July 26, 2022 - 2:50 pm
Updated July 27, 2022 - 5:23 pm
Boyd Gaming Corp. will keep the Eastside Cannery closed until further notice, company leadership said during an earnings call this week.
Executives with the Las Vegas-based operator of several other locals casinos — including nearby Sam’s Town — as well as downtown and out-of-state properties said Tuesday that while the customer base is strong over the company’s three segments, demand for the Boulder Highway spot has not returned enough to open its doors.
“We consistently thought about it in the context of demand,” Boyd Chief Financial Officer Josh Hirsberg said in response to an investor question on the call. “At this point, our view is that we’ve been able to leverage the benefit of Sam’s Town Las Vegas, which is near Eastside Cannery. Until we see, perhaps more demand or something else to suggest we should consider reopening, Eastside Cannery for now will remain closed.”
Company officials declined to say what other factors may guide the decision to reopen. Main Street Station, a Boyd property that was shuttered for several months longer than its two downtown counterparts, reopened in September 2021.
But the continued closure wasn’t cause for concern to Hirsberg and Boyd President and CEO Keith Smith, who told investors on the call they were confident in the company’s operations even in the face of economic uncertainty.
For the quarter that ended June 30, Boyd reported net income of $146.8 million, $1.33 per share, on revenue of $894.5 million. That compared with income of $113.7 million, or $1 per share, on revenue of $893.6 million in the same quarter of 2021.
Net income was up 29.1 percent from the previous year and revenue went up slightly, by .1 percent.
Company leaders say the report shows the company’s stability despite outside fears of a recession.
“We are certainly aware of the economic pressures weighing on the U.S. consumer,” Hirsberg said. “And while predicting the future is particularly difficult now, there is no compelling reason today to say that the course of our business is changing. Our consumer trends in July confirmed the continued stability we have seen for the last year.”
Smith said the key was focusing on the core customer and keeping business efficiencies. After a record-breaking second quarter in 2021, revenue and other measures normalized and provided “stability in all three operating segments” — downtown Las Vegas, the Las Vegas locals market and the Midwest and South.
Companywide operating margins topped 39 percent, with its locals market reaching more than 50 percent for the fifth straight quarter, Boyd reported.
In response to a question about what the company’s models say about how it could handle economic downturn, Hirsberg said good financial leverage was behind his outlook.
“Part of the whole philosophy of having a lower leverage level, the access to undrawn capacity that we have is to be able to weather the uncertain times that we find ourselves in, that everybody’s thinking about and wringing their hands about today,” he said. “At this point we’re kind of just continuing to move through.”
Where Boyd is spending
Company executives said site work began earlier in July for a land-based facility at the Treasure Chest riverboat casino in Louisiana. Boyd previously said it is spending $95 million on construction that’s expected to open in late 2023.
Other construction is occurring at the Fremont in downtown Las Vegas to expand its casino floor and add several quick-serve restaurants.
“This project will help us capture a larger portion of pedestrian traffic throughout the Fremont Street Experience,” Smith said. “We’re making good progress on construction and we’re on track for completion around the end of the year.”
Additionally, the company expects to open the Sky River Casino — which will include 2,000 slot machines, 80 table games and 17 food and beverage spots — by early September. Boyd has a seven-year management agreement with the Wilton Rancheria Tribe to operate the 100,000-square-foot casino south of Sacramento.
A previously announced plan to acquire online casino gaming company Pala Interactive, worth $170 million, is expected to close around the new year. In response to an analyst question, Smith said an iGaming product could be brought to consumers six months after closing.
As part of an ongoing share repurchase program, Boyd repurchased about $168 million in stock during the second quarter of 2022. As of June 30, the company had $481 million remaining under current share repurchase authorizations.The company expects to return an estimated $500 million to shareholders in dividends and share buybacks this year.
Boyd Gaming shares, traded on the New York Stock Exchange, closed Tuesday down 86 cents, or 1.56 percent, to $54.28.
McKenna Ross is a corps member with Report for America, a national service program that places journalists into local newsrooms. Contact her at firstname.lastname@example.org. Follow @mckenna_ross_ on Twitter.
BOYD GAMING CORP.
Second-quarter revenue and earnings for Las Vegas-based Boyd Gaming Corp., operator of Sam’s Town, The Orleans, three downtown Las Vegas properties and several other hotel-casinos. (NYSE: BYD)
2Q 2022: $894.5 million
2Q 2021: $893.6 million
Change: ↑ 0.10%
2Q 2022: $146.8 million
2Q 2021: $113.7 million
Change: ↑ 29.1%
Earnings per share
2Q 2022: $1.33
2Q 2021: $1.00
Change: ↑ 33%