Boyd Gaming Corporation (BYD) Earnings

Management highlights

### Overall Company Performance - On a company-wide adjusted basis (excluding last year's FanDuel transaction and market access tax pass-through impacts), revenue increased 3% and EBITDA grew 2% year-over-year for the quarter. - Company-wide property operating margin held at 40%, with sustained operating efficiency across the business. - Early third quarter (through three weeks of July) trends are consistent with the solid performance seen in the second quarter. ### Capital Investment Projects - **Las Vegas Portfolio**: Suncoast renovations (casino floor, public areas, amenities) will be completed by the end of Q3 2026, with improved performance expected starting in Q4 2026. A full refresh of the Orleans' casino floor and public spaces is scheduled to begin in H1 2027. Cadence Crossing has delivered strong visitation and revenue since its March 2026 opening, and management remains confident in its long-term return. By early 2027, over 70% of Boyd Gaming's Las Vegas hotel room inventory will be renovated, with 17 new food and beverage concepts introduced across the market. - **Sky River (Managed Business)**: Phase one of expansion is off to a strong start; phase two (adding a 300-room hotel, new food and beverage outlets, a spa, and an event center) is underway and on track for completion in early 2028. - **Pipeline of Growth Projects**: The Norfolk, Virginia waterfront resort remains on time and on budget for a late 2027 opening. Modernization of Paradise Casino in Illinois is in the design phase. Subject to regulatory approval, conversion of the Amelia Bell (Louisiana) property to a modern land-based facility is expected to start construction in late 2027. ### Capital Return Strategy - Over $170 million was returned to shareholders in Q2 2026 via share repurchases and dividends. 1.9 million shares were repurchased at an average price of $83.60 per share. - Going forward, the company plans to maintain a base of $150 million in share repurchases per quarter, supplemented by a regular quarterly dividend. For full-year 2026, total shareholder returns are expected to exceed $650 million, equal to approximately $9 per share. ### Balance Sheet Health - At the end of Q2 2026, traditional leverage was 2.2x and lease-adjusted leverage was 2.7x, leaving the balance sheet well positioned. There is ample available capacity under the company's credit facility, with the next debt maturity coming in December 2027, to be refinanced in late 2026 or H1 2027. - The sale of the Shreveport property is expected to close by the end of July 2026.

Guidance

- Full-year 2026 capital expenditure guidance is maintained at $650 million to $700 million. The breakdown is $250 million in maintenance capital, $75 million in incremental hotel capital for the Orleans remodel, $50 million in growth capital for Cadence completion and Paradise pre-construction, and $300 million for the Virginia resort development. - Guidance for full-year 2026 online segment EBITDA was raised by $5 million due to stronger-than-expected performance from Boyd Interactive. - Management expects softness in Las Vegas destination business to continue into the second half of 2026, with an expected EBITDA impact of ~$3 million in Q3 (down from ~$5 million per quarter in prior periods) remaining at a similar reduced level in Q4. - Suncoast construction disruption is expected to remain at ~$3 million of EBITDA impact in Q3 2026, with performance improvement starting in Q4 2026. - Cadence Crossing is expected to begin contributing positive EBITDA in late Q3 2026, with continued ramping through Q4 and into 2027. - Las Vegas Locals segment EBITDA is expected to return to flat or year-over-year growth starting in Q4 2026, following the conclusion of Suncoast construction.

Segment performance

1. Midwest and South: Revenue grew 3% year-over-year, EBITDA grew 4%, and property operating margin expanded to nearly 38% (the segment's highest margin in almost two years). It is the largest contributor to the company's overall growth, leading the quarter's strong results. 2. Las Vegas Locals: Overall gaming revenue was flat year-over-year, impacted by softer destination business and construction activity at the Suncoast property. Excluding Suncoast and the Orleans, remaining properties in the segment achieved 4% revenue growth and 3% EBITDA growth, with operating margins exceeding 50%. 3. Downtown Las Vegas: Business trends were consistent with recent quarters. Play from core and Hawaiian guests was stable, but the segment was negatively impacted by lower pedestrian traffic from continued softness in destination travel. 4. Online (Boyd Interactive): Revenue and EBITDA grew on a comparable basis, driven by strong performance from Boyd Interactive, with consistent contributions from market access agreements. 5. Managed Business: EBITDA grew 18% year-over-year, driven by the successful completion of the first phase of the Sky River expansion project, which drove increased visitation and volume.

Risks & headwinds

- Ongoing macroeconomic volatility, including inflation, higher gas prices, and uneven consumer performance across income segments, could impact customer spending across all segments. - Sustained softness in destination travel continues to negatively impact Downtown Las Vegas and the destination-facing portion of the Las Vegas Locals segment, with no clear signs of a near-term reversal. - Ongoing construction activities at Las Vegas properties create temporary negative EBITDA impacts while work is in progress.

Analyst Q&A

• Q: What is driving Midwest and South growth, and how sensitive is this segment to current macro volatility? /

  A: Management notes customers have increasingly chosen to spend travel and leisure dollars closer to home for multiple quarters, a trend that has benefitted the regional Midwest and South portfolio relative to Las Vegas destination assets. While mixed macro factors (strong stock market performance for higher-income consumers, larger tax refunds, offset by higher gas prices and persistent inflation) impact consumers, Boyd has recorded consistent solid growth from core retail customers across both the Midwest and South and Las Vegas local market segments. /

• Q: What is Boyd Gaming's current appetite for external M&A? /

  A: Management's approach to M&A has not changed: the company is consistently evaluating opportunities but only pursues high-quality strategic assets in the right markets at attractive prices. Boyd does not need to complete M&A, given its strong operating performance, robust capital return program, and strong balance sheet, but will act if the right opportunity meets all of the company's criteria. /

• Q: What drove the improvement in margin flow-through in the Midwest and South segment this quarter? /

  A: In the second half of 2025, higher-than-expected benefit costs caused lower revenue flow-through even as revenue grew. Management adjusted employee benefit programs to address these cost overruns, and has now brought costs under control. The company's management teams maintain a constant focus on operational efficiency and cost controls across all properties, which has supported margin expansion across the portfolio. /

• Q: When will the Las Vegas Locals segment return to top-line growth, and what is the expected cash-on-cash return for the Virginia development project? /

  A: Management expects the Las Vegas Locals segment to return to year-over-year EBITDA growth in Q4 2026, after Suncoast construction concludes and Cadence Crossing begins contributing positive results. The $300 million Virginia project targets a 15% cash-on-cash return once fully ramped, which is expected by the second year of operation after opening in late 2027.