Quarter 1 online growth at Boyd mitigates the impact of land-based decline

In the first quarter of 2018, Boyd Gaming saw a decrease in revenue of 0.4% year-on-year across all three of its primary land-based casino categories. However, the expansion of its online business more than made up for this.

Boyd Gaming's Q2 revenue was €960.5m (£768.4m/€895.8m) for the three months ending 31 March. This came in just short of Boyd's Q1 2023 total of $964.0m.

Less money came in from the three land-based divisions this year: Downtown Las Vegas, Midwest and South, and Las Vegas Locals. Revenue for the Las Vegas Locals fell 6.1% from the previous year, the steepest drop.

Noting that Las Vegas Locals were being compared to a record Q1 in 2023, CEO and president Keith Smith comments on the drop. Smith further brought up "increased competitive pressures" in the sector, specifically mentioning the December opening of the Durango Casino & Resort.

Smith attributed the drop in revenue from Boyd's main market—the Midwest and South—to bad weather in the first quarter. In January, the United States was hit by a series of severe winter storms, which affected land-based casino visitation in various areas.

Although Boyd will be disappointed by these drops, Smith is optimistic about the remaining months of the year.

"Despite these obstacles, positive tendencies emerged in the first quarter," Smith stated. "As the quarter progressed, play from our core customers improved in Nevada as well as across the Midwest and South."

Boyd finds relief as his web business keeps growing
Regarding Boyd's web company, there is additional cause for hope. Here, it recorded a rise in sales of double digits, with the segment's EBITDAR remaining unchanged at $20.5m from the prior year.

Noting the influence of Boyd's 5.0% stake in FanDuel Group, Smith paid homage to this expansion. He claimed that Boyd is reaping the benefits of FanDuel's dominance in the market and its continuous expansion into new states.

Smith expressed satisfaction with the start to the year for their web segment. The segment's EBITDAR results were identical to previous year's outstanding performance. What this means is that FanDuel is rightfully praised for its dominant position in the online sports betting business nationwide.

"Our 5% equity stake in FanDuel also continues to yield benefits on top of these monetary contributions. With FanDuel's national success, this investment is becoming even more beneficial, both financially and strategically, for our organisation.

Deconstructing Q1 revenue
Looking more closely at Boyd's performance in Q1, we see that gaming brought in $634.1m. On the other hand, falling land-based commercial activity resulted in a 4.6% decrease from the previous year.

Online room sales fell marginally to $48.9m, while food and beverage revenue stayed flat at $72.6m. At $22.2m, management fees were basically steady, while other income came in at $36.4m.

Online sales, however, came through in the clutch, increasing by 19.0% year-on-year to $146.2m. This more than made up for the first quarter loss at Boyd's land-based companies.

Midwestern and Southern casinos continue to generate the most revenue for Boyd when it comes to their land-based operations. Revenue for the first quarter came to $500.8m, a 2.2% decrease from $512.2m the prior year.

Downtown Las Vegas saw a 5.5% decline to $53.5m in revenue, and Las Vegas Locals saw a 6.1% decline to $225.6m. Managed and other revenue jumped 7.2% to $34.4m in Q1, according to Boyd.

Boyd sees bottom line impact of increased expenditure
Now let's talk about the numbers: overall operational expenses for the quarter came to $741.1m, a 9.1% increase from $679.1m a year ago. The internet business had a significant increase of 23.0%, with costs reaching $125.5m. On the other hand, operational expenditures related to land were either flat or decreased.

Additional finance-related expenses of $41.9 million were also recorded by Boyd. The result was a pre-tax profit of $177.5 million, a decrease of 31.5% compared to the same period in 2023.

A net profit of $136.5m was generated for Q1, a decrease of 31.7% from $199.7m in Q1 last year, after the group paid $41.0m in taxes. Not only that, adjusted EBITDAR dropped 10.0% to $330.5m, while adjusted EBITDA—after excluding master lease rent expense—fell 10.9% to $303.3m.

"To sum up, although this quarter was difficult, we did see numerous positive trends in the company, such as the ongoing expansion of our core customer base," Smith stated. The efficiency of our operations and the rigour of our marketing and operational strategies continue to be our top priorities.

"We continue to have faith in our capacity to thrive in the present climate and provide value to our shareholders as we look ahead."