Boyd Gaming reported the second-best quarter in its history in Q2, driven by strong performances across all operating segments, while CEO Keith Smith said there was “no compelling reason” to expect a downturn in business despite macroeconomic factors.
The operator noted that year-on-year comparisons with Q2 of 2021 were “challenging” due to benefits received from government stimulus and the lifting of novel coronavirus (Covid-19) restrictions in the same period last year.
However, it added that it was able to achieve year-on-year growth across a number of core metrics due to a continued focus on core customers and sustained efficiencies throughout the business.
“Our operating trends remain strong, as play from core customer segments grew both year-over-year and sequentially from the first quarter of 2022,” Boyd’s president and chief executive Keith Smith said. “We also improved companywide operating margins from the first quarter despite inflationary pressures.”
Total revenue in the three months through to 30 June was $894.5m, a marginal increase from $893.6m in Q2 of 2021. This was despite a 5.9% drop in gaming revenue, with Boyd reporting growth across rooms, food and beverage and other areas.
Boyd’s Midwest and South casinos drew $604.1m in revenue, with revenue from Las Vegas local casinos amounting to $236.5m and Downtown Las Vegas operations $53.9m.
Total operating costs for the quarter edged up 3.5% year-on-year to $649.4m, but pre-tax profit was up 29.3% year-on-year at $188.8m. This is due to their financial costs coming down to $56.2m compared to $120.4m in the previous year, where costs had been impacted by charges related to early extinguishments of debt.
Boyd paid $42.1m in income tax, which left it with a net profit of $146.8m for the quarter, an increase of 29.1% on Q2 of 2021.
In addition, quarterly adjusted earnings before interest, tax, depreciation, amortisation and rent costs (EBITDAR) was $353.9m, an 8.2% drop on the record $385.4m posted in the same period last year.
Turning to its first-half performance, total revenue was 12.5% higher at $1.8bn, with Boyd reporting year-on-year growth across gaming, rooms, food and beverage and other areas.
Midwest and South casinos were the main sources of revenue, generating $1.19bn during the quarter, while revenue from Las Vegas local casinos reached $464.0m and Downtown Las Vegas revenue was $103.4m.
Group operating costs climbed 6.2% to $1.26bn, but financial and other costs were down by almost half to $96.5m. Pre-tax profit was 42.6% higher at $399.6m, while after paying $89.9m in tax, net profit was $309.7m, up 43.5% year-on-year.
Smith also noted that adjusted EBITDAR for the half was 2.2% higher than the year before at $692.7m.
“Overall, we are encouraged by the continued strength of our business and remain confident in our strategy and our ability to navigate today’s uncertain economic environment,” Smith said.
Speaking on an earnings call after the results were published, Smith also spoke about Boyd’s pending acquisition of Pala Interactive, the North America-facing igaming software and services supplier that is majority-owned by the Pala Band of Mission Indians.
Boyd agreed to acquire the business in March for $170.0m and hoped to complete the deal by the first quarter of next year. Smith said this remains on track, with the aim of finalising the acquisition by 1 January 2023, but added that the product offering may not be ready until the middle of the year.
“Our online gaming strategy is built upon leveraging our geographic distribution, loyalty programme and customer database to build a profitable regional online casino business,” Smith said. “Pala will provide us the full suite of products, technology and expertise we need to execute that strategy without the need for additional significant investments or acquisitions.
“If we’re able to close and we get all the regulatory approvals around the first of the year, I think by about middle of 2023, we should have a product where we’re able to offer it to our customers.”
Looking further ahead and at the wider business, Smith acknowledged the current economic issues impacting the industry but said there is “no compelling reason” to believe there will be a significant change in the direction of its business in the near term.
“Our operations remain strong and stable, our management teams are focused and we remain confident in our strategy, our operating model and our ability to navigate these uncertain times,” he said.