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spk08: Please stand by, your program is about to begin. Good day and welcome to Bally's Corporation fourth quarter 2023 and full year earnings conference call. At this time, all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session. In order to ask a question during the session, please press the star followed by the number one on your telephone keypad. Please be advised that today's conference is being recorded. If you require any further assistance, please press star, then zero. I'd now like to turn the call over to Charlie Dow, Senior Vice President and Treasurer for Balance. Please go ahead.
spk04: Good afternoon, and thank you for joining us on today's call. The earnings release and presentation that accompany this call are available in the investor relations section of our website at www.valleys.com. With me today are our chief executive officer, Robeson Reeves, our president, George Pampanier, our CFO, Marcus Glover, and our vice chairman of the board, Jamin Patel. Before we begin, we would like to remind everyone that comments made by management today will contain forward-looking statements. These forward-looking statements include plans, expectations, estimates, and projections that involve significant risks and uncertainties. These risks are discussed in the company's earnings release and SEC filings. Financial results may differ materially from the results discussed in these forward-looking statements. In addition, during today's call, management will refer to certain non-GAAP financial measures. Reconciliations to the most comparable GAAP financial measures are included in the schedules contained in our earnings release. We do not provide a reconciliation of forward-looking non-GAAP financial measures due to our inability to project non-recurrent expenses and one-time costs. This call is also being broadcast live on our investor's website and will be available for replay shortly after the completion of this call.
spk11: Let me hand the call over to Robeson.
spk03: Thank you, Charlie. We're pleased to share our thoughts on Valley's solid fourth quarter and 2023 operating performance, as well as a strong forward growth prospect. Our fourth quarter revenues grew a robust 6% year-over-year, reaching 612 million, with increases across all three of our operating segments. As seen as the results, achieved a 7% revenue increase and maintained strong adjusted EBITDA margins as we successfully offset ramp-up costs in Chicago and the wind-down tropicon. International Interactive continued its solid performance, driven once again by a leading market presence in the UK. The North American Interactive segment gained additional iGaming market share while the rollout of Ballybet OSB progressed. For the full year 2023, our revenues and adjusted EBITDA both increased an impressive 9%. As we turn the page to 2024, I'm excited to share with you our vision for Valley's future, including continued operating performance improvements and our roadmap of unparalleled development opportunities. George and Marcus will follow and dive deeper into the specifics of our quarterly performance. Regarding our vision, there are some who believe that Valley's diversity makes for a complex story. However, we view our core business through a lens of high confidence, seeing it as a source of opportunity and strength. This distinguishes us within the industry and allows us to successfully navigate through various macro environments. For our equity and credit stakeholders, Valley's operations across casinos and resorts, international interactive, and North America interactive offers unique and unparalleled long-term growth potential. Coupled with our consistently strong adjusted EBITDA performance and a thoughtful stage development pipeline, we're crafting a bright future and setting a new industry standard. As adjusted EBITDA is a crucial measure for assessing our financial health, The strength of our adjusted EBITDA generation enables us to reinvest in our properties and development pipeline. Moving to our development pipeline, let's first touch on Chicago. As of the beginning of 2024, our temporary facility is fully operational with a full quarter of financial performance behind it. The property has begun the operating route George laid out during our last earnings call. which he'll update you on in a few moments. As for the permanent, in line with previous timelines we've shared, we remain set to access the Chicago Tribune site late this summer, allowing for demolition and site preparation in the second half of 2024, with completion of the facility coming late in the third quarter of 2026. Reflecting this timeline, there is just over $1.1 billion remaining hard construction costs pursuant to the HCA that will be concentrated in 2025 and 2026. We're also very close to securing the incremental construction financing needed for the permanent facility in addition to the existing 300 million land lease improvement facility and expect to share updates on this important component soon. In Las Vegas, the formal closure of the Tropicana on April 2nd will pave the way for the demolition of the casino and hotel over the coming months with the support of our financing partner, GLPI. Following demolition, site prep, and approval of formal plans, construction of the Las Vegas A Stadium will likely begin sometime thereafter. We continue to assess our available options for the very valuable development lands next to the stadium. Finally, in New York, we're in the early stages of what will be a lengthy and multifaceted journey towards building a world-class super regional casino and entertainment complex in the Bronx at Bally's Golf Links Ferry Point. Securing the license is the first step, and should we achieve this milestone, we believe we'll have a highly attractive and competitive proposal that will allow for numerous pathways to actualized positions. Thinking about our development timeline in this way makes it clear that Bally has a well-developed, staggered spending timeline that extends approximately 5 to 10 years. This approach will maximize the benefits derived from the cash flow generated from our core operations, while accommodating for potential market and financial position shifts. Moreover, this unmatched development pipeline offers opportunities in two of the largest U.S. cities and the country's most distinguished gaming destination. Finally, before I turn the call to George, I want to touch on our interactive segments. Within international interactives, our U.K. operations continue to excel with fourth quarter making our strongest adjusted EBITDA performance to date. This success is attributed to our improved customer acquisition efficiency and refined marketing strategies, which have significantly improved our gross profit margins. Additionally, the segment is benefiting from our strategic reorganization and diligent cost management efforts. In Asia, we've seen our business stabilize and expect more consistent performance in 2024. In the North American Interactive segment, we are pleased with our ongoing progress to refine our strategic approach to the market. NAI delivered its best quarterly revenue of 2023, benefiting from our solid New Jersey and Pennsylvania iGaming results, along with the rollout of the Bally event OSB. It's now live in seven states. We continue to optimize our marketing investments and expect to further benefit in 2024 as we transition more functionality to our technology partners, Cambium White Hat Gaming. We have launched web-based versions of our apps recently and eagerly await the launch of iGaming in our home state of Rhode Island later in the first quarter, where Bally's will be the sole provider. For modeling purposes, Our 2023 fourth quarter NII performance should not be directly projected across the entirety of 2024. We'll continue to invest and broaden our reach, resulting in an anticipated adjusted EBITDA loss of approximately 30 million for 2024. Market expansions inherently involve significant initial investments, but our strategy is to allocate resources wisely to nurture this vital segment. This is an exciting time for our interactive business, and our commitment is underscored by our conviction that OSB is the foundational step towards successful iGaming futures. I'll now pass the discussion to George for further details on our operational performance over the last quarter.
spk11: Thanks, Rosen.
spk02: I'll begin my commentary with insights from our Casinos and Resorts segment. We're diving into the latest developments of the Chicago temporary facility and our continued efforts to ramp up its operations. Resorts exhibited robust performance across most of our portfolio with revenues up 7% for the fourth quarter and up 11% for the year. Adjusted EBITDA was up an impressive 8% for the year. Notably, our two Rhode Island properties have consistently produced strong results in 2023. Similarly, Our Kansas City property has seen robust business following the completion of its phased development in mid-September 2023. Broad Cities is also performing well, and we're quite pleased with the full year of performance in Atlantic City. For the year, AC outperformed expectations despite a hyper-competitive environment and generated high single-digit millions of adjusted EBITDA, our first full year of profits. since acquiring the property. We outperform market-wide GTR comparisons on the same store basis in seven of our 10 markets. The metric we closely monitor as it reflects the underlying strength of our properties and our consistent ability to capture market share. Operationally, we are proactive, assessing every aspect of our properties, striving for cost reductions and enhanced efficiencies. It's critical to remember that our properties portfolio across 10 markets was assembled in under three years, meaning that we're relatively early in the process of managing it as a cohesive portfolio. Moreover, our resources and management expertise positions us well to drive ongoing operating improvements throughout portfolio, as we've demonstrated by our operating results in the last several quarters. Let's shift our focus to Chicago. Since opening the Chicago TEP facility in September, our dedicated property team has made commendable efforts to improve operations in advance towards our desired operational pace, including the build-out of a robust database. As we've noted before, we are several months behind our initial ramp-up schedule due to factors such as delaying opening, restricting operating hours at launch, the absence of valet parking, and limited F&B offerings. We're actively addressing these opportunities for improvement, and we've already seen success with several of them. We initiated 24-7 operations in December 27 and are responding to demand for shuttle bus services in the facility from neighboring communities. We've also expanded parking options for our guests across numerous local garages, significantly enhancing their arrival experience and access to the property. Our team is now focused on adding a new high limit and VIP lounge and upgrading our hospitality offerings, including partnerships with local dining establishments and outlets to integrate Valley's comp currency, thereby enriching our guest's rewards beyond mere free play. These enhancements are evident in the monthly numbers released by the IGB. We hit a record exceeding $10 million in GGR in January, or $9.3 million in AGR as the IGP reports, representing a 9.1 month-over-month improvement despite severe weather conditions and compared to all the competitors we saw who saw declines versus December. We expect this to continue to ramp each month as we move into the second quarter before we begin hitting normalized revenue production rates and benefit from the welcome respite from the Chicago's famous winters. Before passing the call to markets, We are fully dedicated to our partnership with the City of Chicago and are extremely excited about our permanent casino development project. We are here to stay. Second, we received approval from the City for a revised construction plan due to the unexpected discovery of water pipes beneath the site. A revised plan includes the construction of approximately 100 hotel rooms above the casino in the initial phase. with the additional 400 rooms and relocated hotel tower planned for a subsequent phase. This adjustment has not impacted our development timeline and we remain in accordance with the HCA. Lastly, as with many of our peers, we were impacted by severe weather across our portfolio in January, but we have seen a return to more normal seasonal trends in the past few weeks. Furthermore, please remember that the Tropicana will close on April 2nd and have an impact on revenues and contributions beginning in the second quarter.
spk11: With that, now let me turn the call over to Marcus. Thanks, George.
spk13: As Robeson and George highlighted, and as our results demonstrate, 2023 finished on a very strong note. Heading into 2024, the foundational elements are in place to drive sustained growth across our three operating segments. Our casino and resorts portfolio demonstrated solid top-line results characterized by year-over-year organic growth across our portfolio, which helped offset the ongoing wind-down of Tropicana. The segment reported revenues of $342.3 million, a 7% year-on-year increase, and $94.7 million of adjusted EBITDA, including a full-quarters contribution from the Chicago temp. Excluding Atlantic City, Tropicana, and Chicago, EBITDA margins were a solid 34%. Including these properties, EBITDA margins were 28%. For the full year, casino and resorts revenues increased by 11% and adjusted EBITDA grew by 8%, driven by strength in Rhode Island, Kansas City, Blackhawk, and Quad Cities. For the fourth quarter, International Interactive continued its impressive performance. with revenues increasing 2.1% year-on-year to 236 million. The revenue strength was led by our leading UK business, where revenues rose 10% year-on-year on a US dollar basis and 5% in constant currency. International Interactive generated record adjusted EBITDA of 93.2 million this quarter, a 4.3% increase year-on-year. Importantly, we began to see stabilization in Asia, a trend that has continued into 2024. For the full year, international interactive revenues increased by 2.8% and adjusted EBITDA grew by 6.8%. For the fourth quarter, North American interactive generated revenue of 33.4 million, a 27% year-over-year increase. The segment generated an adjusted EBITDA loss of 9.8 million as we continued the rollout of BallyBet, which finished the year live in seven states. We expect four-year adjusted EBITDA to improve significantly as marketing efforts will remain measured given our view of OSB as a funnel for iGaming growth. As we announced in our last call, we have identified additional ways to mitigate costs and will be consolidating our domestic PAM onto the White Hat platform for iGaming and OSB once Rhode Island launches. This will undoubtedly also lead to a better user experience. With that in mind, we are estimating in North America Interactive adjusted EBITDA loss of $30 million for the full year of 2024. The biggest potential swing factors in terms of pace to profitability are highly anticipated launch of iGaming in Rhode Island, which remains on schedule for March 1st, and any additional states that may legalize iGaming in 2024-2025. At the end of the quarter, shares outstanding were approximately $40 million, reflecting the repurchase of 5.8 million Valley shares on the open market for total consideration of $68.6 million. We also have incremental warrants, options, and other dilution of approximately 12 million shares. 52 million shares outstanding is the fully diluted share count. The end of the quarter with $163.2 million of cash on our balance sheet and $3.56 billion of net debt. Turning to guidance, Valleys expects to generate 2024 revenue in the range of $2.5 to $2.7 billion. The company also expects to generate 2024 adjusted EBITDA of $655 to $695 million. We continue to keep a close eye on consumer spending patterns and general economic conditions for impacts to our casino and resource customers. Also, while January was impacted by severe weather across most of the U.S., we have seen an improvement in trends over the past several weeks. Our guidance also assumes the closure of Tropicana on April 2nd, a strong Chicago run rate, EBITDA trajectory in the second half of 2024, continued growth in international interactive, and approximately $30 million of adjusted EBITDA losses in North America interactive. We expect straight line gap rent expense of $126 million and cash rent of $121 million. Our 2024 capital expenditure guidance is $165 million in aggregate. Not included in our capital expenditure guidance is spending in Chicago for site prep and demolition for the permanent casino, as well as similar expenses for Tropicana. In closing, I want to reiterate my enthusiasm for 2024, which will include the continued wrap of our Chicago Temp, the successful launch of iGaming in Rhode Island, and progress on the other growth initiatives which are underway. That concludes my comments. We will now open up the call for Q&A.
spk11: Operator.
spk08: Apologies for the delay. At this time, if you would like to ask a question, please press the star and 1 on your telephone keypad. Keep in mind, you may remove yourself from the question queue at any time by pressing star and 2. Again, if you'd like to ask a question, please press star and 1 now. We'll take our first question from Barry Jonas with True Securities. Please go ahead. Your line is open.
spk09: Yeah, let me have a few. I want to start with Chicago. The temp looks like it's starting to ramp on a month-over-month basis. Curious what kind of player you're seeing there, and how do you think that player database could transfer to the permanent once completed?
spk02: Hey, Barry. It's George. I'll take that question. So, obviously, you know, we're increasing database. We started with zero. And within six months, we're up to 65,000 in our database. We really just started actively mailing to that database in November after we got IGV approval. So we've only been at it for a couple months now. What we're seeing right now is a demographic that's kind of slightly skewed to a younger demographic, primarily driven by table games. You've probably seen that we were already ranked second in the state from a table games perspective. Still got a little work to do on the slot side. What we're seeing is a little bit younger customer on the slot side as well. We think a lot of that has to do with providing the appropriate provisions for parking, which we now have contractual arrangements with several of the garages within a couple blocks of us. So we're starting to see a lot of increases from that. We also have increased shuttle busing in the vicinity. And we're starting to see growth in that as well. So I think the goal really is to build this database and absolutely transfer 100% of that to the permanent facility. We're really happy about the growth short term. And week over week, we're continuing to see all the metrics that we measure success with increasing. So we've gone from 6.8 million in September of 2020 of igb to almost 10 million dollars so and we're happy about the uh we're happy about what we're seeing uh we're getting a little bit more aggressive from an advertising perspective uh in the market as well and uh we're hoping to see um some real real growth in march which is typically when you see that growth in the market and continuing that through the summer months great great and then just shifting to trop
spk09: You know, we haven't heard a lot just yet about what the A's stadium will ultimately look like. Wondering if you have any better visibility and if you could talk about some of those scenarios you're considering for Tropicana. Thank you.
spk02: Yeah, I'll take that again, Barry. So, listen, we announced closure just on the 2nd. We announced closure just towards the end of January that we're closing on April 2nd. Obviously, we did that in order to put us in a position to deliver a construction-ready site to the A's, which is within our contractual arrangement with them. And their goal is to open for season 2028. And the A's are still finalizing their stadium plans, and we just continue to evaluate our options for what we feel is a very valuable development land that's next to the stadium. So we don't have anything further from our perspective.
spk09: Got it. And if I could just sneak in one more, you know, I wanted to ask about the 24 guidance for casinos and resorts. Can you maybe quantify the weather impact in January or else share any maybe additional underlying assumptions, say what base same store EBITDA growth you're expecting if that's sort of flattish, but any additional color there I think would be helpful.
spk02: So let me take a little bit of a step back. You know, we continue to see growth throughout 2023 on our higher tier customer across our portfolio. But we did, like everyone else, experience market softness during the back half of 2023. And, you know, and by the way, during that period, we actually saw market improvement from our perspective in 10 of our 13 markets. that we compete in. So we saw some real impact in October, a lot of softening. But then we got a nice bounce back in December. Then, of course, we ran into the weather, which is really what your question is. That impacted us, just like you've seen the impact in most of the regional operators. Las Vegas really was not impacted, obviously. But to quantify it, we probably It was probably about a 20% impact on us. You'll probably see that translated into the top line revenue numbers. But obviously, we were able to mitigate that at the EBITDA live. But as a follow on, we're seeing weather that's kind of more back to normal weather patterns in February. And right away, we bounce back and we feel that we're back to We're back to normal kind of inflationary growth levels. The other point I'm going to make is that from a guidance perspective, you know, last year I just talked about the softness we had in the second half. We think that's an opportunity in the second half of this year since that comp's going to be a little easier to meet.
spk11: Great. All right. Thank you so much, George.
spk09: You're welcome, Eric.
spk08: We'll take our next question from Jeff Stanchel with Stiefel. Please go ahead. Your line is open.
spk01: Hey, great afternoon, everyone. Thanks for taking our questions. Maybe starting off here on the international interactive business, Robson, can you just update us with the latest with respect to the UK regulatory overhaul? What are you hearing with respect to some of the more impactful categories of proposed changes, whether that's the affordability check, the state limits, what have you? And then in the past, you talked to or guided a low single-digit top line impact at the worst. Have your views on that changed at all since more parameters are clarified? Thanks.
spk03: Thanks, Jeff. So just on the white paper overall, we're working very closely with the Gambling Commission and DCMS, the government body aligned to those areas. The paper is still progressing slowly. I feel very comfortable with every discussion that we're having is rational with a genuine focus on protecting the consumer, which I care a lot about. We have been, we're very flexible when it comes to how we operate our business. So I'm not concerned at all about these regulatory changes. I think it makes for a better market, even if there is a degree of displacement from any of the larger operators. this will impact much smaller operators more severely. So you'll pick up share that way. I think some of you may have seen headlines released today and over the past few days on stake limits, slot stake limits online. So essentially what the press is saying, and I suspect it will be very close to this, is that under 25s, will have a two pound stake limit and over 25s will have a five pound stake limit. Probably implemented somewhere in the, my gut feel is somewhere in the July to September window. I feel good about that. All that ends up resulting in is much more sustainable play. Again, it means that there's greater longevity for this business. This model is very robust when it comes to recession and the challenges that people face there. And when I look at our business performance right now, um in the uk i feel great um even if i'll just add a bit more color even if there are any impacts we will be rolling out sports into the uk market um and we also will be investing further in our valley brand in that market uh i always take the lens and saying we are the biggest iGaming operator in the UK with our sports. This will aid the funnel. Same principles apply to North America as apply to the UK there. So I feel good. I feel good about the UK team.
spk01: Okay, great. That's really helpful. Thank you for that. And then sticking on the international segment, could you just expand a bit more on some of your commentary with regards to what you're seeing in Japan? When you talk to Stabilization is that mostly a function of sort of the comps normalizing? Are you seeing you know actual uplift or kind of improvement in underlying? Consumer trends just you know any additional color you can offer would be helpful.
spk03: Thanks Yeah, so so we we're b2b in Asia and what we're seeing is that the market sentiment from players engaging with the product It's building back so there's more new customers coming into the funnel and and they're still loving our product and engaging with it. We've added extra types of content, which has appealed to different audiences. Yeah, so it feels like Asia stable, feels like it's under control, and we'll see consistent revenues from that area. As you can see in our international interactive performance in 23, the UK was really kind of holding that thing up. I'm hoping everything can contribute this year.
spk01: Okay, great. And then if I could just squeeze in one more here, and apologies if I missed this, but the $50 million EBITDA target for the Chicago temporary facility, is that still intact? Is that what's embedded in guidance for 24?
spk13: Yeah, so to answer your question in short, yes, we are trajecting toward that. Just a moment of clarity and a couple of things as it relates to Chicago. The Georgian team, as you guys can see, are making pretty substantial progress toward our goal. We've contemplated driving revenues, but there are some costs that we are overcoming in that. And so to answer your question in short, yes, that contemplates hitting our run rate that we've shared ending third quarter. That still holds true today.
spk11: Okay, great. Very helpful. Thank you all.
spk08: We'll take our next question from Jordan Bender with Citizens and JMP. Please go ahead. Your line is open.
spk06: Good afternoon. I want to touch on Barry's question and the CNR guidance. Presumably, TROP should help the overall margin profile for that segment. So, with margins guided down about 200 basis points year over year, It implies that a lot of that down year over year should happen in the first quarter. Is that fair to assume that the weather plus the ramp in Chicago are the major hits and then Q2 through Q4 should be more stable? And then are there any run rate losses implied with Trott being closed?
spk13: Yeah, so with TROT being closed, that definitely is incorporated in our model and what we've shared with you for guidance. Weather definitely on the first half of the year is going to impact that guidance as well. But one thing that, and George kind of teased this a little bit, you know, we're seeing and focusing on the top end of our database and ensuring that that stickiness stays in place. We are keeping a cautious eye to the lower ends of our database in the unrated segment. And so some of that free business could materialize into some margin impact. We haven't experienced that yet, but we are contemplating that being a case as we enter some of our more competitive markets.
spk06: Great. And then switching to the North American Online, you know, last year you kind of shifted the strategy into iGaming. As you assess your market position in some of these sports betting-only markets, would you look to exit any of these states? I guess particularly New York, we've seen what a skin price would go for in the state. Thank you.
spk03: Hi, Robeson here. No, we don't have any intention to leave any of these markets. We're being very measured, as we've said, in our marketing approach. We have got a great partnership with both Camby and White Hat, which has enabled us to manage the appropriate investment costs across all of these states. We do view sports as the pathway to iGaming. Today, we will stay in all these states. We're very focused on investing in iGaming as that's where we're achieving our greatest returns.
spk06: Thank you very much.
spk08: We'll take our next question from Chad Baynon with Macquarie. Please go ahead. Your line is open.
spk05: Afternoon. Thanks for taking my question. Robeson, I wanted to return to the international interactive segment. Margins in the quarter, 39%, certainly higher than I think what you had kind of talked to before and kind of where the street was. For 24, I believe your guidance implies 33% to 35%, and you kind of just talked about maybe some of the other regions, you know, hopefully picking up. But as we think about margins and just the overall marketing environment, I guess historically you've talked about 30. Now you're 33 to 35. Can you just kind of provide a little bit more color in terms of what the marketing environment is like and if this 39% in the fourth quarter should be viewed as more of an anomaly? Thanks.
spk03: So touching on fourth quarter, I'd view that as an anomaly. The 33 to 35 range that we discussed allows us to ensure that we can continue to invest. We can continue to look at other ways to grow. So there's some room in that to test. And if you're not testing, you can never actually always find stable growth. Our margins should be holding exactly there i feel good about our plans we're going to go above the line with both bally's and virgin in the uk uh we definitely within that we have expansion in brazil uh we're looking at other markets too um the tool in our locker that we haven't unlocked uh over the past few years is looking at wider market expansion outside of north america interactive and running at these margins, which I know are very sustainable because we retain our customers so well, allows us to look at expansion opportunities.
spk05: Okay, great. Thanks. Great to see that. In terms of capital returns, you repurchased $70 million worth of stock in the quarter, so nice to see you're being opportunistic there. For 24, CapEx is still you know, reasonably low. I believe it picks up in 25 and 26 with Chicago. So how should we think about capital returns? I know you have, I believe, 95 million left on the current program. Do you have the availability to be opportunistic in the market if shares remain depressed?
spk04: Hi, this is Charlie Deal speaking. I think that What we've always said is that we allocate capital among different opportunities, internal investments, development, as well as obviously returning capital. At any point in time, the dynamics of each of those options may change. The point being, we do have significant development expenditures. We expect to get to the financing for those development expenditures and at different points we'll see where the stock is and if it makes sense we'll exercise that the board will exercise that decision thanks Charlie appreciate it guys and as a reminder if you'd like to ask a question today please press the star and one keys on your telephone keypad
spk08: We'll take our next question from Jonathan Navrat with TD Cohen. Please go ahead. Your line is open.
spk10: Hey, how are you guys? It's Jonathan on freelance. I want to touch on international. Any insight into the state of the UK consumer so far in 2024?
spk03: Hi, Jonathan. Robeson here. With respect to UK consumer, we're seeing very stable spending patterns from our players. We we don't have very many big players, right? So it's a very much consistent consumer We're getting high enough volumes of new customers into the funnel and we have enough levers to pull such as hold such as Call it content mix and everything else to ensure that we can manage the returns from our investments there So we're not seeing a slowdown. It was definitely the usual sort of January post Christmas but we'd understood that in all of our numbers, and that happens every single year. We've seen good trends through the end of January and into February, as expected. Yeah, I feel very comfortable about the consumer in the UK.
spk10: Great. In terms of CapEx, you call that 165 mil. Can we just get the split of maintenance versus growth? Yeah.
spk13: Think of it this way, there's about probably 65, 70 million that will go to maintenance for the casino and resort side. We have some growth that's probably in the neighborhood of 35 to 40 million capital that will go into the properties, but probably will not see the ROI on that until 2025. So we'll activate and develop this year, bring online for 2025. and then a significant portion for continued development and investment in our development efforts for interactive. That includes both North America and international interactive, and then a very, very small portion for some enabling technology for centralization and integration efforts across the enterprise.
spk10: Understood. Thanks. And you also call out demolition costs that's not included in CapEx. And I just want to know, what is that figure like? Is it substantial or is it somewhat insignificant that you don't need to call it out?
spk13: Yeah, we separate out. And I'll let George add anything on to it if he has anything to offer. We separate out our development capital from what we share in that 165. So Chicago and Tropicana are separate. I won't give you, we're still going through the process now working with our contractors to understand what those demolition costs will look like. So we don't have a number to share with you today. But those are separated out from that 165 and are not included in that number that we published. I don't know if George has anything else to offer.
spk02: No, you're right. We're going through the bid process right now, both Chicago and Tropicana.
spk04: I think the other issue as relates to I mean, it's just not the demolition and blowing it up. It's site prep and over some period of time. So, the really fixing it on a particular calendar year, some of that's going to wrap over, like, maybe wrap over to 25. So, that's another reason why we don't have specific guidance and held to a certain timeframe.
spk10: Sure. Okay, thanks. And the last one. Can you just remind us where we are with the New York license, I know it's a competitive process, and just where Valley stands at the moment?
spk02: So, obviously it's public that we're part of the process. We're working on presenting an appropriate plan once the RFP process begins. We've secured the land, and we think that it's a real opportunity at that state. We think that anyone that does a project there will be successful, and we're just putting ourselves in a position to build the appropriate project there and be successful. But the first step is acquiring the license.
spk13: Just to put it, we can't give you any color on New York's timeline. We are taking every step and measure that will put our name in the hat for consideration. And so we're very interested in it. We think we have a very, very compelling proposition and site anchored by our Valley Links golf course. And so we will engage and await New York's decision and timeline.
spk10: Thank you.
spk08: We'll take our next question from David Katz with Jefferies. Please go ahead. Your line is open.
spk12: Hi, good evening, everyone. Thanks for taking my question. And apologies, I was a couple minutes late, but I wanted to just go back on Chicago financing, which I know is still an open question. You may not have conclusions for us today, but any updates on what's inbounds or out of bounds as potential outcomes would be helpful.
spk04: Hi, David. This is Charlie. I think we haven't changed. We expect to finance it when we need to have the financing. I know that the market would like to have greater certainty, but the fact is we don't get access to the site until July 4, 2024. We're going to spend the back half of this year demolishing and site prep. Robson mentioned in the introductory, the bulk of the CapEx is in 2025 and 2026. So unfortunately, we don't have a commitment in place to tell you about. If and when we do, we shall do that. But we continue to progress towards that outcome. And we are, you know, confident of our ability to finance the project because it's a great project.
spk12: Okay. We'll have to leave it there. I appreciate it. Thank you.
spk08: We'll take our next question from Brant Montour with Barclays. Please go ahead. Your line is open.
spk07: Hey. Good evening, everybody. Thanks for taking my question. I wanted to circle back on the international interactive segment guidance which is essentially flat on the top line, right, for 24. And I guess if I'm just trying to read between the lines here on the different segments, it sounds like you're constructive on the UK, which I would expect to mean that you expect that part of the business to grow somewhat, and then it sounds like Asia's stable, but maybe you have to lap right, a reset there from last year. And so on a year-over-year basis for the year, Asia would probably be down and maybe those two offset. Am I wildly off there in terms of thinking about the different geographies within that line?
spk03: No, I think you've interpreted it pretty well. Asia does have to lap because there was a significant decline there over the course of 23. Now we're seeing recovery there. which is good, but we have to lap that. We obviously, when we're thinking about our guidance, thinking about our forecasts, you can't predict perfectly in some of these environments. So we know that what we have in there is rational, and we know that we have enough levers to pull on marketing optimization to ensure that we have the right flow through to the bottom line. Yeah. And we're making investments in other markets to set ourselves up for the future as well.
spk07: Got it. That's helpful. And then a follow-up to the capital allocation discussion. You guys gave some color on how you're thinking about it going forward. I guess just sort of thinking or looking back on the fourth quarter, we noticed you drew down some of your revolver. and maybe it's separate though, cash is fun. Well, you bought some of your stock back and so leverage picked up a little bit on that. And so I guess the question is, maybe just remind us your philosophy on your leverage when it sort of is at a level where it doesn't make sense for the stock price to buy back stock and sort of how you think about that.
spk04: Yeah, look, at any point, this is Charlie Young, at any point in time, we have different options. And certainly in the fourth quarter, the equities got too cheap. And, but, you know, we also have various forms, you say our leverage, we do have a land bank that, you know, we may, we know that we can monetize at any point in time. doesn't necessarily mean that we're going to monetize it and then buy stock or do other things with it so those are levers that are available to us and at the end of the day we only spent less than 70 million for that that uh you know that's point one of a turn uh so i i don't know if i can that that satisfies you but point is that that option is never off the table for us but it doesn't mean that you know we're focused on on uh uh doing that exclusive to other opportunities available to us um that's helpful i mean i guess no that that said that's satisfying i guess i'm just curious if you think it's worthwhile to sort of send a signal
spk07: that you care about bringing leverage down, or if you think that this level you're very comfortable with and you don't need to do that?
spk04: I think we're very comfortable with our leverage. Our leverage is elevated because of significant investment in the Chicago development effort. I think we've been in the market in the past that ultimately, as that project is completed, we expect to get all our money back and more. And so, you know, you're in a transitory period where it's a three-year development project and, you know, the denominator and the numerator are not matched. But if you look at our temp, you know, we spent $70 million and within a year we expect that to have a $50 million per annum return. Granted, it was a temporary, but that's a very high return on capital. But obviously, we had to buy the license and other things associated with it that will ultimately be used for the permanent. So we don't look at things as a point in time, but over a period of time. Does that help?
spk08: That's crystal clear. Thanks for all of that. This does conclude the Q&A session. We'll now turn the program back to our speakers for any closing comments.
spk03: Thank you all for joining us. I think we should all just remember we have an exceptionally robust core to our business, and we're handling our development pipeline with care. We see a huge opportunity ahead, and we really want to deliver value for our stakeholders. I look forward to sharing much more of you very soon. So I'll speak to you in the next quarter. Thank you all for joining.
spk08: This does conclude today's call. Thank you for your participation and you may now disconnect.
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