Release Date: July 25, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Boyd Gaming Corp (BYD, Financial) delivered a solid performance in the second quarter, with nationwide operations performing in line with expectations.
- The Las Vegas Locals segment saw sequential improvement and market share growth compared to the first quarter.
- The downtown Las Vegas segment delivered strong growth, with visitation recovering from a temporary decline in the first quarter.
- The Midwest and South segment produced steady results, with modest revenue growth and strong performance from the new Treasure Chest casino.
- The online segment achieved healthy revenue and EBITDA growth, with increased expectations for the full year due to the strong partnership with FanDuel.
Negative Points
- The Orleans and Gold Coast properties in the Las Vegas Locals segment continue to face competitive pressures.
- April was particularly soft for the Midwest and South segment, with business levels recovering only in May and June.
- The promotional environment around the Gold Coast and Orleans remains aggressive, impacting performance.
- The fourth quarter will face tough comparisons due to a record fourth quarter downtown last year.
- Operating expenses, including wage growth and property taxes, increased significantly in Q3 of the previous year, affecting year-over-year comparisons.
Q & A Highlights
Q: There's been a lot of rumors about M&A activity in the gaming space, including Boyd Gaming. Can you discuss your current appetite for large-scale M&A versus one-off acquisitions and your comfort level with leverage if you pursue M&A?
A: Historically, our growth has come through M&A, and we have developed expertise in this area. We are always willing to consider opportunities that arise. Financing a transaction would depend on specific circumstances. If we were to leverage up for an acquisition, our long-term target is to maintain leverage below three times.
Q: Can you provide an update on the promotional environment in the Las Vegas locals market, particularly around the Gold Coast and Orleans properties?
A: The promotional environment around the Gold Coast and Orleans remained similar to the first quarter, with continued pressure from private operators. The rest of the market remains rational and stable.
Q: How do you plan to mitigate the impact of competition in the Las Vegas locals market, particularly around the Orleans and Gold Coast?
A: Our strategy is to be patient and not chase unprofitable promotions. We focus on our core customers and maintain strong relationships with them. We believe the current competitive actions are not sustainable long-term.
Q: Can you discuss the impact of the Durango opening on your Las Vegas locals market and whether the previously guided $20 to $25 million impact is still accurate?
A: The $20 to $25 million impact is still intact. The mix has changed, with more impact coming indirectly from the Orleans and Gold Coast.
Q: What are your expectations for EBITDA growth in the Midwest and South segments and the Las Vegas locals market?
A: We expect the Midwest and South segment to remain stable for the rest of the year, with potential growth next year. The Las Vegas locals market will continue to face competitive pressures around the Orleans and Gold Coast, but we are seeing some encouraging trends.
Q: Can you provide more details on the performance of the Treasure Chest casino since its opening?
A: Revenues have nearly doubled since the opening in early June. While we do not expect this level to be sustained indefinitely, we are very pleased with the initial performance and expect it to settle at a strong level.
Q: How do you view the financing environment for potential M&A, and what is your maximum leverage level for transactions?
A: Financing markets are not the primary driver for our M&A decisions. We focus on strategic rationale, free cash flow generation, and valuation. We do not have a set maximum leverage level, as it depends on market conditions and the specifics of the transaction.
Q: Can you provide an update on the Cadence Crossing project and any other potential expansion opportunities?
A: Cadence Crossing is a modest investment with significant expansion potential as the surrounding community grows. We have several other projects in the pipeline, including opportunities to expand existing properties in Las Vegas and other regions.
Q: How do you approach capital allocation, particularly regarding share repurchases and dividends?
A: We are committed to repurchasing $100 million in shares each quarter, with the flexibility to do more if conditions allow. We also maintain a strong balance sheet to support ongoing investments and capital returns to shareholders.
Q: Can you discuss the seasonality trends you expect in the Las Vegas locals market for the rest of the year?
A: We expect normal seasonality trends to continue, similar to what we have seen over the last couple of years. This includes typical seasonal fluctuations in customer activity.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
