Boyd Gaming Corporation — FY2023 Form 10-K
Reporting period: Fiscal year ended December 31, 2023. This is an annual report, not a standalone fourth-quarter filing; quarterly results are not clearly provided in the supplied filing text.
Business context
Boyd operates 28 wholly owned casino properties across 10 states, of which 27 were open at year-end; Eastside Cannery remained closed. It also operates Boyd Interactive, holds a 5% interest in FanDuel, and manages California’s Sky River Casino. Gaming at its properties and distributed gaming remained the largest revenue source, while online operations and Sky River management fees expanded.
Financial performance and liquidity
| Metric | FY2023 | FY2022 | Change |
|---|---|---|---|
| Revenue | $3.738 billion | $3.555 billion | +5.2% |
| Operating income | $901.8 million | $981.2 million | −8.1% |
| Net income | $620.0 million | $639.4 million | −3.0% |
| Diluted EPS | $6.12 | $5.87 | +4.3% |
| Operating margin | 24.1% | 27.6% | −3.5 percentage points |
| Adjusted EBITDAR | $1.395 billion | $1.391 billion | +0.3% |
| Cash from operations | $914.5 million | $976.1 million | −6.3% |
| Cash capital expenditures | $374.0 million | $269.2 million | +$104.8 million |
Cash from operations less cash capital expenditures was approximately $540.6 million, versus $706.9 million in 2022. Cash and cash equivalents were $304.3 million; working capital was negative $67.0 million. Long-term debt principal was $2.947 billion, including $1.046 billion under the Credit Facility. The company reported $1.193 billion of remaining Credit Facility availability and compliance with debt covenants at year-end. Operating lease liabilities were a further $810.3 million.
Material changes versus FY2022
- Online revenue increased 66.3% to $422.2 million, reflecting Ohio’s launch, Pennsylvania growth, Boyd Interactive, and partner reimbursements. $120.1 million of the year-over-year online revenue increase came from reimbursements of gaming taxes and other expenses, with matching expense and no operating-income contribution.
- Sky River management fee revenue rose to $76.9 million from $26.9 million as Boyd earned a full year of fees.
- Gaming revenue fell 2.3% to $2.613 billion. Management cited softer retail play, particularly in Las Vegas Locals and Midwest & South, against a strong prior-year comparison. Downtown Las Vegas revenue increased.
- Operating income included $107.8 million of asset impairment charges, compared with $40.8 million in 2022. The 2023 charges included $82.0 million of Online goodwill and $21.3 million of Midwest & South gaming-license impairments.
- Inflation, wages, utilities and property insurance pressured margins. Interest expense rose as the weighted-average interest rate increased 110 basis points to 5.4%, partly offset by lower average debt.
- The effective tax rate declined to 17.6% from 22.9%, including a $35.9 million release of state tax valuation allowances. Share repurchases reduced weighted-average shares, contributing to higher EPS despite lower net income.
Outlook, risks and unusual items
- No formal revenue or earnings guidance is stated in the supplied filing text. Management expects cash, operating cash flow and available revolving credit to cover liquidity needs and maintenance capital expenditures for the next 12 months.
- For 2024, Boyd estimated $200–$250 million of annual maintenance capital spending, an additional $100 million for hotel-room renovations, and another $100 million for growth projects, including completion of the Treasure Chest land-based casino, then expected by mid-2024.
- Management identified economic weakness, inflation and interest rates, competition, gaming regulation and taxation, labor availability, cyber and privacy risks, severe weather, and reliance on regional and Hawaiian customer markets as risks. Refinancing will be needed for some debt at or before maturity; $1.914 billion of principal is scheduled for 2027.
- The four GLPI-leased properties carry current annual master-lease rent of $108.4 million, subject to escalation and other obligations. Total operating lease liabilities were $810.3 million.
- The Wilton Rancheria note allowance was fully removed in 2023 following improved repayment expectations; Boyd received $113.6 million of principal and $12.0 million of interest, leaving $0.4 million outstanding at year-end. The allowance release benefited reported results.
- The financial-statement audit opinion was unqualified. However, management and the auditor concluded internal control over financial reporting was ineffective because of a material weakness in journal-entry preparation and independent review; disclosure controls were also deemed ineffective. Remediation efforts were planned or underway after year-end.
Most important facts for investors to verify
- Whether retail gaming softness continued after FY2023, and whether online growth generates improved operating profit after excluding pass-through reimbursements.
- Progress and cost performance on Treasure Chest, hotel renovations and other 2024 capital projects.
- Remediation and independent testing of the material weakness, and whether effective financial reporting controls are restored.
- Refinancing plans and covenant headroom ahead of the substantial 2027 debt maturities, considering variable-rate exposure and lease commitments.
- Whether impairment assumptions for Online goodwill and gaming-license assets remain supportable; further impairment could be material.