As a result of our significant free cash flow and strong balance sheet, we are able to pursue a balanced approach to capital allocation, investing for organic growth in our existing portfolio and returning capital to our shareholders while pursuing opportunities to further grow our company. David, that concludes our remarks, and we’re ready to take any questions.
A – David Strow: Thank you, Josh. We will now begin our question-and-answer session. [Operator Instructions] Our first question comes from Steve Wieczynski of Stifel. Steve, please go ahead.
Steve Wieczynski: Yeah. Hey, guys. Good afternoon, Keith and Josh. Thanks for taking my questions. So, Josh, look, you guys don’t give formal guidance for the full year. You have given some guidance here around certain parts of your business. And Keith, in his prepared remarks, talked about some of the headwinds you guys might face in like the Locals market and coming off the record first quarter of last year and stuff like that. But just wondering if you could maybe help us from a high level kind of maybe help us think about how you’re thinking about the Locals market, Downtown, Midwest & South this year. And if there’s anything else that we need to be thinking about as we kind of build out the cadence for 2024? Thanks.
Josh Hirsberg: Sure, Steve. So look, I think we’ve tried to outlined it pretty well in our prepared remarks. I think as we think about the Las Vegas Locals market, while it’s still early, our properties are performing consistently and very well. As Keith laid out for you kind of some of the challenges that we may face as we go through the year with respect to the Las Vegas Locals with the new competitor, it’s still early, and so we need to kind of see how that plays out. We’ve got construction related to Coast that will go through kind of third quarter. And then we have the first quarter that we think will be a little bit of a challenge of a comp. I think the underlying customer trends give us some level of confidence from where we sit today in terms of the Las Vegas Locals and kind of the trends in that business.
Downtown, I think Downtown has been really kind of plagued with construction disruption on and off throughout the year, and really, 2024 for Downtown will be a year without construction disruption. So, it should do better. In the Midwest & South, I think what we’re seeing is more stabilization in the retail customer segment, kind of gradually getting better year-over-year or less bad year-over-year than it has been. While combined with kind of a stronger and improving core customer, which is really true across all of our business segments. I think what’s made it difficult, and looking at the Midwest & South, it has just been the difficult weather that we’ve seen in — beginning with January. But once we’ve got that behind us, the customer trends feel kind of very similar to what we’ve been seeing.
So, it’s been a difficult kind of start to the year. We’ve got a difficult comparison in Q1 related to LVL, but as we get some of this behind us, it feels like the customers are not getting worse, but at this point, at least very stable. Keith, I don’t know if there’s anything you want to add to that?
Keith Smith: No, Josh, I think between our prepared remarks, where we talked about a lot of this in Josh’s comments, I think it summarizes it well. Nothing else to add.
Steve Wieczynski: And then, Josh, if we go back to the fourth quarter and think about the Midwest, it’s the one market or the one segment that grew margins year-over-year. And just wondering if that essentially was a kind of a clean quarter, meaning there was no benefit in there on the cost line. I just want to make sure that’s kind of a clean number that you guys put up there in the fourth quarter.
Josh Hirsberg: Well, look, I think there is some seasonality into our business. And so from our perspective, when we look at our expenses, we don’t necessarily think Q4 is really a good run rate for — really any segments of our business. I think we would ask people to look back at Q1, Q2 and Q3, and kind of use some combination of that, recognizing we have seasonality with certain aspects of our expenses. So, I don’t think Q4 is a good run rate in terms of expenses for any of our segments, really.
Steve Wieczynski: Okay. Got you. And Josh, one quick housekeeping. Do you have an idea what corporate expense would kind of look like for ’24?
Josh Hirsberg: Since most of it is really headcount-related and that’s going up kind of like 3% or so, I think that’s generally where you should expect that level of increase in corporate expense over what we delivered in 2023.
Steve Wieczynski: Okay, great. Thanks guys. Appreciate it.
Josh Hirsberg: Sure.
David Strow: Thank you, Steve. Our next question comes from Carlo Santarelli of Deutsche Bank. Carlo, please go ahead.
Carlo Santarelli: Hey, guys. How are you? I just kind of — I wanted to essentially try and understand the Locals commentary for the first quarter. Seasonally speaking, historically, 1Q trends relative to 4Q trends, the 1Q has tended to be a little bit better than the 4Q from an EBITDAR perspective. Clearly, you’re going to have a full month of competition, but you talked about kind of play levels and volumes quarter-to-date being similar to the 4Q. I do see, obviously, you have a little bit of a tougher comp in the first quarter last year relative to what was experienced in the 2Q through the 4Q. So, from a level of magnitude perspective, is the first quarter expected to be the most challenging quarter? And should it differ materially from historical seasonality when compared to the 4Q?
