Quieting suggestions of any downturn in the economy being felt in Las Vegas’ neighborhood casinos and across the country, Boyd Gaming said play from its core players continued to grow on a company-wide basis during the first quarter, while retail play was even year-over-year.
“We’ve not seen any meaningful shift in consumer behavior or spending patterns thus far in the second quarter through the first three weeks in April,” Boyd Gaming CEO Keith Smith said during Thursday’s earnings call. “We see our core customers continuing to grow and continue to show up and participate. That’s a strength since we came out of COVID. The retail customer performs on a consistent basis, and we feel very good about the direction.”
In Las Vegas, revenues in the locals’ segment were nearly even with the prior year, while EBITDAR was down less than 4%, primarily attributable to the Orleans west of the Strip. While that property is impacted by competitive pressures, Smith said year-over-year declines in revenue and EBITDAR narrowed during the quarter.
Downtown Las Vegas saw revenue and EBITDAR and growth during the first quarter and Smith said there were encouraging customer trends, with growth both in play from core and retail customers, solid visitation from Hawaii, and healthy pedestrian traffic along Fremont Street.
While downtown did well, that won’t continue; the first quarter of 2024 was impacted by higher air fares during the Super Bowl that discouraged visitation, Smith said.
“We remain confident in the future of our Southern Nevada operations,” Smith said. “The long-term fundamentals of the southern Nevada economy remain strong with consistent growth in the local population, employment, and tourism.”
In the Midwest and South segment, revenue and EBITDAR grew during the first quarter and margins were even with the prior year. Smith said they achieved this performance despite a 28% increase in weather-impacted days compared a year ago. Core customer play grew, while retail play was even.
“As we move past the impacts of weather, trends in late March and April were consistent with the last several quarters and similar to what we saw in our two Nevada segments,” Smith said.
The online segment grew EBITDAR by nearly 14% year-over-year from its market-access agreements and strong growth from Boyd Interactive. It also has a 5% interest in FanDuel.
“Our revenue and EBITDAR growth in the first quarter reflected the strength of our diversified business, resiliency of our customer base and appeal of our properties,” Smith said. “We are further enhancing the competitiveness of our amenities, as we refresh and update our hotels at the IP Casino Resort, Valley Forge Casino Resort, and the Orleans. We’re also continuing our property-wide renovation of the Suncoast (in Summerlin).”
During the first quarter, Boyd repurchased $328 milion of stock and paid $15 million in dividends and Smith said they remain committed to $100 million per quarter of share repurchase. But with the current economic uncertainty, Boyd will be “much more conservative in buybacks above that level as we balance our capital-expenditure program and maintain a strong balance sheet with returning capital to our shareholders.”
In a note to investors, Truist Securities Barry Jonas said Boyd posted a 3% first quarter beat with all segments and that Truist continues to favor it as a buy for shareholders for its growth opportunities, capital returns, FanDuel stake, and real estate holdings.
Management spent $127 million of capex in the first quarter and continues to expect a total 2025 spend of $600 million to $650 million. Boyd has taken steps to mitigate the potential impact of tariffs and has worked to identify any capital projects that can be deferred if needed, Jonas said.
“Given Churchill Downs opted to delay Derby construction projects this morning due to tariff noise, we note Boyd stated it was comfortable with its existing budgets for ongoing builds,” Jonas said. “Management stated the company has flexibility in terms of timing, purchasing, and has pre-purchased materials in some instances to try to avoid the tariff risk. We believe this pre-purchasing strategy also extends to slot machines and some other maintenance capex purchases.”
