Boyd Gaming continues to look to sports betting and iGaming to grow its business after generating revenue of $894.5m in the second quarter of 2022 – a modest year-on-year increase of 0.1%.
The land-based casino operator said flat performance was a strong result for the business considering the strength of the prior-year comparative period, a time during which government support and the lifting of Covid-related restrictions led to record earnings for the operator.Given the strength of the prior-year period, adjusted EBITDA was down year-on-year by 8.9% to $327.2m, however a decrease in expenses – driven principally by significant losses on early extinguishments and modifications of debt in Q2 2021 – saw net income for the quarter increase by 29% to $146.8m.
“We delivered another strong quarter, with quarterly adjusted EBITDAR that was second only to last year’s record results,” said Boyd Gaming president and CEO Keith Smith.
“The second quarter of 2021 was a challenging comparison due to benefits from government stimulus and the lifting of Covid restrictions. This quarter’s excellent results were driven by a continued focus on our core customer and sustained efficiencies throughout our business.
“Our operating trends remain strong, as play from core customer segments grew both year-over-year and sequentially from the first quarter of 2022. We also improved company-wide operating margins from the first quarter despite inflationary pressures.
“Overall, we are encouraged by the continued strength of our business, and remain confident in our strategy and our ability to navigate today’s uncertain economic environment,” Smith concluded.
Boyd Gaming president and CEO Keith Smith: “We expect our existing online sports betting partnerships to generate approximately $30m in EBITDAR this year, and this contribution should grow next year as sports betting expands into Kansas and Ohio.”
Outside its core land-based casino business, Boyd continues to work towards building its presence in the US sports betting and iGaming sectors.
It expects to close the $170m acquisition of B2B online gaming supplier Pala Interactive by the end of this year, while continuing to expand its sports betting presence via an agreement with Flutter Entertainment-owned FanDuel – in which Boyd owns a 5% stake.
Commenting on the possible expansion of its sports betting footprint, Smith told analysts on the firm’s Q2 earnings call: “Kansas and Ohio recently passed sports betting legislation and with our partner FanDuel, we plan to offer retail and mobile sports betting in both states.“Subject to regulatory approvals, we expect to launch sports betting in Kansas in the fall and Ohio around the first of the year, expanding our FanDuel partnership to eight of our nine regional states.
“We expect our existing online sports betting partnerships to generate approximately $30m in EBITDAR this year, and this contribution should grow next year as sports betting expands into Kansas and Ohio.”
With regards to the iGaming vertical, Smith said the operator’s online gaming strategy relies on leveraging its land-based geographic distribution across the US, alongside its loyalty programme and customer database.
The acquisition of Pala Interactive, he said, would provide the business with the full suite of products, technology and expertise it needs to execute that strategy without additional significant investment or acquisitions.
Boyd Gaming treasurer and CFO Josh Hirsberg: “We plan to continue targeting $100m per quarter of share repurchases as part of our recurring program to return capital to shareholders.”
During the Q2 earnings call, Smith concluded that: “With our steady operational performance, attractive growth opportunities, substantial free cash flow, and commitment to maintaining a strong balance sheet, we are in an excellent position to continue returning capital to our shareholders.
“We remain committed to returning $500m to our shareholders this year through a combination of share repurchases and dividends. As we’ve noted before, we are targeting $100m per quarter in recurring share repurchases supplemented by quarterly dividend payments.”
At present, Boyd has repurchased around 6.4 million of its own shares since commencing buyback activity in October last year, worth a total of around $381m.
With the board recently authorising a further $500m in share repurchases, the business is currently authorised to repurchase shares worth a further $481m.
“We plan to continue targeting $100m per quarter of share repurchases as part of our recurring programme to return capital to shareholders,” Boyd treasurer and CFO Josh Hirsberg told analysts.
“We also distributed our second dividend of the year earlier this month, with a payment of $0.15 per share, which is more than double the amount of the company’s previous pre-pandemic dividend,” he concluded.