BOYD GAMING CORP Q3 FY2024 earnings call

Management Statement and Operational Highlights

• Third quarter was a solid performance with property investments driving growth in downtown Las Vegas and Midwest/South segments.
• Online and managed businesses delivered excellent performances, showcasing the value of the diversified business model.
• Maintained operating efficiencies with property-level margins exceeding 39% during the quarter.
• Southern Nevada economy is sound with strong visitation, job growth, and population increase. Home building activity in Las Vegas Valley has accelerated.
• Key projects include Cadence Crossing Casino in Las Vegas, set to break ground next month and open in early 2026; Ameristar St. Charles convention center expansion; and a $750 million commercial casino resort development in Norfolk, Virginia.

Segment Performance

• Las Vegas Local: Orleans and Gold Coast impacted by competitive pressures during the quarter, while the remainder of the segment performed in-line with broader same-store market trends. Excluding Orleans and Gold Coast, EBITDA margins were 49% during the quarter. Hotel revenues continued to grow due to increased room demand.
• Downtown Las Vegas: Delivered strong quarterly performance driven by recent property investments and growing Hawaiian visitation. The Fremont posted a record third quarter revenue and EBITDAR performance. The Southern Nevada economy remains sound with strong visitation, job growth, and population increase.
• Midwest and South: Treasure Chest Casino had a record third quarter performance, with revenue growth since its new facility opened in June. Excluding Treasure Chest, the rest of the segment had essentially even revenue and EBITDAR year-over-year, with margins of 38% during the quarter.
• Online: Had a great third quarter, with growth from market access agreements. Raised full-year EBITDAR guidance to $75 million from continuing operations, up from previous guidance. Acquired Resorts Digital Gaming's New Jersey operations.
• Managed Business: Recorded a strong quarter, with Sky River on track to generate approximately $90 million in EBITDAR this year. Expansion of Sky River is underway with phases planned for completion in 2026 and 2027.

Guidance

• Online segment full-year EBITDAR guidance raised to $75 million from continuing operations, up from $65 million to $70 million previously guided.
• Capital expenditures for 2024 adjusted to a range of $400 million to $425 million, including maintenance capital and recurring growth capital.
• Committed to repurchasing $100 million in shares each quarter, having returned nearly $650 million to shareholders in 2024.
• Sky River Casino is on track to generate approximately $90 million in EBITDAR in 2024.

Risks

• Competitive pressures in the Las Vegas Locals market, particularly from aggressive promotional activities.
• Weather impacts on business operations, such as the hot summer in Las Vegas affecting customer behavior.
• Regulatory uncertainties for new projects, including the development in Norfolk, Virginia.
• Election impacts on consumer behavior, potentially affecting visitation to properties.

Question and Answer

Q: Hi, good afternoon everyone. Thank you for taking my questions. Josh, Keith, if we could start with maybe just the Midwest and South...

A: Yes, Shaun, I think you largely have the gist of it. It is -- when you look at -- let me talk about this quarter first, in terms of the third quarter this year, if we exclude Treasure Chest, our business pretty much performed on a stable basis year-over-year. And when you look at fourth quarter because we don't have the benefits of the reduced expenses from last year, that benefit is largely offset by the addition of Treasure Chest growth. So you can kind of see from the third quarter without treasure chest, West and South was essentially even year-over-year and then we'll offset the benefit of lower expenses that we benefited from in the fourth quarter as a result of the contribution and that will give you the order of magnitude.

Q: Hi, Josh. Hi, Keith. Thank you for the color. Just quickly on the Midwest and South. Obviously, Louisiana is a key element of your story. Josh, could you perhaps maybe talk about -- I understand the Treasure Trust bump in the quarter and the success that properties had. But just overall, if you look at your Midwest and South region margins outside of Louisiana, how they looked in the period? And how much is Louisiana contributing to the outperformance in the quarter?

A: Yes. So basically, if you remove Treasure Chest, margins actually improved in the remainder part of our business. Treasure Chest remember, is opened in June and is the performance has been ramping up, but we're kind of managing through the expenses of a startup organization. So that's what's really kind of contributing to the results for the Midwest and South in terms of the margins overall. So once again, if you exclude Treasure Chest, the margins for the rest of our business would actually have improved slightly.

Q: Afternoon everyone. Thanks for taking my questions. I wanted to just go back to Norfolk for a minute. Having sort of been down there -- there is, right, I think, Keith, you touched on it, a meaningful property that separated by a bit of a body of water, but relatively close by. Can you just talk about the expected or anticipated tax structure or puts and takes that give you some of the comfort that you expressed and how well that property is expected to do?

A: I think it can probably sum it up in two comments. 1.8 million residents in the area and one, maybe two other casinos, casino in Portsmouth, one being developed in St. Petersburg, St. Petersburg being an hour plus away. And if you think about the Las Vegas Locals market, where we have 2-plus million residents, and we have a heck of a lot more than three casinos. So that gives me pretty high confidence that this is going to be successful.