Boyd Gaming Corporation Q3 FY2025 earnings call

Management Statement and Operational Highlights

• Capital Investments: Underway renovations at IP, Orleans, and Suncoast; expanded meeting and convention center at Ameristar St. Charles; Cadence Crossing set to open Q2 2026; design and planning for Illinois gaming facility; $750 million resort development in Norfolk, Virginia.
• Share Repurchases and Dividends: Repurchased $160 million in stock in Q3, total $637 million YTD; plan to maintain $150 million per quarter in share repurchases with recurring dividend.
• Customer Trends: Core customer play continued long-term growth, retail customer play improved; Southern Nevada economy resilient with solid wage growth and diversified economy.

Segment Performance

• Las Vegas Locals: Revenues of $211 million and EBITDAR of $92 million for the quarter. Gaming revenue grew due to strong core and retail customer play, but was offset by destination business decline. Excluding the Orleans, revenues and EBITDAR grew 2% year-over-year, with margins at 47%.
• Downtown Las Vegas: Revenues and EBITDA were in line with prior year, supported by Hawaiian customer play, but offset by soft destination business including lower hotel revenues and pedestrian traffic.
• Midwest and South: Achieved strongest Q3 revenue and EBITDAR in 3 years, with revenues rising 3% to $539 million and EBITDAR growing to $202 million (+2% YoY). Growth was broad-based, including continued gains at Treasure Chest.
• Online: Saw growth from Boyd Interactive and FanDuel transaction, with guidance increased to $60 million in EBITDAR for 2025 and approximately $30 million for 2026.
• Managed Business: Strong performance with growth in management fees from Sky River, with expansion plans including slot machines, parking garage, hotel, and other amenities.

Guidance

• Online segment guidance increased to $60 million EBITDAR for 2025 and $30 million for 2026.
• Total capital expenditures expected to be approximately $600 million for 2025, including ~$250 million in recurring maintenance capital, ~$100 million in hotel renovation maintenance capital, ~$100 million in growth capital, and ~$150 million for Virginia casino development.

Risks

• Weakness in destination business in Las Vegas.
• Cybersecurity incident (no impact on operations, covered by cyber insurance).
• Uncertainty around M&A pipeline and regulatory approvals for new projects.

Question and Answer

Q: Talk about the weakness in destination business in Vegas and if non-destination business will see related weakness.

A: Keith Smith noted core customer play is strong, 90-day hotel bookings have improved though still soft. Josh Hirsberg added the EBITDA decline in Q3 was mostly due to the Orleans.

Q: Thoughts on M&A pipeline.

A: Keith Smith said Boyd has a disciplined M&A strategy, monitors opportunities but no specific deals to report.

Q: Midwest and South segment performance details.

A: Keith Smith said the 17-property portfolio had broad-based strong results, with Treasure Chest continuing to grow post-opening.

Q: Vegas Locals assets CapEx perspective.

A: Keith Smith mentioned renovation at Suncoast is positive, Orleans needs updating, but portfolio is well-positioned.

Q: Returns on internal investments.

A: Josh Hirsberg said generally expects 15%-20% cash-on-cash return, with projects like Treasure Chest and Ameristar St. Charles meeting or exceeding this.

Q: Orleans project disruption impact.

A: Josh Hirsberg said it's early to determine disruption, but management teams have managed Suncoast disruption well.

Q: Promotional environment in Midwest and South.

A: Keith Smith said competitors are more aggressive in marketing, but Boyd remains disciplined with consistent margins.

Q: Suncoast renovation disruption quantification.

A: Keith Smith said it's hard to quantify, but performance is in line with prior year despite disruption.

Q: Sky River expansion impact.

A: Keith Smith said construction is outside the building, no immediate negative impact.

Q: Fourth quarter updates.

A: Josh Hirsberg said Managed & Other will be stable in Q4, with benefits from next year's slot expansion; tax payment from FanDuel stake sale likely in Q1 2026.

Q: Balance sheet and leverage.

A: Josh Hirsberg said leverage is ~1.5x post-FanDuel transaction, plans to gradually tick up with capital plans; Keith Smith said they're thoughtful about leverage positioning.

Q: Hawaii and Downtown performance.

A: Keith Smith said Downtown volumes are down due to lower Las Vegas visitor volumes; Josh Hirsberg explained wage growth and destination business impact on Locals market gap.

Q: Missouri sports betting partnership.

A: Keith Smith said Boyd has 2 properties in Missouri with Fanatics licenses, first relationship, will see how it develops.

Q: Vegas destination market inflection.

A: Keith Smith said 90-day bookings are more positive than 3 months ago, indicating improvement in destination market