Boyd Gaming Corporation 2026 Q3 Earnings Call

Good afternoon, and welcome to the Boyd Gaming third quarter 2026 earnings conference call. This is David Strow, Vice President of Corporate Communications for Boyd Gaming. I will be the moderator for today's call, which we are hosting on Thursday, October 22nd, 2026. At this time, all lines are in listen-only mode. Following our remarks, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star then Zero for the operator. Our speakers for today's call are Keith Smith, President and Chief Executive Officer, and Josh Hirsberg, Chief Financial Officer. Our comments today will include statements that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act. All forward-looking statements in our comments are as of today's date, and we undertake no obligation to update or revise the forward-looking statements.

Actual results may differ materially from those projected in any forward-looking statement. There are certain risks and uncertainties, including those disclosed in our filings with the SEC, that may impact our results. During our call today, we will make reference to non-GAAP financial measures. For a complete reconciliation of historical non-GAAP to GAAP financial measures, please refer to our earnings press release and our Form 8-K furnished to the SEC today, and both of which are available at investors.boydgaming.com. We do not provide a reconciliation of forward-looking non-GAAP financial measures due to our inability to project special charges and certain expenses. Today's call is being webcast live at boydgaming.com and will be available for replay in the investor relations section of our website shortly after the completion of this call. With that, I would now like to turn the call over to Keith Smith.

Keith? Thanks, David, and good afternoon, everyone.

Our third quarter performance reflects the benefits of our diversified business model, the ongoing strength of our core customer, and the appeal of the property investments we've been making across our portfolio. For the quarter, our Midwest and South properties delivered another solid performance, with revenue and EBITDA growth reflecting the consistent strength of this segment. In Las Vegas, play from local residents remained strong. However, this trend was offset by increased softness in destination business to Las Vegas, primarily at the Orleans and construction disruption at the Suncoast. In our online segment, Boyd Interactive once again contributed double-digit revenue and EBITDA growth, and we continued to benefit from the strong performance of Sky River Casino, driving increased management fees in our managed business. Company-wide revenues and EBITDA were down approximately 1% in the third quarter on a reported basis.

However, our third quarter results were impacted by several unusual items this year. These items include the permanent closure of Sam's Town Tunica in November of 2025, the sale of Sam's Town Shreveport on August 1st of this year, higher property taxes at Kansas Star, and a reduction in the tax pass-through amounts. After adjusting for these items, company-wide revenue actually grew 2%, while EBITDA was up 1%, a more accurate reflection of our performance in the third quarter. Now, turning to segment results. In our Midwest and South segment, taking into account the adjustments I mentioned, revenues increased almost 3% for the quarter. Gaming revenues were up more than 2%, and EBITDA grew nearly $5 million, or approximately 2.5%. These results were driven by continued strength in play from both core and retail guests, including growth in unrated play.

Adjusted operating margins for the quarter were 38%, consistent with the third quarter margins over the last several years. This performance demonstrates our continued ability to maintain operating efficiencies throughout the segment. During the quarter, we also benefited from the investments we have made throughout our Midwest and South portfolio. Across the segment, we've enhanced our gaming floors, introduced new food and beverage offerings, renovated hotel rooms, and successfully completed several growth projects. These investments are delivering solid returns for our company, helping drive continued growth in play from our core and retail customers across the segment. Next, in our Las Vegas Locals segment, results in the third quarter were impacted by increased softness in destination business to Las Vegas. This impact was primarily felt at the Orleans. The third quarter results also reflected the final phases of our renovation project at the Suncoast.

Excluding the Orleans and Suncoast, the remainder of our Las Vegas Locals portfolio grew both revenues and EBITDA 3%, consistent with recent quarters. This growth was driven by increased gaming revenue of 3.5%, with play from both core and retail customers continuing to grow, as well as strong growth in unrated play. At the end of the quarter, we completed our project to renovate and upgrade all of the public spaces at the Suncoast. Our guests are responding enthusiastically to the improvements, further strengthening our confidence in the long-term potential of the Suncoast. The final phase of the Suncoast project is the remodel of our hotel rooms, which started late in the third quarter. This project should be completed by the first quarter of next year. We are now preparing for a similar project at the Orleans that will enhance this property's competitive positioning and appeal.

We will begin this project early next year, and we expect only minimal disruption at the Orleans, as the initial phases will be in areas that are not currently accessible to the public. Throughout this year, our Las Vegas Locals results have been supported by continued growth in play from Southern Nevada residents, and the strong underlying fundamentals of the Southern Nevada economy give us confidence these trends will continue. These fundamentals include Southern Nevada's population recently surpassing 2.4 million residents, driven by an annual growth rate that is twice the national average. This population growth is driven by a local economy that continues to add jobs at a healthy pace, leading almost every major metro area in the country. Over the last 12 months, Las Vegas has reported the second highest job growth rate among the nation's 30 largest metro areas.

Local wage growth also continues to outpace the national average, increasing nearly 6% over the past 12 months. Southern Nevada remains an appealing destination for new residents, offering one of the most competitive cost of living environments in the Western U.S. In all, we remain encouraged by the continued strength of the Las Vegas economy and its prospects for our local segment. Moving next to downtown Las Vegas, our results for the third quarter reflect increased softness in destination business in Southern Nevada, as well as the impact of multiple storms on Hawaii during August and September. Additionally, in the second half of the quarter, we saw a significant increase in Hawaiian airfares. While airfares remain elevated today, they have started to moderate. Next, our online segment continued to benefit from double-digit growth at Boyd Interactive during the third quarter.

This was the first quarter since last year's FanDuel transaction to provide comparable year-over-year results and provides a clearer picture of this segment's performance. Finally, our management of the business delivered another quarter of strong growth, driven by increased management fees from Sky River. Sky River continues to perform at a high level, benefiting from the recent expansion project that added 400 slot machines and a 1,600 space multi-level parking structure. With this expansion off to a strong start, work is continuing on the next phase of the project, which will add a 300-room hotel, three new food and beverage outlets, a full-service spa, and a new entertainment and event center. Once complete in 2028, we are confident this expansion will further strengthen Sky River's position as one of Northern California's most successful and popular gaming destinations.

In all, our third quarter performance was supported by the benefits of our diversified business model, the ongoing strength of our customer base, and solid returns from our property investments and capital projects. Building on the success of our recent investments and capital projects, we continue to invest in our properties across the country. In Las Vegas, we expect to complete the remodel of 1,800 hotel rooms at the Orleans in November, followed by more than 400 rooms at the Suncoast in the first quarter of next year. We will be introducing five new food and beverage concepts across the country in the fourth quarter alone. As we continue to enhance our existing portfolio, we are also actively building our long-term growth pipeline.

In Virginia, our resort development in Norfolk remains on time and on budget for a November 2027 opening, and we expect to celebrate the topping off by the end of this year. Once complete, this scale resort will be a true market leader with a 65,000 sq ft casino, 200-room hotel, eight food and beverage outlets, live entertainment, and an outdoor amenity deck. It will also offer the most convenient gaming destination for many of the 1.8 million residents of the Hampton Roads region, as well as the millions of visitors who visit nearby Virginia Beach each year. Next, in Illinois, our Par-A-Dice Casino project continues in the design phase, and we expect to begin construction late next year. Once complete, this project will transform Par-A-Dice into an all-new entertainment facility. With a single-level casino floor and enhanced amenities, the new Par-A-Dice will be positioned for growth well into the future.

In Louisiana, we are planning to convert our Amelia Belle property into a land-based facility featuring a single-level gaming floor and expanded food and beverage offerings. This project is also in the design phase, and we expect to begin construction in late 2027, subject to the necessary regulatory approvals. As we continue to invest in the future growth of our business, we are balancing our capital investments with maintaining a strong balance sheet and returning significant capital to our shareholders. During the third quarter, we returned approximately $180 million to our shareholders through a combination of share repurchases and dividends. We intend to continue targeting share repurchases of $150 million per quarter, supplemented by quarterly dividends. In all, our third quarter results demonstrate the value of our diversified business model. In our Midwest and South segment, we continued to deliver growth across the segment.

In Las Vegas, we benefited from ongoing strength in play from local residents, and also completed our renovations of all public spaces at the Suncoast, positioning this property for future growth. Both our online and managed businesses continue to produce strong results, and we continue to build a strong pipeline for growth. Building on the success of our previous growth investments at Treasure Chest, Ameristar St. Charles, and Cadence Crossing, we are now focused on completing our market-leading resort in Virginia, which remains on track to open next year. In addition, we are moving forward with growth projects at both Par-A-Dice and Amelia Belle. Finally, our financial position remains strong with leverage of 2.2 times at the end of the quarter, supporting our balanced approach to capital allocation and positioning us to continue creating long-term value for our shareholders.