Earnings Call
Boyd Gaming Corp (BYD)
Earnings Call Transcript - BYD Q4 2022
Operator, Operator
Good afternoon. Thank you for joining Boyd Gaming's Fourth Quarter Conference Call today. My name is Tamia and I will be your moderator. All lines will be muted during the presentation, and there will be a chance for questions and answers at the end. It is now my pleasure to turn the call over to your host, Josh Hirsberg, Executive Vice President and Chief Financial Officer.
Josh Hirsberg, CFO
Thank you, operator. Good afternoon, everyone, and welcome to our fourth 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 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 and both of which are available at investors.boydgaming.com. We do not provide a reconciliation of forward-looking non-GAAP financial measures due to our inability to project special charges and certain expenses. Today's call is 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?
Keith Smith, CEO
Thanks Josh. Good afternoon, everyone. We began 2022 with the ambitious goal of surpassing 2021's record results. One year later, we have clearly met that challenge as we sustained the operating momentum we built throughout 2021. We once again delivered a record performance with revenues of $3.6 billion and EBITDAR of $1.4 billion in 2022. And the fourth quarter was a strong conclusion to the year with record company-wide revenues of $923 million and record EBITDAR of $360 million. We also maintained our operating efficiency with company-wide operating margins of 39% for both the fourth quarter and full year. Our results for 2022 are a tribute to our operating teams as we remain focused on growing revenues and building loyalty among our core customers while successfully managing expenses in the current environment. While 2022 was another record performance, we did experience headwinds at times during the year, and that continued in the fourth quarter with some year-over-year softness in our Midwest and South markets. However, the softness in our Midwest and South region was more than offset by strong performances from our two Nevada segments, growing contributions from online gaming and management fees from Sky River Casino. Now, let's review each segment in more detail. In Nevada, we finished the year with record fourth quarter EBITDAR performances in both our Las Vegas Locals and Downtown Las Vegas segments. Starting with the Locals segment, revenues and EBITDAR both grew 2% over last year's records with particularly strong gains in our non-gaming business, including hotel, food and beverage, and entertainment. Throughout our Locals properties, growth was strongest among out-of-town customers as we benefited from increased tourism across the Las Vegas Valley. Play from our core customers remained healthy, but was offset by declines in retail play. Our teams did an outstanding job during the quarter, delivering strong flow-through on revenue growth with margins in our Locals segment exceeding 52%. We are clearly benefiting from a strong Las Vegas economy as travel and tourism to Southern Nevada continues to increase. In 2022, nearly 39 million people visited Southern Nevada, up more than 20% from the prior year, and airport passenger counts reached all-time record levels. Convention business continued to recover as well with the convention and meeting attendance more than double 2021 levels. And with more than 5,000 hotel rooms in the Southern Nevada market, our company is well-positioned to capitalize on these growth trends. Looking ahead, 2023 has gotten off to a good start in our Locals segment with January performing well. We have seen no meaningful changes in our Locals business in the early part of 2023. Next, in Downtown Las Vegas, we delivered an impressive performance, beating last year's fourth quarter EBITDAR record by nearly 38%. We continue to see strong demand throughout the Downtown Las Vegas market as pedestrian traffic and guest counts increased throughout the area. At the same time, our core Hawaiian business has fully recovered and is now exceeding pre-pandemic levels. Additionally, our recent hotel remodel at the Fremont has put us in excellent position to meet growing demand, allowing us to drive further growth in hotel revenues while broadening the property's appeal. Going forward, we will also benefit from Fremont's recently opened casino expansion. This expansion includes incremental slot capacity, a FanDuel-branded sportsbook, and a new contemporary food hall. We are encouraged by the early results from this expansion with strong growth in both gaming and non-gaming volumes at the Fremont since the expansion was completed in mid-December. Next, in the Midwest and South, we achieved fourth quarter records for both revenue and EBITDAR, thanks to growing contributions from online gaming as well as management fees from Sky River. However, the performance of our land-based operations was below prior year for the quarter, partially due to December's severe winter weather and difficult year-over-year comparisons in our Louisiana and Mississippi properties. Additionally, we experienced some softness in play early in the fourth quarter, although these trends improved later in the quarter and into January. Turning to our online business. Our partnership with FanDuel, the nation's number one sports betting company, continues to deliver impressive results. We generated approximately $17 million in EBITDAR from online gaming during this quarter, up more than 100% over the prior year, as we benefited from a strong football season, new FanDuel operations in Louisiana and Kansas and contributions from Pala Interactive, which we acquired on November 1. During the quarter, we also earned $21 million in fees from our Sky River Casino management contract, including a one-time development fee of $5 million. This was Sky River's first full quarter of operation following its opening last August. With Sky River, our goal is to develop a compelling entertainment destination and build a thriving business that would allow the Wilton Rancheria Tribe to achieve their vision of self-sufficiency. Based on early results, we have clearly succeeded with extremely strong visitation levels at Sky River during its initial opening phase. We have long believed there was significant unmet demand in the market and with the high-quality entertainment experience we have created, we're starting to realize Sky River's compelling potential. As a result, we now expect Sky River will generate approximately $50 million in management fees for our company in 2023. So, in all, despite some challenges in our Midwest and South segment, our company achieved record fourth quarter and full year results. As we move into 2023, the economic uncertainty that persists today makes it difficult to predict where consumer trends are headed. However, we are cautiously optimistic about the trends we saw in January across all three segments of our business. Going forward, we believe there are additional opportunities to drive growth in our business through strategic reinvestments in our portfolio, the continued expansion of our online gaming business, and organic growth in our land-based operations. Starting with our existing portfolio, we see opportunities to drive long-term growth through selective reinvestments in our highest-performing properties and markets. A good example is the Fremont in Downtown Las Vegas, where, as mentioned earlier, we have completed work on a significant property expansion. In mid-December, we opened 10,000 square feet of new casino space, increasing Fremont's total slot count by nearly 15%, while creating a more comfortable gaming environment for our guests. We also added a FanDuel-branded Sportsbook in a food hall with six quick-serve restaurants. The expansion is already delivering growth in both gaming and non-gaming revenues at the Fremont. Going forward, this investment will further strengthen our appeal to customers throughout the downtown area, helping us build on our record results in the Downtown segment. And in Louisiana, work continues on our $100 million land-based facility at Treasure Chest Casino. Once complete in early 2024, this project will allow us to take full advantage of demand in the suburban New Orleans market by creating a more spacious single-level casino floor, expanding our non-gaming amenities and improving guest parking. In addition to these land-based growth investments, we expect our online business, including sports, casino, and social gaming, will continue to grow. We took an important step forward in our online growth strategy with our recent acquisition of Pala Interactive, which gives us the talent and technology to begin building our regional online casino business. While online casinos are now limited to just a few states, we believe in the long-term potential from iGaming. Owning and operating our own iGaming operation will allow us to leverage our nationwide portfolio and extensive customer database to create a profitable online casino business. We will start by transitioning our current Stardust Online Casinos in New Jersey and Pennsylvania to our platform over the next several months. We will also selectively target growth in the B2B segment of the business by adding new B2Bcustomers and enhancing our platform's products, features and capabilities, which will benefit both us and our partners. On the sports betting side, we remain fully committed to our successful and growing partnership with FanDuel. This partnership recently expanded into Ohio and Kansas with FanDuel launching mobile and retail sports betting in both states. Our partnership with FanDuel now includes all but one states in our Midwest and South region. In all, our online sports betting, casino and social operations generated approximately $40 million in EBITDAR in 2022. And we expect this business will continue to grow as FanDuel ramps up in Ohio and Kansas. Beyond these growing financial contributions, we will continue to benefit from our 5% equity stake in FanDuel, which grows increasingly valuable as they further strengthened their position as the nation's leading sports betting company. While the opportunities from online and land-based reinvestments are compelling, we also believe there is upside from continued organic growth in our existing operations, particularly in hotel revenues, meeting and convention business, and other non-gaming revenues. In all, our growth opportunities and our operating momentum are further strengthening our free cash flow, allowing us to return substantial capital to shareholders. We plan to continue targeting $100 million in share repurchases per quarter in 2023, supplemented by dividend payments while we pursue our ongoing growth investments. Before concluding, I wanted to note our company's continued progress on ESG initiatives as we recently received prominent national recognition for these efforts. Last month, Boyd Gaming received a five-star rating in Newsweek Magazine's Annual Listing of America's Greatest Workplaces for Diversity. We were the only gaming company to receive a perfect rating in this listing, which was compiled through anonymous employee surveys nationwide. Promoting diversity and inclusion is a central part of our company's culture, and we are honored to have our efforts recognized by Newsweek. So, in conclusion, this record quarter was yet another example of the resiliency and diversification of our portfolio and the strength of our operating model. We set new fourth quarter records for both revenue and EBITDAR, overcoming softness in our Midwest and South markets, with strong results in Nevada and contributions from new growth opportunities. We closed on the acquisition of Pala Interactive, further positioning ourselves for long-term growth in the online space. We maintained operating margins at some of the highest levels in our history as our operating teams continue to successfully manage through higher costs and economic uncertainty. And we continue to return significant capital to shareholders, while maintaining a strong balance sheet. In all, our record fourth quarter results concluded another strong year for our company as we set full year records for revenue and EBITDAR for the second year in a row. I would like to thank every member of the Boyd Gaming team for their hard work and their contributions to this outstanding performance. And while it is difficult to predict the future direction of the economy, we remain confident in our operating model and our team's proven ability to successfully manage the business. Thank you for your time. I'd now like to turn the call over to Josh.
Josh Hirsberg, CFO
Thanks, Keith. This was another very good quarter for our company with record results in the quarter and for the full year against very strong comparisons to 2021. Recall that our full year 2021 EBITDAR performance was more than 50% higher than our previous record set in 2019 and that we set quarterly EBITDAR records in every single quarter of 2021. And yet we have continued to improve on those baselines. In each of 2021 and 2022, EBITDAR approximated $1.4 billion and margins were approximately 40%. And in 2022, adjusted earnings per share exceeded $6 per share. We have accomplished this by focusing on growing our core customer base and managing our business very efficiently. Our operating teams continue to do an excellent job managing our expense structure and maintaining margins. As we look ahead to 2023, we continue to see opportunities to grow our business, supported by continued focus on our core customers, expansion in our non-gaming revenues and online operations and further contributions from the investments we are making in our existing portfolio. In addition, 2023 will benefit from a full year contribution from our management contract with Sky River, which opened in August 2022. Now let's discuss a few key items from the quarter. First, our capital return program remains a priority for our company. We repurchased nearly $107 million in stock during the quarter, representing 1.8 million shares at an average price of $58.22 per share. The actual share count at the end of the year was 102.8 million shares. For full year 2022, we repurchased 9.4 million shares at an average price of $57.48 per share, representing $542 million. We have approximately $240 million remaining under our current repurchase authorization. When combined with our ongoing dividend program, we returned nearly $600 million to our shareholders during 2022. We remain committed to $100 million per quarter in share repurchases, while continuing our dividend program. At the same time that we are returning capital to shareholders, we will continue to strategically invest in our land-based portfolio. Capital expenditures in 2022 were $270 million. We expect to spend approximately $350 million in 2023 for capital expenditures. This includes $250 million in maintenance capital and $100 million in growth capital primarily related to the Treasure Chest project. Turning to the balance sheet. We finished 2022 with total leverage of 2.4 times and lease-adjusted leverage of 2.8 times. Our target leverage remains 2.5 times traditional leverage. Our balance sheet remains very strong with significant flexibility as we have low leverage, no near-term maturities and ample capacity under our credit facility. So, in all, we finished the year in great shape as a company. Thanks to our operating model and growth initiatives, we continue to produce a substantial and diversified stream of free cash flow, allowing us to balance a robust capital return program with strategic investments in our portfolio. This formula has produced strong results for our shareholders, and we are confident it will continue to create considerable value over the long-term. This concludes our remarks, and we're now ready to take any questions.
Operator, Operator
We will now begin the Q&A session. Our first question comes from Chad Beynon with Macquarie. Your line is open.
Chad Beynon, Analyst
Hi, good afternoon. Thank you for taking my question. Josh, Keith, congratulations on a strong quarter. You mentioned some selective reinvestments and the expected returns for the second half of 2022 as well as what you're anticipating in 2023 and 2024. Given your leverage at 2.4 times, how are you considering the portfolio and other opportunities for selective reinvestment to achieve the double-digit returns you’re targeting? Thank you.
Keith Smith, CEO
Sure. Good question, Chad. So, we have kind of studied our portfolio, and we do have several other opportunities to continue to build into strong properties in what we think are growing markets or markets with strong demand. And so as future quarters go by, you'll hear us begin to talk about some of those projects. But we have studied it, and we do have additional opportunities. We just don't have anything to announce today. So, you can expect to hear more in the future. I think we've talked about it in the past, and these are smaller-type projects. These are sub-$100 million-type projects, many of them in the $40 million to $60 million range. So, we're not talking about projects that are hundreds of millions of dollars.
Chad Beynon, Analyst
Okay. Thanks. And then in the Locals market this year, you guys have averaged roughly about $120 million of EBITDA per quarter, obviously, some exceptional strength in the fourth quarter here. I wanted to focus on some of that destination business that's coming back. With CES in January, we've seen ADRs across the strip, and I'm guessing right off the strip, up somewhere between 30% and maybe even 60%. I'm guessing you guys are benefiting from more leans. But against that average of $120 million of EBITDA per quarter, can you help us think about what is still not on the table from mainly the convention business not back to where it was mainly for 2022 and where we should see it in 2023? Thanks.
Josh Hirsberg, CFO
Yes. So, Chad, this is Josh. I think that when we think about kind of the opportunities for our Locals business, it comes from benefiting from the broader recovery in the Las Vegas market overall. And it's really not only our Locals business that will benefit from that, but also our Downtown business. So, we look at kind of an emerging or recovering kind of strip meeting business to help drive our own meeting and convention business, our kind of occupancy in our hotel rooms as well, which we still have opportunities to do across the portfolio, again, not only in Las Vegas, but also that drives incremental visitation downtown. And we benefit from the investments we've been making with Fremont, but also the other properties that we have there as well. Keith, I don't know if there's anything you'd like to add to that.
Keith Smith, CEO
No, look, I think it's pretty well known that convention attendance was up significantly in 2022, more than double the prior year number, but still below 2019 levels. So as that continues to build, we can take advantage of it both at the Orleans and several other of our properties. And as Josh said, Downtown will also improve as overall visitation to Las Vegas and convention attendance improved. So, we definitely will be able to leverage off of that going forward.
Chad Beynon, Analyst
Thanks. Appreciate it.
Operator, Operator
Thank you. The next question comes from Joe Greff with JPMorgan. You may proceed.
Joe Greff, Analyst
Hey, guys. Congratulations on great results here. Keith, I'd love to just follow up with you a little bit, maybe dig deeper onto what you attribute the difference in consumer spend or consumer behavior between Downtown Las Vegas and the Las Vegas Locals market versus the softness you saw in parts of the 4Q in the Midwest and South. I know you called out the destination business is certainly strengthening in the Locals market maybe that was slow to come back. And maybe the regional customer has recovered earlier. Where are you seeing the softness? Is it sort of at the lower end of the database, the higher end of the database? I would just love to get how you're looking at your different subsector of gaming consumer.
Keith Smith, CEO
Sure. So look, I think we've talked about some of this through our prepared comments, but look, the Locals business, once again, we've performed exceptionally well with our out-of-time guests during the quarter as convention attendance and visitation in Las Vegas continued to grow. That also helped boost the Downtown results. And so both of those are doing well. We obviously have a strong Locals component in our Locals segment. We don't get very many locals to Downtown Las Vegas. And so it's a different type of a customer. You commented, and we've long believed, that in these types of situations where you go through dislocations like we've been through with COVID, that the Midwest and South markets do recover a little quicker, we believe those markets have been recovered longer than the Las Vegas market. And therefore, they're a little more mature. And so they're just maybe slowing down a bit before others. And outside of what the December weather that really impacted both the Midwest and the South, some difficult comps that we talked about in our southern properties. When you look at 2022 compared to 2021, there was just some softness. But as I said, the softness was early in the quarter. And in the second half of the quarter, it started to recover and continue to recover through the end of the quarter and into January. So, I don't think there's any real negative trend there. It was softness early in the quarter. Everyone gets started to come back. So, not much more I think I can say.
Joe Greff, Analyst
Great. And when you think about this year and maybe looking at your internal forecasts or budgets, would you expect that the Las Vegas Locals market would grow in excess of the core Midwest and South net regional, net revenue portfolio?
Josh Hirsberg, CFO
Hey Joe, this is Josh. I think we feel that coming into 2023, when we look at the consensus estimates, they are down about 7% or 8% from our results in 2022. We believe our business can perform generally in line with that or possibly a bit better. We see some opportunities for growth in both segments, but we're not ready to claim that there will be growth in the Las Vegas Locals market in 2023. If there is a decline, it will likely be slight compared to 2022. This reflects the uncertainty about consumer behavior as we progress through the year.
Chad Beynon, Analyst
Thank you.
Operator, Operator
Thank you. Our next question comes from Carlo Santarelli with Deutsche Bank. You may proceed.
Carlo Santarelli, Analyst
Thank you for taking my question. I wanted to revisit a point you mentioned earlier, Keith. Sky River fees were $21 million, which included a $5 million one-time adjustment for the management fee, while online fees totaled $17 million. If we exclude that and then consider half of the $17 million from the fourth quarter of 2020, does that suggest a decline in the double-digit EBITDA results for that segment in the fourth quarter? If that's correct, how would you assess the broader challenges you encountered early in the quarter compared to the run rate you were expecting for January?
Josh Hirsberg, CFO
Yes, Carlo, I'll give it a try. It's not entirely straightforward. What we were trying to convey is that we noticed some factors related to the weather and a stronger business performance we experienced in Mississippi and Louisiana last year, which made this year's comparison a bit more challenging. There were also some lingering issues that were more noticeable in the first half of the fourth quarter. We delved into our customer data to understand what was happening, and we observed a widespread weakness among our customers primarily in the first half of the quarter, something we hadn't really encountered before. The weakness was mainly concentrated in Mississippi and Louisiana for us. However, as we progressed through the quarter, we noticed a sequential improvement in the trend, and the final week of the year was particularly strong overall. Additionally, we observed contributions from out-of-town business that supported Las Vegas. As we entered January, the positive trends from late December persisted. We acknowledged the easier comparisons, which made it somewhat complex to evaluate the actual business performance. What we can affirm is that our customers have not drastically reduced their spending. The overall trends among our core customers regained momentum outside of Las Vegas and continued to strengthen throughout the quarter, which was encouraging. Although Las Vegas performed well, it initially had some customer weakness in October. It was a quarter filled with various dynamics, but ultimately it moved in the right direction for us. Reflecting on earlier quarters this year, we experienced a pattern of a weak month, followed by a decent month, and then a strong month, and we saw a similar pattern in the fourth quarter. We aren't in a position to extensively extrapolate from the customer trends we observed in the fourth quarter, but that's our perspective on it.
Carlo Santarelli, Analyst
Understood, that's helpful. Regarding the leverage and its connection to the buyback, Josh, when you assess your leverage using EBITDA in relation to your traditional net debt, you aim for a 2.5% range. This suggests that while there might be fluctuations, you could potentially execute a buyback similar to last year's, though perhaps not exactly the same. The $100 million quarterly figure you previously mentioned, does that goal remain in place, or do you plan to be more aggressive if any dislocations occur? Additionally, I noticed that there was $14 million to $15 million in interest payments, and I wanted to clarify if this is related to the development advances to the Tribe and whether you still anticipate cash payments later this year.
Keith Smith, CEO
So, Carlo, this is Keith. You're right on the share buybacks. We've been communicating for the majority of 2022 that we're targeting $100 million, and we remain targeting $100 million per quarter. If there are some dislocations, given the strength of our balance sheet, strength of our cash flows, then we have the opportunity to do more than that, but we want to continue to anchor people in right around $100 million a quarter. So, we'll just kind of see how that plays out, but we don't want to set an expectation that it will be higher than that. And then on top of that, the dividends that we talked about will continue. In terms of development advances, you're right, we will start to see those being repaid this year. Probably later this year, we'll start to see those repaid. The property has been off to a great start, and we'll see that cash flow into the company in the second half of the year.
Josh Hirsberg, CFO
Yes, Carlo, we had set aside all of our advances to the Tribe. Once the casino opened, the associated risk decreased. Part of that recovery was recognized as interest income, while the other portion was reflected in the preopening line. This was actually a cash payment made to us.
Carlo Santarelli, Analyst
Great. Thank you guys.
Operator, Operator
Thank you. The next question comes from Shaun Kelley with Bank of America. Your line is open.
Shaun Kelley, Analyst
Hi, good afternoon everyone. Thanks for taking my question. Josh or Keith, I wanted to ask about the transition of some online gaming features moving to your in-house platform. Keith, I believe you mentioned this would happen in the next couple of months. Can you discuss the economic implications of this transition? Will it allow you to consolidate a significant amount of additional EBITDA? How will this play out as you begin bringing those operations in-house?
Keith Smith, CEO
We expect the transition to take place within the next couple of months, likely around midyear. As we look at 2023 and early 2024, we anticipate no significant changes in the overall economics during this transition. There will be some adjustments as we begin to shift people to our platform, leading to slight variations as we start to grow. In the first year, we expect the economics to remain flat, but we believe that by consolidating and utilizing our databases more effectively, we can achieve higher growth over time, although not immediately. In the short term, we should see flat results.
Shaun Kelley, Analyst
Great. That’s my only question. Appreciate it everyone.
Operator, Operator
Thank you. Our next question comes from Steve Wieczynski with Stifel. Please proceed.
Steve Wieczynski, Analyst
Good afternoon, everyone. I want to revisit the recovery observed in the South and Midwest in January. I'm curious about whether you believe this recovery was genuine. Specifically, I'm trying to understand if the January recovery was influenced by the December anomaly, with trips that were delayed or canceled being rebooked in January due to weather, or if January experienced benefits from factors like higher social security payments. Could you provide more insight into that recovery in January?
Keith Smith, CEO
So, Steve, as you consider the first quarter and specifically January, the early part of the quarter has easier comparisons because, in January last year, we were just coming out of Omicron in Nevada. There were still some mask mandates, and people weren't fully back to normal. However, in the second half of the quarter, both in Nevada and across the MSR, the business picked up speed. So, to be fair, the comparisons for January are somewhat easier than for later in the quarter. What we wanted to communicate was to set aside year-over-year comparisons and focus on raw customer trends. We didn't observe any significant differences in customer performance when comparing the second half of Q4 to early January. So, rather than focusing on year-over-year comparisons, we think about it more sequentially.
Steve Wieczynski, Analyst
Okay. Understood. And then, Josh, just given the Midwest and the South segment now includes the online and management fees in there, just wondering if you could help us think about maybe how margins should trend in that segment moving forward. And if I could also ask two housekeeping questions, I'm not sure if you'll give it to us, Josh, but maybe help us with corporate expense and interest expense this year?
Josh Hirsberg, CFO
Sure. In terms of our margins, we have a significant amount of taxes that we handle for FanDuel due to our licensing in various jurisdictions. This amount appears as revenue but also shows up as an equal expense, which affects our margins considerably. Last year, our online margins were around 14%, and this year, considering the tax pass-through, six weeks of Pala (now Boyd Interactive), and the revenue share, the margins are approximately 18% to 20%. The extent to which the tax pass-through grows will continue to impact these margins. Regarding interest expense, our debt balances are expected to remain fairly stable, but this will depend on your EBITDA projections. Any changes in interest expenses will likely stem from your expectations regarding interest rates in 2023. If rates rise, our interest expense may increase slightly but should remain in line with the Q4 run rate. As for corporate expenses, we anticipate these will be about $1 million to $2 million higher than in 2022 for this year. Hopefully, that provides clarity.
Steve Wieczynski, Analyst
That’s perfect. Thank you guys. Appreciate it.
Operator, Operator
Thank you. The next question comes from Barry Jonas with Truist. You may proceed.
Barry Jonas, Analyst
Great. Thanks. Guys, can you maybe just talk broadly about the M&A environment out there? How do you think about sale leaseback as a form of financing given where the capital markets are today? Thanks.
Keith Smith, CEO
Regarding your question about sale leasebacks, we believe that due to our strong balance sheet and leverage, we do not currently need to consider other financing options. If we were to explore financing, we think there are likely more cost-effective, traditional options available that allow for pre-payment. Therefore, this is not something we are actively pursuing at the moment. As for M&A, I perceive it as relatively quiet, but perhaps Josh has more insights on the matter.
Josh Hirsberg, CFO
I tell you everything I hear, Keith.
Barry Jonas, Analyst
Okay, great. And just to follow-up. Nevada results, really strong. Just curious if you think you're gaining share or just benefiting from market strength. The way the state reports Locals sometimes doesn't match up exactly. So, curious if you think you're a share gainer or just sort of seeing tailwinds from the market.
Keith Smith, CEO
Yes, I think it is just the strength of the overall Las Vegas market. I don't think there's a lot of share changing going on. I think everybody has settled into where they're at. The promotional environment is relatively stable. Nothing has changed much there. So, it really is the strength of the overall Las Vegas market and increases in visitation and convention attendance.
Barry Jonas, Analyst
Great. Thanks so much.
Keith Smith, CEO
Welcome.
Operator, Operator
Thank you. Our next question comes from Dan Politzer with Wells Fargo. Your line is open.
Dan Politzer, Analyst
Hey, good afternoon everyone. Thanks for taking my questions. First one, Josh, I think you mentioned Louisiana and Mississippi. There's been some softness there. Has there been any change in the promotional environment? Or is that more just something going on with the customer?
Josh Hirsberg, CFO
Yes, I would say the promotional environment has remained stable nationwide, including in Las Vegas and our Midwest and South locations. Thus, it is not a contributing factor. We observed exceptional performance in the fourth quarter of last year at those locations, exceeding what we experienced in the previous quarters of a very strong 2021. It's primarily a comparison-related issue, which might be linked to events like weather or hurricanes, but quantifying that is quite challenging. Overall, we know that sequentially throughout 2021, the fourth quarter was particularly strong for part of those locations, which has made the current situation a bit more challenging for that region in the fourth quarter.
Dan Politzer, Analyst
Got it. And then I just wanted to clarify something. So, as I think about your growth levers for 2023, higher digital, Sky River, the Fremont return and then obviously kind of just the organic environment, and I think back to your comments on the actual overall EBITDAR for 2023 compared to 2022. I just want to clarify, so when you mentioned the Street was estimated down 7% or 8%, you thought that was overly conservative given the growth levers? Or am I misinterpreting something there?
Josh Hirsberg, CFO
I believe we are optimistic about our business trends compared to the Street's consensus, especially considering the uncertain environment. You have correctly pointed out the growth opportunities. We will benefit from a full year of Wilton and some expansion in our online presence. Additionally, we are seeing increased demand for our non-gaming amenities, such as hotels and food and beverage, which we expect to continue as we assess the overall trends in the gaming consumer market for 2023. We also see potential for growing our loyal customer base. Furthermore, we are making small investments that are yielding good returns, and we anticipate these will accumulate into something significant over time. However, we are cautious and not committing substantial capital in the current environment. Overall, we feel confident that our performance will remain at the level we've experienced over the past two years, which was the essence of our prepared remarks. I hope that clarifies our position.
Dan Politzer, Analyst
Yes, that makes sense. And just one last housekeeping one. I think in the past, you've talked about segmenting out Sky River and/or the digital stuff. Is that still a consideration?
Josh Hirsberg, CFO
Yes, we are most likely planning to do this in the first quarter. To provide some historical context, we plan to break out online, which will include our revenue share, our tax pass-through, and what will become Boyd Interactive with the acquisition of Pala. Additionally, we will have a managed and other segment, which will include Wilton and Lattner Entertainment.
Dan Politzer, Analyst
Great. Thanks so much.
Operator, Operator
Thank you. Our next question comes from David Katz with Jefferies. Your line is open.
David Katz, Analyst
Hi, afternoon gentlemen and thanks for taking my question. Apologize if you touched on this in the prepared remarks, but I want to make sure as we go through our model, we reflect all the positives you've discussed so far, but also just contemplate any points of competition that are out there. Did you mention any? Or could we just touch on those for a moment?
Keith Smith, CEO
So, we didn't talk about competition more broadly. I think as we look at where we're at today and into 2023, there are probably a couple of areas. So, I think it's well known that the Horseshoe opened in Lake Charles. It's a property that had been closed for a while as it was rebuilt from some hurricane damage, opened in December. That obviously competes with our Delta Downs property. It's been open a little less than 60 days. I haven't really seen much of an impact, but it is incremental competition. In Indiana at our Blue Chip property, the four winds is opening or expanding a property in South Bend called South Winds, adding a hotel in expanded some casino space last year. We do get some business out of South Bend, so a little bit of incremental competition there. And then the HHRs in Kentucky have been impacting Belterra Park just outside of Cincinnati, Ohio. They existed there in the second half of 2022. So, we'll see a little bit of additional impact there in early 2023 from those HHRs. Other than that, no other significant competition throughout the portfolio.
David Katz, Analyst
Okay, perfect. Thank you very much. Congrats on your quarter.
Keith Smith, CEO
Thank you.
Operator, Operator
Thank you. Our next question comes from Ben Chaiken with Credit Suisse. Please proceed.
Ben Chaiken, Analyst
Hey, how is it going? You mentioned earlier, basically taking back the Stardust brand in mid-2023, I think you said in a few months in vertically integrating. How do you think about the puts and takes of retaining those customers? So, I guess what I mean is, on one hand, they have the wallet established with you. Obviously, the brand loyalty. On the other hand, presumably, FanDuel, who's been running that, wants those customers as well. So, just like net-net, do you have any idea at retention or care to take a shot?
Keith Smith, CEO
No, I do not want to take a guess. We anticipate there will be some breakage. When I earlier inquired about the economics, I meant that in the first year, we should expect them to remain unchanged. The revenue share we had with FanDuel will be equivalent to what we will earn operating it entirely on our own due to breakage, the ramp-up period, and learning to manage the business, especially from a marketing standpoint. Hopefully, we will perform better, but we expect it to be relatively the same for the first year, after which we will begin to ramp up. FanDuel will still operate in those markets and will be a tough competitor, but we have a significant customer database in the markets we plan to enter, and I believe we will perform well.
Ben Chaiken, Analyst
That's helpful. I appreciate it. And then the management fee is going to $50 million in 2023 for Sky River. I believe the previous kind of bogey you guys have thrown out there was $30 million or $35 million, if I'm not mistaken. Did the property sequentially accelerate? Or what was the inflection that made you comfortable this is the right number?
Keith Smith, CEO
I think when we initially projected $25 million to $30 million or $30 million to $35 million, I don't recall our last specific guidance as it was early. The property opened in August, and we didn't have enough time to evaluate its performance. Now that we've had five months of data, we see how it has stabilized. The opening month was exceptionally strong, which contributed to the significant management fees in Q4. However, we now have a clearer picture of its performance in December and January. That's our current expectation.
Ben Chaiken, Analyst
Got it. Makes sense. Then the last point is just some housekeeping.
Keith Smith, CEO
They have been a little conservative lately.
Ben Chaiken, Analyst
Totally appreciate it. Thank you. And then just like the last housekeeping. Did you say that for full year 2022, digital was $40 million of EBITDA? Or did I mishear you?
Keith Smith, CEO
No, you heard correctly. So, including social, online, sports betting, the whole bit was $40 million.
Ben Chaiken, Analyst
Great. Thank you very much.
Keith Smith, CEO
Welcome.
Operator, Operator
Thank you. Our final question comes from John DeCree with CBRE Securities. Please proceed.
John DeCree, Analyst
Hi guys. Thanks for taking my question. You covered a lot of ground already, but maybe one more on the consumer patterns. I guess as you think about what you saw in the first half of fourth quarter and then exiting the fourth quarter, I know you called out some markets, Louisiana, Mississippi, but have you seen a change maybe across demographic cohorts or just infrequency of visit or spend per visit as the quarter progressed? I guess are those kind of trends pretty consistent with what you've seen? Or has there been a shift in the kind of pattern of consumer behavior?
Josh Hirsberg, CFO
John, this is Josh. In the first half of the quarter, we noted a general softness across all customer segments. However, this trend reversed in the second half, aligning more closely with the performance we observed in the preceding quarters leading up to Q4, which continued into January. This makes it challenging to assess the relevance of what occurred in the initial part of the quarter, as the business rebounded, with the last week of the year being particularly strong and that momentum carrying into January. We observed concentrated weakness in the southern portion of our portfolio, along with broader issues affecting the entire company in late October and November.
Keith Smith, CEO
Yes, I think if you're asking about kind of specific components of the database, whether it be by age or worth segment, no specific shifts that occurred that are worth calling out.
Josh Hirsberg, CFO
Right. It kind of picked back up where it left off when you kind of got into the second half of the quarter.
John DeCree, Analyst
Got it. Understood. I appreciate that. Maybe one easy follow-up, Josh. Should we expect Sky River gets going and then kind of your online gaming segment for the year? Any reason to expect any seasonality at Sky River? And then should we kind of assume that the online gaming seasonality would kind of mirror that of the big B2C players kind of in conjunction with the sports schedule?
Josh Hirsberg, CFO
Yes, I think that's right. I mean we have seasonality in the revenue share that we received today. So, in that $40 million that we received this year, there was definitely seasonality, with the fourth quarter being really strong, first quarter typically being strong, and then obviously, third quarter being fairly soft. I would expect, just given you're just getting a percentage of revenue kind of what's termed in net revenues for Wilton or Sky River, that there probably won't be much seasonality to that business, I wouldn't expect.
John DeCree, Analyst
Understood. That’s really helpful. Thanks guys and congratulations on the great quarter and year.
Josh Hirsberg, CFO
Thank you.
Operator, Operator
Thank you. That concludes the question-and-answer session. I will now pass it back over to Josh Hirsberg for closing.
Josh Hirsberg, CFO
Thanks, Tamia. I really appreciate it, and I appreciate everyone participating in the call today with all good questions. If there's any follow-up, please feel free to reach out to the company. Thank you.
Operator, Operator
This concludes the conference call. Thank you for your participation. You may now disconnect your lines.