Executive Summary / Key Takeaways

• Boyd Gaming demonstrated resilience in Q1 2025, achieving revenue and Adjusted EBITDAR growth despite challenging comparisons and weather impacts, driven by strength in core customer play and contributions from strategic investments.
• The company is executing a balanced capital allocation strategy, committing significant investment to high-return growth projects like the Norfolk resort development ($750M estimated total, $150-$200M in 2025), Cadence Crossing, and Ameristar St. Charles expansion, alongside substantial capital returns through share repurchases ($100M/quarter baseline) and dividends ($0.18/share quarterly).
• A strong balance sheet, with low leverage (2.8x total, 3.2x lease-adjusted as of Q1 2025) and ample liquidity ($546.6M Credit Facility availability), provides the financial flexibility to fund these initiatives and manage economic uncertainty.
• Diversification across geographic segments (Las Vegas Locals, Downtown Las Vegas, Midwest & South) and business lines (brick-and-mortar, Online, Managed) provides stability, with the Online segment (guided $80-$85M EBITDAR in 2025) and Managed segment (guided ~$90M EBITDAR in 2025) contributing meaningfully to profitability and future growth potential.
• While facing competitive pressures in specific markets and potential disruptions from construction, Boyd Gaming's focus on operational efficiency, customer loyalty, and disciplined promotional strategy positions it to defend market share and maintain profitability.

Setting the Scene: A Disciplined Operator's Strategic Evolution

Boyd Gaming Corporation, celebrating its 50th year in 2025, has evolved significantly from its origins as a single property operator in Downtown Las Vegas. Founded by Sam and Bill Boyd, the company has grown into a geographically diversified gaming entertainment powerhouse, operating 28 wholly owned properties across 10 states and managing a tribal casino in California. This expansion has been marked by a disciplined approach to growth, blending strategic acquisitions with organic development, all while prioritizing operational efficiency and financial strength.

The company's core business remains rooted in its brick-and-mortar casino operations, with a primary emphasis on slot revenues driven by a loyal base of core customers. However, recognizing the evolving industry landscape, Boyd has strategically diversified into the online gaming space and leveraged management agreements for additional revenue streams. This multi-faceted approach positions Boyd Gaming to capture demand across various customer segments and market types, from the local patrons in Las Vegas to regional players across the Midwest and South, and the growing online gaming audience nationwide.

In a competitive industry landscape populated by larger, globally focused players like Las Vegas Sands (LVS) and Wynn Resorts (WYNN), and major domestic operators like MGM Resorts (MGM) and Caesars Entertainment (CZR), Boyd Gaming distinguishes itself through its regional market expertise, operational cost efficiency, and a focus on cultivating strong customer loyalty through programs like Boyd Rewards. While lacking the sheer scale or luxury positioning of some rivals, Boyd's strength lies in its ability to generate consistent cash flow from its diverse portfolio and execute a balanced capital allocation strategy designed to create long-term shareholder value.

The Digital Frontier: Boyd Interactive and the Online Segment

A critical component of Boyd Gaming's strategic evolution is its presence in the online gaming market, primarily through its Online segment and the Boyd Interactive business. Recognizing the increasing importance of digital channels, Boyd has pursued a deliberate strategy focused on developing a regional iGaming product tailored to customers in its core operating states and surrounding areas, rather than aiming for national market leadership.

This strategy is underpinned by the Boyd Interactive platform, which the company acquired and rebranded. Management views this platform as scalable, allowing for expansion into new states as online gaming is legalized without requiring significant upfront capital expenditures. The acquisition of Resorts Digital Gaming's New Jersey operations in September 2024 was a small, opportunistic move to bolster this regional iGaming business and expand its customer database, particularly leveraging cross-market potential with Pennsylvania.

The Online segment also benefits significantly from a strategic partnership with FanDuel Group, in which Boyd holds a 5% equity ownership. This collaboration provides Boyd with market access agreements across several states (Illinois, Indiana, Iowa, Kansas, Louisiana, Ohio, Pennsylvania), allowing it to participate in the burgeoning sports betting market and receive a revenue share from third-party operators. While gaming taxes and other expenses paid on behalf of online partners can inflate reported online revenues (contributing $130M in Q1 2025 vs. $116M in Q1 2024, with a zero operating income impact), the underlying performance of Boyd Interactive and the market access agreements drives Adjusted EBITDAR growth.

The Online segment contributed $23.3 million in Adjusted EBITDAR in Q1 2025, an increase of 13.7% year-over-year, and management guides for this segment to generate approximately $80 million to $85 million in EBITDAR for the full year 2025, up from a run rate of $76 million in 2024. This growth, driven by Boyd Interactive and stable market access performance, adds a valuable, diversifying revenue stream to Boyd's portfolio, capturing digital demand and enhancing the company's overall competitive positioning against rivals who are also investing heavily in online platforms like MGM's BetMGM or Caesars' digital offerings. The FanDuel equity stake further adds significant, growing value for shareholders as FanDuel solidifies its market leadership.

Performance and Operational Strength Across the Portfolio

Boyd Gaming's Q1 2025 results demonstrated the resilience of its diversified brick-and-mortar operations despite facing several headwinds. Total revenues increased by 3.2% year-over-year to $991.6 million, and Adjusted EBITDAR grew by 2.1% to $337.5 million. This performance was achieved despite challenges including a 28% increase in weather-impacted days in the Midwest & South segment compared to Q1 2024, the impact of Leap Year, and difficult comparisons to the prior year's Super Bowl benefit in Las Vegas.

The Las Vegas Locals segment, a core market for Boyd, saw revenues decrease slightly by 1.3% to $222.8 million and Adjusted EBITDAR decline by 3.5% to $106.5 million in Q1 2025. This was primarily attributed to competitive pressures impacting properties like the Orleans and Gold Coast, as well as a decline in room revenues due to the strong Super Bowl comparison in Q1 2024. However, excluding Orleans and Gold Coast, the remainder of the Locals segment performed robustly, with revenues growing modestly, EBITDA remaining even, and operating margins exceeding 50%. Management noted that core customer play grew across the entire segment, while retail play was consistent. They anticipate stability returning to Orleans and Gold Coast in the second half of 2025 as they anniversary the competitive impacts.

The Downtown Las Vegas segment delivered strong growth, with revenues increasing 7.0% to $57.3 million and Adjusted EBITDAR rising 17.4% to $20.9 million in Q1 2025. This was driven by encouraging customer trends, growth in both core and retail play, healthy pedestrian traffic, and a favorable comparison due to normalized Hawaiian airfares compared to the elevated levels during the Q1 2024 Super Bowl period. The segment continues to benefit from recent property enhancements like the Fremont expansion.

In the Midwest & South segment, revenues grew 0.8% to $504.6 million and Adjusted EBITDAR increased 1.2% to $183.2 million in Q1 2025. This growth was achieved despite significant weather impacts and the Leap Year effect, demonstrating the underlying strength of the regional markets and the benefit from the new land-based Treasure Chest casino, which opened in June 2024 and has significantly outperformed expectations, with revenues nearly doubling the prior year baseline since opening. Excluding Treasure Chest, same-store performance in Q4 2024 showed slight revenue and EBITDAR growth with consistent margins, indicating stability in the broader regional portfolio. Management expects to benefit from an incremental five months of Treasure Chest's performance in 2025.

The Managed Other category, primarily driven by management fees from the Sky River Casino in California, continued its strong performance, with revenues increasing 8.4% to $37.3 million and Adjusted EBITDAR rising 10.2% to $27.3 million in Q1 2025, largely due to a $2.9 million increase in management fees. Management expects this segment to generate approximately $90 million in EBITDAR in 2025. The ongoing expansion at Sky River, with Phase 1 adding 400 slots and a parking garage by early 2026 and Phase 2 adding a hotel and amenities by mid-2027, is expected to drive future growth, addressing physical capacity limitations at the high-performing property.

Across its brick-and-mortar portfolio, Boyd Gaming maintains a strong focus on operational efficiency, consistently achieving property-level margins above 40% (40% in Q1 2025). This is a key competitive advantage, allowing the company to manage expense pressures and maintain profitability even when revenue growth is modest. Management attributes this to a disciplined operating model and targeted marketing approach.

Strategic Investments and Future Growth Pipeline

Boyd Gaming is actively investing in its properties and pursuing strategic growth opportunities to enhance its long-term growth profile. These investments are part of a balanced capital allocation strategy that prioritizes high-return projects and maintaining a strong balance sheet.

Annual capital expenditures are projected to be approximately $600 million to $650 million in 2025. This includes roughly $250 million for recurring maintenance and refurbishment, an additional $100 million for incremental hotel renovations (part of a program to refresh nearly 60% of hotel rooms by 2026), and $100 million for recurring growth projects.

The $100 million annual growth capital is directed towards projects like the Ameristar St. Charles meeting and convention center expansion, expected to open in the fall of 2025, which is already seeing strong pre-bookings from new customers. Another key growth project is the Cadence Crossing Casino in Las Vegas, which broke ground in April 2025 and is expected to open in mid-2026. This new property, replacing the existing Jokers Wild Casino, is designed to capitalize on the growing Cadence master-planned community and is planned for future expansion. Boyd is also in the design phase for replacing the 30-year-old Par-A-Dice riverboat casino in Illinois with a modern facility, with construction potentially starting in the next 12 months, following the success seen at Treasure Chest.

A significant strategic move is the planned Commercial Casino resort development in Norfolk, Virginia. This project, with an estimated aggregate expenditure of $750 million, represents an expansion into a large, underserved gaming market in the Mid-Atlantic region. A modest transitional casino is expected to open in the fourth quarter of 2025, followed by the full resort featuring 1,500 slots, 50 table games, a 200-room hotel, and extensive amenities in late 2027. Boyd views this as a best-in-market resort that will attract customers from the 1.8 million residents in the Hampton Roads area and nearby Virginia Beach. The company is consolidating the entity developing the Norfolk Casino (GEC) as a Variable Interest Entity (VIE) due to its primary beneficiary status, reflecting its control and economic interest in the project.

These strategic investments, particularly the Norfolk development and the recurring growth capital projects, are expected to be key drivers of future EBITDAR growth and shareholder value, building on the demonstrated success of recent projects like Treasure Chest and Fremont.

Financial Health and Disciplined Capital Returns

Boyd Gaming maintains a robust financial position, characterized by a strong balance sheet and significant free cash flow generation. As of March 31, 2025, the company reported total assets of $6.47 billion and total liabilities of $5.12 billion, resulting in total stockholders' equity of $1.35 billion. Total long-term debt principal stood at $3.54 billion. The company's leverage ratios remain low, with total leverage of approximately 2.8x and lease-adjusted leverage of about 3.2x as of Q1 2025. This is consistent with management's long-term target to be below 3 times traditional leverage and provides ample flexibility.

Liquidity is strong, with cash and cash equivalents of $311.5 million and restricted cash of $5.3 million as of March 31, 2025. The company had $546.6 million remaining contractual availability under its Credit Facility. Operating cash flow generation remains healthy, with $256.4 million provided by operating activities in Q1 2025.

This financial strength supports Boyd's balanced approach to capital allocation. Beyond funding its significant CapEx program, the company is committed to returning capital to shareholders. This is anchored by a stated baseline of $100 million per quarter in share repurchases. In Q1 2025, the company repurchased $328 million in stock, acquiring 4.5 million shares at an average price of $73.66. While demonstrating the flexibility to exceed the baseline, management indicated they would be more conservative on buybacks above the $100 million level given the current economic uncertainty, balancing this with investment plans and balance sheet strength. The company also pays a quarterly dividend, which was increased to $0.18 per share starting with the April 2025 distribution. Since October 2021, Boyd has returned nearly $2.2 billion to shareholders through buybacks and dividends, reducing the share count by over 27%.

Competitive Dynamics and Strategic Positioning

Boyd Gaming operates in highly competitive markets, facing direct competition from established casino operators and indirect competition from other entertainment options, including the growing online gaming sector.

In the Las Vegas Locals market, Boyd competes with a mix of large resort operators and smaller, privately held properties. Properties like Orleans and Gold Coast face specific competitive pressures from nearby operators who have engaged in aggressive promotional spending. Boyd's strategy in response has been one of patience and discipline, refusing to engage in unprofitable promotional wars and instead focusing on its core customers, operational efficiency, and enhancing its properties (like the Suncoast renovation). While this has led to some localized pressure, the remainder of Boyd's Locals portfolio has performed strongly, often outperforming the overall same-store market, demonstrating the effectiveness of its core strategy and customer loyalty programs. The Tropicana I-15 interchange project also continues to impact access to the Orleans, a temporary challenge expected to persist into 2025.

In regional markets (Midwest & South), Boyd competes with other land-based and riverboat casinos, as well as distributed gaming operators (like Lattner in Illinois, which is part of the Managed Other segment). The success of the new land-based Treasure Chest casino highlights a key competitive response: replacing older, less competitive facilities with modern, compelling entertainment products. This strategy is being explored for the Par-A-Dice property in Illinois. While new supply additions in Northern and Eastern Illinois are being monitored, management does not currently see a significant impact on its operations. Boyd's regional expertise and established customer base provide a competitive moat in these markets.

The Online segment pits Boyd against major national players like FanDuel (its partner) and DraftKings (DKNG), as well as other casino operators' online offerings. Boyd's strategy here is not to compete head-to-head for national market share but to leverage its regional brand and customer base through Boyd Interactive and market access agreements. This allows it to participate profitably in the online growth without the massive marketing spend often seen among national competitors. The FanDuel partnership provides significant value and exposure to the market leader.

Overall, Boyd's competitive positioning is characterized by its operational efficiency (demonstrated by strong margins even in competitive environments), disciplined capital allocation (investing strategically rather than chasing unprofitable market share), and leveraging its established regional presence and customer loyalty. While smaller in scale than some national rivals, this focused approach allows Boyd to defend its profitability and generate strong cash flow, which is then reinvested in high-return projects or returned to shareholders.

Risks and Challenges

Despite its strengths, Boyd Gaming faces several risks and challenges.

• Economic Uncertainty: The gaming industry is sensitive to economic cycles and consumer discretionary spending. While core customer trends have remained stable, increased economic uncertainty could impact retail play and overall visitation.
• Competitive Pressures: Intense competition in certain markets, particularly the Las Vegas Locals segment around Orleans and Gold Coast, could continue to impact performance if aggressive promotional spending persists. New supply in regional markets also poses a potential risk.
• Construction and Development Risks: Large-scale projects like the Norfolk resort and property renovations (Suncoast, Orleans) are subject to construction delays, cost overruns, and potential disruption to ongoing operations.
• Regulatory and Legal Risks: The gaming industry is highly regulated, and changes in laws, tax rates (including potential tariff impacts on construction/operations), or the outcome of legal proceedings could adversely affect the business.
• Weather and Natural Disasters: Properties in the Midwest & South segment are vulnerable to weather events and flooding, which can cause temporary closures and impact financial results, as seen in Q1 2025.

Boyd is taking steps to mitigate some of these risks, such as adopting a patient, disciplined approach to promotional competition, identifying capital projects that can be deferred if needed, and evaluating sourcing methods to mitigate potential tariff impacts.

Conclusion

Boyd Gaming Corporation presents a compelling investment thesis built on a foundation of operational excellence, strategic diversification, and disciplined capital allocation. The company has demonstrated its ability to generate consistent revenue and profitability, even in challenging market conditions, by focusing on its loyal core customer base and maintaining strong operating efficiencies.

Looking ahead, Boyd is poised for future growth driven by a pipeline of high-return development projects, most notably the significant entry into the underserved Norfolk, Virginia market and targeted enhancements and replacements within its existing portfolio. These investments, coupled with a robust balance sheet and strong free cash flow generation, enable the company to simultaneously pursue growth opportunities and return substantial capital to shareholders through buybacks and dividends. While competitive pressures and economic uncertainty remain factors to monitor, Boyd Gaming's balanced strategy and financial strength position it favorably to navigate the current environment and continue creating long-term value for investors.