Tuesday, December 6, 2022
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Boyd Gaming to continue pursuing strategic opportunities for growth

Boyd Gaming is looking to strengthen “solid nationwide operating results” through “several projects that are beginning to come online,” which the group believes will deliver heightened, and long-term sustained, success.

First under the microscope in a third-quarter earnings call is California’s Sky River Casino, which is expected to build upon an early grand opening in September with an online debut in the not too distant future.

The company has a seven-year management agreement to operate the gaming property on behalf of the Wilton Rancheria Tribe, with delight stressed that these partners are able to “finally realise a vision of economic self-sufficiency”.

Through the first 60 operational days Boyd reports “excellent results” with “very strong visitation and gaming revenues,” however, these volumes are expected to moderate beyond this opening phase.

Elsewhere, an expanded FanDuel partnership brought a mobile and retail sports betting launch in Kansas through September, with preparations having begun in Ohio where a digital debut is anticipated before the close of the year.

“By partnering with the nation’s leading sports betting brand, we have established a profitable digital business that we expect to generate approximately $30m EBITDAR in 2022, and we expect further growth in 2023 as we benefit from our new operations in Kansas and Ohio,” Keith Smith, President and Chief Executive Officer of Boyd Gaming, said in the Q3 earnings breakdown.

“…we are focused on building a profitable online business that will enhance our existing land-based operations”

“On top of all of this, we also benefit from the substantial value of our five per cent equity ownership in FanDuel overall. FanDuel has been a very successful partner for our company, and we remain committed to expanding and strengthening this partnership in the future.”

In addition, the operator has also noted that progress regarding the $170m Pala Interactive purchase is ongoing, with all regulatory approvals and finalisation expected to occur “in the next several weeks”. Once achieved, migration of the New Jersey and Pennsylvania focused Stardust igaming brands will commence.

“We believe we have the foundation to successfully build a profitable, regional, online casino operation that leverages our industry-wide experience, our existing geographic presence, and our proven customer database,” Smith continued. 

“Pala will provide us with the technology, products and management expertise to execute this strategy. Online gaming has become an important part of the growth story for our industry, and we are focused on building a profitable online business that will enhance our existing land-based operations.”

On the retail front, Smith is quick to acknowledge that the group is continuing to pursue “opportunities for growth through strategic reinvestments in our nationwide portfolio”.

Current work being undertaken by the group includes a $50m expansion of Las Vegas’ Fremont Casino & Hotel that is slated to be complete by the end of the year, as well as a $100m Louisiana project.

“…we are focused on building a profitable online business that will enhance our existing land-based operations”

This will see the Treasure Chest Casino migrate from a riverboat setting to a land-based facility that is set to come to fruition in early 2024 and drive additional visitors and “continuing growth”.

This expansion elaboration came amid reflections of a third-quarter performance that saw revenue reach $877.3m, up four per cent year-on-year from $843.1m.

Net income through the three month period increased 13.6 per cent to $157m (2021: $138.2m) however, adjusted EBITDA tracked a slight decline to $337.7m (2021: $340.7m).

“The third quarter was another solid performance for our company,” Smith said. “Our operating model and management teams are successfully meeting the challenges of the current economic environment and continue to deliver consistent results.”

The Boyd CEO added the customer spending through the quarter had been “very consistent” with 2022 trends, with economic struggles not being evidenced in the outlay witnessed across the company’s retail gaming venues.

On a regional basis, increases of 5.67 per cent and and 17.49 per cent to $601.96m (2021: $569.65m) and $49.5m (2021: $42.13m) in the Midwest and South and Downtown Las Vegas divisions offset a 2.42 drop across the Regional Las Vegas segment to $225.79m (2021: $231.26m).

For the year-to-date, Boyd reported increases of 5.72 per cent, 31.81 per cent and one per cent across each of revenue, net income and AEBITDA, to 2.63bn (2021: $2.48bn), $466,693 (2021: $354,064) and $950,619 (2021: 940,293).

“In summary, this was another solid quarter for our company,” Smith noted. “Customer spending remains steady throughout our business, particularly among our core customer segments driving healthy, stable results. 

“At the same time, our management teams continue to demonstrate their ability to successfully manage cost pressures in an inflationary environment.”

Adding: “As we look forward, we believe gaming revenue will return to more normal growth in 2023, and our ability to manage costs will result in continued high levels of operational efficiency.”

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