By tightening operating and marketing costs while managing a varied casino portfolio under COVID-19 restrictions, Boyd Gaming was able to show positive cash flow during the summer months.
CEO Keith Smith said some of the operational changes Boyd instituted are expected to remain in place for the long term.
“The world had changed, and we had to change with it,” Smith said Monday during the company’s third quarter conference call. “We have established a more efficient and more focused business model over these past several months, and we are determined to sustain higher margins going forward. Today is our new normal.”
During the quarter that ended Sept. 30, Boyd’s overall revenues overall fell 20.4% to $652.2 million.
The steepest drop was among Boyd’s three downtown Las Vegas properties, only two of which – Fremont and California – are open. The company’s revenues fell 71.1% in the market.
Boyd’s locals Las Vegas business was down 19.8%, while its regional portfolio saw revenues dip a combined 15%.
But in all three divisions, cash flow increased in the quarter, a jump of 11.9% to $259.9 million.
“By effectively yielding our casino floors and amenities while implementing new efficiencies throughout our business, we greatly enhanced our operating performance in a lower-revenue environment,” Smith said in a statement.
Still, Boyd’s net income in the quarter fell 3.3% to $38.1 million.
Smith said the downtown business will bounce back as travel restrictions from Hawaii are eased. He said the market was impacted by “a near-total shutdown” in Hawaiian travel. In an interview following the conference call, Smith said Hawaiian Airlines had resumed service between Las Vegas and Honolulu and other airlines were adding flights beginning in November.
“We’re starting to see some positive signs,” he said.
Meanwhile, Boyd saw other potential growth areas coming alive in the quarter. The company, which owns 5% of sports betting operator FanDuel Group, launched mobile sports betting platforms in Illinois and Iowa through the partnership, which expanded the company’s digital reach to more than 30 million consumers in five states.
“We are proud of our team’s ability to successfully execute our strategy and are committed to sustaining a more efficient and profitable operating model into the future,” Smith said.
Boyd, which operates 29 gaming properties in 19 states, still has three of its Las Vegas-area casinos closed – Main Street Station downtown, the Eastside Cannery along the Boulder Highway, and the small Eldorado in Henderson. Smith said he didn’t expect any of the three properties to reopen until sometime in 2021.
Analysts asked about any potential reclosures or rollbacks by states that are seeing spikes in their coronavirus cases. Smith said Illinois is rolling back gaming operations in different regions, but the company’s Par-A-Dice riverboat casino in East Peoria hasn’t been affected.
“We can only control what we do and how we operate,” Smith said. He added that Boyd had cash on hand of $506 million and capacity on its revolver of $1 billion.
Boyd had a total debt of $4.04 billion at the end of the quarter.
At that Blue Chip Casino in Northern Indiana, Boyd launched a mobile wallet program developed by Aristocrat Technologies that saw more than 200 signups in just the first few days “without any marketing or promotions,” Smith said.
The digital wallet is currently just for slot machine players, allowing them to avoid the need to handle cash at the machines or to redeem winning tickets. Smith said pending regulatory approval, it will be launched in other markets, will eventually include table games, and will be connected to Boyd’s player loyalty program.
Smith also said that Boyd Gaming’s partnership with the Wilton Rancheria Tribe in Northern California remains on schedule. The company is putting the final pieces in place to secure project financing in the next several months for a hotel-casino project with the tribe near Sacramento.
Smith said the development would open in the second half of 2022.
Shares of Boyd, traded on the New York Stock Exchange, fell 64 cents or 1.84% to close at $34.06. Following earnings, Boyd’s shares were down less than 1% in after hours trading.
Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at hstutz@cdcgaming.com. Follow @howardstutz on Twitter.
