Boyd Gaming Corp

NYSE:BYD

Earnings Call Analysis

Boyd Gaming's Strong Q2 2024 Performance

Boyd Gaming delivered solid results in Q2 2024, with steady performance across all segments. The Las Vegas Locals market improved sequentially, showing a nearly 6% increase in non-gaming revenues and around 49% EBITDA margins. Downtown Las Vegas saw strong growth as visitation rebounded, aided by significant recovery in Hawaiian travel. The Midwest and South segment posted modest revenue growth, supported by a successful opening of the Treasure Chest Casino, where revenues doubled year-over-year in June. Boyd's online segment also performed well, raising full-year EBITDAR guidance to $65-$70 million. Overall, Boyd Gaming remains optimistic about its long-term prospects.

Introduction

Boyd Gaming's second quarter of 2024 has demonstrated consistent results aligned with the company's expectations. It was a period characterized by strength in the core customer segments and stability in retail play, which reinforced the company's performance across all its operating segments.

Las Vegas Locals Segment

The Las Vegas Locals segment saw improvements both sequentially and year-over-year in the second quarter of 2024. The company's market share in this segment grew during the quarter, driven by encouraging customer trends and increased play from core customers. Despite facing competitive pressures at properties like The Orleans and Gold Coast, the segment achieved overall market improvements. Non-gaming businesses also saw healthy growth, with food and beverage and hotel revenues increasing by nearly 6% year-over-year. Boyd Gaming achieved EBITDA margins of approximately 49% in this segment, reflecting strong operating efficiencies .

Downtown Las Vegas Segment

Downtown Las Vegas showed robust performance, with year-over-year growth as visitation significantly recovered from a temporary decline in the first quarter. The rebound in Hawaiian visitation and increased pedestrian traffic bolstered this segment. The company's investments, such as the renovation and expansion of the Fremont Hotel and the remodel of Main Street Station Hotel, have begun to yield positive returns. Las Vegas saw over 41 million visitors in the last 12 months, supported by record passenger traffic through McCarran International Airport and high gaming revenues across Clark County .

Midwest and South Segment

The Midwest and South segment produced steady results in the second quarter. While April experienced softness, business levels recovered in May and June, leading to modest revenue growth for the quarter. A significant highlight was the opening of the new land-based facility at Treasure Chest Casino near New Orleans, which doubled revenue in June year-over-year. The segment is expected to continue its stability for the remainder of the year, with cautious optimism about shifting to growth in the following year .

Online Segments and Managed Operations

Boyd Gaming's online segment and managed operations also performed strongly in the second quarter. The company's partnership with FanDuel remains a significant contributor to the success of its online operations, prompting an increased EBITDAR guidance of $65 million to $70 million for the full year. Additionally, the managed operations, particularly the Sky River Casino in Northern California, continued to exhibit robust demand and year-over-year growth. The company anticipates the managed and other businesses to generate approximately $90 million in EBITDAR for the full year .

Capital Expenditure and Shareholder Returns

Boyd Gaming's capital expenditure for the first half of 2024 reached $204 million, with a full-year projection of $400 million to $450 million. These investments were categorized into three buckets: recurring maintenance ($200 million to $250 million annually), room remodel projects delayed by COVID-19 ($100 million each for 2024 and 2025), and growth capital projects ($100 million annually). Notable projects include the completion of Treasure Chest Casino, expansions at Ameristar St. Charles and Cadence Crossing, and various property upgrades. Alongside these investments, shareholder returns remain a priority. The company repurchased $176 million in shares and paid $16 million in dividends in the second quarter, with a commitment to repurchase $100 million in shares each quarter .

Conclusion

Overall, Boyd Gaming delivered a solid performance in the second quarter of 2024. The company effectively managed its operations across all segments, maintaining strong margins and continuing to invest in growth initiatives. The leadership remains optimistic about future prospects, driven by stable economic conditions in Southern Nevada and strategic capital allocation. Investors are encouraged by the company's consistent returns and growth-oriented investments, positioning Boyd Gaming for sustained success .

Earnings Call Transcript 2024-Q2

[David Strow, executive]

Good afternoon, and welcome to the Boyd Gaming Second Quarter 2024 Earnings Conference Call. My name is David Strow, Vice President of Corporate Communications for Boyd Gaming. I will be the moderator for today's call, which we are hosting on Thursday, July 25, 2024. [Operator Instructions] The -- following our remarks, we will conduct a question-and-answer session. [Operator Instructions]. Our speakers for today's call are Keith Smith, President and Chief Executive Officer; Josh Hirsberg, Executive Vice President and Chief Financial 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 statements. 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, both of which are available at investors.boydgaming.com.

We do not provide a reconciliation of forward-looking non-GAAP financial measures due to our inability to project special charges and certain expenses. Today's call is 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.

With that, I will now turn the call over to Keith Smith. Keith?

[Keith Smith, executive]

Thanks, David, and good afternoon, everyone. Our company delivered a solid performance in the second quarter as our nationwide operations performed in line with our expectations. During the quarter, we saw strength from our core customer segment and continued stability in retail play across the country.

In our Las Vegas Locals segment, the overall market improved from the first quarter and we achieved sequential improvement in our year-over-year results. Importantly, we also grew our market share in this segment during the quarter. Our Downtown Las Vegas segment delivered strong growth during the quarter, consistent with our expectations for downtown, as visitation recovered from a temporary decline in the first quarter. And our Midwest and South segment continued to produce steady results during the quarter.

As a result of these solid performances across all 3 segments of our operations, second quarter property revenues were even with the prior year. At the same time, our operating teams continued their successful focus on managing the business efficiently during the quarter as we achieved property margins of nearly 41%, consistent with the last several quarters.

Also during the quarter, we opened our new land-based casino at Treasure Chest on June 6. And while it is still early, our new property is off to a great start with revenues nearly double the prior year since it opened. And we continue to produce strong results in both our online and managed and other businesses during the quarter. In all, we were pleased with our company's performance in the second quarter.

In terms of operating performance by segment during the quarter, conditions across the Las Vegas Locals market improved, both in total and on a same-store basis when compared to the first quarter. The Orleans and Gold Coast continue to face competitive pressures similar to those we outlined during our first quarter call. Absent these competitive pressures, our Las Vegas Locals properties performed in line with the same-store market.

Looking at the segment more broadly, we saw encouraging customer trends across our Locals business in the quarter. Play from our core customers grew during the quarter, while retail play trends improved compared to the first quarter. We saw healthy growth in our non-gaming business as food and beverage and hotel revenues increased nearly 6% year-over-year. And we achieved EBITDA margins of approximately 49% during the second quarter, reflecting our ability to maintain strong operating efficiencies.

In all, we are pleased with the direction of our Las Vegas local segment as our focus on driving play from our core customers and maintaining operating efficiencies produced solid results.

Next, our Downtown Las Vegas segment delivered a strong performance in the second quarter, achieving the year-over-year growth we expected this year as visitation significantly improved over the first quarter. Hawaiian visitation recovered as their for normalized from the elevated levels that occurred in the first quarter while pedestrian traffic in the downtown area also improved from the first quarter. And we continued to benefit from our investments downtown, including our recently completed renovation and expansion of the Fremont and the remodel of Main Street Station Hotel.

For both our Las Vegas Locals and Downtown Las Vegas segments, the continued strength of the Southern Nevada economy gives us reason for optimism. More than 41 million people visited Las Vegas over the last 12 months, up 2.6% from the prior year. Over 58 million passengers traveled through the Las Vegas Airport over the same period, setting a record for the city. Southern Nevada Gaming revenues exceeded $13.5 billion over the past 12 months, also an all-time record.

Of particular note, monthly gaming revenues in Clark County have been above the $1 billion mark for 23 of the last 24 months. And the local job market continues to strengthen. Total employment increased more than 3% on a year-over-year basis in June and the Las Vegas metropolitan area has been the fastest-growing major job market in the country for 8 consecutive months. As economic trends remained stable across Southern Nevada, we remain confident in the long-term prospects for our Southern Nevada operations.

Moving next to our Midwest and South segment. We were pleased with the overall performance of this business in the second quarter. During the quarter, play from our core customers continue to grow, while retail play was stable. As noted in public revenue reports, regional markets across the country were surprisingly soft in April. However, this softness was short-lived, business levels recovered in May and June, and as a result, we were able to post modest revenue growth in the Midwest and South segment during the quarter.

And in early June, we opened our new land-based facility at Treasure Chest Casino near New Orleans. This project replaced a 30-year-old Riverboat Casino with a modern land-based facility, offering a single level expanded casino floor for new restaurants, meeting space and improved parking. While it is still early, customer demand for our new product has been very strong. And in the month of June, revenues nearly doubled the Treasure Chest on a year-over-year basis.

Next, our online segment achieved healthy revenue and EBITDA growth in the second quarter Our industry-leading partnership with FanDuel continues to produce strong results for our company. And as a result, we are increasing our expectations for the online segment to $65 million to $70 million in EBITDA for the full year.

As we've noted before, our 5% equity interest in FanDuel remains a valuable strategic asset for our company that continues to grow in value as we participate in the ongoing growth of sports betting nationwide.

Finally, in our online -- I'm sorry, finally, in our Managed and Other business, we continue to benefit from the exceptional performance of Sky River Casino in Northern California. Nearly 2 years after opening, demand at Sky River remained strong as the property continues to post year-over-year growth. With Sky River solid performances through the second quarter, we now expect our Managed and Other business to generate approximately $90 million in EBITDAR for the full year.

Building on Sky River's continued success, the Wilton Rancheria tribe recently broke ground on a major expansion of this property. First phase will expand Sky Rivers Casino floor with an additional 400 slots and enhanced properties access with a new 1,600-space parking garage.

Following the completion of the first phase next summer, work will begin on a significant expansion of Sky River's non-gaming amenities, including a 300-room hotel 2 additional food and beverage outlets, a day spa and an entertainment and event center. We share the Wilton Rancheria tribes pride in the success of Sky River and are confident this expansion will help drive continued long-term growth at this property following its completion in early 2027.

So in all, second quarter was a solid performance for our company. with sequential improvement over the first quarter in our property operations and encouraging customer trends across the country. At the same time, we continue to demonstrate our confidence in the long-term prospects of our business through our balanced capital allocation program. An important part of this program are the investments we are making in our operations to drive future growth. We saw the promising results of these investments during the second quarter.

Fremont is now performing at record levels, and while it is still early, business at Treasure Chest is up significantly from it's previous baseline. Having demonstrated our ability to drive incremental growth through capital investments, we are now beginning work on the next projects in our growth pipeline.

In Missouri, we're beginning an expansion of our meeting and convention space at Ameristar St. Charles, allowing us to capitalize on significant unmet demand for our product there. We combined with our ongoing hotel renovation at Ameristar, this investment will expand this property's appeal to new and existing customer segments, driving additional long-term growth at the property following its completion in the fourth quarter of next year.

And in Southern Nevada, we are finalizing design work for Cadence Cross and Casino, a new property located in the southeast portion of the Las Vegas Valley. We expect to begin construction on this project late in the year with expected completion by early 2026. This new property will be built on a 15-acre site that currently hosts our existing Jokers Wild Casino and is directly adjacent to the master planned community of Cadence.

This community will have more than 12,000 homes upon final build-out with 5,200 homes already built. In its initial phase, Cadence Crossing will feature a 10,000 square foot casino with 450 slots, several dining options in live entertainment.

While we are starting with a modest investment, the property will be designed for future expansion as Cadence grows with the ability to add a hotel, additional casino space and more amenities during future phases of development.

Combined, we anticipate investing $100 million between the Ameristar and Cadence Crossing projects. Additionally, we are continuing our program of refreshing and upgrading our properties across the country. This program includes new and refreshed food and beverage offerings and renovating many of our hotel rooms across the portfolio. Renovations of our hotel rooms at Gold Coast, Ameristar St. Charles and Blue Chip will wrap up over the next several months. And following the completion of these projects, we will begin work on our hotels at the Orleans, IP and Valley Forge.

In addition, to investing in our properties, we remain committed to returning capital to our shareholders. In the second quarter, we repurchased $176 million in stock and we remain committed to our ongoing share repurchase program of $100 million per quarter, supplemented by our dividend program.

We also remain committed to maintaining a strong balance sheet. Our total leverage today is just 2.4x, providing our company with significant flexibility to execute on our capital allocation plans.

So as we look back at the second quarter, we are pleased with the performance of our business. We delivered total property level revenues even with prior year results, with encouraging customer trends throughout the country. Our leadership teams efficiently managed our operations, delivering property level margins of nearly 41%. We -- our new Treasure Chest Casino is off to a great start, marking the latest success in our ongoing property investments. We continue our commitment to returning capital to our shareholders with over $300 million in share repurchases and dividend payments since the start of the year.

I want to thank our leadership teams and our team members for their contributions to our success. Their hard work and their commitment to memorable guest to service for the bedrock of our company. Thank you for your time today.

I'd now like to turn the call over to Josh.

[Josh Hirsberg, executive]

Thanks, Keith. As noted, the second quarter was a solid performance for our company. For the remainder of the year, we expect our second quarter commentary regarding customer trends and market conditions to continue. .

In terms of our operating segments for the rest of the year, in Las Vegas Locals, we expect the Orleans and Gold Coast will continue to face competitive pressures similar to those we have experienced over the last 6 months. while overall market conditions are expected to remain stable.

In our Downtown business, we expect positive trends to continue. However, remember, the fourth quarter this year will be comparing against a record fourth quarter Downtown last year.

In our Midwest and South segment, we expect continued stability in same-store revenue with incremental contributions from our new property at Treasure Chest. Treasure Chest is off to a great start, but it will take several months of operating the new facility before we know what to realistically expect for revenue and EBITDAR.

Keith's earlier remarks, he provided full year EBITDAR guidance for our online segment of $65 million to $70 million and Managed of approximately $90 million. For Managed, we expect EBITDAR contributions of approximately $21 million for each of the next 2 quarters.

Recall the fourth quarter last year was a very good quarter for the company, with each segment of our business performing very well. So that will create a difficult comparison for the last quarter of the year.

Next, turning to a few additional items from the quarter. For our Online segment, the quarter, the tax pass-through amount was $104 million, compared to $63 million last year in the second quarter. Excluding the tax pass-through amount, company-wide margins for the second quarter this year would have been approximately 40% or about 420 basis points above the margin we reported.

In terms of capital expenditures, we invested $114 million during this year, including our investments in the Treasure Chest land-based project. We have invested $204 million in capital expenditures year-to-date and continue to project total capital expenditures of $400 million to $450 million for this year.

Our annual capital program can be thought of in 3 buckets. The first bucket is recurring maintenance capital, which is expected to be approximately $200 million to $250 million per year. The second bucket is incremental maintenance capital associated with room remodel projects that were delayed due to COVID. This spending is not recurring. We expect these investments to be approximately $100 million in each of 2024 and 2025.

And finally, for the third bucket, beyond maintenance-related capital, we have allocated a recurring $100 million per year for growth capital projects. In 2024, for example, this $100 million includes capital investments to complete Treasure Chest as well as starting both the Ameristar St. Charles Convention Center expansion and Cadence Crossing Casino.

Following the completion of the Ameristar and Cadence projects, we would expect to announce another set of projects. Think of this recurring growth capital as a pipeline of projects that we choose from each year in order to invest about $100 million per year in growth related capital. Accounting for each of these 3 buckets, you should expect total capital of about $400 million to $450 million in both 2024 and 2025 before stepping down to $300 million to $350 million and beyond following the completion of our hotel renovations.

These property investments are 1 component of our capital allocation plan. Other element of our capital allocation philosophy is returning capital to shareholders in the form of dividends and share repurchases. We currently pay a quarterly dividend of $0.17 per share, representing $16 million in the second quarter. Also during the quarter, we repurchased $176 million in stock, acquiring 3.1 million shares at an average price of $55.88 per share. As previously stated, we remain committed to repurchasing $100 million in shares each quarter. However, we have the financial flexibility to do more as reflected in our actions during the second quarter.

Turning capital to shareholders is an important part of our capital allocation philosophy. When combining our share repurchases with our dividend program, we have returned $313 million to our shareholders through the first half of 2024, and are on pace to return a total of approximately $550 million this year or nearly $6 per share.

Since we began our capital return program in late 2021, we have returned $1.5 million -- sorry, $1.5 billion to shareholders in the form of dividends and share repurchases, and -- resulting in a reduction in our overall share count by nearly 18%. As of June 30, there were 92.3 million actual shares outstanding and we have $545 million remaining under our current repurchase authorizations.

Also important to us is maintaining a strong balance sheet, which provides us the flexibility to continue to invest in our existing business while returning capital to shareholders. We ended the quarter with total leverage of 2.4x lease-adjusted leverage of 2.8x, consistent with recent quarters. With low leverage, no near-term maturities and -- and ample borrowing capacity under our credit agreement, we have the strongest balance sheet in our company's history.

Combined with the significant free cash flow our operations generate, our company has a strong foundation to continue a balanced approach to capital allocation.

David, that concludes our remarks, and we're now ready to take any questions.

[David Strow, executive]

Thank you, Josh. [Operator Instructions]. Our first question comes from Steve Wieczynski of Stifel.

[Steven Wieczynski, analyst]

So let me start with the question. You're probably not going to answer. But obviously, there's been a lot of rumors out there across the gaming space about M&A activity. And your name has obviously been mentioned a lot.

So let me ask this in a way, maybe you'll give me an answer. But just wondering if you could give us your current appetite for maybe large-scale M&A versus maybe one-off type acquisitions? And where you would feel comfortable from a leverage perspective if you did go down an M&A path.

[Keith Smith, executive]

Thanks for the question. So look, if you look back over the history of our company, we've obviously -- the majority of our growth, obviously, has come through M&A. And I think we've developed a great expertise at it. We know how to buy properties right, companies right, and we know how to extract value out of these companies once they're part of our portfolio. .

And look, we've always been willing. It's not new news to take a hard look at opportunities that arise. And so we'll continue to do that. In terms of how we may finance a particular transaction, it's totally dependent on the specific facts and circumstances around the transaction. And so it's hard to speculate on how we might do that.

[Josh Hirsberg, executive]

The only thing I would add to that, Steve, is that to the extent that we were to leverage up to do some sort of transaction or pursue some sort of opportunity, whether it was a development opportunity or acquisition or anything of that nature, we have set a long-term leverage target of to be below 3x traditional leverage in the neighborhood of where we are today. And so we would have the objective of getting back to that level very quickly. So...

[Steven Wieczynski, analyst]

Okay. That's actually more of an answer I thought you would give me. So I appreciate that. And then second question, I wanted to just ask, Josh, maybe about the promotional environment in the locals market. And I know last quarter, you mentioned there were a couple of what we would call kind of nonpublic, bad, so-called players in the market who were overly aggressive on the promotional front. And just wondering if you've seen that level of promotions from those guys essentially settled down.

[Keith Smith, executive]

Yes, thanks. This is Keith. So hoping it used the term bad actors, but nonetheless, the promotional environment, particularly surrounding the Gold Coast and Orleans in the second quarter, it was very similar to the first quarter.

And so we continue to see pressure from some of the private operators operating around those 2 properties didn't change much. The rest of the market remain very rational, very stable. Properties and companies kind of doing what they've done historically, but we continue to feel pressure around those 2 properties.

[Steven Wieczynski, analyst]

Understood. Appreciate it.

[Operator]

Our next question comes from David Katz of Jefferies.

[David Katz, analyst]

I wanted to talk about the Locals market, [ New ] Orleans, in particular. And just get your thoughts on sort of strategies for mitigating the impact that you're seeing, right? The competition is looking to grow and even expand? And how do you and how much can you sort of offset that over a period of time?

[Keith Smith, executive]

I think when we look at the Locals market, probably I'd say a couple of things. One, as it relates to the competitive pressures around the Orleans and the Gold Coast. -- it is -- we've been at this a long time. It's really a matter of being patient. So the strategy is patience. We can chase it and it would not be profitable. We don't believe what competitors are doing is a long-term sustainable program. And so we just need to be patient and wait it out.

In terms of broader strategies, and how we compete with additional competition in the Locals market. Look, we've been at this a long time. We know our customers well. We know how to talk to our customers. The reason we haven't seen a significant impact as a result of the most recent new competitor opening is because we do have specific strategies and specific tools to talk to our customers and they -- they enjoy the relationships they've built with our team members, they enjoy the facilities and the products that we offer and so we'll just kind of continue to do what we've been doing.

Look, to go any further to go any deeper would simply be providing our competitors a pathway as how we think about the business, and so I'm going to stop there.

[David Katz, analyst]

Okay. I don't want you to tell us anything. We won't tell anybody. But what it sounds like is that there is an initial an initial wave of competition trying to induce trial and that may ebb and flow back over time? And is that a fair characterization of it?

[Keith Smith, executive]

That is a good way to think about it.

[Josh Hirsberg, executive]

Yes, I would add just a few things to think about also is underlying what Keith mentioned is, we're not responding dollar for dollar with what's going on. We're staying focused on our strategy. We're not being aggressive in terms of marketing. In fact, our overall marketing as a percentage of revenue has remained very consistent.

And you can see even with consistent levels of reinvestment, we've been able to grow share. We don't think it's a profitable strategy to kind of go head to head to that level of competition that we're seeing. And so we stay focused on our core customer, we stay focused on pursuing profitable business and that's how we think about our business going forward, even in the face of when the competitive environment starts to change and is dynamic.

[Operator]

Next question comes from Joe Greff of JPMorgan.

[Joseph Greff, analyst]

Maybe this is an indirect way of asking an M&A-related question. Keith, Josh, have you have the Board's view on sort of the propco, opco model changed? And can you talk about that a little bit? And has the view changed with respect to utilizing that model under large-scale M&A versus just kind of looking at it as a way to sort of optimize the capital structure for your existing portfolio?

[Keith Smith, executive]

Look, as we talk or think about kind of opco, propco, we still prefer from an M&A standpoint to buy holdco assets. that is more difficult today because most assets are part of an opco propco structure. And so we're certainly willing to do that. We did it with the Pinnacle assets that we bought several years back. And so it's not an impediment to acquire -- buying an opco assets, not an impediment to growing or buying additional assets.

Look, in terms of monetizing our existing real estate, if you will, we have the same view. I think we've always had. We have the opportunity to do it if there were a transaction where it made sense. We enjoy and think we retain great flexibility by owning our own real estate. We think we can finance less expensive ways than trying to monetize our real estate. So look, we think about all of these things with respect to any M&A opportunity. And once again, we're not opposed to looking at opco assets.

[Joseph Greff, analyst]

Okay. Great. And then you mentioned before within the Midwest and South segment in the 2Q, April was soft, and then May and June recovered. Can you talk about what you think happened with your consumer in May and June versus April behaviorally and how much maybe of that improvement might be related to things like calendar or year-over-year weather or things like that? And that's all for me.

[Keith Smith, executive]

Yes. That's a fair question. I think it's probably more about April. Joe, April was particularly soft. We -- we lost a Saturday and Sunday on the calendar, although Easter which was in April last year, it was in March this year. We thought we'd benefit from the move of Easter and it just didn't turn out. I would say that May and June were more in line with what we expected, some slight growth in revenues and April was just softer than we had anticipated.

We knew the calendar shift was happening, but we thought we'd pick it up with the move of Easter, it just didn't happen. So, other than that, I wish I had a better explanation for you, Joe, but we've been scratching our head over April since it happened.

[Operator]

Our next question comes from Barry Jonas of Truist.

[Barry Jonas, analyst]

What's the negative impact so far from the Durango opening relative to that $20 million to $25 million impact you previously guided? And is that range still valid?

[Josh Hirsberg, executive]

Yes. So Barry, I would say that the $20 million to $25 million is still intact from our perspective. I would say, I think we believe the mix has changed because it's coming more from kind of an indirect impact from around the Orleans and Gold Coast that we've spoken about.

[Barry Jonas, analyst]

Got it. Got it. And then I guess as you think about the outlook in Midwest and South and Locals, just curious to get your perspective on when you think EBITDA could return to growth for both segments? Year-over-year growth.

[Josh Hirsberg, executive]

So look, I think we tried to lay that out in my remarks. I think we think of the Las Vegas Locals market for us, kind of continuing to deal with those competitive pressures around the Orleans and Gold Coast for the rest of this year. We're starting to see some kind of lessening in declines year-over-year in the lower end of the database, and so that's encouraging.

And that's similar to what we saw, although on a different time scale, in terms of what was happening in the Midwest and South, I think it was late in 2022, I think, in 2020 -- maybe it was late 2023. And -- by late 2022 and throughout 2023, sorry, getting my time frames mixed up. Then we were dealing with the Midwest and South before kind of flatlined, and that's where we are from a retail customer in that particular segment.

So I would say we believe that the Midwest and South will continue to kind of bounce around being stable for the rest of this year based on what we're seeing in the customer trends and then hopefully start to pivot to growth at some point, but -- next year.

But I think I would characterize Midwest and South as more stable and flattish at this point, obviously, excluding Treasure Chest and then -- and then LVL, kind of still starting to flatline a little bit before we start to see growth maybe sometime early next year.

[Barry Jonas, analyst]

That's really helpful. Appreciate it.

[Operator]

Our next question comes from Carlos Santarelli of Deutsche Bank.

[Carlo Santarelli, analyst]

Keith, Josh, I wanted to just follow up on something you said earlier as it pertains to your Locals market. And I think partially what Davis might have been asking you about earlier as well. If you guys -- I think, Keith, you said if you take out the Orleans and Gold Coast, the rest of the portfolio is performing kind of in line with the market. I guess my question is, was that statement like revenue in line, EBITDA in line? What do you kind of see as the way the market is performing?

[Josh Hirsberg, executive]

Yes. I'll take a shot at that, Carlo, and then Keith can correct me or add to it depending on what about.

Basically, I think we think the Las Vegas market as best we can estimate is down slightly, a very little. You could describe it as almost flattish, but kind of down about 1% or so. And so when we look at our overall portfolio, including some of the impact, quite honestly, at the Orleans and Gold Coast, we start to try to dissect how much was competitive and how much was market. And that's the level of -- that's what we are saying we performed in line with was take out the impact that we estimate was competitive related to the Orleans and Gold Coast and what are you left with there and what's going on with the rest of the business and you kind of get something that's pretty close to what's going on in the overall market generally. That's how we -- that's what we were trying to say in those few words.

[Carlo Santarelli, analyst]

Okay. And then if I could, Josh, in terms of lapping some expense increases that occurred in 2023, is that -- are we kind of there now in the second half of this year where we should start to see kind of OpEx reduce from a year-over-year growth perspective?

[Josh Hirsberg, executive]

I'm going to say it's -- a lot of the changes happened during Q3 that certainly affected. So we've disaggregated this in the past, and I'll do a little bit of it to the extent I can remember.

The last wage -- wage growth in Las Vegas really increased during Q3 of last year. So we're going to need to get through Q3 largely before we are on a comparable basis. Same thing with property taxes and property -- and utilities and things like that. That was a broader base comment across the entire portfolio. So I'd say sometime in the Q3 period as we move into Q4 is when you would start to be on a kind of apples-to-apples basis. Does that make sense?

[Carlo Santarelli, analyst]

Yes, absolutely.

[Operator]

Our next question comes from Jordan Bender of JMP Securities.

[Jordan Bender, analyst]

I'm not asking this in terms of kind of the rumors out there, just more of a strategic question. But with Boyd's Interactive now ramping for a few years, could you see yourself get bigger within that business, either through M&A or stepping in and investing more just given the learnings over the last quarters to years?

[Keith Smith, executive]

Yes. Look, I would say that we're very pleased with where Boyd Interactive is in terms of its growth and where it is and kind of our expectations, operating well in Pennsylvania and New Jersey growing the business. I don't see any material M&A on the horizon to all of a sudden have that grow in any significant fashion.

Once again, when we started that business a couple of years ago, we talked about having a regional strategy, not a national strategy, but a regional strategy that allowed us to speak to the customers in the states where we do business. importantly, and in some of the surrounding states where we draw large portions of our customers. That remains our strategy. And once again, we're pretty pleased with how it's rolling out at this point and really don't see a need to do anything significant to move it along.

[Josh Hirsberg, executive]

I would add that we -- our approach is not to kind of estimate the TAM and expect we're going to get a percentage of that and apply our margin. It's really, as Keith mentioned, kind of building a bottom-up from our existing customers and markets where we bring or draw customers from. We're not in the business of making big investments and losing a lot of money to get market share. That's just not our philosophy. Others may have a different strategy. That's just not our strategy.

[Jordan Bender, analyst]

Okay. Great. And then on the follow-up, just touching on the capital allocation piece here for a second. You stepped up share repurchases in the quarter here, obviously above your $100 million. My question here is just why is the $100 million still kind of that target number could we see that go up just given some of the visibility that you do have on some of your CapEx spend here for the next couple of years?

[Keith Smith, executive]

The $100 million that we've been using for maybe going on 2 years now or at least 18 months, it's really meant to anchor the investment community and what we're committed to.

As Josh said in his prepared remarks, we certainly have the financial flexibility to do more, we certainly do not want to drive expectations higher and so we continue to say, look, you can expect us to do this level, $100 million a quarter, and we're just not at a point where we're going to reset expectations to a different number.

[Operator]

Our next question comes from John DeCree of CBRE.

[John DeCree, analyst]

Maybe a follow-up on a point of clarity, if I heard correctly in the prepared remarks, I think you mentioned maybe gaining a little share I think in reference to the Locals market, if I heard that correctly. I was wondering if you could just -- maybe if I could hear that correctly, put it in context of what you're seeing at the promotional or competitive pressures at Gold Coast and Orleans and some of the other comments you've made on the Locals so far?

[Keith Smith, executive]

Sure. So you heard it correct. We were able to grow share in the second quarter in the Las Vegas Locals market, but to be crystal clear was we grew share over the first quarter, not year-over-year. Obviously, with the addition of a new competitor, it would be very difficult to grow share year-over-year. So we grew it quarter-over-quarter, Q2 versus Q1, but it did grow.

In terms of the competitive environment, once again, absent what we've discussed around Orleans and Gold Coast, it remains relatively stable. And really, nobody stepping out in any particular fashion, doing anything odd as I've said on prior calls, those that got aggressive post COVID over the last couple of years, remain aggressive, those that have remained disciplined, have remained disciplined and the promotional environment, you could call stable, rational really hasn't changed outside of what's happening around Gold Coast and Orleans.

[John DeCree, analyst]

Got it. clarity on share gain sequentially. Maybe one more, Keith or Josh, on the locals market. We've I guess, historically, prepandemic, have noticed seasonality in the locals market. from 2Q into 3Q, but it's been a little harder to read the last couple of years for various reasons. I know we're only a couple of weeks into July, but do you have expectations for seasonality? It's been particularly hot in Las Vegas, given where your assets are. Do you expect some normal seasonality? Or any thoughts there would be helpful. And that's all for me.

[Josh Hirsberg, executive]

Yes, John, it's a good question. Yes, we do. I mean, short answer to the question is, we expect seasonality. I think if you look back at the trends that we've seen going from Q2 to Q3 or however you want to analyze it, it's been pretty consistent over the last couple of years since 2020. And -- and so I think that, that's what you can largely -- or that's what we're expecting. And even going back into pre-COVID the trend seasonality, I think, are what's kind of is what we're seeing today.

[Operator]

Next question comes from Brandt Montour of Barclays.

[Brandt Montour, analyst]

Thanks. Curious on Downtown Las Vegas. A quarter ago, there was -- you guys called out soft foot traffic. And you didn't -- back then, you didn't really have an idea of why it had soft. I'm wondering if you learn more about that, if it came back explicably or inexplicably. And then just sort of how you think about -- I mean, Las Vegas trip has been quite strong. There's some simply coming out of the strip. I have to imagine that it can't hurt you guys in the Downtown area for that. So just curious an update on that part of that business.

[Keith Smith, executive]

Sure. So as we look at our Downtown business in Q2, we saw one, a significant rebound in our Hawaiian play that we talked about. We talked in the first quarter call with the price of airfares in the first one, most -- first quarter, mostly driven by Super Bowl that we had less on occupancy than we typically do. That rebounded in Q2 that drove a big portion of our increase that and probably some pent-up demand from the Hawaiian guests that typically visit us.

I think the traffic on the street or the traffic in Downtown generally seemed more robust in Q2 than it did in Q1. You're right. Historically, a large percentage of the people who visit the strip, visit downtown. We didn't see that as much in Q1 and whether that was once again a result of Super Bowl and the activities occurring somewhere else. And just not enough going on Downtown, we just didn't see that traffic Downtown. I can't articulate, I think, in any more detail why there's more traffic Downtown in Q2 versus Q1. And -- but there is -- or there was, I should say, better traffic flow in the Downtown area in Q2 versus the flow in Q1.

[Brandt Montour, analyst]

Okay. Great. That's helpful. And then just -- sorry to split here. I'm going to circle back on the Locals share question because I was also trying to square your comments. So if you grew in line with the market ex those 2 properties that you mentioned, but then you gained share overall, does that imply that you fought back a little bit on those 2 properties, even though promotions were about the same? I guess is that -- am I thinking about that right?

[Josh Hirsberg, executive]

What was the -- you to -- did you say bounce back?

[Brandt Montour, analyst]

Well, you fought back, you gained a little bit of share on those 2 properties, even though promotions were the same.

[Josh Hirsberg, executive]

Yes. I think it was basically that you're exactly right. we did a little better relative to competition, but we also kind of -- yes, that's what happened. The rest of the market was -- or the rest of our assets performed pretty much in line with the market overall. Maybe a little bit better, but we're just kind of calling it all. There's estimates in all of this. So that's the best I can tell you, really.

[Operator]

Our next question comes from Dan Politzer of Wells Fargo.

[Daniel Politzer, analyst]

First question, Treasure Chest. I know it's still early, but June was very strong out of the gate. How should we think about the ramp of this property going forward? Was June maybe an outlier in strength? Or are we kind of just getting started here in terms of what you're expecting?

[Keith Smith, executive]

So look, since it's opened over the last 7 weeks or so, early July, as I said in my prepared remarks, revenues have doubled. And I would say that we're beyond pleased with revenues doubling in the first 6 or 7 weeks of operation.

Where it settles in, look, we'd be ecstatic if it stayed double. We're not fully expecting it to stay double. And so -- and as Josh talked about, we have to then work through the normal inefficiencies of opening a new property to dial in the EBITDA completely.

So I don't think we're going to ramp up from here. I would never forecast that we're going to go beyond double. It was not our expectation when we built the property, it will probably settle in -- it's something of less than double. But even if it settles in at 50% or 60% above the prior year, I think we'd all see that as a great success.

[Daniel Politzer, analyst]

Got it. And then just in terms of the M&A line of questioning. Obviously, there's been some more activity in the market. I mean, does it feel like maybe the environment is loosening up a little bit and the financing availability is maybe improving?

And then if you could maybe just kind of remind us what your maximum leverage would be for any transaction that you may or may not pursue.

[Josh Hirsberg, executive]

Yes. So I would I would say, for us, when we -- it's not really about the financing market that drives our ability to execute on the transaction. I'm sure at some point, it could come to that. I think really for us, it's about the same things we've talked about before. It's acquiring assets that have a strategic rationale -- rationale is an acquisition that generates free cash flow and the valuation makes sense for us. And so once it gets through that filter, then we can start to think about financing alternatives and leverage and all of those things.

And really, I think it's all those things that get mixed together that then determine whether we should move forward or not. So to say there's a maximum leverage level, I'm not going to be able to say that because it's going to be on -- based on market conditions, it's going to be based on the value creation or the opportunities that we see from an acquisition.

And so just as we've done historically, we've tried to be very disciplined in how we think about acquisitions and how we execute on them. And that's all I can give you as a framework to kind of think about it in terms of answering your question around leverage.

[Operator]

Our last question comes from Chad Beynon of Macquarie.

[Chad Beynon, analyst]

With respect to the Cadence Crossing announcement, you mentioned that in that Henderson sub community, there continues to be development and rooftops going up. So, a, how did you come up with the size and scope of that -- of that market given it's going to take a little bit of time in the market, the number of homes might grow? And then separate from that, any update in terms of Eastside Cannery and opportunities in that region?

[Keith Smith, executive]

On Eastside Cannery really no change in our thinking around that the market around that particular product, which once again, is right next to our Sam's Town, Las Vegas property hasn't changed significantly. And therefore, we just don't have any further views on what and when something may happen there.

With respect to Cadence Crossing, we've been watching that property community develop for a long time because it's in our backyard. Our Jokers Wild Casino sits on the existing site where we're building Cadence Crossing today. The Jokers Wild Casino is slightly smaller footprint to a slightly smaller operation.

And so we have a sense of how we can build that business going forward. And so we're opening what I call a modest investment with the square footage and the slots and the food outlets that I described.

But clearly with the opportunity to expand it. We'll be able to keep Jokers Wild open while we build a new property, and then when we open a new property, we'll be able to shut it down. So we won't lose any EBITDA in the process. but clearly have the expansion opportunity as that community grows, we can grow with it based on demand. So we feel pretty good about the opportunity, once again, modest investment on day 1 opportunity to grow into the future.

[Chad Beynon, analyst]

And just a follow-up on that. So that third bucket of CapEx, are there other entitled land opportunities or adjacent opportunities in LVL or is this third bucket, again, it could be an additional hotel somewhere else, convention center. Any view on where that focus would be for that third bucket of CapEx geographically?

[Keith Smith, executive]

We have a list of projects that we have prioritized and that we continue to review as they start to kind of come next in line, Josh described the next 2. We believe those are the 2 highest ROI projects we have, the most important at this moment in the company's life. We've got several more behind that. And once these 2 get further down the line, we'll start to evaluate those.

To your point, look, we do have a lot of land adjacent to our existing operations here in Las Vegas, whether it be at the Orleans or the Gold Coast or Sam's Town or Aliante, we have opportunities on all those properties to continue to expand the footprint there if demand warranted that.

And what we have, once again, plenty of opportunities outside of Nevada, properties like Ameristar St. Charles, that are extremely strong producers, have extremely strong demand that we can build into. So a number of projects, not ready to disclose anything other than what we disclosed already, but we have lots of additional opportunities in the pipeline.

[Josh Hirsberg, executive]

The only thing I would add is we have more than enough projects is finding the ones that generate the returns we need and then just kind of pacing -- spreading those out and pacing them.

[Operator]

This concludes our question-and-answer session. I'd now like to turn the call over to Josh for concluding remarks.

[Josh Hirsberg, executive]

Thanks, everyone, for dialing in today. If you have any other questions, feel free to reach out to the company. and you can feel free to disconnect now.