of 2020 and unrated play remains at very high levels. While we are very encouraged by April's business trends as other entertainment options become increasingly available, we do expect unrated play levels will normalize. But even as unrated play normalizes, we are confident we can keep delivering strong performances as we pursue additional growth opportunities within our growing rated customer base. One of these opportunities is the 65-and-over segment. While we have seen strong growth from this demographic in the last several months, many are still on the sidelines. And as our country continues to make progress against the pandemic, we are confident that more of these guests will return to our properties as the year progresses. We also see opportunities to grow our destination business. While business from local guest segments remain strong, guest counts from destination travelers remain well below pre-pandemic levels. The softness has been particularly noteworthy at The Orleans, which draws a significant amount of business from destination travelers. This has also impacted our downtown Las Vegas segment, where visitation from our core Hawaiian customers has been severely restrained by travel restrictions. As COVID vaccinations continue to roll out and restrictions lift, we expect visitation among our rated destination customers to improve. We also expect to see improvements in midweek business as restrictions on conventions and meetings are eased and capacity limits are increased. Over the last several weeks, we've started to see the first indications that this destination business is returning. Hotel reservations have increased to their highest level in more than a year. And our booking window is rapidly improving. At the same time, we are experiencing growing demand for non-gaming amenities. We are encouraged by the opportunity for growth on the non-gaming side of the business and we'll take a thoughtful and disciplined approach in reintroducing these amenities. We remain committed to our disciplined operating strategy that has delivered outstanding results over the last several quarters. On top of organic growth opportunities within our portfolio, we continue to make progress with our strategic growth initiatives. For example, our interactive gaming presence and offerings continue to expand. After introducing Stardust as our social casino brand last year, we have now entered the world of real money online gaming, launching our first Stardust online casinos in Pennsylvania and New Jersey last week. We're also excited by the performance and the ongoing potential of our partnership with FanDuel Group. Together, we have established market-leading sports betting products in Pennsylvania, Illinois, Indiana, Iowa and Mississippi with significant future opportunities yet to come in states like Ohio, Louisiana, Missouri and Kansas. And with our recently announced partnership with the NFL, FanDuel's brand will be significantly enhanced through its association as one of the League's official sports wagering partners for this coming football season. FanDuel will have rights to include endgame and postgame highlights directly into its Sportsbook app further separating our partner from the competition in a crowded sports betting landscape. We are also making good progress on the Wilton Rancheria Tribe's Resort near Sacramento, California. Construction is now underway on the Sky River Casino and the project is set to go vertical next month. I had the pleasure of joining the Tribal council, community leaders and hundreds of tribal members for groundbreaking in early March. This was a true celebration by the entire Wilton community as they saw their vision of self-sufficiency finally come to life. We are proud to call the Wilton tribe our friends and are honored to be their partners in this project. We look forward to joining them and opening the doors with Sky River Casino in the second half of 2022. Before concluding, I wanted to take note of our company's ongoing progress on our corporate responsibility initiatives. Last week, we were honored to be recognized as the highest rated gaming company in Forbes Magazine's listing of America's Best Employers for diversity. We are a company that takes pride in promoting a welcoming culture for all team members. Being recognized by Forbes as a leader in workplace diversity is a great honor and reflects our ongoing efforts to create and support an environment where team members feel valued and appreciated. We also released our company's first comprehensive environmental, social and governance report last week. While our company has been committed to the principles of ESG for decades, this report is the first time we have compiled this information into a single document. Within this report, you will see detailed data on the progress we are making to conserve natural resources, reduce our carbon footprint, enhance the lives of our team members, build strong communities and promote good corporate governance. We are pleased with our performance against key ESG benchmarks to-date and look forward to sharing our continued progress with you in the future. In conclusion, this was truly an outstanding quarter for our company. Our business model is allowing us to make the most of an improving environment by delivering exceptional EBITDAR growth and margin improvement throughout the portfolio. Throughout the country, our property leaders are successfully maintaining higher margins and a disciplined operating philosophy as restrictions lift and visitation grows, and we continue to make significant progress on our strategic initiatives. Throughout all of this, our team members have kept their commitment to delivering personal and memorable service to our guests. That service is what makes Boyd Gaming stand out from the competition, and it will continue to draw customers back to our properties as the pandemic recovery continues. To every Boyd Gaming team member, thank you. Together we are achieving new heights as a company and it is an honor to be part of such an incredible team. Thank you for your time today. I'd now like to turn the call over to Josh. Josh?

Thanks Keith. Before I provide comments on the quarter, I want to point out that we have included our 2019 results and the financial tables accompanying today's release. We believe that 2019 is a more relevant comparison period to this year's results since our entire property portfolio was closed during the second half of March of last year. As Keith noted, this was an incredible quarter for our company. As you have seen from our results in the third and fourth quarter of last year, our operating strategy delivers on growing EBITDAR with enhanced margins. And this was also the case in January and February. January and February were very good months, and resembled the third quarter of last year in terms of business levels and margins. Compared to 2019, revenues were down nearly 11% during the February year-to-date period, while company-wide EBITDAR after corporate expense rose 34% and margins improved nearly 1,200 basis points. The month of March was even stronger. March benefited from our more efficient operating model, but was enhanced by stronger revenues particularly from higher-margin unrated play. In March revenues were down just 6% from 2019 levels, while company-wide EBITDAR margins after corporate expense approached 44%. During the first quarter, guest counts and spend both increased from the levels we saw in the third and fourth quarter of last year. We saw improvements across all age and worth segments including the 65-and-over age segments. In terms of gaming revenues, our Midwest and South segment rose more than 2% from 2019. While on the Las Vegas Locals segment, gaming revenues were up approximately 4% from 2019. In addition, we are experiencing increased demand for non-gaming amenities and growing demand for hotel capacity from both rated and unrated customers. Looking forward, we believe there is continued opportunity to grow our business among upper age segments of our database that have yet to fully return, as well as destination business. And we have the opportunity to build relationships with higher worth customers we have added to our database during the last several quarters. Our enhanced tools and capabilities combined with a more disciplined operating philosophy have allowed us to execute the business with much greater efficiency. This philosophy will continue to be our focus, as customer demand continues to return and we successfully and selectively restore additional amenities. We believe that our operating strategy is sustainable, and we are confident that we can maintain a significantly more efficient business model over the long run. Touching on a few additional points from the quarter. We generated over $200 million in cash during the quarter, resulting in approximately $730 million of cash on the balance sheet at quarter end. And we currently have no borrowings outstanding under our $1 billion revolving credit facility. As we continue to grow out of this pandemic, we believe it is most prudent to maintain our financial flexibility with respect to our cash balances and our free cash flow. In terms of our online business, we continue to be excited by the opportunity represented by sports and iGaming. As we previously indicated we expect to generate over $20 million in EBITDAR from online this year. And we are on track to achieve that result. We believe our strategic partnership and equity stake in FanDuel is the right approach, generating positive cash flow in a highly promotional capital-intensive and competitive landscape. And as more states legalize sports betting and FanDuel leads the way as one of the long-term winners in this space, our 5% equity stake will only continue to grow in value for our shareholders. We are also continuing to expand our online gaming presence under the Stardust brand that leverages our customer database and geographic distribution. We just launched the Stardust brand in New Jersey and Pennsylvania. And we continue to explore opportunities to expand and grow our capabilities and presence online, particularly in the iGaming space. So in summary, this was a great quarter. January and February were good. March was exceptional and that strength is continuing into April. Going forward, we will stay firmly committed to our operating strategy, driving increased EBITDAR, as a result of a continued operating discipline and a tight focus on the right customer. And finally, our strategic partnership with FanDuel and our online iGaming business will be growing components of our business. Matt, that concludes our remarks and we're now ready to take any questions.

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

Good afternoon, Keith. Good afternoon, Josh.

Hi, Joe.

Hi Joe.

First question I have for you is, I guess on the sustainability of margins particularly in the Las Vegas Locals segment — 50% EBITDAR margins is impressive to obviously say the least. As you think about further revenue recovery, do margins in that segment have to go down much further outside of mix associated with amenities like F&B? Internally are you estimating higher normalized margins versus what you estimated end of last year, given what you've experienced year-to-date? And just to get a sense of margins in March and April. In the locals market I'm presuming you're above 50% that you reported for the quarter. Where are you in March and April? Is it something like 55% to give us a sense? And then, I have a follow-up.

How can you have a follow-up from that question, Joe? I think the best way to think about margins from our perspective is that these margins are incredible. It is unrealistic to expect that, certainly for the long-term, we will be able to achieve those margins consistently. Equally unrealistic is that they are significantly below that. We said that expecting only 200 or 300 basis points of margin improvements is not realistic either. From the perspective of individual segments, those broad statements continue to apply. We do think that there's upside in our business from customers that haven't returned, both older customers and high-value customers that are destination oriented, and the meetings and conventions business as restrictions are alleviated. On the other side of the ledger, bringing back non-gaming amenities will put pressure on our margins overall, even though we expect to operate those differently and with higher margins and more efficiency than before. So it was a good quarter and a lot of things came together, in particular unrated play. We'll continue to be focused on running a highly efficient, more focused differentiated strategy than we ran pre-COVID.

To be clear, the margins achieved in Q1 should not be viewed as run rate margins. Cutting through what Josh said, we expect to do better than 2019 by a significant amount, but the Q1 margins should not be viewed as the long-term run rate. Everything came together — strong revenue growth and disciplined operating strategies. As we bring back more amenities and unrated play normalizes, you'll see margins dip below what we saw in Q1.

Great. That's helpful. And then my next question, which is not necessarily a multi-part one like the first: Do you think you're more likely to engage or grow through M&A given where your equity valuation is? Why not take advantage of your stock as a currency to complement same-store recovery with accretive inorganic growth?

Our approach to M&A hasn't changed over the last 12 months or the last six months. We look at it in a very disciplined way. Whatever we're looking at has to be strategic. There has to be a reason to own it. It has to be accretive. It has to be a high-quality asset and it has to move the needle for us from an EBITDAR standpoint. How we finance it, whether through equity or debt, is a different conversation than whether we should own it. We're keeping our eyes open, but we're not escalating our involvement in the M&A landscape just because of a higher stock price today.

Thank you very much.

Thanks, Joe.

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

Hey, guys. Good afternoon. Thank you for taking my questions. Josh, can you guys — obviously in the locals market in the quarter relative to 1Q 2019 margins up 1,600, 1,100 in the Midwest and South region. Back on the 3Q call, you talked about achieving half of that was a safe place to be, which would imply about 800 basis points of expansion in the locals market and 500–600 basis points in the Midwest and South segment. Could those feel a lot more comfortable now after seeing the model work through the 3Q and the 1Q strength, and some of the choppier periods in the 4Q where top-line performance wasn't as strong?

I think we definitely have confidence in our ability to execute on the strategy. As each quarter passes we get more comfortable with it and teams are buying into it. We did talk about capturing about half of those increases. From an analyst perspective, that's generally 600 to 650 basis points for the company overall relative to 2019 levels, and we feel comfortable with those levels. We continue to live through the pandemic and get more comfortable over time, but we do have challenges as customers come back and as we introduce non-gaming amenities. Each one of those is a challenge to manage. We feel the historical communications on margins are still valid and we don't believe we'll improve dramatically from those levels at this point.

Great. And then obviously, the first quarter as you guys articulated was kind of a tale of several different months. What do you think specifically about that 65-and-older customer, acknowledging the vaccination rates in that age group are very high, north of 70% or 80%. Do you see any change in behavior or visitation of that customer as we went through the first quarter and into April? Can you benchmark where that customer is today in terms of visitation relative to 2019 levels?

As we focus on that demographic, their frequency is up in the last several months and their spend is up over 2019 in the last several months. Pent-up demand is a major factor; many have not patronized us in a long time. How long that lasts is uncertain — whether it's a new level of play for all of 2021 or for a shorter period. We're seeing increasing numbers come back through March and into April, with better visitation and higher levels of play. It is a matter of when it normalizes.

Are you saying they were up relative to 2019 in March and April?

Yes.

Okay. And then lastly Josh, any color you could provide on CapEx plans for the balance of this year and whether or not there will be any incremental CapEx with some things you are bringing back online as demand presents itself for certain amenities?

We generally have thought about our CapEx plan for this year around $175 million and kept that back-end loaded rather than front-end loaded. Q1 CapEx was about $35 million. We will back-end load our CapEx and spend it as long as we continue to get comfortable with the pandemic roll-through. We don't expect to spend more than that based on what we know today, and that's consistent with what we said at the end of last year.

Great. Thank you, guys. Appreciate it.

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

Thanks so much. Can we spend a minute talking about BoydPay? I believe you're in a couple of properties; any early engagement or funding trends you can share and a timeline for the wider launch?

We are live in four states: Pennsylvania, Indiana, Ohio and Nevada. We expect to be fully deployed throughout the company in all of our states and properties over the next several quarters, definitely by the end of the year. It's going well; people are accessing and using it and the numbers are growing, but we don't have particular quantities to highlight right now.

Got it. And then, as you talk about more normalized run rates for margin versus the Q1 pace, is that tied to any competitive actions around promotions or amenities that you're currently seeing now?

Margins can be discussed in many ways. Revenues, because of our disciplined operating structure, have the biggest impact on whether margins rise or fall. The intensity of the competitive landscape in various jurisdictions will also have an impact. We've seen some smaller competitors revert to old playbooks; most of our markets haven't seen significant competitive escalation except from smaller players. Adding back non-gaming amenities will have some impact, but less significant than revenue trends and competitive landscape, which will have more significant impacts on future margin.

We also got a big boost from unrated play in March, particularly. That's highly profitable revenue since we're not marketing to that customer base. How that trend evolves is relevant to the margin story.

Great. Thanks so much and congrats on a great quarter.

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

Thanks. So, first quarter EBITDAR is typically about a quarter of the year. Can you talk about the gives and takes of being able to sustain this — you did $293 million of EBITDAR in the first quarter — can you sustain that absolute EBITDAR?

When you think about sustaining that level, consider what has happened so far. Q1 this year and Q3 last year were very strong quarters. There is ability to have a positive second quarter, but the rest of the year is difficult from a comp perspective. Q4 was softer due to demand in Q4 of last year. When you think about the remainder of 2021, and while we're not giving guidance, you can't simply multiply Q1 by four to project the year.

Okay. And then a broader topic: are you feeling a lack of labor and starting to see wage inflation?

Hiring team members is one of the bigger challenges today, whether here in Nevada or across the country. Unemployment has dropped in most locations where we operate to significantly below peak levels last year and in most markets is close to 2019 levels. Getting team members is difficult and it's a challenge, but we've been able to work our way through it. We are seeing limited wage inflation — pockets here and there — not anything that's going to significantly alter margin.

Thank you.

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

Hey Keith, hey Josh. Good afternoon. You talked a lot about unrated play being up; I think you said it was up 33% and that continued in April. Can you remind us what percent of your casino business came from unrated play pre-pandemic and what that looks like today? I'm trying to understand the potential impact if some of these non-rated customers gravitate elsewhere as other entertainment options return.

Historically, unrated play has been less than half our business. Today, it's probably grown to be about half the business; it's in that neighborhood.

Not all unrated play will leave when other entertainment options return. We typically track about 75% to 80% of our gaming revenues as rated. Of our rated play, unrated represents about 20% or so. That helps contextualize risk. We don't expect the entire unrated segment to be at risk because there's a core group of unrated customers that provide a base level of performance; March's strength was an extra boost.

Okay. Thanks. Second question: you mentioned demand for non-gaming amenities is picking up. How do you balance bringing those assets back online versus knowing potential margin dilution that could follow? Does the decision come down to the fear around potentially losing that customer to another competitor?

Adding back non-gaming amenities is not a pure margin conversation. It's a business demand conversation about providing the right level of product, service and amenities to our guests. As guest counts grow and guests seek more options and become more comfortable dining in restaurants, we will open more amenities. An amenity that looked and felt a certain way in 2019 may look and feel different today in terms of how we operate and open it. It is about supporting the customer and ensuring loyalty at the right reinvestment levels.

Okay, great. Thanks guys. Appreciate it.

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

Hi, afternoon everyone. I wanted to go back to the discussion about margins and amenities. When we think about the impact of amenities on margin, is it just a function of how those amenities operate within the enterprise, or is there some element of them being given away that is a drag? I'm looking for another layer of insight.

Part of it is understanding who your customer is and who you're providing benefits to within that amenity, whether a restaurant or a hotel. We've gotten better at making sure we understand who we want to provide comps or benefits to. Going forward, we combine better tools, analytics and capabilities to understand who we're marketing to and to do a higher-quality job. Philosophically, we have to decide who we want to market to and offer amenities to. It's a combination of better marketing tools and a clearer approach to whom to reinvest in. That became more visible as we reopened post-COVID.

Got it. And with respect to the rollout of Stardust, is that something to think about as earnings neutral, or is there some drag? How should we look at it over the next year to 18 months?

The rollout of Stardust in Pennsylvania and New Jersey is baked into the $20-plus million estimate we've provided for online EBITDAR for the year. It's included in what we've discussed.

We don't have any significant investment or expense associated with that offering beyond what's already contemplated.

Understood. Thanks. Congrats, great quarter.

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

Hi, good afternoon and thanks for all the color already. Josh or Keith, I wanted to dig a little deeper on the unrated play piece. How much of that do you estimate is coming from stimulus, tax refunds, timing of holidays and vacations? Given the surge, what's your view on the drivers?

It's a great question and one we spend a lot of time on. Given the fungible nature of money, we don't know with precision. Pent-up demand from older segments has been a major factor. Vaccinations and consumer confidence have played a role. There are still limited entertainment options, so as people become more comfortable coming out, we're one of the few entertainment options available. It's a combination of pent-up demand, vaccinations, consumer confidence and limited options. I don't have a more finite answer than that.

If we take a few buckets — remaining destination recovery, the over-65 demographic, and the surge in unrated play — are the first two more than enough to overcome the surge you saw in unrated play, or do they roughly balance out? Trying to think about the magnitude of what's left versus what you just saw.

We would like to quantify that, but the issue is the unknown around the unrated customer. We can quantify opportunities relative to 2019 for customers that haven't returned — their worth, age, destination or local status. What we can't quantify with certainty is to what degree those customers will come back. There are younger demographic customers that haven't returned but their worth is lower; there are high-worth unrated customers both local and destination that haven't returned. We have opportunities from meetings and conventions as restrictions lift, opportunities with the unrated customers we are signing up and learning about, and then the unknown of how much of the unrated play is at risk. That's the part that's difficult to quantify.

One last clarification on the over-65 piece: are you seeing the same customers spending more and coming more frequently, or is total dollars for the over-65 cohort now up in March and April versus 2019? In other words, is it the same customers with higher spend or more customers and higher total dollars?

Total dollars are up. We're seeing higher overall revenues in that segment with more spend and more customers in aggregate.

Yes, it's more customers and more spend in the aggregate for that age group.

Understood. Thank you very much.

Our next question will come from Chad Beynon with Macquarie. Please go ahead.

Hi, good afternoon. Josh, Keith, about a year ago you suspended the dividend, which was roughly $30 million a year, given the unknowns of COVID-19. Here we are a year later, you're setting records, you're talking about over $200 million of free cash flow. It doesn't seem like there are major near-term M&A or CapEx on the horizon. How are you thinking about the return of the dividend if there's nothing else to use the cash for?

It's premature to discuss returning the dividend today. We need to see how we continue to grow out of the pandemic and ensure nothing else happens. Financial flexibility is the key; that's why there's about $730 million of cash on the balance sheet and why we'll maintain flexibility absent a compelling use of liquidity. That remains our focus.

Okay. And on the growth side, there have been RFPs in places like Virginia, Chicago, and others, and now New York and potentially Texas are on radars. How are you thinking about throwing your hat in the ring for some of these ground-up larger investment opportunities if they come up in the near term?

Just because we're generating a lot of free cash flow doesn't mean we'll spend it all. We need confidence in opportunities and to believe we can generate the appropriate return. There are opportunities we've historically watched and remain interested in. There are others where it doesn't make sense for a company like ours because we don't like the market dynamics. It all comes back to whether we can generate an adequate return. If we don't see that, we won't pursue it. That's our fundamental thesis for all opportunities.

Thanks, Josh. Great quarter, guys.

Thank you.

Our next question will come from John DeCree with Union Gaming. Please go ahead.

Hi, Keith. Hi, Josh. The capacity restrictions in Nevada, Las Vegas are going to be lifted to 80% in a couple of days from 50%. What's your take on any implications that has for your business or the competitive landscape? And extrapolate that to any markets you operate in where eased capacity restrictions might benefit you.

We've proven in Q1 and last year that we don't necessarily need more capacity to generate strong results. Lifting capacity to 80% and ultimately 100% is incrementally positive. It helps on large busy weekends and has a psychological effect locally and across the U.S., signaling Las Vegas is reopened and will drive more people to town. Across the country, markets vary; as restrictions get lifted it can drive more customers depending on each market's dynamics. Lifting capacity restrictions is incrementally positive and signals a return toward normal.

Thanks, Keith, and congratulations on a great quarter.

Thank you.

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

Thanks, Matt, and thanks to everyone joining the call today. We appreciate all the questions. If anyone needs to follow-up with the company, please feel free to reach out. Thank you very much.

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