Boyd Gaming expects boost from 5 new acquired properties

Fresh off a profitable third quarter, Boyd Gaming Corp. is primed to enter five markets in four new states and has a new partnership with a prominent sports wagering company in its pocket.

Las Vegas-based Boyd on Thursday said its three downtown Las Vegas properties performed at record levels despite a downturn in cash flow from Hawaiian visitors delivered by charter airlines facing higher fuel costs and disruptions resulting from nearby Project Neon freeway construction.

The company reported a 3.5 percent increase in revenue to $612.2 million for the quarter that ended Sept. 30. Wall Street analysts had projected revenue of $611.8 million.

Net income was off 52.6 percent to $27 million because of higher interest costs resulting from Boyd’s acquisition of four midwestern properties from Pinnacle Entertainment Inc.

The four properties — Ameristar St. Charles and Ameristar Kansas City in Missouri; Belterra Casino Resort in Florence, Indiana; and Belterra Park in Cincinnati, Ohio — were acquired for $575 million through a Federal Trade Commission requirement that Penn National Gaming divest them as part of its acquisition of Pinnacle completed earlier this month.

Boyd also announced in December that it would acquire the Valley Forge Casino Resort in King of Prussia, Pennsylvania, for $280.5 million.

Boyd President and CEO Keith Smith said the acquisitions expand the company’s “geographic reach and significantly strengthens our robust free cash flow.”

The company believes it will achieve cash flow synergies of $8 million from the Pinnacle properties and $5 million from Valley Forge.

“In addition, our recent strategic partnership with FanDuel Group puts us in strong position to take full advantage of emerging sports-betting and interactive gaming opportunities that will expand our appeal to new groups of customers nationwide,” Smith said.

The partnership with FanDuel is part of an emerging trend for established gaming companies to team with brands with which new sports bettors are familiar in states where sports wagering has been legalized or is on the verge of legalization, industry analyst Chris Grove, managing director of Eilers & Krejcik said in a recent interview.

Boyd already has begun capitalizing on the legalization of sports betting in Mississippi, Smith said, with bets being taken at the company’s Sam’s Town Tunica and IP Biloxi properties.

In Boyd’s Downtown Las Vegas segment, revenues were $59.2 million in the third quarter of 2018, up from $58.8 million in the year-ago period, Smith said. Adjusted cash flow was $11.4 million in the third quarter of 2018, compared to $11.6 million a year earlier, reflecting an increased loss of about $900,000 from the company’s Hawaiian charter service.

Boyd shares, traded on the New York Stock Exchange, closed up $1.93, 7 percent, to $29.59 a share Thursday on volume of more than twice the average daily level.

Contact Richard N. Velotta at rvelotta@reviewjournal.com or 702-477-3893. Follow @RickVelotta on Twitter.