Over a span of six days in March, Boyd Gaming closed its 29-property portfolio in 10 states and subsequently changed the financial direction of the Las Vegas-based regional casino operator for at least the rest of 2020, and possibly into next year.
At the time, Boyd was heading toward healthy first-quarter results after two months.
“Then came March, and the COVID-19 outbreak transformed our business and the communities we operate in,” Boyd Gaming CEO Keith Smith said Tuesday on the company’s quarterly conference call, recalling the days in which efforts to slow the spread of the coronavirus pandemic led to a nationwide shutdown of the casino industry.
Boyd furloughed most of its 25,000-person workforce, management took pay cuts, and the company drew down $670 million of its credit line to give a total of $831.2 million in liquidity to weather the spending of more than $3 million a day to cover costs.
Now, Smith said Boyd is focused on reopening its casinos, although it is uncertain what the restart will entail. In several states where Boyd has casinos, portions of the economy are beginning to reopen slowly; casinos, so far, have not been among the businesses discussed.
“We do not know when we will be permitted to resume operations and bring our team members back to work,” Smith said. “It is likely that each of our 10 states will reopen on a different timeline, each with their own specific health and safety guidelines.”
In an interview following the conference call, Smith said he was hopeful the reopening process could begin at the end of May in some states and the beginning of June in others.
“We are currently working with state and local officials across the country to gain a better understanding of when we will be able to re-open, and what re-openings might look like,” Smith said.
Boyd Gaming CEO Keith Smith
Bad March
On March 12, Boyd was the first company in the casino industry to experience a government-ordered shutdown when the pandemic forced Pennsylvania governor Tom Wolf to order the closure of businesses in four suburban Philadelphia counties, including Montgomery County, the home of the company’s Valley Forge Casino.
A day later, Illinois gaming regulators closed the state’s riverboat casino market, including Boyd’s Par-A-Dice Casino in East Peoria.
Prior to Nevada’s casino shut down on March 18, Boyd was already implementing social distancing protocols, such as increased space between slot machines and fewer seats at gaming tables and inside restaurants. Smith said the company is preparing for similar rules when the casinos are allowed to begin operations.
“It will look different when we reopen and we will look different 60 days after,” Smith said. “We just have to be prepared.”
While he said the goal is to open the company’s regional properties when allowed, Nevada will be different. He expects Boyd will reopen all its locals’ properties at the same time because they all serve “distinct customer bases.”
As for the company’s three downtown Las Vegas properties, which cater heavily to a Hawaiian audience, the air travel from the islands could dictate the timeline. Also, the Fremont Street Experience will have to limit crowds, which could slow the opening.
‘I have not spoken with the mayor’
Smith said he had not spoken to Las Vegas Mayor Carolyn Goodman since her much-panned television interview last week with CNN’s Anderson Cooper, in which she called for casinos and other nonessential businesses to reopen and suggested the city could serve as a test case to measure the impact during the coronavirus pandemic.
“I have not spoken with the mayor about her comments, but I think (Nevada Governor Steve Sisolak’s) approach has been the appropriate approach,” Smith said. “He shut down early to stop the spread and now he needs to lay out a game plan for the community on how we move forward. I think he’s going to do that.”
Boyd’s net revenues for the quarter that ended March 31 fell 17.7% to $680.5 million, reflecting the impact of the casino closures. Revenues fell almost 19% in the Las Vegas locals market, 14.1% in downtown, and almost 18% in the Midwest and South.
Companywide cash flow fell 35.2% to $144.4 million. The net loss of $18.3 million, or 16 cents a share, was a 140.3% decline.
Shares of Boyd closed at $16.87 on the New York Stock Exchange Tuesday, up 43 cents or 2.62%. However, the shares declined 5.75% in after-hours trading.
“At first, these closures were meant to be short-lived,” Smith said. “But as the full extent of the crisis became apparent, stay-at-home orders were extended across the country.”
Smith said in an interview Boyd has developed reopening plans for its casinos, which stretch from Nevada and across the South and Midwest, but the company isn’t ready to share them publicly.
He said customers, however, will be ready to return, even if social distancing limits access to the properties, reduces gaming capacity, and lowers restaurant seating.
“Initially, we’re going to see fewer people in the buildings,” Smith said. “People will be looking for an escape and we hope we’ll be a part of that escape.”
Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at hstutz@cdcgaming.com. Follow @howardstutz on Twitter.
