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BOYD GAMING CORP 10-K Analysis & Summary – 2/21/2025

⚠️This is not investment advice.

⚠️ This is an experimental project and this report is for informational purposes only and should not be considered investment advice. Conduct your own thorough research and consult with a qualified financial advisor before making any investment decisions. ⚠️

BOYD GAMING CORP

Filing date:

02/21/2025

TLDR:

Boyd Gaming Corp’s 10-K filing for 2024 shows revenue growth driven by online gaming, but net income decreased. Key risks include economic sensitivity and competition, while opportunities lie in online gaming expansion and acquisitions.

ELI5:

Boyd Gaming made more money overall, mainly from online games, but their profits were lower because of some extra costs. They need to watch out for the economy and competition, but they can grow by expanding their online games and buying other companies.

Accession #:

0001437749-25-004757

Published on

Analyst Summary

  • Total revenues increased by 5.1% year-over-year, driven primarily by online gaming.
  • Net income decreased from $620.0 million in 2023 to $578.0 million in 2024.
  • Gaming revenue decreased by 1.1%, indicating potential market share challenges.
  • Online revenue increased significantly by 43.6%, highlighting the importance of this segment.
  • Adjusted EBITDAR decreased slightly, suggesting cost pressures are impacting profitability.
  • Gross Profit Margin: 23.6% (decreased by 2.1%).
  • Operating Profit Margin: 23.6% (decreased by 2.1%).
  • Net Profit Margin: 14.7% (decreased by 11.4%).
  • Return on Assets (ROA): 9.0% (decreased by 9.1%).
  • Return on Equity (ROE): 36.6% (increased by 2.8%).
  • Basic EPS: $6.19 (increased by 1.1%).
  • Diluted EPS: $6.19 (increased by 1.1%).
  • Current Ratio: 0.90 (increased by 1.1%).
  • Quick Ratio: 0.87 (increased by 2.4%).
  • Cash Ratio: 0.52 (no change).
  • Debt-to-Equity Ratio: 2.02 (increased by 19.5%).
  • Debt-to-Assets Ratio: 0.50 (increased by 6.4%).
  • Interest Coverage Ratio: 5.23 (decreased by 0.8%).
  • Inventory Turnover: 11.98 (increased by 2.9%).
  • Days Sales Outstanding (DSO): 12.3 days (decreased by 8.9%).
  • Days Payable Outstanding (DPO): 15.9 days (decreased by 0.6%).
  • Asset Turnover: 0.61 (increased by 1.7%).
  • Price-to-Earnings Ratio (P/E): 11.5.
  • Price-to-Book Ratio (P/B): 4.2.
  • Price-to-Sales Ratio (P/S): 1.7.
  • Enterprise Value to EBITDA (EV/EBITDA): 7.9.
  • Revenue Growth: 5.1%.
  • Net Income Growth: -6.8%.
  • EPS Growth: 1.1%.

Opportunities and Risks

  • Economic Sensitivity: The gaming industry is highly susceptible to economic downturns and changes in consumer spending.
  • Cybersecurity: Maintaining the integrity of IT systems and protecting customer data is crucial.
  • Competition: Intense competition from other gaming companies and online platforms.
  • Regulatory Changes: Potential changes in gaming regulations and tax policies.
  • Indebtedness: High levels of debt and restrictive covenants.
  • Online Gaming Expansion: Continued growth in online gaming presents a significant opportunity.
  • Strategic Acquisitions: Acquisitions like Resorts Digital can enhance market position.
  • Capital Investments: Investments in property enhancements and new developments (e.g., Cadence Crossing, Norfolk Casino) can drive future growth.

Potential Implications

Company Performance

  • Monitor the company’s ability to manage costs, navigate competitive challenges, and effectively leverage its online gaming opportunities.
  • Further analysis of the impact of new developments and debt management strategies is needed.

SEC Filing Report: BOYD GAMING CORP 10-K (2024)

Executive Summary

This report analyzes Boyd Gaming Corp’s 10-K filing for the year ended December 31, 2024. The company demonstrates revenue growth driven by online gaming, but net income decreased due to higher tax provisions and interest expenses. Key risks include economic sensitivity, cybersecurity threats, and intense competition. Opportunities lie in expanding online gaming and strategic acquisitions. Overall, a HOLD recommendation is warranted, pending further assessment of competitive pressures and debt management.

Company Overview

Boyd Gaming Corporation is a multi-jurisdictional gaming company operating 28 wholly-owned gaming entertainment properties across multiple states, including Nevada, Illinois, Indiana, Iowa, Kansas, Louisiana, Mississippi, Missouri, Ohio, and Pennsylvania. The company also owns and operates Boyd Interactive, an online gaming business. Boyd Gaming focuses on building customer loyalty, efficient operations, and strategic growth through acquisitions and capital investments.

Detailed Analysis

Management’s Discussion and Analysis (MD&A)

Management highlights revenue growth, particularly in the Online segment, and emphasizes efficient operations and strategic initiatives. However, the MD&A also acknowledges competitive pressures and the impact of weather events on gaming revenue. The tone is cautiously optimistic, balancing growth achievements with awareness of existing challenges.

Financial Statement Analysis

Key Ratios and Trends

  • Revenue Growth: Total revenues increased by 5.1% year-over-year, driven primarily by online gaming.
  • Net Income: Net income decreased from $620.0 million in 2023 to $578.0 million in 2024.
  • Gaming Revenue: Gaming revenue decreased by 1.1%, indicating potential market share challenges.
  • Online Revenue: Online revenue increased significantly by 43.6%, highlighting the importance of this segment.
  • Adjusted EBITDAR: Adjusted EBITDAR decreased slightly, suggesting cost pressures are impacting profitability.

Segment Performance

Segment Key Observations
Las Vegas Locals Revenue decreased due to competitive pressures.
Downtown Las Vegas Revenue increased, but Adjusted EBITDAR decreased due to cost increases.
Midwest & South Revenue increased slightly, but Adjusted EBITDAR decreased due to cost increases.
Online Significant revenue and Adjusted EBITDAR growth.

Uncommon Metrics

  • Reimbursements of Gaming Taxes and Other Expenses: A significant portion of online revenue growth is attributed to reimbursements, which have a zero-sum impact on operating income.
  • Share Repurchase Program: The company actively repurchased shares, indicating a commitment to returning capital to shareholders.

Risk and Opportunity Assessment

Risks

  • Economic Sensitivity: The gaming industry is highly susceptible to economic downturns and changes in consumer spending.
  • Cybersecurity: Maintaining the integrity of IT systems and protecting customer data is crucial.
  • Competition: Intense competition from other gaming companies and online platforms.
  • Regulatory Changes: Potential changes in gaming regulations and tax policies.
  • Indebtedness: High levels of debt and restrictive covenants.

Opportunities

  • Online Gaming Expansion: Continued growth in online gaming presents a significant opportunity.
  • Strategic Acquisitions: Acquisitions like Resorts Digital can enhance market position.
  • Capital Investments: Investments in property enhancements and new developments (e.g., Cadence Crossing, Norfolk Casino) can drive future growth.

Red Flags

  • Decreasing Net Income: Despite revenue growth, net income declined, indicating potential cost management issues.
  • Gaming Revenue Decline: The decrease in gaming revenue in the Las Vegas Locals segment raises concerns about competitive pressures.
  • High Debt Levels: The company’s significant debt burden could limit financial flexibility.

Conclusion and Actionable Insights

Boyd Gaming demonstrates a mixed financial performance. While revenue growth, particularly in the online segment, is encouraging, declining net income and competitive pressures warrant caution. The company’s high debt levels and restrictive covenants pose additional risks.

Recommendation: HOLD. Investors should monitor the company’s ability to manage costs, navigate competitive challenges, and effectively leverage its online gaming opportunities. Further analysis of the impact of new developments and debt management strategies is needed before making a buy or sell decision.

Boyd Gaming Corporation Financial Analysis – 2024

1. Financial Ratio and Metric Analysis

Profitability

  • Gross Profit Margin:

    • Calculation: ($3,930.2 – $3,002.4) / $3,930.2 = 23.6%
    • Trend: ($3,738.5 – $2,836.7) / $3,738.5 = 24.1% (2023). Percentage change: (23.6% – 24.1%) / 24.1% = -2.1%
    • Industry: The gaming industry typically sees gross profit margins between 20% and 40%. Boyd’s margin is within this range.
  • Operating Profit Margin:

    • Calculation: $927.8 / $3,930.2 = 23.6%
    • Trend: $901.8 / $3,738.5 = 24.1% (2023). Percentage change: (23.6% – 24.1%) / 24.1% = -2.1%
    • Industry: A good operating margin for the gaming industry is typically between 15% and 25%. Boyd’s margin is within this range.
  • Net Profit Margin:

    • Calculation: $578.0 / $3,930.2 = 14.7%
    • Trend: $620.0 / $3,738.5 = 16.6% (2023). Percentage change: (14.7% – 16.6%) / 16.6% = -11.4%
    • Industry: A net profit margin of 10-15% is considered healthy in the gaming industry. Boyd’s margin is within this range.
  • Return on Assets (ROA):

    • Calculation: $578.0 / $6,391.8 = 9.0%
    • Trend: $620.0 / $6,273.1 = 9.9% (2023). Percentage change: (9.0% – 9.9%) / 9.9% = -9.1%
    • Industry: The gaming industry typically sees ROA between 5% and 10%. Boyd’s ROA is within this range.
  • Return on Equity (ROE):

    • Calculation: $578.0 / $1,581.5 = 36.6%
    • Trend: $620.0 / $1,744.1 = 35.6% (2023). Percentage change: (36.6% – 35.6%) / 35.6% = 2.8%
    • Industry: ROE in the gaming industry can vary widely, but a good ROE is generally considered to be above 15%. Boyd’s ROE is significantly higher than this.
  • Earnings Per Share (EPS) – Basic and Diluted:

    • Calculation: Basic EPS = $578.0 / 93.314 = $6.19, Diluted EPS = $578.0 / 93.349 = $6.19
    • Trend: Basic EPS = $6.12, Diluted EPS = $6.12 (2023). Percentage change: (6.19 – 6.12) / 6.12 = 1.1%
    • Industry: EPS varies significantly based on the company’s size, profitability, and share structure.

Liquidity

  • Current Ratio:

    • Calculation: $561.5 / $622.7 = 0.90
    • Trend: $529.3 / $596.3 = 0.89 (2023). Percentage change: (0.90 – 0.89) / 0.89 = 1.1%
    • Industry: A current ratio of 1 or higher is generally preferred, indicating sufficient current assets to cover current liabilities. Boyd’s ratio is slightly below 1.
  • Quick Ratio (Acid-Test Ratio):

    • Calculation: ($561.5 – $21.2) / $622.7 = 0.87
    • Trend: ($529.3 – $20.7) / $596.3 = 0.85 (2023). Percentage change: (0.87 – 0.85) / 0.85 = 2.4%
    • Industry: A quick ratio of 0.8 to 1.0 is generally considered acceptable. Boyd’s ratio is within this range.
  • Cash Ratio:

    • Calculation: $321.4 / $622.7 = 0.52
    • Trend: $307.9 / $596.3 = 0.52 (2023). Percentage change: (0.52 – 0.52) / 0.52 = 0.0%
    • Industry: The cash ratio is typically lower than 1, as companies rely on other current assets for liquidity.

Solvency/Leverage

  • Debt-to-Equity Ratio:

    • Calculation: $3,200.3 / $1,581.5 = 2.02
    • Trend: $2,946.8 / $1,744.1 = 1.69 (2023). Percentage change: (2.02 – 1.69) / 1.69 = 19.5%
    • Industry: The gaming industry often has higher debt-to-equity ratios due to capital-intensive operations. A ratio of 1.5 to 2.5 is common. Boyd’s ratio is within this range.
  • Debt-to-Assets Ratio:

    • Calculation: $3,200.3 / $6,391.8 = 0.50
    • Trend: $2,946.8 / $6,273.1 = 0.47 (2023). Percentage change: (0.50 – 0.47) / 0.47 = 6.4%
    • Industry: A debt-to-assets ratio of 0.5 or lower is generally considered healthy. Boyd’s ratio is at this level.
  • Interest Coverage Ratio (Times Interest Earned):

    • Calculation: $927.8 / $177.4 = 5.23
    • Trend: $901.8 / $171.2 = 5.27 (2023). Percentage change: (5.23 – 5.27) / 5.27 = -0.8%
    • Industry: An interest coverage ratio above 3 is generally considered good, indicating the company can comfortably cover its interest expenses. Boyd’s ratio is well above this level.

Activity/Efficiency

  • Inventory Turnover:

    • Calculation: Not applicable to the entire business, but can be calculated for food and beverage. COGS for F&B is $253.9. Inventory is $21.2. $253.9 / $21.2 = 11.98
    • Trend: $240.9 / $20.7 = 11.64 (2023). Percentage change: (11.98 – 11.64) / 11.64 = 2.9%
    • Industry: This ratio is specific to the food and beverage portion of the business.
  • Days Sales Outstanding (DSO):

    • Calculation: ($132.3 / $3,930.2) * 365 = 12.3 days
    • Trend: ($137.9 / $3,738.5) * 365 = 13.5 days (2023). Percentage change: (12.3 – 13.5) / 13.5 = -8.9%
    • Industry: DSO is relatively low in the gaming industry due to the nature of cash transactions.
  • Days Payable Outstanding (DPO):

    • Calculation: ($131.3 / $3,002.4) * 365 = 15.9 days
    • Trend: ($124.7 / $2,836.7) * 365 = 16.0 days (2023). Percentage change: (15.9 – 16.0) / 16.0 = -0.6%
    • Industry: DPO is relatively low in the gaming industry.
  • Asset Turnover:

    • Calculation: $3,930.2 / $6,391.8 = 0.61
    • Trend: $3,738.5 / $6,273.1 = 0.60 (2023). Percentage change: (0.61 – 0.60) / 0.60 = 1.7%
    • Industry: Asset turnover in the gaming industry is typically below 1, reflecting the capital-intensive nature of the business.

Valuation

  • Price-to-Earnings Ratio (P/E):

    • Calculation: $76.86 / ($577.952 / 86.184) = 11.5
    • Trend: To determine the trend, we would need the P/E ratio from the previous comparable period, which is not provided in the filing.
    • Industry: The P/E ratio varies widely depending on market conditions and company-specific factors.
  • Price-to-Book Ratio (P/B):

    • Calculation: ($76.86 * 86.184) / $1,581.5 = 4.2
    • Trend: To determine the trend, we would need the P/B ratio from the previous comparable period, which is not provided in the filing.
    • Industry: The P/B ratio varies widely depending on market conditions and company-specific factors.
  • Price-to-Sales Ratio (P/S):

    • Calculation: ($76.86 * 86.184) / $3,930.2 = 1.7
    • Trend: To determine the trend, we would need the P/S ratio from the previous comparable period, which is not provided in the filing.
    • Industry: The P/S ratio varies widely depending on market conditions and company-specific factors.
  • Enterprise Value to EBITDA (EV/EBITDA):

    • Calculation: Market Cap = $76.86 * 86.184 = $6,624.1. EV = $6,624.1 + $3,200.3 – $321.4 = $9,503.0. EBITDA = $927.8 + $276.6 = $1,204.4. EV/EBITDA = $9,503.0 / $1,204.4 = 7.9
    • Trend: To determine the trend, we would need the EV/EBITDA ratio from the previous comparable period, which is not provided in the filing.
    • Industry: The EV/EBITDA ratio varies widely depending on market conditions and company-specific factors.

Growth Rates

  • Revenue Growth:

    • Calculation: ($3,930.2 – $3,738.5) / $3,738.5 = 5.1%
    • Industry: The gaming industry typically sees revenue growth between 3% and 7%. Boyd’s revenue growth is within this range.
  • Net Income Growth:

    • Calculation: ($578.0 – $620.0) / $620.0 = -6.8%
    • Industry: The gaming industry typically sees net income growth between 5% and 10%. Boyd’s net income growth is below this range.
  • EPS Growth:

    • Calculation: ($6.19 – $6.12) / $6.12 = 1.1%
    • Industry: The gaming industry typically sees EPS growth between 5% and 10%. Boyd’s EPS growth is below this range.

Other Relevant Metrics

  • Adjusted EBITDAR:

    • Analysis: Adjusted EBITDAR is a non-GAAP metric used by Boyd Gaming to assess operating performance. It excludes certain items such as master lease rent expense, depreciation and amortization, share-based compensation expense, project development, preopening and writedowns, impairment of assets, and other operating items, net.
    • Calculation: Adjusted EBITDAR decreased slightly from $1,394.8 million in 2023 to $1,390.6 million in 2024.
    • Critical Assessment: While Adjusted EBITDAR can provide insights into core operating performance, it’s important to consider the excluded items, particularly master lease rent expense and depreciation, as they represent real costs to the business.

2. Commentary

Boyd Gaming Corporation’s financial performance in 2024 shows a mixed picture. Revenue increased by 5.1%, indicating continued growth in the business. However, net income and net profit margin decreased, suggesting potential challenges in managing expenses or increased costs. The company maintains a solid interest coverage ratio, indicating a healthy ability to meet its debt obligations. While the debt-to-equity ratio increased, it remains within an acceptable range for the industry. Overall, Boyd Gaming demonstrates a stable financial position with moderate growth, but needs to improve net income.

⚠️ This is an experimental project and this report is for informational purposes only and should not be considered investment advice. Conduct your own thorough research and consult with a qualified financial advisor before making any investment decisions. ⚠️