Boyd Gaming Corporation

Good evening. Thank you for attending today's Boyd Gaming fourth quarter earnings call. My name is Bethany and I will be your moderator for today's call. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. If you would like to ask a question, please press star one on your telephone keypad. I would now like to pass the conference over to our host, Josh Hershberg, Executive Vice President Chief Financial Officer and Treasurer at Boyd Gaining. Please go ahead.

Thank you, Bethany. Good afternoon, everyone, and welcome to our fourth 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 and 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'll 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 8K, furnished to the SEC today, and both of which are available at investors.boyd.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 would now like to turn the call over to Keith Smith. Keith.

Thanks, Josh, and good afternoon, everyone. 2021 was a record-breaking year for our company, and the fourth quarter was certainly no exception. For the fourth time in a row, we set new quarterly records for EBITDA and operating margins on a company-wide basis. EBITDA increased 65% to $347 million as we posted company-wide operating margins of 39.5%, once again proving our ability to deliver strong operating margins. Our fourth quarter operating margin was almost 640 basis points ahead of the fourth quarter record we set 12 months ago and was up more than 1,200 basis points from the fourth quarter of 2019. Just as importantly, our continued operating efficiency did not come at the expense of top-line results. Revenues grew more than 38% year-over-year and were up nearly 6% from the fourth quarter of 2019. Every segment of our business contributed to this exceptional performance, with 24 of our 27 open properties growing revenues at a double-digit rate during the quarter. And 26 of our properties achieved double-digit EBITDAHR increases, The sole exception was our property in Shreveport, where we are contending with a new smoking ban. In a Las Vegas locals business, revenues rose 46% over the prior year, EBITDA was up 76%, and margins exceeded 52%. This marks the fourth straight quarter that we have achieved margins of 50% or greater in our locals business. Downtown Las Vegas had an equally impressive performance, posting record EBITDA $20.2 million, and margins of nearly 38% for the quarter. And in our Midwest and South segment, revenues grew more than 29%. EBITDA was up over 42%, and margins increased approximately 350 basis points to more than 38%. On a full year basis, we achieved record company-wide revenues of nearly $3.4 billion, EBITDA of almost $1.4 billion, and operating margins over 40%. 2021 marked the first time that our EBITDA exceeded the billion-dollar mark, surpassing our previous annual record by nearly $500 million. And at 40.5%, our company-wide margin was more than 1,250 basis points higher than the prior annual record set in 2020. This strong performance, is the direct result of our operating team's incredible efforts over the past 18 months. By streamlining our cost structure, enhancing our capabilities, and focusing on our core customers, we have been able to consistently deliver exceptional results since reopening. In terms of more recent trends, while we have seen some slowing in late December and January due to the Omicron surge and winter weather, business improved as we moved through the month of January with both revenue and EBITDA exceeding the prior year for the month of January. While our 2021 results set a high bar for us going forward, we expect our business to continue to perform from a position of strength in 2022 as we have a number of organic growth opportunities available to us. One of the more significant opportunity is an increased hotel occupancy in the gaming revenue associated with these incremental rooms. Today, we are unable to fulfill or I'm sorry, today we are unable to fully accommodate the demand from our customers due to labor constraints. So as the labor market recovers, we expect we will be able to drive incremental growth from these customers. We also expect to see further growth in our operations as meeting and convention business and midweek travel continue to recover. Looking beyond 2022, we expect to drive additional growth from several development projects now underway across the country. In Northern California, Sky River Casino remains on budget and on schedule to open early this fall. The building structure is now complete and our focus has turned to completing the interior and the infrastructure for this operation. Conveniently located just south of Sacramento, we believe Sky River will be ideally positioned to become one of the region's top performing tribal casinos. As a reminder, we have entered into a seven-year management agreement with the Wilton Tribe and will receive a management fee typical for these types of arrangements. Next, in Louisiana, we will soon begin work on a $95 million project that will convert Treasure Chest Casino into a fully land-based facility, meaningfully enhancing this property's performance after its projected opening in late 2023. We will be expanding and enhancing the gaming experience and our food and beverage offerings, adding meeting facilities and greatly improving the accessibility and convenience of our parking. In all, this project will significantly improve the Treasure Chest experience for our loyal customers, and it will give newcomers a compelling reason to visit us for the first time. Finally, in downtown Las Vegas, we've begun work on a renovation and upgrade of our Fremont property. This $50 million project will upgrade Fremont's food and beverage offerings while expanding and enhancing its gaming floor. Based on the demand we are already seeing at the Fremont today, We expect to see excellent returns from this investment following its completion in early 2023. In addition to growth investments in our properties, we believe there's also considerable potential from our online business. Across the country, our partnership with FanDuel continues to grow. Over the last two months, we opened FanDuel Sportsbooks in each of our five Louisiana properties, and we launched mobile sports betting in Louisiana last week. With the addition of Louisiana, we have now expanded the FanDuel sports betting partnership to six of our nine regional states. Next to come is Ohio, which passed sports betting legislation in December and is expected to go live toward the end of 2022. While online and retail sports betting are increasingly important parts of our business, we see a more compelling digital opportunity in online casino gaming. We view iGaming as an attractive complement to our existing land-based operations and an opportunity to engage our customer base by integrating online gaming with our existing player loyalty program. We took the first steps towards this vision last April with the launch of the Stardust branded online casinos in Pennsylvania and New Jersey. And we have further strengthened our digital presence through Stardust Social Casino, which has allowed us to establish a digital foothold in states that do not allow real money online gaming today. Currently, online casino is still in its infancy. Only six states have legalized iGaming so far, though a number of states have introduced legislation in recent months. In 2021, our digital operations generated approximately $24 million in EBITDA for our company. And we expect EBITDA to exceed $30 million in 2022 from our online operations. And as iGaming continues to expand into new markets across the country, we believe the upside could become even more significant in the years ahead. So in all, as we look back on 2021, we delivered outstanding results for our shareholders by every measure. And with continued growth opportunities still ahead, we are optimistic about 2022. As a result of our strong financial performance, our company is generating more free cash flow than ever before. We have put this free cash flow to work by significantly delivering our balance sheet and beginning a robust program to return capital to our shareholders. Earlier today, we announced that our board has approved a $0.15 per share dividend starting this April. This dividend is more than double the amount we were paying pre-pandemic. This dividend is in addition to the $300 million share repurchase program our board approved in October. To date, we have bought back $150 million in stock since we resumed our share repurchase program. This capital return program reflects the strength of our business, our confidence in the future, and our commitment to pursue a balanced approach in creating long-term shareholder value. While we are proud of our operational successes and what we are delivering for our shareholders, we have always believed that our mission goes beyond financial performance, and we remain committed to responsible corporate citizenship through our ESG programs. Thanks to initiatives like water and energy conservation, reducing carbon emissions, and promoting diversity and responsible gaming, we are making a positive and meaningful impact on our communities and our stakeholders across the country. We look forward to sharing more with you about these initiatives when we publish our next ESG report this spring. Before we conclude, I want to take a moment to again recognize our team members across the country who truly made this exceptional year possible. Like all employers, we have contended with a very tight labor market over the past year. and that has made it more challenging to hire team members and to fill openings. Yet, our team members have continued to deliver outstanding guest service, going above and beyond to serve our customers. I'm tremendously proud of what they have been able to accomplish, and it is a pleasure to be part of such a dedicated team. Our team members have always been the foundation of our success, and together we have achieved incredible results in 2021. And as we look ahead to 2022, I am as confident as ever in the direction of our company and our ability to continue creating long-term value for our shareholders. Thank you for your time today. I'd now like to turn the call over to Josh. Josh?