10-Q 1 bgc20240930_10q.htm FORM 10-Q bgc20240930_10q.htm
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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

____________________________________________________

FORM 10-Q

 ____________________________________________________

(Mark One)

 

☒

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended September 30, 2024

OR

 

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from              to              

Commission file number: 1-12882

___________________________________________________

 

logo1.jpg

BOYD GAMING CORPORATION

(Exact name of registrant as specified in its charter)

 ____________________________________________________

 

Nevada

88-0242733

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

 

6465 South Rainbow Boulevard, Las Vegas, NV 89118

(Address of principal executive offices) (Zip Code)

(702) 792-7200

(Registrant's telephone number, including area code)

 ____________________________________________________

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

 

 

Common stock, $0.01 par value

 

BYD

 

New York Stock Exchange

 

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer", "accelerated filer", "non-accelerated filer", "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

☒

Accelerated filer

☐

 

 

 

 

Non-accelerated filer

☐ 

Smaller reporting company

☐

 

 

 

 

 

 

Emerging growth company

☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒

 

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

 

The number of shares outstanding of the registrant’s common stock as of October 28, 2024 was 88,389,119.

 

 
Table of Contents

 

 

 

BOYD GAMING CORPORATION

QUARTERLY REPORT ON FORM 10-Q

FOR THE PERIOD ENDED SEPTEMBER 30, 2024

TABLE OF CONTENTS

 

 

 

Page

No.

PART I. FINANCIAL INFORMATION

 

 

 

Item 1.

Financial Statements (Unaudited)

3

 

 

 

 

Condensed Consolidated Balance Sheets as of September 30, 2024 and December 31, 2023

3

 

 

 

 

Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2024 and 2023

4

 

 

 

 

Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2024 and 2023

5

 

 

 

 

Condensed Consolidated Statements of Changes in Stockholders' Equity for each of the quarters within the nine months ended September 30, 2024 and 2023

6

 

 

 

 

Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2024 and 2023

7

 

 

 

 

Notes to Condensed Consolidated Financial Statements

8
     
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 23
     

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

34

 

 

 

Item 4.

Controls and Procedures

35

 

 

 

PART II. OTHER INFORMATION

 

 

 

Item 1.

Legal Proceedings

 36

 

 

 

Item 1A.

Risk Factors

 36
     
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 36
     
Item 5. Other Information 36

 

 

 

Item 6.

Exhibits

37

 

 

 

Signature Page

38

 

 

 
Table of Contents

 

 

PART I. Financial Information

 

Item 1.        Financial Statements (Unaudited)

 

BOYD GAMING CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

 

  

September 30,

  

December 31,

 

(In thousands, except share data)

 

2024

  

2023

 

ASSETS

        

Current assets

        

Cash and cash equivalents

 $286,281  $304,271 

Restricted cash

  3,928   3,659 

Accounts receivable, net

  103,475   137,892 

Inventories

  20,414   20,692 

Prepaid expenses and other current assets

  67,820   59,293 

Income taxes receivable

  19,948   3,508 

Total current assets

  501,866   529,315 

Property and equipment, net

  2,633,248   2,542,512 

Operating lease right-of-use assets

  747,018   793,335 

Other assets, net

  67,028   67,779 

Intangible assets, net

  1,395,279   1,392,844 

Goodwill, net

  957,992   947,341 

Total assets

 $6,302,431  $6,273,126 

LIABILITIES AND STOCKHOLDERS' EQUITY

        

Current liabilities

        

Accounts payable

 $118,690  $124,668 

Current maturities of long-term debt

  44,364   44,275 

Accrued liabilities

  447,466   427,379 

Total current liabilities

  610,520   596,322 

Long-term debt, net of current maturities and debt issuance costs

  3,024,992   2,871,223 

Operating lease liabilities, net of current portion

  665,382   711,387 

Deferred income taxes

  313,942   288,826 

Other liabilities

  55,793   61,266 

Commitments and contingencies (Note 7)

          

Stockholders' equity

        

Preferred stock, $0.01 par value, 5,000,000 shares authorized

  —   — 

Common stock, $0.01 par value, 200,000,000 shares authorized; 88,849,292 and 96,832,453 shares outstanding

  888   968 

Additional paid-in capital

  —   — 

Retained earnings

  1,631,949   1,744,232 

Accumulated other comprehensive loss

  (1,035)  (1,098)

Total stockholders' equity

  1,631,802   1,744,102 

Total liabilities and stockholders' equity

 $6,302,431  $6,273,126 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

 
3
Table of Contents

 

 

BOYD GAMING CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

 

   

Three Months Ended

    

Nine Months Ended

  
   

September 30,

    

September 30,

  

(In thousands, except per share data)

  

2024

    

2023

    

2024

    

2023

  

Revenues

                                

Gaming

   $ 640,528     $ 641,168     $ 1,925,486     $ 1,966,205  

Food & beverage

     72,728       70,986       222,361       212,936  

Room

     50,226       48,720       151,768       148,546  

Online

     141,312       90,288       417,412       298,153  

Management fee

     21,030       17,153       64,527       54,629  

Other

     35,422       34,849       107,725       103,611  

Total revenues

     961,246       903,164       2,889,279       2,784,080  

Operating costs and expenses

                                

Gaming

     252,213       251,536       749,966       751,330  

Food & beverage

     62,713       59,672       187,852       177,623  

Room

     19,674       19,180       57,728       54,880  

Online

     115,119       79,080       353,269       252,478  

Other

     12,171       11,549       38,332       34,119  

Selling, general and administrative

     102,391       99,944       315,709       299,333  

Master lease rent expense

     28,160       27,236       83,247       81,163  

Maintenance and utilities

     40,421       41,720       112,111       115,337  

Depreciation and amortization

     70,344       64,797       198,934       188,577  

Corporate expense

     27,614       27,872       88,254       88,232  

Project development, preopening and writedowns

     11,347       2,405       21,954       (11,268 )

Impairment of assets

     —       —       10,500       4,537  

Other operating items, net

     (906 )     301       4,947       959  

Total operating costs and expenses

     741,261       685,292       2,222,803       2,037,300  

Operating income

     219,985       217,872       666,476       746,780  

Other expense (income)

                                

Interest income

     (392 )     (1,585 )     (1,241 )     (22,445 )

Interest expense, net of amounts capitalized

     46,208       42,352       131,466       128,933  

Other, net

     189       (30 )     289       596  

Total other expense, net

     46,005       40,737       130,514       107,084  

Income before income taxes

     173,980       177,135       535,962       639,696  

Income tax provision

     (42,852 )     (41,902 )     (128,516 )     (112,278 )

Net income

   $ 131,128     $ 135,233     $ 407,446     $ 527,418  
                                 
                                 

Basic net income per common share

   $ 1.43     $ 1.34     $ 4.30     $ 5.16  

Weighted average basic shares outstanding

     91,863       100,804       94,769       102,139  
                                 
                                 

Diluted net income per common share

   $ 1.43     $ 1.34     $ 4.30     $ 5.16  

Weighted average diluted shares outstanding

     91,893       100,850       94,807       102,187  

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

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BOYD GAMING CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)

 

   

Three Months Ended

    

Nine Months Ended

  
   

September 30,

    

September 30,

  

(In thousands)

  

2024

    

2023

    

2024

    

2023

  

Net income

   $ 131,128     $ 135,233     $ 407,446     $ 527,418  

Other comprehensive income (loss), net of tax:

                                

Fair value adjustments to available-for-sale securities

     504       (119 )     360       467  

Foreign currency translation adjustments

     159       (254 )     (297 )     (54 )

Comprehensive income

   $ 131,791     $ 134,860     $ 407,509     $ 527,831  

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

5
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BOYD GAMING CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Unaudited)

 

                  

Accumulated Other

     
  

Common Stock

  

Additional

  

Retained

  

Comprehensive

     

(In thousands, except share data)

 

Shares

  

Amount

  

Paid-in Capital

  

Earnings

  

Loss

  

Total

 

Balances, January 1, 2024

  96,832,453  $968  $—  $1,744,232  $(1,098) $1,744,102 

Net income

  —   —   —   136,473   —   136,473 

Fair value adjustments to available-for-sale securities

  —   —   —   —   250   250 

Foreign currency translation adjustments

  —   —   —   —   (318)  (318)

Release of restricted stock units, net of tax

  85,597   1   (1,586)  (2,049)  —   (3,634)

Release of performance stock units, net of tax

  150,063   2   (119)  (6,091)  —   (6,208)

Shares repurchased and retired

  (1,658,377)  (17)  (5,155)  (101,133)  —   (106,305)

Dividends declared ($0.17 per share)

  —   —   —   (16,264)  —   (16,264)

Share-based compensation costs

  —   —   6,860   —   —   6,860 

Balances, March 31, 2024

  95,409,736   954   —   1,755,168   (1,166)  1,754,956 

Net income

  —   —   —   139,845   —   139,845 

Fair value adjustments to available-for-sale securities

  —   —   —   —   (394)  (394)

Foreign currency translation adjustments

  —   —   —   —   (138)  (138)

Stock options exercised

  23,431   —   271   —   —   271 

Release of restricted stock units, net of tax

  19,837   —   (1)  (33)  —   (34)

Shares repurchased and retired

  (3,143,995)  (31)  (10,635)  (166,756)  —   (177,422)

Dividends declared ($0.17 per share)

  —   —   —   (15,736)  —   (15,736)

Share-based compensation costs

  —   —   10,365   —   —   10,365 

Balances, June 30, 2024

  92,309,009   923   —   1,712,488   (1,698)  1,711,713 

Net income

  —   —   —   131,128   —   131,128 

Fair value adjustments to available-for-sale securities

  —   —   —   —   504   504 

Foreign currency translation adjustments

  —   —   —   —   159   159 

Release of restricted stock units, net of tax

  1,423   —   (32)  (8)  —   (40)

Shares repurchased and retired

  (3,461,140)  (35)  (7,508)  (196,508)  —   (204,051)

Dividends declared ($0.17 per share)

  —   —   —   (15,151)  —   (15,151)

Share-based compensation costs

  —   —   7,540   —   —   7,540 

Balances, September 30, 2024

  88,849,292  $888  $—  $1,631,949  $(1,035) $1,631,802 

 

 

                  

Accumulated Other

     
  

Common Stock

  

Additional

  

Retained

  

Comprehensive

     

(In thousands, except share data)

 

Shares

  

Amount

  

Paid-in Capital

  

Earnings

  

Loss

  

Total

 

Balances, January 1, 2023

  102,816,110  $1,028  $305,152  $1,285,827  $(1,382) $1,590,625 

Net income

  —   —   —   199,731   —   199,731 

Fair value adjustments to available-for-sale securities

  —   —   —   —   474   474 

Foreign currency translation adjustments

  —   —   —   —   4   4 

Stock options exercised

  32,000   —   315   —   —   315 

Release of restricted stock units, net of tax

  45,942   1   (1,926)  —   —   (1,925)

Release of performance stock units, net of tax

  318,878   3   (12,777)  —   —   (12,774)

Shares repurchased and retired

  (1,726,308)  (17)  (106,994)  —   —   (107,011)

Dividends declared ($0.16 per share)

  —   —   —   (16,289)  —   (16,289)

Share-based compensation costs

  —   —   7,819   —   —   7,819 

Balances, March 31, 2023

  101,486,622   1,015   191,589   1,469,269   (904)  1,660,969 

Net income

  —   —   —   192,454   —   192,454 

Fair value adjustments to available-for-sale securities

  —   —   —   —   112   112 

Foreign currency translation adjustments

  —   —   —   —   196   196 

Release of restricted stock units, net of tax

  17,871   —   (63)  —   —   (63)

Shares repurchased and retired

  (1,492,451)  (15)  (101,001)  —   —   (101,016)

Dividends declared ($0.16 per share)

  —   —   —   (16,041)  —   (16,041)

Share-based compensation costs

  —   —   12,198   —   —   12,198 

Balances, June 30, 2023

  100,012,042   1,000   102,723   1,645,682   (596)  1,748,809 

Net income

  —   —   —   135,233   —   135,233 

Fair value adjustments to available-for-sale securities

  —   —   —   —   (119)  (119)

Foreign currency translation adjustments

  —   —   —   —   (254)  (254)

Release of restricted stock units, net of tax

  1,974   —   (56)  —   —   (56)

Shares repurchased and retired

  (1,627,777)  (16)  (107,345)  —   —   (107,361)

Dividends declared ($0.16 per share)

  —   —   —   (15,804)  —   (15,804)

Share-based compensation costs

  —   —   8,033   —   —   8,033 

Balances, September 30, 2023

  98,386,239  $984  $3,355  $1,765,111  $(969) $1,768,481 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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BOYD GAMING CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

 

   

Nine Months Ended

  
   

September 30,

  

(In thousands)

  

2024

    

2023

  

Cash Flows from Operating Activities

                

Net income

   $ 407,446     $ 527,418  

Adjustments to reconcile net income to net cash provided by operating activities:

                

Depreciation and amortization

     198,934       188,577  

Amortization of debt financing costs and discounts on debt

     5,698       5,854  

Non-cash operating lease expense

     66,019       59,302  

Non-cash expected credit loss (income) on note receivable

     —       (34,371 )

Share-based compensation expense

     24,765       28,050  

Deferred income taxes

     25,131       (9,995 )

Non-cash impairment of assets

     10,500       4,537  

Other operating activities

     10,143       (516 )

Changes in operating assets and liabilities, excluding the impact of acquisition:

                

Accounts receivable, net

     34,855       5,473  

Inventories

     278       1,533  

Prepaid expenses and other current assets

     (7,446 )     (22,086 )

Income taxes (receivable) payable, net

     (16,440 )     1,335  

Other assets, net

     870       3,262  

Accounts payable and accrued liabilities

     1,979       (2,876 )

Operating lease liabilities

     (66,019 )     (59,302 )

Other liabilities

     (1,694 )     1,057  

Net cash provided by operating activities

     695,019       697,252  

Cash Flows from Investing Activities

                

Capital expenditures

     (289,224 )     (279,023 )

Payments received on note receivable

     208       82,459  

Cash paid for acquisition, net of cash received

     (28,774 )     —  

Other investing activities

     (2,674 )     (3,022 )

Net cash used in investing activities

     (320,464 )     (199,586 )

Cash Flows from Financing Activities

                

Borrowings under credit facility

     1,317,000       1,086,700  

Payments under credit facility

     (1,168,700 )     (1,232,700 )

Share-based compensation activities

     (9,645 )     (14,503 )

Shares repurchased and retired

     (483,218 )     (312,656 )

Dividends paid

     (47,510 )     (47,805 )

Other financing activities

     (140 )     (138 )

Net cash used in financing activities

     (392,213 )     (521,102 )

Effect of foreign currency exchange rates on cash, cash equivalents and restricted cash

     (63 )     5  

Change in cash, cash equivalents and restricted cash

     (17,721 )     (23,431 )

Cash, cash equivalents and restricted cash, beginning of period

     307,930       295,065  

Cash, cash equivalents and restricted cash, end of period

   $ 290,209     $ 271,634  

Supplemental Disclosure of Cash Flow Information

                

Cash paid for interest, net of amounts capitalized

   $ 127,851     $ 124,132  

Cash received for interest

     213       10,804  

Cash paid for income taxes

     119,802       120,449  

Supplemental Schedule of Non-cash Investing and Financing Activities

                

Payables incurred for capital expenditures

   $ 21,153     $ 8,091  

Dividends declared not yet paid

     15,151       15,804  

Expected credit loss (income) on note receivable

     —       (34,371 )

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

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BOYD GAMING CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

as of September 30, 2024 and December 31, 2023 and for the three and nine months ended September 30, 2024 and 2023

______________________________________________________________________________________________________

 

 

NOTE 1.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization

Boyd Gaming Corporation (and together with its subsidiaries, the "Company," "Boyd," "Boyd Gaming," "we" or "us") was incorporated in the state of Nevada in 1988 and has been operating since 1975. The Company's common stock is traded on the New York Stock Exchange under the symbol "BYD".

 

We are a geographically diversified operator of 28 wholly owned brick-and-mortar gaming entertainment properties ("gaming entertainment properties"). Headquartered in Las Vegas, Nevada, we have gaming entertainment properties in Nevada, Illinois, Indiana, Iowa, Kansas, Louisiana, Mississippi, Missouri, Ohio and Pennsylvania. In addition, we own and operate Boyd Interactive, a business-to-business ("B2B") and business-to-consumer ("B2C") online gaming business. We also manage the Sky River Casino located in California under a management agreement with Wilton Rancheria. 

 

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with the instructions to the Quarterly Report on Form 10-Q and Article 10 of Regulation S-X and, therefore, do not include all information and footnote disclosures necessary for complete financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP"). These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes for the year ended December 31, 2023, as filed with the U.S. Securities and Exchange Commission ("SEC") on February 26, 2024.

 

The results for the periods indicated are unaudited but reflect all adjustments, consisting only of normal recurring adjustments, that management considers necessary for a fair presentation of financial position, results of operations and cash flows. Results of operations and cash flows for the interim periods presented herein are not necessarily indicative of the results that would be achieved during a full year of operations or in future periods.

 

The accompanying condensed consolidated financial statements include the accounts of the Company and its subsidiaries. Investments in unconsolidated affiliates, which are 50% or less owned and where we have significant influence and do not meet the controlling financial interest consolidation criteria of the authoritative accounting guidance for voting interest or variable interest entities, are accounted for under the equity method. All intercompany accounts and transactions have been eliminated in consolidation.

 

Cash and Cash Equivalents

Cash and cash equivalents include highly liquid investments, which include cash on hand and in banks, interest-bearing deposits and money market funds with maturities of three months or less at their date of purchase. The instruments are not restricted as to withdrawal or use and are on deposit with high credit quality financial institutions. Although these balances may at times exceed the federal insured deposit limit, we believe such risk is mitigated by the quality of the institution holding such deposit. The carrying values of these instruments approximate their fair values as such balances are generally available on demand.

 

Restricted Cash

Restricted cash consists primarily of: (i) amounts restricted by regulation for gaming and racing purposes; (ii) amounts restricted by regulation for the value in players' online casino gaming accounts; and (iii) advance payments received for future bookings with our Hawaiian travel agency. These restricted cash balances are invested in highly liquid instruments with a maturity of 90 days or less. These restricted cash balances are held by high credit quality financial institutions. The carrying values of these instruments approximate their fair values due to their short maturities.

 

The following table provides a reconciliation of cash, cash equivalents and restricted cash balances reported within the condensed consolidated balance sheets to the total balance shown in the condensed consolidated statements of cash flows.

 

  

September 30,

  

December 31,

  

September 30,

  

December 31,

 

(In thousands)

 

2024

  

2023

  

2023

  

2022

 

Cash and cash equivalents

 $286,281  $304,271  $269,155  $283,472 

Restricted cash

  3,928   3,659   2,479   11,593 

Total cash, cash equivalents and restricted cash

 $290,209  $307,930  $271,634  $295,065 

 

 

8
Table of Contents
 

BOYD GAMING CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)

as of  September 30, 2024 and  December 31, 2023 and for the three and nine months ended September 30, 2024 and 2023

______________________________________________________________________________________________________

 

Leases

Management determines if a contract is or contains a lease at inception or modification of a contract. A contract is or contains a lease if the contract conveys the right to control the use of an identified asset for a period in exchange for consideration. Control over the use of the identified asset means the lessee has both (a) the right to obtain substantially all of the economic benefits from the use of the asset and (b) the right to direct the use of the asset. Operating lease liabilities are recognized based on the present value of the remaining lease payments, discounted using the discount rate for the lease at the commencement date. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. For our operating leases for which the rate implicit in the lease is not readily determinable, we generally use an incremental borrowing rate based on information available at the commencement date to determine the present value of future lease payments. The incremental borrowing rate is determined based on the weighted average incremental borrowing rate at the lease commencement or modification date that is commensurate with the rate of interest in a similar economic environment that we would have to pay to borrow an amount equal to our future lease payments on a collateralized basis over a similar term, including reasonably certain options to extend or terminate. The determination of the incremental borrowing rate could materially impact our lease liabilities. Operating right-of-use ("ROU") assets and finance lease assets are recognized based on the amount of the initial measurement of the lease liability. Lease expense is recognized on a straight-line basis over the lease term. Lease and non-lease components are accounted for separately.

 

Revenue Recognition

The Company’s revenue contracts with customers consist of gaming wagers (including both those made at our gaming entertainment properties and online B2C wagers), hotel room sales, food & beverage offerings and other amenity transactions. See Collaborative Arrangements below for further discussion of revenues earned under our online collaborative arrangements. The transaction price for a gaming wagering contract is the difference between gaming wins and losses, not the total amount wagered. Cash discounts, commissions and other cash incentives to customers related to gaming play are recorded as a reduction of gaming revenues. The transaction price for hotel, food & beverage and other contracts is the net amount collected from the customer for such goods and services. Hotel, food & beverage and other services have been determined to be separate, stand-alone performance obligations and the transaction price for such contracts is recorded as revenue as the good or service is transferred to the customer over their stay at the hotel, when the delivery is made for the food & beverage or when the service is provided for other amenity transactions.


We have established a player loyalty point program to encourage repeat business from frequent and active slot machine customers and other patrons. Members earn points based on gaming activity and such points can be redeemed for complimentary slot play, food & beverage, hotel rooms and other free goods and services.


Gaming wager contracts involve two performance obligations for those customers earning points under the Company’s player loyalty program and a single performance obligation for customers who do not participate in the program. The Company applies a practical expedient by accounting for its gaming contracts on a portfolio basis as such wagers have similar characteristics and the Company reasonably expects the effects on the financial statements of applying the revenue recognition guidance to the portfolio to not differ materially from that which would result if applying the guidance to an individual wagering contract. For purposes of allocating the transaction price in a wagering contract between the wagering performance obligation and the obligation associated with the loyalty points earned, the Company allocates an amount to the player loyalty contract liability based on the stand-alone selling price of the points earned, which is determined by the value of a point that can be redeemed for a hotel room stay, food & beverage or other amenities. Sales and usage-based taxes are excluded from revenues. An amount is allocated to the gaming wager performance obligation using the residual approach as the stand-alone price for wagers is highly variable and no set established price exists for such wagers. The allocated revenue for gaming wagers, excluding race and sports wagers, is recognized when the wagers occur as all such wagers settle immediately. The allocated revenue for race and sports wagers is recognized when the specific event or game occurs. The player loyalty contract liability amount is deferred and recognized as revenue when the customer redeems the points for a hotel room stay, food & beverage or other amenities and such goods or services are delivered to the customer. See Note 5, Accrued Liabilities, for the balance outstanding related to the player loyalty program.

 

The Company collects advance deposits from hotel customers for future hotel reservations and other future events such as banquets and ticketed events. These advance deposits represent obligations of the Company until the hotel room stay is provided to the customer or the banquet or ticketed event occurs. See Note 5, Accrued Liabilities, for the balance outstanding related to advance deposits.

 

The Company's outstanding chip liability represents the amounts owed in exchange for gaming chips held by a customer. Outstanding chips are expected to be recognized as revenue or redeemed for cash within one year of being purchased. See Note 5, Accrued Liabilities, for the balance related to outstanding chips.

 

The retail value of hotel accommodations, food & beverage, and other services furnished to guests without charge is recorded as departmental revenues. Gaming revenues are net of incentives earned in our player loyalty program and the estimated retail value of complimentary goods and services provided to customers (such as complimentary rooms and food & beverage). The estimated retail values related to goods and services provided to customers without charge or upon redemption of points under our player loyalty program, included in departmental revenues, and therefore reducing our gaming revenues, are as follows:

 

  

Three Months Ended

  

Nine Months Ended

 
  

September 30,

  

September 30,

 

(In thousands)

 

2024

  

2023

  

2024

  

2023

 

Food & beverage

 $31,621  $29,978  $94,074  $87,573 

Room

  16,084   15,873   46,424   46,367 

Other

  2,076   2,328   6,449   6,265 

 

9
Table of Contents
 

BOYD GAMING CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)

as of  September 30, 2024 and  December 31, 2023 and for the three and nine months ended September 30, 2024 and 2023

______________________________________________________________________________________________________

 

Gaming Taxes

We are subject to taxes based on gross gaming revenues in the jurisdictions in which we operate. These gaming taxes are assessed based on our gaming revenues and are recorded in the condensed consolidated statements of operations as a gaming expense for gaming entertainment properties and online expense for Boyd Interactive operations. Gaming taxes recorded as gaming expense totaled approximately $129.5 million and $128.1 million for the three months ended September 30, 2024 and 2023, respectively, and were $386.4 million and $387.8 million for the nine months ended September 30, 2024 and 2023, respectively. Gaming taxes recorded as online expense, excluding taxes paid under collaborative arrangements (see Collaborative Arrangements below for further discussion), totaled $3.7 million and $2.1 million for the three months ended September 30, 2024 and 2023, respectively, and $9.3 million and $3.9 million for the nine months ended September 30, 2024 and 2023, respectively.

 

Income Taxes

Income taxes are recorded under the asset and liability method, whereby deferred tax assets and liabilities are recognized based on the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. We reduce the carrying amounts of deferred tax assets by a valuation allowance if, based on the available evidence, it is more likely than not that such assets will not be realized. Use of the term "more likely than not" indicates the likelihood of occurrence is greater than 50%. Accordingly, the need to establish valuation allowances for deferred tax assets is continually assessed at a minimum quarterly, and as facts and circumstances change, based on a more-likely-than-not realization threshold. This assessment considers, among other matters, the nature, frequency and severity of current and cumulative losses, forecasts of profitability and taxable income, the duration of statutory carryforward periods, our experience with the utilization of operating loss and tax credit carryforwards before expiration and tax planning strategies. In making such judgments, significant weight is given to evidence that can be objectively verified.

 

In performing our second quarter 2023 valuation allowance analysis, we determined that the positive evidence in favor of releasing a portion of our valuation allowance for certain state jurisdictions, outweighed the negative evidence. We utilize a rolling twelve quarters of pre-tax income adjusted for permanent book to tax differences as a measure of cumulative results in recent years. We transitioned from a cumulative loss position to a cumulative income position over the rolling twelve quarters ended June 30, 2023. Other evidence considered in the analysis included, but was not limited to, a trend reflective of improvement in recent earnings, forecasts of profitability and taxable income and the reversal of existing temporary differences. The change in these conditions during the three months ended June 30, 2023 provided positive evidence that supported the release of the valuation allowance against a significant portion of our state deferred tax assets. As such, we concluded that it was more likely than not that the benefit from our deferred tax assets would be realized. As a result, during the second quarter of 2023, we released $35.9 million of valuation allowance on our state income tax net operating loss carryforwards and other deferred tax assets. 

 

Other Long-Term Tax Liabilities

The Company's income tax returns are subject to examination by the Internal Revenue Service ("IRS") and other tax authorities in the locations where it operates. The Company assesses potentially unfavorable outcomes of such examinations based on accounting standards for uncertain income taxes, which prescribe a minimum recognition threshold a tax position is required to meet before being recognized in the financial statements.

 

Uncertain tax position accounting standards apply to all tax positions related to income taxes. These accounting standards utilize a two-step approach for evaluating tax positions. Recognition occurs when the Company concludes that a tax position, based on its technical merits, is more likely than not to be sustained upon examination. Measurement is only addressed if the position is deemed to be more likely than not to be sustained. The tax benefit is measured as the largest amount of benefit that is more likely than not to be realized upon settlement.

 

Tax positions failing to qualify for initial recognition are recognized in the first subsequent interim period that they meet the "more likely than not" standard. If it is subsequently determined that a previously recognized tax position no longer meets the "more likely than not" standard, it is required that the tax position is derecognized. Accounting standards for uncertain tax positions specifically prohibit the use of a valuation allowance as a substitute for derecognition of tax positions. As applicable, the Company will recognize accrued penalties and interest related to unrecognized tax benefits in the provision for income taxes. If applicable, accrued interest and penalties are included in other long-term tax liabilities on the condensed consolidated balance sheets.

 

The IRS has selected our federal corporate income tax return for the tax year ended December 31, 2021, for examination. The IRS examination began in the second quarter of 2024 and is early in the process. As of  September 30, 2024, and for the three and nine months then ended, there were no changes to our unrecognized tax benefits to date.

 

Collaborative Arrangements

We hold a five percent equity ownership in and have a strategic partnership with FanDuel Group ("FanDuel"), the nation's leading sports-betting operator, to pursue sports-betting opportunities across the country, both at our gaming entertainment properties and online. Subject to state law and regulatory approvals, we have established a presence in the sports wagering industry, both at our gaming entertainment properties and online, by leveraging FanDuel's technology and related services. We offer online sports wagering under the FanDuel brand or under market access agreements with other companies in Illinois, Indiana, Iowa, Kansas, Louisiana, Ohio and Pennsylvania. We also operate sportsbooks under the FanDuel brand at one of our Downtown Las Vegas gaming entertainment properties, our gaming entertainment properties in Mississippi and all of the gaming entertainment properties in the states where we offer online sports wagering. Under our online collaborative arrangements with FanDuel and other third parties, we receive a revenue share from FanDuel or the other third-party operators based on actual wagering wins and losses. The activities under these collaborative arrangements related to online wagering, are recorded in online revenue and online expense on the condensed consolidated statements of operations. The activities under these collaborative arrangements related to sportsbooks at our gaming entertainment properties, are recorded in gaming revenue and gaming expense.

 

Under certain of our collaborative arrangements, we are the primary obligor and are responsible for paying gaming taxes and other license payments owed as the gaming licensee for the related online gaming activities. We are reimbursed for these taxes and other payments by the third-party operators. We report these gaming taxes and other expenses paid as online expense and the reimbursements we receive as online revenues. These taxes and other payments totaled approximately $103.2 million and $71.4 million for the three months ended September 30, 2024 and 2023, respectively, and $322.7 million and $230.6 million for the nine months ended September 30, 2024 and 2023, respectively.

 

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BOYD GAMING CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)

as of  September 30, 2024 and  December 31, 2023 and for the three and nine months ended September 30, 2024 and 2023

______________________________________________________________________________________________________

 

Our five percent equity ownership in FanDuel is recorded at cost in accordance with the measurement alternative allowed under Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 321, Accounting for Investments in Equity Securities. We do not have the ability to exercise significant influence over FanDuel's operating and financial policies. We evaluate the investment for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. We evaluate the recorded value of the investment when any observable price changes in orderly transactions for an identical or similar investment would require an adjustment of the investment to fair value.

 

Currency Translation

The Company translates the financial statements of its foreign subsidiary that are not denominated in U.S. dollars. Balance sheet accounts are translated at the exchange rate in effect at each balance sheet date. Income statement accounts are translated at the average rate of exchange prevailing during the period. If a material income statement event occurs, the transaction would be translated at the exchange rate in effect on the date of occurrence. Translation adjustments are recorded in other comprehensive income (loss). Gains or losses from foreign currency transaction remeasurements are recorded as other non-operating income (expense).

 

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.

 

Recently Issued Accounting Pronouncements

A variety of proposed or otherwise potential accounting standards are currently being studied by standard-setting organizations and certain regulatory agencies. Because of the tentative and preliminary nature of such proposed standards, we have not yet determined the effect, if any, that the implementation of such proposed standards would have on our condensed consolidated financial statements.

 

 

NOTE 2.    ACQUISITION

Resorts Digital Gaming, LLC

On September 1, 2024, Boyd Interactive Gaming, Inc. ("Boyd Interactive"), a wholly owned subsidiary of the Company, completed its acquisition of Resorts Digital Gaming, LLC ("Resorts Digital"), pursuant to a Membership Interest Purchase Agreement (the "Membership Agreement"), entered into on May 15, 2024, by and among Boyd Interactive, DGMB Casino Holding, LLC and DGMB Casino SPE Corp. Resorts Digital is now a wholly owned subsidiary of Boyd Interactive.

 

Resorts Digital is an online casino operator based in New Jersey, operating a dual-brand strategy across Resorts Casino and Mohegan Sun. This acquisition is another step forward in building out our online casino business. In addition to acquiring the existing online business under both brands, the acquisition includes a 20-year marketing agreement with a 10-year renewal option that provides for marketing and promotional services at Resorts Casino in Atlantic City, New Jersey. This marketing agreement allows us to provide our online customers in New Jersey access to a gaming entertainment property where they can redeem points earned under a loyalty program for such amenities as complimentary food & beverage and hotel rooms. The acquired company is aggregated into our Online segment (See Note 10, Segment Information).

 

Consideration Transferred

The fair value of the consideration transferred for the membership interests of Resorts Digital included the purchase price of the net assets transferred. The total gross consideration was $34.0 million (with $3.7 million of cash and restricted cash acquired and $1.5 million not paid as of September 30, 2024, for total cash paid for acquisition, net of cash received as of September 30, 2024 of $28.8 million).

 

Status of Purchase Price Allocation

The Company is following the acquisition method of accounting pursuant to FASB Accounting Standards Codification Topic 805 ("ASC 805"). For purposes of these condensed consolidated financial statements, we have allocated the purchase price to the assets acquired and the liabilities assumed based on preliminary estimates of fair value as determined by management with the assistance from third-party specialists. The excess of the purchase price over the preliminary estimated fair value of the assets acquired and liabilities assumed has been recorded as goodwill. The Company has recognized the assets acquired and liabilities assumed in the acquisition based on fair value estimates as of the date of the acquisition. The determination of the fair values of all the acquired intangible assets and the related determination of their estimated lives is currently in process. This determination requires significant judgment and as such, management has not completed its valuation analysis and calculations in sufficient detail necessary to finalize the determination of the fair value of the intangible assets acquired, along with the related allocation of goodwill. The final fair value determinations may be different than those reflected in the condensed consolidated financial statements at September 30, 2024.

 

 

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BOYD GAMING CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)

as of  September 30, 2024 and  December 31, 2023 and for the three and nine months ended September 30, 2024 and 2023

______________________________________________________________________________________________________

 

The following table summarizes the preliminary allocation of the purchase price:

 

(In thousands)

 

As Recorded

 

Current assets

 $4,316 

Other assets

  110 

Intangible assets

  22,800 

Total acquired assets

  27,226 
     

Current liabilities

  3,918 

Other liabilities

  28 

Total liabilities assumed

  3,946 

Net identifiable assets acquired

  23,280 

Goodwill

  10,700 

Net assets acquired

 $33,980 

 

The following table summarizes the preliminary values assigned to acquired intangible assets and preliminary weighted average useful lives of definite-lived intangible assets:

 

  

Useful Lives

     

(In thousands)

 

(in years)

  

As Recorded

 

Gaming license right

 Indefinite $15,000 

Customer relationships

 5   3,300 

Marketing agreement

 20   4,500 

Total intangible assets acquired

     $22,800 

 

The goodwill recognized is the excess of the purchase price over the preliminary values assigned to the assets acquired and liabilities assumed. All of the goodwill was assigned to the Online reportable segment. 

 

The Company expensed $0.1 million of acquisition related costs for the three and nine months ended September 30, 2024. These costs are included in project development, preopening and writedowns on the condensed consolidated statements of operations.

 

The revenue and earnings from the acquisition are not material for the period subsequent to acquisition through  September 30, 2024. The pro-forma revenue and earnings from the acquisition assuming all impacts as if it had been completed on January 1, 2024, are not material through September 30, 2024.

 

 
 

NOTE 3.    PROPERTY AND EQUIPMENT, NET

Property and equipment, net consists of the following:

 

  

September 30,

  

December 31,

 

(In thousands)

 

2024

  

2023

 

Land

 $338,469  $338,469 

Buildings and improvements

  3,392,404   3,237,863 

Furniture and equipment

  1,843,325   1,742,666 

Riverboats and barges

  241,758   241,826 

Construction in progress

  119,753   182,710 

Total property and equipment

  5,935,709   5,743,534 

Less accumulated depreciation

  (3,302,461)  (3,201,022)

Property and equipment, net

 $2,633,248  $2,542,512 

 

Depreciation expense is as follows:

 

  

Three Months Ended

  

Nine Months Ended

 
  

September 30,

  

September 30,

 

(In thousands)

 

2024