Boyd Gaming Posts Strong First Quarter, Sees Continued Hospitality Growth
Despite a slow start to the year, Boyd Gaming ($BYD) managed to end the first quarter with positive margins and an optimistic outlook for the rest of the year.
On the company’s earnings call, Keith Smithchairman and chief executive, told analysts that the first quarter results were a product of the momentum displayed in 2021.
At the time of writing, the actions of $BYD were trading at $61.05.
Boyd Gaming has additional growth opportunities
From Tuesday’s call, Smith acknowledged that the slow start to 2021 was primarily due to lingering fears of the COVID-19 pandemic. However, as more states reduce their terms, Smith anticipates there will be opportunities for growth.
According to Smith, one of the opportunities for continued growth is that the company hotel.
“While January got off to a slow start due to COVID and the Omicron variant, we saw activity levels gradually return during the quarter as case counts and COVID concerns began to subside.”
Discussing the company’s Las Vegas operations, Smith said revenues increased by almost 25% while EBITDAR increased by 31%.
As a result, margins reached a new record in the first quarter of more than 52%marking the fourth consecutive quarter where local margins are above 50%.
But a continuing cause for concern is in the workforce.
No more labor constraints for Boyd Gaming
At the height of the pandemic, casino companies across the United States were forced to cut staff, hoping they would return once things calmed down. Unfortunately, employees are coming back at a slower rate, causing companies to remain understaffed.
Smith had this to say:
“Due to labor constraints, we are currently unable to meet all of the demands we have from our major customers. As the labor market normalizes, we will be able to accommodate more of these well-known players in our hotels, which will provide the opportunity for incremental growth in gaming and non-gaming revenue.
Earlier this year, Boyd announced that he would be increasing his minimum wage at $15 per hour for all team members who did not receive a tip. Smith said Boyd has started implementing the program and expects it to be completed in 12 months.
But the lack of a full workforce hasn’t stopped Boyd from investing heavily in his regional properties. Smith said the company is busy investing in Louisiana, downtown las vegasand Northern California.
In Louisiana, Boyd plans to begin construction of an onshore facility at Treasure chest with an attempt opening in 2023.
As for Northern California, construction work continues on Sky River Casino, which is on budget and on schedule to open early this fall. Owned by the Wilton Rancheria Tribethe casino located in South Sacramento will have 2,000 slot machines, 80 table games and 17 food and drink locations.
Boyd got a seven-year management agreement with the Tribe to manage Sky River and will receive a typical management fee.
Increase online gaming footprint
Another area of growth continues to be the advancement of online game sector.
Boyd recently announced the acquisition of Interactive Palace. With this deal, Boyd has access to a player management system and a full stack of iGaming products.
“The acquisition of Pala will position us to take a direct approach to the emerging iGaming opportunity. With our geographic spread, strong loyalty program and large database, we are confident in our ability to build a profitable regional online casino business.
Key financials and where Boyd is going next
As a regional gaming operator, Boyd has positioned itself well in invest in leading sectors without expanding into markets like Macau. It’s no secret that itThe asinos anticipate a return to pre-pandemic volume within the next two years.
But what helps bridge the gap is the continued advancement of online casinos and sports betting, which continue to spread in the United States.
Thanks to Boyd’s free cash flow, the company resumed its quarterly dividend on April 15 with a $0.15 per share Payment. This is double the previous dividend of $0.07.
Smith also spoke of the company’s commitment to creating long-term shareholder value. As things stand, Boyd is on track to return about 500 million dollars to shareholders this year.
“With growth opportunities throughout 2022 and 2023, we are confident that our business is well positioned for continued success.”