weather icon Clear

Boyd Gaming reports 18% revenue drop in first quarter

Updated April 28, 2020 - 5:22 pm

During the 2008 financial crisis, Strip properties were much quicker to recover than Las Vegas’ local casinos, with a wider pool of visitors and variety of incremental amenities like dining and entertainment options.

Boyd Gaming Corp. executives don’t expect to see similar results during the coronavirus pandemic.

“People aren’t going to want to travel,” said Josh Hirsberg, Boyd’s executive vice president and CFO. “People are waiting to get back to a normalized life and want to get back to what they viewed as normal before the coronavirus … that can happen pretty quickly (with our properties).”

Strip operators have discussed a phased reopening with certain properties and amenities shut weeks past the reopening date, but Boyd President and CEO Keith Smith said he sees most — if not all — of Boyd’s local properties in Southern Nevada opening as soon as shutdown orders are lifted.

The strategy could be a major boon for the casino operator, which reported a substantial drop in revenue in the first quarter as it works to preserve liquidity amid nationwide casino shutdowns.

Preserving liquidity

Boyd’s revenue dropped 18 percent to $680.5 million in the first quarter of 2020, compared to $827.3 million in the same period the previous year, according to preliminary results.

Smith believes the company is “well-positioned” to sustain itself through the closure period, and plans to emerge on the other side as a more efficient and operationally-focused company.

The casino operator has made a series of steps in recent weeks to mitigate the financial impact of the COVID-19 pandemic.

Most staff members have been placed on furlough, and company executives are set to take “significant salary reductions,” according to a statement released April 8. All nonfurloughed members at its corporate and property management teams are taking a salary cut, and Boyd’s board of directors has agreed to suspend its compensation.

Additionally, all capital projects and Boyd’s cash dividend program have been suspended, and all nonessential spending has been postponed indefinitely. These steps are meant to ensure the company will have sufficient liquidity and resources to sustain itself until it can reopen.

These changes allowed the company to drop its monthly cash requirements to $60 million per month and gave it the ability to “weather the crisis” and be prepared for the resumption business, Hirsberg said.

As of March 31, Boyd had $831.2 million in cash on hand and $4.44 billion in total debt.

Getting ready to reopen

Boyd’s 29 wholly owned gaming properties — 12 of which are in Nevada — remain closed to the public. It’s not yet clear when Nevada will allow casinos to reopen, but Boyd currently is accepting reservations for its Las Vegas hotels beginning May 15.

Smith said the reopening time line will likely look different across all the states in which the company operates.

He’s optimistic locals will be some of the first to return to casinos, and Boyd will lead the gaming industry’s recovery.

“The majority of our business comes from local customers. We are not reliant on destination or convention business for success,” Smith said. “We believe we will benefit from a business model that is largely focused on local and regional visitation.”

Smith pointed to Boyd’s Las Vegas local market, which brings in a large percentage of business from retirees. Smith said little has changed for them in terms of discretionary spending money.

“Those retirees didn’t have a job before this started, don’t have a job now. They still have their income,” he said.

Smith also expects to see pent-up demand among the local segment, enough to allow Boyd to open most of its regional properties in Southern Nevada and other states as soon as they’re allowed.

“Each of the properties is in a very distinct part of (Las Vegas), and has a very distinct customer base,” he said. “I would see us opening most, if not all of them, as soon as we’re allowed to open them because they all have a largely different customer base. So I don’t see a phasing.”

The only outlier may be the company’s three downtown properties — Fremont Hotel, Main Street Station and California Hotel — since that area relies on visitors to the Fremont Street Experience and the Hawaiian market, who may be more averse to traveling to Las Vegas during the pandemic.

Overall, Smith expects to see some level of demand once the shutdowns are lifted, enough to continue the company’s laid back promotional strategy.

“We, as a company, don’t plan on going out there and instituting a marketing war simply to get people in the building,” he said. “People are looking for an escape, and once again I think when we reopen we will be part of that escape.”

While Boyd has yet to release a detailed outline of what its sanitation protocols will look like, Hirsberg said the properties are “going to look different,” with increased social distancing and fewer people in the building.

He added that altering or temporarily doing away with some amenities — such as buffets — during the outbreak could help offset the costs needed for extra sanitation measures, according to Hirsberg.

“I can’t say with confidence that on day one we’ll be cash-flow positive, but it doesn’t take much to be cash flow positive,” he said. “You can bet we’ll be focusing on running the business to get there as quickly as possible.”

Contact Bailey Schulz at bschulz@reviewjournal.com or 702-383-0233. Follow @bailey_schulz on Twitter.

Don't miss the big stories. Like us on Facebook.
Business Videos
Electronic Marquees above the Las Vegas Strip: Welcome Back
Electronic marquees above the Las Vegas Strip display a message "Welcome Back." After 78 days without gambling Las Vegas casinos begin to reopen, ushering in gusts eager to try their luck. (Bizuayehu Tesfaye/Las Vegas-Review Journal) @bizutesfaye
Allegiant Stadium lanai doors open revealing Al Davis Memorial Torch
On Wednesday Allegiant Stadium opened its massive lanai doors revealing the 85-foot-tall Al Davis Memorial Torch and a peek inside the $2 billion, 65,000 fan capacity indoor stadium.
Status of renters and homeowners during COVID19 pandemic - Video
Rj reporter Eli Segall discusses how COVID19 is affecting renters and homeowners in Nevada. (Renee Summerour/Las Vegas Review-Journal)
Health experts: Smoking in casinos should be banned - Video
Experts say smoking can spread the COVID-19 coronavirus. But not because of airborne particulates. The virus could spread from a smoker’s likely pattern of fingers-to-mouth-to-gaming-device. (Las Vegas Review-Journal)
Knights’ empathy questioned
A sports talk host called this week a public relations disaster for the Knights and a tourism official said it may shorten the honeymoon period between the team and its devoted fan base.
Chinese visitors in Las Vegas - Video
There were 236,970 visitors from China in Las Vegas in 2018, according to data from the Las Vegas Convention and Visitors Authority. (Las Vegas Review-Journal)
Resorts World Las Vegas lights up - Video
Construction crews tested exterior lights at Resorts World on the Las Vegas Strip, May 19. (David Guzman/Las Vegas Review-Journal)
Station Casinos releases health and safety plan for reopening - Video
Station Casinos rolled out new health and safety protocols Monday morning, May 18, including the use of thermal scanners, testing all employees for COVID-19 and “enhanced cleaning technologies.” (Michael Quine/Las Vegas Review-Journal)
Maverick Helicopters offers 250 free tours for two - VIDEO
Maverick Helicopters will restart its flights on Friday, according to a news release. To celebrate, Maverick will give away 250 flights for two with its “Our Vegas” promotion. (James Schaffer/Las Vegas Review-Journal)
MGM Resorts to bring back free parking on Las Vegas Strip - VIDEO
MGM Resorts on Monday announced free parking for all guests at its Strip resorts for the foreseeable future. New York-New York and Bellagio are the first announced hotels to reopen for casino business and return to the golden days of no-cost parking.
Laughlin’s iconic Colorado Belle to stay closed indefinitely - VIDEO
The Colorado Belle, an iconic hotel-casino on the Colorado River in Laughlin, will stay closed for the foreseeable future and lay off its 400 workers. (Michael Quine/Las Vegas Review-Journal)
Laughlin’s iconic Colorado Belle to stay closed indefinitely; 400 to lose jobs - VIDEO
The Colorado Belle, an iconic hotel-casino on the Colorado River in Laughlin, will stay closed for the foreseeable future and lay off its 400 workers.
MSG Sphere construction site remains dormant - Video
The MSG Sphere at The Venetian construction site remains sidelined and representatives of MSG Entertainment offered no updates on when workers might return. (Michael Quine/Las Vegas Review-Journal)
Nevada Gaming Control Board keeping reopening plans confidential
The state Gaming Control Board requires every licensee, from the megaresorts to the corner gas station convenience store slot machine operators, to submit reopening plans, but they intend to keep them confidential.
Natural turf added to Allegiant Stadium field tray
The massive field tray, which will roll in and out of the stadium, has a fresh layer of natural grass turf for Raiders home games.
Players show up at Gila River Casino in Arizona - Video
Gila River Casino at Wild Horse Pass in Chandler, Arizona, is packed with players on the casino’s reopening day, Friday, May 15, 2020. (Elizabeth BrumleyLas Vegas Review-Journal)
Casinos reopening in Phoenix area - Video
Harrah’s Ak-Chin Casino reopened in Maricopa, Arizona, on Friday, May 15, 2020. It was closed during the government shutdown for coronavirus. (Elizabeth Brumley/Las Vegas Review-Journal)
Caesars Entertainment to phase In reopenings - Video
Caesars Entertainment, the operator of Caesars Palace and eight other Las Vegas resorts, on Monday announced it would phase in reopenings with a comprehensive safety and health plan with employees wearing masks across its network of properties. (Las Vegas Review-Journal)
Nevada Gaming Commission meeting
Full meeting of the Nevada Gaming Commission on Thursday, May 7, 2020.
Sisolak says businesses will begin reopening under phase 1 - VIDEO
The first phase of reopening Nevada’s businesses will begin Saturday, May 9, Gov. Steve Sisolak said Thursday. (James Schaeffer / Las Vegas Review-Journal)
Henderson winery reacts to Sisolak's economic plan - VIDEO
Governor Sisolak's reopening plan is easier said than done for the only winery in Clark County. Grape Expectations is trying to figure out how to open up shop when they are three businesses in one. (James Schaeffer / Las Vegas Review-Journal)
Southwest requiring face coverings
In an effort to increase safety for passengers and staff during the COVID-19 pandemic, Southwest Airlines is updating protocols that include requiring passengers to wear face coverings beginning May 11.
Locals rush to reopened tennis courts
Daniel Nunez and Sarah Germain made immediate plans to go to their local tennis court, Darling Tennis Center, when they received an email that the facility would open on May 1.
Businesses in Henderson begin reopening - VIDEO
In downtown Henderson and at The District at Green Valley Ranch, small shops are opening their doors for business. (Michael Quine/Las Vegas Review-Journal)
MGM CEO: Bellagio, New York-New York to reopen first after shutdown - VIDEO
The head of MGM Resorts International isn’t sure when he’ll be able to open properties in Las Vegas, but said Thursday that New York-New York and Bellagio will likely be the first to open their doors. (James Schaeffer / Las Vegas Review-Journal)
New visitation report shows plunging numbers for March
The Las Vegas Convention and Visitors Authority reported Thursday that convention attendance fell 54.8 percent to 249,800. March normally is one of the city’s strongest months for conventions and trade shows.
US jobless claims climb to 30 million in 6 weeks - VIDEO
The Labor Department released the tally of the most recent jobless claims on Thursday. First-time claims for the week ending on April 25 increased by more than 3.84 million. (Las Vegas Review-Journal)
The Venetian to have EMTs, thermal cameras upon reopening - VIDEO
The hotel-casino operator, Las Vegas Sands Corp., announced updated protocols on April 28 for when its Las Vegas properties reopen, sometime after May 31. (Michael Quine/Las Vegas Review-Journal)
Unions contracts expiring - VIDEO
RJ investigations reporter Arthur Kane and Renee Summerour discuss the uncertainty of union contracts expiring in June, and how the extent of the financial damage from the crisis will make it difficult for unions and governments to negotiate collective bargaining agreements, possibly sending many to arbitration. (Renee Summerour/Las Vegas Review-Journal)
Las Vegas Strip hoteliers outline cleaning plans upon reopening - VIDEO
Nevada Gov. Steve Sisolak has yet to confirm when casinos will be able to reopen, but operators are already preparing for the day they’ll have to reassure guests their properties are clean and safe amid the virus outbreak. (James Schaeffer / Las Vegas Review-Journal)