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Boyd Q2 revenue falls 75% after Covid-19 closures


Regional casino operator Boyd Gaming saw revenue for the quarter ending 31 June collapse by 75.2% due to the novel coronavirus (Covid-19) outbreak, as the business recorded losses of $108.5m. 

Of Boyd’s $209.9m of revenue from the second quarter of 2020, $185.1m came from gaming, down 70.8% year-on-year. The operator made a further $10.7m from food and beverages, down 90.5% while room revenue collapsed 88.7% to $6.9m from rooms, and other revenue fell 77.8% to $7.2m.

Breaking revenue down by region, the vast majority of revenue came from Boyd’s midwestern and southern venues, which brought in $156.5m. However, this figure was still down 72.1%. Boyd’s Las Vegas local casinos saw revenue fall 78.0% to $48.7m, while revenue for its downtown Las Vegas properties came to just $4.7m, down 93.8%.

Boyd’s operating costs also fell sharply, by 58.9% to $296.2m, but not as drastically as revenue.

The largest operating expense was cost of sales in gaming, which fell 72.8% to $76.8m. Food and beverage costs of sales fell 83.9% to $16.7m while costs of sales from rooms were down 81.7% to $5.1m and other costs of sales declined by 91.3% to $2.2m.

Selling, general and administrative expenses, meanwhile, were down 48.4% to $60.3m while rent expenses rose 4.0% to $25.4m. Maintenance and utility costs were down 44.5%, at $21.7m.

Boyd incurred depreciation and amortisation charges of $69.2m, up 1.7%, while corporate expenses fell 48.2% to $14.0m. Project development, pre-opening and writedown costs came to $3.8m, down 22.2%, while other operating costs increased by almost 1000% to $1.1m.

After these costs, Boyd’s operating loss came to $86.3m, compared to a $126.7m profit in Q2 of 2019.

The business paid a further $58.6m in net interest costs, down 4.5% year-on-year. It lost a further $412,000 through early extinguishments and modifications of debt and $115,000 through other losses. This resulted in net financial expenses of $59.2m, down 2.2% year-on-year.

After these costs, Boyd’s pre-tax loss came to $145.5m, compared to a $66.2m profit the year prior.

However, the business received $37.0m in income tax provisions, after paying $17.7m in taxes in 2019. 

This meant Boyd made a net loss of $108.5m, compared to a $48.5m profit in 2019.

Despite the losses, Boyd president and chief executive officer Keith Smith said performance had looked promising since it was able to reopen its properties again.

Smith noted that earnings before interest, tax, depreciation amortisation and restructuring (EBITDAR) for the period in which venues were open again grew year-on-year, thanks to high margins and spending per customer.

“Across the country, our team members did a tremendous job getting our properties back open quickly and safely over the final six weeks of the quarter,” Smith said. “And since reopening began, we are off to an excellent start. On a comparable basis at our reopened properties, we achieved company-wide EBITDAR growth and significant margin improvement while complying with state-regulated reductions in gaming capacity. 

“During the reopening period, our Midwest and South properties posted double-digit EBITDAR gains, while our Las Vegas Locals properties also improved EBITDAR performance versus prior year. While overall visitation and revenues are down, spend per visit is robust and we have successfully streamlined operating and marketing expenses to drive margin gains of more than 1,000 basis points in both the Midwest & South and Las Vegas Locals segments.”

He added that these positive trends had continued into July, which gave the business confidence that it could sustain increased efficiencies in its operating model.

Turning to the first half of 2020, Boyd’s revenue came to $890.3m, down 46.3%. Gaming was responsible for $694.9m of this revenue, down 44.5%. Food and beverages brought in $100.5m, down 54.8%, while room revenue declined 54.7% to $53.6m and other revenue was down 47.0% to $41.3m.

In terms of regions, the operator’s casinos in the south and midwest brought in $602.2m, down 45.4%. Its Las Vegas local casinos saw revenue fall 48.3% to $229.5m while its downtown Las Vegas properties brought in $58.8m, down 53.9%.

Operating expenses for the half-year came to $1.11bn, down 22.0%. Costs of sales for gaming came to $315.5m, for food and beverages $106.6m, for rooms $28.1m and for other income $23.6m.

Selling, general and administrative expenses fell 25.2% to $173.7m while rent expenses grew 1.8% to $50.1m and maintenance and utility costs declined 30.1% to $54.8m.

Depreciation and amortisation costs grew by 0.6% to $136.2m, while corporate expenses fell 33.2% to $38.9m and project development costs were down 18.8% to $7.3m.

In addition, the business incurred a $171.1m impairment cost in the first quarter of the year.

These costs resulted in an operating loss of $224.1m., compared to a $244.3m profit the year before

After net financial expenses of $110.4m, down 9.4%, Boyd’s pre-tax losses came to $334.5m, compared to a profit of $122.5m in 2019.

The business received $78.4m in tax benefits, compared to paying $28.5m in taxes in 2019, meaning its final loss for the half-year came to $256.1m, after having made a profit of $93.9m in 2019.

Smith said that going forward, the online sector would become a larger part of Boyd’s business. Boyd launched Stardust, a social casino app, earlier this month as well as an online casino product in Pennsylvania through a partnership with FanDuel. This partnership was also extended to Indiana and Iowa, where FanDuel offers a sports betting product in partnership with Boyd-operated casinos.

“We are also making great progress positioning our company for the digital future of our industry. With the recent launch of our Stardust Social Casino mobile app, we established our first interactive gaming presence under the Stardust brand,” Smith said. “We also continued to expand our strategic partnership with FanDuel Group as we introduced an online casino product in the state of Pennsylvania. 

“With our industry-leading strategic partner and the iconic Stardust brand, Boyd Gaming is in an excellent position to capitalize on the compelling growth opportunity presented by interactive gaming and mobile sports betting.”

Earlier this month, Boyd said it would lay off staff members still on furlough, having warned in May that disruption caused by novel coronavirus (Covid-19) could force it to significantly cut headcount. 

In May, at a time when the casino sector was shuttered as a result of Covid-19, the operator informed workers that between 25% and 60% of staff could lose their jobs, with layoffs likely to take place between July 1 and 14.