Boyd Gaming (NYSE:BYD) reported third-quarter financial results on Thursday. The transcript from the company’s third-quarter earnings call has been provided below.
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Summary
Boyd Gaming’s third-quarter revenues and EBITDAR were down approximately 1% on a reported basis. After adjusting for unusual items, revenue grew 2% and EBITDAR increased by 1%.
The Midwest and South segment saw revenues increase by almost 3% and EBITDAR grow by 2.5%, driven by gaming revenue growth and efficient operations.
The Las Vegas Locals segment faced softness in destination business, but excluding The Orleans and Suncoast, the portfolio grew revenues and EBITDAR by 3%.
The Suncoast renovation was completed, with full benefits expected in future quarters, while a similar project is planned for The Orleans.
The Online segment continued to show double-digit growth, with strong contributions from Boyd Interactive and the Sky River Casino.
Investments in property improvements and new projects in Virginia, Illinois, and Louisiana are ongoing, with a focus on long-term growth and maintaining shareholder returns through buybacks and dividends.
Management reiterated confidence in the strength of its diversified business model and the Las Vegas economy, despite current pressures on destination business.
Full Transcript
OPERATOR
Thank you for standing by. This is the conference operator. The Boyd Gaming call will begin momentarily. Thank you for your patience.
David Strau (Vice President of Corporate Communications)
Good afternoon and welcome to the Boyd Gaming third quarter 2026 earnings conference call. This is David Strau, Vice President of Corporate Communications for Boyd Gaming. I will be the moderator for today’s call, which we are hosting on Thursday, October 22, 2026. At this time all lines are in listen-only mode. Following our remarks, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star then zero for the operator.
Our speakers for today’s call are Keith Smith, President and Chief Executive Officer, and Josh Hershberg, Chief Financial Officer. Our comments today will include statements that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act. All forward-looking statements in our comments are as of today’s date and we undertake no obligation to update or revise the forward-looking statements. Actual results may differ materially from those projected in any forward-looking statement.
There are certain risks and uncertainties, including those disclosed in our filings with the SEC, that may impact our results. During our call today we will make reference to non-GAAP financial measures. For a complete reconciliation of historical non-GAAP to GAAP financial measures, please refer to our earnings press release and our Form 8-K furnished to the SEC today, both of which are available at investors.boydgaming.com. We do not provide a reconciliation of forward-looking non-GAAP financial measures due to our inability to project special charges and certain expenses.
Today’s call is being webcast live at boydgaming.com and will be available for replay in the Investor Relations section of our website shortly after the completion of this call. So with that, I would now like to turn the call over to Keith Smith.
Keith Smith (President and Chief Executive Officer)
Thanks, David, and good afternoon, everyone. Our third quarter performance reflects the benefits of our diversified business model, the ongoing strength of our core customer, and the appeal of the property investments we’ve been making across our portfolio. For the quarter, our Midwest and South properties delivered another solid performance, with revenue and EBITDAR growth reflecting the consistent strength of this segment. In Las Vegas, play from local residents remained strong. However, this trend was offset by increased softness in destination business to Las Vegas, primarily at The Orleans, and construction disruption at the Suncoast. In our online segment, Boyd Interactive once again contributed double-digit revenue and EBITDAR growth, and we continued to benefit from the strong performance of Sky River Casino, driving increased management fees in our managed business.
Companywide revenues and EBITDAR were down approximately 1% in the third quarter on a reported basis. However, our third quarter results were impacted by several unusual items this year. These items include the permanent closure of Sam’s Town Tunica in November of 2025, the sale of Sam’s Town Shreveport on August 1st of this year, higher property taxes at Kansas Star, and a reduction in the tax pass-through amounts. After adjusting for these items, companywide revenue actually grew 2% while EBITDAR was up 1%, a more accurate reflection of our performance in the third quarter.
Now turning to segment results, in our Midwest and South segment, taking into account the adjustments I mentioned, revenues increased almost 3% for the quarter. Gaming revenues were up more than 2%, and EBITDAR grew nearly $5 million, or approximately 2.5%. These results were driven by continued strength in play from both core and retail guests, including growth in unrated play. Adjusted operating margins for the quarter were 38%, consistent with our third quarter margins over the last several years.
This performance demonstrates our continued ability to maintain operating efficiencies throughout the segment. During the quarter, we also benefited from the investments we have made throughout our Midwest and South portfolio. Across the segment, we have enhanced our gaming floors, introduced new food and beverage offerings, renovated hotel rooms, and successfully completed several growth projects. These investments are delivering solid returns for our company, helping drive continued growth in play from our core and retail customers across the segment.
Next, in our Las Vegas Locals segment, results in the third quarter were impacted by increased softness in destination business to Las Vegas. This impact was primarily felt at The Orleans. Our third quarter results also reflected the final phases of our renovation project at the Suncoast. Excluding The Orleans and Suncoast, the remainder of our Las Vegas Locals portfolio grew both revenues and EBITDAR 3%, consistent with recent quarters. This growth was driven by increased gaming revenue of 3.5%, with play from both core and retail customers continuing to grow, as well as strong growth in unrated play.
At the end of the quarter, we completed our project to renovate and upgrade all of the public spaces at the Suncoast. Our guests are responding enthusiastically to the improvements, further strengthening our confidence in the long-term potential of the Suncoast. The final phase of the Suncoast project is the remodel of our hotel rooms, which started late in the third quarter. This project should be completed by the first quarter of next year. We are now preparing for a similar project at The Orleans that will enhance this property’s competitive positioning and appeal.
We will begin this project early next year, and we expect only minimal disruption at The Orleans, as the initial phases will be in areas that are not currently accessible to the public. Throughout this year, our Las Vegas Locals results have been supported by continued growth in play from Southern Nevada residents, and the strong underlying fundamentals of the Southern Nevada economy give us confidence these trends will continue. These fundamentals include Southern Nevada’s population recently surpassing 2.4 million residents, driven by an annual growth rate that is twice the national average. This population growth is driven by a local economy that continues to add jobs at a healthy pace, leading almost every major metro area in the country.
Over the last 12 months, Las Vegas has reported the second-highest job growth rate among the nation’s 30 largest metro areas. Local wage growth also continues to outpace the national average, increasing nearly 6% over the past 12 months, and Southern Nevada remains an appealing destination for new residents, offering one of the most competitive cost-of-living environments in the Western U.S. In all, we remain encouraged by the continued strength of the Las Vegas economy and its prospects for our local segment.
Moving next to downtown Las Vegas, our results for the third quarter reflect increased softness in destination business in Southern Nevada, as well as the impact of multiple storms on Hawaii during August and September. Additionally, in the second half of the quarter we saw a significant increase in Hawaiian airfares. While airfares remain elevated today, they have started to moderate. Next, our online segment continued to benefit from double-digit growth at Boyd Interactive during the third quarter. This was the first quarter since last year’s FanDuel transaction to provide comparable year-over-year results and provides a clearer picture of this segment’s performance. Finally, our managed and other business delivered another quarter of strong growth, driven by increased management fees from Sky River. Sky River continues to perform at a high level, benefiting from the recent expansion project that added 400 slot machines and a 1,600-space multi-level parking structure.
With this expansion off to a strong start, work is continuing on the next phase of the project, which will add a 300-room hotel, three new food and beverage outlets, a full-service spa, and a new entertainment and events center. Once complete in 2028, we are confident this expansion will further strengthen Sky River’s position as one of Northern California’s most successful and popular gaming destinations. So in all, our third quarter performance was supported by the benefits of our diversified business model, the ongoing strength of our customer base, and solid returns from our property investments and capital projects. Building on the success of our recent investments and capital projects, we continue to invest in our properties across the country. In Las Vegas, we expect to complete the remodel of 1,800 hotel rooms at The Orleans in November, followed by more than 400 rooms at the Suncoast in the first quarter of next year, and we will be introducing five new food and beverage concepts across the country in the fourth quarter alone.
As we continue to enhance our existing portfolio, we are also actively building our long-term growth pipeline. In Virginia, our resort development in Norfolk remains on time and on budget for a November 2027 opening, and we expect to celebrate the topping off by the end of this year. Once complete, this upscale resort will be a true market leader with a 65,000-square-foot casino, 200-room hotel, eight food and beverage outlets, live entertainment, and an outdoor amenity deck.
It will also offer the most convenient gaming destination for many of the 1.8 million residents of the Hampton Roads region, as well as the millions of visitors who visit nearby Virginia Beach each year. Next, in Illinois, our Paradise Casino project continues in the design phase, and we expect to begin construction late next year. Once complete, this project will transform Paradise into an all-new entertainment facility with a single-level casino floor and enhanced amenities. The new Paradise will be positioned for growth well into the future. And in Louisiana, we are planning to convert our Amelia Bell property into a land-based facility featuring a single-level gaming floor and expanded food and beverage offerings.
This project is also in the design phase, and we expect to begin construction in late 2027, subject to the necessary regulatory approvals. As we continue to invest in the future growth of our business, we are balancing our capital investments with maintaining a strong balance sheet and returning significant capital to our shareholders. During the third quarter, we returned approximately $180 million to our shareholders through a combination of share repurchases and dividends. We intend to continue targeting share repurchases of $150 million per quarter, supplemented by quarterly dividends.
In all, our third quarter results demonstrated the value of our diversified business model. In our Midwest and South segment, we continue to deliver growth across the segment. In Las Vegas, we benefited from ongoing strength in play from local residents and also completed our renovations of all public spaces at the Suncoast, positioning this property for future growth. Both our online and managed businesses continue to produce strong results, and we continue to build a strong pipeline for growth.
Building on the success of our previous growth investments at treasure chest, the mayor’s, our St. Charles, and in Cadence Crossing, we are now focused on completing our market-leading resort in Virginia, which remains on track to open next year. In addition, we are moving forward with growth projects at both Paradise and Amelia Bell. And finally, our financial position remains strong, with leverage of 2.2x at the end of the quarter, supporting our balanced approach to capital allocation and positioning us to continue creating long-term value for our shareholders.
Our success is a reflection of the dedicated Boyd team members across the country and their commitment to delivering memorable experiences for our guests. I would like to thank them for everything they do for our company. Thank you for your time today. I’d now like to turn the call over to Josh.
Josh Hirsberg (EVP, CFO and Treasurer)
Thank you, Keith. During the third quarter, play from both core and retail customers continued to grow. As Keith mentioned, in our Midwest and South segment, adjusted revenues for the quarter grew nearly 3% while EBITDAR grew approximately 2.5%, supported by growth in gaming revenues. And in our Las Vegas Locals segment, excluding The Orleans and Suncoast, revenues and EBITDAR each grew 3% with gaming revenue growth of 3.5%. Increased softness in destination business to Las Vegas negatively impacted our Las Vegas Locals segment, primarily at The Orleans, and also impacted visitation to downtown Las Vegas. Despite these pressures in Las Vegas, we remain disciplined in executing our operating strategy. Excluding The Orleans and Suncoast, margins in our Las Vegas Locals segment were 47%. Even with the third quarter in each of the last two years company-wide.
Outside of the impact of destination business to Las Vegas, the remainder of our land-based portfolio across the country is performing well, and our managed and online businesses both continued to grow during the fourth quarter, contributing to the diversification of our revenues and EBITDAR. During the quarter we invested $159 million in capital expenditures, bringing our year-to-date capital expenditures to $456 million. We now expect to spend approximately $650 million for this year, including $250 million of maintenance capital, $75 million of incremental hotel capital associated with our Orleans hotel remodel which is on schedule to be completed by the end of this year, $50 million in growth capital primarily related to completing Cadence and the design and pre-construction efforts related to our Paradise project, and finally $275 million for our casino resort development in Virginia, which as Keith mentioned, remains on schedule and on budget.
In terms of our capital return program, during the third quarter we paid $15 million in dividends and made $164 million in stock purchases representing 2 million shares. Our actual share count at the end of the third quarter was 71.2 million shares, a 9.4% reduction in our share count since the third quarter of last year. We plan to continue targeting approximately $150 million in shares per quarter, placing us on track inclusive of dividends to return more than $680 million to shareholders this year, representing approximately $9.80 per share in value for our shareholders.
Given our strong free cash flow, we are able to make capital investments and return capital to shareholders while maintaining a strong balance sheet. We ended the quarter with traditional leverage of 2.2x and lease-adjusted leverage of 2.7x. We have ample capacity available to us under our credit agreement. With our next debt maturity in December 2027, we expect to refinance that maturity later this year or in the first half of 2027. In conclusion, our consistent operating performance, strong balance sheet and robust free cash flow position us well to continue creating long-term value for our shareholders. David, this concludes our remarks and we’re now ready to take any questions.
OPERATOR
Thank you, Josh. We will now begin our question and answer session. If you would like to ask a question, please press star then 1 on your touchtone phone. You will hear a prompt that your hand has been raised. Should you wish to withdraw your request, please press star then 2. If you’re using a speakerphone, please use your handset when asking your question. We’ll now pause a moment while we compile our list of questioners. First question comes from Steve Pizzella of Deutsche Bank.
Steve, please go ahead.
Steve Pizzella (Analyst)
Hey, good afternoon everybody and thank you for taking my questions. For Las Vegas Locals, you outlined some good underlying growth trends ex-destination and Suncoast. Given these trends, do you think the local segment can grow next year, and are you able to quantify the estimated destination and Suncoast impact?
Josh Hirsberg (EVP, CFO and Treasurer)
Sure. So, Steve, I’ll take the first part. Basically, I think we believe that we could see modest growth next year in Las Vegas Locals EBITDAR. I think it’s really dependent on what happens with the destination business. Q3 destination was a little bit softer than we expected, but we don’t expect that to really continue into Q4 at that level. I think we would generally expect kind of destination trends to be similar to what we have seen for the quarters preceding the third quarter.
Suncoast disruption in Q3 was a little bit less than we expected, and as we kind of go into Q4 and 2027, Keith mentioned that Suncoast will have some rooms out of service in Q4 and then again in Q1. So our expectation is to kind of have kind of very modest contribution from Suncoast in Q4 just given those rooms being out of service, and then for it to ramp up really kind of coming into Q1 and into Q2 of next year. But I will point out we’ve got rooms coming online in Q4 and Q1, Suncoast, Orleans in Q4, and Cadence contributed in Q3 and is continuing to ramp in Q4 to hit full stride around Q1 of next year.
Steve Pizzella (Analyst)
Okay, thank you. That’s helpful. And then just pivoting towards the buyback, can you talk about how you view share repurchases with the stock at current levels? Does it make you want to be more aggressive?
Josh Hirsberg (EVP, CFO and Treasurer)
Look, we’ve signaled that we’re targeting $150 million per quarter and that’s probably all we’re going to say at this point. We have tended, if you look at our history, to be a little more aggressive as there’s dislocation in the stock price. But it’s a function of other things we have going on, and once again trying to maintain this balanced approach, looking at what we’re reinvesting in our properties, looking at our growth projects, looking at how many shares we want to buy back or how much in terms of dollar value that we want to buy back.
But our history does indicate that we do take advantage of dislocations in the stock price.
Steve Pizzella (Analyst)
Okay, great. Thank you.
OPERATOR
Our next question comes from Steve Wozynski of Stifel. Steve, please go ahead.
Steve Wozynski (Analyst)
Hey, guys. Good afternoon. So, Keith or Josh, want to go back to the destination weakness that you guys were kind of referring to. I think at this point we’ve kind of heard that same narrative from you guys for the last, I think it’s been probably the last two quarters or so. And if I hear you right, so make sure we have this right, it sounds like it actually did intensify relative to where that was back in the second quarter. I think that’s kind of what you guys were referring to.
And if that’s true, maybe what gives you the conviction that you think that kind of turns around in the fourth quarter?
Keith Smith (President and Chief Executive Officer)
So I think you heard it correct, which is our view is that the softness in destination was a little stronger or intensified in Q3 vis-à-vis Q1 and Q2. I think you’ve probably heard this conversation from us for the last three or four quarters. Actually, part of that is driven by the fact that, you know, in Las Vegas, as everyone knows, the third quarter, the summer quarter, is our weakest quarter. So these types of pressures get intensified during the quarter.
And so, you know, July looked okay. August was probably weaker than we anticipated, and, you know, with shift to the holiday, it’s a little hard to tell. And September was a little bit better than August. Look, as we look at the fourth quarter, we look at having hotel rooms back at The Orleans. You know, we’ve had more than 300 rooms out of service every day for the last year. Now do we need those rooms on weekdays? The reality is no. Do we need those rooms on weekends?
The answer is yes. So that will support us, and we think that just the general trends will soften the impact of the weakness in destination as we look at Q4 and next year. Just a combination of factors.
Steve Wozynski (Analyst)
Okay, that makes sense. And then, you know, Josh, or for M&A, given obviously we’ve kind of seen gaming valuations here contract over the last, call it six months or so, and with where your balance sheet is, your strong balance sheet, is that something you’re kind of more thinking about these days? And then, Josh, totally unrelated to that, you were giving us guidance for the online and managed segments. Is what you told us last quarter still a fair range for those two segments?
Keith Smith (President and Chief Executive Officer)
On the M&A side, look, I would say our comments haven’t changed. You know, changing in multiples and valuations of stock prices and other factors doesn’t change our appetite, doesn’t make us more aggressive or less aggressive. We have the same discipline we’ve had over the years, which is we have a set of filters that it has to work its way through: being the right asset at the right price and the right market, which means it has to be a stable market from a tax and regulatory standpoint, has to be a high-quality asset.
You know, we have as big of an appetite as we’ve ever had, but we remain disciplined. And, you know, absent all the rumors of us looking at lots of things, you know, they’re just that, they’re rumors. But, you know, we’ve grown a lot through M&A over the years. We tend to do it in, you know, we grew a lot in ’11 and ’12 and took a few years off, grew a lot in ’17 and ’18. And when the right opportunity presents itself, you’ll see us execute. In the meantime, we remain disciplined.
Josh Hirsberg (EVP, CFO and Treasurer)
Yeah, I think that we don’t feel like we have to do anything. We have a good core business that has been operating consistently, generates a lot of free cash flow, and we just have to be really good at allocating that capital. Just to add to the comments on the M&A side, in terms of online and managed, we previously gave guidance. What I would say is, given the performance in Q3, that the guidance still holds, but I would kind of direct people toward the high end of the ranges that we had previously given for both of those segments, both online and managed.
Steve Wozynski (Analyst)
Okay, great. Thanks, guys. Appreciate it.
OPERATOR
Our next question comes from Barry Jonas of Truist Securities. Barry, please go ahead.
Barry Jonas (Analyst)
Thanks, guys. You talk about a 3% growth in the Las Vegas Locals portfolio outside of Orleans and Suncoast. Just curious how much of that is the addition of Cadence Crossing, and maybe just talk about the ramp that you’re seeing there. Thanks.
Josh Hirsberg (EVP, CFO and Treasurer)
Yeah, so Cadence is definitely helping, but it’s not the majority of it. It’s a component of it. It’s probably, and I don’t have the numbers in front of me, but it’s probably like a third of it or so. And then it’s continuing to ramp in Q4 as well. So it’s coming around. Revenues are ahead of, quite honestly, where we expected they would be. It continues to improve, and so we think it’ll continue to kind of ramp from an EBITDAR perspective, likely hitting full steam in Q1 of next year.
Barry Jonas (Analyst)
Got it. And then just had a question about Pennsylvania and Midwest and South. With skill-based games being removed in that market, are you seeing or would you expect to see any upside to operations in the state? Thanks.
Keith Smith (President and Chief Executive Officer)
So in Pennsylvania, where they’ve been shut down and, to the best of my knowledge, being removed, we would certainly hope that we see some uplift in the business at Valley Forge. Obviously it’s early and I have nothing to report right now, but we certainly expect there to be some uplift. Exactly how much? Hard to say, but we’re paying attention.
Barry Jonas (Analyst)
Thank you.
OPERATOR
Our next question comes from Dan Pulitzer of J.P. Morgan. Dan, please go ahead.
Keith Smith (President and Chief Executive Officer)
I think when we look at the locals market, a couple of things. One is, as both Josh and I pointed out in the prepared remarks, the core market, ex Suncoast and Orleans, performed very well, performed at a similar pace as it had earlier in the year. That gives us confidence that the core business is actually performing well once again. Suncoast, the walls related to the construction project came down late in the quarter. So we’d expect that to begin to recover in Q4. And then as it relates to the Orleans, I guess what gives us confidence is a couple of things. One, once again, we’re going to get 350ish hotel rooms back. While we may not need them midweek, I said this earlier, we certainly can use them on weekends, especially during high-demand holiday periods, the rodeo period coming up and others.
I also think that—and we believe—the kind of intensity increasing in what we call the destination softness has a lot to do with the fact it was summer and it’s the weakest quarter of the year in Las Vegas. And so these trends tend to get exaggerated and then at the end of the day it’s probably just a little old-fashioned optimism in there also.
Josh Hirsberg (EVP, CFO and Treasurer)
Yeah, I think I’d like to just make sure we’re talking about the same thing. So big picture—and this kind of broadly applies, broadly, not just destination, applies across Las Vegas and the Midwest and South—you know, July was a good month for us. August was a very soft month, not only in the Midwest and South, but also in Las Vegas. September, I would say, was kind of more normal. It just wasn’t strong enough to kind of offset the softness that we had seen in August.
So when we think about the destination business, it followed that same kind of pattern, if you will. And so it was much softer in August than we had seen in any other month. So we’re just saying—and I even said it on the last earnings call—that as we anniversary the destination business, we thought it was going to be down, but just down less. What we’re saying is that in Q3, the softness in destination got worse than the trend that we had seen in the preceding four quarters.
Going into the fourth quarter, we attribute some of the incremental softness associated with the destination, as Keith said, to the slower seasonality in the business. I think what we’re saying for Q4 and going forward is the destination business is going to have trends that are similar to what we saw before Q3. We’re not suggesting it’s going to be flat. We’re not suggesting it’s going to grow. We’re not even saying it’s going to be less bad. It’s going to be similar to the trends that we have previously seen. And then as we progress through the year next year, we’ll get a sense of how it’s going to perform.
But we’re not suggesting that we have any kind of crystal ball to suggest when what is really a broader impact on Las Vegas—that is, it’s not just our business, it’s a market-driven kind of demand issue with destination business—you know, when visibility changes on that, that’s when it’ll change in our business.
OPERATOR
Our next question comes from David Bain of Texas Capital Bank. David, please go ahead.
David Bain (Analyst)
Great. Good afternoon. Thank you. I guess first, once Suncoast renovations are fully complete and, you know, operational disruption kind of clears, if you will, can locals margins recapture that 2020–2025 level next year? I mean it seems like a yes given John’s Q3 locals margin comments, but are there any promotional, labor, or other considerations that we should think about when looking at next year on margins?
Keith Smith (President and Chief Executive Officer)
When you look at the Suncoast, you look at the locals portfolio, you know, Josh, I think, indicated that ex Suncoast and Orleans margins were 47%. You know it is a soft summer quarter. I think the most other quarters were hovering around the 50% level. And so I think as you think about the business next year you can think about those margins. Suncoast is, for all intents and purposes, done with the exception of the rooms, which will have, you know, some small impact on the business.
And the rest of the portfolio is just performing as we’d expect, as we talked about, with 3% EBITDAR growth and good gaming revenue growth. And once again, we’re going to get some rooms back at the Orleans and we’ll just see how the destination business ebbs and flows. But I think we’re comfortable thinking about that 50% margin number.
David Bain (Analyst)
Awesome. Okay, great. And then I hate to beat this to death, but just maybe a follow-up on the potential cadence of quarterly destination trends. It sounds like what you’re saying is just it could be more seasonally acute right now. But there’s nothing specific from a marketing or competitive variable disruption that you’re seeing—something new like the all-inclusive options or anything that would be more aggravating to results. Is that what I’m kind of getting?
Josh Hirsberg (EVP, CFO and Treasurer)
I think you assess it right. There was no promotional activity in the quarter that significantly changed the cadence of destination business in our local segment. It was pretty typical. I mean aggressive room rates on the Strip, but they’ve been aggressive for more than the last couple of months. You know, the local promotions to the Las Vegas residents generally don’t have an impact regardless—that happens every so often. So yeah, nothing unusual in the quarter that would have exaggerated that.
David Bain (Analyst)
Okay, great. Thanks guys.
OPERATOR
Thank you. Our next question comes from Ben Chaikin of Mizuho. Ben, please go ahead.
Ben Chaikin (Analyst)
Hey, thanks for taking my question. Maybe going back to locals—and we’ve touched on some of this a few times—but can we maybe talk more about the investment at the Orleans and maybe flesh out what you’re solving for? Is it just the hotel rooms for peak periods that you were referring to, Keith? I think a few questions ago. I guess I ask because it seems to serve one of the, you know, obviously it serves one of the softer segments. Is the idea just to invest in the long term despite near-term headwinds or is there something the property doesn’t have today that you think is contributing to the softness you’re seeing over the last 12 months?
Does that question make sense?
Keith Smith (President and Chief Executive Officer)
I think I understand what you’re trying to ask. First of all, the hotel rooms, you know, needed to be remodeled. They’re on a cadence. It’s maintenance capex and they just need to happen. And so that was just something that was going to happen kind of regardless of where we’re at in the cycle and those just—you know, we have 1,800 hotel rooms there—so it took a long time to get through. So that’s one issue. In terms of the broader renovation of the Orleans, it’s just, it’s time. I mean the property is, in its current format, probably 30 years old and while we’ve maintained it, it needs to be—it simply needs to be—renovated and upgraded for the long-term competitiveness of it. It is an important asset in our portfolio. It is not as competitive today as it has been in the past and simply needs to be upgraded as part of the process. You can just think of it as a major maintenance upgrade is what it is.
And every 30 years or so these buildings need to be reinvested in and refreshed. And that’s where we’re at with the Orleans.
Josh Hirsberg (EVP, CFO and Treasurer)
Understood, Ben. What I would add to that is, you know, we’re effectively doing the same thing at the Suncoast and, you know, we’re kind of bringing the property up to what would be viewed as a current competitive product. And that’s what we will do at the Orleans. And there, what we have seen is re-engagement of our customers, not only our recurring kind of loyal customers, but picking up new customers, and the excitement around the investments is really positive.
So while we treat it as maintenance capital, I think we expect there to be growing contributions after making those type of investments.
Keith Smith (President and Chief Executive Officer)
Maybe to your point, there’s nothing in particular we’re trying to solve for except simply creating a higher-quality experience for our customers.
Josh Hirsberg (EVP, CFO and Treasurer)
And I think, I know investors are generally worried at times about disruption. And as Keith mentioned in his remarks, just to remind, in 2027, there won’t be any disruption because all of the activity will be taking place in areas that are not available to customers today.
Keith Smith (President and Chief Executive Officer)
So. And it’ll be a different type of rollout.
Ben Chaikin (Analyst)
Okay, that’s all very helpful. Then just one quick one. In downtown, you mentioned both airfares and storms—sorry, yeah, airfares and storms—both of which make sense. Is there any way to kind of like quantify and delineate between the two?
Josh Hirsberg (EVP, CFO and Treasurer)
Yeah, there really isn’t. They kind of happened simultaneously the last six weeks of the quarter. You had four storms impact, you know, the Hawaiian Islands. That’s unprecedented over the years. That just doesn’t happen in six weeks. And at that same time, you saw airfares spike. You know, airfares around the country are generally up in the 20% category. You saw airfares spike significantly higher than that. They’ve begun to, you know, recede and moderate, but they’re still high.
Ben Chaikin (Analyst)
Okay, thank you.
OPERATOR
Our next question comes from Joe Stoff of Susquehanna. Joe, please go ahead.
Joe Stoff (Analyst)
Thank you. Hi, Keith. Josh, could you give us maybe an update, building on the last couple questions around the Orleans, about the competitive situation? We’ve been talking about this, you know, for I guess now approximately two years and just wondering, you know, if the level of competition that you’re seeing from them in terms of excess promotion has stabilized. And then second question on OpEx, looks like very tight management in the third quarter. Just wondering, are there any headwinds or special accruals that you have to solve for in terms of continuing management of that cash OpEx in the fourth quarter in particular?
Keith Smith (President and Chief Executive Officer)
On the OpEx part, I would say there’s nothing special. Look, it’s just the focus of the team. We have obviously a high-quality team that’s been together for a long time and they have a good handle on the business. It’s, you know, in today’s world, it’s day-to-day combat, simply fighting through expenses and trying to make adjustments and ensure we maintain margins, you know, where they need to be and kind of stick to our very disciplined approach that we’ve been executing post-COVID.
I’m not sure I fully understood the first half of your question.
Joe Stoff (Analyst)
First, it’s just, you know, the promotional levels, you know, especially impacting likely Orleans from Palms and some of the other casinos that’s occurred over the past, say, year to two and where that is.
Keith Smith (President and Chief Executive Officer)
Yeah, I’ll take a shot at it. Look, I think first of all, think back to the question just before yours from Ben. In terms of the philosophy behind investing in New Orleans, it’s really about making sure that we have and can remain competitive from the product that we’re offering. I think that in relation to the significant marketing from properties around the Orleans and Gold Coast, we had really gotten to the point where we had adjusted our business to manage that business.
If you remember that level of competition, if you recall—I’m going to get all my dates wrong—but starting about a year ago, we had really the impact of destination. But if you look back at Q1 and Q2 of 2025, our business, in terms of the impact from that competitive pressure, that promotional activity rather, had really started to stabilize. Gold Coast has stabilized and started to improve, and the Orleans just started to stabilize. So, and then destination started to impact.
From my perspective, it’s not that those properties are not having an impact—it’s that we’ve learned how to manage through that competitive pressure. And so really the focus is on kind of understanding this destination business and figuring out how we’re going to counter that over time, either through some kind of economic recovery that occurs or in terms of how we’re running the business. I will point out that we are, at the Orleans in particular, and we have been for several quarters now, adjusting how we operate to match that level of demand that we’re seeing from destination customers.
And we’re choosing not to be aggressive in terms of promoting just to drive revenue. In fact, on the other hand, we are sticking to what has made us successful since COVID, and that is making sure that we’re investing in the right customers that are driving profitable revenue. There’s no reason to promote or discount rooms aggressively. And so if you take all that, put it in the blender, and sit around and think about where we need to invest and where we want to kind of ensure that our portfolio remains competitive, the Orleans is an obvious example of where we need to deploy capital.
OPERATOR
Our next question comes from Lizzie Dove of Goldman Sachs. Lizzie, please go ahead.
Lizzie Dove (Analyst)
Hey, thanks for taking the question. I just wanted to kind of broaden it out to the consumer environment more broadly. I guess it’s hard to separate out just from the destination market and airfare and all of that. But to the extent some of the volatility that we’ve seen there and with gas prices, how you think that’s kind of impacting, whether it be the locals market or more on the Midwest and South side of things. And if you could comment on any kind of recent trends quarter-to-date.
Josh Hirsberg (EVP, CFO and Treasurer)
So looking at the third quarter, what I would say is—and we talked about this in our prepared remarks—we saw strong growth from our core customers. We saw strong growth in unrated play both here in Las Vegas, excluding Suncoast and Orleans, as well as throughout the Midwest. We saw good growth in ADT, or spend, from our core customers, up mid-single digits or better, and once again, good growth in unrated play. Softness in the low end of the database—no surprise—more economically sensitive to inflationary items, whether it be gas prices or just inflation in general.
And so I think that explanation is applicable both to Las Vegas as well as across the Midwest. We’re not seeing any real significant distinction between the South or our East Coast properties, or our Midwest properties or Las Vegas properties, in terms of how the consumer is spending—or at least our consumer is spending—their money.
Lizzie Dove (Analyst)
Got it. Makes sense. And then, you know, you’ve had those pretty consistent trends in the Midwest and South, you know, adjusting for the tax and whatnot this quarter this year. I guess as you look to next year on a kind of, you know, normalized basis, exa sale, how do you think about—you know, there were some tailwinds this year, especially earlier in the year from tax refund and whatnot, potentially—but as you look to next year, just kind of the sustainability of this kind of underlying growth that you’d seen.
Keith Smith (President and Chief Executive Officer)
Yeah. So look, I think that we think there are several kind of different initiatives or items that are enabling the Midwest and South to deliver the levels of performance that it has. And in reality, it’s the same thing that’s happening in Las Vegas outside of the Orleans and Suncoast, rather. And that is people naturally are staying a little bit closer to home. They’re spending more closer to home. Secondly, there was some degree probably of benefit from the tax bill, and that affected Las Vegas as well as the Midwest and South.
I think we’ve also had good success in investing in our products both in Las Vegas and the Midwest and South. So we don’t look at it really as, oh, there was one item that is contributing to the success of the Midwest and South, or for that matter, the properties outside of the Orleans and Suncoast. And so as we look at our business trends and the underlying health of our consumer, just generally across all the segments within our databases and even looking at unrated outside of the database, we don’t really see that shifting at this point. We don’t see any reason that suggests that it’s going to change.
So as we look at 2027, we would expect the Midwest and South to largely perform consistently in terms of similar levels of growth that we have seen in 2026. And we would expect, with a little bit of portfolio changes—and I’ll tell you what I mean by that in a minute—in Las Vegas, outside of the Orleans, really, to continue to grow at similar paces. So, you know, we’ll get the benefit of the rooms at the Orleans and Suncoast coming online, and we’ll get Suncoast to start contributing, most likely in late Q1 and Q2, and Cadence will hit full stream as well.
So ultimately, as we sit here, you know, there’s components of our business that feel good today, have felt good throughout the year, and don’t show any signs of why they wouldn’t continue in that direction in 2027.
Lizzie Dove (Analyst)
Great, thank you.
OPERATOR
Our next question comes from Trey Bowers of Wells Fargo. Trey, please go ahead.
Trey Bowers (Analyst)
Hey, guys, thanks for the question. Just two quick ones. The first one—I’m going to kind of repeat a previous question—but curious, when you guys have the stock kind of as dislocated as it is right now, does that change the calculus around any kind of M&A or strategic moves, given you obviously show with your repo how much you feel the stock’s undervalued? But if something came along, would, when the stock’s down like this, kind of, you know, possibly impact the thought process of doing a deal?
Josh Hirsberg (EVP, CFO and Treasurer)
It’s hard to, I think, address that or answer that in the abstract. Right. It really is all fact and circumstances, if you will. We have to see what we’re doing, what the opportunity is. We’re certainly flexible in terms of our balance sheet and where leverage would go to depending on the type of acquisition—the significance of the acquisition. Is it a smaller tuck-in? Is there larger or more strategic? Where is the stock and how much do we feel like we should buy back?
We have a strong balance sheet. We’ve had one for a while and we want to continue to have a strong balance sheet. We use the word balanced approach to capital allocation, and we’re serious when we say it, so we take all this into account. But we are flexible in terms of where leverage goes as long as we can see it returning to a level we’re comfortable with. So it’s kind of hard to answer your question in the abstract without very specific facts or circumstances to address, but that’s how we think about it.
Keith Smith (President and Chief Executive Officer)
But Trey, I think you highlight exactly what we have been saying for quite some time. The reason that we want to have a strong balance sheet with low leverage is so that we can do all the things that we’ve communicated and do on a regular basis and then not have to forego opportunities as they come along—obviously, all within reason. So just because we have a strong balance sheet doesn’t mean we’re going to run out and just spend it frivolously or without discipline.
We’ve shown that we don’t do that. History shows that as well. And so we will continue to have that discipline. But when an opportunity comes along that we feel like makes sense for the company, we don’t have to sacrifice share repurchases or capital investments or whatever else we’re thinking about doing because of the low leverage. And I think that’s one thing that we’ve learned to appreciate, and we hope the market learns to appreciate over time.
As we were coming out of COVID, people highly questioned whether we should have the leverage where we are. I think we said that the benefit of doing that is so that we can tell you what we’re going to do, and you can be pretty sure that we’re going to be able to keep doing that. Obviously, there’s some ranges of extremities that would prevent that at some point, but as long as everything’s kind of in the range, you can know we’re going to make these investments, we’re going to make these share repurchases, we’re going to pay down debt, we’re going to maintain a strong balance sheet.
And then if an acquisition opportunity comes along and it meets the criteria, we don’t have to second-guess that we can do it because we can. And then we’ll deleverage back down to these leverage levels again and just reset for the next time. It is the strength of the position that we occupy and the strength of the position that the company has put itself in—to be able to have that flexibility. So we’ll use it carefully, but we don’t have to make choices.
Trey Bowers (Analyst)
And then a quick follow-up. Just given the amount of time we spent talking about destination and Orleans on this call, you guys already break out locals Vegas. Would it make sense to also break out kind of that destination property and therefore be able to highlight more concretely just what’s going on in the actual specific locals market? Thanks, guys.
Keith Smith (President and Chief Executive Officer)
Yeah, interesting thought. Look, it is interesting, the focus on destination. The benefit of having a diversified portfolio is that this is one small segment of our portfolio. It is a small segment within Las Vegas locals and an even smaller segment within the total Boyd portfolio. About the Midwest and Central and our managed business and our online business and how well everything else is performing, I don’t think we— I don’t think in the near term we think about breaking it out by itself.
It’s just the Orleans—it’s a part of the Orleans business. It’s not all of the Orleans business. And, yeah, it’s being impacted today. But when you look at the rest of the business, as Josh indicated, outside of this piece of the business at the Orleans, our portfolio is performing extremely well.
Josh Hirsberg (EVP, CFO and Treasurer)
Yes. I think to that point and to the diversification point, I know there’s a lot of focus and there should be a conversation around destination, but overall, not even adjusting for anything, we’re essentially down 1% in revenues and EBITDA. Right. The business has been consistent all year long, and the stock’s vastly underperformed that level of consistent performance.
Trey Bowers (Analyst)
Thanks, all.
OPERATOR
Our next question comes from David Katz of Jefferies. David, please go ahead.
David Katz (Analyst at Jefferies)
Hi. Afternoon. Thanks for taking my question. I want to focus just on Virginia for a minute. Observing a divide between public operators who either support or oppose iGaming legalization when and if it should occur in their markets. Should we presume that you are inclined to be supportive and embrace iGaming in hypothetical markets and/or Virginia, should it become a reality?
Keith Smith (President and Chief Executive Officer)
You know, properly regulated, properly taxed, legalized? Yes, we are supportive of iGaming, whether it be in Virginia or in other places in the United States. It’s our position today. It’s been our position for a while. We have enough experience with this over the last decade. Plus, you know, this is complementary to our overall business. It is. It’s not predatory. It doesn’t hurt the business. It is complementary. So we are supportive of it. TBD. It just depends once again on facts and circumstances. We have largely used the Stardust brand up in Canada and in Pennsylvania and in New Jersey where we launch it. We also have a couple other brands we’re using in those states. So it just kind of depends on how many skins there are or what the opportunities are. And like I said, it is a little bit fact based, so it’s hard to answer right now.
Thank you.
OPERATOR
Our next question comes from Chad Banan of Macquarie. Chad, please go ahead.
Chad Banan (Analyst)
Hi, good afternoon. Thanks for taking my question. Wanted to ask about the Chicago VLT distributed gaming opportunity. I think that’s something it was originally talked about when Illinois legalized this form of gaming over a decade ago and now it looks like the catalyst might be near term. So how are you thinking about Lattner and the opportunities to expand into that market? Thanks.
Keith Smith (President and Chief Executive Officer)
Yeah, so look, I think we evaluate that just like we would evaluate any other opportunities. And Lattner is a smaller piece of our business, but we evaluate, you know, so we have to consider that in context of the other opportunities that are available to us. But there’s not really much more I can say about it. Yeah. Look, the Lattner team will be focused on trying to get some of those licenses, but it’s not anything that will be a tailwind for us, that will move the needle for us, that will in any way, shape, or form kind of propel us to the next level. But it is something that you can be assured that the Lattner team is looking at. It’s been on the radar screen for a while. It’s just not a significant driver of our overall business.
Yeah, well run piece of our business, but unfortunately a small piece.
Chad Banan (Analyst)
Thank you. And then one more on potential expansion or M and A. Does the return to seasonality on the strip or destination markets, particularly with let’s call it mid and or below properties. And what we’ve seen with financials in the first half of the year, what we saw 2025, does that change how you’re thinking about M and A opportunities? And what I’m getting at is I think the operational leverage for these low to mid end focus properties have been hit really hard where obviously the higher end ones have held up and maybe the returns are just harder to get there.
Penciling them now after seeing some of these results in the past six months from other strip operators. Thanks.
Keith Smith (President and Chief Executive Officer)
Yeah, look, I would say that, you know, today’s conditions really don’t change our calculus and how we look at M and A. You know, I go back to the litany of things that are important to us. Higher quality assets, you know, at the right price in stable markets, we don’t have to, as Josh mentioned, have to do anything. So we’re not going to buy assets just because they’re cheap or they maybe are priced right. They have to be a high quality asset. They have to produce a significant amount of EBITDA for us to, you know, to move the needle for us, for us to be interested and have to be in stable tax and regulatory jurisdictions.
And so, you know, seasonality, dislocation of value and those types of things doesn’t really change how we view it. It still has to be the right asset for us.
Chad Banan (Analyst)
Thank you.
Keith Smith (President and Chief Executive Officer)
Appreciate it.
OPERATOR
Our next question comes from Brant Montour of Barclays. Brant, please go ahead.
Brant Montour (Analyst)
Hi everybody. Thanks for taking my question back to Las Vegas locals. If you were to take out destinations in Suncoast and just look at the core business, is there any reason why that business would look differently third quarter into fourth quarter, seasonality wise versus the last, call it three years, which I think, you know, you kind of typically did something like mid to high teens. Anything. Any reason why it wouldn’t look like that this year?
And then just sort of an embedded question there, you know, are you concerned at all about the midterm elections in the state of Nevada and if that could affect either foot traffic or just sort of distract your customers in the fourth quarter?
Keith Smith (President and Chief Executive Officer)
Yes. As it relates to the upcoming elections, we really don’t see that having a material impact on the business one way or the other. If it did, it would probably be happening now with all the commercials on TV to the extent people actually watch terrestrial TV these days and watch all those commercials. But we’ve seen it in the past, you know, that Democratic governors, Republican governors has been changing administration. It’s not going to have any sort of material impact on our business.
Interesting, but not impactful to the direction of the business. I’ll let Josh tackle the first half of your question.
Josh Hirsberg (EVP, CFO and Treasurer)
Yeah, so Brant, I think ultimately, sequentially, it’s difficult to talk about. I feel more comfortable with the numbers in front of me. Just saying, like year over year, you know, when you look at the business again, excluding New Orleans and Suncoast, we expect the same level of growth. I think there are going to be changes that sequentially make it a little bit differently. Different. Right. You’re not going to have the drag of construction disruption from Suncoast.
You’re going to probably have, at least from our perspective. So we think about a little bit different impact from destination business going from Q3 to Q4. So talking sequentially when you have so many moving pieces, I would be hesitant to do that on the fly. I’ve tried to do it in the past and hopefully I’ve learned to stop doing that. So I think I prefer to just talk about it year over year.
Brant Montour (Analyst)
Okay, thanks everyone.
Josh Hirsberg (EVP, CFO and Treasurer)
Thanks, Brant.
OPERATOR
Our last question comes from John Decree of CBRE. John, please go ahead.
John Decree (Analyst)
Great. Thanks guys. Just one to revisit your commentary on the online business, Keith, I think you spoke to it a little bit about maybe new markets, Virginia, but as you think about investment capital, you’ve got a number of casino development projects in front of you. What would you need to see from the return profile or opportunity to invest more dollars in the online segment? Not just M and A, but you know, greater maybe investment in brand or customer acquisition.
Do you think that could be a bigger piece of the business over time?
Keith Smith (President and Chief Executive Officer)
A couple of comments. I think as we think about today’s online business, it’s, it’s performing at a very high level, strong margins. We’re comfortable with what our CPAs are in terms of what we’re paying to acquire customers. Customers don’t feel like we need to juice it or become more aggressive. It’s a very efficient business, very well run, very comfortable with their trajectory. And as we’ve talked over the last couple of quarters, it is growing nicely as we think about, you know, potential M and A in that world.
It’s not unlike, you know, brick and mortar land based M and A. It’s got to provide a high return. It’s got to be additive to the overall business. Business that is add something that we can’t otherwise do on our own. And so we look at it in a similar fashion. Are we afraid to do M and A in that world? No. But the returns have to be significant, the price has to be right and we have to see that it’s additive to the whole business at the end of the day.
So we really don’t view it any differently. It doesn’t distract and we don’t separate it out. When we look at land based M and A from any online opportunities. It’s kind of all part of the same calculus.
Josh Hirsberg (EVP, CFO and Treasurer)
Yeah, John, your question is a good one because I think ultimately most people think about our M and A just on the land based side and we have done a couple of smaller acquisitions around to add to the capabilities of Boyd Interactive and I think we will continue to look for kind of bite sized opportunities that not only add to what the offering is, but enhance, from our perspective at least, the ability for that business to grow over a longer period of time.
It is a good part of our business and we could see that becoming a larger part of our business and continuing to contribute to the overall diversification and growth of the company. I don’t want people to misconstrue the comments to mean we’re going to pursue the strategies that some of our peers have because that’s not how we think about it and those strategies are good for those companies, but we do look for opportunities to grow that business further.
John Decree (Analyst)
Got it. That’s helpful, Josh. Keith, I appreciate the color on that one.
Keith Smith (President and Chief Executive Officer)
Thank you.
OPERATOR
This concludes our question and answer session. I’d now like to turn the call over to Josh for concluding remarks.
Josh Hirsberg (EVP, CFO and Treasurer)
Thanks everyone for joining the call. All the questions were really good, even though there were a lot of them, and so we appreciate the interest and happy to follow up with you after the call. If you have any further questions, feel free to reach out to the company.
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