Cash flow records for Boyd lead to reinstatement of dividend

Boyd Gaming Corp. is investing $50 million in the Fremont hotel in downtown Las Vegas, the company’s top executive said Thursday.

Keith Smith, president and CEO of the Las Vegas-based company, noted the plans during an earnings conference call with investors following a profitable fourth quarter and 2021.

“This $50 million project will upgrade Fremont’s food and beverage offerings by expanding and enhancing its gaming floor,” Smith told analysts. “Based on the demand we are already seeing at the Fremont today, we expect to see excellent returns from this investment following its completion in early 2023.”

Smith also said the company’s board of directors authorized a quarterly cash dividend of 15 cents per share on April 15 to shareholders of record as of March 15, more than double what the company paid prepandemic.

The move follows Boyd reporting record companywide cash flow and operating margins for the fourth straight quarter.

The company reported net income of $109.8 million, 96 cents a share, on revenue of $879.8 million for the quarter that ended Dec. 31. That compared with net income of $83.3 million, 73 cents a share, on revenue of $635.9 million.

For the year, Boyd posted net income of $463.8 million, $4.07 a share, on revenue of $3.37 billion. That compares with a net loss of $134.7 million, $1.19, on revenue of $2.178 billion in 2020.

“Every segment of our business contributed to this successful performance with 24 of our 27 open properties growing revenue at a double-digit rate during the quarter and 26 of our properties achieved double-digit (cash flow) increases with the sole exception being our property in Shreveport, (Louisiana), where we are contending with a new smoking ban,” Smith said.

“By streamlining our cost structure, enhancing our capabilities and focusing on our core customers, we have been able to consistently deliver exceptional results since reopening,” he said.

As a regional casino operator, Boyd has other opportunities beyond Nevada, where it has three downtown Las Vegas properties and several locals casinos.

The company is spending $95 million to convert its Treasure Chest casino on Lake Pontchartrain in New Orleans into a fully land-based casino by late 2023.

It also has a seven-year management agreement beginning in the fall to operate the tribal Sky River Casino, south of Sacramento, California.

Boyd has a partnership with FanDuel, a daily fantasy sports company, to operate sportsbooks in six of its nine regional states. FanDuel books opened in the company’s five Louisiana casinos with a new state, Ohio, due to go live by the end of the year.

Smith also was enthusiastic about the company’s iGaming initiatives, using the company’s Stardust brand to attract customers.

He said the company is generating more free cash flow than ever before, enabling the return of $500 million to shareholders, through dividends and with $150 million in stock buybacks since a share repurchase plan was restarted last year.

In response to an analyst’s inquiry, Smith said a brief lull in casino visits as a result of the omicron variant occurred in late December, but crowds have returned in January. Smith said it is unclear how much mask mandates are affecting casino visitation. He added that visitation from Hawaii, one of Boyd’s strengths with its decadeslong association with the islands, still hasn’t returned to 2019 levels.

Labor constraints have reduced some visitation, but Smith is convinced workers gradually will return as midweek visitation and convention traffic perks up.

Smith is enthused about the company’s downtown Las Vegas prospects.

“There’s a new property, Circa, bringing people to downtown, but most people will usually visit at least one of our three properties downtown because of the value,” he said.

Joe Greff, a gaming industry analyst with J.P. Morgan, said he was impressed with Boyd’s quarter.

“If we were to be honest, we wouldn’t be able to tell that there was a December impact from omicron in this report,” he said. “Obviously, fourth-quarter 2021 results would have been much stronger than what was reported. We were pleased to hear more specificity around its capital return plans, relevant given its impressive free-cash-flow generation and current balance sheet leverage that doesn’t require or need any more deleveraging.”

Boyd shares, traded on the New York Stock Exchange, were down 66 cents, 1.1 percent, in average volume trading Thursday. After hours, shares clawed back 85 cents, 1.4 percent, to $60.40 a share.

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