BYD 2Q REPORT CARD

In an effort to evaluate performance and as a follow up to our YouTube, we compare how the quarter measured up to previous management commentary and guidance

 

 

OVERALL

  • WORSE:  A big miss and below conensus guidance for Q3

 BYD 2Q REPORT CARD - byd

 

ECONOMIC OUTLOOK

  • WORSE:  Economic activity worsened in May and June and BYD saw an impact on their business
  • PREVIOUSLY:  "Economic fundamentals supporting our business are strengthening and we anticipate this trend will continue."

HIGH END CUSTOMER

  • SAME:  Top tier customers are continuing to be spend
  • PREVIOUSLY:  "The higher end of the database is certainly the area where we continue to see strength, I mean, that the customers we know the best they're obviously most entrenched with our brands and that segment continues to grow, I think at a very healthy pace."

REVEL IMPACT

  • WORSE:  Despite the addition of a new competitor and renovations at another (Golden Nugget), the market has not grown.  While the impact on BYD's casino business has likely been in line with their expectations, F&B has taken a big hit and that has also impacted traffic to their property.  The promotional activity in AC has been rational but Revel has definitely stepped up promotional activity.
  • PREVIOUSLY:  "The guidance we provided incorporates some expected impact of Revel along with some offsetting and marketing expenses, the new marketing programs that we would anticipate to make sure that our customers continue to visit the Borgata along with additional efficiencies that we have built in over the quarter so that we can continue to manage the business and not only create the best experience, but maximize the profitability of the property."

LV LOCALS

  • WORSE:  business from casual gaming customers have softened.  Low hold from BYD's sport books and higher benefit expenses also hurt this segment.  
  • PREVIOUSLY: "We are seeing some positive factors as strip frequency from our customer base continues to grow and is now at the highest level in three years. Looking ahead, we expect steady EBITDA growth in our Local [LV] business."

DOWNTOWN LV

  • WORSE:  BYD had pulled back on marketing programs but that tactic backfired.  BYD also reduced weekly flights from five to four.  However, BYD is confident the slowdown is only temporary as they have reinstated their marketing programs. BYD expects business to stabilize in 3Q and resume growth in 4Q
  • PREVIOUSLY: "Looking ahead, there is a lot of excitement about the progress that has been made in Downtown Las Vegas in recent months. The overall gaming market is expanding and its long-term outlook is encouraging. The Smith Center for Performing Arts and the Mob Museum opened during the first quarter, giving people new reasons to come to the area. These are exciting times in Downtown Las Vegas and we expect to see steady growth in visitor traffic as the renaissance of Downtown continues."

IP OUTPERFORMANCE

  • SAME:  cost efficiencies drove the property to continue to run ahead of expectations
  • PREVIOUSLY:  At this point, the IP is exceeding our expectations and we see considerable additional upside for the property.  I think there is certainly some upside from the 25.9% [margin] that we posted.  B connected...goes into play live there next week.  We think that is a big, big plus from a customer experience perspective and customer reward perspective. The summer is the peak season in the Gulf Coast market....there is a small new player coming online here in the next month or so, which we don't think will have an impact on our business, but, nonetheless, will mix things up a little bit."

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