Boyd Gaming CEO Keith Smith has his answer to the acquisition question committed to memory.
Last year, the company acquired five Midwest casinos and an Illinois slot machine route operator. Still, the Las Vegas-based regional gaming giant remains open to other potential deals, as long as they are strategic and fit into the company’s vision.
Boyd Gaming CEO Keith Smith
Smith has said on almost every conference call in the past few years the company would like to own and operate a resort on the Las Vegas Strip, but not just any property.
“We’re not interested in vanity products,” Smith told an analyst Thursday during Boyd’s first quarter conference call. “It has to be the right asset, in the right market, for the right price.”
So, what about Caesars Entertainment? The casino operator has almost 40 properties in 13 states, including nine on the Las Vegas Strip and three in Atlantic City. The company’s largest shareholder, Carl Icahn, said Caesars is on the market for either a buyout or merger.
“We don’t talk specifically about anything, if we’re looking at something or not looking at something,” Smith said in an interview following the conference call. “We’re a very disciplined acquirer.”
However, Smith said there are other markets that would interest the company before Boyd would consider a return to Atlantic City, where it operated and owned 50 percent of the Borgata.
For now, Boyd is content operating its newest properties and integrating the resorts into the company’s portfolio that covers 29 gaming properties in 10 states.
In the quarter than ended March 31, Boyd grew revenues 36.5 percent to $827.3 million. The bulk of the increase was attributable to new resorts operating in the Midwest and South region. Revenues in the market grew 67.4 percent with $223 million in revenue attributed to its latest acquisitions.
Smith told analysts 16 of the 17 properties in the region reported cashflow growth during the quarter, despite weather-related issues.
For the quarter, Boyd’s net income grew 9.8 percent to $45.5 million while earnings per share increased 11 percent to 40 cents per share.
In Las Vegas, the company’s locals market segment grew revenue less than 1 percent to $222.9 million while its downtown casino market saw revenues increase 4.2 percent to $63 million.
In response to an analyst question, Smith said the company’s Gold Coast casino has not lost business to the neighboring Palms, which underwent a $690 million two-year renovation by Red Rock Resorts.
“The Palms product is not attractive to the Gold Coast customer,” Smith said. “There has been no significant impact from that business. We feel good about the Gold Coast.”
However, Smith said Boyd’s three downtown casinos will benefit greatly from the development of the 777-room Circa Resort and Casino by Derek Stevens, who owns the Golden Gate and D Las Vegas.
Smith cautioned that Main Street Station and the California Hotel-Casino, which are adjacent to the Circa site, could experience some disruption during the nearly two-year building process.
“Derek has been a great neighbor and is doing everything he can to mitigate the disruption,” Smith said. “We think this is a tremendous development for downtown.”
Meanwhile, Smith said the company is still evaluating its own plans for expanding downtown. Last year, Boyd received approval from the City of Las Vegas to add a hotel tower expansion at Fremont Hotel and Casino, which now has 447 rooms.
Wall Street had a positive reaction to Boyd’s first quarter performance.
“We expect to see a modestly positive response to Boyd’s earnings report,” said Stifel analyst Steve Wieczynski. “The reported results were slightly better than some investors had feared, and management’s encouraging forward-looking business commentary should put to rest any concerns around the health of the regional gaming consumer.”
SunTrust gaming analyst Barry Jonas said consumer trends remain stable, particularly in the Las Vegas locals market “which continues to benefit from solid economic growth.”
Jonas added the company noted “that excluding weather impacted properties in the Midwest and South, consumer trends felt largely stable and in line with solid levels seen in 2018.”
Shares of Boyd closed at $30.57 on the New York Stock Exchange, down 36 cents or 1.16 percent.
Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at hstutz@cdcgamingreports.com. Follow @howardstutz on Twitter.
