Continuing JP Morgan‘s march through Las Vegas, senior analyst Joseph Greff met with Boyd Gaming CEO Keith Smith and CFO Josh Hirsberg. They seemed pleased, on the whole, marveling and the resilience of their customers, whose play was “amazingly consistent” no matter how many Covid-related mandates you throw at them. Downtown, they conceded was somewhat more of a challenge, given the lack of Hawaiian players. Spend per visitor, however, is above 2019 levels “which management attributed to a healthy consumer backdrop and a higher value customer coming through the doors.” This is some cooling-off in the regional markets, although Las Vegas locals and drive-in players remain stalwart. Boyd has even ceased marketing to low-value customers, what with Baby Boomers returning … albeit not yet at previous magnitude.
Management said it’s have trouble filling jobs, “noting that the shortage is somewhat limiting the amenities that can be offered.” That, in turn, is inhibiting revenue growth. Currently Boyd is at 60% of workforce strength compared to two years ago and “Surprisingly, the expiration of unemployment insurance/stimulus in some states has not resulted in people coming back to work.” Boyd is improving its profit margins by savaging marketing spending and relying less on full-time employees. (And they wonder why they’re having problems re-staffing.) Dark Eastside Cannery will remain so until January, possibly March. After all, it’s redundant to Sam’s Town next door, where business is “strong, but not overdone to level where additional capacity is needed.” A final bit of good news is that Boyd has gotten its leverage down to 3X equity or thereabouts, another sign of a company that rarely strays from sound business fundamentals.
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