Boyd Gaming CFO On Las Vegas Destination Slump: 'We're Not Even Saying It's Going To Be Less Bad'
Boyd's CFO said third-quarter destination softness in Las Vegas worsened, and management expects trends like those before the quarter.
Boyd Gaming, the Las Vegas-based casino operator, said on its third-quarter earnings call Thursday that destination business to Las Vegas got worse than the trend of the prior four quarters. Chief Financial Officer Josh Hirsberg said the company is not forecasting a recovery: "We're not even saying it's going to be less bad."
A summer that got worse
Hirsberg said the fourth quarter and beyond should bring destination trends similar to what Boyd saw before the third quarter. He added that the company is not suggesting they will be flat or grow, and that it has no crystal ball on timing, calling it a market-driven demand issue.
July was good, he said, August was very soft and September was closer to normal but not strong enough to offset August.
An analyst from Stifel noted the company had described destination weakness for roughly the last two quarters and asked what supported a fourth-quarter turnaround. President and CEO Keith Smith agreed the softness "intensified in Q3 vis-a-vis Q1 and Q2," and said investors had heard the conversation for "the last three or four quarters, actually." He said summer is Las Vegas's weakest quarter, so such pressures get exaggerated.
Orleans rooms and old-fashioned optimism
Smith pointed to the Orleans, which he said has had more than 300 hotel rooms out of service every day for the last year. The property regains roughly 350 rooms, which he said Boyd can use on weekends and holidays. The remodel of 1,800 Orleans rooms is due to finish in November, with more than 400 Suncoast rooms following in the first quarter.
Asked by a JPMorgan analyst why the fourth quarter should improve, Smith added that "there's probably just a little old-fashioned optimism in there also." He said no promotions changed the cadence of destination business in the quarter.
Hirsberg said Boyd believes Las Vegas locals EBITDAR could grow modestly next year, but that it depends on destination business.
Rest of the portfolio held up
Boyd operates 27 casino properties in 11 states and manages Sky River Casino in California. Company-wide revenue and EBITDA fell about 1% on a reported basis; adjusted for the Tunica closure, the Shreveport sale, higher Kansas Star property taxes and lower tax pass-through amounts, revenue grew 2% and EBITDA 1%, Smith said.
Midwest and South adjusted revenue rose almost 3%. Excluding the Orleans and Suncoast, Las Vegas locals revenue and EBITDA each grew 3%, at a 47% margin.
Boyd returned about $180 million to shareholders in the quarter and ended with 71.2 million shares, a 9.4% reduction from a year earlier. It still targets about $150 million of buybacks per quarter.
Boyd expects to finish the Orleans room remodel in November and the Suncoast rooms by the first quarter of next year.
Sources
- Boyd Gaming leans on growth in the Midwest and South as Las Vegas tourism drags (BYD:NYSE) | Seeking Alpha — seekingalpha.com
- Boyd: Q3 Earnings Snapshot — Associated Press
- Boyd (BYD) Q3 Earnings Preview: What You Should Know Beyond the Headline Estimates — Yahoo Finance
- Boyd Gaming (BYD) Reports Q3: Everything You Need To Know Ahead Of Earnings — Yahoo Finance
- JP Morgan Maintains Neutral on Boyd Gaming, L... — benzinga.com
