Q3 2026 Boyd Gaming Corp Earnings Call

October 22, 2026

Speaker #1: Thank you for standing by. This is the conference operator, the BOYD GAMING CALL. We'll begin momentarily. Thank you for your patience. Good afternoon, and welcome to the BOYD GAMING Q3 2026 earnings conference call.

Speaker #1: 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 22, 2026.

Speaker #1: 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 * then 0 for the operator.

Speaker #1: 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.

Speaker #1: 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.

Speaker #1: 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.

Speaker #1: For complete reconciliation of historical non-GAAP to GAAP financial measures, please refer to our earnings press release in our Form 8K, furnished to the SEC today, and both of which are available at investors.boygaming.com.

Speaker #1: We do not provide a reconciliation of forward-looking non-GAAP financial measures due to our inability to project special charges in certain expenses. Today's call is being webcast live at boygaming.com and will be available for replay in the Investor Relations section of our website shortly after the completion of this call.

Speaker #1: So, with that, I would now like to turn the call over to Keith Smith. Keith?

Speaker #2: 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.

Speaker #2: For the quarter, our Midwest and South properties delivered another solid performance, with revenue and EBITDA growth reflecting the consistent strength of the 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 Sun Coast.

Speaker #2: In our online segment, BOYD Interactive once again contributed double-digit revenue and EBITDA growth, and we continue to benefit from the strong performance of SkyRiver Casino, driving increased management fees in our managed business.

Speaker #2: 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.

Speaker #2: These items include the permanent closure of Samstown Tunica in November of 2025, the sale of Samstown Shreveport on August 1st of this year, higher property taxes at Kansas Star and a reduction in the tax pass-through amounts.

Speaker #2: 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.

Speaker #2: Now, turning the 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%.

Speaker #2: 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 our third quarter margins over the last several years.

Speaker #2: 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.

Speaker #2: Across the segment, we have 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 play growth in play from our core and retail customers across the segment.

Speaker #2: Next, in our Las Vegas local 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.

Speaker #2: Our third quarter results also reflected the final phases of our renovation project at the Sun Coast. Excluding the Orleans and Sun Coast, the remainder of our Las Vegas locals portfolio grew both revenues and EBITDA 3%, consistent with recent quarters.

Speaker #2: 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.

Speaker #2: At the end of the quarter, we completed our project to renovate and upgrade all of the public spaces at the Sun Coast. Our guests are responding enthusiastically to the improvements, further strengthening our confidence in the long-term potential of the Sun Coast.

Speaker #2: The final phase of the Sun Coast 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.

Speaker #2: 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.

Speaker #2: 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.

Speaker #2: 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.

Speaker #2: 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.

Speaker #2: Local wage growth also continues to outpace the national average, increasing nearly 6% over the past 12 months. And Southern Nevada remains an appealing destination for new residents, offering one of the most competitive cost-of-living environments in the Western U.S.

Speaker #2: 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 to Southern Nevada as well as the impact of multiple storms on Hawaii during August and September.

Speaker #2: 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.

Speaker #2: 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 fan dual transaction to provide comparable year-over-year results and provides a clearer picture of this segment's performance.

Speaker #2: Finally, our managed and other business delivered another quarter of strong growth, driven by increased management fees from SkyRiver. SkyRiver 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.

Speaker #2: 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 events center.

Speaker #2: Once complete, in 2028, we are confident this expansion will further strengthen SkyRiver's position as one of Northern California's most successful and popular gaming destinations.

Speaker #2: So 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.

Speaker #2: 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.

Speaker #2: Followed by more than 400 rooms at the Sun Coast in the first quarter of next year. And we will be introducing five new food and beverage concepts across the country in the fourth quarter alone.

Speaker #2: 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.

Speaker #2: Once complete, sub-scale resort will be a true market leader, with a $65,000 square foot casino, 200-room hotel, eight food and beverage outlets, live entertainment, and an outdoor amenity deck.

Speaker #2: 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.

Speaker #2: Next, in Illinois, our Paradise Casino project continues in the design phase, and we expect to be begin construction late next year. Once complete, this project will transform Paradise into an all-new entertainment facility.

Speaker #2: With a single-level casino floor and enhanced amenities, the new Paradise will be positioned for growth well into the future. And in Louisiana, we are planning to convert our Amelia Bell property into a land-based facility featuring a single-level gaming floor and expanded food and beverage offerings.

Speaker #2: This project is also in the design phase, and we expect to be 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 or shareholders.

Speaker #2: During the third quarter, we returned approximately $180 million to our shareholders through a combination of share repurchases and dividends. We attend to continue targeting share repurchases of $150 million per quarter, supplemented by quarterly dividends.

Speaker #2: And in all, our third quarter results demonstrate the value of our diversified business model. And our Midwest and South segment, we continue to deliver growth across the segment.

Speaker #2: In Las Vegas, we benefited from ongoing strength in play from local residents and also completed our renovations of all public spaces at the Sun Coast, positioning this property for future growth.

Speaker #2: 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, a Marriage Star St.

Speaker #2: 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 Paradise and Amelia Bell.

Speaker #2: And 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.

Speaker #2: Our success is a reflection of the dedicated BOYD team members across the country and their commitment to delivering memorable experiences for our guests, and I would like to thank them for everything they do for our company.

Speaker #2: Thank you for your time today, and now I'd like to turn the call over to Josh.

Speaker #1: Thank you, Keith. During the third quarter, play from both core and retail customers continued to grow. As Keith mentioned, in our Midwest and South segment, adjusted revenues for the quarter grew nearly 3%, while EBITDA grew approximately 2.5%, supported by growth in gaming revenues.

Speaker #1: And in our Las Vegas local segment, excluding the Orleans and Sun Coast, revenues and EBITDA are each grew 3%, with gaming revenue growth of 3.5%.

Speaker #1: Increased softness in destination business to Las Vegas negatively impacted our Las Vegas local segment, primarily at the Orleans, and also impacted visitation to downtown Las Vegas.

Speaker #1: Despite these pressures in Las Vegas, we remained disciplined in executing our operating strategy. Excluding the Orleans and Sun Coast, margins in our Las Vegas local segment were 47%, even with the third quarter in each of the last two years.

Speaker #1: Company-wide, outside of the impact of destination business to Las Vegas, the remainder of our land-based portfolio across the country is performing well. And our managed and online businesses both continue to grow during the fourth quarter, contributing to the diversification of our revenues and EBITDA.

Speaker #1: During the quarter, we invested $159 million in capital expenditures, bringing our year-to-date capital expenditures to $456 million. We now expect to spend approximately $650 million for this year.

Speaker #1: Including $250 million of maintenance capital, $75 million of incremental hotel capital, associated with our Orleans hotel remodel, which is on schedule to be completed by the end of this year, $50 million in growth capital, primarily related to completing Cadence and the design and pre-construction efforts related to our Paradise project, and finally, $275 million for our casino resort development in Virginia, which is Keith mentioned, remains on schedule and in on budget.

Speaker #1: In terms of our capital return program, during the third quarter, we paid $15 million in dividends and made $164 million in stock purchases, representing $2 million shares.

Speaker #1: Our actual share count at the end of the third quarter was 71.2 million shares, a 9.4% reduction in our share count since the third quarter of last year.

Speaker #1: We plan to continue targeting approximately $150 million in shares per quarter, placing us on track inclusive of dividends, to return more than $680 million to shareholders this year.

Speaker #1: Representing approximately $9.80 per share in value for our shareholders. Given our strong free cash flow, we are able to make capital investments and return capital to shareholders while maintaining a strong balance sheet.

Speaker #1: We ended the quarter with traditional leverage of 2.2 times and lease-adjusted leverage of 2.7 times. We have ample capacity available to us under our credit agreement, with our next debt maturity in December of 2027.

Speaker #1: We expect to refinance that maturity later this year or in the first half of 2027. In conclusion, our consistent operating performance, strong balance sheet, and robust free cash flow position us well to continue creating long-term value for our shareholders.

Speaker #1: David, this concludes our remarks, and we're now ready to take any questions.

Speaker #3: Thank you, Josh. We will now begin our question and answer session. If you would like to ask a question, please press star then 1 on your touchstone phone.

Speaker #3: You will hear a prompt that your hand has been raised. Should you wish to withdraw your request, please press star then 2. If you're using a speakerphone, please use your handset when asking your question.

Speaker #3: We will now pause a moment while we compile our list of questioners. First question comes from Steve Pisella of Deutsche Bank. Steve, please go ahead.

Speaker #4: Hey, good afternoon, everybody. And thank you for taking my questions. For Las Vegas locals, you outlined some good underlying growth trends, ex-destination in Sun Coast.

Speaker #4: Given these trends, do you think the local segment can grow next year? And are you able to quantify the estimated destination in Sun Coast impact?

Speaker #2: Sure. So, Steve, I'll take the first one. Basically, I think we believe that we could see modest growth next year in Las Vegas local's EBITDA.

Speaker #2: I think it's really dependent on what happens with the destination business. Q3 destination was a little bit softer than we expected. But we don't expect that to really continue into Q4.

Speaker #2: At that level, I think we would generally expect kind of destination trends to be similar to what we have seen for the quarters preceding the third quarter.

Speaker #2: Sun Coast disruption in Q3 was a little bit less than we expected. And as we kind of go into Q4 and the 2027, Keith mentioned that Sun Coast will have some rooms out of service in Q4 and then again in Q1.

Speaker #2: So our expectation is to kind of have kind of very modest contribution from Sun Coast in Q4, just given that room those rooms being out of service, and then for it to ramp up really kind of coming into Q1 and into Q2 of next year.

Speaker #2: But I will point out we've got rooms coming online in Q4 and Q1. Sun Coast, Orleans in Q4, and Cadence contributed in Q3 and is continuing to ramp in Q4 to hit full stride around Q1 of next year.

Speaker #4: Okay, thank you. That's helpful. And then just pivoting towards the buyback, can you talk about how you view share repurchases with the stock at current levels?

Speaker #4: Does it make you want to be more aggressive?

Speaker #2: Look, we've signaled that we're targeting $150 million per quarter. And that's probably all we're going to say at this point. We have tended, if you look at our history, to be a little more aggressive as there's dislocation in the stock price.

Speaker #2: But that's a function of other things we have going on. And once again, trying to maintain this balanced approach, looking at what we're reinvesting in our properties, looking at our growth projects, looking at how many shares we want to buy back or how much in terms of dollar value that we want to buy back.

Speaker #2: But our history does indicate that we do take advantage of dislocations in the stock price.

Speaker #4: Okay, great. Thank you.

Speaker #2: Yep.

Speaker #3: Our next question comes from Steve Wozinski of Stiefel. Steve, please go ahead.

Speaker #5: Hey, guys. Good afternoon. So Keith or Josh, I want to go back to the destination weakness that you guys were kind of referring to.

Speaker #5: I think at this point, we've kind of heard that same narrative from you guys for the last, I think it's been probably the last two quarters or so.

Speaker #5: And if I hear you right, I just want to make sure we have this right. It sounds like it actually did intensify relative to where that was back in the second quarter.

Speaker #5: I think that's kind of what you guys were referring to. And if that's true, maybe what gives you the conviction that you think that kind of turns around in the fourth quarter?

Speaker #2: So I think you heard it correct, which is our view is that the softness in destination was a little stronger or intensified in Q3 vis-à-vis Q1 and Q2.

Speaker #2: I think you've probably heard this conversation from us for the last three or four quarters, actually. Part of that is driven by the fact that in Las Vegas, as everyone knows, the third quarter, the summer quarter is our weakest quarter.

Speaker #2: So these types of pressures get intensified during the quarter. And so July looked okay, August was probably weaker than we anticipated. And with the shift of the holiday, it's a little hard to tell.

Speaker #2: And September was a little bit better than August. Look, as we look at the fourth quarter, we look at having hotel rooms back at the Orleans.

Speaker #2: We've had more than 300 rooms out of service every day for the last year. Now, do we need those rooms on weekends? Or weekdays?

Speaker #2: The reality is no. Do we need those rooms on weekends? The answer is yes. So that will support us. And we think that just the general trends will soften the impact of the weakness in destination as we look at Q4 and next year.

Speaker #2: So just a combination of factors.

Speaker #5: Okay, that makes sense. And then Josh or Keith, I want to ask about your current appetite for M&A, given obviously, we've kind of seen gaming valuations here contract over the last, call it, six months or so.

Speaker #5: And with where your balance sheet is, your strong balance sheet, is that something you're kind of more thinking about these days? And then Josh, totally unrelated to that, you were giving us guidance for the online and managed segments.

Speaker #5: Is what you told us last quarter still a fair range for those two segments? Thanks.

Speaker #2: On the M&A side, look, I would say our comments haven't changed. Given changing in multiples and valuations of stock prices and other factors, it doesn't change our appetite, doesn't make us more aggressive or less aggressive.

Speaker #2: We have the same discipline we've had over the years, which is we have a set of filters that it has to work its way through, being the right asset at the right price and the right market, which means it has to be a stable market from a tax and regulatory standpoint.

Speaker #2: It has to be a high-quality asset. We have as big of an appetite as we've ever had. But we remain disciplined. And apps and all the rumors of us looking at lots of things, they're just that.

Speaker #2: They're rumors. But we've grown a lot through M&A over the years. We tend to do it in chunks. We grew a lot in '11 and '12.

Speaker #2: And took a few years off, grew a lot in '17 and '18. And when the right opportunity presents itself, you'll see us execute. In the meantime, we remain disciplined.

Speaker #6: Yeah, I think that we don't feel like we have to do anything. We have a good core business that has been operating consistently. It generates a lot of free cash flow.

Speaker #6: And we just have to be really good at allocating that capital. Just to add the comments on the M&A side. In terms of online and managed, we previously gave guidance.

Speaker #6: What I would say is, given the performance in Q3, that the guidance still holds, but I would kind of direct people toward the high end of the ranges that we had previously given for both of those segments, both online and managed.

Speaker #5: Okay, great. Thanks, guys. Appreciate it.

Speaker #6: Sure.

Speaker #3: Our next question comes from Barry Jonas of Truist Securities. Barry, please go ahead.

Speaker #6: Thanks, guys. You talk about a 3% growth in the biggest locals portfolio outside of Orleans and Suncoast. Just curious, how much of that is the addition of Cadence Crossing?

Speaker #6: And maybe just talk about the ramp that you're seeing there. Thanks. Yeah, so Cadence is definitely helping it, but it's not the majority of it.

Speaker #6: It's a component of it. It's probably and I don't have the numbers in front of me, but it's probably like a third of it or so.

Speaker #6: And then it's continuing to ramp in Q4 as well. So it's coming around. The revenues are ahead of quite honestly where we expected they would be.

Speaker #6: It continues to improve. And so we think it'll continue to kind of ramp from an EBITDA perspective. Likely hitting full steam in Q1 of next year.

Speaker #4: Got it. And then just had a question about Pennsylvania and Midwest and South. With skill-based games, being removed in that market, are you seeing or would you expect to see any upside to operations in the state?

Speaker #4: Thanks.

Speaker #2: So in Pennsylvania, yeah, where they've been shut down and they're best of my knowledge being removed, we would certainly hope that we see some uplift in the business at Valley Forge.

Speaker #2: Obviously, it's early and have nothing to report right now, but we certainly expect there to be some uplift exactly how much? Hard to say, but we're paying attention.

Speaker #4: Thank you.

Speaker #3: Our next question comes from Dan Politzer of JP Morgan. Dan, please go ahead.

Speaker #7: Hey, good afternoon, everyone. Thanks for taking the question. Maybe just a broader question going back to the destination commentary in the Las Vegas locals market.

Speaker #7: It feels like when you start to see the softening, I think it was this third quarter of last year, which kind of coincided with some of the soft and some of the strip.

Speaker #7: So I mean, it seems like these are obviously pretty related, but I guess what gives you that confidence that fourth quarter gets better than along those lines?

Speaker #7: I think in the past, you've said that the fourth quarter could be kind of where you get back to flat or growth in the locals market.

Speaker #7: Do you feel still feel like that's kind of within a realistic expectation?

Speaker #2: I think when we look at the locals market, a couple of things. One is, as both Josh and I pointed out in the prepared remarks, the core market ex-Suncoast and ex-Orleans performed very well, performed at a similar pace as it had earlier in the year.

Speaker #2: That gives us confidence that the core business is actually performing well. Once again, Suncoast, the walls related to the construction project came down late in the quarter, so we'd expect that to begin to recover in Q4.

Speaker #2: And then as it relates to the Orleans, I guess what gives us confidence is a couple of things. One, once again, we're going to get 300 and 50-ish hotel rooms back that, while we may not need them midweek, I said this earlier, we certainly can use them on weekends, especially during high-demand holiday periods, the rodeo period coming up, and others.

Speaker #2: I also think that, and we believe the kind of intensity increasing in what we call the destination softness has a lot to do with the fact it was summer and it was it's the weakest quarter of the year in Las Vegas.

Speaker #2: And so these trends tend to get exaggerated. And then at the end of the day, it's probably just a little old-fashioned optimism in there also.

Speaker #6: Yeah, I think I'd like to just make sure we're talking about the same thing. So big picture, and this is kind of broadly, applies broadly, not just destination, applies across Las Vegas and the Midwest and South.

Speaker #6: July was a good month for us. August was a very soft month, not only in the Midwest and South, but also in Las Vegas.

Speaker #6: September, I would say, was kind of more normal. It just wasn't strong enough to kind of offset the softness that we had seen in August.

Speaker #6: So when we think about the destination business, it followed that same kind of pattern, if you will. And so it was much softer in August than we had seen in any other month.

Speaker #6: So we're just saying, and I even said it on the last earnings call, that we anniversaried the destination business. We thought it was going to be down, but just down less.

Speaker #6: What we're saying is that in Q3, the softness in destination got worse than the trend that we had seen in the first in the preceding four quarters.

Speaker #6: Going into the fourth quarter, we attributed a lot of the or some of the incremental softness associated with the destination as Keith said, to the slower seasonality in the business.

Speaker #6: I think what we're saying for Q4 and going forward is the destination business is going to have trends that are similar to what we saw before Q3.

Speaker #6: We're not suggesting it's going to be flat. We're not suggesting it's going to grow. We're not even saying it's going to be less bad.

Speaker #6: It's going to be similar to the trends that we have previously seen. And then as we progress through the year next year, we'll get a sense of how it's going to perform.

Speaker #6: But we're not suggesting that we have any kind of crystal ball to suggest when what is really a broader impact on Las Vegas i.e., it's not just our business.

Speaker #6: It's a market-driven kind of demand issue with destination business. That's when visibility changed on that, that's when it'll change in our business.

Speaker #3: Got it. Thanks so much. Our next question comes from David Bain of Texas Capital Bank. David, please go ahead.

Speaker #7: Great. Good afternoon. Thank you. I guess first, what's Suncoast Renovations are fully complete and operational disruption kind of clears, if you will. Can locals margins recapture that 2025 level next year?

Speaker #7: I mean, it seems like a yes given John's 3Q locals margin comments, but are there any promotional labor or other considerations that we should think about when looking at next year on margins?

Speaker #2: When you look at the Suncoast, you look at the locals portfolio, Josh, I think, indicated that ex-Suncoast and Orleans margins were 47%. It is a soft summer quarter.