Boyd Gaming Corporation — FY2022 Form 10-K
Reporting period: Fiscal year ended December 31, 2022. This is an annual filing; the provided filing text does not give a clear standalone fourth-quarter income statement or cash-flow total.
Business context
Boyd operated 27 of its 28 wholly owned gaming properties across 10 states; Eastside Cannery remained closed due to market demand. It also managed Sky River Casino under agreement with Wilton Rancheria, held a 5% interest in FanDuel Group, and acquired online gaming technology company Pala Interactive on November 1, 2022. Results are reported in Las Vegas Locals, Downtown Las Vegas, and Midwest & South segments.
Key financial metrics
| Metric | FY2022 | FY2021 | Change |
|---|---|---|---|
| Total revenue | $3,555.4 million | $3,369.8 million | +5.5% |
| Operating income | $981.2 million | $900.1 million | +9.0% |
| Net income | $639.4 million | $463.8 million | +37.8% |
| Diluted earnings per share | $5.87 | $4.07 | Higher |
| Net cash provided by operating activities | $976.1 million | $1,010.4 million | Lower |
| Cash and cash equivalents at year-end | $283.5 million | $344.6 million | Lower |
| Long-term debt principal, including current maturities | $3,088.5 million | $3,069.4 million | +$19.1 million |
Operating margin was approximately 27.6%, versus 26.7% in 2021; net margin was approximately 18.0%, versus 13.8%. Adjusted EBITDAR, a non-GAAP measure, was $1,390.5 million, up 1.8% from $1,366.0 million. Segment Adjusted EBITDAR was $481.6 million for Las Vegas Locals, $86.0 million for Downtown Las Vegas, and $911.5 million for Midwest & South; the latter declined from $927.0 million.
Revenue mix shifted: gaming revenue declined 1.1% to $2,674.7 million; food and beverage rose 20.0% to $276.0 million; room revenue rose 22.6% to $189.1 million; and other revenue increased 48.4% to $415.6 million. Other revenue growth included online gaming and Sky River management and development fees. Gaming margins were 62.4%, versus 63.1%; food and beverage margins were 16.2%, versus 16.4%; room margins were 63.8%, versus 62.6%.
Cash used in investing activities was $422.3 million, including $269.2 million of cash capital expenditures and $167.9 million net cash paid for Pala Interactive. Cash used in financing activities was $615.9 million, including $541.6 million of share repurchases and $48.2 million of dividends paid. Working capital deficit was $107.9 million, compared with $49.2 million a year earlier. Revolving credit availability was $1,095.4 million after borrowings and letters of credit. The company reported compliance with debt covenants at year-end.
Changes, outlook, and notable items
- Revenue growth reflected recovery in travel and amenities, higher online gaming activity, the opening of Sky River Casino, and the acquisition of Pala Interactive. Gaming revenue nevertheless fell, in part as 2021 had benefited from government stimulus and fewer competing entertainment options.
- Net income growth also reflected lower interest expense and lower debt-extinguishment losses. FY2022 included a $35.1 million reduction in the expected-credit-loss allowance on the Wilton Rancheria note, recognized across project-related income and interest income; a $12.6 million Hurricane Laura insurance gain; and $40.8 million in asset impairments, including $31.6 million of goodwill and $9.2 million of trademark impairments.
- Management said cash, operating cash flow, and available revolving credit were expected to meet liquidity needs and maintenance capital requirements for the next 12 months. Estimated annual maintenance capital spending is $240–$260 million. The Treasure Chest replacement land-based casino project was expected to require an additional $100 million in 2023 and be completed in early 2024.
- No specific revenue or earnings guidance was provided in the filing text. Management’s stated priorities include operating efficiency, balance-sheet strength, shareholder returns, online gaming growth, and selective development and acquisitions.
- Key risks include economic weakness and inflation reducing discretionary spending; competition, including online and tribal gaming; gaming regulation and taxes; cybersecurity and privacy; labor availability; weather and other disruptions; and significant debt, variable interest rates, and lease obligations. Annual rent under GLPI master leases was $106.6 million. A 100-basis-point interest-rate change was estimated to change annual interest cost by approximately $11.9 million.
- The credit facility’s maximum net leverage covenant was 5.00x through the quarter ending June 30, 2023, declining to 4.50x from September 30, 2023. The filing warns refinancing may be needed at or before debt maturity. Approximately $2.0 billion of scheduled principal maturities fall in 2027, including the $1.0 billion notes and scheduled credit-facility amounts.
- The acquisition purchase-price allocation for Pala remained preliminary; final fair-value determinations were expected in the second quarter of 2023. The auditor issued unqualified opinions on the financial statements and internal controls; Pala was excluded from management’s 2022 internal-control assessment.
Important facts for investors to verify
- Whether gaming demand and revenue stabilize after the year-over-year decline, and how much growth in other revenue reflects recurring online and management fees versus reimbursements or one-time items.
- The final Pala purchase-price allocation, its contribution to earnings and cash flow, and the expected returns from the online gaming strategy.
- Debt-refinancing plans, covenant headroom, variable-rate exposure, and the ability to fund debt maturities alongside capital spending and shareholder returns.
- Actual costs and timing for the Treasure Chest project and planned maintenance capital expenditures.
- Impairment sensitivity in Midwest & South assets, including goodwill, trademarks, and gaming license rights with limited valuation headroom.
- The status of Eastside Cannery, labor availability, and the continued recovery of Hawaiian and destination travel.