Boyd Gaming (BYD) - 2021 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) This section presents the unaudited condensed consolidated financial statements for Boyd Gaming Corporation as of June 30, 2021, and for the three and six months ended June 30, 2021 and 2020, including balance sheets, statements of operations, comprehensive income, changes in stockholders' equity, and cash flows, along with detailed notes explaining the basis of presentation and significant accounting policies Condensed Consolidated Balance Sheets As of June 30, 2021, total assets were $6.29 billion, a decrease from $6.56 billion at December 31, 2020, primarily due to a reduction in cash and cash equivalents, while total liabilities decreased to $4.93 billion from $5.44 billion, largely from a reduction in long-term debt, and stockholders' equity increased to $1.36 billion from $1.12 billion Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Total Assets | $6,291,913 | $6,558,948 | | Cash and cash equivalents | $334,537 | $519,182 | | Property and equipment, net | $2,446,808 | $2,525,887 | | Total Liabilities | $4,933,646 | $5,435,005 | | Long-term debt, net | $3,300,226 | $3,866,743 | | Total Stockholders' Equity | $1,358,267 | $1,123,943 | Condensed Consolidated Statements of Operations The company reported a significant turnaround in the second quarter of 2021 with total revenues of $893.6 million and net income of $113.7 million, compared to revenues of $209.9 million and a net loss of $108.5 million in the same period of 2020, reflecting recovery from COVID-19 related property closures in the prior year Statement of Operations Summary (in thousands, except per share data) | Metric | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $893,602 | $209,859 | $1,646,909 | $890,384 | | Operating Income (Loss) | $266,342 | $(86,348) | $460,077 | $(224,109) | | Net Income (Loss) | $113,729 | $(108,544) | $215,890 | $(256,103) | | Diluted EPS | $1.00 | $(0.96) | $1.89 | $(2.26) | Condensed Consolidated Statements of Cash Flows For the six months ended June 30, 2021, net cash provided by operating activities was $499.3 million, a significant improvement from the $52.8 million used in the same period in 2020, while net cash used in financing activities was $629.1 million, primarily due to the retirement of senior notes, contrasting with $1.18 billion provided by financing in the prior-year period which was used to bolster liquidity during the pandemic Cash Flow Summary (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $499,342 | $(52,805) | | Net cash used in investing activities | $(49,427) | $(75,916) | | Net cash provided by (used in) financing activities | $(629,065) | $1,183,706 | | Change in cash, cash equivalents and restricted cash | $(179,150) | $1,054,985 | Notes to Condensed Consolidated Financial Statements This section provides detailed explanations of the company's accounting policies and financial results, covering the impact of the COVID-19 pandemic, revenue recognition, debt management, segment information, and fair value measurements, noting that as of June 30, 2021, 26 of the company's 28 properties were open - As of June 30, 2021, 26 of the company's 28 gaming facilities are open and operating. Two properties in Las Vegas remain closed due to market demand and cost containment efforts[27] - In June 2021, the company issued $900 million of 4.750% Senior Notes due 2031 and used the proceeds, along with cash on hand, to redeem its outstanding 6.375% and 6.000% Senior Notes[73][75] - The company has a strategic partnership with FanDuel Group to pursue sports betting and online gaming opportunities, with operations in Illinois, Indiana, Iowa, Mississippi, and Pennsylvania[48] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the significant recovery in financial performance for the second quarter and first half of 2021, attributing it to the reopening of properties closed during the COVID-19 pandemic in 2020 and a new, more efficient operating model, covering results by operating segment, liquidity position, debt management activities, and capital allocation strategy, highlighting strong revenue growth, margin improvement, a strengthened balance sheet, and continued focus on strategic growth and operational efficiency Overall Performance Summary (in millions) | Metric | Q2 2021 | Q2 2020 | H1 2021 | H1 2020 | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $893.6 | $209.9 | $1,646.9 | $890.4 | | Operating Income (Loss) | $266.3 | $(86.3) | $460.1 | $(224.1) | | Net Income (Loss) | $113.7 | $(108.5) | $215.9 | $(256.1) | - The significant increase in revenues and operating income is primarily due to the comparison against the prior year period which was heavily impacted by COVID-19 property closures[144][145] - Following property reopenings, the company implemented a strategic shift to a more efficient operating model, focusing on maximizing gaming revenues, streamlining costs, and reducing lower-margin amenities, which improved profitability[138][145] Results of Operations For Q2 2021, total revenues surged to $893.6 million from $209.9 million in Q2 2020, with all segments showing strong recovery, including Las Vegas Locals revenue growing to $236.1 million, Midwest & South to $618.7 million, and Downtown Las Vegas to $38.8 million, while Adjusted EBITDAR for the company reached $385.4 million, a substantial increase from $16.1 million in the prior-year quarter, driven by higher revenues and improved margins across all departments, particularly gaming, which saw its margin increase to 64.3% from 58.5% Revenues by Reportable Segment (in millions) | Segment | Q2 2021 | Q2 2020 | H1 2021 | H1 2020 | | :--- | :--- | :--- | :--- | :--- | | Las Vegas Locals | $236.1 | $48.7 | $418.5 | $229.5 | | Downtown Las Vegas | $38.8 | $4.7 | $60.2 | $58.8 | | Midwest & South | $618.7 | $156.5 | $1,168.2 | $602.1 | | Total Revenues | $893.6 | $209.9 | $1,646.9 | $890.4 | Adjusted EBITDAR by Reportable Segment (in millions) | Segment | Q2 2021 | Q2 2020 | H1 2021 | H1 2020 | | :--- | :--- | :--- | :--- | :--- | | Las Vegas Locals | $133.6 | $2.9 | $224.2 | $49.6 | | Downtown Las Vegas | $15.4 | $(7.2) | $17.9 | $2.7 | | Midwest & South | $260.0 | $32.6 | $478.1 | $138.5 | | Adjusted EBITDAR | $385.4 | $16.1 | $678.0 | $160.5 | - Gaming margins improved to 64.3% in Q2 2021 from 58.5% in Q2 2020, enhanced by effectively yielding the casino floor and maintaining cost focus under the revised operating model[150][151] Liquidity and Capital Resources As of June 30, 2021, the company had $334.5 million in cash and cash equivalents and $1.02 billion available under its revolving credit facility, with total long-term debt reduced to $3.39 billion from $3.95 billion at year-end 2020 through strategic refinancing, and generated $499.3 million in cash from operations in the first half of 2021, believing current liquidity is sufficient for operating needs and maintenance capital expenditures for the next twelve months, while share repurchase and dividend programs remain suspended - As of June 30, 2021, the company had cash and cash equivalents of $334.5 million[187] - Total long-term debt (principal balance) was reduced by $562.9 million during the first six months of 2021, from $3.95 billion to $3.39 billion[196] - The company has remaining contractual availability of $1,021.8 million under its revolving credit facility as of June 30, 2021[198] - The share repurchase program, with $61.4 million remaining authorization, and the quarterly dividend program both remain suspended as of June 30, 2021[207][209] Item 3. Quantitative and Qualitative Disclosures about Market Risk The company's primary market risk exposure is to interest rate fluctuations, which could impact its long-term debt, with approximately 26.1% of its long-term debt being variable-rate as of June 30, 2021, meaning a hypothetical 100 basis point (1%) change in interest rates would result in an approximate $8.8 million change in annual interest costs, and the company does not use derivative financial instruments for trading or speculative purposes - The company's main market risk is interest rate risk on its long-term debt[225] - As of June 30, 2021, 26.1% of long-term debt was variable-rate. A 100 basis point change in interest rates would alter annual interest costs by approximately $8.8 million[226] Item 4. Controls and Procedures Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of June 30, 2021, with no material changes in the company's internal control over financial reporting during the most recent fiscal quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report[228] - No changes occurred during the most recent fiscal quarter that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[229] PART II. OTHER INFORMATION Item 1. Legal Proceedings The company is involved in various legal proceedings that arise in the ordinary course of business, and management believes that the outcomes of these pending claims will not have a material adverse effect on the company's business, financial position, results of operations, or cash flows - The company states that pending legal proceedings are not expected to have a material adverse effect on its business or financial condition[231] 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, 2020 - No material changes were reported from the risk factors disclosed in the Annual Report on Form 10-K for the year ended December 31, 2020[232] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including the indenture for the 4.750% Senior Notes due 2031, an amendment to the credit agreement, a list of guarantor subsidiaries, and certifications by the CEO and CFO - Key exhibits filed include the indenture for new senior notes, an amendment to the bank credit agreement, and required CEO/CFO certifications[234]