Boyd Boosted by Buoyant Results, Stock Soars

Posted on: July 28, 2020, 04:12h. 

Last updated on: July 29, 2020, 08:14h.

Todd Shriber @etfgodfather Read More

Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Shares of Boyd Gaming (NYSE:BYD) surged more than five percent in Tuesday’s after-hours session, after the Orleans owner reported second-quarter results that easily topped Wall Street expectations.

The Aliante operator said it lost 96 cents a share on revenue of $209.68 million during the April through June time frame. Analysts expected a loss of $1.45 a share on turnover of $199.61 million. While those results are far cries from the year earlier period — in which Boyd earned 43 cents on revenue of $846.1 million — the operator issued what is one of the better set of numbers to this point in gaming industry earnings season, confirming it’s experiencing some reopening tailwinds.

And since reopening began, we are off to an excellent start,” said Boyd CEO Keith Smith in a statement. “On a comparable basis at our reopened properties, we achieved company-wide earnings before interest, taxes, depreciation, amortization, and restructuring or rent costs (EBITDAR) growth, and significant margin improvement.”

Boyd runs 29 casinos in 10 states, including a dozen in its home market of Las Vegas.

Confirming Regional Thesis

With 12 Las Vegas venues, Boyd is clearly exposed to demand trends in Sin City. But the company’s footprint there is downtown, not on the more economically sensitive Strip.

Additionally, Boyd is viewed by the analyst and investment communities as a regional operator, the segment of the gaming industry being favored in the current environment due to companies’ lack of dependence on destination markets.

While overall visitation and revenues are down, spend per visit is robust, and we have successfully streamlined operating and marketing expenses to drive margin gains of more than 1,000 basis points in both the Midwest & South and Las Vegas Locals segments,” said Smith of Boyd’s performance since reopenings commenced in mid-May.

The company runs a combined seven casinos in Louisiana and Mississippi, which have been among the better-performing regions since gaming properties started coming back online following the COVID-19 shutdown.

Smith said Boyd venues in the Midwest and South notched double-digit EBITDAR gains in the reopening phase, and that July trends are looking strong. That could be supportive of decent third-quarter results.

Mixture of News

Between May 20 and July 1, 26 of Boyd’s 29 gaming properties, including nine in Sin City, reopened. As of today, the Eastside Cannery, Eldorado, and Main Street Station remain closed to the public. A timeline for when those casinos will reopen wasn’t mentioned.

With gaming properties operating at limited capacity throughout the US, Boyd previously said 25 percent to 60 percent of the company’s workforce could be laid off. As many as 10,300 workers could be affected by those reductions.

As of June 30, Boyd had $1.31 billion in cash on hand and debt of $4.98 billion. A significant portion of those liabilities come by way of $600 million in corporate bonds the company sold in May, and $670 million it drew on a credit revolver in March.