Boyd Gaming Reiterates Pragmatic Approach to M&A, Q3 Results Hindered by Las Vegas

Shares of Boyd Gaming retreated Friday after the regional casino operator delivered tepid third-quarter results that were pinched by Las Vegas lethargy, but the company reiterated its interest in deal-making.

One of the names most frequently attached to casino industry consolidation speculation, Boyd executives expressed interest in possibly buying what CEO Keith Smith described as a “high-quality asset,” but they’re not going to rush to make a deal.

At a time when investors are expressing preference for lower leverage casino stocks, Boyd may be rewarded for slow-playing mergers and acquisitions activity. The company concluded the September quarter with $297.2 million in cash on hand and debt of $2.7 billion.

Boyd Has a ‘Big Appetite’ And Discipline

Due to large-scale deal-making and some operators looking to prune their portfolios, prospective buyers could soon have a large menu to choose from when it comes to individual casinos that are for sale. That may be enticing, but it’s not an impetus for Boyd to break from its disciplined approach.

“We have the same discipline we’ve had over the years, which is we have a set of filters that it has to work its way through being the right asset at the right price in the right market, which means it has to be a stable market from a tax and regulatory standpoint,” said Smith on a conference call. “It has to be a high-quality asset. We have as big of an appetite as we’ve ever had, but we remain disciplined.”

When it comes to purchases of individual gaming venues, another likely requirement for Boyd is that the target includes owned real estate. Some of Boyd’s regional casinos are leased, but the operator owns the real estate on the bulk of its portfolio, including in Las Vegas.

Some analysts believe Boyd could express interest in some of the nine regional casinos Churchill Downs (NASDAQ: CHDN) is selling and that may prove accurate because the seller owns the real estate of all of those venues.

Quick Look at Q3

In the third quarter, Boyd posted adjusted earnings before interest, taxes, depreciation, amortization, and restructuring or rent costs (EBITDAR) of $320 million on revenue of $991 million. Wall Street expected EBITDAR of $316 million on sales of $1 billion.

The top-line miss is largely attributable to softness in both the Las Vegas locals and destination (downtown), but a rebound could occur in 2027 if tourism bounces back.

On the locals front, construction disruptions at the Orleans and Suncoast — two of Boyd’s marquee Las Vegas locals venues — are expected to dissipate next year, potentially providing catalysts for the stock along the way.