Aided by a boost in the Las Vegas economy and tourism, Boyd Gaming set a record for revenue and adjusted earnings during the fourth quarter and 2022 as a whole, setting the stage for strong earning reports to come in February from Strip and other operators.
For all of 2022, Boyd Gaming reported revenue of $3.56 billion, compared to $3.37 billion for 2021. Net income was $639.4 million, or $5.87 per share, compared to net income of $463.8 million, or $4.07 per share, for 2021.
Total adjusted EBITDAR for 2022 was $1.39 billion versus $1.37 billion for 2021. Full-year 2022 adjusted earnings were $662.0 million, or $6.07 per share, compared to adjusted earnings of $584.2 million, or $5.12 per share, for 2021.
“We began 2022 with the ambitious goal of surpassing 2021’s record results. One year later, we have clearly met that challenge as we sustained the operating momentum we built throughout 2021,” Boyd President and CEO Keith Smith said during Thursday’s earnings call to Wall Street analysts. “Looking ahead, 2023 has gotten off to a good start in our locals’ segment, with January performing well. We’ve seen no meaningful changes in our locals’ business in the early part of 2023.”
Smith said the Las Vegas locals segment posted record fourth-quarter revenue and EBITDAR, with operating margins exceeding 52%. Growth in the locals market was driven by destination business, non-gaming operations, and continued strength in play from core customers.
Growth at the company’s locals’ properties was strongest among out-of-town customers, as Boyd benefited from increased tourism across the Las Vegas valley, Smith said. Play from core customers remained healthy, but was offset by declines in retail play.
“We’re clearly benefiting from a strong Las Vegas economy, as travel to southern Nevada continues to increase,” Smith said. “In 2022, nearly 39 million people visited southern Nevada, up more than 20% from the prior year, and airport passenger counts reached all-time record levels. Convention business continued to recover as well, with convention and meeting attendance more than double 2021 levels. And with more than 5,000 hotel rooms in the southern Nevada market, our company is well-positioned to capitalize on these growth trends.”
Boyd’s downtown Las Vegas business also achieved a fourth-quarter EBITDAR record, as visitation grew throughout the downtown market and volume from Hawaiian customers exceeded pre-pandemic levels, Smith said.
“While 2022 was another record performance, we did experience headwinds at times during the year, and that continued in the fourth quarter with some year-over-year softness in our Midwest and South markets,” Smith said. “However, the softness in the Midwest and South was more than offset by strong performances from our two Nevada segments, growing contributions from online gaming and management fees from Sky River Casino (near Sacramento).”
During the quarter, Boyd earned $21 million in fees from its Sky River Casino management contract, including a one-time development fee of $5 million. This was Sky River’s first full quarter of operation following its opening last August.
Smith said Boyd’s partnership with FanDuel continues to deliver “impressive results.” Boyd generated about $17 million in EBITDAR from online gaming during the fourth quarter, up more than 100% over the prior year by benefitting from a strong football season, new FanDuel operations in Louisiana and Kansas, and contributions from Pala Interactive, which Boyd acquired on November 1.
The fourth-quarter earnings report prompted positive reports from analysts.
John Decree with CBRE upgraded Boyd to a buy rating, saying the fourth-quarter results reaffirm the strength of Las Vegas. While the threat of a potential recession will keep estimates conservative, Decree said Boyd was likely too bearish in their 2023 outlook.
“While we still expect some economic impact on the consumer later this year, Boyd should be able to offset most of this with the accelerating recovery of visitation and group business in Las Vegas, as well as from increasing EBITDA contribution from both Sky River and online gaming, both of which are exceeding our original forecasts,” Decree said. “Even with some conservatism in our new estimates, valuation remains accommodating for new buyers of the stock.”
Barry Jonas with Truist Securities said Boyd beat their estimates and he continues to recommend a buy rating. He said the report is a positive for Red Rock Resorts’ upcoming earnings call on Feb. 7.
Carlo Santatelli with Deutsche Bank said despite some concerns about regional earnings from Penn National and Caesars Entertainment’s pre-announcement on Jan. 23, he said Boyd delivered better-than-expected results and reaffirmed a buy rating.
“Though the Midwest and South raise some questions, we think the continued strength in Las Vegas and the good enough results in the Midwest and South, even after adjusting for the favorable one-timer, should carry trading in the near term,” Santarelli said.
There was also a positive report from Joseph Greff at J.P. Morgan and reaffirmed an overweight rating.
David Katz with Jefferies Equities Research said, “The better-than-expected revenue performance and margin durability, which could continue, should lift the shares marginally higher.”
He added that while Boyd could outperform peers, there’s economic uncertainty and that the company has exposure to regional markets. He called for a measured stance on shares as being prudent and reiterated a hold rating.
