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Online growth softens blow of land-based decline at Boyd in Q1

| By Robert Fletcher
Boyd Gaming posted a year-on-year drop in revenue across its three core land-based casino segments in Q1, although growth within its online business helped offset this decline and limit a decline in total revenue to just 0.4%.
Boyd Gaming

Revenue for the three months to 31 March amounted to €960.5m (£768.4m/€895.8m). This was only marginally lower than the $964.0m posted by Boyd in Q1 2023.

This year, revenue was lower in all three land-based segments: Las Vegas Locals, Downtown Las Vegas and Midwest and South. The sharpest decline was noted within the Las Vegas Locals, with revenue down 6.1% year-on-year.

Commenting on the decline, CEO and president Keith Smith notes Las Vegas Locals results were being compared to a record Q1 in 2023. Smith also referenced “increased competitive pressures” in the market, namely the Durango Casino & Resort that opened in December.

As for a decline within the Midwest and South business, Boyd’s primary source of revenue, Smith put this down to poor weather in the early part of Q1. Several extreme winter storms swept the US during January, impacting land-based casino visits in several markets.

While these declines will come as a blow to Boyd, Smith remains upbeat about prospects for the rest of the year.

“Beyond these challenges, there were encouraging trends during Q1,” Smith said. “Both in Nevada and across the Midwest and South, play from our core customers improved as we moved through the quarter.”

Relief for Boyd as online business continues to grow

There is more reason for optimism at Boyd in terms of its online business. Here, it reported double-digit revenue growth, while EBITDAR for the segment amounted to $20.5m, in line with the previous year.

Paying tribute to this growth, Smith also noted the impact of Boyd’s 5.0% holding in FanDuel Group. He said that FanDuel’s ongoing growth and market leadership across several states is benefitting Boyd. 

“We are pleased with our online segment’s strong start to the year,” Smith said. “In terms of EBITDAR, the segment matched last year’s exceptional results. This is a tribute to FanDuel’s industry-leading position in online sports betting across the country.

“In addition to these financial contributions, we also continue to benefit from our 5% equity interest in FanDuel. This investment is growing in value with the success of FanDuel across the country and it remains a valuable strategic and financial asset for our company.”

Breaking down Q1 revenue

Taking a closer look at Boyd’s performance during Q1, gaming generated the most revenue at $634.1m. This, however, was 4.6% lower than last year due to declines within the land-based businesses.

Food and beverage revenue remained steady at $72.6m while room revenue online dipped slightly to $48.9m. Management fees and other revenues were relatively level at $22.2m and $36.4m, respectively.

However, it was online that saved the day, with revenue up 19.0% year-on-year to $146.2m. This almost entirely offset the decline from Boyd’s land-based businesses during Q1.

In terms of land-based casino performance, Midwest and South is still by far the primary money-maker for Boyd. For Q1, revenue amounted to $500.8m, down 2.2% from $512.2m in the previous year.

Las Vegas Locals revenue dipped 6.1% to $225.6m, while Downtown Las Vegas revenue also fell 5.5% to $53.5m. Boyd also noted that managed and other revenue increased by 7.2% to $34.4m in Q1.

Higher spending hits bottom line at Boyd

Turning to costs, total operating expenses in quarter hit $741.1m, up 9.1% from $679.1m in the previous year. One of the main increases came within the online business, where costs were 23.0% higher at $125.5m. In contrast, land-based operational costs were either level or lower.

Boyd also noted an additional $41.9m in finance-related expenses. As such, it was left with a pre-tax profit of $177.5m, down 31.5% from the same point in 2023.

The group paid $41.0m in tax, resulting in a net profit of $136.5m for Q1, a drop of 31.7% from last year’s $199.7m. In addition, adjusted EBITDAR fell 10.0% to $330.5m and adjusted EBITDA – minus master lease rent expense – slipped 10.9% to $303.3m.

“In summary, while this was a challenging quarter, there were many encouraging trends in the business, including continued growth in play from our core customers,” Smith said. “We remain diligently focused on our disciplined marketing and operating strategies and our commitment to operating efficiently.

“Looking ahead, we remain confident in our ability to successfully navigate the current environment and deliver value to our shareholders.”

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