Good afternoon, and welcome to the Boyd Gaming fourth-quarter and full-year 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, February 6, 2025.
(Operator Instructions)
Speakers for today's call are Keith Smith, President and Chief Executive Officer; and 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 and both of which are available at investors.boydgaming.com.
We did 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 on our Investor Relations website shortly after the completion of this call.
So with that, I would now like to turn the call over to Keith Smith. Keith?
Thanks, David. Good afternoon, everyone.
2024 marked another successful year for our company as our diversified business model, continued operating efficiencies, and recent property investments all contributed to a strong full-year performance. We generated over $3.9 billion in revenues in 2024, setting a full year of record, and we achieved companywide EBITDA of nearly $1.4 billion while maintaining property level operating margins of over 40%. These results demonstrate our company's continued ability to deliver a high level of performance.
Looking at the fourth quarter specifically, our performance was consistent with the solid results we have achieved over the last several quarters. Quarterly revenues surpassed the $1 billion mark for the first time, while EBITDA increased nearly $380 million. Our fourth-quarter performance, much like our full-year results was driven by our diversified portfolio, efficient operations, and contributions from our recent property investments, most notably a treasure chest.
Importantly, throughout our property operating segments, we continue to see strength in play for our core customers, and stable trends in play from our retail customers.
Now let's review segment results in more detail. Starting with our Las Vegas Locals segment. During the fourth quarter, we delivered our best year-over-year performance of 2024 despite ongoing competitive pressures in the market.
Excluding Orleans and Gold Coast, our Las Vegas Locals properties continued to perform better than the same-store market and our operating margins continued to exceed 50%. (technical difficulty) core customers continue to grow across the segment during the quarter, while play from our retail customers improved and our ongoing project to enhanced Suncoast is beginning to show its potential as this property posted a solid performance despite the addition of a new competitor in the market in late 2023.
Next, we delivered another strong performance in our Downtown Las Vegas segment during the fourth quarter. Our recent enhancements at our Downtown properties are providing a solid foundation for long-term growth. Similar to our Las Vegas Locals segment, overall customer trends were consistent with recent quarters, with growth in play from our core customers and consistency in play among our retail players. Visitation from our Hawaiian customers remains healthy, while pedestrian traffic throughout the Downtown area has been steady.
Looking at the Southern Nevada market more broadly, fundamentals of the local economy remains strong. With recent gains in employment, personal income, population, and tourism-related activity. Local employment has grown for 45 consecutive months now, with increases across most major employment sectors. Average weekly wages increased nearly 6% during the fourth quarter, outpacing the national growth rate.
Southern Nevada's population has surpassed 2.3 million residents and continues to show growth, with home building permits increasing 13% over the prior year. Total visitation to Las Vegas remains healthy, growing more than 2% over the prior year to nearly 42 million visitors in 2024. And airport traffic continues to achieve record levels, exceeding 58 million passengers last year. By the end of the first quarter this year, airline capacity is expected to increase by another 3%, which includes continued growth from international markets.
Finally, residential and commercial construction activity remains robust throughout Southern Nevada, with more than $8.5 billion in notable projects currently under construction. In all, we remain confident the long-term strength of the Southern Nevada economy as we enter 2025.
Outside of Nevada, our Midwest and South segment achieved another quarter of growth led by continued strong results at Treasure Chest Casino. Our new facility at Treasure Chest has consistently performed ahead of expectations since opening in June, and remains on track to exceed our targeted EBITDA return.
While Treasure Chest was the strongest performer in this segment on a year-over-year basis, we were also pleased with the performance of our same-store operations. After adjusting for certain one-time benefits in the fourth quarter of 2023, same-store revenue and EBITDA grew slightly while margins remained consistent at 37%. And on both of total same-store basis, play from our core customers continue to grow, while retail customer play remained stable consistent with recent quarters.
Next, our Online segment, once again contributed to company-wide growth. With a strong Q4 performance, our Online segment generated $76 million in EBITDA for the full year after excluding $32 million one-time fees. This performance reflects continued growth from our market access agreements, primarily with FanDuel as well as contributions from our nascent online gaming business.
Beyond the financial contributions from our Online segment, we also have significant value in our 5% equity interest in FanDuel. Across the country, FanDuel is strengthening its position as America's leading online gaming company, further enhancing the considerable value of our equity stake.
Finally, our Managed business closed out 2024 with another solid quarter of growth. For the full year, this business generated $96 million in EBITDA, driven mainly by management fees from Sky River Casino. Sky River continues to perform at a very high level. Work has begun on a significant expansion of this property.
Work is now underway on the first phase of that expansion, which will add 400 slots at a 1,600-space parking garage to the property. Upon completion of phase 1, first quarter of 2026,
Construction will begin on the second phase of the expansion, which will include a 300-room hotel, 2 additional food-and-beverage outlets, a day spa, and an entertainment and event center. Once fully complete in mid-2027, this expansion will position Sky River for continued long-term growth, further strengthening its reputation as one of Northern California's is leading gaming entertainment destinations.
So in all, both our fourth-quarter and full-year results demonstrated our company's continued ability to deliver a high level of performance. And we are building on our track record of success as we continue our program of investing in our nationwide portfolio.
An example of these investments is the ongoing renovation of our hotel room product. We have recently begun hotel renovations at the Orleans, IP, and Valley Forge, which account for nearly one-third of our hotel rooms across the country. When combined with other recently completed hotel renovations, we will have refreshed and updated nearly 60% of our hotel room inventory by next year.
We're also enhancing the customer experience throughout our properties. An example of this is the Suncoast, where we opened a new sports book, high-limit room, and premium steakhouse in 2024. All of these new amenities have been well-received by our customers, helping drive solid results at Suncoast over the last several quarters.
Extra come at the Suncoast is a complete renovation of the casino floor, a new food hall, and expansion of the properties meeting space. Unveiled the first section of the Suncoast Casino renovation earlier today and are on track to complete all property enhancements by early 2026.
In addition to enhancing our properties, we continue to pursue strategic growth investments in our portfolio. At Ameristar St. Charles, we are making progress on the expansion of that property's Meeting and Convention Center, Ameristar's existing meeting and convention business, the core part of its business model.
With a four-diamond rated hotel, extensive amenities in close proximity to the St. Louis airport, Ameristar sees more demand than it can currently accommodate. With didn't already exceeding our current space, the Ameristar team is having great success booking future business for its expanded Convention Center, positioning the property to deliver strong results once our expansion's completed this fall.
Next in Southern Nevada remain on schedule to open Cadence Crossing Casino in mid-2026. This development will replace our existing Joker's Wild Casino with a modern casino entertainment experience. The nearby master-planned community of Cadence is one of the fastest growing neighborhoods in the Las Vegas Valley and this development will position us to capitalize on the growth.
Cadence Crossing will begin as a smaller property, with 450 slots and several restaurants. But as the Cadence community continues to grow towards its full build-out, 12,000 homes, Cadence Crossing will grow with it with plans for hotel, more casino space, and additional amenities.
And as work continues on these projects, we are developing plans for the next investments in our property-growth pipeline. One of these projects will be in Central Illinois, where we anticipate replacing our 30-year-old riverboat casino at Par-a-Dice with a compelling new entertainment destination.
While it is still early in the design process, we could begin construction as early as the first half of 2026 pending regulatory approvals. We are confident that this project will deliver a solid return on our investment by driving incremental growth in visitation and business volumes at Par-a-Dice following its completion.
In addition to ongoing investments in existing properties, we're also investing to expand our portfolio with our resort development in Norfolk, Virginia, where construction is set to begin shortly. This $750 million project will further diversify our portfolio by expanding our presence in one of the largest underserved gaming markets in the mid-Atlantic region.
We are confident in our ability to create a market-leading resort experience in Norfolk that will attract customers from throughout the region, serving as a key growth driver for both the city of Norfolk and our company.
The resort, which is scheduled for completion in late 2027, will include a casino with 1,500 slots and 50 table games, a 200-room hotel, 8 food-and-beverage outlets, live entertainment, and a 45,000 square foot outdoor amenity deck. Part of this project, we plan to open a modest transitional casino this November.
In all these investments form the foundation of our future growth. While we are investing in these strategic-growth opportunities, we are also continuing to return capital to shareholders. In the fourth quarter, we repurchased $203 million in stock, bringing our total repurchase activity for 2024 to $686 billion. While we have repurchased more than our targeted level of shares over the last several quarters, this has been purely opportunistic.
Looking ahead to 2025, we remain committed to $100 million per quarter in repurchase activity, supplemented by our ongoing dividend program. In addition to invest in growth opportunities and returning capital to shareholders, our balanced approach to capital allocation includes maintaining a strong balance sheet. We ended 2024 with total leverage of approximately 2.5 times, giving us a strong foundation to continue our successful approach to capital allocation.
So as we look back in 2024, we are pleased with the performance of our company, strong foundation we have built for the future. We continue to generate substantial free cash flow through our diversified business model and our consistent operating performance. Our ongoing property investments are delivering solid returns and positioning us for long-term growth.
And we are successfully balancing these investments with our capital return program, returning nearly $750 million in capital to our shareholders in 2024, while maintaining the strongest balance sheet in our company's history.
Finally, before I turn it over to Josh, I wanted to take a moment to recognize a historic milestone for our company. January 1 of this year, we celebrated Boyd Gaming's 50th year in business. We've come a long way since Sam and Bill open the California Hotel and Casino in 1975.
Since then, our company has grown from a single property in Downtown Las Vegas into one of the largest and most respected gaming companies in the United States. And while our company is much different today than it was in 1975, division and integrity of Sam and Bill Boyd continue to guide us to this day.
Their commitment to growth and their commitment to making a positive difference for our team members in our communities, our principles that we probably carry forward as a company. Our success throughout these past five decades would not have been possible without the hard work of our team members. Their dedication to delivering memorable service for our guests is what makes the Boyd experience unique.
Thank you for your time today. I'd now like to turn the call over to Josh.
Josh Hirsberg
Thank you, Keith. The fourth quarter represented the conclusion to a very good year for our company. We finished 2024 generating nearly $1.4 billion in EBITDA, with annual property level margins exceeding 40%. As a result of our performance, our diversified portfolio generates significant free cash flow that we are deploying to reinvest in our business and return significant capital to our shareholders.
I'll now provide additional commentary on our fourth-quarter and full-year 2024 results and provide comments on our 2025 outlook.
Beginning with our Online segment. In this segment, we generated $108 million in EBITDA for the full year of 2024, including $32 million in nonrecurring market access fees. For 2025, we expect to generate approximately $80 million to $85 million from our Online segment, which compares to the $76 million of run rate EBITDA in 2024.
This segment includes contributions from our revenue share agreements and Boyd Interactive. For reference, the tax pass-through amounts reported as revenues and expenses in our Online segment were $128 million for the fourth quarter and $450 million for the full year of 2024. This compares to $97 million in the fourth quarter of 2023 and $328 million for the full year of 2023.
In our Managed business, we generated $96 million for the full year of 2024, primarily driven by the management fees we earn from Wilton Rancheria Sky River Casino. We expect to generate a similar amount of EBITDA in 2025 from our Managed and Other businesses.
In terms of capital expenditures, we invest $111 million in capital during the fourth quarter, bringing total 2020 for capital spend to $400 million. For 2025, our capital investment plans include maintenance capital, incremental maintenance capital related to our hotel room refurbishment initiative, recurring property growth investments, and starting our development project in Virginia. In terms of each of these capital spend categories, we estimate our recurring maintenance capital to be approximately $250 million per year.
We will spend an additional amount of maintenance capital related to hotel room refurbishments this year of approximately $100 million at IP, Valley Forge, and New Orleans. Our initiative to upgrade our hotel rooms is scheduled to be complete in mid-2026.
In terms of our recurring property growth investments, we expect to invest approximately $100 million each year. In 2025, this amount includes investments in the convention expansion at Ameristar St. Charles, which is scheduled to open in the late -- in the fall of 2025.
And the Cadence Crossing development here in Las Vegas, expected to be complete in mid-2026. As these projects come to conclusion, can we expect to begin the next round of projects, including potentially replacing our 30-year-old riverboat at Par-a-Dice.
And finally, we are beginning work on our casino resort development in Virginia with estimated capital spending of $150 million to $200 million in 2025. The total investment in this project related to the development of the temporary and permanent facilities is estimated to be $750 million. The temporary facility is on track to open in November of this year, while the permanent resort is scheduled to open in late 2027.
To summarize our capital plans for 2025, we estimate maintenance-related and property-growth capital of $450 million and an additional $150 million to $200 million for Virginia, resulting in total CapEx for 2025 of approximately $600 million to $650 million.
In addition to these investments, we remain committed to returning capital to our shareholders. We paid a quarterly dividend of $0.17 per share during the fourth quarter. Also, during the quarter, we repurchased $203 million in stock at an average price of $71.79 per share, acquiring 2.8 million shares. When combined with our share repurchases with our dividend program, we returned nearly $750 million to our shareholders during 2024, or more than $8 per share.
As of yearend 2024, we had $640 million remaining under our current repurchase authorizations, and the actual number of shares outstanding at year end was 86.2 million shares.
Since October 2021, we have returned nearly $1.9 billion in capital to our shareholders in the form of share repurchases and dividends, reducing our share count by more than 23% over that time period. We ended the quarter with total leverage of about 2.5 times and lease adjusted leverage of about 2.9 times. We have no near-term maturities, strong free cash flow supported by a diversified portfolio of assets, and ample borrowing capacity under our credit agreement continuing to place our company and I see strongest financial position and our history.
Transitioning to our 2025 outlook and our Las Vegas Locals segment, we expect stability will return to the Orleans and Gold Coast during the second half of the year as we fully anniversary competition. Expect other properties and our Locals segment to perform slightly better than the overall Locals market consistent with the 2020 for performance of these properties.
In Downtown Las Vegas, we expect growth during the year in line with the Downtown market in. Our Midwest and South segment, we expect to benefit from an incremental five months of the Treasure Chest expansion, which opened in June of 2024. For the remaining properties in this segment, we expect results similar to 2024.
For the first quarter, it is worth noting that this segment has been impacted by poor weather conditions throughout January, similar to the first quarter of 2024. Beyond our expected performance for these three segments, with the continued success of investments like the Fremont and Treasure Chest, our pipeline of investments continues to strengthen our EBITDA and position us for future growth.
David, that concludes our remarks. we're now ready to take any questions.
Thank you, Josh.
David Strow
Thank you, Josh. We will now begin our question-and-answer session.
(Operator Instructions)
Steve Wieczynski, Stifel.
Steven Wieczynski
Hey, guys, good afternoon. Hey, Keith and Josh. So without giving formal guidance for the full company, Josh, you have given us some high-level guidance around certain parts of your business. I'm just wondering if you could maybe help us again from a high level -- help us understand how you're thinking about maybe your core customers versus your retail customers in '25. Just, I guess, just trying to understand how you're thinking about both of those segments. And I would assume stability is what you're going to say but I wanted to ask that question anyway.
Josh Hirsberg
Yes. So thanks, Steve. I'll take a shot at it. I think what we've seen really very consistently is our core customer has been really growing. And so we would expect that customer set to continue to go the growth.
In terms of retail, I would divide that customer into really two parts of our business, one in Las Vegas and one outside of Las Vegas. The retail customer for us and the markets outside of Las Vegas has largely been stable, meaning bouncing around flat year over year in terms of growth for probably the better part of a year, if not longer.
So we're really are poised for that part of the business to convert our pivot to positive at some point, although it hasn't at this at this juncture. And I think that's probably more reflective of the broader economic issues facing that customer segment.
In terms of Las Vegas, throughout 2024, what we've seen is what I would call a stabilizing of impact or stabilizing or recovering kind of performance from the retail customer, meaning getting less bad year-over-year, sequentially. So year over year, the declines are getting less bad sequentially as we move through 2024.
And I think as we look through 2025, we would expect us to really kind of start to reach more stability. Maybe still both be down a little bit in the second half of the year once we fully anniversary the competition. I don't think we will start to see growth in that segment in '25. Our best opportunity for that would be in the second half. But I'm not sure if we'll get there this year or not. It will depend on things that are a little bit out of our control.
Keith, I don't know if there's anything you want to add to that?
Keith Smith
No, I think this really summarizes where we're at with core and retail.
Steven Wieczynski
Yes, that's perfect commentary. Thanks, Josh. Second question again, maybe trying to dig in a little bit more towards guidance. And I apologize, but maybe help us think about flow through in '25 or, you know, a better understanding of how you're thinking about maybe some of the headwinds or tailwinds that you might be starting to encounter on the margin front as well.
And then, Josh, real quick. A housekeeping question in terms of how you're thinking about corporate expense for the year would be helpful as well. Thanks.
Josh Hirsberg
So I'll take a shot at this. In terms of flow through and margins, look, I think from an expense perspective, continue to see expense pressures, but nothing like what we've seen over the last several years. So I would stick with the theme of expenses moderating while still a bit challenging.
I think, overall, things continuing trend in a direction that's favorable from an expense perspective. And what we really need to start seeing is kind of better revenue growth from primarily that Retail segment that we spoke about to get to kind of enhance our flow through.
But I think we're at a period of time where we can manage our margins fairly effectively in this environment, absent any significant change in our customer spend behavior. And I think that applies really across our portfolio.
Keith Smith
I think you've seen margins fairly consistent recently, and that's what you should think about as you think about 2025 to get the LVL apps in Orleans and Gold Coast exceeding 50% margins in the MSR being consistent at 37%. And as Josh said, some of that is most expenses are moderating, and we're able to manage through it. So we have to think about 2025, think about consistency.
Josh Hirsberg
Again, I think overall, if you look at our property level margins, they've been consistently above 40%, really since COVID sort of been managing through all of the challenges while maintaining a very healthy margins that I think people were skeptical that we'd be able to maintain. I think we've, after four years, would hopefully have some confidence that we can manage and deliver this level of performance consistently.
You ask about the corporate expense. And I think for 2025, I would build in about a 3% to 3.5% kind of growth in corporate expense. We do have kind of a one-time item in 2025 where we're making some larger donations that will hit corporate expense. And so I think a good number for this year it's about $95 million.
Steven Wieczynski
Okay, great. Appreciate the color. Thanks, Josh.
David Strow
Barry Jonas, Truist Securities.
Barry Jonas
Hey, guys. Online was ahead of our expectations, even when factoring the one-timers. Just curious, did a core NFL hold in the quarter flows through to you guys at all, or just other elements of growth enough of an offset? Thanks.
Keith Smith
I think the answer to that is yes and yes, we certainly were impacted in the online space by the lower hold during NFL season. At the same time, we saw good growth in the business and good growth market access agreements as well as some growth from our small, but growing, the online gaming business.
Barry Jonas
Understood. And then just as a follow-up, Keith, there's lots of activity these days on the legislative front. As you look at states discussing gaming, curious, where do you see the greatest risks and maybe opportunity for Boyd's perspective.
Keith Smith
Yes. If you look across the landscape, it's early in the season. There's lots of gaming bills out there. We're monitoring all of them and paying attention. It's really hard to judge a month into most of these sessions. Some place like Louisiana hasn't gone into session yet. And so we're monitoring them. It's early. We've been through this, you know, for a lot of years. And so we'll just have to see what happens.
But I don't really have any other comments beyond that.
Barry Jonas
Understood. All right. Thank you so much, guys. Nice quarter.
David Strow
Carlo Santarelli, Deutsche Bank.
Carlo Santarelli
Hey, guys, thanks for taking my question. Josh, you talked a little bit about regional kind of bouncing around a little bit last year on a same store basis. And obviously, the last few months, fourth quarter specifically, did look better from what we see from the GGR perspective, certainly kind of showed through in your net revenue of Keith's comments about what the same-store portfolio did.
But then I guess, taking your commentary around 2025, it kind of sounded as though you were insinuating a flattish year-over-year, same-store kind of EBITDA trajectory. Am I interpreting that right. And then secondly, is there anything that kind of hindering your willingness to maybe talk about an improving trend line in '25?
Josh Hirsberg
Yes. So I think your interpretation is correct. I think for those of you who remember and follow along, we had what we thought was going to be a challenging comparison to Q4 of last year with all the one-time benefits that we had, then that we didn't get the benefit of this year.
I think we had a little bit better performance out of Treasure Chest than we expected in Q4. And we also had a little bit better performance throughout the portfolio, quite honestly, than we expected. I think when we remain cautious because I don't think we've seen enough of strength in primarily the Retail segment, given my comments earlier, to say that they have pivoted to contribute to sustainable kind of a growing segment.
Now maybe that will happen, but that's not what we're seeing. And the customer trends at this point, we're seeing just more, I'm trying to think of how to describe, more consistency in their play that's not pivoting to consistent growth, if that if that makes sense.
So that's the hesitation to kind of get excited about what was a little bit better quarter than maybe what we expected from the Midwest and South.
Keith Smith
Look, Carlo, I think it's just our natural hesitation to go -- think about the entire year go too far out on a limb at this point. There's a lot of things that can go on. We think it will overall be a better year, but there's nothing that jumps out to you that says you should predict something that was significantly greater.
Josh Hirsberg
I know this isn't related to your question, Carlo, but I just want to remind people, January so far in the Midwest and South, has been very similar to January of last year with the weather. So not that that's an answer to your question, but I'm just saying don't forget that.
Carlo Santarelli
Understood. And if I could just a follow-up. Obviously, last three quarters stacked up the buyback to over $200 million, a very steady at $100 million a quarter. And I think that there has always been at least under $100 million a quarter, but we'll certainly have gotten more aggressive with your buyback activity.
And when you couple that with kind of the elements of up the development pipeline, the CapEx that you're spending the room remodels, clearly, the other projects that you talked about, the Virginia Cadence, that potentially Illinois getting started later. Where does within the context of any kind of M&A or acquisitions portfolio you might be looking at, how have you guys kind of frame the returns on capital that you're spending relative to something that might do outside the company?
Josh Hirsberg
Yes, I think it's strictly an evaluation of the alternatives that we have in front of us based on the returns that they will generate. If we did have good projects like the Treasure Chest, for instance, or some of the projects that we're pursuing as part of the recurring property growth investments, we wouldn't be doing them. We'd be investing more in returning capital to shareholders.
So it's really a balance of where we can get the best returns. And we've mentioned before we have a pipeline of projects. We have plenty of projects to choose from. We have to choose the best ones that continue to generate superior returns. That's why we tried to do it in a manner that we're doing it, weigh that against repurchasing shares.
And then if another opportunity, whether be greenfield development or acquisition, it will just be evaluated in the same context. There will have to be a compelling opportunity relative to either invest in our portfolio or buying back shares.
Carlo Santarelli
Understood. Thank you, Josh. Thanks, Keith.
David Strow
Jordan Bender, Citizens JMP.
Jordan Bender
Good afternoon, everyone. Good to hear about our performance in the Locals market. And it's been a little bit tougher to decipher what the true growth in the Locals market has been with all the new competition. So without getting into 1Q guidance, can you maybe help us with what that answer actually kind of looks like and, more specific to you guys, what would you attribute the outperformance that you're calling out versus the overall market.
Keith Smith
You cut out for second there. Could you re-ask your question, I apologize.
Jordan Bender
Yes, I guess it's been just a little bit tougher to decipher what the true underlying growth of the Locals market has been with all the competition. So can you just kind of help us with what the exit rate is for the locals market into the new year? And then I guess more specific to you guys, what be your review your outlook of outperformance versus the market tail.
Keith Smith
I think in terms of own performance and our outperformance versus kind of what we call the same-store market in 2024, I think it's a combination of having some refreshed product, good marketing programs, and just a good overall operation. The promotional environment here in Las Vegas has remained fairly stable, and we remain very disciplined on that front.
As we've talked about in her prepared remarks, we've seen good growth from our core customers and continued steady growth from that group. And some stability, as Josh talked about, amongst the retail customers.
In terms of kind of the exit rate of growth in the LVL as we think about 2025, it's kind of tough to predict. Is it low-single digits? Probably. If you were depending on your estimate of where the new competitor, how much revenue the new competitor generated on a quarterly or annual basis throughout 2024, you were to subtract that out of the market. I think what you'd be looking at as a marker kind of growing in that low-single digit range. So that continues into 2025.
Jordan Bender
Helpful. And on the follow-up, any sense of what the Par-a-Dice move to land costs you guys?
Keith Smith
No. We're still on the design phase, I mean that's, you know, if you think about your Treasure Chest, which we quoted in the $100 million range, it's probably something similar or it's not significantly larger or smaller.
Jordan Bender
Great. Thank you very much.
David Strow
David Katz, Jefferies.
David Katz
Hi, afternoon. Congrats on your quarter. Look, I also wanted to go back some of the capital allocation on the M&A side. Because I know we've had conversations about properties, smaller companies, larger companies, but it's a pervasive thing. And so the follow-up really is how do you think about risk tolerance on leverage take on and off PropCo versus owned and operated a little insight there would help. Thanks.
Keith Smith
I don't think our views on this has changed much over the years. We certainly prefer so to purchase wholeco as opposed to opco. But in today's world, most of what we have the opportunity to buy or opco. So it doesn't discourage or dissuade us from looking at it asset because it's in that structure once again, preference to buy wholeco in terms of leverage.
We have talked about this in the past. We are flexible with our leverage profile by allowing leverage to float up for an acquisition as long as we can see it return to levels that we wanted to return to. So as long as we can see a way to de-lever quickly, then we're okay with leading leverage float backup.
And I would say that over the years, once again, we've developed a good discipline when it comes to M&A or acquisitions. I think we've developed an expertise and look, it's got to be first of all, a good strategic fit and the right market. It's got to be the Right size assets, going to be high-quality asset.
That's kind of not a different set of facts today than it's been over the last, I don't know, several years. So that's when we think about M&A, we think about leverage, we think about opco PropCo versus wholeco. What's going to think it's consistent over the last several years, but that's how we think about it.
David Katz
Got it. Thank you very much.
David Strow
Brandt Montour, Barclays.
Brandt Montour
Hello, everybody. Thanks for taking my question. So I wanted to circle back on the sort of post-election trends question. If you look at the Midwest and South regions that weren't affected by weather, was there sort of anything encouraging at all? 1
I mean, we had seen sort of incremental lift across any of our other sectors, demands being called out, just with consumers, got a little bit better at it anytime excess foot traffic or spend per visit or anything else. You did see that was encouraging?
Keith Smith
It's always, we've said this in the past, it's always hard to discern from a consumer standpoint, what is motivating them to come out and participate in our business? Is it a pre-election, post-election phenomena. Where they, maybe less coming out less frequently pre-election and came out more post-election?
Was the revenue growth in the markets kind of across the board? Was it a little stronger post-election and pre-election? Yes, I think it was in depending on market you look at. But for the most part, yes, it was still longer the fourth quarter. Is that a matter of the election as a matter of consumers feeling better that a matter of higher pay checks? Always hard to sort through that.
But clearly the facts are yes, a little more growth in our markets in the fourth quarter than a third quarter. Could be seasonality. Hard to hard to discern, but does it feel like the consumer feels a little bit better today than they did earlier in the year? I don't know, maybe a little bit, but not materially.
Josh Hirsberg
Not enough to take it and run with it, I guess is what we're trying to say.
Brandt Montour
That's really helpful, guys. And a follow-up I had is on Par-a-Dice project and just sort of comparing it to Treasure Chest, which did with the build cost. And I appreciate that. But just digging into sort of the quality and the qualified aspects of that project. When you think about Treasure Chest, which was a slam dunk. There, we've had a sort of built in market in its area and you were taking out a ton of friction when you took it from the boat to land.
I'm just curious if there's a similar sort of natural factor in that project that will get to this sort of immediate lift. And then if there's other factors in that market, we should consider when we think about a comparable IRR.
Josh Hirsberg
Generally, outside of development costs for the Par-a-Dice project, comparing it to Treasure Chest, I'd encourage you to completely separate the two projects. The market dynamics are completely different. The populations in the areas are completely different. The level of competition surrounding Par-a-Dice with all the VLTs or VGTs in Illinois is significantly greater than it is in the New Orleans or where we're at the counter area. And so outside of build costs, all the dynamics will be different.
Will we save money? Is there less friction going from a riverboat operation to non-riverboat operation? Yes, absolutely. But the dynamics other than that, it will be completely different. I think we were all surprised, just to be clear about the level of pickup at Treasure Chest.
We expected a great return. We didn't expect to double revenues or have revenues be up kind of 80% pre-project. So I think that's been a home run. And I would not factor that into a Par-a-Dice development.
Brandt Montour
Loud and clear. Thanks.
David Strow
Dan Politzer, Wells Fargo.
Daniel Politzer
Hey, good afternoon and thanks for taking my questions. First one is really the local-centric, but it could relate to Midwest and South as well. The current administration, they proposed reducing or eliminating taxes perhaps and more recently overtime pay and social security payments.
And it seems like it would play right into your sweet spot, but perhaps you can put some numbers around any of this impact if you think it might be incremental to your business, either from a cost or revenue standpoint.
Josh Hirsberg
Okay. Obviously, it's in the statement of the obvious, but I'll say it anyways, which is that, look, it all depends on what shape a bill takes and what the exact guardrails are in parameters or specifics are of any build that gets passed. Clearly, if the local consumer, whether they're in Las Vegas or what's going to deal largely to locals throughout the country is healthier for their lower taxes on their income. It will support our business; we will benefit from it.
What does that translate to in terms of dollars? Couldn't begin to tell you. Is it millions of dollars? Yes. How many? 1 to 10, 10 to 20. Actually, don't know because it all depends on what that bill looks like, but it will be incremental the business as we think about the business today.
Daniel Politzer
Yes. I guess it's still early, but it's something worth asking. And then just pivoting to back to the balance sheet, net leverage on a it sounds like it's going to be up from, I think you're right, you said about 2.9. I just given the CapEx you've laid out and kind of at the EBITDA, our expectations, I guess as you think about buying back stock and or organic growth opportunities maybe versus M&A, is there a threshold or through our leverage target, which to think about?
And maybe along with that, is there a scenario where, you know, clearly your stock has been performing well, we consider using that your stock as a currency in an M&A transaction?
Keith Smith
Yes. Look, in terms of how we would fund an M&A transaction, it's all very fact specific. Won't comment on that. We historically have not used our equity as currency, but it's all very fact specific. In terms of leverage, I said a little bit earlier that we would be very accommodating from a leverage profile standpoint for the right acquisition to our leverage to go up.
So as long as we could see it coming down in future, that remains true. Look, we're fairly disciplined in terms of looking at assets in terms of M&A. We find the right asset and find the right opportunity were likely to execute. But Josh talked earlier about, we look at share buybacks and the return we get from that.
We look at returns from our internal investments and we look at M&A and we're trying to balance it all we talk about this balanced approach to capital allocation. It's not investing in any one thing or allocating it in any one place. It's trying to allocate it across the board so that we have a very strong foundation to continue to grow from. So that's the best I can do.
Josh, you want to add on?
Josh Hirsberg
Dan, you mentioned the 2.9 nature reference was lease-adjusted leverage. We said at the current leverage is about 2.5 today. And lease adjusted leverage today is 2.9 times. I didn't say that it was 2.9. Just want to be clear.
Daniel Politzer
Right. Got it. Thank you.
David Strow
Shaun Kelley, Bank of America.
Shaun Kelley
Good afternoon, everyone. Josh or Keith, most of my questions have been asked and answered, but a couple of small ones. First of all, on Norfolk, if we could, obviously a bit more color on the temp facility timing.
But could you just help us out there with scope and scale of that project in terms of position count or just kind of how we should think about it? And just any plans around ramp up our marketing just given the size, you'll start with there.
Keith Smith
So here's I'd think about it is actually pretty simple. So much in the cost of it is built within the $750 million overall project costs. The timing is November of this year and from a financial return standpoint or incremental EBITDA standpoint, you should assume zero.
It's a small will be a small, modest facility and you should just assume it's breakeven. Might be slightly positive, might be slightly negative. You should assume breakeven.
Josh Hirsberg
We're basically at the same time going to be focused on building the ultimate project. That's why it's small to start with.
Shaun Kelley
I mean, maybe to push on that for a moment, then like what would be the point of doing it if the contribution was zero? Is it a requirement to get something open and operating as a part of the development agreement or something?
Keith Smith
Yes, as part of the overall development agreement, we will be opening a temporary facility or transitional facility.
Shaun Kelley
Okay. That's helpful. Thanks for that. And then a second follow-up would just be scaling back the Treasure Chest and obviously, the property been a big success, but there was some concern as, in particular in New Orleans opened up. You have some incremental improvement there that perhaps you take a little bit of spillover a little bit of impact. Have you observational seen, I mean, we've obviously got access to some of the state level reported data.
But just as you look at -- as the run rate cooled off there at all, or have you been on generally impressed by the levels or seen any change in behavior as that asset started to stabilize?
Keith Smith
Josh will not be happy with this comment. Actually, our Q4 performance from a revenue standpoint was better than our Q3 performance. So I think maybe whatever went on in Downtown New Orleans assisted us overall.
Shaun Kelley
Okay Set the bar low then. Thank you very much.
David Strow
Joe Stauff, Susquehanna.
Joe Stauff
Okay, thanks. Hey, Keith and Josh. Have a question on the renovation sleeve of your CapEx outlook, $100 million and wondering similar to your project CapEx sleeve of $100 million, should that also be something that we assume you'll continue, say, going forward?
And then I was wondering if you just kind of comment from your perspective in terms of your -- where are you seeing regional competitive pressure in terms of what markets? I mean, certainly we can see we can guess. But I was just wondering, from your perspective, where you see the bigger impacts from competitive pressure. I think you answered one of them. Right, in Shaun's question thus far, but I was wondering if you comment on the other areas.
Keith Smith
So look, I'll answer question. Josh will talk about the CapEx side of your question.
But from a competitive standpoint, the promotional landscape, the competitive landscape has been fairly consistent for '24. We don't see much change in '25. Look, there were some new additions, new supply additions in Northern Illinois that impact a little bit. And there's a project in Eastern Illinois, outside of Chicago that potentially impacts Northwest Indiana.
It's early, so we're watching those. None of those have had a significant impact on us. And so we think about is there a market where we'll see larger competition than another market, no. On our New Orleans market, our Treasure operation continues to perform at a very high level.
I can't speak to what is going on in the market there. But we're continuing to do well. And everything seems pretty stable.
Josh Hirsberg
Yes, the I think we're pretty well. I mean what Keith comments you're saying is we've pretty well insulated from competition and reality, at least for the foreseeable future. I think from -- just to clarify on the $100 million room refurbishment projects, you can think of that as we're catching up coming out of COVID capital kind of stuff.
And so when we started talking about that, we said it was going to be $100 million in 2024 and $100 million in 2025. And then it would go away. With the way it's playing out as we actually spent less in 2024, that's going to be what gets shifted out to 2026. And that's why we think it will be done in mid-2026.
So to the extent we're able to hit the $100 million that we expect to spend this year, then there'll be another $50 million in the first half of next year. And then that will be done to the extent that for some reason, because it takes us longer or whatever, we don't spend full $100 million, you'll see that rollover.
But we've got projects identified. We've got the budgets identified. It's $200 million, it's just really spread over what time period that we execute on those. So that's that.
And then that's not to be infused with the $100 million we spend every year or that we started spending every year for the growth projects like Fremont, Treasure Chest, meeting space at Ameristar St. Charles, Cadence Crossing and then eventually Par-a-Dice and others to come. That's a recurring $100 million of growth capital.
Joe Stauff
Understood. Can I squeeze one more in how to think about just the potential construction disruption in the locals market from your Suncoast, some projects as well as Orleans?
Keith Smith
I think there could be some, I mean that is a risk to any commentary that we talk about, say an elaborate surgery on an operating live gaming operation. And so we've done this before Downtown where we take a little bits and pieces of the casino floor and work our way across it.
And there will be some periods of time where we have a disruption to operations. At this point, we're planning to mitigate that and we're not planning for disruption, but life will happen, and we'll let you know when that does happen.
And the reason we call out the hotel rooms is not only sell that, you know, we got capital calls every once in while we run into unexpected issues with those as well. So again, we're not expecting we're trying to plan around it, but some of these buildings are really old, and you have to take out more of a tower than you expected, and we've encountered that before. And those who followed us have learned with us as we've experienced that.
So we're trying to let you know what we're doing. And so if something goes awry, you go, okay. That kind of makes sense as to when it's not a surprise and will be surprised by the disruption when you guys are surprised by. So that's how we're trying to do here.
Joe Stauff
Yes. Thanks a lot.
David Strow
John DeCree of CBRE.
John DeCree
Hi, Josh, hi, Keith. Thanks for taking my question. Maybe shift gears to the Online business a little bit. I know we've covered a lot of ground already, but you know, Josh, you have a really good detail on CapEx investments for the upcoming year and even into 2026.
So curious if you have much plans for investing in the Online business this year, particularly here, you're kind of a gaming business, many give EBITDA guidance, but curious if there's any kind of OpEx investments in that.
And then I guess the bigger picture questions, what would you need to see in that business to kind of push more investment dollars to the gaming business? Is it more kind of state legislation is kind of how you think about investing in gaming on over a multi-year period?
Josh Hirsberg
John, if we're very pleased with the platform we have, it is scalable. And so as other states legislators begin to consider this and potentially approve this, it's not going to require significant CapEx to do anything to quote, unquote scale up to take advantage of those opportunities.
We're happy with the platform we have and where it's out. I would not assume any significant CapEx in that business that it will continue to have, I think, a modest growth going forward and will accelerate probably only when other states begin to legalize this product.
John DeCree
Understood. Thanks, Keith. And if I could sneak one more in probably not a ton free to add on some of the strip phenomena. Curious if you've seen any business differences in the Locals market delivering F1 this year, whether it be displaying a less disruption or different levels of visitation? And then similar question about expectations for Super Bowl this year. If you expect any meaningful variance in your business volumes in the Locals market?
Keith Smith
So I think we just think about F1 last year, the programming in the city was differences may be hard to unpack it because there was a Raiders in town, Raiders play Denver that weekend. And so there was more demand, there was more demand for hotel rooms. There is different customer in town, which was good because the prior year, the town just didn't fill up to the extent it was expected.
Look, year over year, room rates were down during the up-time frame because the, you know, the irrational exuberance as they say from year one of F1 kind of subsided. So it was a little less disruptive, but it still takes months to put that together, which disrupts the strip and still takes more than a month to tear it down, which disrupts the strip.
In terms of Super Bowl, I think what you want to think about is Super Bowl is always a great time in Las Vegas, always one of our busiest weekends. I'm not sure room rates will be quite as high year over year. The room rates will be down year over year from a Super Bowl standpoint. Town will still be full, will still be very strong weekend for us. Just on the non-gaming side, maybe not quite as robust as it was last year.
John DeCree
That's great. Thanks, Keith. I appreciate all that color and congratulations to all and the epic milestone anniversary.
David Strow
Chad Beynon, Macquarie.
Chad Beynon
Hi, good afternoon. Thanks for taking my question. Just one for me. Josh, you talked about the Managed and Other segment in 2025, essentially being flat year over year. Obviously, trees don't grow to the sky but has been one of the higher growth areas of your company. And I know there's a phase 1 into phase 2.
So should we assume that you might just be being a little more conservative, given all the volatility in the market in terms of this property growing? Or is there something else in the database or competition or maybe disruption with phase 1, um, that should kind of limit some of the growth that we've seen in the past couple of quarters? Thanks.
Josh Hirsberg
Yes, one of the things that limits growth is it's a very high-performing property as we sit here today. And there's only so many people who put it in that building on a weekend, which is when most of the business has generated in. So there are just natural limitations. We cannot add capacity to the four walls.
We believe it today and therefore just growing that business much beyond what it is today. It's very difficult from a physical standpoint. It is at capacity on weekends -- at holiday weekends, just almost every weekend. So it's a physical limitation as much as anything.
Keith Smith
I think the next opportunity for growth for the point you made, Chad, as once phase 1 is done and we get that up and running and work out the kinks out, but that's probably a 2026, sometime in 2026, kind of contribution.
Josh Hirsberg
It's not a disruption from project. The project is largely outside the existing four walls.
Chad Beynon
Okay. Thank you, both next quarter. Appreciate it.
David Strow
Thank you. This concludes our question and answer session. I'd now like to turn the call over to Josh for concluding remarks.
Josh Hirsberg
Thanks, David, and thanks for everyone joining the call today. If you have any follow-up questions, feel free to reach out to the company.
