Boyd Gaming (BYD) Q2 2019 Earnings Call Transcript

Boyd Gaming (BYD -15.44%)
Q2 2019 Earnings Call
Jul 30, 2019, 5:00 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good afternoon, and welcome to the Boyd Gaming's second-quarter 2019 conference call. All participants will be in listen-only mode. [Operator instructions] After today's presentation, there will be an opportunity to ask questions. [Operator instructions] Please note, today's event is being recorded.

I would now like to turn the conference over to Josh Hirsberg, executive vice president and chief financial officer. Please go ahead, sir.

Josh Hirsberg -- Executive Vice President and Chief Financial Officer

Thank you, Rocco. Good afternoon, everyone, and welcome to our second-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. Good afternoon, everyone. During the second quarter, our diversified national portfolio continued to yield positive results for our shareholders as we delivered same-store revenue, EBITDAR and margin growth in every segment of our business. While the pace of our same-store growth did moderate from prior quarters, this is primarily due to difficult comparisons to record performance at The Orleans last year, as well as softness in several markets in Louisiana.

However, these issues were more than offset by strong performances elsewhere in our business, demonstrating the strategic value of geographic diversification. On a same-store basis, we delivered record results in Downtown Las Vegas and solid growth throughout the remainder of our Las Vegas and regional properties. Our customers remain healthy. Our geographically diversified portfolio is performing well, and our operating teams continue to successfully enhance margins throughout our business.

And as I'll discuss in a few minutes, we are successfully executing on strategic initiatives that position us for continued growth into the future. On an overall basis, our second-quarter results were significantly enhanced by strong performances at our five newly acquired properties. Through focused efforts to drive profitable revenues and efficiencies at these properties, we grew combined EBITDAR more than 7% over their prior-year stand-alone results while improving operating margins more than 150 basis points. In Missouri, Ameristar Kansas City and Ameristar St.

Charles each grew EBITDAR at a double-digit pace compared to last year's stand-alone results with EBITDAR at St. Charles reaching its highest levels in eight years. At our Belterra properties, EBITDAR at Belterra Resort in Southern Indiana declined slightly due to the impact of new competition in the Louisville market. While in Ohio, Belterra Park achieved the best quarterly revenue in EBITDAR performance in its history.

And in Pennsylvania, Valley Forge achieved a record second-quarter EBITDAR performance boosted by strong growth in stock volumes and contributions from the FanDuel sports book that opened in March. In all, these new properties are off to an astounding start under our leadership as our operational approach delivered growth above their solid stand-alone performances last year. Once again, we are demonstrating our ability to successfully integrate acquisitions and immediately drive improved performance. While the addition of our new assets accounted for much of the year-over-year increase at our Midwest and South regional results, we also continued to drive same-store growth as this segment achieved its fifth consecutive quarter of same-store EBITDAR gains.

As I mentioned earlier, segment results were impacted by a weaker quarter in Louisiana. This was primarily due to softness across the southwestern part of the state, where last year's results benefited from hurricane recovery work throughout the area. Elsewhere in our Midwest and South region, results were quite encouraging with solid performances throughout the remaining properties in the segment. In Indiana, Blue Chip had another solid quarter of revenue and EBITDAR gains as it continues to outperform the Northwest Indiana market thanks to its market-leading amenities and skilled operating team.

In Iowa, both of our Diamond Jo properties delivered revenue and EBITDAR growth for the quarter. On the Gulf Coast, the IP achieved its ninth straight quarter of EBITDAR gains as more efficient and effective marketing programs continue to drive growth. And to the West, we were particularly pleased with our performance at Kansas Star as operational and marketing refinements drove solid growth in visitation, revenues and EBITDAR during the quarter. In Nevada, our Las Vegas locals business produced its highest second-quarter EBITDAR since 2005 as continued gains in revenues and operating margins drove our 17th straight quarter of EBITDAR improvement.

While long-term growth continues across our locals segment, these gains were partially offset by a challenging quarter at The Orleans. Resulted property were impacted by unusually low hold during the quarter, as well as a difficult comparison to last year when a major event at The Orleans helped drive record results at the property. The Orleans did not have the benefit of that event this year. After adjusting for these onetime items at The Orleans, EBITDAR was up 4.5% on our locals segment as the balance of our locals properties continued to deliver solid results.

At the Gulf Coast, we again posted strong revenue and EBITDAR gains. At Eastside Cannery, we saw a considerable improvement over the first quarter as operational adjustments reversed the negative trends we saw in Q1. And Aliante's positive trajectory continued during the quarter. Thanks to more effective marketing initiatives and a strong management team, we're making the most of strong residential and commercial growth throughout North Las Vegas.

And while growth has been particularly strong in North Las Vegas, positive economic trends are continuing throughout Southern Nevada. The Las Vegas Valley is the third fastest-growing metropolitan area in the country according to the latest estimates from the Census Bureau. Job growth and wage growth are both outpacing the national average with the local economy adding more than 21,000 jobs over the trailing 12 months. Taxable sales have grown more than 7%, and tourism to our community continues to grow, driven by strong convention business and record passenger counts through McCarran Airport.

The strength of the Southern Nevada economy is also benefiting our Downtown Las Vegas operations as we achieved record results in our downtown segment during the second quarter. All three of our downtown properties set new second-quarter EBITDAR records with strong business volumes and visitation across our operations. Business from both the Hawaiian customers and unrated players was up significantly during the quarter, a clear indication that we are benefiting from growth throughout the downtown market. While we are encouraged by the health of Downtown Las Vegas, we continue to anticipate construction disruption from the Circa project adjacent to the California and Main Street Station.

This disruption will likely have an impact on our results in the coming quarters and is included in our current guidance. But in the long term, we are confident that Circa will be a significant positive for the entire market when it opens late next year, drawing more visitors than ever to Downtown Las Vegas. In all, our nationwide portfolio continues to perform well, and we are confident in our ability to continue growing through further operational refinements and strategic initiatives. The expansion of our B Connected program to our new properties is a good example of a growth initiative that is helping drive stronger results.

Another promising initiative is the ongoing expansion of sports betting across the country. At the IP, Sam's Town Tunica and Valley Forge, our new sports books, are drawing new and younger customers through our doors. And there is more to come over the next several months. Just days ago, FanDuel launched its mobile sports betting app in the state of Pennsylvania, marking the first digital gaming partnership between our companies.

Our retail on-premise sports betting presence will also expand in the coming weeks. By early September, FanDuel will open sports books at Blue Chip, Belterra Resort, Diamond Jo Dubuque and Diamond Jo Worth. Based on what we've achieved so far in Mississippi and Pennsylvania, we're optimistic our partnership with FanDuel will continue to contribute to growth in visitation and revenues across our regional operations while further expanding our customer base. We also see future growth potential from the Wilton Rancheria tribal resort project near Sacramento.

Once complete, this resort will be exceptionally well-positioned to serve the Northern California market. Located just south of Sacramento along Highway 99, a major freeway in the area, the Wilton property will be the closest casino to more than 5.5 million people from Sacramento to the Bay Area. This resort and the revenue stream it will generate will be a historic step forward for the Wilton Rancheria Tribe and its quest for self-sufficiency, and it will be a significant growth opportunity for our company as well. Beyond these growth initiatives, acquisitions will also continue to be a core component of our long-term growth strategy.

Over the last eight years, we have acquired 15 separate assets and seven separate transactions and all have performed at or above our initial expectations. As we demonstrated yet again in the second quarter, we have a proven track record of identifying and executing transactions that create value, successfully integrating and operating these new assets and taking full advantage of their potential. As we consider future growth initiatives, we will remain disciplined and prudent in how we deploy our capital, always acting in the best interest of our shareholders and creating long-term value. So in conclusion, we remain pleased with our continued long-term progress as a company.

We continue to deliver broad-based top and bottom-line growth throughout our same-store operations. We are achieving great results at our newly acquired properties. We are successfully executing on marketing and operational initiatives to further grow and diversify our business. We are further capitalizing on our partnership with FanDuel, leveraging the nationwide expansion of sports betting to drive new visitation and new customers to our properties.

We continue to deploy our expanded free cash flow to pursue a balanced approach to value creation. We remain focused on achieving our long-term leverage target of four to five times EBITDA while returning a portion of capital to our shareholders through dividends and share repurchases. And we will keep executing a proven growth strategy of disciplined capital investment in our business, including reinvestments in our existing properties and strategic acquisitions. Our strategy is sound.

The fundamentals of our business are strong, and we remain confident in the direction of our company. Thank you for your time. Now I'd like to turn the call over to Josh.

Josh Hirsberg -- Executive Vice President and Chief Financial Officer

Thank you, Keith. Our operating teams delivered another solid performance during the second quarter with all segments showing year-over-year improvements in revenue, EBITDAR and margin. Our recent acquisitions are performing in line with our expectations, and the integration of these properties is going extremely well. As Keith noted, our rate of same-store growth during the quarter was below the pace we have seen over the last several quarters due to challenges at The Orleans Casino and in the Louisiana market.

However, given the favorable underlying customer trends in our business and the positive economic climate in the markets in which we operate, we remain comfortable with our guidance. As noted in our release, we are reaffirming our full-year EBITDAR guidance after corporate expense of $885 million to $910 million. Providing a few more specifics about the quarter, leverage at quarter end was about five times debt to EBITDA, and lease-adjusted average was 5.4 times. Our target leverage is four to five times EBITDA, and we expect to approach the midpoint of this range by year end.

We reduced debt by $43 million in the quarter and by $75 million year to date. Through the first six months of this year, we have paid $13 million in dividends and repurchased $28 million in shares at an average price of $25.82 per share. We will continue to be measured in the execution of our share repurchase program. Consistent with our past practice, we will use our free cash flow to pursue the highest-returning projects, whether those are reinvesting in our business, strategically growing our company or returning capital to shareholders, all balanced with a continued focus on deleveraging our balance sheet.

Capital expenditures during the quarter were $37 million, bringing year-to-date investment to approximately $126 million. We now expect capital spending for this year to be approximately $180 million, slightly higher than our previous guidance of $160 million. Our quarter-end debt and cash balances were provided in our earnings release. Finally, in terms of our master lease, rent coverage for the assets governed by the lease for the LTM period was 1.92 times.

With that, Rocco, that concludes our prepared remarks, and we are now ready to take any questions.

Questions & Answers:

Operator

Absolutely, sir. We will now begin the question-and-answer session. [Operator instructions] Today's first question comes from Carlo Santarelli of Deutsche Bank. Please go ahead.

Carlo Santarelli -- Deutsche Bank -- Analyst

Hey, guys. Thank you. Keith, you talked a little bit about The Orleans and the impact that it had, and you mentioned that ex the difficult comp and ex the event that you had there last year, same-store EBITDAR was up 4.5%. I just wanted to clarify, is that ex Orleans altogether? Or are you including Orleans but normalizing for the event and hold impact?

Keith Smith -- President and Chief Executive Officer

Great question. It includes The Orleans normalized for the hold issue.

Carlo Santarelli -- Deutsche Bank -- Analyst

Understood. OK. And then both of you spoke a little bit about some of the challenges in New Orleans. Obviously, July has seemingly gone off to a little bit of a tough start with some of the weather there, obviously the storms.

I believe at least two of your properties were closed for a period of time. Could you talk a little bit about how we should think about not only Louisiana but Mississippi as well for kind of July and how that relates to the 3Q period?

Keith Smith -- President and Chief Executive Officer

Well, you're right. Actually, three of our properties were closed for a weekend, Friday, Saturday, Sunday, Treasure Chest, Amelia Belle and Evangeline Downs, all for different reasons but all related to Hurricane Barry. It had additional effects, frankly, on the IP as people who would go from the New Orleans market over to the Gulf Coast for a weekend vacation didn't travel and also had some effect over in the southwestern part of state, the Delta, because the Houston market after last year's event kind of stayed home and stayed away from the area. So it had a much broader effect.

Now it was one weekend out of the month, one weekend out of the quarter. These are very localized markets, and so I think it's too early to predict any impact on the quarter. It obviously will have an impact on the month of July, but it's too early to predict an impact on the quarter.

Carlo Santarelli -- Deutsche Bank -- Analyst

Understood. And then if I could, just one last one. You guys laid out here the contributions in the period from the four legacy Pinnacle assets that you acquired in mid-October of last year, which is helpful kind of framing the context of the same-store but obviously with Valley Forge in the 2Q this year and not there last year and Lattner kind of sprinkled in a little bit last year and there this year, if you were to exclude those two, is it safe to assume that the balance of the legacy Boyd portfolio saw margin expansion and EBITDAR growth as well?

Josh Hirsberg -- Executive Vice President and Chief Financial Officer

They -- we did see same-store EBITDAR growth, and we saw same-store margin improvement as well when you take out the contribution from the acquisitions in both periods.

Keith Smith -- President and Chief Executive Officer

So Carlo, our same-store commentary in our prepared remarks excluded the five properties, and Lattner is such a small piece of it, but it excluded Valley Forge and the four PNK properties we acquired.

Josh Hirsberg -- Executive Vice President and Chief Financial Officer

And it excludes the Lattner as well.

Keith Smith -- President and Chief Executive Officer

Yes, excludes the Lattner. So the numbers we've quoted in our prepared remarks were --

Carlo Santarelli -- Deutsche Bank -- Analyst

Were ex everything all six assets effectively?

Keith Smith -- President and Chief Executive Officer

Yes.

Josh Hirsberg -- Executive Vice President and Chief Financial Officer

Yes, correct.

Carlo Santarelli -- Deutsche Bank -- Analyst

Perfect. OK. Thank you, guys.

Keith Smith -- President and Chief Executive Officer

Thank you.

Josh Hirsberg -- Executive Vice President and Chief Financial Officer

You're welcome.

Operator

And our next question today comes from Thomas Allen of Morgan Stanley. Please go ahead.

Thomas Allen -- Morgan Stanley -- Analyst

Just -- you made some comments about potential future M&A. Just in terms of that topic, how does it feel -- like how active does the M&A market feel right now? And how willing are you to take on incremental leverage here at this point in the cycle to do deals? Thanks.

Keith Smith -- President and Chief Executive Officer

You're right. I think we've probably made a comment on M&A on every call for a number of years as we continued to view ourselves as a growth company and look for ways to expand. And once again, we kind of have a proven track record in acquisitions. As always, anything we look at will be disciplined in terms of what price we pay, making sure we can provide the right return to our shareholders and making sure it fits in the portfolio.

There's a reason to acquire it. I think we are flexible in terms of looking at our leverage going up to acquire the right asset in the right market. As long as we see it coming down very quickly, we'll not let our leverage go up without a way to see it coming down very quickly. We're cognizant of the fact that we're a little long or late in this economic cycle.

It's been going on for quite a while, and so we're a little -- have a little more sensitivity to looking at acquisitions today than we probably did four or five years ago, acknowledging where we're at in the cycle. But we're still looking how active is the market. It's hard to tell. It feels a little quiet to me right now, but you never know what's going to happen tomorrow.

Thomas Allen -- Morgan Stanley -- Analyst

Thank you. And then just two questions on downtown. Obviously, you highlighted Circa could be more of a headwind, but you've been even growing EBITDAR in that segment about 5% in the first half of this year. Like do you still expect it to grow in the second half of the year? And then there's been some talk about you guys expanding in downtown, kind of where are you there now? Thank you.

Keith Smith -- President and Chief Executive Officer

So I would say that -- will it continue to grow in the second half of the year? Yes. It will continue to grow, just not at the same pace as it did in the first half because of what we expect to be an impact from the Circa development. As it goes vertical, there's just that much more construction traffic in the area. It's harder for people to get to our buildings.

And once again, two out of the three of our assets are back there. So I think growth will slow in the second-half downtown. In terms of the Fremont, once again, we've owned a piece of land behind the Fremont for a couple of decades, if not longer. We've looked at using that piece of land to expand the Fremont any number of times.

We're looking at it again currently because, quite frankly, the Fremont just has a great, great business going on there with record or near-record EBITDAs almost every quarter. And so the question becomes, is there a way efficiently and effectively at the right price to expand that property and get a return on that investment? No decision has been made, still something that we're looking at, but those are kind of the dynamics surrounding the Fremont.

Thomas Allen -- Morgan Stanley -- Analyst

Helpful. Thank you.

Keith Smith -- President and Chief Executive Officer

You're welcome.

Operator

And our next question today comes from Joe Greff of J.P. Morgan. Please go ahead.

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

Hey, guys. Can you just talk about the promotional environment in the Las Vegas locals market in the 2Q? I guess I'm approaching this question from the point of view that we've heard, I guess mixed signal with different points during the 2Q. And how does it feel now versus different points during the 3Q, particularly as you have a couple of your competitors' properties that are ramping up relatively new product offerings?

Keith Smith -- President and Chief Executive Officer

Yes. Look, the promotional environment, I think, in the locals market is pretty transparent. It's out there in the paper and on TV every day. And if you're looking at it, I think you would say that in the months of May and June, in particular, it was a little elevated given some of the point multipliers that were being offered, some of the more expensive promotional giveaways that you're seeing when you compare it to the year-ago Q2.

April didn't seem that way. July, thus far -- I mean, we're four weeks into July. July is virtually over, doesn't feel quite as aggressive, but certainly May and June were a little elevated in the market just once again knowing what was out there.

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

OK, great. And then Josh, corporate expense came in lower than what we had anticipated. Was there anything timing-wise or onetime in nature there? And how are you thinking of the full year on corporate expense?

Josh Hirsberg -- Executive Vice President and Chief Financial Officer

Yes. So I think we did a really good job of managing corporate expense in quarter two if you kind of look at the trends from -- even last year, they would suggest Q3 will be a little bit higher and Q4 maybe even a little bit higher than that, but I think we are trending slightly below kind of what I feel is an estimate out there of about $90 million. So I think it will be kind of in that $88 million to $90 million range, not materially different at this time.

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

OK, great. And just going back to your earlier response, Keith, on M&A. How would you assess the risk criteria evaluating M&A for Las Vegas Strip asset versus more traditional Midwest or Southeast regional casino?

Keith Smith -- President and Chief Executive Officer

I guess I can provide a more generic answer because, typically, it is a little property specific. Given the quality of the property which you're looking at, you may assign a different risk profile to it. Look, Las Vegas is still a very strong market. I think it has a great future ahead of it, and therefore, it has stable regulatory and tax environment.

And so from a risk standpoint, a risk perspective, I put acquisitions in Las Vegas financially at a lower risk profile even though it's a much more competitive market. In many of the other states, as we've seen, you're subject to massive gaming expansion bills like happened in Illinois that can impact the landscape very quickly and changes to regulations in other states that can impact you competitively. It generally hasn't happened here in Las Vegas. So --

Josh Hirsberg -- Executive Vice President and Chief Financial Officer

I think the only other thing that I would add to a consideration for ours is just how important or strategic is the asset relative to the valuation. And does that necessarily mean we're going to have to pursue it in an opco/propco structure because I think to the extent it has an opco component to it, I think we will pursue that if it makes sense, but that's another kind of consideration for us and how much exposure we want to have to that type of capital structure, if you will, or that form of financing as we consider acquisitions going forward.

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

Thank you.

Operator

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

David Katz -- Jefferies -- Analyst

Hi, afternoon everyone. Josh, I wanted to just go back to the last part of the very last sentence to your last answer, which was around the mix of opco and propco. How do you think about what your tolerance for exposure to that could or would be? Do you have a notional split in mind? Or is the answer, as it is to many other things, it really depends?

Josh Hirsberg -- Executive Vice President and Chief Financial Officer

I would like to give you clarity, but I think it really just depends on the opportunity that's presented. And look, I think we've been pretty transparent around how we think about it, and we think of it as a form of financing clearly and we think of it as a substitute for reissuing equity ourselves. And so to the extent that we're going to go out and do a project, I think we evaluate the return characteristics based on, whether we would have to use our own equity or not, to pursue that opportunity. And so it really is going to be specific to the opportunity as to whether it warrants that kind of financing or not, and in that mix goes back to everything Keith said and everything we've said historically around as we evaluate acquisition, which is how strategic is it, how much free cash flow we're going to -- the amount of free cash flow going to generate and the value that we can ultimately create from that opportunity.

And so I don't think we have a specific kind of target for opco exposure, but those are the kinds of things that we would factor in if we had a specific opportunity.

David Katz -- Jefferies -- Analyst

Right. And if I may, since it's been a while, what would be the circumstances or the boundaries around which Boyd would be interested in being on the Las Vegas Strip at this point?

Keith Smith -- President and Chief Executive Officer

Well, I think we'd look at it like all acquisitions. We have said in the past on prior calls that we certainly would like to get back on the Las Vegas Strip with an asset at some point in our future. It doesn't drive us. We don't think about it day and night.

We keep our eyes open for opportunities. We'll evaluate it like any other opportunity, the right asset at the right price. I said earlier we have great confidence in the strength of the Las Vegas market both short term and long term, and so we'd like to be there but you won't see us do anything stupid. And once again, being a little late in the economic cycle, we'll be sensitive to whatever it is that we do knowing -- not knowing what the future is going to look like.

Josh Hirsberg -- Executive Vice President and Chief Financial Officer

And the only other comment I would add that we talk about quite a bit is that I don't think we feel like we need acquisitions to grow our business. We continue to have significant opportunities just in terms of operating our business more efficiently and focusing on that aspect of the opportunity for our company going forward and then as an acquisition that is purely opportunistic comes our way that fits our criteria, then that's when we'll be interested in it. Otherwise, we're fine kind of tending to our own business.

David Katz -- Jefferies -- Analyst

Got it. Thank you very much.

Operator

Our next question today comes from Felicia Hendrix of Barclays. Please go ahead.

Felicia Hendrix -- Barclays -- Analyst

Hi. Thanks a lot. Keith, in your responses to M&A recently, not just on this call but recently, you've talked about the economic cycle and where we are in terms of a potential risk factor with M&A, but as we think about your business today, it doesn't seem like your consumer is reflecting any kind of economic sensitivity. So just -- and I know they're two separate things but to get to your consumer in particular, I mean I think your results speak for themselves, but are you seeing any sensitivity in any particular -- like any buckets of sensitivity anywhere?

Keith Smith -- President and Chief Executive Officer

A fair question. I think that from a consumer standpoint -- I think I used the term consumer, our consumer remains healthy. They're acting normally. I don't see the business decelerating in the near term.

I don't see it accelerating either. I mean it's more of the same as we look at the first three or four weeks of July across the portfolio. You see generally the same trends we've been seeing for a while. So the consumer remains healthy.

As you -- as we think about acquisitions and we think about providing a return to our shareholders over a longer period of time, which is sensitive to levering up when the expansionary cycle that we're in or the economic cycle we're in could be winding down a little bit. We are continuing to be focused on hitting a leverage profile, as Josh said, of between four and five times, and so we're trying to balance that with the other things that we need to do to continue to grow the company. So we do have flexibility and we remain flexible in terms of seeing that leverage go up, as I said in my earlier comments, as long as we can see it come back down in a rather short amount of time. So we'll remain flexible.

We're -- I don't think in the past we've let any great opportunities slip through our fingers and we're not going to do that in the future either.

Felicia Hendrix -- Barclays -- Analyst

And that makes sense. And just switching gears to your same-store sales and you explained why that was kind of slower, but if I look at the flow-through, it was still good. Just you've talked about the initiatives and the step that you've done in the past to kind of keep that flow-through in a strong place, but it's been consistent over time and you don't really seem to significantly anniversary that. So are there some new initiatives that you're doing or some things that you're reinforcing? Can you just talk about that for a minute?

Keith Smith -- President and Chief Executive Officer

Yes. Look, I think it's become part of our everyday culture more so than it has in the past to find ways to continue to drive flow-through, reduce margins -- or, I'm sorry, improve margins, reduce costs. We continue to roll out new tools on the marketing side or on the analytic side that allow us to look at the customer differently, talk to the customer differently. Some of these things are fully baked in.

Some of them are just rolling out. So I think we continue to benefit from -- there are more and more initiatives that we uncover and I think we do have more to go. It gets harder every month or every quarter to continue to find that next initiative that's going to drive more margin, but the team is focused on it and I'm confident that there is more out there.

Felicia Hendrix -- Barclays -- Analyst

Great. And then just, Josh, quickly, what is specifically driving your higher capex?

Josh Hirsberg -- Executive Vice President and Chief Financial Officer

Oh, from the $160 million to the $180 million number?

Felicia Hendrix -- Barclays -- Analyst

Yes, yes.

Josh Hirsberg -- Executive Vice President and Chief Financial Officer

It's -- last year, we actually spent about $160 million and we were going to trying to manage that level again despite the acquisitions, and I think we're finding that we need to spend a little bit more money. And so I expect it to be kind of in that $180 million neighborhood as we go through time, but that's largely what we're -- that's largely the driver of it.

Felicia Hendrix -- Barclays -- Analyst

OK. So it's more really the acquisitions. And then just as far as the synergies that you set out, those are all on track?

Josh Hirsberg -- Executive Vice President and Chief Financial Officer

Yes, absolutely. I would say we feel very comfortable with the synergies. And also, what's been great about the acquisitions is the teams that we -- that are now part of Boyd are -- really have been very consistent with our culture and it's been great to have them contribute to our organization as well. And so there's been a lot of great collaboration and it's really been very seamless.

And so not only have we benefited from the synergies but there's just been overall kind of one plus one equals more than two in this case because of the collaboration between everyone.

Felicia Hendrix -- Barclays -- Analyst

Great. Thanks so much.

Operator

And our next question comes from Jared Shojaian of Wolfe Research. Please go ahead.

Jared Shojaian -- Wolfe Research -- Analyst

Hi. Good afternoon, everybody. Thanks for taking my question. With respect to the weather impact in Louisiana, you mentioned it's too early to predict any sort of impact.

So I guess my question is, how did you think about that in terms of your guidance for the full year? And is it fair to say that you would have raised guidance without the weather impact? Is it that big of an impact? Or is it not enough of a needle mover?

Josh Hirsberg -- Executive Vice President and Chief Financial Officer

Yes. Jared, this is Josh. It would not be big enough to raise guidance. We try to give guidance from the beginning of the year that we feel like we can accommodate some ups and downs that are naturally going to occur throughout the year.

And so that would be just something that we unknowingly built in because of our allowance for things to not always go right, and that's what gives us the opportunity when we kind of hit some bumps in the road to continue to kind of set an expectation that we can meet from the beginning of the year. So that's all there is really.

Jared Shojaian -- Wolfe Research -- Analyst

Got it. And then just switching gears here on the sports betting side. Can you give us some sort of sense as to what you're seeing from a numbers perspective with gaming revenue and non-gaming revenue in markets where sports betting has gone live versus where it was previously or maybe versus some of your other markets?

Keith Smith -- President and Chief Executive Officer

Yes. So we're not in a position to really kind of talk through that in detail. As we look at sports betting, what I call kind of the vertical, if you will, itself of sports betting for our properties in Mississippi and Valley Forge, the profit is nice and it's incremental but it's really about the incremental traffic that it drives into the building that supports the casino, whether it be table games or slots that support the restaurants and support other parts of the building. And once again, we've seen good traction.

We've seen good foot traffic from the three operations that we've opened thus far. Obviously, our Mississippi operations which opened last August, we have more experience with. And once again, we're just seeing good traffic. And the Valley Forge, when it opened in March, saw the same thing, good traffic.

So it's really about traffic generation for us.

Jared Shojaian -- Wolfe Research -- Analyst

Got it. Thank you very much.

Operator

And our next question today comes from Harry Curtis of Instinet. Please go ahead.

Harry Curtis -- Nomura Instinet -- Analyst

Hi guys. I think that there's a little life left in this horse. So I want to beat this horse to death on the issue of acquisitions. I'm sure you're enthusiastic about that.

The question is, if you set aside price for a Strip asset, can you walk us through the strategic reasons it might be appealing and maybe weave into your thoughts, the fact that while -- Keith, you said that they are -- it is lower risk but the fact is that Strip assets are, to some degree, higher -- have higher cyclical risk and then -- and do you think that your loyalty program, your network outside of Vegas is now broad enough to support ownership of a Strip property without having to rely too heavily on third-party booking engines?

Keith Smith -- President and Chief Executive Officer

So look, setting price aside, everything is easy, but as we think about why a property on the Strip besides the fact that once again we have tremendous confidence in the long-term future of the Strip when you think about the Raiders stadium, you think about more rooms coming into the market, you think about the expansion of the Convention Center and just the growth in the community, we have great confidence. One of the successes we've had over the last, I don't know, one year, 18 months and that continues to build for us is cross-property play. It is becoming a larger and larger part of our marketing efforts with this expanded portfolio, as you highlighted. And so I think that, that absolutely helps support our property on the Strip.

Right now, we're able to put those folks whether it's in our downtown properties or many of them go to The Orleans, very few of them end up out of the Suncoast because it's too far out of town, but I think having a property in the Strip will -- we could support many of the room nights in there with cross-property play because many people want to be on the Strip. That's just what their desire is. But between that and just confidence, yes, Strip assets tend to be a little pricier. You have to have a long-term view.

You have to -- you have a strategic rationale. So I think once again, we'll be careful. We'll be thoughtful. We've had opportunities to look at Strip assets in the past, haven't executed on anything and we'll continue to be very prudent about what it is we do with any opportunity that comes up.

Harry Curtis -- Nomura Instinet -- Analyst

Thank you. And my follow-up question goes back to the locals, the growth in locals revenues really from 30,000 feet. It's interesting in the first quarter, the growth rate was roughly 3% and that did decelerate a bit to under 1%. And I'm interested in your thoughts as to why it was a bit more subdued in the second quarter.

Keith Smith -- President and Chief Executive Officer

It's a fair question. I think one of the things that happens clearly that impacts us is the calendar shift when you look at holidays and those types of things. Outside of that, when you look at the quarter, the second quarter generally, it was -- felt a little soft because of the calendar shift. May felt pretty normal and June felt maybe a little on the soft side or said another way, not up to our expectations.

My comments earlier, the first four weeks of July looking pretty normal. So was it just a soft quarter? Was it just a soft month outside of the calendar change? That's how we're looking at it at this point. We're not reading any more into it. We're not picking up a natural -- a huge deceleration of the business of any sort, once again, because as we look at July, it's feeling pretty normal to us.

We're kind of back to volume increases that we would have expected. We're talking about calendar changes from March to April specifically for the Easter.

Harry Curtis -- Nomura Instinet -- Analyst

OK. All right, great. Well, look forward to the second half. Thank you very much.

Keith Smith -- President and Chief Executive Officer

You're welcome.

Operator

And our next question today comes from Barry Jonas of SunTrust. Please go ahead.

Barry Jonas -- SunTrust Robinson Humphrey -- Analyst

Thanks. Maybe just following up on some of the Strip commentary. I think the locals GGR historically correlated fairly high with the Strip. I'd love to get your thoughts qualitatively how correlated you think the -- your locals business is with the Strip and if you see that correlation strengthening or weakening from here.

Josh Hirsberg -- Executive Vice President and Chief Financial Officer

I'll just make an initial comment, Barry, and then I think -- see if Keith wants to add anything because he's obviously there a bit longer than I have. But I think that when -- it's just an anecdote when we -- when the recession occurred and Strip came back, we kept expecting that our business was going to come back pretty shortly thereafter basically on the premise that a lot of our customers are -- either supply the Strip in terms of being -- having a vendor/supplier relationship or employed by the Strip, operators. And that correlation did not hold up and we've seen other periods of time even as the recession kind of became further in the rearview mirror where the locals business continued to perform well and the Strip business had its own set of issues. So I'm not so sure that there is much of a correlation although kind of leading up to the recession, I think everybody would have thought there would have been more of a significant correlation.

Keith, I don't know if you want to add anything to that.

Keith Smith -- President and Chief Executive Officer

No. I think that's right. Look, there is a limited correlation as it relates to room rates because to a large extent, The Orleans can trade off the room rates on the Strip but there isn't as direct of a correlation in today's world as there used to be prerecession.

Barry Jonas -- SunTrust Robinson Humphrey -- Analyst

Great. And then you just had a question about Illinois. A gaming expansion bill was passed recently. How should we think about the potential impact to your casinos and Lattner?

Keith Smith -- President and Chief Executive Officer

So with respect -- I'll take the last one first. It's easier. With respect to Lattner, our slot route, it's all good news. They're able to add a sixth slot machine so you get to go from five to six.

So as a percentage base, it's a pretty big increase. So we'll benefit that business kind of across the state. As it relates to the rest of the bill, which was what I just referred to as a pretty massive expansion with multiple new casinos across the state, I would tell you it depends on what actually happens and who jumps in to build a casino and where they build it, places like Danville or Waukegan or Rockford. We're in the southern part of the state.

I think it's too early to tell. I don't think we have any risk in the next 18 and 24 months because nothing will happen that quickly, and then the longer-term risk is clearly dependent on where it's built and the quality of the operation that somebody builds and operates. So I wish I could give you a better answer. I think it's just too early to start to try and predict that.

Barry Jonas -- SunTrust Robinson Humphrey -- Analyst

Would you consider participating either in a new build or else an expansion of your existing facilities?

Keith Smith -- President and Chief Executive Officer

Yes. So we generally don't comment on projects that we may or may not be looking at in any state. So I'll just avoid that.

Barry Jonas -- SunTrust Robinson Humphrey -- Analyst

Fair enough. Thanks a lot, guys.

Keith Smith -- President and Chief Executive Officer

Thanks, Barry.

Operator

And our next question comes from Shaun Kelley of Bank of America. Please go ahead.

Shaun Kelley -- Bank of America Merrill Lynch

Hi, everyone. I think all of my questions have been asked and answered. Thank you very much.

Keith Smith -- President and Chief Executive Officer

Thanks, Shaun.

Operator

And our next question comes from John DeCree of Union Gaming. Please go ahead.

John DeCree -- Union Gaming Securities LLC -- Analyst

Hi, Keith. Hi, Josh. I think I have two more for you, not on M&A but wanted to circle back. Some of the comments, Keith, I think you made on the consumer in one of the prior questions about no changes.

I'm wondering if you could elaborate a little bit on that. You talked about downtown seeing a nice uptake in unrated play? Was curious how the database tiers were doing outside of Las Vegas in the regional markets, if you're seeing anything notable in unrated play in those markets or the higher-end tiers of database. Any additional color would be helpful.

Keith Smith -- President and Chief Executive Officer

Sure. So as we think about -- or as we look at the database generally, some maybe global comments. So visitation is up across all of our operating segments, whether it's here in Nevada or across the Midwest and South regions. Spend is up in all of our operating segments.

Those statistics are particularly strong in the higher work segments, which is very good to see for us because when we relaunched our B Connected program in August of last year, one of the focuses was reinforcing the higher-end play and trying to do a better job with that customer and it seems to be working as once again, those tiers are growing a little higher than the lower tiers. We do see unrated coin-in growing pretty consistently across -- once again, all of our operating segments, whether it's here, whether it's out of state. Whether you're talking 14 quarters or 15 quarters, you're talking several years of continued growth in unrated coin-in and once, as I said earlier, we're seeing good kind of cross-property or cross-market play from our customers. So that's kind of a broad snapshot from 30,000 feet of what we're seeing out of the database from our existing consumers.

John DeCree -- Union Gaming Securities LLC -- Analyst

Appreciate the additional color. That's helpful. And one more. I think on back to some of your earlier prepared remarks, if I remember the number, you had given I think combined EBITDAR of your new acquired properties was up 7% on a same-store basis and I think you noted about 150 basis points of margin at those properties if I remember correctly from earlier in the call.

I was just wondering if some of that stuff is the synergies that you've -- it's stated at those properties, if some of it's operational improvements. And I guess really at a high level, anything that may have surprised you as you kind of get through integrating those properties and kind of how you see the upside particularly on the margin front at those new acquired properties if you roll up your sleeves and kind of do what you do.

Keith Smith -- President and Chief Executive Officer

Yes. So I think you do remember the numbers correctly, 7%, 150 basis points. I think it is a combination of synergies, which we've extracted a lot of but we're not fully done because those things take a while; operational improvements based on kind of our style of operating and how we kind of look at the customer and market to the customer and do those types of things. I think it is the integration of those properties into B Connected, which occurred at the first of the year.

I think it is -- you have the quality of the management teams and how seamlessly they integrated into the company. Josh talked a little bit about that earlier. That has helped drive all of that. So -- and we feel very good about that.

The same comments generally hold true for Valley Forge also, not just the PNK properties. And so we feel very good about all five of those acquisitions and how they're fitting in. Have we extracted the majority of the synergies? Have we extracted the majority of the margin increases we can expect? Hard to predict right now. Do I think there's a little more margin? I do.

I don't know if there's a lot more margin to come out of those properties. But I do think there's a little more margin. They were admittedly very well-run properties under the prior ownership and we've been very happy that we've been able to continue to grow them.

John DeCree -- Union Gaming Securities LLC -- Analyst

Great. Appreciate the additional color and commentary. Thanks, Keith.

Keith Smith -- President and Chief Executive Officer

Sure.

Operator

And our next question is a follow-up from Joe Greff of J.P. Morgan. Please go ahead.

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

At this point, all my questions have been addressed. Thanks.

Keith Smith -- President and Chief Executive Officer

Thank you, Joe.

Operator

And our next question comes from David Hargreaves of Stifel. Please go ahead.

David Hargreaves -- Stifel Financial Corp. -- Analyst

Hey, everyone. I'd love to get an update on Wilton, number one.

Josh Hirsberg -- Executive Vice President and Chief Financial Officer

OK. Dave, this is Josh. So at this point, we're continuing to work through all of the components to be ready for approaching the market for both construction and financing. So our expectation is that sometime later this year, certainly no later than first of next year, that we would be in a place to do that.

And then we're expecting kind of an 18- to 20-month construction period and then it would open and be very successful. And so that's basically where we are. We're just kind of going through the process to kind of be ready to kind of launch.

David Hargreaves -- Stifel Financial Corp. -- Analyst

When you talk about organic growth opportunities, I would think you guys have some good ones in Louisiana and I'm just wondering if you're getting close to wanting to take advantage of those if we should expect anything in the near future.

Keith Smith -- President and Chief Executive Officer

Well, I don't think we're prepared to make any announcements right now, and as always, I think the company has made an announcement. When we had something to announce, we'd really telegraph it ahead of time. So I think we don't really have anything else to say. I think we have good opportunities in Louisiana in a number of locations, including in our Treasure Chest facility, to go on land but there are other opportunities we have in that state.

And there's other opportunities organically throughout the portfolio to grow the business, make investments in existing assets and to get good ROIs on those investments. The key for us is making sure that if we're going to move forward with something like that, whatever that is, whatever organic growth opportunity exists that we ensure that, that ROI happens. Just like when we built the out the Delta hotel a few years ago, that property has benefited from that, EBITDA stronger there as a result of that and so we use that as an example of making sure that we get an ROI from those projects.

David Hargreaves -- Stifel Financial Corp. -- Analyst

Right. Just to clarify where I'm going with that is when I -- if I tell people that we like Boyd because we think Boyd has opportunities outside of turning to financial engineering to find growth, you wouldn't say I'm misguiding and saying there are significant opportunities in Louisiana?

Josh Hirsberg -- Executive Vice President and Chief Financial Officer

I couldn't hear what he's --

Keith Smith -- President and Chief Executive Officer

No, I don't think you would be significantly misguided to say that there are significant growth opportunities organically that we control that we don't need to resort to financial engineering to simply improve earnings or EBITDA or somehow raise our stock price. We have lots of opportunities to continue to grow the business.

David Hargreaves -- Stifel Financial Corp. -- Analyst

Because that would be -- that is one of your strong points. Lastly, would you talk about any trends in slot refreshment, if you're going to be spending more or less going forward on replacing machines?

Keith Smith -- President and Chief Executive Officer

Yes. I think we're at a pretty level stage and so I wouldn't expect more and I wouldn't expect less even though our operating guys ask me every week for more. They never ask me for less. They always ask me for more.

But it's steady as she goes. It's been that way for a couple of years and we'll continue to hold the line on slot capital at its current level.

David Hargreaves -- Stifel Financial Corp. -- Analyst

I don't want to monopolize things, but if I could ask one more on the way out. I'd love to get your thoughts on player development. I think there's a trend toward spending less on player development. I'd like to hear your thoughts on if it's necessary going forward or not.

Keith Smith -- President and Chief Executive Officer

Well, I think player development is just one part of an overall marketing program. So I don't think you can look at it in isolation or in a vacuum and talk about should you spend more or less in that particular segment of marketing. It depends on everything else that you're doing and kind of where you're at when you say player development, how deep you're into it and what it all means. I'm not sure I can provide a very good answer to your question except to say it's just one part of a broader marketing platform.

David Hargreaves -- Stifel Financial Corp. -- Analyst

All right, well, thank you very much for your answers.

Keith Smith -- President and Chief Executive Officer

You're welcome.

Operator

And ladies and gentlemen, we have time for one more question. And today's last question comes from Brian McGill of Telsey. Please go ahead.

Brian McGill -- Telsey Advisory Group -- Analyst

Good afternoon. Thanks for taking my question. I just had a quick question on sports betting. How does your arrangement with FanDuel work in the sense that if I'm an existing FanDuel customer in Pennsylvania and I play on the mobile device, do you see any benefit from that in terms of revenue? And is -- how does it work in the other states, I guess, going forward?

Keith Smith -- President and Chief Executive Officer

Right. So there is a formula so to speak as to how all that works. Yes, we do benefit if one of our existing customers goes online and there's a mechanism to track all of this so that we don't kind of lose wallet from that customer or lose the benefit of that customer. All these things get negotiated ahead of time before the launch happens.

Each state is a little bit different given the dynamics in the state. So it's not a template that can we kind of rubber stamp and roll it out. Each state is kind of a separate conversation to make sure that both parties, both Boyd and FanDuel, are treated fairly in the process and, once again, as FanDuel has access to those customers. Remember, we have access to 8 million FanDuel customers that we get to market to on a regular basis also.

So --

Brian McGill -- Telsey Advisory Group -- Analyst

So you do get to see their database, you benefit from that?

Keith Smith -- President and Chief Executive Officer

Absolutely.

Brian McGill -- Telsey Advisory Group -- Analyst

And you would -- if their playing just coming through FanDuel, you see a piece of that as well so that, in theory, could be somewhat significant?

Keith Smith -- President and Chief Executive Officer

Could be.

Brian McGill -- Telsey Advisory Group -- Analyst

OK. Awesome. Thank you.

Keith Smith -- President and Chief Executive Officer

You're welcome.

Operator

And this concludes the question-and-answer session. I would like to turn the conference back over to Josh Hirsberg, for any closing comments.

Josh Hirsberg -- Executive Vice President and Chief Financial Officer

Thank you, Rocco, and thank you all for joining today and participating. And should you have any follow-up questions, feel free to reach out to the company. Have a good rest of your day.

Operator

[Operator signoff]

Duration: 58 minutes

Call participants:

Josh Hirsberg -- Executive Vice President and Chief Financial Officer

Keith Smith -- President and Chief Executive Officer

Carlo Santarelli -- Deutsche Bank -- Analyst

Thomas Allen -- Morgan Stanley -- Analyst

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

David Katz -- Jefferies -- Analyst

Felicia Hendrix -- Barclays -- Analyst

Jared Shojaian -- Wolfe Research -- Analyst

Harry Curtis -- Nomura Instinet -- Analyst

Barry Jonas -- SunTrust Robinson Humphrey -- Analyst

Shaun Kelley -- Bank of America Merrill Lynch

John DeCree -- Union Gaming Securities LLC -- Analyst

David Hargreaves -- Stifel Financial Corp. -- Analyst

Brian McGill -- Telsey Advisory Group -- Analyst

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