Boyd Gaming credits core customer base for strong Q3 performance

Boyd Gaming Pala Interactive
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The year-over-year numbers for Boyd Gaming were relatively flat, but the company is considering that a win given inflation and last year’s record numbers. Boyd President and CEO Keith Smith attributed the results to the strong performance of new and renovated properties, growing spend from the core customer base, and the profitable market access deal the company has with FanDuel Sportsbook and Online Casino.

Looking ahead, the company is also committed to expanding its online casino presence beyond the FanDuel deal and diversify the business via its pending acquisition of Pala Interactive.

Boyd Gaming Q3 earnings key numbers

Here is a look at the top-line numbers:

Revenue: $877.3 million (up 4% YoY)
Net income: $157 million (up 13.6% YoY)
Adjusted EBITDAR: $337.7 million (down 0.9% YoY)
Adjusted earnings: $159 million (up 6.7% YoY)

While EBITDAR was down on the quarter, the company’s EBITDAR for the year so far is still trending just ahead of 2021.

“This quarter was another solid performance by our Company, as we achieved third-quarter EBITDAR that was second only to last year’s record quarterly performance. These results were driven by our continued focus on core customers and sustained efficiencies throughout our business, as our operating model is successfully meeting today’s challenges and delivering consistent results,” said Smith in the earnings release. “Our strong operating performance is producing robust free cash flow, allowing us to return nearly $500 million in capital to our shareholders so far this year. Overall, we are encouraged by the resiliency of our business, and remain confident in our strategy and our ability to deliver consistent results in the current economic environment.”

Core customer base growing, making up for dips elsewhere

On the earnings call Smith and Boyd Treasurer, SVP, and CFO Josh Hirsberg repeatedly reminded listeners that the previous year was a time when economic stimulus checks and other programs were boosting revenue activity, so it should not be treated as a benchmark. Nonetheless, the 2022 quarter continued to bring in customers.

“While there are clearly headwinds in the economy, we have not seen any evidence of meaningful change in our customers’ behavior during the quarter,” said Smith. “Rated guests frequency held steady and play from customers in our database continued to increase. Play from our core customers is the foundation of our success, and this segment in particular continues to grow, increasing 5% during the quarter.”

These core casino customers helped to offset other retail declines across the quarter. Meanwhile, hotel reservations for the coming months are trending ahead of pre-pandemic numbers and food and beverage is on the rise.

“Despite the challenges of the current economic environment, we’re successfully maintaining a disciplined approach to operating our business,” Smith observed.

Unsurprisingly, Las Vegas continued to be a productive sector for the company, but Smith noted a new northern California casino opened in tandem with the Wilton Rancheria tribe which will generate big management fees. Additionally, the company is investing $100 million into its Treasure Island property in Louisiana to take it off the riverboat and onto dry land.

Boyd getting into the B2B online casino business

The company is taking steps in the online realm as well. While the group enjoys a 5% equity ownership in FanDuel in exchange for its market access deal, Boyd has bigger aims when it comes to online gambling. Smith said the $170 million acquisition of Pala Interactive should be done “in the next several weeks.” Then, the in-house Stardust Online Casino brand will move to the Pala platform in the first half of 2023.

“We will also focus on growing Pala’s B2B business through acquiring new B2B customers and enhancing the platform’s products, features, and capabilities, he added. “We have the foundation, successfully building profitable regional online casino operations that leverages our experience, our existing geographic presence, and our proven customer database that will provide us the technology products and management expertise to execute this strategy.”