Josh Hirsberg: Thank you, Keith. This was another solid quarter for our company. Our core customers are continuing to perform well even growing in this challenging environment. In terms of our retail customers, consistent with recent quarters, we experienced softness on a year-over-year basis during the quarter. Retail customer volumes took a step-down beginning in the fourth quarter of last year. However, sequentially, these volumes have remained consistent since then. As we experienced year-over-year operating trends in the third quarter – sorry, as we expected, year-over-year operating trends in the third quarter were very similar to those in the second quarter, as we face more difficult comparisons and experience a continued return of seasonality to our business.
Our operating teams have continued to deliver at a very high level of efficiency. Property level margins were 40%, while company-wide margins were 36%. Consistent with what we experienced during the second quarter, major expense categories that increased year-over-year during the third quarter were wages, utilities and property insurance. Moving to our Online segment, we expect this part of our business to generate $60 million to $65 million in EBITDAR this year. During the third quarter, the tax pass-through amount related to our online partnerships was $71 million this year versus $45 million last year in the third quarter. These amounts were recorded as both revenue and expense in this segment and impacted overall corporate-wide margins by more than 300 basis points this quarter compared to 200 basis points last year in the third quarter.
Capital expenditures were $108 million during Q3, including spend for both Fremont and Treasure Chest. Year-to-date, capital expenditures have been $280 million. We continue to project total capital expenditures for the year of approximately $350 million, including $250 million of maintenance capital and $100 million related to Treasure Chest and Fremont. Now that Fremont is complete and as we anticipate opening Treasure Chest mid next year, we expect to announce additional growth projects during the upcoming year. And as Keith already mentioned, as part of our annual maintenance capital spend this year and next year, we have planned several restaurant upgrades and hotel room remodels. In terms of our capital return program, we have repurchased $106 million in stock during the quarter, representing 1.6 million shares at an average price of $65.30 per share.
This resulted in an actual share count at the end of the quarter of 98.4 million shares. Additionally, we paid a quarterly dividend of $0.16 per share on October 15. Between share repurchases and dividends, we have returned more than $1 billion to shareholders since resuming our capital return program two years ago. And by year-end, we will have returned over $1 billion through our share repurchase program alone. As of September 30, we have approximately $426 million remaining under our current repurchase authorization. Thanks to our substantial free cash flow, we have balanced our capital return program and our property reinvestments while maintaining a strong balance sheet. Our total leverage at the end of the quarter was 2.3x, while lease adjusted leverage was 2.7x.
We have no near-term maturities and ample borrowing capacity under our credit agreement. Our balance sheet is the strongest in the company’s history. Providing us the confidence in our ability to reinvest in our portfolio and return capital to shareholders while pursuing opportunities to further grow our company. David, that concludes our remarks, and we’re now 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 Joe Greff of JPMorgan. Joe, please go ahead.
Joe Greff: Hi, thank you, everybody. Afternoon, Josh, Keith. Just circling back on the topic of OpEx pressures. When you look at OpEx pressures by your reportable geographic segments, is there much of a difference in cost pressures in Las Vegas versus the Midwest and South? It looks like in the quarter, the sequential changes in margins and expenses was more acute in the regionals versus the locals. I don’t know if that’s a fair way of looking at it on a sequential quarter-over-quarter changes this year versus last year. But if you could help us understand that, that would be great.
Josh Hirsberg: Yes. So Joe, I’ll try to answer or give you a sense of that. I think there – first of all, there is some seasonality related to expenses, right. So utilities, which were a large part of the increases when you look quarter-over-quarter, have to do primarily or in this percents are entirely impacting Nevada’s operations. On the other hand, when you look at increases in like property taxes or property insurance, that is more weighted toward – although it did impact Nevada, but it’s definitely more impacted the Midwest and South assets. And that can be kind of a one-off – especially when you’re looking year-over-year, have to be a little careful because there are just kind of one-off changes that may not be impacting the business going forward.
I think the bigger component of – when you look year-over-year is definitely labor. And there’s really not anything unique regionally about that other than just the company’s practices to give wages to – raises to its hourly team members on a July 1 basis. I don’t think that’s applied in the Midwest and South. But that’s the only nuance there. I generally think of the impact. These are nuances that you can point to as differences between the segments. But largely, the spread of costs are all pretty even across all the segments of our business. I hope that helps you a little bit.
Joe Greff: I do. That is helpful. Thanks Josh. And this is more of a specific question to Las Vegas Locals and Downtown, with Durango and Fontainebleau opening up over the next two months here, are you experiencing above-average employee departures turnover? And with presumably higher wages on the strip associated with this new union contract, do you see labor pressures incrementally worsening in the fourth quarter and early next year? And if so, could you help quantify that amount?
Keith Smith: Yes. So with respect to kind of talent wars, if you will, and what we’re experiencing on that front, we’ve seen a little bit of additional turnover as people are looking at some of these new positions, but it is not significant. We obviously have known these properties were going to be opening on these timelines for a while now, and so we’ve been able to prepare for it. So it’s nothing significant, nothing that is impacting the business, Joe, in terms of additional turnover or employees kind of moving on to the next opportunity. In terms of wages, hard to tell where they’re going to land on the strip, rates will be higher than they are today. Do I think it will impact once again? Will people migrate to the strip for those higher wages?
I don’t think so. They are already – strip already pays generally more than we’re paying in the Locals market, and people could already make that decision today if they wanted to. We’ve raised wages here over the course of last year or two and feel like we’re in a good place, but it is a competitive marketplace, and I think we’ll just have to see what happens on the strip and deal with as it comes. I don’t have any prediction as to what will happen on the strip, how much of an increase it will be, and what the ripple effect could end up being, but we’ll obviously pay close attention.
Josh Hirsberg: Joe, I think one thought I would add to your question is, I think as we look at expenses for Q3 and think about how they relate to what they may imply going forward, I think generally we think or feel like the order of magnitude of expenses that we incurred in Q3, when you look at them by segment, that’s what you largely can expect going forward at least from what we know today. In other words, we don’t expect our overall expense structure to be increasing disproportionately going forward. We expect kind of the level of expenses that we’re seeing in terms of total dollars to be largely the same.
