Boyd Gaming Corporation

Good day, and welcome to Void Gaming second quarter 2021 earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing star then zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, press star then one on your touchtone phone. To withdraw your question, press star then two. Please note this event is being recorded. I would now like to turn the conference over to Josh Hirschberg. Please go ahead.

Thank you, Tom. Good afternoon, everyone, and welcome to our second quarter conference call. Joining me on the call this afternoon is Keith Smith, our President and Chief Executive Officer. Our comments today will include statements that are forward-looking statements within 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 complete reconciliation of historical non-GAAP to GAAP financial measures, please refer to our earnings press release and our Form 8K furnished to the SEC today. and both of which are available in the investor section of our website at 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 also 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. So with that, I'd now like to turn the call over to Keith Smith.

Keith. Thanks, Josh, and good afternoon, everyone. The second quarter was another outstanding performance by our company and our entire team. Our transformed operating model and enhanced capabilities delivered record results as our business continues to strengthen. On a company-wide basis, we achieved record EBITDA of more than $385 million, up 66% from the second quarter of 2019, and record EBITDA margins of just over 43%. And for the first time since the pandemic began, gaming revenues surpassed 2019 levels. In our Las Vegas local segment, EBITDA rose 87% over 2019 levels as margins approached 57%. And in our core locals business, which excludes our closed properties in a tourism-dependent Orleans, we grew EBITDA by nearly 107% over 2019 levels with an operating margin of more than 58%. Downtown Las Vegas, our two open properties, the California and the Fremont, each set all-time record for EBITDA and operating margins during the quarter. Combined, they grew EBITDA by 24% over 2019, with margins exceeding 45%. And in the Midwest and South segment, EBITDA topped 2019 levels by nearly 58%, with margins of 42%. All 26 of our open properties achieved EBITDA growth over the second quarter of 2019 with 25 properties growing EBITDA at double-digit rates. While our second quarter results were strengthened by the impact of government stimulus, improving vaccination rates, and the easing of COVID restrictions, the strong operating performance from the first half of the year has continued into July. Today, our cost structure is more streamlined, our marketing investment is more targeted, and we are successfully driving play from our most valuable customers. And while there is a bit more uncertainty today surrounding the direction of the pandemic, we are confident in our ability to continue performing well above our pre-COVID levels as we continue to successfully execute our operating philosophy. This operating philosophy has continued to deliver significant results since we reopened last year, But the real planning and implementation of many of these initiatives began before the pandemic. We have been investing in new technology, capabilities, and analytics for several years now, all aimed at gaining a better understanding of our customer base, building stronger customer relationships with our best guests, and creating a more efficient operation. Prior to COVID, we were seeing encouraging results from these investments, with solid growth in EBITDA and margins across our operations. These positive results continue to accelerate as we reopen our business last year. Since reopening, we have delivered consistent, sequential growth in play and visitation from our core customers as we realize enhanced operating efficiencies throughout our business. The proven success of this business model is why we are optimistic we can maintain much of our region margin improvements in the long term. Beyond the ongoing growth we are delivering from our core operations, We continue to pursue initiatives to further expand and enhance our business. One area of focus is the continued implementation of new technology to improve the customer experience. Boyd Pay, our cashless digital wallet, is an example of that technology. We are making good progress rolling out Boyd Pay, which is now active at five properties and should be live at 21 properties by year end, pending regulatory approvals. After successfully connecting the Boyd Pay wallet to our slot floors, We are now focused on expanding its capabilities. We will be launching a test program for non-gaming amenities in Nevada this week, followed by table games later this year. The customer response to Boyd Pay has been encouraging, with our core customers recognizing the convenience of a cashless gaming experience. As a result, we believe that Boyd Pay will be another key enhancement to our ongoing focus on building stronger relationships with our guests. Turning to the digital gaming space, Our Stardust branded online casinos are off to an excellent start in Pennsylvania and New Jersey, exceeding our expectations for player volumes and revenues since our launch in mid-April. Our sports betting partnership with FanDuel also continues to perform well. After successfully establishing partnerships with FanDuel in Pennsylvania, Indiana, Iowa, Illinois, and Mississippi, we are now setting our sights on new opportunities in Louisiana, and we are optimistic we will be able to launch FanDuel retail and mobile sportsbooks in that state before the end of the year. Our relationship with FanDuel continues to generate value for our shareholders, both through our revenue sharing arrangements as well as the significant value of our 5% equity stake in FanDuel Group. Based on our strong performance so far this year, we remain firmly on track to generate more than $20 million in EBITDA from sports betting and interactive gaming this year. While digital gaming is an attractive growth opportunity for our company, we're also pursuing strategic opportunities to expand our traditional gaming operations. Our partnership with the Wilton Rancheria Tribe near Sacramento, California, is just one example. Steel is in the ground at the Sky River Casino site. Team member recruitment is underway, and we are on time and on budget with the construction of this resort, which will include 2,000 slot machines, 80 table games, and 12 food and beverage offers. We share the tribe's excitement for the tremendous potential of this resort and look forward to opening Sky River's doors early in the fourth quarter of next year. As construction on Sky River continues, we're also evaluating opportunities to reinvest in our existing operations. One of these opportunities is Treasure Chest, which has long been a strong performer in our regional portfolio. We are currently in the planning phase of developing a land-based facility at Treasure Chest which will significantly enhance the guest experience of this property. Finally, before concluding, I want to provide an update on the company's ongoing ESG initiatives. Sharing our success with others and investing in stronger communities have always been our core values of our company, and those tenets remain as important to us as the day we were founded. We have been fortunate as a company to recover so quickly after last year's closures. But we are also well aware that there are many in our communities who are still struggling with the economic and social impacts of the pandemic, and we stand ready to help. During the second quarter, Boyd Gaming provided nearly $1 million in cash donations to charities in the communities we serve across the Midwest and South. The majority of these donations went toward organizations focused on food insecurity, which is a strategic priority of our ESG efforts. These contributions follow a similar campaign we undertook in support of the Southern Nevada community last year. We are proud to work with our nonprofit partners across the country to assist our neighbors in need, and we will continue to step up for our communities in the months and years ahead. So in conclusion, the second quarter was another remarkable performance for our company and our entire team. Our nationwide portfolio continues to generate robust levels of EBITDA and our operating strategy and tight focus on the right customer are producing the highest margins in our history. And we believe that our strong performances since reopening are largely sustainable. These achievements would not have been possible without the dedication and hard work of the entire Boyd Gaming team. It would be difficult to overstate what a great job our thousands of team members have done over these past 12 months. They have helped take our company to new heights of performance. And to thank them in a meaningful way, Boyd Gaming awarded more than $10 million in one-time cash bonuses to our frontline team members in late June. We have the best team members in the business, dedicated, hardworking, and committed to providing memorable service to our guests. It is a privilege to be part of such an incredible team. I look forward to achieving continued success together. Thank you for your time this afternoon. I'd now like to turn the call over to Josh. Josh?