Boyd Gaming Q121
The top line
The Las Vegas to regional casino operator boasted of all-time record results as the company looks to exit the extraordinary Covid period firing on all cylinders.
Q1 revenue rose 10.7% to $753.3m, adjusted EBITDAR rose 91.5% to $311.2m. Revenues were down 8.9% on 2019 but EBITDAR was up on 2019 by 26.7%.
A Deutsche Bank note was titled ‘There are beats and then there are bludgeons; this is the latter’ as the analyst team pointed out Boyd had bettered earnings estimates by 20%.
Exceptional performance: The company said the performance was driven by the general economic recovery from the pandemic and increasing visitation, particularly among the returning older demographic. On the earnings call, CEO Keith White hailed an all-time EBITDAR record. “Consumers are clearly growing more comfortable in returning to their pre-pandemic activities,” he said.
Getting back to normal: In part, Boyd said it had benefited from the lack of other entertainment options, and the company expects the rate of play to normalise as the situation changes. The upside from this general societal return to normal will be an expected increase in the destination business.
Impossible margin: One huge factor in the record quarter is the margin performance, up around 1,750 basis points to 41.3%, a factor that Deutsche Bank said was “the story.” Josh Hirsberg, CFO, said Q1 margins were “incredible.” “It is unrealistic to think we will maintain that,” he said. DB said that while margins “should not be construed as the new base line” there were hopes that a margin improvement of around 600bps vs 2019 levels might be achievable.
“Given considerable reductions in labor, more efficient marketing, and refined customer re-investments, as well as the historical performance, relative to select regional peers, we have long believed this type of margin appreciation was achievable.”
Sitting on cash: Given the free cash flow and the high rating of the stock, Hirsberg and White were asked about the potential for getting involved in further M&A. Said White: “Our approach hasn’t changed over the last 12 months. We look at it in a very disciplined way. How we finance, whether it is equity or debt, is a different conversation from whether we should own it.” Hirsberg was more direct:
“Just because we have all this free cash flow, doesn’t mean we are going to spend it all. It all comes back to whether we can generate the return from the investment and if we don’t see it, we’re not going to do it.”
Stardust memories: Online got a mention on the earnings call. As well as the FanDuel partnership (Boyd owns a 5% stake) the company spoke about the launch of the Stardust online operation in Pennsylvania and New Jersey. The company reiterated that it expected the interactive business to deliver $20m+ in EBITDA in 2021.
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