Boyd Gaming Corporation (BYD) Q1 2012 Earnings Report, Transcript and Summary

Good afternoon, and welcome to the Boyd Gaming First Quarter 2012 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. And I'll now turn the conference over to Mr. Josh Hirsberg. Please go ahead.

Thank you very much, operator. Good morning, everyone, and welcome to our first quarter earnings conference call. Joining me on the call this morning are Keith Smith, our President and Chief Executive Officer; and Paul Chakmak, our Executive Vice President and Chief Operating Officer. Our comments today will include statements relating to our estimated future results, including, among others, guidance for the second quarter, the financial outlook for the company, our expansion and development projects and other market, business and property trends 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 whether as a result of new information, future events or otherwise. Actual results may differ materially from those projected in any forward-looking statements as a result of certain risks and uncertainties, including, but not limited to, those noted in our earnings release, our periodic reports and our other filings with the SEC. 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 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. Finally, today's conference call is also being webcast live and will be available for replay on the Investor Relations section of our website, boydgaming.com, shortly following the completion of this call. I'd now like to turn the call over to Keith Smith, our President and CEO. Keith?

Thanks, Josh. Good morning, everyone. Thank you for joining us for our first quarter earnings call. I'm pleased to report that the positive trends we have been experiencing in previous quarters continued in the first quarter. Our business clearly continues to move in the right direction, and we expect this momentum to continue for the remainder of the year. Our strong performance and continued confidence is rooted in 3 factors: first, the economic fundamentals supporting our business are strengthening, and we anticipate this trend will continue; second, our strategy of having a geographically diverse collection of properties is allowing us to capitalize on the strengthening conditions in our Midwest and South region; and third, our focus on driving profitable revenue, along with growing EBITDA, will help us deleverage the business. When you look at the first quarter from an operating perspective, it was extremely encouraging as we reported widespread strength in the Midwest and South region and strong results to Borgata. All of this helped us to beat expectations. On a wholly-owned basis, including the IP, we reported our fourth straight quarter of revenue growth and fifth quarter of EBITDA growth. But even without the IP, our wholly-owned revenues grew for the fourth consecutive quarter, and our wholly-owned EBITDA increased for the fifth straight quarter. Focusing on the IP, first quarter results were very encouraging and provide us just a glimpse of the full potential of this acquisition. We generated EBITDA growth of more than 10% of the property during our first full quarter of ownership primarily due to more effective marketing initiatives and stronger management. It is notable that we achieved this growth without the benefits of our B Connected player program, which is just being rolled out. This performance is not an accident. It is the result of the expertise and experience of our management team as they unlock the full value of this asset. And we are confident the IP will continue to perform at a high level in the coming quarters, ultimately making the multiple for this acquisition well below 7x. I would like to take a moment to commend our entire team for the progress they have made so far at the IP. In addition, our management and team members throughout the Midwest and South region have done a terrific job in marketing effectively even as they have diligently controlled expenses. The results speak for themselves. Apart from the IP, our Midwest and South region had an outstanding quarter with broad-based growth across the region as we outperformed our competition, and we were able to grow revenues, EBITDA and margins. While this strong performance was led by Delta Downs, Treasure Chest and the IP, the majority of our properties in the region posted double-digit EBITDA gains. Paul will provide more color during his comments. In Atlantic City, Borgata posted solid growth, further reinforcing its position as the areas' premier resort. While some of these gains came from improved table holds, we were encouraged by growth across our non-gaming business segments as well, which added to our EBITDA gains. As you know, a new competitor has opened in Atlantic City. And while it is early, I can tell you that we have yet to see a meaningful impact on Borgata. So far in April, we have seen year-over-year increases in guest counts, visitation and rate of slot win. Occupancy is higher as well, running ahead of our expectations. And our cash room sales are up about 8% during the month. While April's performance is encouraging, we expect it will be several quarters before it is clear what impact this new competitor will have in the Borgata. Before turning the call over to Paul, I'd like to review a few strategic points. First, deleveraging and strengthening our balance sheet is and will continue to be our major focus. We made significant progress towards that goal last year and in the first quarter of this year, and we believe that continued growth, whether through our core business, through acquisitions or through new development, will allow us to further delever the business as we grow EBITDA and use free cash flow to pay down debt. Second, acquisitions remain a strong part of our growth strategy, and they contribute to our efforts to strengthen our balance sheet. As we discussed earlier, the return from the IP during our first full quarter of ownership show our ability to unlock the value with strategic acquisitions. The IP is already a deleveraging transaction from a balance sheet perspective and was accretive to earnings in its first full quarter of operations. We expect to realize further benefits in the quarters ahead as synergies take hold. The IP is the 11th property we have acquired and further builds on our long track record of successfully integrating new properties into our company. Acquisitions will remain a key part of our growth strategy going forward, and the Midwest and South will be of particular interest to us given the impressive growth across this region. And we will look for other growth opportunity as well. We have positioned the company to take full advantage of online gaming with our joint venture with bwin.party digital entertainment. We continue to believe Congress should enact a national structure of legalization and an effective regulation of Internet gaming. And when it does, the growth opportunities available to us will be substantial. However, we will be prepared to take advantage on a state-by-state approach if Congress does not enact federal legislation. Finally, we will maintain our focus on delivering outstanding service and great guest experiences. This has been a hallmark of our brand and will ensure continued success of our company for years to come. Thank you for joining us this morning. I would now like to turn the call over to Paul to discuss our regional results in more detail. Paul?

Thanks, Keith. Hello, everybody. Overall, we were encouraged with our operating results in the first quarter. Despite continued elevated promotional activity in Nevada, our operations held steady. We're particularly pleased with growth in the Midwest and South region, where we gained share in almost all of our markets. We got off to a great start in our first full quarter of ownership at the IP, posting 10% EBITDA growth even before realizing the full benefit of most of our anticipated synergies. Borgata delivered a strong year-over-year comparison and is performing well against heightened competition. So let's get into the details. We'll begin with the Las Vegas Locals business. We were encouraged to see business volumes holding steady during the first quarter as visitation increased in our properties. We posted a slight increase in revenue and both table game drop and coin-in were comparable to last year's levels. The slight shortfall in EBITDA was the result of ongoing promotional environment in the locals market. And we temporarily increased our marketing expense during the quarter as we made a strategic decision to test a few programs targeted at our lower tier customers. While this did generate new revenue, we didn't see flow-through to the bottom line. These results were further compounded by table game hold at The Orleans and Gold Coast that was below last year's levels. Hold impacted EBITDA by more than $1 million. However, we are seeing some positive factors as trip frequency from our customer base continues to grow and is now at the highest level in 3 years. Looking ahead, we expect steady EBITDA growth in our local business. Now let's move to Downtown, where we own about 1/3 of the market. We saw gains at the top line driven largely by strong growth in our non-gaming business. In March, for example, the Fremont set an all-time monthly record for cash revenues from its food and beverage outlets. However, F&B business is not as profitable as casino side, so we did not see much flow-through of this growth to the bottom line. In addition, we experienced a $750,000 increase in jet fuel expense at our Vacations-Hawaii charter service. Compounding matters, we saw year-over-year decline in table game hold percentage of our Downtown properties, impacting EBITDA by about $1 million during the quarter. Factoring out fuel expense and fluctuations in hold, we project our Downtown business would have reported a slight increase in EBITDA during the quarter. On a positive note, rated play increased year-over-year, driven by continuing strength in our Hawaiian customer segment. And we saw double-digit increase in rated guest counts during the quarter, which are now at their highest level since the recession began. Looking ahead, there is a lot of excitement about the progress that has been made in Downtown Las Vegas in recent months. The overall gaming market is expanding, and its long-term outlook is encouraging. The Smith Center for Performing Arts and The Mob Museum opened during the first quarter, giving people new reasons to come to the area. These are exciting times in Downtown Las Vegas, and we expect to see steady growth in visitor traffic as the renaissance of downtown continues. In the Midwest and South region, same-store EBITDA rose more than 10%, and revenues increased nearly 6%. We saw broad-based EBITDA growth across the region and gained share in most of our markets as both visitation and spend per visit increased. Our team members did a tremendous job of delivering great customer experiences, operating efficiently and marketing effectively. As a result, operating margins in the Midwest and South region rose 150 basis points to nearly 24%, the highest level since 2007. Delta Downs, Treasure Chest and the IP reported the region's strongest year-over-year comparisons. At our 2 Southern Louisiana properties, casino volume indicators reached their highest levels in 3 years. And in March, Delta reported its highest monthly coin-in ever. Over at the IP, we grew EBITDA by more than 10% year-over-year and improved operating margins by 350 basis points to 25.9% during our first full quarter of ownership. It's important to note that this increase was primarily the result of more effective management. In the months ahead, we will see further efficiencies from operational synergies contributing positively to EBITDA growth. And the rollout of B Connected next week will have a positive impact as well. At this point, the IP is exceeding our expectations, and we see considerable additional upside for the property. Finally, in Atlantic City, Borgata grew revenue by more than 4% and EBITDA by 22.7%, marking its second consecutive quarter of double-digit EBITDA growth. Several factors were at work. One was favorable comparisons in table game hold percentage. The property's table hold percentage rose by 145 basis points year-over-year, increasing from below historical levels last year to a rate of 13.9% in the first quarter of 2012. But there was far more at work than favorable hold as we saw strength across our non-gaming operations. Cash ADRs rose more than 5%, cash room sold were up nearly 4% and F&B revenues increased year-over-year. We also continued to widen our leadership position in poker, where revenue grew by about $1 million as we captured nearly half of the entire Atlantic City poker market. These top line gains were magnified on the bottom line as the property increased EBITDA margins by more than 330 basis points during the first quarter, a reflection of the Borgata team's commitment to driving further efficiencies in the business without compromising the property's first-class customer experience. As Keith noted earlier, we have yet to see any meaningful impact on Borgata's operations from Atlantic City's newest property. They opened with a limited number of hotel rooms and few amenities, so we expect the ultimate impact to 1 Borgata will not be clear for several quarters. While we are encouraged by our performance so far, we're taking nothing for granted and are hard at work enhancing Borgata's market-leading service, reinforcing our position as the clear leader in Atlantic City. A redesign of Borgata's hotel rooms is underway, and we continue to receive very positive feedback from our customers. Borgata has a well earned reputation as one of the leading resorts on the East Coast, and we are confident it will remain the top-grossing resort in Atlantic City for years to come. Finally, I want to provide an update on B Connected, our nationwide player loyalty program. The web-based home of the program, B Connected Online, delivers a very personalized experience that ensures every customer gets the maximum benefit out of their membership. And with last week's launch of B Connected Social, we now offer the first comprehensive, nationwide social gaming platform linked to a casino loyalty program. B Connected now taps into the growing popularity of online social environments. Every day, millions of people log into various social websites, spending time and effort to earn points, badges and other kinds of recognition. B Connected Social applies these dynamics to B Connected Online and our other websites. With this new program, our customers earn social points for routine transactions, which can then be redeemed for entries into regular contests. In addition, B Connected Online now ties into major social media networks like Facebook, Twitter and Foursquare, recognizing our customers for sharing information through those services. Customers earn social points for promoting us through social media, and we receive the benefit of referrals and word-of-mouth marketing directly from our customers. These social elements are far more extensive and broad based than anything else in our industry, and we believe they will further extend B Connected Online's leadership position. So to recap, the first quarter was an encouraging one from an operating perspective. Borgata continued to expand its leadership position in Atlantic City, posting its second straight quarter of strong growth. Our Midwest and South region is hitting on all cylinders, and our team is doing an exceptional job at the IP, positioning the property for further growth in the quarters ahead. Thanks for your time today, and now over to Josh.

Thanks, Paul. I'll start with a few items from the quarter and then provide guidance for the second quarter. Beginning with the balance sheet, excluding Borgata, our debt balance at the end of the first quarter was approximately $2.55 billion, a reduction of about $50 million from the end of last year. At the end of the first quarter, there was about $1.6 billion outstanding under our credit facility. At quarter end, availability under our credit facility was approximately $175 million, and our cash balance was $122 million. Our next maturity of $216 million is April 2014, approximately 2 years from today. We would expect to refinance that debt sometime prior to April of next year. From a financial covenant perspective, as calculated under the terms of our credit agreement, at the end of the quarter, secured leverage was 4x compared to our covenant of 4.5x. And total leverage was 6.5x versus a covenant of 7.75. Both of these metrics have improved by approximately 25 basis points since December. Borgata's debt balance was $814 million, of which $22 million was outstanding under their $75 million credit facility. Their cash balance at the end of the quarter was $34 million. On the income statement, corporate expense, excluding share-based compensation, was $10.1 million, essentially even with last year. Consolidated depreciation expense in the quarter, that is including Borgata, was $50 million, even with the prior year. Our depreciation expense, including about $4.8 million associated with IP, was approximately $35 million compared to $31.7 million last year. Borgata's depreciation expense of approximately $15 million was $3.7 million below first quarter last year. Excluding the impact of consolidating Las Vegas energy, interest expense for the quarter was approximately $60 million, roughly $3 million higher than last year due to valuation adjustments related to purchase accounting at Borgata. Our interest expense was $40 million, essentially even with last year as higher interest expense this year was offset by swaps that matured in the middle of last year. Borgata's interest expense in the quarter was approximately $20 million. The tax provision for adjusted earnings per share was 35%. The GAAP tax provision in the quarter resulted in an effective tax rate of 49%, reflecting the impact of federal and state statutory rates on our income and provisions related to 1048[ph]. Capital expenditures in the quarter were approximately $15 million. And at Borgata, capital expenditures were $17 million. Now in terms of guidance for the second quarter. As has been our practice, we will provide quarterly EBITDA and EPS guidance. Because we consolidate Borgata, we will provide separate EBITDA guidance for Borgata. We'll provide guidance for adjusted EPS for the consolidated business, including both our wholly-owned segments and Borgata. With that, we expect wholly-owned EBITDA, again after the deduction for corporate expense, to be in the range of $90 million to $95 million. We expect Borgata to generate EBITDA of $33 million to $35 million. With this range of EBITDA guidance, adjusted EPS for the second quarter is expected to be in the range of $0.06 to $0.10 per share. Operator, that concludes our formal remarks. And we are now ready for any questions from participants on the call.

[Operator Instructions] And our first question will come from Felicia Hendrix of Barclays.

Just on the Las Vegas Locals market, just wondering, is it growing right now? The market number is from the state that we saw, obviously, through February, but they did show some slot and table volume growth. So just wondering if you're actually seeing growth, because your actual year-over-year revenue growth was a bit lower than we had expected?

Yes, and I saw your comment in your note this morning, Felicia. When we look at the state-reported numbers, which are out for February is the most current set, where in particular, I think everyone focused on the Boulder Strip region where Sam's Town operates as well as certainly many of our other competitors who saw a very, very significant revenue growth, gaming revenue growth, in that particular market. I think you got to peel it back one more layer and look at the changes in hold percentage for the market overall, which were also very significant from a positive perspective when they -- the entire region was looked at in that particular case. So adjusted for the change in year-over-year hold percentage, growth in the Boulder Strip region for February was a much, much lower number than 22%. I think it was, if our memory is correct, 2% or 3% because of factors again just related to hold. When you compound that with my earlier comments about marketing that's going on, which, obviously, certainly drives revenue, not necessarily profitability of marketing expenses, higher, we kind of end up in the situation we're in today, and you saw in our first quarter numbers overall, which showed very modest changes if not flat revenue from that particular region. If you go back for our last 3 quarters, I think you see that same very modest revenue growth in the Las Vegas Locals business, less than 1%, but positive in all 3 quarters, which is certainly a very positive note from the negative -- the large negative numbers we saw in the previous few years. So we think that the market is continuing to strengthen, certainly not at the pace of the Midwest and South region by any stretch, but I think the healing process is just going to be longer and more extended in Las Vegas.

Okay, that's actually really helpful. So as we think through the rest of the year, are we -- should we be looking at similar growth rates to what we have seen in the last few quarters? Because I think folks have -- some folks have been assuming maybe not more than 1% but to see some improvement?

Yes, I mean, I think we continue to be optimistic. We obviously do a lot of market research here given not only the fact that we live here, but we have a very significant portion of our business that is of great interest to our shareholders in the city. And there are plenty of economic indicators in Las Vegas, more macroeconomic indicators, that are showing much more positive signs. And we think, in all honesty, there has been a lot of pent-up demand for big-ticket item purchases and other things that drive things like sales tax receipts to much more healthy levels. And that has to kind of flow through and people got to kind of adjust their own family budgets around those changes, and I think they'll get right back into it. I mean, as we said, people are coming to our properties more than they ever have in years. And we just need to see that upswing as they kind of take care of other personal matters that they're dealing with.

And then just quickly, final question. On the marketing testing that you did this quarter, and you mentioned the tough promotional environment, I'm a bit confused because the promotional environment has not been -- it hasn't been neutral. It's -- actually, there's -- the promotional environment has been active for a while now, and you guys have been rather consistent at standing firm and not increasing your marketing efforts, particularly given your success with B Connected. So I'm just wondering, what changed this quarter? And given how you -- given the results of your -- of the marketing that you did, are you planning on continuing those programs?

Well, it's Paul again. I mean, we -- as I said, we did do what we referred to as a test. Now in fairness, a test is more than like 100 or 1,000 people. We need a fairly large group to really see what the response rate is. We did the test at the lower end, which we would refer to as our Ruby level -- it's our entry level into the B Connected club -- because we were seeing that increase in visitation and we wanted to see if we could stimulate demand at that level by spending some more marketing dollars on that particular group. We saw that they certainly came. They used their incremental offers. But we really didn't see any additional gaming value out of those customers. So it's easy enough for us to turn that test off fairly quickly. But as I said, it definitely impacted marketing expense in the first quarter. That, in turn, impacted margins for the Las Vegas Locals business and, to some extent, led to the numbers that we reported from a profitability perspective. And we'll continue to evaluate those things on a kind of case-by-case basis. We don't stay out there firm on aggressive marketing campaigns quarter-over-quarter. At the same time, we kind of owe it to ourselves and everybody else to make sure we're not missing something by being too frugal.

Now I think, to add to Paul's point, we want to make sure that we're not leaving revenue on the table. And I think periodically, we will try things to make sure that where we're seeing areas of strength, we can capture that. And we've done it historically as well over the last couple of years periodically. But when we see it doesn't work, we pull back aggressively and evaluate what we've seen.

Our next question comes from Harry Curtis of Nomura.

A couple of quick questions. It looked like your margin at the IP was around 26%. What would you guess your mature or run rate margin can get to over the next year or so?

Well, Harry, I think that property really hasn't seen those type of margins since kind of the post-Hurricane Katrina days where, obviously, it ran at unbelievably high margins because of just the limited supply in that particular market. We've talked about synergies overall. We've quantified those. It's $5-plus million. As both Keith and I have said I think separately, obviously, not all of those have been put into play and fully realized at this point in time. I think there's certainly some upside from the 25.9% that we posted. B Connected, as I said, goes into play live there next week. We think that is a big, big plus from a customer experience perspective and customer reward perspective. And in fairness, this summer is the peak season in the Gulf Coast market. So I'm not going to give you a specific number we can get to. We do benefit, obviously, from a lower gaming tax rate in Mississippi. With that said, we've got more competition there than we have in other markets because it is not a limited-license jurisdiction and there is a small, new player coming online here in the next month or so, which we don't think will have an impact on our business but, nonetheless, will mix things up a little bit. So I think we certainly got some upside from where we're at, and I think we'll get a better read on it as we kind of play through the summer.

All right, so we'll move our margin up to 50% then?

You could do that.

All right. Then going back to the locals market. Obviously, the promotional environment remains high. And so what do you think the factors are that caused it to become more rational? Is it -- I mean, historically, when you see companies in bankruptcy, they are afforded the opportunity to be less rational. So do you have a sense of an amount of time that you might have to endure this elevated level of promotional activity?

Harry, this is Keith. It's an interesting question. It is, I think, tough to predict what your competitor is going to do. A rational, I think, competitor would sample these types of programs, determine they are not profitable and turn them off. I think as we did in the first quarter, we tried a few things to drive some revenue. It didn't provide the results that we were looking for and, therefore, are not going to continue them. So we would hope that we have some rational competitors in the market. We hope that they will not continue to -- continue marketing programs that don't make them money, but it's hard to predict.

And then the last question is -- again, it's a similar question, probably hard to answer. But are you getting any rumblings of increases in promotional activity in Atlantic City? Might it be benign through the stronger summer months? But you do have some competitors again who have balance sheets that are kind of tough. Do you think that, that -- they're forced into a corner where when it comes to fall, they begin ratcheting up promotional environment?

Yes, I think you answer your own question partially. It is difficult to predict what's going to happen over the summer. Look, we -- we're seeing a good April at the Borgata. We're coming into a very busy summer season. I think there will be very robust business in Atlantic City over the summer. And the fall will be the point in time where we'll begin to see more clearly what that impact is. And properties at the lower end may act more irrationally, but we'll just have to wait and see.

Our next question comes from Steven Kent of Goldman Sachs.

Just a couple of questions. First, can you just talk about your rated and not rated players across the portfolio? You talked a little bit about it in the press release and then in your opening comments, but are you seeing better traction from the higher end? The lower end? Both? Where's the greatest increases? And where you -- where do you find that you need to do the most work? And then on the Midwest and South regions, maybe you could just talk about -- you mentioned weather as one of the issues and some of the other onetime issues. But are there other core trends there that are improving that you want to talk about?

Well, first on the database question, Steve. The -- I mean, not surprisingly, as we've said in the past, the higher end of the database is certainly the area where we continue to see strength. I mean, the customers we know the best, they're obviously most entrenched with our brands. And that segment continues to grow, I think, at a very healthy pace. On the lower-end segment, I obviously talked quite a bit about the lower-end segment in Las Vegas. And I think the impact of those marketing programs, as I said, had a heck of a lot more to do with just the economy and individual financial situation a lot of folks are in as opposed to anything else. Outside of Las Vegas, we certainly are starting to see some positive signs at the lower end as well. It shouldn't be a surprise. As recovery takes hold, you should see growth throughout the database. And in fact, we are starting to see in our best markets unrated growth, which is something that we hadn't seen before. Now again, all those are factors, in all honesty, you should just expect if you're going to start to see an upswing in business overall. I will note, and it's kind of an interesting dynamic, as we and certainly our competitors have gotten much better at putting loyalty cards in the hands of our customers, the group of unrated almost becomes a difficult group to find anymore. They sort of become extinct to some extent from the standpoint of you can't not check in to one of our hotels without getting handed a players club card. So you basically only stay unrated for one trip, and then you end up in the rated database where you stay, obviously, as long as your play continues. So kind of the future conversation of unrated is maybe something that will kind of go the way because it is so easy to get a players club card and, to some extent, almost unofficially mandated as you walk in the door. Your second question about weather, I didn't specifically talk about weather. I think some of our competitors have certainly talked about weather. I think on a year-over-year basis, in the first quarter, we definitely had tougher weather conditions in 2011 that we had in 2012. That certainly, potentially, would have had some positive contribution to the performance in our Midwest and South region. If you look at our first quarter of 2011 financial details, again going back to last year, in the reconciliation page, as we pulled out of EPS a gain that was -- or about $3 million related to some property tax adjustments, we saw that as really offsetting last year the weather impact on our business. So I think for Boyd Gaming in a unique perspective, weather, on a year-over-year comparison, almost got factored out because we had an unusual financial situation last year that was positive EBITDA.

To add to some of Paul's comments, Steve, I think in the Midwest and South, that business has definitely -- is not really in recovery mode anymore. It's a business that we don't think of in that light. It's a business that's continuing to strengthen. It has a customer base that, in terms of visitation and spend per visit, generally the metrics are improving. And I think hand in hand with that, we do a really good job of managing not only on the cost side but how we market efficiently there to make sure that we're getting the full benefit of that. And that's really a kind of a focus of the company across the company, not just in the Midwest and South. We just seem to have a healthier customer there, and I'm sure many of our competitors are benefiting from that as well. So sure, everybody benefited from weather and an improving customer, but I think it is against the backdrop of trying to manage the business as efficiently as possible. And I think you're seeing a lot of that with just a very specific way in terms of IP as well.

Our next question comes from Mark Strawn at Morgan Stanley.

I just had one question on Atlantic City. You gave a few data points, isolated data points, about performance post-Revel. Just broadly, are total revenues and EBITDA up since the property opened? It's kind of hard to get a sense given the various metrics you gave.

Right, we didn't -- Mark, this is Keith. We didn't talk about revenues and EBITDA, and we're not going to project that probably for April. But the volumes are up, as I said, the cash ADR is up, our occupied rooms are up. All the important business metrics are pointing in the right direction in the first kind of 3 weeks after they've opened. So we're pleased with the initial results post opening of Revel. We know that the full impact hasn't yet been felt. We know that it will once again probably occur not until the fall season after the busy summer season when we see where things settle in. But we're not going to be predicting revenues or giving out revenues for April.

Our next question comes from Joel Simkins at Credit Suisse. Joel H. Simkins - Crédit Suisse AG, Research Division: A couple of quick questions for you. Number one, with the Strip coming back and, obviously, the SLS [ph] guys redoing the Sahara, what does this do in terms of changing your thoughts with regard to the Echelon land?

Joel, this is Keith. We continue to monitor the situation and if I look far enough into the future to determine when it is we should take a look at that project, we don't have a solid view on that right now. We're still monitoring it. We're still trying to understand when that project may be restarted. I think our last official statement was we still believe it's 3 to 5 years into the future. I think that is still our feeling today, that it is still 3 to 5 years in the future before we would do anything with that piece of land. So our view hasn't changed. We're very encouraged by continued development on the Strip. We're very encouraged by increased visitation and the growth on the Strip and seeing increased occupied room nights and increased visitor counts. Those are all positives for us. But we're not ready to make a decision today. Joel H. Simkins - Crédit Suisse AG, Research Division: And in terms of the Borgata stake that MGM holds, is there any reason for us to assume that they might be willing to part ways with that before the mandated date? And my other follow-up here is you did have an announcement a couple of quarters ago back regarding an investment on a Native American project. When can we expect to get some more color in that regard?

On the -- your MGM question, I think I've said for a while now that I'm not going to kind of predict how MGM is going to move through the process. We're a little bit of an innocent bystander. We don't have any real information in terms of kind of what they're currently doing or what their current thought process is. So I don't really have any update in terms of how they're moving it or how quickly they may want to move it or whether or not they would let it go to the trustee after the 18-month period is up. So I can't provide you really any other color on that. With respect to the Native American investment we had made, it's still kind of a work in progress. It was a small investment we made for a tribe in California that we're still working with to see if we can pull a deal together and make an announcement. We'll probably have something hopefully to report later in the year. But it's still -- think of it as a construction in progress, if you will, not literally but just figuratively.

Our next question comes from Carlo Santarelli of Deutsche Bank.

I just wanted to ask briefly about Borgata and the guidance. If you can kind of talk to -- obviously, there's a lot of pushes and pulls with hold last year, April being a favorable comparison. But could you talk about maybe what the underlying cannibalization or impact from Revel that you guys have baked into your guidance and how that's kind of segmented both on the margin and top line?

Yes. Yes, that's going to be a hard one for us to talk about. I think, generally, we expect to have some marginal impact from Revel in the quarter and naturally what's being reflected in that guidance. I would say it's hard for us to talk about the guidance in light of what we've seen so far only because the impact has been muted relative to the product that they've opened. We got -- we fully recognized that they don't have all of their amenities. We've made comments to that effect. And so our guidance expects some impact. It expects it to be not material just given the seasonality of the business. And we expect to see perhaps really what's going to happen in the marketplace more toward the end of the year. So I'm not sure what else we can really say in that regard.

Just to tag on to what Josh said, the guidance we've provided incorporates some expected impact of Revel along with some offsetting marketing expenses and new marketing programs that we would anticipate to make sure that our customers continue to visit the Borgata, along with additional efficiencies that we have built in over the quarter so that we can continue to manage the business and not only create the best experience but maximize the profitability of the property. So all that gets boiled down into the guidance we gave, but we're probably not going to be providing any details, specifics on lost trips or lost customers or any of those types of statistics.

Our next question comes from Cameron McKnight of Wells Fargo.

This is a question for Paul or Keith. If we look at Borgata and Atlantic City, we tend to think of it in terms of 3 discrete segments. You've got the growing gaming customer, which became more commoditized after Pennsylvania opened up; you've got the premium gaming customer; and then you've got the leisure customer on the weekend. How do you think about the impact of Revel as it relates to, I guess, those 3 segments of demand?

This is Keith. I think ultimately, that will be based on the success of their product and the success of their marketing programs. Look, being located on the Boardwalk in Atlantic City, they, I believe, naturally will have a lot of the growing business, a lot of the business on the Boardwalk. I think the Marina district is viewed as a different location, and we have the benefit of being in the Marina district, maybe draws a slightly different customer. Certainly, the product that they've created is targeted at a premium customer. Whether that premium customer gravitates to that product or whether they're able to execute on the promise and deliver on the promise, I think, is yet to be seen. And so I think they'll probably get some of all that business, the growing, the premium and the leisure segment, but it will depend on, at the end of the day, their execution of their business model as to where it really ends up.

Our next question comes from Bill Lerner of Union Gaming.

Two questions. One, Paul, for your Locals business, and I'm really just thinking here, I think, about Gold Coast, Orleans, Sam's Town, what percentage of -- generally of the revenue stories there comes from non-locals? I mean, obviously, geographically speaking, they're destination relevant. And then a quick follow-up.

Well, it actually varies dramatically between those 3 properties. Not surprisingly, The Orleans has the lowest percentage of locals given it has almost 2,000 hotel rooms. And that number kind of fluctuates a little bit, but call it 50-50 at The Orleans, to the Gold Coast and Sam's Town, which would skew a little bit certainly more heavily locals, Gold Coast in particular with its proximity, to Chinatown and a very significant Asian gaming business, particularly table game business, at that location. So they would push up into the I'll call it 70%, 75% locals. And then the Suncoast, which you didn't mention, is predominantly local, say 95%.

Got you there. And then the follow-up is, you guys mentioned Smith Center. What have you seen Downtown? Everything seems to be inflecting down there since early March or mid-March when it opened. But what are you seeing in second half of March and April? Is it similar to that? Is it a different player behaving differently? I'm just curious.

Yes, I don't know that the folks, which appear to be primarily local in all honesty going, to The Smith Center are going to be gaming customers for anybody Downtown. With that said, The Smith Center is, as I'm sure you've seen, just a beautiful facility and I'm sure will attract. And certainly, us and others will use it for our casino guests as just another amenity in town to take care of folks. And there will be some trickle over there. Overall, I think beyond The Smith Center, there is the revitalization of Downtown. And in all honesty, many, many folks, I think, are just working it into their normal routine of coming to Las Vegas. There was recently a visitor profile for Las Vegas that was released for 2011, and that was put together by the Las Vegas Convention and Visitors Authority that showed actually some statistics that potentially, there was a decline in Downtown from a visitation perspective. And I got to tell you, there is no statistic that we can see in our business that would corroborate that particular survey. And maybe it was just one of those things where surveys sometimes skew with some error to them.

Our next question comes from Brian Egger of Topeka Capital Markets.

Maybe you can just clarify a little bit about your trajectory of interest expense for the next couple of quarters. It's been a -- moved around a bit. And just in view of some of your comments on the call, I don't know if, Josh, if we could maybe get a little bit better sense of what's happening in the next few quarters on interest?

Sure. Well, we provided annual guidance on our last call regarding interest expense, and so I'd ask to refer you to that. With respect to -- so interest expense on our income statement is comprised of interest at Boyd and interest at Borgata. And Borgata's interest expense at about $20 million a quarter is probably a good run rate. So not much changing there. And at Boyd, we've generally said, I think, around $160 million to $165 million. And that's pretty much spread evenly throughout as well. I think when you compare it to prior year is what makes it a little confusing. But I think the first quarter and really even beginning late in the fourth quarter, those run rates are pretty consistent.

Our next question comes from Joe Greff of JPMorgan. Joseph Greff - JP Morgan Chase & Co, Research Division: Most of my questions were addressed. Josh, within sort of the nonoperating items that maybe you can talk about like corporate expense, depreciation and CapEx, how are you viewing them for the rest of the year?

Consistent with the comment I just made, we gave guidance at the end of the fourth quarter or when we announced fourth quarter around the expectations for those line items, and that -- those would not have changed. And I can go through that individually, if you'd like, by line item offline.

Our next question comes from Shaun Kelley of Bank of America Merrill Lynch.

I just want to go back to the Borgata guidance question because I guess down 12% year-on-year at the midpoint. I mean, I understand you don't want to give too much in the way of specifics there, but if you're not seeing an impact today, just how conservative is that? Or, I mean, are some of the marketing programs that you're planning as kind of Revel ramps up, are some of those marketing programs kind of already in process and can't be dialed back at this point?

I don't -- I mean, it's not the latter. I think it's just more a reflection of what we expect to happen in the marketplace. Any variance from last year is really what we expect to occur purely attributable to what's happening at Revel and the market. It's nothing -- it's not like we're...

And look, if you'd look at the Borgata number relative to the first quarter, we talked a fair amount about how, in all honesty, we played lucky. And just like we pointed out when things are down, we also pointed out when things are up because we don't expect those trends to necessarily continue. Statistically, we expect them to normalize. So obviously, if you'd adjust for that, the first quarter number for Borgata wasn't as large as we posted. But certainly, luck played into that. And I think that, to some extent, ties back to the expectation for the second quarter. We expect normalization. We expect some impact from Revel. Again, as Keith said, not really seeing it right now, but it's a long quarter ahead. And I'm trying to put out a number that we think is reasonable and that is achievable.

Okay, that's actually really helpful. And then I guess the second question would just be, as you guys are kind of looking through your database, have you thought about Maryland at all in terms of incremental competition for Atlantic City? Is that something that as you look at your database and where some of the customers are coming from, obviously Pennsylvania has been negative -- negatively impacted, but the customers come up that far from Maryland? Or is that -- or do you not think that will be much of an impact when Maryland Live! opens in June?

Yes, Shaun, this is Keith. We're not overly concerned with the impact from that operation. We have looked at our customers, where they're coming from. We're more focused on those properties kind of in the Philadelphia and the New York area. We're not expecting any impact really from that operation.

Our next question comes from Kevin Coyne of Goldman Sachs.

You had mentioned that M&A will remain a key part of your strategy going forward. I know there's a report back in February that a large gaming company may consider selling some of its Midwest assets. I was just wondering. Is that something you would look at? Or would you look at something that perhaps would have a safer, more secure customer list?

Well, probably. I'm not -- look, when it comes to M&A, we're certainly looking for good acquisitions like the IP, and we'll be very selective as we look for those assets. We're looking in markets that would be strategic to us, something where maybe we're not in today. And we will be very careful about the assets we select to make sure that they're complementary, to make sure that we believe that there's future value there that we can drive, much like at the IP. We'll be very careful, obviously, not to buy an asset that we don't think we can improve. So I think we've been very successful over the years at buying assets and unlocking value that is trapped inside them and increasing EBITDA. And that will be our focus. So if we don't believe that that's possible, we probably won't look at the asset.

Great. And just turning to Atlantic City. Obviously, your new competitor is focusing on trying to draw group and convention business to the market. I was just curious if you are -- have been able to sell or getting any inquiry to sell any large-block rooms for '12 or '13 as perhaps a sign of demand returning or coming into the market on the group side?

Yes, I'm not in a position to provide any color on that question right now. I don't have those statistics in front of me. So I, at this point, can't help you with that.

Our next question is from David Bain of Sterne Agee. David Bain - Sterne Agee & Leach Inc., Research Division: Hey, guys, I just have a question on the complementary meal tax situation. And wondering kind of what that forward process is, if you're accruing for that tax. And then if you could potentially speak to the impact or quantify it one way or another?

So obviously, it is a process that's been going on for a while. There was a hearing earlier this week with Department of Taxation that I don't really think provided any new information or any direction on the process of that. I imagine at the end of the day it will wind up in the Supreme Court or, very potentially, there is some legislative solution that occurs during the next legislative session. It is quite a significant bill to the state of Nevada. With respect to accruing, no, we are not accruing because we expect that our position is the right position and that we have a refund coming. And so we're not accruing. We don't believe the state has the right to implement this tax the way they're going about implementing it and that they need to go through a very formal rule making process that they haven't gone through. So we'll just see how it continues to play out. But no, we're not accruing it. David Bain - Sterne Agee & Leach Inc., Research Division: Okay. Is it -- I mean, can you quantify the significance? When will -- so just to try to help us out a little bit?

David, I -- we can, but I don't know the number off the top of my head. It was a while ago that I saw the calculation and I just haven't seen it recently. So I don't remember the number exactly. But it's not -- it's somewhere between $1 million to $2 million.

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

Well, thank you, operator. And we appreciate each of you participating in the call today. And should you have any follow-up questions, feel free to call the company. Thank you.

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