Boyd Gaming Corporation — FY2021 Form 10-K
Reporting period: Fiscal year ended December 31, 2021; comparisons are primarily with FY2020. Boyd Gaming operates casinos and related hospitality businesses across ten states and holds a 5% stake in FanDuel Group. At year-end, 27 of 28 wholly owned properties were operating; Eastside Cannery remained closed.
Financial performance
| Metric | FY2021 | FY2020 | Change / context |
|---|---|---|---|
| Revenue | $3.370 billion | $2.178 billion | Up 54.7%; FY2020 was affected by pandemic closures. |
| Operating income | $900.1 million | $14.3 million | Operating margin was approximately 26.7%, versus 0.7%; 2020 included $174.7 million of asset impairment charges. |
| Net income (loss) | $463.8 million | $(134.7) million | 2021 diluted EPS was $4.07, versus $(1.19). |
| Operating cash flow | $1.010 billion | $289.0 million | Improved with reopened properties, operating changes and working-capital timing. |
| Capital expenditures | $199.5 million | $175.0 million | Cash flow after capital expenditures was approximately $810.9 million, before other investing and financing items. |
| Adjusted EBITDAR | $1.366 billion | $609.9 million | Non-GAAP measure; up substantially, reflecting reopening and operating changes. |
Gaming generated about 80% of revenue. Gaming revenue was $2.706 billion, up 52.4%; food and beverage revenue was $230.0 million, room revenue $154.2 million and other revenue $280.1 million. Gaming margin rose to 63.1% from 58.6%; room margin rose to 62.6% from 49.3%. Other revenue growth included online gaming partner revenue and reimbursements of gaming taxes.
Revenue and Adjusted EBITDAR by segment were: Las Vegas Locals, $886.1 million and $473.2 million; Downtown Las Vegas, $155.8 million and $51.3 million; Midwest & South, $2.328 billion and $927.0 million. Segment Adjusted EBITDAR excludes specified costs and should not be treated as GAAP operating income or cash flow.
Debt and liquidity
- Gross long-term debt principal was $3.069 billion at year-end, down $880.4 million from 2020. Cash and cash equivalents were $344.6 million; working capital was a $49.2 million deficit.
- Approximately $1.020 billion was available under the revolving credit facility, after letters of credit. Management stated cash, operating cash flow and available borrowing capacity should meet liquidity needs and maintenance capital requirements for the next 12 months.
- Boyd issued $900 million of 4.75% notes due 2031 and used proceeds and cash on hand to redeem $1.45 billion of 6.375% and 6.000% notes due 2026. It also redeemed $300 million of 8.625% notes due 2025. Debt extinguishments and modifications resulted in a $95.2 million loss.
- The credit facility matures September 15, 2023; scheduled debt maturities include $827.7 million in 2023 and $300 million in 2025. Boyd reported covenant compliance at year-end. The filing identifies a 1.75x minimum interest coverage covenant and leverage limits.
- Master-lease rent expense was $104.7 million in 2021; the GLPI master leases carry substantial rent, maintenance and capital obligations. Total operating lease liabilities were $900.9 million.
Material changes, outlook and risks
- The substantial year-over-year rebound reflects the comparison with pandemic-related shutdowns and restrictions in 2020, as well as increased online gaming revenue. Management also described a post-reopening operating model emphasizing core gaming customers, cost discipline, targeted marketing and lower-margin offering reductions.
- No specific full-year 2022 revenue or earnings guidance is provided. Management estimated annual ongoing refurbishment and maintenance capital needs of $240–$260 million, and expected to spend an additional $50 million in 2022 on the Treasure Chest replacement casino and Fremont renovation and expansion. The Fremont project is expected to finish in early 2023; the $95 million Treasure Chest land-based replacement is expected to finish in late 2023.
- Other developments include construction of the Wilton Rancheria Sky River Casino, expected to open in fourth quarter 2022, and the February 2022 reinstatement of a quarterly dividend of $0.15 per share, payable April 15, 2022.
- Key risks include further effects of COVID-19 or other public-health events, consumer spending and visitation, intense casino and online gaming competition, labor availability, gaming regulation and taxes, cybersecurity and privacy, extreme weather, and the company’s debt, refinancing needs and lease commitments. Management noted hiring pressures and uncertainty about the continuing effects of the pandemic.
- Unusual FY2021 items included $8.2 million of impairment charges, a $15.0 million agreement termination fee, $8.5 million of abandoned-project write-offs and $10.7 million of nonrecurring employee bonuses. The filing reports no pending litigation expected by management to have a material adverse effect.
Important facts for investors to verify
- How much of the FY2021 improvement reflects sustainable operating performance versus reopening effects and an unusually weak 2020 comparison.
- The company’s ability to refinance or repay the credit facility debt due in 2023, maintain covenant compliance and manage interest-rate exposure; a 100-basis-point rate change was estimated to affect annual interest cost by about $8.7 million.
- Whether planned maintenance and development spending, master-lease obligations, share repurchases and the reinstated dividend are consistent with the stated priority of strengthening the balance sheet.
- Progress and funding for Treasure Chest, Fremont and Sky River projects, including construction schedules, regulatory approvals and expected returns.
- The assumptions underlying goodwill and intangible-asset valuations: goodwill was $971.3 million, and the auditor identified impairment valuation as a critical audit matter.