Boyd Gaming Corp

NYSE:BYD

Earnings Call Transcript 2021-Q4

[Operator]

Good evening. Thank you for attending today's Boyd Gaming Fourth Quarter Earnings Call. My name is Bethany, and I will be your moderator for today's call. All lines will be muted during the presentation portion of the call with an opportunity for questions-and-answers at the end.

I would now like to pass the conference over to our host, Josh Hirsberg, Executive Vice President, Chief Financial Officer and Treasurer at Boyd Gaming. Please go ahead.

[Josh Hirsberg]

Thank you, Bethany. Good afternoon, everyone, and welcome to our fourth quarter 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'll make reference to non-GAAP financial measures.

For a complete reconciliation of historical non-GAAP to GAAP financial measures, please refer to our earnings press release and our Form 8-K furnished to the SEC today and both of which are available at investors.boyd.com.

We do not provide a reconciliation of forward-looking non-GAAP financial measures due to our inability to project special charges and certain expenses. Today's call is also being webcast live at boydgaming.com and will be available for replay in the Investor Relations section of our website shortly after the completion of this call.

So with that, I would now like to turn the call over to Keith Smith. Keith?

[Keith Smith, President and Chief Executive Officer]

Thanks, Josh, and good afternoon, everyone. 2021 was a record-breaking year for our company, and the fourth quarter was certainly no exception.

For the fourth time in a row, we set new quarterly record for EBITDAR and operating margins on a company-wide basis. EBITDAR increased 65% to $347 million as we posted company-wide operating margins of 39.5%, once again proving our ability to deliver strong operating margins.

Our fourth quarter operating margin was almost 640 basis points ahead of the fourth quarter record we set 12 months ago and was up more than 1,200 basis points from the fourth quarter of 2019.

Just as importantly, our continued operating efficiency did not come at the expense of top line results. Revenues grew more than 38% year-over-year and were up nearly 6% from the fourth quarter of 2019.

Every segment of our business contributed to this exceptional performance with 24 of our 27 open properties growing revenues at a double-digit rate during the quarter. And 26 of our properties achieved double-digit EBITDAR increases.

The sole exception was our property in Shreveport where we are contending with the new smoking ban. In Las Vegas Locals business, revenues rose 46% over the prior year. EBITDAR was up 76% and margins exceeded 52%. This marks the fourth straight quarter that we have achieved margins of 50% or greater in our Locals business.

Downtown Las Vegas had an equally impressive performance, posting record EBITDAR of $20.2 million and margins of nearly 38% for the quarter. And in our Midwest & South segment, revenues grew more than 29%, EBITDAR was up over 42% and margins increased approximately 350 basis points to more than 38%.

On a full year basis, we achieved record company-wide revenues of nearly $3.4 billion, EBITDAR of almost $1.4 billion and operating margins of 40%. 2021 marked the first time that our EBITDAR exceeded the $1 billion mark, surpassing our previous annual record by nearly $500 million.

And at 40.5%, our company-wide margin was more than 1,250 basis points higher than the prior annual record set in 2020. This strong performance is the direct result of our operating team's incredible efforts over the past 18 months.

By streamlining our cost structure, enhancing our capabilities and focusing on our core customers, we have been able to consistently deliver exceptional results since reopening. In terms of more recent trends, while we have seen some slowing in late December and January due to the Omicron surge and winter weather, this has improved as we moved through the month of January with both revenue and EBITDAR exceeding the prior year for the month of January.

While our 2021 results set a high bar for us going forward, we expect our business to continue to perform from a position of strength in 2022 as we have a number of organic growth opportunities available to us. One of the more significant opportunity is an increased hotel occupancy in the gaming revenue associated with these incremental rooms.

Today, we are unable to fulfill -- I'm sorry, today, we are unable to fully accommodate the demand from our customers due to labor constraints. So as the labor market recovers, we expect we will be able to drive incremental growth from these customers. We also expect to see further growth in our operations as meeting and convention business and midweek travel continue to recover.

Looking beyond 2022, we expect to drive additional growth from several development projects now underway across the country. In Northern California, Sky River Casino remains on budget and on schedule to open early this fall.

The building structure is now complete, and our focus has turned to completing the interior and the infrastructure for this operation. Conveniently located to south of Sacramento, we believe Sky River will be ideally positioned to become one of the region's top-performing tribal casinos.

As a reminder, we have entered into a seven-year management agreement with the Wilton Tribe and will receive a management fee typical for these types of arrangements. Next, in Louisiana, we will soon begin work on a $95 million project that will convert Treasure Chest Casino into a fully land-based facility, meaningfully enhancing this property's performance after its projected opening in late 2023.

We will be expanding and enhancing the gaming experience and our food and beverage offerings, adding meeting facilities and greatly improving the accessibility and convenience of our partner. In all, this project will significantly improve the Treasure Chest experience for our loyal customers, and it will give newcomers a compelling reason to visit us for the first time.

Finally, in Downtown Las Vegas, we've begun work on a renovation and upgrade of our Fremont property. This $50 million project will upgrade Fremont's food and beverage offerings while expanding and enhancing its gaming floor. Based on the demand, we are already seeing at Fremont today, we expect to see excellent returns from this investment following its completion in early 2023.

In addition to growth investments in our properties, we believe there is also a considerable potential from our online business. Across the country, our partnership with FanDuel continues to grow. Over the last two months, we opened FanDuel Sportsbooks in each of our five Louisiana properties, and we launched mobile sports betting in Louisiana last week.

With the addition of Louisiana, we have now expanded the FanDuel sports betting partnership to six of our nine regional states. Next to come as Ohio, which passed sports betting legislation in December, and is expected to go live toward the end of 2022.

While online and retail sports betting are increasingly important parts of our business, we see a more compelling digital opportunity in online casino gaming. We view iGaming as an attractive complement to our existing land-based operations and an opportunity to engage our customer base by integrating online gaming with our existing player loyalty program.

We took the first steps towards this vision last April with the launch of the Stardust branded online casinos in Pennsylvania and New Jersey. And we have further strengthened our digital presence through Stardust Social Casino, which has allowed us to establish a digital foothold in states that do not allow real money online gaming today.

Currently, online casino is still in its infancy, only six states have legalized gaming so far, though a number of states have introduced legislation in recent months. In 2021, our digital operations generated approximately $24 million in EBITDAR for our company, and we expect EBITDAR to exceed $30 million in 2022 from our online operations.

And as iGaming continues to expand in new markets across the country, we believe the upside could become even more significant for the years ahead. So in all, as we look back on 2021, we delivered outstanding results for our shareholders by every measure. And with continued growth opportunities still ahead we are optimistic about 2022.

As a result of our strong financial performance, our company is generating more free cash flow than ever before. We have put this free cash flow to work by significantly delevering our balance sheet and beginning a robust program to return capital to our shareholders.

Earlier today, we announced that our Board has approved a $0.15 per share dividend starting this April. This dividend is more than double the amount we were paying pre-pandemic. This dividend is in addition to the $300 million share repurchase program our Board approved in October.

To date, we have bought back $150 million in stock since we resumed our share repurchase program. This capital return program reflects the strength of our business, our confidence in the future and our commitment to pursue a balanced approach in creating long-term shareholder value.

While we are proud of our operational successes and what we are delivering for our shareholders, we have always believed that our mission goes beyond financial performance. And we remain committed to responsible corporate citizenship through our ESG programs.

Thanks to initiatives like water and energy conservation, reducing carbon emissions and promoting diversity and responsible gaming, we are making a positive and meaningful impact on our communities and our stakeholders across the country. We look forward to sharing more with you about these initiatives when we publish our next ESG report this spring.

Before I conclude, I want to take a moment to again recognize our team members across the country who truly made this exceptional year possible. Like all employers, we have contended with a very tight labor market over the past year. And that has made it more challenging to hire team members and to fill openings.

Yet our team members have continued to deliver outstanding guest service, going above and beyond to serve our customers. I'm tremendously proud of what they have been able to accomplish and it is a pleasure to be part of such a dedicated team. Our team members have always been the foundation of our success.

And together, we have achieved incredible results in 2021. And as we look ahead to 2022, I am as confident as ever in the direction of our company and our ability to continue creating long-term value for our shareholders. Thank you for your time today.

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

[Josh Hirsberg]

Thank you, Keith. Our operating teams generated record results in 2021. We finished the year with EBITDAR approaching $1.4 billion, more than 50% higher than the previous record set in 2019.

As a result of our strong operating performance, our leverage has declined significantly from pre-COVID levels. With EBITDA increasing since the end of 2019 by approximately $500 million and debt balances reduced during that same period of time by approximately $850 million, our leverage has been reduced by half from pre-COVID levels.

Our current leverage is approximately 2.4x, and lease-adjusted leverage is 2.8x. As of the end of 2021, our NOL balance was $7 million. As a result, beginning in 2022, we'll be a cash taxpayer. Our expected tax rate is 23.5%.

We expect our 2022 capital program to be approximately $250 million, which includes amounts for hotel room renovations and conversions of space previously utilized for buffets. We also expect to spend in 2022 an additional $50 million for the Treasure Chest and Fremont projects.

Based on the current outlook for our business, we believe after these capital investments, we will have ample free cash flow to return capital to our shareholders. As Keith mentioned, our Board authorized the resumption of our quarterly dividend of $0.15 per share, which is more than double our previous quarterly amount. Also in late October, our Board approved a $300 million share repurchase authorization that was in addition to $61 million remaining from our previous authorization.

Since last October, we have repurchased $150 million in stock, representing approximately 2.5 million shares. We have approximately $210 million remaining under our current repurchase authorizations.

For this year, assuming our business continues to perform at these levels and subject, of course, to board approval, we currently plan to repurchase on a recurring basis of approximately $100 million per quarter.

As was the case in the past three months, we may have additional opportunistic repurchases as well. So in total, with our planned share repurchases and the announced dividend, we expect to return approximately $500 million to shareholders this year.

As we move forward, we will remain focused on maintaining our strong operating performance, remaining disciplined in our execution, and growing our business organically through thoughtful investment in our existing portfolio and growing our online presence.

Bethany, that concludes our remarks, and we're now ready to answer any questions from participants on the call.

[Operator]

Certainly, we will now begin the question-and-answer session. [Operator Instructions] The first question comes from the line of Barry Jonas with Truist Securities. You may proceed.

[Barry Jonas, Truist Securities]

Can you maybe talk about general consumer trends you're seeing across the segments? Any concerns around rising inflation? And then I guess to what extent has the older demographic returned?

[Keith Smith, President and Chief Executive Officer]

Sure. I'll make a few comments see if Josh wants to add anything. I think the consumer trends that we saw through the majority of the quarter were similar to what we've seen over the last several quarters with good attendance from our loyal guests to higher end of our database continuing to grow at significant rates.

And so really, until I'd say the end maybe in the last two weeks of the quarter, where the Omicron variant took hold, we saw some softening of the business, but prior to that, consumer trends were pretty normal.

In terms of rising inflation, look, I think it's something we've been dealing with for a while now. And our team deals with it on a daily basis, whether it is increases in food and beverage pricing or increases in the cost of other supplies that we use, it is something that is being managed daily. And I think it's reflected in the margins that we produced in the quarter.

And so we've been able to, thus far, continue to work our way through it and produce strong results. On the older demographic, frankly, once again, prior to mid-December in the pickup in the Omicron cases, the older demographics, 65-plus, was coming back at stronger rates in other parts of the portfolio.

And so, we were seeing good visitation out of that group. It did slow once again in mid-December. And as I said in my prepared remarks, we have seen the business pick up as we move through January.

[Josh Hirsberg]

The only thing I would add to that is just -- as we -- the only thing I'd add, Barry, is as we've moved through January, we continue to see a recovery in all those customer trends, kind of gaining traction back to what we saw kind of pre-second half of December. So, we're encouraged in what we're seeing as we move through January and into February.

[Barry Jonas, Truist Securities]

Great. And then I was just hoping to get a little more color on the strength downtown and what's driving it. I guess to what extent is the Hawaiian business back to pre-COVID levels?

[Keith Smith, President and Chief Executive Officer]

So the Hawaiian business has continued to build back. Much like the rest of our business in mid-December, it started to tail off as they saw cases increase in Hawaii also. So I think -- while -- I would say our Hawaiian business is not back to 2019 levels, it is on its way back and doing very well, once again, pre this omicron wave. And what's driving downtown business generally, I think it's a couple of things.

One, once again, there is a new property down there that is bring drawing people down there in the form of circa. Two, it has always been a value-oriented destination, and people continue to go down there for the value that Downtown represents vis-à-vis the strip. And we just run a very, very strong business down there.

So, we're doing well with all the increased visitation to Downtown generally to make it in -- because we have three properties down there, they generally visit one of our three properties when they're in Downtown Las Vegas.

[Operator]

Thank you, Mr. Jonas. Our next question comes from the line of Steve Wieczynski with Stifel. You may proceed.

[Steven Wieczynski]

So you've seen some of your peers get on the path of reinitiating guidance, which I know is still very difficult to do, and you guys aren't doing that obviously at this point. But if you were, Josh, and who knows of the answer this question, just kind of wondering how you guys would be thinking about same-store metrics as we kind of move through the year.

[Josh Hirsberg]

Yes. So, we are not providing guidance, Steve. So that was a very obvious notice that you made there. I think that as we think about the business, going into 2022, the only thing I will say is the second quarter was really strong, and that will be what we're watching in terms of how we perform relative to that strong quarter.

Other than that, I think we'll just leave it to you guys. You'll do a really good job of estimating where you think we're going to come out and just kind of go from there. And that's all we're willing to really say at this point.

[Steven Wieczynski]

Okay. Understood. Second question would be about unrated play. And obviously, that seemed like it was pretty strong throughout most of '21. But can you help us understand what that trended like during the fourth quarter and how that's trended so far into this year?

And I'm just trying to get a sense of what type of impact there could be as we move into '22 of some of these non-rated customers gravitate elsewhere as other entertainment options come back online.

[Keith Smith, President and Chief Executive Officer]

Yes. So our unrated play has been consistent throughout 2021, whether you look from Q1 to Q2, three, four, and thus far into January, really not much movement at all. And so we haven't noticed -- it may move 1% or 2%, but that's not material. So it's been very, very, very consistent.

[Operator]

Thank you, Mr. Wieczynski. The next question comes from the line of Carlo Santarelli with Deutsche Bank. You may proceed.

[Carlo Santarelli, Deutsche Bank]

Josh, I heard you loud and clear as to not providing guidance. But I did want to ask, as you think about the cadence of 2022, clearly, first quarter is a relatively easy comparison. Second quarter is obviously your hardest of the year, and third and fourth quarters are kind of what they are.

But as you look at kind of current consensus has, I think, adjusted EBITDA down about 2% year-over-year, do you see as an area where kind of as you balance everything, whether it's inflation, whether it's kind of changes in the portfolio, just kind of an easy comp in the 1Q where your EBITDA can match 2021 levels? Assuming you're getting kind of a $10 million head start with some of the online stuff as well in there.

[Josh Hirsberg]

So you and Steve are trying to double team me here. Look, I think, when we think about the business, we think that we are coming into a period of time where we have opportunities to grow. And we like to set up in terms of people giving us room for things that may not happen because of the uncertainty of the environment we're in.

But we're approaching 2022 from the perspective that we expect to grow off of that base. And we think that there is rationale for that. We think our ability to execute at these levels will continue that this is how we're going to run the business. And so it's not like we are concerned about inflation or pressures from labor or wages or anything like that.

Obviously, we are cognizant of those and managing through them, as Keith mentioned. And so we feel like we've done that for over a year now. And all of our amenities are open and -- so it's -- for us, it's just coming in every day and executing on the business. And our perspective is as we expect to grow the business from here. There will certainly be some challenges that we face.

And it won't always work out that we're able to do that. But I think that as we kind of move through the year, we think that there is -- there are enough opportunities from like Keith mentioned in his remarks, known gaming customers that we're having to turn away today because we don't have enough labor to clean the rooms, downtown business has opportunities to grow.

Our mid-week and convention business have opportunities to continue to come back. Some of our rated business continues to have. And we kind of line those up on one side and then on the other side, the risk associated with maybe some of the unrated play and some of the other challenges that we may face, we see more upside than down, but we're going to have to manage through those. So that's how we're thinking about it.

[Keith Smith, President and Chief Executive Officer]

And Carlo, I would correct you, there's no such thing sitting on our side of the table that's an easy comp. And so you can say that Q1 maybe is an easy setup, but with the current Omicron issues with weather that's running across the country with all the challenges in labor and inflation and just all the general issues that we face, it's one of the reasons we're not providing guidance.

There's enough uncertainty out there. There's enough challenges. As Josh said, we think there's plenty of -- there are certain offsets that we have in terms of running the business to handle those. But how that all nets out at the end of the year, we'll see when we get there.

[Carlo Santarelli, Deutsche Bank]

Understood. And then if I could, guys, just some clerical stuff, like -- you talked about the $150 million of buybacks. Josh, could you break that out between kind of what took place in the fourth quarter and then maybe perhaps the maintenance CapEx, cash interest, cash taxes, those types of things for the fourth quarter as well?

[Josh Hirsberg]

Yes, I have some of that. So, we repurchased about -- right at $80 million of stock during the fourth quarter. That would have been from the really the first of November through the end of the year. So the remainder of about $70 million or so has occurred since January 1 through literally today. In terms of CapEx -- what was the question around CapEx, Carlo? What it is around?

[Carlo Santarelli, Deutsche Bank]

Just where did maintenance CapEx and cash interest, and if there were any cash taxes for the year or for the quarter, whatever is easier for you for 2021?

[Josh Hirsberg]

So for the year, capital -- for 2021, capital expenditures was right at $198 million. Interest cash interest usually is pretty close to our reported interest. It's -- the only thing we have is really deferred maintenance -- deferred finance charges, which is about $10 million.

So that will give you a sense of kind of where that ended up. And then cash taxes were really small to the -- I don't have that number in front of me, but I would guess it's probably $9 million or $10 million, nothing significant. It's all state taxes. As I mentioned, we'll become a federal taxpayer in 2022.

[Operator]

Thank you, Mr. Santarelli. Our next question comes from the line of Joe Greff with JPMorgan. You may proceed.

[Joe Greff, JPMorgan]

Just maybe ask you a question about margins maybe in a different way that's been asked or how you've discussed it, when you think about 2022 and inflation pressures and finding labor and things that you've talked about, but if we had a scenario where 2022 revenues were exactly flat versus '21 across all segments, how margin degradation would you have relative to fourth quarter '21 annualized or if you want to think about it, the full year 2021?

[Josh Hirsberg]

That's a good -- interesting question. So you're saying if revenues were flat to 2021, is that what you said, Joe?

[Joe Greff, JPMorgan]

Right, yes.

[Josh Hirsberg]

Yes. Our margins were -- at the end -- for the full year, we're right at -- we're 40.5%, I believe. And so I think just doing some back of the envelope math, if our kind of expenses with no revenue growth continue through from the second half of '21 into '22, we'd probably have probably 150 basis points of margin degradation as a result of that.

I think what makes it hard to do on the fly like this is that we've got a downtown business that effectively has only been in operation maybe one quarter, maybe 1.5 quarters. And that business contributes probably -- at least in Q4, it was a 38% margin business.

So I think we could do better than that. But I think just kind of answering the question as you asked, which was flat revenues and kind of annualizing kind of the most recent operating expenses that would include gaming taxes as well. I think it'd be about 100 to 150 basis points is my best guess.

[Joe Greff, JPMorgan]

Great. Okay. That's sort of the rough math that we had. We just take OpEx and grow at a 2.5% or 3.5%. But -- and then back to the buyback question, it's great to hear both buyback and dividend and sort of very obvious commitment there.

Just as we kind of think about modeling, what's the average diluted share count at the quarter end? I know -- the end of period share count, I know you have the average diluted share count in the release.

[Josh Hirsberg]

Yes. So you want to know the actual number of shares that we...

[Joe Greff, JPMorgan]

Maybe the way to answer it is this way, Josh, is of the $80 million that you bought back in the 4Q, what was the average price or what was the amount of stock that you bought back?

[Josh Hirsberg]

Yes. I don't have that in front of me. I can call you after with it, Joe. But I would say, if I -- my memory was -- we probably had about 1.5 million shares that we purchased in the in the fourth quarter. I don't have that information in front of me, but I can call you with it afterwards.

[Operator]

Thank you, Mr. Greff. The next question comes from the line of Dan Politzer with Wells Fargo. You may proceed.

[Dan Politzer, Wells Fargo]

And nice quarter. Just the first question just on the Las Vegas Locals market in terms of what you're seeing, obviously, your numbers indicated was a pretty strong quarter. But to what extent, if any, have you guys seen any impact from the mask mandate, whether it's on visitation or spend per visit?

[Keith Smith, President and Chief Executive Officer]

The mask mandate has been in place for a while now and -- here in Nevada. And so it's hard to really discern what the specific impact is. Look, do customers like wearing masks? The answer is no and the customers that aren't showing up and participating because of masks?

Absolutely, what is the impact of that? Hard to really know, once again, the mask mandate has been in place long enough now here in Nevada, where I don't have a good answer for you in terms of, is it a 1%, 5%, 10% impact, hard to determine at this point.

[Dan Politzer, Wells Fargo]

All right. Fair enough. And then on labor expenses, I know you've talked about that a bit on the call. And certainly, I think last quarter, you mentioned you're bringing back, I think, a couple of thousand employees. As we think about 2022 and on Joe's question of kind of how margins should kind of evolve, how should we think about layering in the additional employees that you're looking to hire throughout 2022?

[Keith Smith, President and Chief Executive Officer]

I think as you think about -- as we bring back team members, we're bringing them back to clean more hotel rooms, service more guests in our restaurants, provide more service on the casino floor, which implies that there will be revenue associated with those team members. And so it's not just a purely incremental cost or purely a margin impact conversation.

And so we've always said or we have said for the last several quarters, I should say, that we expect to maintain our margins generally around where they're at, not absolutely where they're at, that we expect that over the course of time as we add back a little bit of marketing, a little bit of labor, you'll see a little bit of a decline but we don't expect to see much of a decline. So it's kind of all built into our generic comments.

Yes, margins will go down slightly. But as we bring on more team members, it is to add revenue to the business.

[Operator]

Thank you, Mr. Politzer. The next question comes from the line of David Katz with Jefferies. You may proceed.

[David Katz, Jefferies]

Actually following up on that, one of the issues that we continue, and I know, Keith, you mentioned it or at least the notion of inflation, generally speaking, labor inflation is one of the issues it seems our whole coverage is dealing with. In part just because of the scarcity and in part because of rising minimum wage. If you could just color us in a bit on what you're seeing and how you're dealing with it that would help, please.

[Keith Smith, President and Chief Executive Officer]

Look, it's not a new phenomenon for us. I think we've been dealing with it for the better part of this year. It is a challenge, not just here in Las Vegas, but across the country, hiring team members. And whether it is just sheer quantum of team members and the sheer quantum of applicants low, or whether it's a price issue in terms of what it costs to attract them, and we've been dealing with it all year.

It's something that as you -- once again, it's reflected in our current margins. It's something we continue to deal with. If you look at our margins over the last couple of quarters, they've been relatively stable, but it is built in.

As we look into 2022, it's something we expect to continue to deal with. Once again, inflation from whether it'd be cost of groceries, whether it's cost of supplies, whether it'd be inflation and wages, we expect that we will continue to pay through those. But thus far, our team has done a great job of managing this on a daily basis.

We've been able to maintain the margins that we want to maintain. And so we'll continue to find ways, whether it's adjusting prices or adjusting staffing levels or being more creative about finding ways through this. We work on it every single day, and that's what we'll continue to do. So, the best I can answer it.

[David Katz, Jefferies]

It's perfect. And if I may just follow up quickly. With respect to the notably positive capital return program you've laid out, how should we think about the potential boundaries around acquisitions, right, which presumably might sort of impact or defer or change some of that? Are acquisitions of any size? Do they have some boundaries or possibilities?

[Keith Smith, President and Chief Executive Officer]

Well, I think as we think about it, these are somewhat unrelated. We've worked hard to bring the leverage of the Company down to a point where it isn't a choice between one of these or the others or something else, where it would leverage in the low 2s the type of cash flow we're producing today, we can maintain our properties.

We can invest in small growth opportunities like Treasure Chest and Fremont. We can maintain the capital return program. And so we don't see it as a choice. I would say that as we look around the horizon or look over the horizon, we don't see anything -- I don't want to say see anything interesting, we don't see anything out there that is maybe interest us.

And so we don't see anything that we're going to be looking at any time soon. But -- we don't think we're going to have to make those types of choices where in order to do something, we'll have to pull back on the capital return program.

[Josh Hirsberg]

I think, David, the only thing -- I would add a couple of things to that. One is I think when you have a low leverage and you're generating a lot of free cash flow, investors are obviously concerned you're going to go out and do something crazy with that money. I would basically tell you that we have this conversation internally all the time just because we can doesn't mean we will.

And as Keith mentioned, there are things out there for sale today. And we're just -- we're going to continue to stick to what we know best that's executing on the business primarily, reinvesting in our existing assets.

That's basically smaller investments that have great returns. And if something comes along at some point, that's strategic, and makes sense for the Company, that's a different story. But just because we have low leverage, we have a significant amount of free cash flow. We will have these one-off smaller projects that we invest in and have the benefit of low leverage and a lot of free cash flow to return to shareholders.

And then the only other aspect I would mention that we mentioned in our remarks is we do want to grow our online presence with a focus on iGaming. It's a regional strategy. It's not a strategy that many of our peers have chosen to pursue. And so you shouldn't expect us to make big investments and incur big losses to be in the online space.

But it is something that we want to do, and that will take the form over time, don't have a set time frame for it. We think we have time just given iCasino is likely to roll out much slower.

But we'll either build it out, continue to partner with a third party or make some sort of investment in that arena, but we think that's important strategically for the Company longer term. But again, we're not about making big investments, incurring big losses related to that opportunity.

[Operator]

Thank you, Mr. Katz. The next question comes from the line of Chad Beynon with Macquarie. You may proceed.

[Chad Beynon, Macquarie]

Given that the foundation of business, as you mentioned, is close to $1.4 billion of EBITDAR, I believe your rent expense is right around $100 million, maybe slightly over, any updates in terms of how you're thinking about considerations for more sale leasebacks given the multiples that we've seen out there in the past couple of months?

[Keith Smith, President and Chief Executive Officer]

Look, I don't think our view has changed. We still view owning our real estate is a strategic asset for us and a strategic option for us. Frankly, we may feel more strongly today, look, with low leverage at kind of trading out debt, we can continue to pay down for permanent hire price debt doesn't seem to make a lot of sense.

We wouldn't be in the position we're in if we weren't able to pay down the debt. We just paid down over the course of the last 18 months and cut our leverage in half. So our views really haven't changed. We're certainly aware of what's going on out there. As we've said for the last five years, we paid attention to this.

We understand it, we monitor it, we'll make the right decisions on behalf of the Company, but sitting here today, our view hasn't changed.

[Josh Hirsberg]

Yes. I think the ability to generate $1.4 billion of EBITDAR and convert 50% to 60% of that to cash flow is something that we enjoy doing as to having the fixed cost of that lease in between there and growing every year.

[Chad Beynon, Macquarie]

And then just asking for a little bit more of a finer point with the $24 million of online EBITDAR bridging up to $30 million, you have a lot of rev share agreements that should probably build on top of the $24 million. But is most of that growth that you're expecting from those rev share agreements in places like Louisiana and the like, is that from the Stardust, I guess, in-house iCasino business that you said you're going to be focusing on even more next or this year?

[Keith Smith, President and Chief Executive Officer]

So it's probably a combination of the lion's share, but it will come out of Louisiana, having five operations in the state as well as the online business. And then we didn't start the iGaming in New Jersey and PA until April. So, it will be a quarter of incremental revenue from that. So, it is a combination of the two.

[Operator]

Thank you, Mr. Beynon. We have time for one last question. The last question comes from the line of Thomas Allen with Morgan Stanley. You may proceed.

[Thomas Allen, Morgan Stanley]

On the capital returns, it sounds like when you authorized the buyback program last quarter was that you tend be more measured in your approach? And then this quarter, obviously, you're guiding to $100 million of buyback a quarter and potentially more, and then you interested in dividend. I mean, anything changed? Like what drove the more aggressive stance?

[Josh Hirsberg]

I would say nothing. It reflects just what we expected to do all along. We just want to take it one step at a time. We don't view this any differently than the way we were thinking about it when the share repurchase program was approved. We're generating a lot of free cash flow.

And I would say that the stock has been particularly volatile in the quarter in the last three months going from I don't know, a range of probably 54 to 67 or 68, so we just had plenty of opportunities to execute on our program over and above kind of what we thought we would do on a regular recurring basis. And so look, I think that we want to be able to return capital to shareholders, and we want to do it in a way that makes sense.

And we announced a program that we want to execute on. We didn't want to announce one that was so big that we didn't have credibility that we wouldn't execute on it, and we want to be able to announce a program and then re-up as soon as possible with an open, just so that people can understand that we think there's real value in our stock and in the ability of our team and our operations teams to execute at these levels. And -- we really have no doubt in that confidence.

[Thomas Allen, Morgan Stanley]

And then just my follow-up. Can you just remind us of the structure of the relationship with Flutter around the iGaming business?

[Keith Smith, President and Chief Executive Officer]

Sure. So once again, it is similar to how sport betting is handled and that we are using Flutter's technology and their software to help us run that business, obviously, as well as our expertise. We don't have a deep expertise in that business at this point. So we're leveraging their expertise and their technology and to a large extent, effectively taking the revenue share off of that also.

[Operator]

There are no additional questions waiting at this time. I would like to pass thanks to the management team for any closing remarks.

[Josh Hirsberg]

Thank you, Bethany, and thank you for everyone joining today. If you have any follow-up questions, feel free to please reach out to the Company.

Thanks again for joining.

[Operator]

That concludes the Boyd Gaming fourth quarter earnings call. I hope you all enjoy the rest of your day. You may now disconnect your lines.