Earnings Call Transcript - BYD Q1 2023

Operator, Operator

Hello, everyone. Thank you for joining today's Boyd Gaming First Quarter 2023 Conference Call. My name is Sierra, and I will be your moderator. I would now like to hand the call over to our host, Josh Hirsberg, CFO and Treasurer of Boyd Gaming. Please proceed.

Josh Hirsberg, CFO and Treasurer

Thank you, operator. Good afternoon, everyone, and welcome to our first quarter earnings conference call. Joining me on the call this afternoon is Keith Smith, our President and Chief Executive Officer. Our comments today will include statements that are forward-looking statements within the Private Securities Litigation Reform Act. All forward-looking statements in our comments are as of today's date, and we undertake no obligation to update or revise those forward-looking statements. Actual results may differ materially from those projected in any forward-looking statement. There are certain risks and uncertainties, including those disclosed in our filings with the SEC that may impact our results. During our call today, we will make reference to non-GAAP financial measures. For a complete reconciliation of historical non-GAAP to GAAP financial measures, please refer to our earnings press release and our Form 8-K furnished to the SEC today and both of which are available at investors.boydgaming.com. We do not provide a reconciliation of forward-looking non-GAAP financial measures due to our inability to project special charges and certain expenses. As noted in an 8-K filed earlier this month, we have recast our segments. Online is now reported separately. Additionally, the results that include Wilton's management fee and Lattner Entertainment, reported in a separate category Managed & Other. These results were previously reported as part of our Midwest & South segment. For additional information on these segments, including results recast for prior periods, please refer to the Form 8-K we filed on April 11. Today's call is being webcast live at boydgaming.com and will be available for replay in the Investor Relations section of our website shortly after the completion of this call. So with that, I would now like to turn the call over to Keith Smith. Keith?

Keith Smith, President and CEO

Thanks, Josh. Good afternoon, everyone. The first quarter of 2023 was an excellent start to the year for our company as we once again improved the strength of our business model and the resilience of our diversified portfolio. Our strategy of focusing on growing play from our core customers and managing our business efficiently has delivered consistently higher levels of performance and record results over the last several years. In the first quarter, it was no exception, led by record performances in our Las Vegas Locals and Downtown segments as well as substantial growth in both our online operations and our management fees from Sky River Casino. On a company-wide basis, revenues were $964 million, and EBITDA was more than $367 million, both first quarter records as operating margins exceeded 38%; and when excluding contributions from the Online and Managed segments, our margins were 40% again, consistent with our margins over the last several years. During the quarter, play from our core customers across the country rose more than 3% driven by increased spend per visit, while our core customer counts also continued to grow. Our strategic focus on growing core customer play is the foundation of our ongoing success. By tailoring our business to our core customers, we've built a more efficient and profitable business model that exhibits both strength and resilience in today's economic environment. Looking at segment results, our Las Vegas Locals business had another strong quarter, setting first quarter records for revenues, EBITDAR and operating margins. Revenues and EBITDAR each grew about 6% in the segment, while operating margins were 52.5%, once again exceeding 50%. Gaming revenue was up in the Locals segment as core play increased 3% over the prior year, while unrated play also grew slightly. Non-gaming revenue growth was even stronger, driven by demand from out-of-town guests. Hotel revenue in the segment rose nearly 30% year-over-year, driven by double-digit gains in both occupied rooms and cash run rates. These trends should continue as hotel reservations for the next 90 days at our locals properties are currently up more than 10% year-over-year. We also drove solid gains in our Food & Beverage business at our locals properties. Looking ahead, we expect to see continued benefits from the strong tourism trends across the Las Vegas Valley. Over the trailing 12 months, more than 40 million people visited Las Vegas, up 16% from the prior year, while traffic through the Las Vegas Airport reached 54.7 million passengers during that same timeframe, an all-time record. And Las Vegas visitors are spending much more during their trips, averaging over $1,100 per visit last year, an increase of nearly 35% over 2019 levels. This resulted in annual visitor spend of approximately $45 billion in Las Vegas last year, an all-time high. Convention business is strengthening as well, rising 86% over the trailing 12 months. The entire market is benefiting from a strong lineup of entertainment and sporting events across the city within the first quarter and throughout 2023. With more than 5,000 hotel rooms in the market, our locals properties are well positioned to capitalize on these strong visitation trends. These trends are also helping to drive solid growth at our Downtown Las Vegas business, which set first quarter records for EBITDAR and margins. Downtown revenues rose 14%, EBITDAR was up 22% and margins increased 240 basis points to 39.5%. With more people visiting Las Vegas, more of them are stopping by downtown during their stay. 58% of Las Vegas visitors reported they visited Downtown Las Vegas last year. This increased visitation is benefiting all three of our downtown properties. But our Downtown growth story goes well beyond increased tourism in the Fremont Street area. We continue to see strong trends in our core Hawaiian customer segments as well, with play from these customers up more than 10% year-over-year in our Downtown properties. And our recent investments at the Fremont, including our new food hall, expanded slot offering and FanDuel Sportsbook helped to drive significant revenue and EBITDAR gains, with rated play up 20% year-over-year at that property. Moving next to the Midwest & South, revenues were in line with the prior year, while EBITDAR declined due to softness in Louisiana and Mississippi. However, outside of these two states, customer trends remained very stable across our Midwest & South portfolio with core customer play for the entire segment increasing 2% for the quarter. Excluding our Louisiana and Mississippi properties, core play grew 6% and unrated play also grew at our other regional properties. And on a sequential basis, results for the first quarter improved over the fourth quarter in the Midwest & South region. Similar to the rest of our portfolio, we are seeing strong growth in non-gaming revenues across the Midwest & South. We have recently made investments to enhance our hotel and food and beverage offering across many of our regional properties, and these investments are now contributing to solid non-gaming revenue growth and core customer play. Next, our Online segment achieved first quarter EBITDAR of nearly $21 million. This is more than double our prior year results, driven by the launch of online gaming in Ohio and Kansas, continued growth in our existing markets and the addition of Boyd Interactive. Based on our strong start to the year and normal seasonality of the business, we estimate our online operations will generate approximately $50 million in EBITDAR in 2023. This projection includes a full year of contribution from FanDuel operations in Ohio and Kansas as well as results from Boyd Interactive. We will soon be expanding Boyd Interactive's portfolio. We expect to transition, subject to final regulatory approvals, our sturdiest online casinos in Pennsylvania and New Jersey to the Boyd Interactive platform during the month of May. Once complete, this transition will be an important step forward in the execution of our online gaming strategy. Beyond the increasing financial contributions of our online business, we've also created significant shareholder value as a result of our 5% equity stake in FanDuel Group which has established itself as the nation's clear leader in sports betting. Last, our Managed & Other business benefited from exceptional results at Sky River. Sky River continues to perform ahead of expectations generating $20 million in management fees for our company during the quarter. We are proud to have achieved such strong results for the Wilton Rancheria Tribe. And given this early success, the Tribe is now considering expanding the property which could further enhance its long-term potential. Sky River is off to an excellent start, and we look forward to continued success in the years ahead. So in all, our nationwide operations had a great start to the year. Looking ahead, while the economic outlook remains uncertain, we remain optimistic regarding the direction of our business. Our core customer continues to perform well, and we have not seen any meaningful change in consumer behavior. In addition, our results will benefit from online and management fees from Sky River as we expect both to maintain strong year-over-year growth. We also expect continued returns from the investments we are making in our properties nationwide. In addition to driving non-gaming revenue growth, these investments are essential to our strategy of attracting and retaining core customers. Looking further ahead, we anticipate solid returns from our $100 million expansion of Treasure Chest Casino, which is on track to open next spring. This project will significantly improve our product with a land-based single-level casino facility, an expanded array of non-gaming amenities, and much improved parking. When complete, we are confident this investment will allow us to improve the customer experience, attract new customers and enhance the overall efficiency of operations at this property. Thanks to our robust free cash flow, we are successfully balancing these investments in our portfolio with our capital return program. We plan to continue our $100 million per quarter share repurchase program supplemented by our dividend distributions. We are also creating value through our ESG initiatives as illustrated in our recently issued ESG report. In this year's report, we outlined our continued progress on many key initiatives, such as reducing carbon emissions, conserving water, diverting waste from landfills, promoting diversity and inclusion, and supporting our communities through contributions to non-profit organizations nationwide. Through these initiatives, we are fulfilling our long-standing commitment to ensure that our company is having a positive and lasting impact on our communities. In conclusion, this was another outstanding quarter for our company, further demonstrating the resilience of our business and the strength of an efficient operating model built on driving play from our core customers. As a result of our diversified portfolio, our record performances in Las Vegas Locals and Downtown Las Vegas and increased contributions from our online and managed operations, we delivered another quarter of record results. Our core customer remains strong. Our growth initiatives like Sky River, online and property investments are delivering strong results, and we are successfully maintaining strong efficiencies throughout our business, remaining financially disciplined in the allocation of our free cash flow. I'd like to thank every member of the Boyd team for their contributions to our success. Together, we are delivering great results for our shareholders, and it is a privilege to be part of this talented and dedicated team. Thank you for your time. I would now like to turn the call over to Josh.

Josh Hirsberg, CFO and Treasurer

Thanks, Keith. This was another successful quarter for our company, reflecting a focus on our core customer and a disciplined approach to operating our business. Revenues were $964 million, and EBITDAR after corporate expense was $367 million, both records. Margins were 38%. Excluding contributions from online and management fees, property level margins after corporate expense were 40%, consistent with the margins we have delivered over the last several years. This quarter's performance stands out for its consistency and for our ability to continue to deliver these results in today's economic environment. As I mentioned earlier, we are now reporting separately our online operations and our managed operations. The Online segment consists of contributions from our partnership with FanDuel and other market access agreements as well as results from Boyd Interactive, our online casino business. Revenues in this segment also include tax pass-through amounts that were $96 million in the first quarter and $42 million last year during the same period. Based on Keith's earlier comments, we expect this segment will generate about $50 million in EBITDAR this year compared to $40 million last year. This performance reflects the growth in our online business as well as a full year contribution from Boyd Interactive. The Managed & Other segment consists of fees generated by our management contract at Sky River Casino as well as contributions from Lattner Entertainment. On our last call, we indicated we expected to generate about $50 million in management fees during 2023 from Sky River. Given the ongoing success of this property, we now believe it is reasonable to expect that we will earn approximately $65 million to $70 million in management fees this year. In addition to the management fees that we earned during the first quarter, the Tribe began repaying the $113 million we advanced to the project. We received $17 million during the quarter. And based on current projections with ongoing quarterly payments, we expect the loan will be fully repaid by early 2024. As you can see from our results, both of these segments were important contributors during the quarter. For the full year, these segments are expected to generate approximately $130 million of EBITDAR in 2023 compared to approximately $80 million in 2022 on a comparable basis. During the first quarter, capital expenditures were $96 million, including spend for Fremont and Treasure Chest. For the full year, we expect total capital expenditures to be $350 million, including $250 million in maintenance capital and $100 million related to the Treasure Chest land-based project and completing the renovation of the Fremont. In terms of capital returns to shareholders, we repurchased $106 million in stock during the quarter, representing 1.7 million shares at an average price of $61.59 per share. The actual share count at the end of the quarter was 101.5 million shares, and we have approximately $133 million remaining under our current repurchase authorization. During the first quarter, we also announced an increase in our quarterly dividend to $0.16 per share, which was paid on April 15. Between our share repurchases and dividends, we have returned nearly $800 million to shareholders since late 2021, and we expect to surpass $1 billion in capital returns by the end of 2023. We have a very strong balance sheet with low leverage, no near-term debt maturities and ample borrowing capacity under our credit agreement. As of March 31, total leverage was 2.3x and lease-adjusted leverage was 2.7x. With robust free cash flow and a strong balance sheet, we have significant flexibility in today's uncertain economic environment to successfully balance our shareholder returns with capital investments. So in all, after another record first quarter, our company remains on very solid footing. Our diversified operations continue to generate substantial free cash flow, and combined with our strong balance sheet, allow us to execute our capital return program while reinvesting in our property portfolio. As a result, our company is in the strongest position in our history with a proven business model focused on our most loyal customers, robust and diversified free cash flow and a strong balance sheet. That concludes our remarks, and we are now ready to take any questions.

Operator, Operator

Our first question today comes from Steve Wieczynski with Stifel.

Steve Wieczynski, Analyst

So Josh, I want to ask about margins in the Midwest and the South segment, which were down about 200 basis points. And I'm just wondering if you could help us think about maybe what the drag was from Louisiana and Mississippi. And then maybe have you seen those markets improve at all? Or at the very least, are they weakening any more? Or are they pretty stable at this point?

Josh Hirsberg, CFO and Treasurer

Yes, Steve. I think we've started to see stability in those two markets. It's really hard for us to completely understand what's going on at this point. Some of it is related to one-time events that occurred in those markets, but it does seem to be more broadly based and economically impacted. If we look at margins, excluding Mississippi and Louisiana from the Midwest and South, the margins would be down about 90 to 100 basis points. Those two assets account for a little more than half of the decline in margins. Hopefully, that gives you some insight into the situation.

Steve Wieczynski, Analyst

Yes, it does. And then second question, Josh, if we think about your guide for the online segment, I think you said you're still kind of expecting that $50 million-ish for the year. Can you maybe just help us think about seasonality then through the last couple of quarters of the year, given the fact that you guys did $21 million in the first quarter, just trying to kind of square away how you guys think about the year, maybe some of the things we need to be watching for over the balance of the year?

Josh Hirsberg, CFO and Treasurer

In the first quarter, we generated $21 million, as mentioned, which included some one-time fees from our market access arrangements. This figure also reflects the first full quarter of Boyd Interactive, previously known as Pala. When considering the seasonality of our business, excluding Boyd Interactive, the first quarter is typically strong, as is the fourth quarter. Conversely, the second and third quarters usually see lighter performance due to standard seasonal trends. Looking back at last year's results in the second and third quarters, you can observe the performance variance compared to the stronger fourth quarter and this year's first quarter.

Keith Smith, President and CEO

Yes. Steve, this is Keith. It really is about the seasonality of the sports calendar. College, NFL, football is what drives most of it and then into Q1 as well as the college basketball playoffs in Q1. It gets pretty soft from a business standpoint in Q2 and Q3.

Operator, Operator

Our next question comes from Joe Greff with JPMorgan.

Joseph Greff, Analyst

I was hoping you could talk a little bit about what you're seeing on your land-based casino side of things in April, particularly, with maybe some of the lower tiers of your database as well as the 55-year-old plus segment?

Keith Smith, President and CEO

Yes. So Joe, this is Keith. I think the trends we're seeing in early April are not meaningfully different than what we saw in the first quarter. In the first quarter, we saw good growth from both our 45 and up customers as well as we call our core customers through the kind of high-end customers. As you get lower in the database, they didn't perform as well, but that is nothing new. It's been going on for several years, and so it's kind of an ongoing trend. Our focus is on the higher end of the database. So getting strong growth both across demographics, age categories as well as worth categories.

Operator, Operator

Our next question is from Carlo Santarelli with Deutsche Bank.

Carlo Santarelli, Analyst

I want to address Steve's question regarding the year-over-year performance in online for the rest of the year. From the second to the fourth quarter, in relation to the $50 million guidance from the first quarter, it seems you are suggesting a flat result for the period from April to December. Can I interpret this as being either A, conservative; or B, reflecting some spending related to acquiring Boyd Interactive customers that is offset by the growth you are experiencing with the FanDuel partnership and online sports betting?

Keith Smith, President and CEO

Yes, I'll try to help you, Carlo. I think we tend to be conservative, but we're not deliberately trying to be ultra conservative. A part of this is the shift between online and Boyd Interactive. Everything will fall under the same category, so it's important to group it all together when considering it. In terms of the revenue share component of our business, referring to the approximately $21 million we reported in Q1, if you exclude the one-time payments and Boyd Interactive, you have a run rate of around $17 million in revenue share for Q1. This reflects the seasonal aspect of the business. Boyd Interactive, previously known as Pala, generated about $5 million last year, and we're expecting it to reach around $5 million to $6 million this year as well. So if you look at it on a full-year basis, factoring in the $17 million from Q1, adjusting for seasonality, Q4 will likely be similar or slightly better than that, and then we consider Boyd Interactive on an annual basis. That's generally how we arrived at the numbers.

Carlo Santarelli, Analyst

Got it. That makes sense. And then, Josh, I'm 90% sure on this, but I just wanted to double check. When you were discussing Managed & Other and you were talking about the success at Wilton, your guide was $65 million to $70 million, then you mentioned the $130 million number. The plug there between that and online, is Lattner contributing somewhere in the $10 million to $15 million range? Is that the piece that was missing there?

Josh Hirsberg, CFO and Treasurer

Yes, that's exactly right, Carlo.

Carlo Santarelli, Analyst

Great. Okay. And then just lastly on the Locals market. Clearly, top line remains strong. You don't really have any sort of weather impacts in there. But it did look like there was an acceleration of revenue in the first quarter benchmarked against the first quarter of 2019 relative to what you saw in the second half of last year, is there anything noticeable that you guys are seeing in the locals market of late?

Josh Hirsberg, CFO and Treasurer

I wouldn't highlight anything specific. The main point I can share, Carlo, is that we believe the performance in the first quarter was generally better than in the fourth quarter when looking at it sequentially. We noticed improved results in the lower end and unrated segments of our database, along with overall strong performance, especially among our core customers and older demographics. This seems to be positively affecting both Las Vegas Locals and Downtown, which might explain the increase in performance you're observing.

Keith Smith, President and CEO

Carl, I think overall, Las Vegas had a very strong first quarter. When you think about convention business and hotel occupancy, absent the gaming numbers that came out today, convention business was extremely strong, grew from January to February into March, occupancies were high, rates were high. And so there was a lot of business in town in the first quarter of this year. So I think you probably saw a little bit stronger performance maybe in Q1 than you've seen in prior quarters.

Operator, Operator

Our next question is from Barry Jonas with Truist.

Barry Jonas, Analyst

Maybe just at a high level, you grew EBITDAR over 8% year-on-year in Q1. Consensus estimates right now, assuming EBITDAR is going to contract 3% this year or around there, is there anything you're seeing, expect to see which would warrant total EBITDAR to contract this year?

Josh Hirsberg, CFO and Treasurer

Yes, Barry. From our perspective, consumer trends remain very stable and consistent. As I mentioned in response to Carlo's question earlier, we experienced stronger business not only among our core customers and higher-end customers but also benefited from some of the lower-end market in January and February. So, Q1 was positive. However, we anticipate facing more challenging comparisons as we move into Q2. Looking ahead to the rest of the year, we find comfort in the stable customer trends we are observing, and we feel we have a bit of a safety net with the growth we are seeing in online and our Managed & Other segments, as discussed in our prepared remarks. This gives us some security in case our business weakens, which is a concern for many. That's the current outlook from our side.

Barry Jonas, Analyst

Got it. As a follow-up, can you provide more insight into the current labor environment across your segments? Do you anticipate that it will maintain margins at their current levels, or do you expect any additional impacts due to the labor situation?

Keith Smith, President and CEO

So Barry, this is Keith. I think from a margin standpoint, we're comfortable with where we are today. We're facing various cost pressures, including wage increases and rising utility costs, but our teams are managing them effectively. We're satisfied with the margins we're achieving in both the Las Vegas Locals region and the Downtown region of the Midwest and South, and we expect to maintain margins close to our current levels moving forward.

Operator, Operator

Our next question comes from Shaun Kelley with Bank of America.

Shaun Kelley, Analyst

Most of my questions have been answered, but I have two smaller ones. First, I'd like to revisit the online aspect. Josh, can you remind us about Ohio's significant gross gaming revenue number from your partner there? When you receive your fees, are they based on that growth? Is that part of the extra seasonality we might observe in that market?

Josh Hirsberg, CFO and Treasurer

Yes, I would say we had a very strong start in Ohio, and their performance is reflected in our revenue share.

Keith Smith, President and CEO

Yes, Shaun. It's important to note that when Ohio launched in January, not all competitors entered the market immediately. By the fourth quarter of this year, there will be increased competition for the gambling dollar. FanDuel had a strong start in the first quarter, but as we approach the fourth quarter, there will be more competition.

Shaun Kelley, Analyst

That's helpful. And then a small just sort of detailed one, but you gave some color on the consumer side, particularly in the regional markets. I think you mentioned the core customer spend both kind of with and without Louisiana and Mississippi. Just any quick highlight on kind of how unrated play looked in those markets? Was it down? And are you seeing that subside at all? Or is it relatively stable or healthy?

Keith Smith, President and CEO

I think if you look at unrated play here in the Las Vegas markets, the Locals market or the Downtown markets, we continue to see growth in unrated play. And if you exclude the South, we continue to see growth in kind of the other parts of our Midwest region. The South is down for the reasons we've talked about, frankly, over the last couple of calls.

Operator, Operator

Our next question comes from David Katz with Jefferies.

David Katz, Analyst

Josh, you commented earlier about roughly $5 million last year and $5 million to $6 million for Pala. Could we maybe get a bit more specific about what's in that 5 million or 6 million? Are there some extra costs? I'm trying to get a sense for where that could go and what the earnings power might be so that we could venture our own forecast as we get out a little further?

Josh Hirsberg, CFO and Treasurer

Yes, David. We have focused on historical performance as an indicator of this year's results because we consider this business to be realigning within the Boyd infrastructure. This year is crucial for them as they will be investing in their current operations, both in human resources and technology, to support growth in the areas for which we acquired them and to enable long-term development. Therefore, we believe it is too early to anticipate growth until those investments are made and we enter the new year or later.

Keith Smith, President and CEO

Yes, David, and this is not a zero-sum game. So as we take over the platforms in New Jersey and Pennsylvania, hopefully during the month of May, we'll stop receiving the fees we're receiving from FanDuel. And so simply to look at the growth in the Boyd Interactive business without some offsets from other fees you'd be overestimating or over forecasting the results. Overall, we've provided some level of guidance, which we generally don't do is provide guidance, and that's probably about as far as we're going to go.

David Katz, Analyst

Fair enough. And if I can just ask one other qualitative follow-up about it. It may be too early to tell, but the degree to which you're seeing some crossover cannibalization one way or the other from land-based to digital. Is there anything that's discussable there?

Keith Smith, President and CEO

No. I would just say that it's been our experience thus far as we've ventured into the online space, whether it be in the sports betting space or the online space that we haven't seen any cannibalization. We firmly believe that the two businesses are complementary and together that it makes for a much stronger product overall.

Operator, Operator

Our next question comes from Dan Politzer with Wells Fargo.

Daniel Politzer, Analyst

First, regarding the locals segment, revenues increased by about 6% year-over-year. In the press release, there was mention of double-digit growth in non-gaming. Can we assume that gaming revenues also saw an increase? Additionally, considering that non-gaming is becoming a larger part of the business mix, how should we view the margin structure in light of these changing dynamics?

Keith Smith, President and CEO

So I think it is fair to assume the gaming revenue did grow in the locals market during the quarter. We called out non-gaming because we saw significant upside or uptick in the business, both on the hotel side and the F&B side. I commented a little bit earlier about the growth in convention business during the first quarter. That helped drive both meeting and convention business at The Orleans where we have a bit of space as well as room rates throughout the Las Vegas portfolio. Look, it's still not a significant portion of the locals business. Our gaming revenue still is what drives our results here in Las Vegas. But in a quarter like this, it was up significantly, which is why we called it out. I don't think there's a significant margin shift as a result of the growth in that business. So I wouldn't adjust your model for that.

Josh Hirsberg, CFO and Treasurer

I don't think it's a significant contributor compared to our gaming revenues. Additionally, we have improved the overall margins in those segments as we progress through our business. Therefore, we do not expect it to dilute our margins.

Operator, Operator

Got it. And then for my follow-up, if Flutter is exploring a secondary listing in the U.S. It seems like, obviously, they are the clear market leader. How do you think about the timeframe or ways to maybe unlock the 5% stake that you have in FanDuel and would the listing possibly be a catalyst to get there?

Keith Smith, President and CEO

Look, I think we view our 5% ownership stake in FanDuel as a very strategic ownership stake. It's been a great partnership over the years. Obviously, it's created a very profitable online business for us. They're great partners, and it's great to have partnered up with the market leader. How and when we might monetize some of that or any of that is to be determined; we haven't really gone down that path. We're just focused on helping FanDuel to the extent we can continue to be a market leader, and that's about it.

Operator, Operator

Our next question comes from Brandt Montour with Barclays.

Brandt Montour, Analyst

Wondering if you'd be willing to give us your thoughts about the setup for Las Vegas citywide and convention calendar for the 2Q and 3Q. And if you look out and sort of see the activity and sort of think that can grow handily off of last year or if there's going to be any sort of pockets within that timeframe where there's actually less activity, how do you think about that?

Keith Smith, President and CEO

Yes. It's a good question. We're probably not the best suited to talk in detail about the convention business. We do have some space, as I said, at dealer lean and some limited space on other properties, but the convention business has rebounded once again, the numbers in January and February and March of this year grew significantly as each month went by. I think we had over 700,000 attendees in the month of March. And the calendar, I do know is strong. The exact number of groups and where there may be a pocket of weakness I couldn't articulate sitting here today. But the calendar is strong, and convention business is continuing to grow, I think is a great sign for the overall city and a great sign for our portfolio.

Brandt Montour, Analyst

That's very helpful. My second question is regarding Sky River and the Managed & Other segment. Should we consider that property fully ramped based on its performance in the fourth quarter and the first quarter? Also, are you anticipating any seasonality for that property throughout the year?

Keith Smith, President and CEO

Well, I think the best way I could answer it is that the business has been remarkably stable since we opened in August. We haven't seen many peaks or valleys, and so you could consider it fully ramped, and we gave some indication of what we thought the full year management fee might be, that $65 million to $70 million. So it should be a kind of an indication. We think it's a pretty stable business. It has proven to be in the first eight months that we've been open. We haven't been through a full year, so I don't think we fully understand seasonality of that business, but we haven't seen any true seasonality in the eight months it's been open.

Operator, Operator

Our next question comes from Edward Engel with ROTH.

Edward Engel, Analyst

Was there any notable improvement from the 65 plus or retiree segment since the start of the year? Or was performance from that demographic generally in line with the rest of the core business?

Keith Smith, President and CEO

I think that the 65-plus demographic performed extremely well, probably stronger than many other parts of the database. And so we're very pleased with how it performed.

Edward Engel, Analyst

Got it. Helpful. And then it looks like just across the portfolio, your kind of core OpEx increased a bit Q-over-Q. Is that a fair run rate to kind of think about the rest of the year? Or are you still seeing some inflationary impacts that might continue to drive that higher?

Keith Smith, President and CEO

I think if you're projecting out, that's probably a fair run rate to use. Most of the costs have settled in as we look at the business, it's probably a good number to use going forward.

Operator, Operator

Our next question comes from Joel Stauff with Susquehanna.

Joseph Stauff, Analyst

Good afternoon, Josh. Good afternoon, Keith. Keith, I wanted to get your thoughts on core customers. You mentioned that average spending increased by about 3%. I'm curious about the volume growth. Did this come from existing customers increasing their spending as they move up in the loyalty program, or was it mainly due to new customers joining the casino?

Keith Smith, President and CEO

So I think depending on which region, obviously, the numbers move around. But overall, we saw an increase in play from our core customers, and we saw increased counts of core customers. So total guest counts were up and play was up. So it's a combination of both.

Josh Hirsberg, CFO and Treasurer

Joe, just to add to that. First, I'm learning to speak English as well. So I think…

Joseph Stauff, Analyst

Let me know when you get there, Josh.

Josh Hirsberg, CFO and Treasurer

Yes. From our perspective, we continue to see strong health in our operations. Not only are customer counts increasing, but our overall database is also growing. Sign-ups are on the rise, and the value of those sign-ups has been improving since we reopened after COVID. This trend is consistent, and overall, the health of the database remains quite good.

Operator, Operator

That will conclude the question and answers for this call. So I will pass the conference back over to the management team for any closing remarks.

Josh Hirsberg, CFO and Treasurer

Thank you, Sierra, and thank you, everyone, for spending time with us today. And if you have additional questions or follow-up, please feel free to reach out to the company. Thank you very much.

Operator, Operator

That concludes the Boyd Gaming First Quarter 2023 Conference Call. Thank you all for your participation. You may now disconnect.