Steven Pizzella

Steven Pizzella asked about the company's strategy for balancing debt reduction and share repurchases, given the expected free cash flow generation in 2026 and the current stock valuation.

Answer

CEO Tom Reeg stated that the company will continue to balance debt paydown and share repurchases, similar to 2025, noting that the second quarter typically generates more free cash flow, which would influence the timing of more active repurchases.

Steven Pizzella asked about Caesars' strategy for balancing debt reduction and share repurchases in 2026, given the expected free cash flow generation and current stock valuation. He also inquired about the drivers behind the 7% year-over-year increase in the Las Vegas 'other revenue' line item and its future outlook.

Answer

CEO Tom Reeg stated that Caesars will continue to balance debt paydown and share repurchases, similar to 2025. He noted that Q1 is typically a low free cash flow quarter, while Q2 is significant, suggesting more repurchase activity in Q2. For the question regarding the Las Vegas 'other revenue' line item, Reeg indicated that he would need to provide that level of detail on a follow-up call.

Steven Pizzella from Deutsche Bank asked about Boyd Gaming's expectations for any benefit from the recently passed tax bill, particularly as it applies to early next year.

Answer

Josh Hirsberg, CFO, explained that while the tax bill includes several elements like tax-on-tips, higher standard deductions, and senior credits, the company has not quantified the overall benefit in terms of revenue and EBITDA. He noted that it is expected to provide incremental benefit.

Steven Pizzella asked about any expectations for a benefit from the new tax bill early next year.

Answer

CFO Josh Hirsberg stated that it is difficult to quantify the overall benefit from the tax bill, which includes elements like tax-on-tips, higher standard deductions, and senior credits. He concluded that it is expected to provide an incremental benefit overall.

Steven Pizzella asked about expectations for ancillary fee growth, specifically drivers from the credit card program, how to think about lapping tough comparisons, and the acceleration of the procurement business.

Answer

CFO Michele Allen highlighted 18% ancillary revenue growth in Q3 (14% year-to-date), driven by a 10% increase in new credit card accounts and a 7% lift in average spend per cardholder. She identified multi-year growth drivers including credit card replatforming, international expansion, the debit card, Wyndham Connect, and Wyndham Insider. CEO Geoff Ballotti added that the sourcing (procurement) team is making significant strides with new categories and global expansion, providing substantial savings for franchisees.

Steven Pizzella inquired about Wyndham's expectations for ancillary fee growth, specifically its acceleration from low teens this year to mid-teens in 2026, the drivers behind this, particularly from a credit card and procurement perspective, and how the company views lapping tough comparisons.

Answer

CFO Michele Allen highlighted strong ancillary revenue performance, up 18% in Q3 and 14% year-to-date, driven by a 10% increase in new credit card accounts and a 7% lift in average spend per cardholder. She identified multi-year growth drivers including credit card replatforming, international expansion, the debit card, Wyndham Connect, and the new Wyndham Rewards Insider program. CEO Geoff Ballotti added that the sourcing team is making significant strides with new categories, global expansion, and new brands like Nestlé and Starbucks, along with a program for franchisee insurance savings, all contributing to optimism for upside on the sourcing side.

Steven Pizzella of Deutsche Bank asked for more detail on the 'encouraging recent trends' management mentioned, their sustainability, and what level of performance would be needed to reach the midpoint of the revised EBITDA guidance.

Answer

CFO Michele Allen explained that the low end of the guidance assumes March/April trends continue, while the high end assumes those trends were transitory. She noted that reaching the midpoint or higher end of the guidance would require performance to improve from the down 3% trend seen in the U.S. in March and April. While there are early positive signs, she stressed that full visibility depends on the crucial summer months, which account for the majority of EBITDA.

Steven Pizzella asked about the RevPAR environment required to achieve the 8.5% adjusted EBITDA CAGR through 2026 and sought guidance on how to think about ancillary fee growth in 2026, particularly if there is a step-up in the credit card deal.

Answer

CFO Michele Allen stated that achieving the target would imply a RevPAR CAGR of about 1% to 2% over the three-year plan, including currency effects. Regarding ancillary fees, she projected further acceleration in 2026, with growth expected to be in the mid-teens range, up from the low-teens expected in 2025.

Steven Pizzella asked if the ahead-of-schedule net rooms growth was a pull-forward from Q4 and questioned the drivers behind the strong margin expansion and how to think about margins going forward.

Answer

CFO Michele Allen clarified that while some international openings were pulled forward, leading to a potentially lower Q4, the full-year growth will be in line with expectations. She attributed margin expansion to ancillary revenue growth, organizational efficiencies, and technology enhancements, noting these benefits, excluding a one-time insurance proceed, are expected to be sustainable.

Steven Pizzella asked if there are differences in the migration from pre-match to live betting across various U.S. sports and requested insight into the difference in hold rates between pre-match and live betting.

Answer

CEO Carsten Koerl noted that fast-moving sports like basketball and hockey see higher live betting adoption, but baseball also works well. He explained that live betting profitability can be lower than pre-match, particularly with parlays, but new products and user interfaces are helping to bridge that gap for operators.

Steven Pizzella from Deutsche Bank questioned the strategy behind the quarter-over-quarter decline in Illinois locations despite higher win-per-day. He also requested an update on the Louisiana integration and whether the Illinois optimization strategy is being applied to other markets. Finally, he asked if there were any start-up costs or financial impacts from the Fairmount sportsbook in Q1.

Answer

Executive Andrew Rubenstein confirmed that reducing locations in Illinois is part of a continuous optimization strategy to prune underperforming sites and reallocate assets, a practice that will be applied across all markets. CFO Mathew Ellis noted that while it's early, the Louisiana integration is showing positive results. Executive Mark Phelan added that integrating technology and proprietary content is driving outperformance in markets like Nevada, Nebraska, and Georgia. Regarding Fairmount, Mr. Ellis affirmed there were start-up costs in Q1 related to hiring before the casino opened.

Steven Pizzella inquired about the expected financial contributions from the recent Louisiana acquisition and the new Fairmount casino, as well as recent performance trends in Illinois and other markets.

Answer

CFO Matt Ellis provided guidance, stating Louisiana should contribute approximately $6 million in EBITDA for the full year 2025. For Fairmount, he projected the temporary casino, opening in Q2, would generate about one-third of the full $25 million run-rate EBITDA, prorated for the partial year. CEO Andy Rubenstein added that Q1 performance was affected by variable weather in Illinois but noted positive results from remodels and new product introductions in other markets.

Steven Pizzella of Jefferies inquired about the strategy behind recent Illinois location closures, the expected impact on performance metrics, and sought an update on the Fairmont acquisition's financial projections and its partnership with FanDuel.

Answer

CEO Andrew Rubenstein explained that the location closures are a continuous process of portfolio optimization, recently accelerated by inflation and a state tax increase that impacted margins at underperforming sites. President of U.S. Gaming Mark Phelan added that the Fairmont project's cost and EBITDA projections (around $20-$25 million) remain on track, and the partnership with FanDuel is a confidential, long-term, and mutually favorable arrangement.