Boyd Gaming has stirred the industry with discussions of potential mergers and acquisitions (M&A), highlighted during its post-Q2 earnings call. Speculations have emerged regarding a joint bid with Flutter Entertainment for Penn Interactive. Although both Boyd and Flutter have kept their cards close to their chest, the strategic division would see Boyd acquire the brick-and-mortar operations, while Flutter would take over the digital segment, including ESPN Bet.
During the earnings call on July 25th, M&A was a focal point. CEO Keith Smith didn’t dismiss the possibility of future deals, stating that historically, the majority of Boyd’s growth has been through acquisitions. Smith emphasized the company’s expertise in integrating new properties and extracting value from them, underscoring a readiness to seize opportunities that arise.
Keith Smith articulated Boyd’s preference for acquiring “wholeco” assets despite the current market complexities, where many assets are part of intricate operational or property structures. Smith mentioned Boyd’s previous success with the acquisition of Pinnacle assets, highlighting that such strategic moves are not a barrier to growth.
In discussing monetizing existing real estate, Smith maintained that owning their properties gives Boyd flexibility and financial leverage. He explained that financing could be more cost-effective than trying to monetize real estate assets. This approach reflects Boyd’s strategic thinking in evaluating M&A opportunities.
Boyd Gaming reported a notable 5.5% increase in revenue for Q2, reaching $967.5 million. The standout performer was the interactive segment, with revenue soaring by 52.8% to $129.9 million. This success can be attributed to Boyd’s 5.0% stake in Flutter’s FanDuel, which has proven to be a lucrative investment.
Given the success of the online segment, Boyd has adjusted its full-year targets for adjusted EBITDAR, now expected to be between $65.0 million and $70.0 million. Despite the strong performance, Smith mentioned there are no immediate plans for online M&A, indicating contentment with the current trajectory and the strategic value of their stake in FanDuel.
The Midwest & South segment remained the primary revenue driver, generating $521.8 million, a slight increase of 0.6%. Boyd observed stable retail play and growing core customer activity in this region.
In contrast, the Las Vegas Locals segment experienced a 2.4% decline in revenue, though it showed improvement over Q1. Meanwhile, Downtown Las Vegas saw an 8.9% increase in revenue, benefiting from improved visitation compared to the first quarter.
Overall, Boyd’s Q2 results showed a mixed bag. Total revenue saw positive growth, but the bottom line was impacted by higher operating costs. Operating expenses rose by 10.0% to $740.4 million, with gaming costs being the most significant expense at $252.1 million. Despite generating a pre-tax profit of $184.5 million, this represented a 9.4% decline year-on-year. Net profit fell by 27.4% to $139.8 million, with adjusted EBITDAR slipping 2.5% to $316.3 million.
