Boyd Gaming reports revenue growth, cites locals, downtown segments

Boyd Gaming Corp.’s locals and downtown gaming segments continue to grow well past pre-pandemic measures, company officials said Tuesday.

Keith Smith, the company’s president and CEO, called the quarter a “solid performance” in a statement ahead of its third-quarter earnings call.

“These results were driven by our continued focus on core customers and sustained efficiencies throughout our business, as our operating model is successfully meeting today’s challenges and delivering consistent results,” Smith said. “Our strong operating performance is producing robust free cash flow, allowing us to return nearly $500 million in capital to our shareholders so far this year. Overall, we are encouraged by the resiliency of our business, and remain confident in our strategy and our ability to deliver consistent results in the current economic environment.”

Boyd reported net income of $157 million, or $1.46 per share, on revenue of $877.3 million, for the quarter ending Sept. 30. That’s compared with a net income of $138.2 million, or $1.21 per share, on revenue of $843.1 million during the same quarter in 2021.

Officials reported revenue trends are increasing among “core customers” — cash flow measures in the locals segment was nearly 75 percent above 2019’s third quarter and trailing only behind 2021’s record third quarter.

Leadership noted the downtown Las Vegas segment had cash flow margins that were 49 percent better than the pre-pandemic third quarter in 2019. It partially attributed the strong performance to the return of its Hawaiian customers, an important demographic given the company’s historic marketing connections. Smith said visitation from Hawaii is still below pre-pandemic levels, but the total play is 7 percent higher.

“This quarter the gaming revenue growth from our core customer helped to offset declines in spend from the stimulus driven results we’ve benefited from last year during the third quarter,” Chief Financial Officer Josh Hirsberg said. “As a result, gaming revenues are essentially even with last year.”

Also during the quarter, Boyd Gaming opened Sky River Casino near Sacramento on Aug. 15. The company has a seven-year management agreement with the Wilton Rancheria Tribe. Management declined to specify how much it will earn from the management fee, but previously estimated it could be between $25 and $30 million.

Revenue from its midwest and south segment, where the tribal operation is reported, jumped 5.7 percent compared to the same time last year.

Boyd said it expects the acquisition of Pala Interactive, worth $170 million, to close in the next several weeks, the company said. The acquisition is intended to beef up the company’s operations in the online gaming space.

Smith and Hisrberg said the iGaming sector was important for its growth. Boyd plans to take a regional approach by operating in states with existing Boyd enterprises and possibly some key adjoining states.

Additionally, FanDuel — which the company has a 5 percent stake in and recently rebranded its Fremont casino sports book to that name — is expected to generate about $3 million in cash flow this year and more in 2023, executives said. FanDuel launched mobile and retail sports betting in Kansas and will do the same in Ohio in the coming months.

Around Las Vegas

Analysts were curious about how Boyd leadership viewed upcoming events and changes to the Las Vegas Valley.

When asked about the expansion plans of its competitor Red Rock Resorts, parent company of Station Casinos, Smith said he doesn’t anticipate a “significant” impact.

“We have some customers in an area but it’s not the core market we draw from at any of our locals properties,” Smith said. “As we look at that addition to the market, which is really the only significant addition in the next 15 months, we don’t see any significant impact to our business. Will there be some? Sure, customers always go and visit new properties, but we don’t expect it to be significant.”

Others wondered how the packed special events calendar in 2023 and 2024, with marquee events like the Formula 1 race in November 2023 and the Super Bowl in February 2024, would affect Boyd’s business.

“As the Strip does better, more people come to Las Vegas,” Smith said. “Whether it’s our downtown operations or The Orleans, which has 1,900-plus hotel rooms and a fair amount of meeting/convention space — all that allows us to both fill and to leverage pricing up and so we will absolutely do better as the town continues to be full, has more unique events and draws more customers into town.”

Boyd Gaming, traded on the New York Stock Exchange, closed Tuesday at $54.78, up 1.86 percent. Shares rose 0.77 percent after hours to end at $55.20.

McKenna Ross is a corps member with Report for America, a national service program that places journalists into local newsrooms. Contact her at mross@reviewjournal.com. Follow @mckenna_ross_ on Twitter.