Boyd Gaming (US:BYD)2019-08-07 20:27Part I. Financial Information Item 1. Financial Statements (Unaudited) This section presents Boyd Gaming Corporation's unaudited condensed consolidated financial statements for the periods ended June 30, 2019, detailing financial position, operations, and cash flows Condensed Consolidated Balance Sheets Total assets increased to $6.71 billion from $5.76 billion at year-end 2018, driven by new operating lease right-of-use assets Condensed Consolidated Balance Sheets (In thousands) | (In thousands) | June 30, 2019 | December 31, 2018 | | :--- | :--- | :--- | | Total Assets | $6,710,452 | $5,756,339 | | Total current assets | $396,793 | $399,751 | | Property and equipment, net | $2,726,554 | $2,716,064 | | Operating lease right-of-use assets | $916,613 | — | | Goodwill, net | $1,102,977 | $1,062,102 | | Total Liabilities | $5,497,737 | $4,610,598 | | Total current liabilities | $530,843 | $469,701 | | Long-term debt, net | $3,882,220 | $3,955,119 | | Operating lease liabilities, net | $850,536 | — | | Total Stockholders' Equity | $1,212,715 | $1,145,741 | Condensed Consolidated Statements of Operations Total revenues increased 37.2% to $846.1 million for the three months and 36.8% to $1.67 billion for the six months ended June 30, 2019, largely due to acquisitions Condensed Consolidated Statements of Operations (In thousands, except per share data) | (In thousands, except per share data) | Three Months Ended June 30, 2019 | Three Months Ended June 30, 2018 | Six Months Ended June 30, 2019 | Six Months Ended June 30, 2018 | | :--- | :--- | :--- | :--- | :--- | | Total revenues | $846,132 | $616,793 | $1,673,420 | $1,222,911 | | Operating income | $126,692 | $96,258 | $244,318 | $191,032 | | Net income | $48,484 | $38,945 | $93,935 | $80,344 | | Diluted net income per common share | $0.43 | $0.34 | $0.83 | $0.70 | Condensed Consolidated Statements of Cash Flows Net cash provided by operating activities increased to $264.3 million for the six months ended June 30, 2019, while investing and financing activities used $154.9 million and $119.5 million, respectively Condensed Consolidated Statements of Cash Flows (In thousands) | (In thousands) | Six Months Ended June 30, 2019 | Six Months Ended June 30, 2018 | | :--- | :--- | :--- | | Net cash provided by operating activities | $264,312 | $217,991 | | Net cash used in investing activities | ($154,948) | ($173,198) | | Net cash provided by (used in) financing activities | ($119,489) | $386,366 | | Change in cash, cash equivalents and restricted cash | ($10,125) | $431,641 | Notes to Condensed Consolidated Financial Statements These notes detail accounting policies, including the adoption of the new lease standard recognizing $926.7 million in right-of-use assets, and cover acquisitions, segment performance, and debt structure - The Company adopted the new Lease Standard (ASU 2016-02) on January 1, 2019, resulting in the recognition of $926.7 million of Right-of-Use (ROU) assets and $921.8 million of lease liabilities on the balance sheet41 - The company operates 29 gaming properties across 10 states, which are aggregated into three reportable segments: Las Vegas Locals, Downtown Las Vegas, and Midwest & South15127 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the 37.2% revenue increase to $846.1 million for Q2 2019, driven by acquisitions, and outlines the company's financial condition, segment performance, and strategic priorities - The company's strategy focuses on four key areas: strengthening the balance sheet, operating efficiently, evaluating acquisition opportunities, and maintaining its brand163164165 Total Revenues, Operating Income, and Net Income (In millions) | (In millions) | Three Months Ended June 30, 2019 | Three Months Ended June 30, 2018 | | :--- | :--- | :--- | | Total revenues | $846.1 | $616.8 | | Operating income | $126.7 | $96.3 | | Net income | $48.5 | $38.9 | - The significant increase in revenues and operating income for the three and six months ended June 30, 2019, is primarily attributed to the acquisitions of Lattner, Valley Forge, and the Pinnacle Properties, which bolstered the Midwest & South segment171172173 Results of Operations by Segment The Midwest & South segment led growth with 67.1% revenue increase to $560.7 million in Q2 2019 due to acquisitions, while other segments showed modest gains Total Revenues and Adjusted EBITDAR by Segment (In millions) | (In millions) | Three Months Ended June 30, 2019 | Three Months Ended June 30, 2018 | | :--- | :--- | :--- | | Total Revenues | | | | Las Vegas Locals | $220.9 | $220.0 | | Downtown Las Vegas | $64.5 | $61.2 | | Midwest & South | $560.7 | $335.6 | | Adjusted EBITDAR | | | | Las Vegas Locals | $71.4 | $70.2 | | Downtown Las Vegas | $15.9 | $13.6 | | Midwest & South | $165.1 | $98.5 | Liquidity and Capital Resources As of June 30, 2019, the company maintained $239.4 million in cash, $574.2 million in credit facility availability, and generated $264.3 million in operating cash flow, ensuring sufficient liquidity - As of June 30, 2019, the company had $574.2 million of remaining contractual availability under its bank credit facility219 - During the six months ended June 30, 2019, the company repurchased 1.1 million shares of its common stock, with an additional $72.8 million remaining authorized for repurchase under the 2018 plan224 - The company declared a quarterly cash dividend of $0.07 per share on June 7, 2019, an increase from the previous $0.06 per share226 Item 3. Quantitative and Qualitative Disclosures about Market Risk The company's primary market risk is interest rate fluctuations, with 42.9% of long-term debt being variable-rate, and no derivative use for speculation - A 100 basis point (1%) change in interest rates would cause the company's annual interest costs to change by approximately $17.0 million, based on debt levels at June 30, 2019243 Item 4. Controls and Procedures Management concluded disclosure controls were effective as of June 30, 2019, following successful remediation of a material weakness in internal control over financial reporting - A material weakness related to the lack of segregation of duties within the general ledger system, identified in Q4 2018, was successfully remediated as of June 30, 2019245247 - Remediation efforts included modifying user role definitions in the general ledger system to eliminate incompatible functions and implementing new controls to review user roles and journal entry processing247248 Part II. Other Information Item 1. Legal Proceedings The company is party to various legal proceedings arising in the ordinary course of business but believes none would have a material adverse effect on its financial position or operations - The company states that pending legal claims are not expected to have a material adverse effect on its financial condition or operations250 Item 1A. Risk Factors There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2018 - No material changes to risk factors were reported for the quarter250 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds During Q2 2019, the company repurchased 245,221 shares for $6.1 million, with $72.8 million remaining authorized under the repurchase program Share Repurchases (Q2 2019) | Period | Total Number of Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | April 1-30, 2019 | — | $— | | May 1-31, 2019 | 135,586 | $25.81 | | June 1-30, 2019 | 109,635 | $23.78 | | Totals | 245,221 | N/A | - As of June 30, 2019, approximately $72.8 million remained available for repurchase under the company's authorized plan253 Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including certifications by the CEO and CFO pursuant to Exchange Act rules and the financial statements formatted in iXBRL