Boyd Gaming Corporation

Good afternoon, and welcome to the Boyd Gaming third quarter 2025 earnings conference call. My name is David Strau, Vice President of Corporate Communications for Boyd Gaming. I will be the moderator for today's call, which we are hosting on Thursday, October 23, 2025. 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 Hirshberg, 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 statement. 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 8K, furnished to the SEC today, both of which are available at investors.boygaming.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 boygaming.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. The third quarter was another quarter of growth for our company, with revenues once again exceeding $1 billion, while EBITDA was $322 million for the quarter. After adjusting for our recent FanDuel transaction, we continued to deliver revenue and EBITDA growth on a company-wide basis, while margins were consistent with the prior year at 37%, as we successfully maintained efficiencies throughout our operations. During the third quarter, play from our core customers continued its long-term growth trend, and we saw further improvements in play from our retail customers. This strength in play drove healthy gaming revenue growth across all three of our property operating segments and more than offset the weakness in destination business. Across the portfolio, our results reflect continued broad-based improvements in customer demand, sustained operating and marketing efficiencies, and the success of our capital investments focused on enhancing our property offerings. Now, turning the segment results. A Las Vegas local segment posted revenues of $211 million and EBITDA of $92 million for the quarter. Gaming revenues continued to grow during the quarter, driven by strong demand from our local customers. We continue to benefit from ongoing growth and play from our core customers, as well as improving trends and play from our retail customers. This growth in gaming revenue was offset by declines in our destination business, primarily at the Orleans. Excluding the Orleans, our local segment delivered year-over-year growth of 2% in both revenues and EBITDA, with gaming revenue growth in line with the broader locals market for the quarter, while margins for the third quarter were consistent with the prior year at 47%, supported by disciplined marketing and operating efficiencies. For the broader Las Vegas locals market as a whole, gaming revenue growth was up more than 3% over the last 12 months, reflecting the resilience of the locals' market. The health of the locals' market is supported by solid wage growth throughout the Southern Nevada economy. Through August, average weekly wages were up more than 6% over the trailing 12 months, outpacing the national average. Over the last 10 years, the local population has grown at twice the national rate, reaching 2.4 million last year. And during the same timeframe, per capita income in the Las Vegas Valley has grown by more than 5% on an annual basis, while total personal income in Southern Nevada has nearly doubled. An important driver of this growth has been the increasing diversification of the local economy. While hospitality has continued to grow over the past decade and currently represents approximately 25% of the local job market, job gains have been more substantial in other sectors. These include education, health services, transportation, warehousing, and professional and business services sectors. Construction jobs have also remained a steady performer, growing more than 5% since 2019. With more than $10 billion in projects currently underway across the Las Vegas Valley, construction employment should remain healthy well into the future. And as we head into next year's tax season, we believe that our customers around the country will benefit from the tax bill passed by Congress this summer. including new deductions for tips and overtime and an additional deduction for seniors, as well as a larger standard deduction for all taxpayers. In all, the Southern Nevada economy remains resilient and is more diversified than ever, positioning our Las Vegas locals business for continued success. Next, in our downtown Las Vegas segment, revenues and EBITDA were in line with the prior year, supported by continued strength and play from our Hawaiian customers. Much like our local segment, growth in gaming revenues were offset by softness in destination business, including lower hotel revenues and reduced pedestrian traffic along the Fremont Street experience. Next, our Midwest and South segment achieved the strongest third quarter revenue in EBITDA performance in three years. For the quarter, revenues rose 3% to $539 million, while EBITDA grew to $202 million, more than 2% over the prior year. Operating margins once again exceeded 37%, as we remained disciplined in our cost structure and marketing spend. Growth in the segment was broad-based, including continued gains at Treasure Chest more than a year after the opening of our new land-based facility there. Similar to our Nevada segments, gaming revenues increased year-over-year in the Midwest and South, driven by continued growth in play from our core customers and further improvements in play from our retail customers. Next, results in our online segment reflected growth from Boyd Interactive, as well as changes related to our recent FanDuel transaction. Given current trends, we are increasing our guidance for this segment to $60 million in EBITDA for this year. For 2026, we expect approximately $30 million in EBITDA from this segment. Finally, our managed business had another strong performance with continued growth in management fees from Sky River Casino. Demand has remained strong over the three years since Sky River opened, giving us and the Wilton Rancheria Tribe great confidence in the growth potential of the property's ongoing expansion. The first phase of this expansion will add 400 slot machines and a 1600 space parking garage upon completion in the first quarter of next year. Once this first phase is complete, We'll begin a second phase that will further enhance SkyRiver's appeal by adding a 300-room hotel, three new food and beverage outlets, a full-service resort spa, and an entertainment and event center. On its completion in mid-2027, we are confident this expansion will further strengthen SkyRiver's position as one of Northern California's leading gaming and entertainment destinations. So in all, the third quarter is another quarter of growth for our company. Across the country, we continue to see strengthening play from our core customers and improvements in play from our retail customers against the backdrop of consistent and efficient property operations. And while the fourth quarter has just started, it is worth noting that the customer trends we saw in the third quarter have continued into October, including improving play from both core and retail customers. Our strong operating performance is supported by the investments we are making throughout our portfolio, as we enhance our casino floors, food and beverage outlets, and hotel rooms. Hotel room renovations will be completed early next year at the IP, and work is set to begin next month on a room renovation project at the Orleans. We are also continuing our modernization project at Suncoast, with the complete transformation of our casino floor, as well as enhanced meeting and public spaces. While we are dealing with ongoing construction, we are encouraged that Suncoast's performance is in line with the prior year further increasing our confidence in the long-term growth potential of this investment. Following completion of our Suncoast renovations around the middle of next year, we plan to begin a similar project at the Orleans as we look to further enhance our offerings at this important property. In addition to these property enhancements, we are continuing work on our growth capital projects with an annual budget of $100 million per year. In September, we completed our expanded meeting and convention center in Ameristar St. Charles. By nearly tripling the size of its meeting space, Ameristar can now accommodate more and larger events. This will create incremental visitation from new customers as well as groups who had previously outgrown our space. We are already seeing great interest with strong bookings in the fourth quarter and into the next several years. In Southern Nevada, construction is progressing on Cadence Crossing, our newest Las Vegas locals property. Scheduled to open in the second quarter of 2026, Cadence Crossing will replace our existing Joker's Wall Casino with a modern and appealing gaming and entertainment facility. This investment will allow us to better serve the adjacent community of Cadence, one of the fastest growing master plan communities in the nation. And we are well positioned to keep pace with continued residential growth in the area future plans for hotel, additional casino space, and more non-gaming amenities. Next in Illinois, we're continuing the design and planning work for our new gaming facility at Paradise, and expect to start construction in late 2026, pending regulatory approval. Finally, development is well underway on our most significant growth opportunity, our $750 million resort development in Norfolk, Virginia. Pending regulatory approval, we are just a few weeks away from opening our transitional casino at the site. And while we look forward to reaching this key milestone, our focus remains on the development of our permanent resort scheduled to open in November of 2027. This market-leading resort experience will feature a 65,000 square foot casino, two-in-a-room hotel, eight food and beverage outlets, live entertainment, and an outdoor amenity deck. In addition to offering the highest quality gaming experience in the market, we will have the most convenient location for much of the 1.8 million residents of the Hampton Roads region, as well as the 15 million tourists who visit nearby Virginia Beach each year. In all, our capital investments are delivering strong returns for our company, enhancing our competitiveness and supporting our long-term growth. At the same time, our substantial free cash flow and strong balance sheet allow us to continue returning capital to our shareholders. During the third quarter, we repurchased $160 million in stock and paid $15 million in dividends. So far this year, we have returned a total of $637 million to our shareholders. Share repurchases and dividends are important components of our balanced approach to capital allocation. We intend to maintain a pace of $150 million per quarter in share repurchases supplemented by our recurring dividend. In closing, we are pleased to deliver another quarter of strong performance as we continue to execute on our strategy and create long-term value for our shareholders. During the quarter, we continue to benefit from strong growth in plate from our core customers, as well as improving plate from retail. Our capital investment program is delivering excellent returns and positioning us well for future growth. Our teams across the country are successfully maintaining efficiencies and delivering consistent property operating results. And we continue to return substantial capital to our shareholders, while maintaining the strongest balance sheet in our company's history. Our success is a reflection of the dedication and contributions of thousands of Void Gaming team members across the country. We are grateful for all that they do for our company and our guests. Thank you for your time today. I would now like to turn the call over to Josh.

Thanks, Keith, and good afternoon, everyone. During the third quarter, play from our core customers continued its long-term growth trend. while retail customers' play also continued to improve. Management teams did their part, remaining focused on operating efficiently and generating returns from our capital investments. As a result, excluding the effects of our recent FanDuel transaction, we continue to deliver growth in revenue and EBITDA despite weakness in our destination business. We are continuing our capital investment program to enhance our guest experience while expanding our opportunities for growth. During the third quarter, we invested $146 million in capital, bringing year-to-date capital expenditures to $440 million. We now expect total capital expenditures for this year to be approximately $600 million. Capital plans include approximately $250 million in recurring maintenance capital, an additional $100 million in maintenance capital related to hotel room renovation projects, $100 million in growth capital, which includes the recently completed meeting and convention space at Ameristar St. Charles and the ongoing Cadence Crossing development here in Las Vegas, and then finally $150 million or so for our casino development in Virginia. Our growth capital projects remain on budget and on schedule. In terms of our shareholder capital return program, we paid a quarterly dividend of 18 cents per share during the quarter, totaling $15 million. Also during the quarter, as Keith mentioned, we repurchased $160 million in stock, acquiring 1.9 million shares at an average price of $84.05 per share. Actual shares outstanding at the end of the quarter were 78.6 million shares, an 11 percent reduction in our share count since the third quarter of last year. Since we began our capital return program in October 2021, we have returned more than $2.5 billion in the form of share repurchases and dividends, while reducing our share count by 30 percent. Going forward, we intend to maintain repurchases of approximately $150 million per quarter, supplemented by our regular quarterly dividend. This equates to more than $650 million per year or more than $8 per share. With strong free cash flow, low leverage, and ample liquidity, we are maintaining the strongest balance sheet in our company's history while continuing to invest in our business and return capital to shareholders. As you may recall, during the quarter, we closed on our transaction to sell our 5% stake in FanDuel. We initially used proceeds from that transaction to repay our term loan A balance and borrowings outstanding under our revolver. As a result, our total leverage ratio declined from 2.8 times at the end of the second quarter to 1.5 times at the end of the third quarter. Our lease adjusted leverage declined from 3.2 times to 2.0 times. Finally, beginning with this quarter's financial results, we have provided the tax pass-through amounts as a separate line item on our GAAP income statement. Excluding the tax pass-through amount for this quarter, company-wide margins for the third quarter this year would have been 510 basis points above the margin we reported. In conclusion, with strong play from our core customer and improving trends among our retail customers, efficient operations, robust free cash flow, and a strong balance sheet, we have outstanding flexibility to continue executing our strategy for creating long-term value for our shareholders. With that, I'd like to turn the call to David to open the call for questions. David?