Boyd Gaming Posts Record 2017 Revenues But Shares Plunge on Q4 Profits

Posted on: February 21, 2018, 04:00h. 

Last updated on: April 26, 2019, 10:35h.

Despite posting record revenues of $2.38 billion for 2017 on Tuesday, Boyd Gaming stock had slipped 5.7 percent by the end of trading that day. Investors, it seems, are a tough bunch to please – as are analysts.

Boyd Gaming CEO Kevin Smith
Boyd Gaming CEO Keith Smith said 2017 had been an exceptional year for the company but its disappointing adjusted earnings for Q4 had investors rattled. This, combined with a cautious outlook for 2018, saw share prices slip. (Image: YouTube)

The dip occurred because adjusted Q4 earnings came in lower than analysts’ expectations. Meanwhile, the company’s own projected earnings for 2018 also fell short of independent predictions.

Boyd said it generated record Q4 net revenues of $590.8 million, an increase of 6.5 percent from the corresponding period of 2016. Q4 operational income, net of tax, was $82.2 million a huge increase from the $10.7 million reported in Q4 2016.

But Q4 adjusted earnings dropped 42 percent year-on-year during the fourth quarter of 2017. That’s from a Q4 2016 high of $44.3 million to $25.6 million.

Boyd Gaming Cautious for 2018

Nevertheless, Boyd CEO Keith Smith praised 2017 as an “exceptional year” in which the company created “significant growth” for its shareholders.

Our Nevada operations continued their long-term growth trajectory, with our 11th consecutive quarter of same-store Adjusted EBITDA gains in our Las Vegas Locals segment,” he said.

“Our regional operations showed further improvement, as our Midwest and South segment posted its best performance of the year. And we laid the groundwork for future growth, reaching agreements in December to acquire five properties in the Midwest and Northeast,” he added.

Boyd based its cautious outlook for 2018 on the particularly cold winter and new competition in the Midwest and South. These factors are expected to offset strong profits in Las Vegas, where it vies with Red Rock Resorts for dominance of the locals’ market.

New Acquisitions Bearing Up

The company’s late-2016 Vegas acquisitions of the Cannery and Eastside Cannery, as well as the Aliante, helped to contribute to 2017’s record revenues, Boyd said.

“During the fourth quarter, Cannery and Eastside Cannery each continued to grow adjusted EBITDA at a double-digit pace over their 2016 standalone results.  Results at these properties reflect the realization of synergies, marketing and operational enhancements, and a growing regional economy.”

Boyd also noted it had “laid the groundwork for future growth,” through December deals to acquire five properties in the Midwest and Northeast, including four Penn National casinos and the Valley Forge Casino Resort in Pennsylvania.

The latter acquisition will allow Boyd to enter Pennsylvania’s impending online gaming market, should it choose to do so.