Using words like “strong” and “easily surpasses forecasts,” Deutsche Bank analyst Carlo Santarelli gave Boyd Gaming a thumbs-up for 4Q24. This was despite a “cautious tone” in the previous earnings call and “choppy” regional performance in the most recent quarter. Looking ahead, Boyd management highlighted “areas of concern in a prudent, but not overly draconian manner.” But on Wall Street you’re only as good as your last quarter, so let’s see what it divulged.
Boyd’s cash flow was $356 million, 8% higher than The Street’s consensus estimate. Net revenue was $954.5 million. J.P. Morgan analyst Joseph Greff noted that, with $235 million in revenue, Boyd’s Las Vegas locals casinos were “doing much better than feared (fears stoked given new competition in that market with the December opening of Red Rock’s $790m Durango property) on both revenues and margins performance.” The company also outperformed in both the Midwest and Dixie, while online activity and the Sky River Casino management contract chipped in another $124 million and $34 million, respectively. “Overall, we were pleasantly surprised with the quarter,” wrote Greff, adding that there wasn’t “meaningful” cannibalization from Durango Resort. Locals-derived revenue was down 2.5% but Greff had expected worse.
Having absorbed salary increases and property insurance in 3Q23, Boyd execs’ message was that “the worst of its cost pressures are over.” Expenses are expected to continue increasing but at a slower cadence. If gambling dollars were down a bit, Vegas hotel revenues rose and F&B was described as “strong.” The current quarter will be more challenging, especially with 50% of Gold Coast rooms out of action for renovation. Back online at full strength was the Fremont Hotel, which enabled the Downtown properties to come in slightly ahead of projections. Ditto a “record” quarter at Main Street Station. Greff reported that “core and retail play [are] both growing nicely, which management expects to continue into 2024 on easier comparisons.”
Regionally, Boyd is seeing the benefit of capex reinvestment, especially in its F&B returns. It came in just shy of a half-billion in revenue from its outlying casinos, even if gambling win was flat. Management warned that “severe winter weather” was dampening 1Q24 numbers but that lately business was back up to end-of-year levels. One other bright note: Internet gambling and sports betting generated a positive ROI of $17 million. It may not seem like much but it’s a start. Greff raised his price target on BYD two dollars, to $80/share. Santarelli was even more exuberant, going from $73/share to $78. Other analysts, as is their annoying wont, evidently pestered Boyd bosses to make some kind of big M&A move. The brass were not to be budged, “again reiterating that the deal would have to be needle moving, while also noting their limited appetite for the sale-leaseback model.” Good for them.
Sports bettors in the Free State gave operators a heyday last month, as revenue rocketed up 35% (to $78 million) and money wagered vaulted 25%, to $528 million. Give the credit for the outperformance to an astronomical hold rate of 15%. Sports books shelled out $22.5 million in promos and free-play offers. Despite curbing promos by 85%, ESPN Bet held its ground quite well, with market share (as measured in bets) going from 8% in December to 7% in January. FanDuel led operators with $44 million in win, followed by DraftKings with $23.5 million. Then came BetMGM ($5 million), Caesars Sportsbook ($2 million) and ESPN Bet ($1.5 million). BetRivers and Fanatics were ostensibly in there pitching but only came up with a million bucks, combined.
As was evidently the case in Maryland, Illinois and Iowa, casino revenues in Indiana were said by Joseph Greff to have been dented by severe winter conditions, Big Gaming feeling the pain of climate change. Hoosier State casinos grossed $166 million, a 16% dropoff from last year and 6% off 2019. Greff blamed some of the declivity on Bally’s Casino in Chicago but we think that gives Bally’s too much credit. Hard Rock Northern Indiana was comfortably on top with $31.5 million (-10%). Horseshoe Hammond absorbed a 29% wallop, down to $19 million. Also hit hard was Blue Chip ($8 million, -22%), while Ameristar East Chicago was down 21.5% to $13 million. Obviously people mind the weather less when Hard Rock is their destination.
Both Horseshoe Indianapolis ($22 million, -15.5%) and Harrah’s Hoosier Park ($15 million, -12%) were both severely affected but not half as bad as Belterra Resort ($5 million, -24%). Only French Lick Resort had the weather problem licked, being just 6% down to $6 million. Bally’s Evansville slipped 10% to $13.5 million, Caesars Southern Indiana dropped 13% to $19 million and Hollywood Lawrenceburg dipped 8% to $12 million. That leaves little Rising Star, off 13% to $3 million. Let’s hope Boyd management is right and February proves out much better.
Sports betting revenues were aided by high hold, catapulting 47% to $53.5 million. Handle was just 13% higher, at $481 million. As is so often the case, FanDuel was tops, netting $23 million to DraftKings‘ $19 million. Other players of consequence were BetMGM ($4 million), Caesars Sportsbook ($3 million) and ESPN Bet ($1.5 million). BetRivers and Fanatics earned participation trophies.
Just when one is trying to go easy on DraftKings, what does CEO Jason Robins do but something truly vile, such as bringing foul Dave Portnoy back into gaming. Details of the deal, announced late yesterday, are sketchy. However, one can see the attraction between Robins’ brash corporate culture and Portnoy’s outhouse-oriented one.
Finally … last night saw an epic Super Bowl, one in which it took almost 15 minutes of overtime for the Kansas City Chiefs to prevail over the San Francisco 49ers. We learned that one should never, ever, ever count Patrick Mahomes out. It was Las Vegas‘ biggest-yet moment on the world stage and Sin City delivered, whether in the eye candy (think MSG Sphere) or the entertainment, which was plentiful. The NFL and the world’s gambling capital have come together, and it didn’t feel like an unholy alliance. Far from it. Let’s do this again, NFL … and soon.