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Boyd continues to feel Covid-19 impact in Q3


Casino operator Boyd Gaming said novel coronavirus (Covid-19) weighed on its third quarter performance, reporting a 20.4% year-on-year drop in revenue for the period.

Group revenue for the three months to September 30 amounted to $652.2m, down from $819.6m in the corresponding period last year.

Gaming revenue was down 7.7% from $613.5m to $566.0m, as Boyd’s properties were forced to continue operating at limited capacity due to state orders related to the Covid-19 pandemic.

However, the operator noted that despite the year-on-year decline, this total did represent an improvement on Q2, during which gaming revenue only reached $185.1m, due to many of its properties being closed for much of the reporting period due to Covid-19.

Food and beverage revenue in Q3 was down by 64.1% year-on-year to $38.8m, while room revenue fell 55.7% to $26.9m, and other revenue 44.8% to $20.6m.

In terms of geographical performance, Boyd saw revenue declines across all of its core markets.

Revenue in Las Vegas, Nevada, fell 19.8% to $171.1m in Q3, while downtown Las Vegas revenue plummeted 71.1% to $17.6m, and Midwest and South revenue 15.0% to $463.6m.

Despite these declines, Boyd president and chief executive Keith Smith praised the operator’s performance in Q3, saying it had successfully adapted in order to reduce the pandemic’s impact on the business.

“During the third quarter, we successfully navigated the challenges presented by the Covid-19 pandemic thanks to our outstanding operating team,” Smith said. “By effectively yielding our casino floors and amenities while implementing new efficiencies throughout our business, we greatly enhanced our operating performance in a lower-revenue environment.”

This approach included lower spending, with operating costs for Q3 down 25.6% to $525.2m, with expenses cut across a number of areas. This saw Boyd make a number or employees redundant in Q3, with more staff having also been let go after the end of the quarter.

Boyd’s main outgoing was gaming-related costs, though spending here was reduced by 22.2% to $215.0m, while food and beverage costs were slashed by 62.1% to $38.7m, and room spend more than halved to $12.9m.

Other major savings included cutting selling, general and administrative costs by 25.6% to $87.0m, and reducing maintenance and utilities spending by 18.4% to $33.8m. However, depreciation and amortisation expenses edged up 6.5% to $69.3m.

Reduced spending meant Boyd saw its operating profit climb 12.1% to $127.1m, and after taking into account other costs – including interest expenses of $62.4m – of $57.4m, this left Boyd with a profit before tax of $69.7m, up 29.6% on last year.

Boyd paid $31.6m in taxes during the third quarter, which left it with an overall profit of $38.1m for the period, which was only slightly lower than $39.4m in Q3 of 2019. However, earnings before interest, taxes, depreciation, amortisation and restructuring or rent costs (EBITDAR) climbed 11.9% year-on-year to $238.8m.

“On a company-wide basis, we delivered 12% EBITDAR growth and improved operating margins by more than 1,000 basis points, as both our Las Vegas Locals and Midwest and South segments set records for quarterly EBITDAR and margins,” Smith said.

Smith also picked out a number of major highlights for Boyd in Q3, including expanding its partnership with FanDuel Group, and launching mobile sports betting platforms in Illinois and Iowa.

Looking at how Q3 impacted Boyd’s year-to-date performance, revenue for the nine months to the end of September stood at $1.54bn, down 38.2% on the same period last year.

Gaming revenue was 32.5% lower at $1.26bn, with food and beverage revenue down 57.9% to $139.3m and rooms revenue 55.0% to $80.6m.

Operating costs were reduced by 23.2% to $1.64bn, but as this was higher than total revenue for the period, this meant Boyd posted an operating loss of $97.0m, compared to a profit of $357.7m last year.

After accounting for $167.8m in other finance costs, this left the operator with a $264.8m loss before tax, in contrast to a $176.3m profit in 2019. Boyd did secure $46.8m in tax benefits in the period, but still posted a net loss of $218.0m, compared to a $133.3m profit last year.

“We are proud of our team’s ability to successfully execute our strategy and are committed to sustaining a more efficient and profitable operating model into the future,” Smith added.