BOYD GAMING CORP BYD

The Midwest and South segment demonstrated robust performance, with revenues growing 3% and EBITDA increasing 4%, achieving property operating margins of nearly 38%. This marks the segment's strongest margin in almost two years, driven by growth in gaming revenues from both core and retail customers. Management attributes this success to guests staying and spending closer to home, as well as the benefits of recent property investments including hotel renovations and new food and beverage offerings at properties like Treasure Chest and Ameristar St. Charles.

The Las Vegas Locals segment showed mixed results. While the overall segment was impacted by softer destination business and Suncoast construction, properties excluding Orleans and Suncoast delivered solid performance with 4% revenue growth and 3% EBITDAR growth, maintaining margins over 50%. The company is heavily investing in this segment, with Suncoast renovations completing by Q3 FY26 and a refresh of Orleans casino floor and public spaces planned for H1 2027. By early next year, over 70% of Las Vegas hotel rooms will be renovated, and 17 new F&B concepts introduced, aiming to enhance competitiveness and appeal.

Management expressed confidence in the long-term prospects of the Las Vegas Locals business, citing strong Southern Nevada economic indicators. Employment growth is increasing at the fastest rate among major metro areas, with over 200,000 jobs added outside hospitality in the last decade. Weekly wages are growing at more than twice the national average, and Las Vegas remains an attractive relocation destination due to its competitive cost of living. These factors are expected to support continued growth in population, employment, and personal income, benefiting the local customer base.

The Online segment achieved revenue and EBITDA growth on a comparable basis, primarily driven by strong performance from Boyd Interactive. Contributions from market access agreements remained consistent. The Managed business saw an 18% year-over-year EBITDAR increase, largely due to the successful completion of Phase 1 of the Sky River expansion project, which significantly expanded the casino floor. Phase 2 of Sky River, including a hotel and additional amenities, is expected to complete in early 2028.

Boyd Gaming is actively building its development pipeline for long-term growth. The Norfolk Waterfront resort in Virginia is on time and budget for a late 2027 opening. The Par-A-Dice Casino modernization in Illinois is in the design phase, and plans are underway to convert the Amelia Belle property in Louisiana to a land-based facility, with construction expected to begin in late 2027. The company balances these capital investments with a commitment to returning significant capital to shareholders, maintaining a strong balance sheet and robust free cash flow.

The company reiterated its consistent stance on M&A, stating that while they are always looking for strategic opportunities, any acquisition must involve the right asset in the right market at the right price, and be a higher-quality asset. They emphasized that they do not need to pursue M&A given their strong business performance and capital return program. Regarding internal capital investments, management indicated they are at a comfortable pace and do not expect to significantly increase the amount of money spent, preferring to maintain a high-quality execution of current projects.