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Boyd Gaming (NYSE:BYD)
Q1 2019 Earnings Call
April 25, 2019 5:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good day, everyone, welcome to the Boyd Gaming first-quarter conference call. [Operator instructions] Please note that today's event is being recorded. And I would now like to turn the conference over to Josh Hirsberg, executive vice president, and chief financial officer. Please go ahead.

Josh Hirsberg -- Executive Vice President, and Chief Financial Officer

Thank you, Cole. Good afternoon, everyone, and welcome to our first-quarter earnings conference call. Joining me on the call this afternoon is Keith Smith, our president and chief executive officer. Our comments today will include statements that are forward-looking statements within the Private Securities Litigation Reform Act.

All forward-looking statements in our comments are as of today's date, and we undertake no obligation to update or revise 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 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 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. I'd now like to turn the call over to Keith Smith.

Keith?

Keith Smith -- President and Chief Executive Officer

Thanks, Josh, and good afternoon, everyone. The first quarter was another strong quarter for our company and a great start to the year is the broad based growth trends of 2018 continued in every segment of our business. Our ongoing initiatives to drive operational efficiencies and marketing refinements, combined with a healthy consumer nationwide, continued to drive growth in same store revenues, EBITDAR and operating margins in every segment of our business. We are especially proud of our performance in our Midwest and South segment, as we overcame severe winter weather to deliver our fourth consecutive quarter of same store EBITDAR growth.

The underlying strength of our regional business was on full display late in the first quarter as weather conditions improved. In March, 16 of our 17 regional properties delivered EBITDAR growth. These strong March results included all five of our recent acquisitions, which posted strong performances in their first full quarter under our ownership. The integration of these properties into our company is well under way and we are confident in the future potential of these new assets and in our ability to achieve the target level of synergies we previously announced.

And here in Nevada, the regional economy remains strong and long-term growth trends are firmly in place. In Nevada, our Las Vegas local segment achieved its highest first quarter EBITDAR since 2007, reflecting broad based strength in our locals business. Segment operating margins improved 134 basis points during the quarter and now exceed 33%. On a property basis, strong growth trends continued at Aliante as the property set an all-time record for quarterly EBITDAR.

New Orleans had another exceptional performance delivering its best quarterly EBITDAR since 2005. And at the Gold Coast, the property maintained its strong gains from the prior year, despite recently completed renovation projects at the Palms and Palace Station. Overall results in our local segment would have been even stronger had it not been for temporary softness in business volumes at the Eastside Cannery. Excluding this, EBITDAR was up nearly 8% in the local segment in the first quarter.

While the shortfall of the Eastside Cannery was disappointing, recent adjustments are now driving improved results at this property. In all, our locals business continued to deliver sustained growth during the quarter, thanks to ongoing operational efficiencies and marketing requirements. And we remain optimistic about the future of this business as the robust Southern Nevada economy continues to grow. From a population perspective, Nevada grew more rapidly than any other state in the country in 2018.

In addition, Clark County saw the second highest population increase of any county in the United States. That strong influx of new residents is continuing into this year. Southern Nevada also continues to add jobs. Our 2.4% growth rate over the last 12 months is well ahead of the national average and ranks Las Vegas in the top 10 for job growth among the nation's largest metropolitan areas.

These job gains are spread across nearly every sector of the local economy, led by an 11% increase in the construction sector and with more than $12 billion in development now under way across the valley, that strong job growth is likely to continue for some time to come. In addition, visitation in Las Vegas is also up over the period of 12 months as convention and meeting business reached an all-time high. And with several major entertainment and convention venues opening in Las Vegas over the next two years, new infrastructure is being put into place to support further visitation growth in the years ahead. In all, the outlook for our locals business remains bright and we are confident that long-term growth trends will continue.

But our strength in Nevada goes well beyond our local segment as our downtown Las Vegas operations delivered a record first-quarter EBITDAR performance. All three of our downtown properties posted revenue and EBITDAR gains, driving double-digit EBITDAR growth in the segment and margin improvement of nearly 200 basis points. Our Hawaiian customer base, the core of our downtown business, remains strong and we continue to benefit from downtown's growing popularity as a tourist destination. Today, roughly half of all Las Vegas visitors make at least one trip to downtown during their visit, a clear indication of the market's strong appeal to tourists.

Looking ahead, we are confident this market will continue to grow as new investments and attractions draw more visitors than ever to Downtown Las Vegas. Moving outside of Nevada, our Midwest and South operations overcame severe winter weather during the quarter to deliver another solid performance with continued growth in same store revenues, EBITDAR and operating margins. This continued strength in our operating trends was overshadowed in January and February by challenging weather across our Midwestern markets, but the positive trends we saw throughout 2018 quickly returned in March as weather conditions improved. 16 of our 17 regional properties recorded revenue and EBITDAR growth in March with record or near record monthly performances at multiple properties.

On a property basis, our blue chip property in Indiana continued to perform well, delivering solid revenue and EBITDAR growth. This property continues to outperform a competitive market that attribute to its first class amenities and its strong operating team. We also posted excellent results in Kansas, where the Kansas Star recovered from difficult winter weather to record the best monthly EBITDAR in its history in March. Further south, strengthening economic conditions helped drive solid growth across our Louisiana portfolio, led by double-digit EBITDAR growth at Treasure Chest.

This property delivered its ninth consecutive quarter of EBITDAR gains, recording its best first quarter since 2008. To the east of Mississippi, we continue to generate double-digit EBITDAR gains at our two properties in the state. And in Biloxi, the IP posted its best first-quarter EBITDAR performance since 2012 as the property reported its 8th consecutive quarter of EBITDAR growth. In all, our same store properties continue to perform well, finishing the quarter with an exceptional March.

Our newly acquired properties also delivered strong results for the quarter, achieving revenue and EBITDAR growth on a combined basis. While winter weather was particularly severe at the two Ameristar properties in Missouri, business levels were strong late in the quarter. In March, Ameristar Kansas City posted its highest monthly EBITDAR since 2011, while Ameristar St. Charles achieved its second best monthly EBITDAR on record.

The Belterra properties in Indiana and Ohio also posted excellent quarterly performances, despite brief closures due to flooding in mid-February. Belterra Park delivered record EBITDAR in March, while Belterra Resort held steady with the prior year, despite impacts from new competition in its Louisville feeder market. Finally, in Pennsylvania, Valley Forge set all-time quarterly records for both revenue and EBITDAR, driven by the recent expansion of its slot floor. Across the nation, at both our legacy properties and our new acquisitions, our operations are performing at a high level.

And we expect that these trends will continue thanks to our enhanced marketing capabilities, our operational efficiencies and the skill of our operating teams across the country, we are driving strong EBITDAR growth and margin improvement across our business, aided by healthy economic conditions nationwide. And we continue to execute additional initiatives that will allow us to build upon this momentum in the future. First, we are making good progress integrating our new properties in our nationwide player loyalty network. We introduced our B Connected program at the Ameristar and Belterra properties in January, allowing us to begin taking advantage of the cross marketing potential of these new properties.

With B Connected now in place, we have begun driving visitation from the Kansas City, St. Louis and Cincinnati markets to our destination resorts in Las Vegas and elsewhere in the country. And we are now able to provide our existing customers with new alternatives to play and earn benefits in these markets. We're also well-positioned to benefit from the expansion of sports betting across the country.

We have seen great results at the IP since its sports book opened in August as sports betting is contributing to strong growth in visitation at this property. We're also optimistic about the potential of the new FanDuel sports book at Valley Forge, which opened last month. The considerable strength of the FanDuel brand can be seen in neighboring New Jersey, where FanDuel has established itself as a clear leader in one of the nation's largest sports betting markets. We are confident that FanDuel brand will hold similar appeal for our customers in a lucrative Philadelphia market, helping drive a long-term growth and visitation to Valley Forge.

We now offer sports betting in three states across the country and that number will only increase in the future as legislation of legalized sports betting continues to move forward in state houses nationwide. Examples of this include Iowa and Indiana where sports betting legislation was approved by state law makers this week. Pending final approval by the governors of these states, we look forward to the opportunity to introduce sports betting at our four properties in Iowa and Indiana later this year. And thanks to our partnership with FanDuel and our market access agreement with MGM Resorts, we are in an excellent position to further capitalize on this proven driver of visitation as sports betting becomes a reality in new states across the country.

In addition to enhancing our current operations, we continue to pursue opportunities to further expand our nationwide portfolio. In Northern California, we continue to work toward the start of construction of the gaming resort we will manage on behalf of the Wilton Rancheria Tribe. Once complete, this resort will be a significant step forward or a significant step toward the tribe's vision of self sufficiency. We share their excitement for the potential of this project and look forward to starting construction later this year.

New developments like the Wilton project are one facet of our proven and disciplined growth strategy that includes acquisitions, property reinvestments and operational enhancement. This growth strategy continues to deliver strong results and will remain at the core of our approach to creating long-term shareholder value, but we will also continue to balance our desire to grow with returning capital to shareholders and de-leveraging our balance sheet. We expect to achieve our long-term leverage target of four to five times EBITDA later this year. In summary, the first quarter marked a strong start to 2019 as we continue to build upon the positive momentum of last year.

Solid growth is continuing across every segment of our business, as our talented property leadership teams make the most of a healthy economy, new operational efficiencies and enhanced marketing capabilities. Sports betting is proving to be a key growth driver at our properties in Mississippi and Pennsylvania and we look forward to introducing this new amenity into additional states like Iowa and Indiana. Finally, our newly acquired properties are off to a strong start. We are well on our way to integrating them into our company and achieving our target synergies.

In all, our strategic growth plan continues to deliver great results for our shareholders and I remain confident in the direction of our company. Thank you for your time this afternoon. I will now turn the call over to Josh. Josh.

Josh Hirsberg -- Executive Vice President, and Chief Financial Officer

Thanks, Keith. Despite the negative impact of weather in the Midwest and South, the first quarter marked another successful quarter for our company, as we continue to drive profitable revenue growth and margin improvement across our business. Our recent acquisitions are on track and across the country our consumer remains healthy as we continue to focus on improving our operational capabilities to leverage our size and scale. Shifting to a few comments about the quarter.

In terms of leverage, a quarter end debt to EBITDA was 5.1 times and least adjusted leverage was 5.5 times. We remain on track to achieve our target leverage of four to five times EBITDA during this year. We reduced debt by $32 million in the quarter, less than is typical for the first quarter, due to the timing of capital spending for this year. In the first quarter, capital expenditures were $89 million, larger than in years past, driven primarily by the purchase of our new Aristocrat slot system and higher than usual carryover capital from projects started late last year.

However, we do not expect our capital spending this year to be materially different than the guidance of approximately $160 million we provided during our fourth-quarter earnings call. Our quarter-end debt and cash balances were provided in our earnings release. We returned over $28 million to shareholders during the quarter in the form of a $0.06 per share quarterly dividend and share repurchases of approximately $22 million at an average price of $26.09. We will continue to be measured in the execution of our share repurchase program.

Consistent with our past practice, we will balance returning capital to shareholders with disciplined investment in high returning projects, such as new developments in acquisitions, while also continuing to focus on de-leveraging our balance sheet. In terms of our master lease, rent coverage for the assets governed by the lease for the LTM period was 1.9 times and is estimated to be 1.9 times at year end 2019 as well. As noted in our release, we are reaffirming our previously provided EBITDAR guidance of $885 million to $910 million. Cole, that concludes our remarks and we are now ready to answer any questions from the audience. 

Questions and Answers:

Operator

[Operator Instructions] Our first question today comes from Joe Greff with JP Morgan. Please go ahead.

Joe Greff -- J.P. Morgan -- Analyst

Good afternoon, guys, and thank you for taking my questions. First question is, can you talk about what you think the anticipated impact is of the Palms at your property across the street? Particularly maybe what impact, if any, that you've seen since its Phase 2 opening and maybe what you see for the summer -- late summer opening from its Asian gaming offerings? And then my second question relates to sports betting impact. Can you identify, if you would, sort of the incremental EBITDA that is -- that you think attributable to that segment in the 1Q and perhaps what you anticipate incrementally for the balance of the year. And that's all for me.

Thank you.

Keith Smith -- President and Chief Executive Officer

With respect to, Joe, your first question, kind of the opening, the grand opening of the Palms and the renovations there, and quite frankly at Palace Station. Look, there's been over $1 billion or about $1 billion in new investment over 1,000 new slot machines added to this market kind of in the last year and we're actually very pleased with our performance at the Gold Coast. We saw some strong gains throughout the year last year at the Gold Coast and we were able to maintain them in the first quarter, not go backwards and so we feel very good. The Palms product, the way it's positioned, is not really attractive to the Gold Coast customer.

And so we don't anticipate, we're not seeing today, we don't anticipate in the future any significant impact from that business. So we feel pretty good about where the Gold Coast is operationally and what its future is and how it's done over the course of the last year. Secondarily, with respect to sports betting, we've talked about kind of the growth in visitation we've seen at the IP as a result of that. We've seen good growth in that market, we think sports betting is helping to drive that.

We see customers spending a little more time on property and we see new faces in the building. We're beginning to see that at Valley Forge, although we've only been open a little over a month at Valley Forge. And so it's all positive. I don't have, and we don't -- we're not breaking out kind of the direct incremental EBITDA associated with that, but suffice to say it is very much a net positive to the overall business, both in Mississippi in IP and at Sam's Town Tunica as well as at Valley Forge.

Operator

Our next question comes from Carlo Santarelli with Deutsche Bank. Please go ahead with your question.

Carlo Santarelli -- Deutsche Bank -- Analyst

Hi, guys. Good afternoon. Just one for me. To the extent that you guys can, if you look at just the Midwest and South same store portfolio, it looks like your EBITDA margins were up about 40 basis points year over year on a same store basis, despite the weather.

Is there anyway that you guys could quantify, and acknowledging weather was pretty putrid in the first-quarter '18 as well as in the 1Q '19, but is there anyway you could quantify maybe the impact that this year's weather had on margins for the same store portfolio?

Josh Hirsberg -- Executive Vice President, and Chief Financial Officer

Carlo, it's Josh. I don't think that we've gotten comfortable with really being able to quantify the weather impact just because there was flooding last year and flooding this year. And also trying to calculate the difference of weather during a weekend versus during a weekday. So it became such a complex calculation from our perspective, we weren't really comfortable kind of coming out with a number and therefore calculating a margin impact.

I think overall where we got comfortable with what was happening in the business and Keith spoke about it quite a bit in his commentary was when we looked at what happened in March, we felt generally good about the recovery of the business and the business really kind of picking up where it left off in December. And so generally I think our comments when they relate to the Midwest and South is that it feels like the business is just picking up where it left off in 2018 and continuing with those trends. So that's about all the color.

Carlo Santarelli -- Deutsche Bank -- Analyst

And Josh, if I could, just one follow-up. Obviously you had the tough time in January, February with the weather. March a lot better, gives you guys confidence. Are you seeing some of that pent up demand from January, February that you saw in March kind of following through here in April thus far as well?

Josh Hirsberg -- Executive Vice President, and Chief Financial Officer

Go ahead, Keith.

Keith Smith -- President and Chief Executive Officer

I was going to say -- this is Keith. So April's kind of an odd month with the movement of Easter and the movement of the calendar, but generally the trends when you sort through all of that, the trends we're seeing in April feel very similar to what we saw in March and what we saw in 2018. So we're not seeing any discernable changes in the trends in the first four months of the year.

Carlo Santarelli -- Deutsche Bank -- Analyst

Great. Thank you, guys.

Operator

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

Thomas Allen -- Morgan Stanley -- Analyst

Thanks. Can you just talk about what was going on at the Eastside Cannery in just a little bit more detail? Thanks.

Keith Smith -- President and Chief Executive Officer

So look, ever since we've bought that, we've been modifying the operation there, trying to combine it with Sam's Town and improve EBITDA and we generally have had pretty good success over the last couple of years. We made some changes late in the fourth quarter that frankly weren't successful to EBITDA at that property down. We made some quick changes to it late in the first quarter and we're seeing better results in April. So just they were just another series of changes that we thought would help continue to drive profitability to that property and it worked in reverse.

Thomas Allen -- Morgan Stanley -- Analyst

And then Downtown Las Vegas, EBITDA was up 14%. I mean that market you've been performing well, but not this well. So can you just talk about maybe what's driving the very strong acceleration.

Josh Hirsberg -- Executive Vice President, and Chief Financial Officer

It's got to have to do something with the CFO, but I'm not sure exactly what he did. No, I think generally the downtown business has had generally strong underlying trends for quite some time. The long-term kind of outlook for downtown continues to be positive. More and more people are going downtown.

And I think generally the guys did a really good job in that segment of our business managing to the level of revenues that we saw. I think we are a little cautious going in for the rest of the year with respect to the potential construction disruption that we talked about at year end that is likely to impact our business. But for the first quarter, it's been really good so far.

Thomas Allen -- Morgan Stanley -- Analyst

And is that construction disruption going to get worse or was it already going on and you just did better than expected?

Josh Hirsberg -- Executive Vice President, and Chief Financial Officer

No, look, the construction just started and so you've got a brand new 800 room-ish hotel going on right across the street from us. And so between dust and dirt and traffic from dump trucks and closure of streets and difficulty walking through it, I mean it's just starting. It's going to go on for the next year and a half. I think the worst is not behind us, but in front of us and I think over the course of the next year we'll fight a way through it.

I will say that they've been good neighbors and they've tried to work cooperatively with us to keep it to a minimum, but nonetheless, it is impacting the business a little bit.

Keith Smith -- President and Chief Executive Officer

Yes, there will be periods of time where we don't see any impact and then there'll be periods of time where there's significant impact based on whatever they're doing to develop their project.

Thomas Allen -- Morgan Stanley -- Analyst

Helpful. Thank you.

Operator

And our next question comes from Steve Wieczynski with Stifel. Please go ahead with your question.

Steve Wieczynski -- Stifel Financial Corp. -- Analyst

Hey, guys. Good afternoon. So I guess you talked a lot about weather and I guess if we think about a normal weather day I guess what we're trying to figure out is are your key gaming metrics, and I don't care which one you want to look at, whether that's unrated play, visitation, length of stay, any of those. Any changes to those metrics relative to where you would have thought they would have been at the beginning of the year?

Josh Hirsberg -- Executive Vice President, and Chief Financial Officer

I think that's the message we're trying to communicate is no. I mean we certainly were impacted by weather, but when there were either non-weather impacted days or in segments of our business that didn't have the weather impacts, it was just a continuation of the trends that we had seen sequentially improving throughout 2018, continuing into 2019. But you have -- what we were grappling with is several of our properties in the northern part of the Midwest and South segment saw significant declines in their business related to weather. Not just single digit declines in EBITDA as a result of the weather.

Keith Smith -- President and Chief Executive Officer

Answering in a different way, look, if you look at the southern part of our portfolio, Mississippi, Louisiana, where generally they didn't have weather in the first quarter or anything unusual, the business performed pretty normal, pretty much like the fourth quarter. Trends were the same, visitation levels were -- continued to grow, unrated coin in continued to grow and the business looked pretty normal for much like the quarters from last year. When you try and dissect the Midwest, which is where most of the weather was, on non-weather days, it felt pretty normal. But once again comparing a year to year is very difficult this year.

In some cases you had fewer weather days in February this year than last year, but they were on weekends, so they were more impactful than last year, which were weekday impacts. And so fighting your way through all of that, trying to be intellectually honest, we didn't want to quote a number because it's just hard to pull it all together.

Steve Wieczynski -- Stifel Financial Corp. -- Analyst

And then here's a totally loaded question, but I'm going to try to ask it anyway. One more weather question too. If you guys hypothetically didn't have the weather impact in the first quarter, Josh, do you think you would have been able to adjust your guidance for the year?

Josh Hirsberg -- Executive Vice President, and Chief Financial Officer

Oh you mean --

Steve Wieczynski -- Stifel Financial Corp. -- Analyst

Essentially raise it.

Josh Hirsberg -- Executive Vice President, and Chief Financial Officer

Yes, I know. I was doing the math real quickly. I don't think so. I think we were comfortable with the guidance that we gave, understanding at the time that we gave that guidance we knew there was some weather impact in January and mid-February.

And so it's difficult to -- we gave ourselves plenty of room within that range.

Keith Smith -- President and Chief Executive Officer

I would also say that it's only one quarter and we typically don't change guidance at the end of the first quarter. While the weather was significant, it wasn't so significant it would put us over the top of our range. I think it's fair to say that.

Josh Hirsberg -- Executive Vice President, and Chief Financial Officer

Yes, I think that's [Inaudible].

Steve Wieczynski -- Stifel Financial Corp. -- Analyst

OK. Gotcha. Thanks, guys. Appreciate it.

Operator

And our next question comes from David Katz with Jefferies. Please go ahead with your question.

David Katz -- Jefferies -- Analyst

Good afternoon, everyone. Josh, I was hoping you could just give a little more detail on the capex, which I think you said was $89 million in the quarter. If you could sort of help us understand what the maintenance was, and I think I believe you also said the full year's guidance still holding around $160 million. It feels like it doesn't leave a ton of room for other projects in the year.

Did I hear all that right?

Josh Hirsberg -- Executive Vice President, and Chief Financial Officer

Yes, I mean you not only heard it right, but you deduced the outcome pretty [Inaudible] as well. Which is basically we're going to -- any projects that we started late in the year, late last year, we're going to let those roll through. And we spent a little bit more heavily related to the cost of the Aristocrat system. We got a benefit for paying it early in one lump sum, and so we wanted to take a benefit of -- capture that benefit.

And so our maintenance capital is typically about $100 million to $120 million or so, so we can kind of manage that if we need to. So I think this is not like affecting the maintenance of the properties by any means. It's just causing us to kind of reimagine how we may deploy capital with respect to some other initiatives that we want to do. We're just going to hold off on those and try to hit the targets that we've set for folks.

And we still believe we can.

David Katz -- Jefferies -- Analyst

And my second question is, Keith, in your prepared remarks I think you indicated that -- and I don't mean to suggest that you tried to slip it in there, but I believe that you talked about opportunities for other properties, to add other properties to the portfolio. If you could give us -- if you both could give us a little bit of color on what that opportunity set looks like these days, and just give us an updated thought on where the boundaries are or are not and whether the strip is inside or outside or Reno or how we should think about size, etc.

Keith Smith -- President and Chief Executive Officer

I think if you look back at the last decade or so, we've been in active acquire of businesses, although a very disciplined acquire. I think we always talk about that we will remain disciplined and that is true. We will remain disciplined. We also don't ever talk about things that we're looking at or may be looking at or we don't comment on rumors.

Look, we'll only execute on something if it is additive to the portfolio and we can generate a return for our shareholders. We're not interested in vanity projects. Would we like to be on the strip? The answer is yes. We've said that for a long time, but not just to say that we're on the strip.

If there's an asset on the strip that becomes available, that's priced right, that is additive to the portfolio, that can generate a return, then we'll execute on it. If there's assets in other parts of the country that meet those same requirements, we'll do the same. And that I don't think is any different than the way we have looked at growth over the last decade, frankly. And so we'll just continue to execute that way.

Other than that, we're not going to comment on anything specific that we may or may not be looking at just as we haven't in the past. And Josh, feel free to add anything you would like.

Josh Hirsberg -- Executive Vice President, and Chief Financial Officer

The only other thing I was going to add is there's an important aspect to considering growth through future acquisitions or future development and that is weighing it against the opportunity to continue to focus on de-leveraging our balance sheet and return capital to shareholders through dividends and share repurchases. So all of that gets thrown in the blender and mixed together to figure out what we believe are the best decisions to create the highest return for the long-term for our shareholders. So just because there's a strip asset for sale or a regional asset for sale, doesn't mean that it's the best use of our capital necessarily and just because somebody in our company wants to build something doesn't mean that that's what we're going to do either. So we're going to have to weigh all those and make the best decisions possible for creating the most value long-term for our shareholders.

David Katz -- Jefferies -- Analyst

Got it. Thanks so much.

Operator

And our next question comes from Harry Curtis with Instinet. Please go ahead with your question.

Harry Curtis -- Nomura Instinet -- Analyst

Thank you and good afternoon. Keith, in the press release you used the phrase marketing refinements. And you guys have been refining your marketing probably for the last two years, if not the last 20 years. So what -- is there anything new to the marketing refinements that this refers to? And if so, when might it have been put in place? And exactly what does it mean?

Keith Smith -- President and Chief Executive Officer

Well, with all due respect, Harry, if I told you then our competitors would know and we wouldn't be able to take advantage of it. Look, I think marketing refinements we've been working on in earnest for a couple of years and it has to do with the combination of both technology and rolling out new technology, some of which have been rolled out, some of which are being rolled out in future quarters. Some of it has to do with how we've organized around it, more centralization, hiring maybe a few more people at a central level to analyze it. Better tools, better analytics and some standardization of practices as the portfolio gets bigger and being able to then maybe eliminate some very unprofitable practices.

It's not anything where there's a singular playbook and you go and execute it all at once. And so it is an evolving strategy with some things working, some things not working, new technology continuing to roll out and B Connected was all part of that. B Connected was part of what I will call marketing refinements as we relaunched a very important part of our marketing toolkit, our Players Club. And it's been I think a successful launch.

And so it's all of those things together that comprise this general term, and I appreciate the question, called marketing refinements. It's a whole lot of things wrapped into two words.

Harry Curtis -- Nomura Instinet -- Analyst

This is -- one of the things that I'm scratching my head over is that you guys have done a really, really great job in a market where your revenues have been flat with these marketing refinements in squeezing more EBITDA out. What's really interesting is the growth in visitation or not on visitation, but on population in Vegas. And do you think that that's mainly in areas that are just not well served by casinos? Is there an opportunity for you there? Or do you have to stretch your marketing a little bit further afield to capture some of that growing population?

Keith Smith -- President and Chief Executive Officer

I think we're actually -- well you don't see it or it may not be obvious in some of the top-line revenue numbers, if you look at the last three months gaming revenue here in the State of Nevada and here in the locals market of Nevada, we're actually seeing good growth. Many of our properties, as part of our locals portfolio, are outgrowing the market averages. You look at North Las Vegas in Aliante, the market grew 5% and we're growing well north of 5%. And you look at some of our other properties in Las Vegas, now it's being offset by some properties that aren't growing.

And so when you look at the portfolio effect, you don't see a lot of revenue growth. And I've said this in prior calls, some of the properties that are a little more mature in this process where we've spent more time with some of these marketing capabilities, are seeing better results in terms of revenue growth. So I think we're very happy with where we're at, we're happy with the revenue growth we're seeing. We always want more, we're always striving to achieve more, just like we're always striving to achieve continued margin improvement and it's a balance to make sure that we're generating or we're maximizing EBITDA through a combination of margins and revenue enhancements.

Harry Curtis -- Nomura Instinet -- Analyst

Much appreciated.

Operator

Our next question comes from Chad Beynon with Macquarie. Please go ahead with your question.

Chad Beynon -- Macquarie Research -- Analyst

Good afternoon. Thanks for takin my questions. Josh, last quarter you went into greater detail on a couple of different line items for 2019 guidance, including share based comp and depreciation, etc. I think the most important one for us was free cash flow.

Have any of those numbers changed?

Josh Hirsberg -- Executive Vice President, and Chief Financial Officer

No, not that I would expect or otherwise we would have been kind of updating you on that. So I think the timing of some of the expenses related to capex is the only new thing which I'm updating everyone on at the same time. But generally the direction of the business we expect to be the same, otherwise we would have updated EBITDAR guidance. And I think all the line items below that, when I looked and checked versus where our models are and our expectations for those line items and what we gave you at the year end are basically the same.

So nothing's really changed.

Chad Beynon -- Macquarie Research -- Analyst

Secondly, in Las Vegas you have a lot of hotel rooms downtown in the locals market. Can you talk about your ability to continue to raise resort fees and if you've had any increased pushback from your customers, either late in the year or as we've kind of gone into 2019. I'm not sure if you continued to raise those fees, but just an update on how that's tracking.

Keith Smith -- President and Chief Executive Officer

I can't speak to the last time we raised resort fees. For us, it's a number, but it's much more modest than the types of numbers that you see on the strip. I don't think we've raised it in downtown in a while, but I frankly just don't recall. But once again, these are very modest numbers when compared to what's going on in other parts of our industry.

And in terms of pushback, yes, we haven't had any customer issues, because once again there are benefits provided and the numbers aren't that large.

Chad Beynon -- Macquarie Research -- Analyst

Thanks, Keith. Appreciate it.

Operator

And we have one last question that comes from Shaun Kelley with Bank of America. Please go ahead with your question.

Shaun Kelley -- Bank of America Merrill Lynch -- Analyst

Hey, good afternoon, guys. Thanks for bringing me in. Just two quick ones. The first one, just sticking with kind of your downtown performance.

I'm just curious, have you guys ever done any survey work or anything that would validate or point to any share gain or share shift between the strip, which does have some of those very high price points in things like resort fees and any movement to downtown? I mean you mentioned I think that visitors do cross over between both, but have you ever kind of seen -- have you seen any quantifiable change in just market share as you look at the two different markets?

Josh Hirsberg -- Executive Vice President, and Chief Financial Officer

Shaun, it's a really good question and I think we'll have somebody do it if we can figure out how to. We've not looked at market share shifts between say downtown and the Las Vegas strip, but what we have seen is just -- and it's evident in the performance of -- in our segment in particular is we've just seen a more -- certainly a more -- more of an affinity or a more interest in going downtown, not only from the strip, but regionally and locally as well because of the enhanced amenities, the value proposition, the ability to walk around, the ease, the different kind of -- the true experience of downtown. So all of those things play into the attractiveness for a certain segment of the customer base.

Keith Smith -- President and Chief Executive Officer

It's hard to know if it's shifting from downtown or whether people are spending more time down there. We do some survey work, but nothing that would be responsive necessarily to that particular question. There's a zip line downtown, those numbers continue to grow, which is one of the metrics that we look at in just anecdotally listening to our managers, who spend time out on the mall and watching the business. We just see continued business.

Josh Hirsberg -- Executive Vice President, and Chief Financial Officer

And most of the play downtown is because it's coming off Fremont Street in many cases is unrated play. That makes it also kind of a little bit -- it's a different business really than the other segments of our -- where we have a much higher track component of business.

Shaun Kelley -- Bank of America Merrill Lynch -- Analyst

And then the other one is just I think we saw in one of the local papers or trade papers a proposal by the governor of Illinois to possibly raise the VGT tax rate like significantly. Any legislative update on what you know about that proposal? Is it still possibly in the works and what that might mean for [Inaudible]?

Keith Smith -- President and Chief Executive Officer

I don't have a specific update on that. The one thing that I've been operating in Illinois for the last couple of decades is you kind of have to wait until the end of the session and you see how it all washes out. We're obviously paying attention to that. There's a proposal to raise the -- or change the whole state income tax for residents, which would impact the corporate income tax.

There's the ability for sports betting. There's VGTs in the Chicagoland area. There's a whole lot going on in Chicago. If you've paid attention to it long enough, they've had an omnibus gaming bill that includes new casinos and lots of other things for years that just hasn't made it through the legislative process.

So we're paying attention. I can't speak to that question directly, but we are actively engaged in all those issues.

Shaun Kelley -- Bank of America Merrill Lynch -- Analyst

Got it. Thanks very much.

Operator

And this will conclude our question and answer session. I'd like to turn the conference back over to Josh Hirsberg for any closing remarks.

Josh Hirsberg -- Executive Vice President, and Chief Financial Officer

Thanks, Cole. Thanks, everyone for joining today. We appreciate all the questions and you spending the time to participate in the call. If you have any other question, feel free to reach out to the company.

Thank you.

Duration: 44 minutes

Call Participants:

Josh Hirsberg -- Executive Vice President, and Chief Financial Officer

Keith Smith -- President and Chief Executive Officer

Joe Greff -- J.P. Morgan -- Analyst

Carlo Santarelli -- Deutsche Bank -- Analyst

Thomas Allen -- Morgan Stanley -- Analyst

Steve Wieczynski -- Stifel Financial Corp. -- Analyst

David Katz -- Jefferies -- Analyst

Harry Curtis -- Nomura Instinet -- Analyst

Chad Beynon -- Macquarie Research -- Analyst

Shaun Kelley -- Bank of America Merrill Lynch -- Analyst

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