Dan Politzer: Got it. Thanks so much.
David Strow: Thank you, Dan. Our next question comes from Jordan Bender of JMP. Jordan, please go ahead.
Jordan Bender: Great. Thanks for taking my question. So the question gets brought up every couple of quarters, but there’s a view out there that the FanDuel stake that you own isn’t reflected really in your stock. So, is there a thought from the company to either look to monetize some of that or all of it to maybe help you recognize some of that value in your shares? Or I guess, asked another way, I believe in 2028, there’s a valuation agreement period between the two companies. Like, could you imagine a scenario where you would look to monetize it before that date? Thank you.
Keith Smith: I think we have historically and currently view our 5% ownership in FanDuel as a very strategic partnership, a very strategic relationship. And through today, we continue to view it that way. What the future brings, if and when we’d monetize it, we don’t have any thoughts or comments on that topic, but it is very much an important strategic relationship and drives a significant portion of the $60-plus million we generated in the online portion of the business. So, important, and we’ll just see what the future brings.
Jordan Bender: Understood. And then just a housekeeping modeling item. $103 million impairment charge in the quarter, is there anything to call out on that?
Josh Hirsberg: No, not really. It’s just the accountants doing their thing. So, I wouldn’t put too much into that. A lot of it has to do with the kind of the changes in interest rates and things like that in terms of what they discount the cash flows at. That’s really what it comes down to.
Jordan Bender: Great. Nice quarter. Thanks.
Josh Hirsberg: Thank you.
David Strow: Thanks, Jordan. Our next question comes from Shaun Kelley of Bank of America. Shaun, please go ahead.
Shaun Kelley: Hi, everyone. Thanks for taking my question. Really, just two quick clarifications for me. So first, I think it goes back to Barry’s question. But, Josh, I mean, with Online being flat — or the guidance or an outlook being flat, just trying to understand why — with the market access agreement, why you wouldn’t benefit on sort of same-state GGR growth? Appreciate there’s no maybe big step function on new state launching. But is there either an offset on the expense base and something else that’s there? Or is there something else that caps that number? I’m just kind of — yeah, why that wouldn’t be more participatory on a market that still seems like it’s growing easily, 15% to 20% a year?
Josh Hirsberg: Yeah. I guess we just don’t share the same view of that. I think, as — we view it as markets open up and then generally kind of mature pretty quickly. And remember, we’re just getting a percentage of that growth. There’s no increase in expenses. There’s no cap or anything nefarious going on. It’s strictly our view of the world that these markets are not just going to keep growing to the sky, and they have more modest growth once they kind of open up and have been around for about a year. So, to the extent that we’re off on that, that will drive our results. But again, it’s — we only get a small percentage of that growth.
Keith Smith: Look, to what Josh’s saying, to the extent you’re right, Shaun, then yeah, we’ll see that number go up.
Josh Hirsberg: Yeah.
Keith Smith: We don’t know. But…
Josh Hirsberg: That’s not what we expect.
Shaun Kelley: Okay. I totally get it and then follow how you underwrote it. So that’s helpful. And then, sort of the other clarification, Josh, I appreciate it’s not a number that we should be building our expense base off of, but just to go back to Midwest & South because the margin performance was so stellar and the expenses were down quite materially quarter-on-quarter. I guess, just very explicitly was, was there any either tax reversal or insurance benefit or some one-timer that hit in that? Or again, just for that number — and again, I appreciate that’s not the base we would model off of either way, but just curious if that number is — if there was anything else that might have driven that margin performance, because it just looked very, very strong?
Josh Hirsberg: Yeah. No. Nothing that is like unusual that we could call out that would — yeah, it was — I mean things happen around year-end and things like that, but it’s all just kind of normal stuff. So I can’t — yeah, nothing jumps out.
Shaun Kelley: Okay. Yeah, that’s it. Appreciate it, and thank you for all the comments throughout and some of the guidance. Appreciate it.
Josh Hirsberg: Sure.
David Strow: Thanks, Shaun. Our next question comes from David Katz of Jefferies. David, please go ahead.
David Katz: Hi. Good evening. Appreciate all the details as well. I wanted to just pose a question, it’s a bit hypothetical. Leverage down at under 3 times, makes sense in an environment with elevated interest rates. As interest rates come down, does it make you a bit more comfortable perhaps letting that rise a bit and therefore, implying that some more capital returns might be enabled along with your earnings growth? Where would your target leverage be, hypothetically, if interest rates started to come back down again?
Josh Hirsberg: Yeah. I’ll tell you and then, Keith, jump in. I think that it’s not interest rate-driven really. It’s overall leverage driven. And I think we said generally, we’re comfortable in this range. We’re not opposed to leveraging up over time for whatever reason we so choose if it makes strategic sense to do so. But it will be with the goal of deleveraging back down to around these levels. So, we’re comfortable running the business at this leverage level. We think it gives us flexibility to continue to do the things we want to do without being kind of having to deviate from that if something happens economically or if we choose to do an acquisition or something else, and we can kind of keep returning capital to shareholders and keep reinvesting in our existing portfolio. So that’s the logic behind the leverage level.
