Boyd Gaming (US:BYD)2021-10-27 02:44Financial Data and Key Metrics Changes - The company achieved record third quarter performance with revenues exceeding both 2019 and 2020 levels, setting a new third quarter record [8] - Adjusted EBITDAR exceeded $340 million, a 42% increase from Q3 2020 and a 60% increase from Q3 2019 [8] - Company-wide operating margins exceeded 40% for the second consecutive quarter, growing nearly 400 basis points year-over-year and over 1,400 basis points from 2019 [8][9] - Free cash flow more than doubled, with total EBITDAR over the last 12 months surpassing $1.2 billion and leverage declining to 2.75 times [21][24] Business Line Data and Key Metrics Changes - In the Las Vegas Locals segment, revenues grew 35% year-over-year, with EBITDAR up almost 60% and operating margins exceeding 54% [8][9] - Downtown Las Vegas reported record third quarter EBITDAR of $13.2 million, a significant improvement from the EBITDAR loss reported a year ago [9] - The Midwest & South segment set new records for both revenues and EBITDAR, with EBITDAR growing 22% over the prior year and 42% from 2019 [9] Market Data and Key Metrics Changes - The company noted that 21 out of 26 properties open the entire quarter grew EBITDAR by double digits over last year, with 18 setting new third quarter EBITDAR records [9] - The company anticipates continued growth in Downtown Las Vegas as tourism recovers and Hawaiian visitation improves [12] Company Strategy and Development Direction - The company is focused on driving play from loyal guests, streamlining its cost structure, and adopting a more efficient operating model [6][10] - BoydPay cashless technology is being expanded to enhance customer convenience and streamline processes [10][11] - The company views online gaming and online casinos as strategic growth opportunities, with plans to expand iGaming operations and sports betting partnerships [13][14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's future growth, citing a strong financial position and prospects for continued growth [7][21] - The company expects to see further recovery in visitation as COVID restrictions are lifted and travel resumes [12][21] - Management acknowledged potential challenges such as labor market normalization and inflationary pressures but remains optimistic about revenue opportunities [56][57] Other Important Information - The Board of Directors authorized a $300 million share repurchase program, reflecting confidence in the company's future [7][24] - The company is committed to ESG initiatives, including reducing water and energy consumption and enhancing workforce diversity [17][20] Q&A Session Summary Question: Labor Return and Optimization - Management indicated that labor levels are significantly reduced from pre-COVID levels, with expectations to gradually add back team members as amenities are introduced [27][28] Question: Share Buyback vs. Growth Opportunities - The $300 million buyback was sized considering necessary investments in properties while maintaining leverage around current levels [32][33] Question: Dividend Resumption - Management stated that the share repurchase is currently the most efficient way to return capital to shareholders, with no immediate plans for dividend resumption [35][36] Question: Promotional Environment - The promotional landscape in Las Vegas Locals has remained stable, with larger operators maintaining discipline while smaller operators have reverted to aggressive marketing [37][40] Question: M&A Boundaries - Management emphasized a disciplined approach to M&A, focusing on strategic and value-oriented acquisitions while maintaining a strong balance sheet [42][45] Question: Property Level EBITDAR Margins - Margins were maintained throughout the quarter despite challenges, with management effectively managing expenses during periods of softness [47][48] Question: NOL Balance and Cash Taxpayer Status - The company expects to have an NOL balance running out sometime in 2022, depending on performance [50] Question: CapEx Guidance - CapEx for the current year is on track for about $200 million, with $40 million spent in Q3 [78]