Boyd Gaming executives said Tuesday they’re expecting “continued upside” in the gaming industry into 2022. At the same time, its board of directors announced a $300 million stock repurchase amid growing confidence as the pandemic fades.
Boyd said during a third-quarter earnings call that continued growth in visitation and spending among its core customers, a strategy on which it has focused, combined with a more efficient operating model, resulted in a third-quarter companywide revenue record, adjusted earnings growth of more than 42%, and a nearly 400-basis point improvement in operating margins. Companywide, adjusted margins after corporate expenses were 40.4% in the third quarter, increasing from 36.6% in third quarter 2020.
Among properties that serve Las Vegas locals, revenues grew 35% over 2020 and adjusted earnings grew by almost 60%. Downtown Las Vegas posted record third-quarter adjusted earnings on margins of 31%. That’s up double digits over downtown’s record third quarter in 2019.
In the Midwest and South, Boyd set new third-quarter records for revenue and adjusted earnings, with earnings growing 22% over 2020 and 42% compared to 2019. Some 11 of 17 regional properties set new records for adjusted earnings for the third quarter. Of the 26 properties open nationwide, 21 grew adjusted earnings by double digits over 2020 and 18 set new third-quarter records.
As the pandemic recedes, restrictions are lifted, and additional guests return to its properties nationwide, Boyd executives said they were confident in continued revenue and earnings growth throughout its business.
“We believe there are still a number of revenue opportunities for us as we move into 2022,” said Keith Smith, president and CEO of Boyd Gaming. “As the labor market recovers and we’re able to rent all of our hotel rooms and open more of our amenities, we believe there are more revenue opportunities. As COVID restrictions are lifted — they’re lifting the mask mandate in Louisiana (Wednesday) and here in Nevada, we still have a mask mandate and hopefully by mid-November that will run its course — we still have the opportunity to grow the business across the U.S. Out-of-town travel will continue to grow here in Nevada. Meeting and convention business will continue to grow in the U.S.”
Boyd will be increasing expenses by adding labor over time and Smith said some marketing spending “will come back into the system.” The Boyd team is doing a “great job in dealing with inflationary pressures, whether it’s the cost of goods or wage inflation, and that hasn’t affected the margins,” Smith said.
Josh Hirsberg, executive vice president and chief financial officer, said the level of business in 2021 is sustainable because of positive trends among loyalty card customers and unrated ones alike.
Smith said customers 55 and older and 65 and older continued to grow in the third quarter, including their core customers and especially those on the high end.
“We expect those trends to underlie our business as we go into 2022 with the added benefits,” Hirsberg said.
Smith said many hotels have been operating below their capacity due to a tight labor market. That has prevented them from accommodating rated customers with established gaming history. When more hotel rooms come online as the labor market normalizes, that will drive gaming revenue growth, he said.
“In downtown Las Vegas, we anticipate continued growth as tourism throughout the city recovers and Hawaiian visitation improves,” Smith said. “We also have opportunities for future growth in our midweek business and meeting and convention business. Overall, we expect to see further recovery in visitation throughout our portfolio as restrictions are lifted, COVID numbers improve, and travel resumes.”
Smith said Boyd is positioned for gains in the digital-gaming landscape. Online gaming is a strategic growth opportunity with operations across 10 states and a strong loyalty program.
“Our igaming operations are off to a good start in both Pennsylvania and New Jersey where our Stardust brand and online casinos have delivered strong results since launching in April,” Smith said.
Boyd’s partnership with FanDuel continues to grow, Smith added. The current focus is on Louisiana, where they’re preparing to launch sports betting at their five properties by the end of 2021, pending regulatory approval.
“Once live, this will expand our partnership with FanDuel to six of our nine regional states,” Smith said. “In all, we expect our digital operations, including sports, casino, and social casino, will generate more than $20 million in (adjusted earnings) this calendar year. Digital is a profitable business for us today and will be an increasingly important part of our overall strategy in the years ahead, generating incremental revenue and (adjusted earnings) for our company, expanding our customer base, and importantly, building loyalty among our guests by providing another opportunity to engage with them.”
Smith said they continue to benefit from their 5% equity partnership in FanDuel as it expands across the country and becomes one of the leading online sports and casino operators.
“FanDuel has launched new sports betting operations in Arizona and Connecticut and expects to go live in Maryland, Washington state, and Wyoming by the end of the year,” Smith said. “It will have sports-betting operations in 15 states by year end.”
Smith said the casino project with the Wilton Rancheria Tribe in Northern California remains on time and on budget. They are on track to open Sky River Casino early in the fourth quarter of 2022.
Boyd continues to make progress on development plans for a land-based casino at Treasure Chest in Louisiana, with expanded gaming space and significantly upgraded non-gaming amenities.
“Treasure Chest has been a strong performer for years and this project will allow us to further enhance a property that has already produced strong results,” Smith said.
The company announced that its Boyd Pay cashless technology, which is live at 11 properties in four states, has been expanded from slots to tables and non-gaming amenities. In the next several weeks, it will be expanded to the majority of Boyd’s restaurants in Las Vegas.
“We recently launched a field trial for table games in Nevada, with Pennsylvania soon to follow,” Smith said. “We expect Boyd Pay will become available at every Boyd Gaming property next year, pending regulatory approvals.”
