Good afternoon, and welcome to today's Boyd Gaming First Quarter 2022 earnings call. My name is Sam, and I will be your moderator for today's call. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. If you'd like to ask a question, please press star one on your telephone keypad. At this time, I'd now like to hand the call over to our host, Josh Hirsberg, Executive VP, Chief Financial Officer, and Treasurer of Boyd Gaming. Josh, please proceed.
Thank you, Sam. Good afternoon, everyone, and welcome to our first quarter earnings conference call. Joining me on the call this afternoon is Keith Smith, our President and Chief Executive Officer. Our comments today will include statements that are forward-looking statements within the Private Securities Litigation Reform Act. All forward-looking statements in our comments are as of today's date, and we undertake no obligation to update or revise the forward-looking statements. Actual results may differ materially from those projected in any forward-looking statement. There are certain risks and uncertainties, including those disclosed in our SEC filings 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 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. With that, I'd now like to turn the call over to Keith Smith. Keith?
Thanks, Josh, and good afternoon, everyone. Our first quarter results were a great start to 2022 as we delivered another remarkable quarterly performance across our business and continued the momentum of a record 2021. Our continued focus on our core customer, enhanced capabilities, and streamlined cost structure all contributed to record revenues, EBITDA, and operating margins in the first quarter. Company-wide revenues were up more than 14% year- over- year. EBITDA grew nearly 16%, and operating margins surpassed last year's record by more than 50 basis points. This growth was broad-based as each of our three operating segments posted new first quarter EBITDA records. In our Las Vegas Locals business, revenues were up nearly 25%, EBITDA rose 31%, and margins reached a new first-quarter record of more than 52%. This marks the fourth consecutive quarter that our Locals margins have been above 50%.
Our Downtown Las Vegas business continued its recovery, delivering record first quarter EBITDA and margins of 37%. Outside of Nevada, our Midwest and South segment continues to perform well, growing revenues and EBITDA over last year's record performances. While January got off to a slow start due to COVID and the Omicron variant, we saw business levels gradually return during the quarter as both case counts and concerns around COVID began to subside. Overall, customer trends during the first quarter remained consistent with the third and fourth quarters of last year, including rated guest counts, frequency, and spend. Unrated play trends also remained consistent with the last several quarters.
While some macroeconomic challenges are present today, as we look at the first three weeks of April, we have not noticed any meaningful shift in customer behavior as business trends continue at the levels we have seen throughout each of the last three quarters. Looking at the remainder of the year, we anticipate there will be opportunities to further grow our business. One opportunity for continued growth is through our hotel business. Due to labor constraints, we are currently unable to accommodate all the demand we have from our core customers. As the labor market normalizes, we will be able to host more of these known players in our hotels, providing the opportunity for incremental growth in both gaming and non-gaming revenues. Also, as travel continues to recover nationwide, we expect to see further recovery in our midweek destination and meeting and convention business, particularly at our Las Vegas properties.
We expect to see continued improvement in our Downtown Las Vegas segment over the next several quarters with all three properties now open and visitation recovering throughout both the downtown and the broader Las Vegas markets. In addition, we're also investing in longer-term growth opportunities in both our land-based and online operations. In Louisiana, we plan to begin construction this summer on a land-based facility at Treasure Chest, which will replace our existing riverboat casino. We expect to complete construction and open this facility in late 2023. For more than 25 years, Treasure Chest has been a consistently strong performer for our company. By significantly enhancing its gaming and non-gaming offerings, we will provide a more attractive entertainment experience that will further expand our customer base while increasing its appeal to our loyal customers. We're also investing in Downtown Las Vegas.
We have started work to expand the Fremont's casino space and dining options. Expanding our gaming floor will help us better leverage our location in the heart of the busy Fremont Street Experience, especially during weekends. We are also enhancing the Fremont's appeal by adding a food hall concept that will include six quick-service restaurants, including several nationally known brands. Once complete early next year, we are confident these enhancements to the Fremont will drive further growth in our downtown segment. In Northern California, construction work continues on Sky River Casino, which is on budget and on schedule to open early this fall with 2,000 slot machines, 80 table games, and 17 food and beverage venues. We have a 7-year management agreement with the Wilton Rancheria Tribe to manage Sky River and will receive a management fee typical for these types of arrangements.
With a compelling entertainment product and an ideal location just south of Sacramento, we are confident this project will be a tremendous step forward for the Wilton Tribe in realizing their vision of self-sufficiency. We look forward to opening Sky River's doors in the coming months. In addition to these land-based investments, we advanced our online gaming strategy during the quarter with our announcement to acquire Pala Interactive. The acquisition of Pala will position us to take a direct approach to the emerging iGaming opportunity. With our geographic distribution, strong loyalty program, and significant database, we are confident in our ability to build a profitable regional online casino business. This acquisition will provide us with both the operational and marketing expertise and technology we need to create a successful online casino business.
Pala's technology includes a proprietary player account management system and a full suite of iGaming products, including a game studio. As we execute our iGaming strategy, we remain fully committed to our sports betting partnership with FanDuel. By leveraging the FanDuel brand and the expertise of one of the nation's clear leaders in online sports betting, we have built a profitable sports betting business that will contribute approximately $30 million in EBITDA to our results this year. Through our 5% equity ownership in FanDuel, we have the opportunity to participate in the expansion of sports betting across the country. While we actively invest in the future growth of our land-based and online operations, our robust free cash flow allows us to balance these investments with our ongoing program to return capital to our shareholders.
We resumed our quarterly dividend on April 15th with a $0.15 per share payment, which is more than double our previous dividend payment of $0.07 per share. At the same time, we are continuing our programmatic approach to stock buybacks, targeting $100 million per quarter in share repurchases. We may also make opportunistic share repurchases from time to time. Our capital return program is an important part of our commitment to creating long-term shareholder value, and we remain on track to return approximately $500 million to our shareholders this year. As we continue to create value for our shareholders, we also remain committed to benefiting our stakeholders through our ESG initiatives. Later this quarter, we will share detailed information on our progress with the release of our annual ESG report.
In this report, we will provide updates on our ESG efforts, including environmental, diversity, responsible gaming, and corporate giving initiatives. We look forward to sharing this information with you when our ESG report is published. Before I conclude, I want to take a moment to thank our team members who have played a vital role in our success over the last two years. Our team has overcome repeated challenges since the pandemic first began in early 2020. Despite COVID-related restrictions and labor shortages, our team members have come through and delivered consistently memorable service to our guests. That level of service is an important reason why we have built such a strong loyalty with our core customers. We're grateful for everything our team has done, and as part of our long-standing commitment to their well-being and professional fulfillment, we continue to invest in our team members in meaningful ways.
Earlier this year, we announced that we will be increasing our minimum wage for all non-tipped team members to $15 per hour. We have already started implementing this program and expect it to be completed over the next 12 months. This follows the payment of two appreciation bonuses over the last nine months, with more than $20 million paid to our non-executive team members. These investments are in addition to the many other benefits and offerings we've extended to our team members as part of our commitment to being an employer of choice. In summary, 2022 is off to a great start as our business continues to perform at a remarkably consistent level. With opportunities for growth throughout 2022 and 2023, we are confident our company is well-positioned for continued success. Thank you for your time today. I'd now like to turn the call over to Josh.
Thanks, Keith. This was another successful quarter for our company as we maintained our operating momentum from 2021 with record first quarter revenue and EBITDA. Company-wide margins also improved over the record first quarter we delivered last year and remain well ahead of pre-pandemic levels. The customer trends we saw throughout the second half of 2021 are continuing, with strong growth in business volumes from our core customers and consistency in our unrated business. Looking ahead, it is important to remember that second quarter year-over-year comparisons will be more challenging due to the impacts last spring from significant government stimulus and the improving COVID trends during that time. This challenging comparison does not reflect a change in the direction of our business. The positive trends of the first quarter are continuing into April, with business volumes similar to what we've seen throughout the last three quarters.
With continued strength in our operations, substantial free cash flow, and the lowest leverage in our company's history, we are able to continue executing our capital return program balanced with strategic investments in our portfolio. We repurchased $132 million in stock during the quarter, representing 2.1 million shares at an average price of $62.86. The actual share count at the end of the quarter was 109.6 million shares. Since commencing our repurchase activity last October, we have repurchased 3.4 million shares through the end of March for a total of $213 million, leaving $149 million under our current board authorizations.
We plan to continue a programmatic approach to share repurchases of $100 million per quarter and expect those repurchases to be supplemented with opportunistic buybacks from time to time. We intend to request additional authorizations from our board as necessary to continue our programs. We also resumed quarterly dividend payments earlier this month with a $0.15 per share payment on April 15. In total, our dividend and share repurchase programs are on track, and we expect to return approximately $500 million to shareholders this year. At the same time, we continue to invest to maintain and grow our business. We expect to spend approximately $250 million this year on maintenance capital expenditures and an additional $50 million on the Fremont and Treasure Chest projects that Keith spoke about.
During the first quarter, total capital expenditures were $47 million. Separately, we have also agreed to acquire Pala Interactive for $170 million in cash and expect this transaction to close by the first quarter of next year. We ended the first quarter with leverage at 2.2x and lease-adjusted leverage of 2.7x . As we move forward, we will remain focused on maintaining our strong operating performance and growing our business through thoughtful investment in our existing portfolio and building our online presence. Sam, that concludes our remarks, and we're now ready to answer any questions from participants on the call.
Thank you. We will now begin the Q&A session. If you'd like to ask a question, please press star one on your telephone keypad. If for any reason you would like to remove that question, please press star two. As a reminder, if you are using a speakerphone, please remember to pick up your handset before asking your question. Our first question comes from Barry Jonas of Truist Securities. Barry, you may proceed.
Great. Thank you. I actually had a question on the Downtown segment to start. For those of us who've been following you guys for some time, I think it's interesting to note no impact from higher gas prices were noted. Maybe talk about the charter business and the strategy there going forward.
Sure. Thanks for the question. Downtown has performed exceptionally well over the last several quarters and, you know, Hawaiians are continuing to, you know, show up at our properties and our operations in strong numbers. We actually are not running our own charter currently, and so we are not kind of subject to the, you know, fluctuations in gas prices. We've modified that model and now are buying seats on Hawaiian Airlines and several other airlines, and so we're not subject to that risk of fuel price changes.
Got it. I noticed you didn't mention Boyd Pay. Just curious if you can give any updates there, maybe any comments on what you're seeing in terms of adoption and if you think it's driving higher spend or play levels?
Yeah. I would say, and I think I probably said this last quarter, it continues to be a very slow, modest rollout. It is active in 13 of our properties through today. We are launching it or have launched it at one of our properties in Nevada on table games, and so we continue to expand it and roll it out. We continue to kind of work through some of the early, you know, kinks in the software that always happens with these types of products. We haven't done a major marketing push or launch yet, so it continues to, once again, be kind of a slow adoption, but a positive adoption. The people that have used it or that are continuing to use it like it.
I can't tell you that they're playing at a significantly higher level, but they do enjoy it. They enjoy the ease and the convenience of it. Something that I think will take just a little more time to roll out and be fully adopted by the customer.
Got it. All right. Thank you, and nice quarter.
Thank you.
Thank you, Barry. The next question is from Steve Wieczynski of Stifel. Steve, please proceed.
Yeah. Hey, guys. Good afternoon. Keith or Josh, I wanna ask about your April commentary, which sounds like business trends continue to be very strong. There's uncertainty. There's certainly concerns out there about the consumer potentially weakening. I guess my question would be, have you seen trends remain strong across the whole portfolio, or have you seen any changes across any markets or even across your database in terms of low-end customer spend versus the mid or high-tier customers?
Yeah. As we look at the portfolio overall, I think the term we used in our prepared remarks was consistent to remarkably consistent, and that's what we've seen. You know, the higher end of the database, the higher worth customers continue to perform at an exceptionally, you know, high level and perform extremely well. The mid-tier is performing well. From an age demographic standpoint
Our, you know, older customers, once the Omicron and COVID counts started to drop kind of mid Q1, have performed extremely well and are coming out in big numbers. The younger demographic, that kind of 45-65 age group, is also continues to perform extremely well. The trends are really consistent. Look, we assume that there is some, you know, fall off or degradation in play with some of our customers, but honestly, it's not discernible as we analyze the database. To the extent that they're falling off on the unrated side, they're being, you know, replaced with additional players on the unrated side. When we look at, you know, our core customers throughout our database, it's been remarkably consistent.
That kind of leads into my second question. I'm gonna sound probably a little bit, you know, pessimistic here again, so, you know, excuse me for that. But you know, in terms of your return to capital program, you know, Josh, you went through and kind of said you're still kind of sticking to that $500 million a year, this year to shareholders. And I guess, you know, kind of given the, you know, there's much smarter people out there than me that, you know, believe we could be, you know, heading into a correction in terms of the economy. Does that change your thinking at all? You know, meaning do you start to potentially hoard more cash versus returning cash to shareholders?
Yeah, Steve. I think the way we think about it is that we've built in the flexibility around our programs and the plans that we've made and discussed with the investment community to contemplate potential risks to our business. I mean, that's one reason we're running at the leverage levels we are. You know, we're not using every dollar of free cash flow that we have available to us to return to shareholders and dividends and share repurchases. We have flexibility there. You know, our growth capital programs aren't geared toward using up every dollar that we're generating as free cash flow.
I think as we look at kind of where we are today, understanding, not being naive about potential risk in the business, we've tried to build it in terms of having a flexible balance sheet, a strong balance sheet, and understanding that we have flexibility in decision-making as we go forward. We feel like we've built in some cushion in the way we're thinking about it and executing on these programs at this point.
Okay, great. Thanks, guys. Really appreciate it.
Yep.
Thank you, Steve. Next question is from Shaun Kelley of Bank of America. Shaun, please go ahead.
Hey, good afternoon, everyone. Just maybe to start, Josh, you know, I wanted to kind of go back to the core consumer that Steve asked about a little bit. You know, I think just if we break down specific markets, could you just give us a sense of, you know, maybe some of the patterns you saw in maybe just the core regional side of the business? I think there's been some concern that maybe in March things slowed down a little bit relative to trends seen earlier in the year, certainly in the back half of last year. Could you just talk about, you know, maybe what you saw across some of the core regional markets and some of the behaviors there?
Yeah, look, I think that certainly in March, we didn't, and as Keith mentioned in his remarks going into April, you know, the business actually, in our mind, at least as we were looking at our trends in our business, continued to build through the quarter as we came away from Omicron. February was good, and then it continued into March. Now you do have to realize, certainly, we started to see some of the stimulus benefits start to roll out in late March, and our Midwest and South business kind of really kicked in at a pretty high level pretty quickly. And then Las Vegas came in a little bit behind that.
When we look at the general health of the business and look at the trends sequentially, as Keith mentioned in his remarks, and I know some people have heard me say this as well, it's just been, it continues to be a consistent business. We don't see uniquenesses in one market versus the other. We did have kind of one-off issues in some of the Midwest and South markets that we operate in, but that was exogenous. That wasn't related to customer trends. That was more of other things going on in those markets.
I think we generally feel pretty good about where things are trending today and acknowledging, I think, that in some of the unrated play, maybe there is softness there, but it's being replaced by other I mean, our unrated business is has been very consistent as a percentage of the overall volume of our business.
Yeah, Shaun, maybe just emphasize two things. One, as Josh said, the quarter actually strengthened as we went through it. You know, January was impacted by Omicron, but it got stronger as case counts went down and as mask mandates, at least here in Nevada, came off. That's important to understand. Secondarily, as we move into the second half of March and April and May, you know, it is about a sequential improvement or sequential trend, not year-over-year, because clearly the year-over-year comparisons are tougher in the second half of March and April because of the stimulus that was in the economy last year. We've tran-- we have or are transitioning to looking at this sequentially from Q1 to Q2.
As we mentioned a number of times, as we look sequentially over Q3, Q4, Q1, you know, the business continues to perform at a very high level. We continue to see strong growth in our database and strong performers, strong performance from the upper tiers of our database.
Great. Just my follow-up would be, you know, obviously, the other area where there's a lot of, you know, question marks out there kind of remains the margin sustainability and really, you know, the broader inflation backdrop. So could you just comment a little bit, you know, Keith, I think you mentioned getting back to a $15 or getting to a $15, you know, minimum wage. And maybe give us a sense either how much your cost structure, you know, that could impact or, you know, just help us get a sense maybe broadly for where you think your what kind of headwind you may have from the, you know, kind of the labor side of the business as we progress through 2022.
Sure. You know, as we've talked about for probably a year now, these elevated margins that are now just part of our business and part of our core business, while we will not maintain 100% of the increase that we have generated, we do expect to maintain, you know, the majority of the increase. We do expect over time some payroll to come back into the business and some marketing costs to come back into the business. We expect to maintain very high margins, but not every point of what we've achieved over the course of the last couple of years. Built into our thinking and built into our commentary is, you know, the raising of our minimum wage to $15 an hour. While it's not insignificant, it has been kind of built into our estimates.
You know, we believe that there are offsets as we are able to attract more team members, as we're able to run less overtime by attracting more team members at $15 an hour, as we have less turnover in the business. It all nets out, so it's not a material impact to the overall margin profile of any one of our properties or any one of our regions.
The one other thing I would add to it, as I think about adding labor back, it really falls into kind of two categories. One is labor that we need to add back to relieve the strain of our team members, where we're just too short in terms of the amount of labor we have. Then on the other side there are revenue opportunities associated with bringing some of that labor back as well. I mean, Keith in his remarks talked about the hotel opportunity on the hotel side of things. You know, I think we continue to have an opportunity on the non-gaming side as this business continues to return over time.
Also, you know, on the gaming revenue side as well, because it's not just about filling those hotel rooms with hotel guests that pay a cash ADR, it's about filling them with really high-quality casino customers that we're turning away today. There are elements of costs that are going to come back into the business. I'm sure there's some unanticipated costs that we aren't aware of today, but at the same time, there's also revenue opportunities that we have the ability to capture over time as well. It's not just on one side of the ledger, so to speak, that we will see pressure. There's also opportunities.
Thank you very much.
Thank you, Shaun. The next question is from Carlo Santarelli of Deutsche Bank. Carlo, please proceed.
Hey, guys. Thank you. Josh and Keith, you guys talked a little bit about the labor front. Just in terms of broader cost pressures and acknowledging, you know, clearly labor, gaming taxes are the vast majority of your expenses, especially in your regional markets. Are you seeing any other signs of kind of cost inflation, be it, you know, other utilities, things along those lines that are meaningful in any way?
Well, I think, you know, you captured it. Labor, marketing, and gaming taxes are the largest share of the expenses when we look at a P&L. Certainly, you know, utility costs are up when we look quarter-over-quarter and year-over-year. There are, you know, incremental costs. I think Josh was just alluding to it. We will see, you know, incremental costs going up in the business. You know, are they having a material impact? No, but they are clearly up year-over-year. Outside of utilities, food costs being up are also being offset by increased menu prices and increased average check. There is, you know, a lever that we can pull as cost of food goes up.
Utilities, it's hard to offset, so that's just a pure, you know, impact to the bottom line. It's something we're monitoring and watching. Outside of those two issues, Josh, nothing is coming to mind where we're seeing significant incremental costs.
No, I think you and Carlo hit them all really. It's labor and marketing related items that are our biggest costs that we're particularly focused on, and utilities have gone up as well. I think what we're taking some comfort in at least is our ability to kind of maintain our margins while we're facing some of these cost increases. Our operations teams are doing a really good job of balancing, you know, trying to get labor into the business, facing some of these costs on the food side and on the utility side. I think what we're also seeing is just our core customer and that focus on that core customer continue to kind of help us be successful in this environment. We've just gotten a lot better as a company, really since reopening, since being closed for COVID.
I mean, we were working on this pre-COVID, but just getting really better at kind of being focused on that loyal core customer and continuing to try to drive that business from them is helping us offset some of these cost pressures.
That's helpful, guys. Thank you. If I could just to follow up kind of on that same theme. If you think about kind of your non-gaming tax related OpEx in the first quarter, and then I believe it was down in several of the regions with some seasonality. Then you just kind of think about over time, seasonally, the way that that OpEx has kind of trended. Given kind of the minimum wage increase and given some of the other more real-time kind of inflationary pressures that may exist or some of the smaller stuff that you guys just kind of call. Is there reason to believe like the seasonality of that OpEx changes materially off of the first quarter, you know, relative to how it's trended in prior years?
Normalized years, obviously, going back to 2019 and prior.
Carlo, just to make sure I understand your question. You're saying if you took the Q1 OpEx excluding taxes, that is there seasonality related to that as you move through the year? Is that your question?
Well, I'm saying, would the seasonality be dramatically different than it's been in prior years? If we went back and looked at those numbers, you know, 2017, 2018, 2019, and kind of ran it from there on a quarterly sequential basis, do you think there's a material change in the way that moves throughout the year this year, you know, given some of the things that you're seeing presumably on the cost side this year?
Yeah. Look, I'm not sure if this is gonna answer your question, so obviously ask it again if I missed the point of your question. I think ultimately that, you know, if I look back. I kind of typically look back at 2019 as a year to use for a base and look at that seasonality and use that to think about 2022. There is some seasonality, but I think it's not like dramatic. I've noticed some, but not like hugely variable.
That was kind of what I got to. I guess what I was saying was that more so this year, if you're putting you know the minimum wage in and you're seeing-
Yeah.
... you know, other kind of costs that are going up in real time, are those things enough to kind of disrupt what has been the historical seasonality, I guess, is the easier way to ask?
I think. Yeah, I hear what you're saying. I think if you just looked at isolated costs, you would say that there could be some increased seasonality associated with those costs. In other words, you may have higher costs as you progress through the year because you're bringing on more labor and you're having those folks at a higher wage, potentially. I also want to point out. You know, there are offsets to that that are going on in the business, where we're getting away from either temporary labor that we had to hire or COVID-related costs that are no longer in the business as well.
I think it's not as clear cut as, oh, we're gonna add back labor, it's gonna be at a higher cost, and that's gonna grow over time. There's some puts and takes that are happening not only in the first quarter, but gonna continue to happen throughout the year as well that will. I don't know if they'll totally offset it, but they will mitigate some of that.
Yeah. Carlo, if you were looking at it OpEx in isolation using 2019 as a seasonality base, yes, you'd expect there to be some incremental cost as you went through 2022 because of the increased minimum wage and increased utility costs that, you know, were not maybe aren't fully baked in yet. Once again, you have to pull back, and as Josh said, there'll be revenue opportunities, there'll be other offsets. Right now, we may be using some contract labor that'll be converted at a lower cost to in-house labor. It's hard just to think about OpEx in isolation without thinking about the, you know, kind of the whole, you know, the whole property or the whole picture, if you will.
Yeah.
That makes sense, guys. That's super helpful. I appreciate it. Thank you.
Yep.
Thank you, Carlo. The next question comes from David Katz from Jefferies. David, please proceed.
Hi. Afternoon, everyone. Thanks for taking my question.
All right.
You covered a lot of detail. Look, I think one of the topics we've talked about in the past is the degree to which strength on the Strip drives locals business, you know, potentially is there any, you know, what the coexistence or cohabitation or interaction is between the Strip and your locals business, because at times it has not, and I'm wondering whether there's any change to that.
Well, I think that as the Strip has performed well, as Las Vegas has, you know, hit its peak demand, that our locals business has also performed extremely well because we do get, whether it's overflow pricing from the Strip. As the Strip hotel rooms fill up, we're able to price our hotel rooms higher. Or whether it's just increased visitation, as in the case of downtown Las Vegas, where, you know, a large percentage of visitors to the Strip visit downtown Las Vegas, and so we get the benefit of that. There's always been somewhat of a symbiotic relationship between both downtown and our locals properties in the Strip, because we don't have as much pricing power if the Strip isn't full. It exists today.
You know, maybe a decade ago, it wasn't quite as strong, but I'd say at least for the last decade, it's been a fairly, you know, strong relationship. As they do better, we do better. As more out-of-town guests are in town, as people are traveling, as more people are coming through the airport, as meeting and convention business rebounds, we end up doing better in our locals properties.
Just as a follow-up, you know, given the financial flexibility that you have, is a Strip asset, you know, a possibility in your future under the right circumstances?
Look, I think today we are intensely focused on our core operations, kind of continuing to fine-tune and maximize the results and the performance of these properties and making sure that we are focused on the future and have all the amenities and the physical assets we need to continue to perform at this level. That's why we're doing things like Treasure Chest in the Fremont, and there's a handful of other smaller projects could follow along once those are further into development. We've grown a lot, as we've talked about on prior calls, through M&A, and it's something that, you know, look, we always have our eyes open to. I think last time on this call, somebody said, it may have been Josh, just because you can do something doesn't mean you should do something. We've always been a very disciplined acquirer.
We'll continue to be extremely disciplined. I gotta tell you, our main focus now is on running our core business and extracting everything we can out of that and making sure that, you know, we find our way through this inflationary environment we're in and continue to have a strong business going forward.
Perfect. Thanks a lot.
Thank you, David. The next question is a follow-up from Joe Greff of J.P. Morgan. Joe, please go ahead.
Hey, everybody.
Yeah.
Yeah, I guess most of our everybody's focus on today's call is, you know, what's going on with the lower-end consumer and how you're thinking about margins and going forward, and those two topics have been discussed enough. The only thing I really have at this point late in the call is, you know, when we think about the CapEx going into Treasure Chest into downtown Las Vegas, do you anticipate, and can you help us understand what sort of disruption you might have in the near term before those things open up?
Yeah, good question, Joe. If you think about the Fremont first, the actual, you know, construction of the new, food outlets, the food hall, if you will, is happening, where the buffet used to be and on a piece of land that was vacant right behind the building that's being incorporated in. Up until recently, when we hung some steel, people didn't even know there was construction going on at the property. It really is, to a large extent, seamless as we build out that food facility there. That's a real benefit. As part of that, we're also building out some additional casino square footage, which once again is behind a wall and so has no impact on our existing operations. That project should be largely, you know, non-impactful to the Fremont's operations.
In the case of Treasure Chest, separate land-based facility on a separate piece of land. The existing riverboat operation will stay fully in business and producing, you know, full results until it's time to move over some of the gear in late 2023. Really no impact as you think about 2022 or even early 2023 on the Treasure Chest business because it's a whole separate building kind of across the way from the existing facility.
Josh, how much CapEx for these two projects in 2023?
In 2023? It's been 25. So it's about $60 million or $65 million for Treasure Chest, and I think like $10 million or $15 million remaining for Fremont because it'll largely be finished later this year, first quarter of next. Treasure Chest will take into the late 2023. So what's happening is Fremont largely gets done this year, finishes up first quarter next year, probably has $10 million or $15 million. Then Treasure Chest largely gets started probably later this year and mainly gets done and does get done in 2023 and opens in 2023. So I look at that as probably a $60 million-$65 million spend at that point.
You know, we'll be probably in the works planning the next project to come online to take the place of, say, the Fremont, as long as it has an adequate return relative to our alternative. That's how to think about it. That would be on top of-
Great. One final.
Obviously the maintenance stuff. Yeah.
Yep.
Yeah, go ahead.
Got it. One final thing with regard to the Sky River Casino opening in the fall. Can you remind us what sort of advances you have out with the tribe and your anticipation of the timing of that recovery of that event?
Yeah, Joe. Right now we have, it's about $105 million advanced. That's about $75 million or so of actual advances, and then the rest is interest that's been accruing of those advances over the last, you know, several years that we've been supporting the tribe to get them to the point where they could then arrange their own financing and develop the project. That $105 million will continue to earn interest until we are reimbursed from cash flow from operations. Obviously that's a little dependent on how well it does. Should be a good project, and so we would expect to be reimbursed, you know, over the first several years of that project.
Separately from that, as you probably know, we earn a management fee that's about 25% of, effectively, pre-tax income that we earn once the project starts opening or does open rather. Those are the two components of cash flow the company will start seeing once the project opens.
Great. Thank you very much.
Thank you, Joe.
Thank you, Joe. Next question is from Dan Politzer of Wells Fargo. Dan, go ahead.
Hey, good afternoon everyone, and thanks for taking my questions. I think-
Sure.
A few months ago, you guys mentioned there was not much reason to think 2022 EBITDA wouldn't be at least equal to 2021 levels. You know, given you're out to a $45 million or so head start after the first quarter, but you know, there's additional concerns out there on the consumer end, and on the cost side. You know, how are you thinking about this, and what are you seeing across your portfolio that could, you know, maybe be the puts and takes to this?
Well, Dan.
Go once, guys.
Look, I think when we look at it, I don't really think. It's hard to have a different view today when we look at our business, except to be obviously cognizant of, you know, what everyone's worried about. It's a natural thing to be worried about, right? In terms of inflation, a war, and all of those things that could weigh on the consumer. I think where we continue to have confidence is in the underlying trends we're seeing in our consumer, which have been, and I hate to be a broken record, but have largely not changed since we reopened. In fact, you know, our core customers just continue to grow throughout all of this.
Even in periods of time when we had Omicron and the business took a little bit of a step back because of that, within that framework, the core customers keep continuing to grow. So that's the only thing we have in our pocket that we can count on today. I think everything else is a concern that we just, you know, we'll deal with as we come to it, if we ever come to it. You know, we can all be rational and reasonable to expect that to happen at some point, but maybe it doesn't. I'd say the other thing to think about, at least as we think about it, is Q2 last year was really good. We don't expect to replicate that.
What we expect to do over time is make up some of that difference through the growth in Q1, Q3, and Q4 that we expect naturally to happen. It depends largely on how successful we are in Q2 and how we make up those differences over time. That's how we think about the business today. We're not naive to the risks that are inherent in it. We still have some opportunities with respect to the top line aspects that we've talked about. We're kind of working through every day. Our operations guys are doing great job of managing the expenses and staying very tight and focused on executing our business. I think that's what gives us the confidence in kind of how and where we sit today.
I don't really know how else to really answer that question.
Yeah. As Josh said, there's-
No. That...
Those growth opportunity. There's growth opportunities that he highlighted in terms of Las Vegas and the return of meeting and convention business here. Just the return of out of town or destination travel to Las Vegas, certainly offset by things like, you know, higher wages and inflationary aspects. How does all that net out at the end of the day? Well, you know, hopefully it nets out to zero, and we end up where we were last year. We'll work our way through it every day and every week as we move forward.
Got it. Just for my follow-up on Pala Interactive. I mean, given the focus is gonna be on iGaming, you know, how should we think about the revenue and maybe the EBITDA opportunity? Should we be thinking about there's, you know, an additional investment on technology or integration or on your rewards program just to integrate all of these things together?
Yeah, I wouldn't anticipate any significant additional cost. I mean, we bought Pala because it gave us both the technology that we needed to roll this out, as well as the operational and marketing expertise to run this business. The management team is, you know, staying intact and becoming part of us. You know, we don't see any other significant costs. Yes, we'll. You know, their team will have to develop an interface with our loyalty program. That's not a very big lift. In terms of rolling it out, it's really more about other states, you know, approving this or adopting this legislatively. You know, we're taking a regional approach focused on the 10 states where we do business and maybe a few adjoining states where we get a lot of customers from.
We're not out there looking to have a national presence as much as a regional presence. No significant incremental costs as we go forward. No, you know, no anticipated additional acquisitions to be able to move this forward.
Understood. Thanks so much for all the color.
Yep.
Thank you, Dan. Next question comes from Thomas Allen of Morgan Stanley. Thomas, please go ahead.
Thanks. In prior cycles, you guys have benefited from higher oil and gas prices. Are you seeing that this cycle at certain properties?
Yeah. I mean, we're naturally seeing it in some of the Louisiana assets, that's contributing to our results. You know, it's not outsized. I would say when we look at the trends of the business, they're just trending, you know. They're getting benefit, but it's like, it's not outsized relative to the performance that we're seeing in the rest of the business, if that makes sense.
It does. Just my follow-up. In Louisiana, retail sports betting was legalized or launched in the fourth quarter of last year. Online launched in the first quarter. Any observations over the past few months?
No. Look, we've seen that most of the properties, once we launched the FanDuel sports book, our retail at each one of our five Louisiana properties, so each one of the properties has a retail location up and running and, you know, FanDuel online is up and running. It's been incrementally positive as we've seen new customers come to the properties. It's not, you know, it's all incrementally positive. I don't really have any other color. Trying to think if there's anything else interesting to add, but I don't think so, Thomas.
Okay, thank you.
You're welcome.
Thank you, Thomas. Next question is from Joe Stauff of Susquehanna. Joe, please proceed.
Thanks. I was wondering if you can maybe update us on the promotional environment in your various segments, you know, Locals, South, and Midwest. If you see, you know, any competitor responses that you have to match. Just wondering where that is now.
I think just globally, kind of over across all the markets, that it has been relatively stable. Many of our competitors, post-COVID, opened up at a very high level, either, you know, at or some cases even slightly above pre-pandemic levels. For the most part, they've stayed there. We obviously have not, and some of our competitors like us have taken a more conservative approach to marketing going forward. Most people have kind of stayed where they started. Some have gotten slightly more aggressive, and some of the aggressive ones have maybe pulled back a little bit. For the most part, I would say the promotional environment for the last several quarters has been, you know, kind of very neutral, if you will.
Nothing has materially changed in the business, whether it be here in Las Vegas, or whether it be in the South or whether it be in the Midwest.
Hmm. I see. Thank you.
You're welcome.
Thank you, Joe. There are no further questions waiting at this time, so I'd like to hand the call back over to Josh for closing remarks.
Thank you, Sam, and each of you for your thoughtful questions. If you have any follow-up, feel free to reach out to the company and we'll try to facilitate getting those questions answered. Everybody stay well. Thank you.
That concludes the Boyd Gaming First Quarter 2022 conference call. Thank you all for your participation. You may now disconnect your line.