Boyd Gaming Corporation (BYD) Q1 2020 Earnings Report, Transcript and Summary

Good afternoon. And welcome to the Boyd Gaming First Quarter 2020 Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Josh Hirsberg, Executive Vice President and Chief Financial Officer. Please go ahead.

Thank you, Grant. Good afternoon, everyone. And welcome to our first quarter earnings conference call. First and most importantly, I hope each of you, your family and friends are all safe, doing well and staying healthy. 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 and our comments are as of today’s date and we undertake no obligation to update or revise the forward-looking statements. Actual results may differ materially from those projected in any forward-looking statement. There are certain risks and uncertainties, including those disclosed in our filings with the SEC that may impact our results. During our call today, we will make reference to non-GAAP financial measures. For a complete reconciliation of historical non-GAAP to GAAP financial measures, please refer to our earnings press release and our Form 8-K furnished to the SEC today and both of which are available in the Investors section of our website at boydgaming.com. We do not provide a reconciliation of forward looking non-GAAP financial measures, due to our inability to project special charges and certain expenses. 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. Before I turn the call over to Keith, I want to point out that the release we issued today, reports are preliminary first quarter results, as our accounting team and external auditors are continuing to complete required impairment reviews. To their work result in any impairment charges and associated tax implications, you will see that report -- reported in our 10-Q filing for the first quarter. It is important to note that continuing review for our potential impairments will not impact the operational results we are reporting today. So, with that, I would like now to turn the call over to Keith Smith. Keith?

Thanks, Josh. Good afternoon, everyone. I hope that everyone staying safe during these extremely difficult times. It is times like these to do remind us what is truly important in life, our health, our families and our friends. The financial damage of COVID-19 can and will be repaired over time. The same cannot be said of lives lost to this tragedy. The human cost of COVID-19 has been terrible, but it could have been far worse. Over the last six weeks, the freeze and non-essential businesses across the country, there’s a lot of communities to start flattening the curve saving countless lives. While the mandated closure of our properties was a necessary part of the broader effort to stop COVID-19, the impact to our company, our team members and our communities has been significant. Before the crisis began in March, our company was on track to report strong first quarter results opening the year with two consecutive months of solid growth across the country. Prior to the closures, are Las Vegas Locals segment was well on its way to posting its 20th straight quarter of EBITDAR growth with year to date revenue, EBITDAR and margin improvement across our Southern Nevada properties. Our Downtown Las Vegas business was poised for another record quarter and we saw strong performances across our Midwest and south properties with 13 of our 17 properties producing double digit EBITDAR growth through the first two months of the year. During this period, all but one of our regional properties supposed to be year-over-year growth in both revenue and EBITDAR. Then came March and when the COVID-19 outbreak transformed our business, to the communities we operate in. In response to state orders aimed at preventing the spread of COVID-19, Boyd Gaming closed every one of our 29 properties across the country over a six day period from March 12th through March 18th. In the initial days following these closures, our first priority is we are providing support to our team members and our communities. Our properties donated tens of thousands of pounds of food in cities across the country and we contributed significant quantities of gloves and masks to first responders in hospitals. We also supported our team members across the country, providing a full month of pay and benefits while their properties were closed. The first disclosures were meant to be short lived, but as the full extent of the crisis became apparent, stay at home orders were extended across the country. Today, six weeks after the closures began all of our properties across the country remain closed to the public and reopening day to remain uncertain. The results we reported today show the significant impact of these closures on our business. In order To ensure that our company is able to navigate through this crisis and resume operations in a strong position, we have made some difficult but necessary decisions. Our executive and management teams have taken significant pay cuts and our Board of Directors agreed to suspend their compensation. We have halted all non-essential spending, all major capital projects have been suspended as well our quarterly dividend payments and share repurchase activities. But by far the most difficult decision was placing most of our team members on furlough status in mid-April. This was the hardest choice we have ever made as a company, we care deeply about the wellbeing of our team members and we postpone this decision as long as we could. But without any clear visibility on when we would be able to reopen our business, this was a decision we had to make. We recognize the impact that these furloughs have on our team members and we have tried to mitigate this impact by continuing to provide benefits coverage. All furlough team numbers who are enrolled in our benefits program will remain covered through June 30th at no cost to the team member. And thanks to the approval of stimulus payments and enhanced unemployment benefits by Congress last month, our team members and our communities will receive much needed support to help them through these difficult times. As of today, we do not know when we will be permitted to resume operations and bring our team members back to work. It is likely that each of our 10 states will reopen on a different timeline, each with their own specific health and safety guidelines. We are currently working with state and local officials across the country to gain a better understanding of when we will be able to reopen and what reopening may look like. And while we do not have clear visibility regarding opening dates based on the actions we have taken to reduce expenses and strengthen our cash reserves, as well as the work we have done in recent years to strengthen our balance sheet, we are confident, we have sufficient liquidity to sustain our company until we can reopen our doors once again Once the reopening process begins protecting the health and safety of our team members and customers will be our utmost priority, and the safety protocols we put into place will meet or exceed the standards set forth by local state and federal health officials. As we look ahead and prepare for a return to business, we believe we will benefit from a business model that is largely focused on local and regional visitation. Across our nationwide portfolio the majority of our business comes from local customers, we are not reliant on destination or convention business for success. As a result as operations resume, we believe our local customer base will position us to lead the recovery of our industry. While these are certainly unprecedented times, we know that they will come to an end and we look forward to the start of the recovery. Before I turn the call over to Josh, I want to take a moment to recognize our team members who I know have been significantly impacted by this crisis. While our properties may be closed, you are still part of the Boyd team and we look forward to bringing you back to work as soon as we can. With those team members who have remained on the job throughout these closures, thank you for your hard work and keeping your property safe and secure, your dedication and efforts will help us reopen quickly when the time comes. To our customers, we look forward to welcoming you back when it is safe to do so. I know that many of you will be looking for entertainment when stay at home orders finally end and we look forward to hosting you again as much as you look forward to visiting us. And finally, we want to recognize the first responders and medical personnel who have been on the frontlines of this fight. You have worked countless hours and put your health and wellbeing at risk to save lives and protect our communities during this pandemic, I know I speak for everyone at this company and thanking you for your incredible service, you are an inspiration to all of us. Thank you for your time. I will now turn the call over to Josh.

Thanks, Keith. Over the last several years, we have had a focused effort to strengthen our balance sheet for deleveraging and managing the company to achieve increased size, scale and geographic diversification. Thanks to these efforts we have been able to respond to this crisis from a strong financial position. As we manage our business through these challenging times, we have taken several steps to ensure we are able to preserve the strength of our company throughout the closure period and during the reopening of our properties. Keith mentioned some of the important decisions we have made thus far. We have aggressively reduced expenses across the enterprise, including making the difficult decision to furlough most of our property and corporate team members in mid-April. Our executive leadership team and our remaining property and corporate management teams have often taken significant salary reductions and our Board has agreed to forego their compensation. In terms of capital expenditures, all major capital projects have been suspended and we have reduced our expected CapEx spend to approximately $45 million for the remaining nine months of the year. During the first quarter, prior to our closures, we purchased 693,000 shares for a total investment of about $11 million of our stock. Since those repurchases we have halted our capital return programs and in March suspended both our share repurchase program and our quarterly dividend. As a result of these combined efforts, we have significantly reduced our monthly cash requirements, positioning the company successfully whether this crisis and be prepared for the resumption of our business. Our current monthly cash requirement is approximately $60 million per month. Our available cash at the end of March was $831 million, including $670 million we drew on our revolving credit facility in March. Based on our current cash requirements, our cash balances provide us sufficient resources during these challenging times. Now that we have reinforced our financial foundation, we have turned our focus on planning for reopening our business, reengaging our team members, and serving our customers and communities. We look forward to providing more details about our reopening plans in the weeks to come. Grant that concludes our prepared remarks and we are now ready to take any questions from the participants.

[Operator Instructions] Our first question will come from Carlo Santarelli with Deutsche Bank. Please go ahead.

Hey, guys. Good afternoon and good evening. Thank you for the comments and your remarks. Acknowledging this is a fluid situation in terms of when things will open and how things will open, et cetera. To the best of your ability at this time and with respect to obviously to the fact that you just noted that you would kind of give us an outline in the next few weeks as you put plans in place. How do you guys foresee maybe based on your conversations with regulators to-date? What social distancing, indoor properties on a blanket perspective obviously each state could be different could look like and maybe what some of the steps are that you guys will take to make your property as efficient as they can be with likely hard to quantify demand curve, as we look out over the next few months and quarters.

Sure. Carlo, I will take a shot at that and see if I can address your question. I think each state will as you said handle it differently. But I think most of the conversations are centering around social distancing, limiting whether it’s a number of people in restaurants, whether it’s every other slot machine or every third slot machine if you will, whether it’s the number of people at a 21 table or a craps table. I think you have to think of it as limited capacity or limited access into the building, social distancing at bars and anywhere else where people gather. And so we will have I think initially fewer people in the building, and I say initially, because I think as time goes on and we see where this virus goes and what type of vaccines and other immunizations come forward, that will change and so we open these properties or these properties will probably not be how they look in the long-term, but they will be restricted access or restricted capacity across the Board. In terms of kind of running an efficient business, I reflect back to the crisis in ‘08. And in ‘08 and ‘09, I think, a lot of people forget is, we didn’t have a real drop in demand. We had above 90% of the people in the building that we had prior to the crisis in ‘08. They were spending about half as much money and so in ‘08 and ‘09 we had to re-engineer the business to deal with that. Today, we actually have a closed business and there’s nobody in it so the ability to re-engineer it is much greater and much easier to do and to start to figure out how do you run a business that maybe initially looks like 50% or 60% capacity with different staff, with different cleaning protocols and how does all that work. So, we will and have worked through much of that, and we understand how we will kind of rebuild going forward when we are allowed to reopen and it will look different. But I stress that we are -- I think all certainly hopeful that this isn’t a permanent situation as much as it is an evolving situation and that as the world gets our arms around this COVID-19 issue that we will return to normal whether that’s later this year or into next year.

That’s helpful, Keith. Thank you very much. And then, Josh, just one housekeeping item, your -- you said $45 million of maintenance capital expenditures through year-end. I am assuming that number stays static regardless of when property is open, but also what was the 1Q spend?

The first quarter spend was about $48 million.

Great. Thank you very much.

Sure.

Our next question will come from the Joe Greff with JPMorgan. Please go ahead.

Good afternoon, guys. So following up on sort of how do you think about opening up type of questions. In markets like Las Vegas Locals in Downtown Las Vegas where you guys have multiple properties. How are you thinking about the phasing of opening properties there? What type of properties do you open first, which later, and kind of what you said Keith, about having maybe fewer people in the building and taken to account social distancing measures. Does that suggest that because you have sort of a hampering of revenue generating input that maybe makes sense to open up multiple properties at once or how are you thinking about, I know quite early at this juncture.

Right. So good question. As you think about our Las Vegas Local segment each of the properties is in a very distinct part of town and has a very distinct customer base. And so I would see us opening most if not all of them as soon as we are allowed to open them and because they are all once to have a different -- largely a different customer base and so I don’t see a phasing. Same thing as I think out of state obviously they are all in different markets and so we would open those as we are allowed. Downtown with the three properties Downtown dealing largely to the Hawaiian market and then to crowds on Fremont Street, I think, that business is going to look different. And we will have to wait and see how kind of inbound tourism from Hawaii it looks and we will have to see how the Fremont Street experience and how crowds on Fremont Street experience are allowed to develop and so that business sitting here today is a little tougher to think through how it opens up.

Great and thank you very much, Keith. And then, Josh, you mentioned in your prepared comments that your monthly cash requirements on total about $50 million per month. I could do the math $45 million divided by 9 for CapEx is $5 million. How do you allocate the other $55 million between property, corporate, cash interest and maybe other sources of cash use?

Yeah. So, I guess, I think, about how to answer that. The kind of the operating expenses and corporate expense level when you kind combined all of those, there they run probably, I don’t know, but it’s -- probably about $20 million a month or so, I would say, a little bit more than that maybe. Rent is around $8.5 million to $9 million. Interest expense, kind of is a little bit all over the place just because of the timing associated when we make payments and stuff like that, but it averages about $16 million to $17 million a month. And then, the CapEx and that’s really about it. So I am doing this a little bit from memory, but those are generally kind of big picture numbers.

Excellent. That’s all from me. Thanks, guys.

Yeah. Sure.

Our next question will come from Steve Wieczynski with Stifel. Please go ahead.

Hey. Good afternoon, guys. So, Josh, obviously, you gave the monthly cash burn number and we obviously appreciate that. But maybe a different way to kind of ask that question is more around, have you guys thought about what your cost structure could look like as we get back into a normal operating environment, meaning, some of the calls that you have stripped out at this point so far. Is there a way for us to understand how much of those costs could be permanent down the road?

Yeah. Steve, this is Keith. As I said in a response to a question from Carlo earlier, we are looking and have done a lot of work around kind of reengineering the business, knowing that when we reopen on day one, we are simply not going to have -- it’s not going to look like it did when we closed it down in March. And so I don’t think we are in a position to kind of go into permanent cost reductions or what that’s going to look like. But suffice to say, we have done a lot of work around that we understand what that can look like and we will just have to see how we open and we will take it from there but nothing really to report today.

Okay. Got you. And then can you help us think about how you are thinking about the promotional environment, the assets eventually start to reopen. And I guess the question here is how were you thinking about what it’s going to cost to get customers back in the door? And then, secondly, do you think, we could -- you guys could have to enter some kind of promotional or down the road in order to get customers back in your properties?

Well, I certainly hope not. I think as we ended and as we were shutting down this business and I think we generally had a fairly tamed promotional environment across the country and we certainly hope, when we reopen that it remains the same. Having said that, I do believe that there will be some level of pent up demand once the stay at home orders are lifted and we are allowed to reopen and welcome customers back in the door. I think in some markets that we may have more demand than we have capacity in the building or than we are allowed to have in the building. So obviously hard to tell, but we as a company don’t plan on going out there and instituting the market and we are simply to get people in the building and once going to I think there will be good pent up demand once we are able to reopen. People are at home. People are needing to get out. You see it across the country. You see it on TV every day. People are looking for an escape and once again, I think, when we reopen, we will part of that escape.

Okay. Great. Thanks, guys. Appreciate it.

Our next question will come from David Katz with Jefferies. Please go ahead.

Hi. Afternoon everyone. Thanks for taking my question and good to hear from you. I wanted to ask about the degree to which you might be opportunistic for all of this and it may be not at the top of the list of thoughts we have, but could there be circumstances where there would be M&A opportunities that come about out of this and maybe that’s a bit later on. But have you given any thought to whether you would look to be opportunistic on the backend of this?

Okay. I think your comment right now is not in -- kind of in the front of mind, we are focused now on. How do we reopen? We are focused now on health and safety and sanitation protocols and making sure we reopen with a very efficient business and producing as much as EBITDA as we can. As always if opportunities happen to present themselves, we will see where it goes, but that is not our focus right now. Our focus is on getting these businesses reopened, operating as efficiently as we can and kind of maintaining the strength of the company that we have built over the last several years.

Got it. And if I can just follow-up, with respect to the when you think about the Vegas Valley in total and what you apply cite is on what would be unevenness potentially across the valley. And if we could accept the notion that the strip maybe ramps up more slowly than more localized properties, I would certainly welcome your input on that point. But can the locals markets start to ramp without a productive like the flourishing Las Vegas Strip. How do those two kind of functions? How do you envision those kind of rolling out as best as you can?

Well, look, we are going to want to talk to the strip operators. But roughly 20% of visitation coming into Las Vegas is international visitation, very little if any of that shows up in our buildings. And so we don’t have to worry about that in terms of the type of visitation coming into our buildings. I think that if you look back at ‘08 and ‘09 once again and you look at the recovery from that point in time or from that period of time there was this expectation that the rebound on the strip would fuel the rebound in the locals market and it really never did. I mean, I think, we all kept waiting for the health of the strip to trickle into the locals market and it took years, it took years for that to show up. So I am not sure if there’s a direct correlation there like we thought there was back in ‘08. I do think the Las Vegas Locals market will be healthy. It’s going to large percentage of our business our retirees that live here and those retirees didn’t’ have a job before they started, don’t have a job now, they still have their income and so it’s going I think that there will be because we will have reduced capacity there will be good demand for the product. It’s not going to look like it did when we closed in March but we won’t be offering the same product that we closed within March.

Got it. I appreciate that we are all sort of answering questions with less complete sets of information than normal. Thank you for -- thanks for the answers.

Sure. Sure.

Our Next question will come from Harry Curtis with Instinet. Please go ahead.

Hi, Keith and Josh. I wanted to follow-up on the pace of openings or the departmental openings, probably, useful to understand other than the casino floor, what your most productive businesses are that that you, probably, want to open up pretty early, is it likely to be a one or two restaurants. Are you going to the extent that you have salon or spa services, hotels, what sort of sense of urgency do you have to reopen those and maybe I will start there.

Well, I think, you should think about reopening the locals property. I have given my comment earlier that most of our customers are local and drive to us that having restaurants and bars open will be important. The number, the quantity, which ones you know high-end restaurants, mid-tier restaurants, which of those do you open. It is all would be capacity driven and each property and each operator will have different issues given what their buildings look like and what type of restaurants they have, but those will be important to service the customers. Hotels are profitable for us, but it will depend on demand and that is unknown, we have small hotels in most of our properties. We have a couple of large hotels, 1,000 rooms at the IP and 1,900 rooms at the Orleans. I don’t suspect we will be opening all those hotel rooms initially, because I don’t think there will be quite that demand there. But we will take that kind of on a case by case basis based on the demand for the product.

Thank you. And Josh, I had a quick one for you, based on your cash burn, you have got, probably, more liquidity than most of your peers even on -- even the larger cap names, which is quite commendable. I think, probably, it’s worth exploring, what alternative sources of liquidity that you have, if it’s needed, we hope it’s not other than the high yield and the equity markets. So maybe you could speak to the opportunity that you have in the -- in secured debt markets and not that you need to look now but should the need arise?

Yeah. Harry, I think, we do benefit from plenty of opportunity to think about and explore the different options we have as a company to kind of continue to strengthen our balance sheet and put more cash on the balance sheet and that’s what we think is necessary in this environment. And I think as we have always said before it was really important for our company to maintain a lot of flexibility and optionality for the unknown and I think we are in a situation where optionality and flexibility kind of make the company have a much stronger position honestly have a lot of alternatives to consider. And we are fortunate that we have a support bank group. We have what I believe to be very good relationship with our long-term investors. We have relationships with both long-term equity and credit investors and I think we have seen that coming through with the calls that we have gotten to consider alternatives. And I think without going into specifics, I think, we have a lot of flexibility. We have a lot of optionality and I think we have to room to make those decisions and not be under pressure to do something that will write down the road. And I think, we will use that in this environment of uncertainty whether it’s with respect to re-openings or the duration or the recurrence of the virus potentially. So that’s how I would think about it today.

All right. I will leave it at that and let’s hope it doesn’t -- it’s not needed. Thanks.

Thanks Harry.

Our next question will come from Jared Shojaian with Wolfe Research. Please go ahead.

Hi. Good afternoon, everybody. Thanks for taking my question. Josh, I realize this is a tough question to answer, but I am going to hopefully get you to take a stab at it. Once casinos begin to reopen, can you just talk about what capacity level you think you need to be at in order to be cash flow neutral? And I guess -- and maybe a different way to ask that too is, what percentage of your operating cost will be fixed once you open back up?

Yeah. So you are right, it’s a very hypothetical question. I think what we are working for now and trying to make sure that we understand fully is, the business is going to look a lot different. It’s going to look a lot different in terms of all of the social distancing and the constraints that we are put on to make sure that we are responsible with respect to reopening. But I would say also in that regard the business -- the amenities that we offer whether its not offering [inaudible] side, we are offering bond credits, whether it’s a limited restaurant product, whether it’s limited hotel product. So the margins of the business will be very much different than it was when it was a fully operating, I shouldn’t say margin but expense, structure of the business to be very different than it was when we were prior to the virus. And I think that will -- that could work to offset many of the extra cost we need to deploy for sanitizing the buildings or doing some of these extra steps that we need to pay. So, I don’t think it is -- I think that -- I can’t say with confidence that day one we will be cash flow positive, but I think it doesn’t take much to be cash flow positive and we will be -- you can bet we will be very focused on only growing the businesses to generate and get there as quickly as possible.

That’s helpful. Thank you. And then just somewhat of a longer term question on corporate expense. One share back to 100% capacity at your casinos whether that’s a year from now two years from now, who knows. But do you think you need to go back to the $86 million level that you are guiding to this year on corporate expense or do you think you have learned some things through this crisis and ways to be more nimble on corporate costs going forward?

Well, first of all, I think, we are continuing to learn as a result of this crisis. It gives us a very unique opportunity as awful and terrible as the crisis is, the reality is, it does give us an opportunity to really to look at what is important for the business going forward, where our priorities need to be and how we -- where we want to put our emphasis going forward. So I do think that corporate expense will be less. I don’t know how much less. I mean, we have got all kinds of scenarios that we are thinking through and still working through and as soon as we can get the business open, kind of about a stabilized level, we will be able to give you guys some indication of that, but we are not ready to do that obviously now, but I do think it will be less.

Okay. Thank you very much.

Sure.

Our next question will come from Felicia Hendrix with Barclays. Please go ahead.

Hi. Thank you so much. So, Josh, just getting back to the liquidity questions, just I would -- would you be willing to sell real estate if you got to that point?

Well, I would say, that our -- I think our philosophy on selling real estate is fairly well understood. I think that that’s not our preference. But one thing we have consistently said and I alluded really in our, probably, kind of a way with Harry, which is we have a lot of options and we have always maintained that optionality is important to the company. It would not be at the top of the list. It would probably be on the bottom -- on the list and then move toward the bottom of the list, is what I would say. But we are nowhere near the situation where we have to consider something like that, to be clear.

Yeah. Okay. Great. That’s helpful. And I am going to just switch gears and ask you an iGaming question, if that’s okay. So in the first quarter, Valley Forge did have a strong first quarter with the iCasino up and running. So just wondering if you guys, where you think that business could eventually get to and if you would expect more states to approve iGaming or maybe accelerate the approval, I know a lot of people have talked about that to fill in the gaps from the last tax gaming revenues and then also just power the economics there are different sports spending for you?

Sure. So, look, I think, you have seen a big increase in iGaming in Pennsylvania kind of both from the launch of our product in late January to where it was in February to kind of where it is and what I will call this kind of post COVID-19 world with all the land based casino shot. I think the revenue run rate when the numbers come out you will see 60% higher today 6-0 percent higher today than it was when everything was open and customer acquisitions are up quite significantly. I think you will see other states take a look at this, there were some conversations that had been happening prior to the shutdown and states look to fill budget deficits, I think you will see a lot of states start to have more serious conversations about this especially those states that have already adopted sports betting. iGaming is kind of part of the digital strategy that we have been deploying over the course of the last couple of years starting with sports betting and now online casino gaming and we expect to continue to participate in that as this rolls out across the country. So the economics are different than they are in sports betting. I think we are not in a position to kind of get into those details now, but they are different. But it is a profitable business for us.

Okay. Thank you for that. And just one quick housekeeping, have you guys ever said or maybe you could say now what percentage of your customer base is older than 60?

I don’t think we have disclosed that in the past, yeah.

We don’t have that relationship but something we could get.

Okay. I mean you are obviously wondering for obvious reasons, right, I mean, just in terms of that class of folks being more vulnerable and just trying to extrapolate the kind of traffic that might be coming to the casinos in the future, so, okay. Thank you.

Yeah.

Sure. Nice question.

Our next question will come from Barry Jonas with SunTrust. Please go ahead.

Thank you. There was a question for on corporate cost but other opportunities to permanently remove any operating costs once things go back to normal or I guess is there may be an opportunity to accelerate any margin efficiency initiatives through all this?

Well, I do think there are opportunities to again restructure and re-engineer the business, most likely we have done over the last several years. And knowing that we will not be opening with a full complement of amenities and having full load of table games and slot machines then we have to be smart about how we open. We have to be able to take cost out of the business. I said earlier the kind of the teams have been hard at work, while working on that frankly over the last month since we shut the business down, I think we have made great progress in understanding how we can operate differently i.e. at lower cost structure more efficiently going forward in this new world. So we will have to wait and see when we open in terms of how successful we are and what it means to margins. But we are confident that there are and can be some permanent shifts in the cost structure as we move forward in life.

Great. And then can you maybe give a status on the Wilton Rancheria projects. I mean I am just curious how quickly that could pick up again and what you need to see to go there?

I am going to defer to, Josh. Basically nothing is happening kind of as we speak, because we are at a point in time where we need to arrange for financing for the project. We have GMP in place and we have bids, and we have plans, and we were at a point in time right as this crisis hit, right as this pandemic hit to go to the market and so there’s not much we can do until that market reopens. But, Josh?

Yeah. I think Keith described it pretty well. I think we were getting closer to being able to go to the market for financing. We were close to finalizing the GMP and some final details to be able to start to really put some kind of effort into us to kind of formulating and financing go forward is. It was just that this is happening and has sort of falls on everything for the time being. But it remains a very good project long-term not only as a manager but for the tribe as well and so we are very interested and hoping to drive this successful. But obviously we have to get beyond this.

Got it. And then last question even if it’s qualitatively, I am just curious given the current state of the business. What sort of things are embedded in that $45 million CapEx guidance for the remainder of the year?

It’s largely. Sorry. Yeah. It’s largely things continue to break even though there’s nothing in the air and so we have made some assumptions no people are in there. So it’s basically an assumption of what’s going to be needed to keep the buildings ready to go and that’s about it. No -- nothing beyond that. No kind of bank expansion of capital or expansion projects or anything like that. I will just call it core base maintenance to have the buildings ready to go.

Yeah, I think the mechanical, electrical, life safety systems all of which have various lives and we are coming due for upgrades or replacements throughout the course of the year. We need to continue on with those regardless of whether or not anybody is in the building.

Elevators and things like that.

Understood. Thanks so much, guys.

Sure.

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

Hey. Good afternoon. And just thinking specifically on the Midwest and the south region, are there certain properties or property types you expect to recover quicker and one that you think will take longer? Thanks.

Well, I think, there are -- probably, there are certain properties that have more of a local market i.e. that the customer base is closer to that property taken IP, for example, of the thousand hotel rooms part of the success of that property is filling those thousand hotel rooms and having people come into the Biloxi market. So that would may recover a little slower than some other properties like maybe Delta Downs that really is driving, came and stay there. We have a few hotel rooms but certainly not a lot of hotel rooms or a treasure chest which is truly a Locals market. People live within 10 or 15 minutes generally of the building. So as you kind of go through our Paradise or the Blue Chip in Northwest Indiana. Many of those are very, very local markets. We have a couple once again where they come from further away where they have IP in out of state property with a large hotel base. That would be probably a little slower to recover.

Helpful. Thanks, Keith. And then just on the Las Vegas Locals market, it was obviously significantly hit during the financial crisis more than most of the regional market. Can you just help us compare and contrast how it is today?

Yeah. So I think -- I don’t think the comparison is really that direct to be honest. But I think, in fact is almost the opposite in many ways when you think about it. The strip recovered more quickly than the locals business did because it had a wider population pool and visitor pool to attract from. It was a business that had a lot of incremental amenities and all of those things really aren’t what’s relevant today in the sense that people aren’t going that necessarily want to travel and so our local and more regional customers are going to probably be more comfortable with that initially. All of the non-gaming amenities will be -- where we have limited -- less kind of contribution from that, we will probably not be allowed in a significant way as we initially open. I think also in terms of just the level of recovery, it -- to me it seems like people are wanting to get back to a normalize life. They want to get back to what they viewed as normal before the Coronavirus. And generally to the extent that we are prudent about how we open, prudent about how we allow folks to interact with our business, that can happen fairly quickly. And then, lastly, I think, that the whole situation is different, as Keith mentioned earlier, in one of the earlier questions or remarks, it was at that time we had a lot of people in the building it was a spend issue, this time it’s almost reverse of that. I don’t know that we will necessarily have a spend issue but we will have not restarting from a place where there’s going to be no one in the building going to limited people in the building to hopefully more people. So I think those are the compare and contrast points that are relevant. And I think beyond that you really have to say, while many of us have were here when the recession, the financial crisis happened and we learned a lot from it, there are a lot of things that are very different that, while you think you may be prepared for this, you are really not it happened a lot quicker and it’s a lot different. And so I think those are the facts -- factors that I would come put down in front of people to think about.

Okay, Thank you.

Yeah.

We have time for one more question and it will come from Shaun Kelley with Bank of America. Please go ahead.

Hi. Good afternoon, everyone. Thank you for taking my question. Maybe just two quick ones, first would be for the reopening and probably in the spirit of last question a little bit. We are understanding is that there’s going to be sort of clusters of states that worked together that kind of try and get reopened given that people obviously are fluid and move across borders often. Is there any -- are there any particular markets or states that you guys are watching just particularly for your portfolio. Do you think you are going to be the first to go or are you getting some signals, you think it will be important to watch just as we are starting to going to track this ourselves?

Yeah. So we are having very good constructive dialogues with state leadership in each of the 10 states where we operate and a handful of those states are reopening other parts of their businesses and their communities, this week, next week, whether you think about Mississippi or Ohio I was talking about it. None of them have talked about opening casinos in the next couple of weeks. But they are all talking about the opening of casinos at some point in the future, which is a good sign that we are in the dialogue, we are in the conversation, we are an important part of many of these, if not all of these economies, whether you think of obviously Nevada or Mississippi or Missouri or Kansas or Iowa and so good dialogues going on. I think we will see them open at their own pace. I am certainly hopeful that many of them are open by late May and as you look to early June many more are opened. And in fact we are having good conversations, there’s no -- it is fluid as the comment was used earlier, it has been used a lot. But there are good conversations happening and once again if you think about late May or early June, I am hopeful that many of our -- not all but many of our properties will be open.

Great. Thanks for the clarity, Keith. And then on…

Yeah.

…second question, it’s a bit specific, but obviously, I think, we are all very focused on demand, but there is some supply growth in the downtown market slated for late this year and into the next. Can you just give us a quick update for those of us who haven’t traveled obviously recently, how’s construction proceeding and in some of those projects or in that market, is it postponed or what’s the activity level out there right now and kind of any idea of how some of those projects may be impacted by what’s going on?

So two to project specific Downtown Las Vegas to Downtown Grand which is the addition of about 500 hotel rooms. That one had been in close. It was ready to -- was supposed to open in July. I don’t really have any insight on that, but my guess is it was continuing because it was largely complete. Derek Stevens the other big project that is right across from the cow and on Fremont Street. They have topped it off. I think there maybe taking the outside elevators down and so that is continuing to move ahead. I don’t know the opening date. I think it’s -- maybe pushed into next year at this point. But they are continuing to make progress on that project. And once again there are still a number of other big projects going on Las Vegas where they look at Resorts World with the convention center or a legion stadium, there are still things going on in town. There is still economic activity happening across the valley here, but Downtown once again the Derek Stevens project which is a big one is still moving forward.

Great. Thanks a lot Keith. That’s all for me.

Yeah.

This concludes our question-and-answer session. I would like to turn the conference back over to Josh Hirsberg, Executive Vice President and Chief Financial Officer for any closing remarks.

Thank you, Grant. And thank you everyone for joining the call today again from Boyd Gaming, we wish that all you remain healthy and stay safe and to the extent that you have more land bank questions that you want to follow-up with about the company or our results please feel free to reach out to us. Thanks. Good-bye.

The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.