ボイド・ゲーミング（BYD）2026年第3四半期決算説明会：調整後売上高は2%増

主要ハイライト

• ボイド・ゲーミングは、2026年第3四半期の全社売上高およびEBITDARが前年同期比で約1%減少したと発表しました。ただし、施設閉鎖、不動産売却、固定資産税の上昇、税パススルー額の減少などを除くと、売上高は2%増加し、EBITDARは1%増加しました。
• 調整後の中西部・南部部門の売上高は3%近く増加し、ゲーミング売上高は2%以上増加、EBITDARは約2.5%（500万ドル近く）増加しました。同部門は38%の営業利益率を維持しました。
• ラスベガス・ローカル市場では、特にオルリーンズで目的地型需要が減退したほか、サンコーストの改装工事も追い打ちをかけました。これら2施設を除くと、売上高とEBITDARはいずれも3%増加し、ゲーミング売上高は3.5%増加しました。
• ボイドは当四半期に1億5,900万ドルの設備投資を実施しており、バージニア州のカジノリゾート開発向けの2億7,500万ドルを含め、2026年通期の設備投資額は約6億5,000万ドルになると見込んでいます。
• 同社は配当と自社株買いを通じて約1億8,000万ドルを株主に還元しました。経営陣は引き続き、四半期ごとに約1億5,000万ドルの自社株買いを目指しています。
• 四半期末時点の従来のレバレッジ比率は2.2倍、リース調整後レバレッジ比率は2.7倍でした。経営陣は、このバランスシートの余力が施設投資、株主還元、および潜在的なM&Aを支えていると述べています。

主要財務データ

事業および業績ハイライト

中西部・南部部門

同部門はボイド・ゲーミングの店舗型ビジネスにおいて、最も安定して成長に貢献する部門であり続けました。ゲーミング売上高の増加や、コア顧客、リテール客、非会員顧客の増加に支えられ、調整後売上高は3%近く増加しました。経営陣は、カジノフロア、客室、飲食サービスへの投資や完了した成長プロジェクトが業績の一部に寄与したとしています。

経営陣は、足元の顧客動向と継続的な施設投資を踏まえ、中西部・南部部門の2027年の成長率は2026年におよそ相当する水準になると見込んでいます。

ラスベガス・ローカル部門

地元の基礎的需要は引き続き堅調でしたが、目的地型来訪客の低迷がオルリーンズの足かせとなりました。また、サンコーストの工事も当四半期の業績に影響を与えました。オルリーンズとサンコーストを除く同部門の売上高およびEBITDARは3%増加し、利益率は47%となりました。

サンコーストの共用スペースの改装は四半期末までに完了しました。残る客室の改装作業は2027年第1四半期に完了する見込みです。経営陣は、2026年第4四半期のサンコーストによる業績寄与は限定的となり、2027年第1四半期から第2四半期にかけて本格化すると予想しています。

オルリーンズの1,800室の客室リニューアルは11月に完了する予定です。より広範な改装工事は2027年初めに開始される見込みですが、当面は顧客が立ち入らないエリアから開始されるため、営業への影響は限定的になると経営陣は見込んでいます。

ケイデンス・クロッシングはラスベガス・ローカル部門の成長に寄与し、オルリーンズとサンコーストを除く3%の増収分の約3分の1を占めました。売上高は経営陣の予想を上回っており、EBITDARは2027年第1四半期頃に本格的な巡航速度（ランレート）に達する見通しです。

ダウンタウン・ラスベガス部門

ダウンタウン部門の業績は、目的地型需要の弱まり、当四半期の最後の6週間にハワイに影響を与えた4つの嵐、およびハワイ便の航空運賃急騰によって圧迫されました。経営陣によると、航空運賃は落ち着き始めつつあるものの、依然として高水準にとどまっています。

オンラインおよび受託運営部門

ボイド・インタラクティブは売上高とEBITDARで2桁成長を達成しました。経営陣はオンライン事業について、高い利益率と許容可能な顧客獲得コスト（CAC）を備えた効率的なビジネスであると説明しました。同社は機能を補強するための小規模な買収を検討する可能性はありますが、一部の競合他社が採用しているようなアグレッシブな顧客獲得戦略をとる計画はありません。

受託運営事業は、スカイ・リバーからの受託管理報酬の増加により恩恵を受けました。最近完了したスカイ・リバーの拡張工事により、400台のスロットマシンと1,600台収容の立体駐車場が新設されました。2028年に完了予定のさらなる拡張には、300室のホテル、3箇所の飲食施設、スパ、エンターテインメント・イベントセンターが含まれます。

開発パイプライン

バージニア州ノーフォークのリゾート開発は、2027年11月の開業に向けて予定通りかつ予算内で進行しています。計画には、65,000平方フィートのカジノ、200室のホテル、8箇所の飲食施設、ライブエンターテインメント施設が含まれています。

ボイドは、イリノイ州でのパラダイス・カジノの再開発工事を2027年後半に開始する予定です。また、ルイジアナ州のアメリア・ベルを陸上施設へ転換する計画についても、規制当局の承認を前提として2027年後半に着工する見込みです。

業績予想（ガイダンス）

• 2026年通期の設備投資額は全体で約6億5,000万ドルとなる見込みです。内訳は、維持管理費用が2億5,000万ドル、オルリーンズの客室リニューアルが7,500万ドル、成長投資が5,000万ドル、バージニア州のリゾート開発が2億7,500万ドルです。
• 経営陣は四半期ごとに約1億5,000万ドルの自社株買いを目指しています。配当を含めた2026年の総株主還元額は6億8,000万ドル（1株あたり約9.80ドルに相当）を超えると予想されています。
• ボイドは2027年のラスベガス・ローカル部門のEBITDARが緩やかな成長になると予想していますが、業績は目的地型需要の動向に左右されます。
• 経営陣は、需要動向次第ではあるものの、改装工事による影響が解消するにつれて、ラスベガス・ローカル部門の利益率は約50%に向けて回復する可能性があると述べました。
• オンラインおよび受託運営部門の公表済みガイダンスは維持されており、経営陣は投資家に対し従来の予想レンジの上限寄りを示唆しています。
• 同社は、2027年12月に返済期限を迎える次回債務の借り換えを、2026年後半または2027年前半に実施する見込みです。

リスクおよび注視すべき点

• ラスベガスの目的地型需要は、特に8月において前四半期までよりも大幅に低下しました。経営陣はトレンドが第3四半期前のパターンに戻ると見込んでいますが、需要が直ちに横ばいまたはプラスへ転じるとは予測していません。
• ハワイ便の航空運賃高騰や悪天候の影響がダウンタウン・ラスベガスへの来訪者数に響きました。これらの打撃の期間と規模は依然として不透明です。
• コア顧客の支出が1桁台半ば以上のペースで増加した一方で、低価格帯の顧客はインフレやガソリン価格の影響を受けやすい状況が続いています。
• 客室の閉鎖に伴い、サンコーストによる短期的業績寄与は2027年第1四半期まで引き続き制限される見通しです。
• パラダイス・カジノとアメリア・ベルのプロジェクトは開発スケジュールの影響を受けるほか、アメリア・ベルについては規制当局の承認も必要となります。

アナリスト質疑応答の要点

経営陣は、現在のカジノ業界における評価（バリュエーション）の変動が同社の買収基準を変えることはないとしています。対象案件は、高品質な資産、妥当な価格、安定した税制・規制市場を備えている必要があります。ボイドはM&Aを急ぐ必要はないと考えていますが、低いレバレッジ水準により、自社株買いや既存の設備投資プロジェクトを犠牲にすることなく柔軟に対応できるとしています。

オルリーンズについて経営陣は、目的地型需要の低下がより大きな問題となる前に、競合他社とのプロモーション合戦は沈静化していたと説明しました。ボイドは無理な値引きを避け、収益性の高い顧客からの売上確保を優先し続けています。計画されている改装工事は、単一の運営上の問題を解消するためではなく、同施設の長期的な競争力を高めることを目的としています。

経営陣は、バージニア州での合法化の可能性を含め、適切に規制および課税されたiGaming（オンラインカジノ）を支持しており、店舗型ビジネスを補完するものとして捉えています。ブランディングや市場参入戦略は、取得可能なライセンス数や個別の市場条件に応じて決定されます。

消費者の動向に関して経営陣は、ラスベガスおよび中西部・南部全体で、コア顧客および非会員顧客の利用が引き続き成長していると報告しました。低価格帯の顧客データ層は依然として厳しい状況にあるものの、顧客の支出パターンに地域的な明確な差は見られませんでした。

決算説明会 文字起こし全文

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決算説明会の完全なトランスクリプト

経営陣による説明

Operator

Good afternoon, and welcome to the Boyd Gaming Third Quarter 2026 Earnings Conference Call. This is David Strow, 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.[Operator Instructions] Our speakers for today's call are Keith Smith, President and Chief Executive Officer; and Josh Hirsberg, 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 statements. 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 and 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?

Keith Smith

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 of the Suncoast. In our online segment, Boyd Interactive once again contributed double-digit revenue and EBITDAR growth. and we continue to benefit from the strong performance of [indiscernible] River Casino driving increased management fees in our managed business.

Company-wide 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 Sountunica ] in November of 2025, the sale of Sam's Town Shrevenport on August 1 of this year, higher property taxes at [ HandoStar ] and a reduction in the tax pass-through amounts. After adjusting for these items, company-wide 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. The 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% and 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'll begin this project early next year. 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 continued 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 Pala 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 Manage 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 in a 1,600-space multilevel parking structure. With this expansion off to a strong start, work is continuing in the next phase of the project, which will add a 300-room hotel, 3 new food and beverage outlets, a full-service spa and a new entertainment and event 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 in 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 5 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, subscale resort will be a true market leader with a 65,000 square foot casino, 200-room hotel, 8 food and beverage outlets, live entertainment and an outdoor [indiscernible] 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 Belle ] 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 be in 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. And in all, our third quarter results demonstrated the value of our diversified business model. In our Midwest and South [indiscernible], 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, Ameristar St. Charles and 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 of a Paradise and Amelia belt.

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 our 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

Thank you, Keith. During the third quarter, play from both core and retail customers continue to grow. As Keith mentioned, in our Midwest and South segment, adjusted revenues for the quarter grew nearly 3% and 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%. The 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 2 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 preconstruction efforts related to our Paradise project. And finally, $275 million for our casino resort development in Virginia, which as Key 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 of 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.

David Strow

Thank you, Josh. [Operator Instructions] First question comes from Steve Pizzella of Deutsche Bank.

質疑応答

Steven Pizzella

For Las Vegas Locals, you outlined some good underlying growth trends ex destination in 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

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. We -- 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 that room, 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 or liens in Q4 and cadence contributed in Q3 and is continuing to ramp in Q4 to hit full stride around Q1 of next year.

Steven Pizzella

Okay. 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?

Keith Smith

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.

David Strow

Our next question comes from Steve Wieczynski of Stifel.

Steven Wieczynski

So Keith or Josh, I 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 thing narrative from you guys for the last -- I think it's been probably the last 2 quarters or so. And if I hear you right, I just want to 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

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-a-vis Q1 and Q2. I think you've probably heard this conversation from us for the last 3 or 4 quarters actually Part of that is driven by the fact that in Las Vegas, as everyone knows, the third quarter, summer quarter is our weakest quarter. So these types of pressures get intensified during the quarter. And so July looked okay. August was probably weaker than we anticipated. And with the 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. We've had more than 300 rooms out of service every day for the last year. Now do we need those rooms on weekends or weekdays, the reality is, no. 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. So just a combination of factors.

Steven Wieczynski

Okay, that makes sense. And then Josh [indiscernible] just for M&A, given obviously, we've kind of seen gaming valuations here contract over the last, call it, 6 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 2 segments?

Keith Smith

On the M&A side, look, I would say our comments haven't changed given changing in multiples and valuations of stock prices and other factors, doesn't change our appetite. It 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 that has to be a stable market from a tax and regulatory standpoint has to be a high-quality asset. We have as big of an appetite we've ever had, but we remain disciplined. And absent all the rumors of us looking at lots of things, they're just that. There are rumors, but we've grown a lot through M&A over the years. We tend to do it in chunks. 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, remain disciplined.

Josh Hirsberg

Yes. 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 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 that the guidance still holds, but I would kind of direct people towards the high end of the ranges that we had previously given for both of those segments, both online and managed.

David Strow

Our next question comes from Barry Jonas of Truist Securities.

Barry Jonas

You talked about a 3% growth in the biggest local 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.

Josh Hirsberg

Yes. So Cadence is definitely helping them, 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 1/3 of it or so. And then it's continuing to ramp in Q4 as well. So it's coming around. The revenues are ahead of, quite honestly, where we expected they would be. It continues to improve. And so we think it will continue to kind of ramp from an EBITDAR perspective, likely hitting full steam in Q1 of next year.

Barry Jonas

Got it. And then I 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?

Keith Smith

So in Pennsylvania, yes, where they've been shut down on their 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 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.

David Strow

Our next question comes from Dan Politzer of JPMorgan.

Daniel Politzer

Maybe just a broader question, going back to the destination commentary in the Las Vegas Locals market. It feels like when you start to see the softening, I think it was this third quarter of last year, which kind of coincided with some of the softtness on the Strip. So I mean, it seems like these are obviously pretty related. But I guess what gives you that confidence that fourth quarter gets better than along those lines? I think in the past, you said that the fourth quarter could be kind of where you get back to flat or growth in the Locals market? Do you feel -- still feel like that's kind of within a realistic expectation?

Keith Smith

I think when we look at the Locals market, a couple of things. One, as both Josh and I pointed out in the prepared remarks, the core market ex Suncoast [indiscernible] 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 in 350-inch hotel rooms back that 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 the -- what we call the destination softness has a lot to do with the fact it was summer, and it was -- 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 fashion optimism in there also.

Josh Hirsberg

Yes. I think I'd like to just make sure we're talking about the same thing. So big picture, and this is kind of broadly applies broadly, not just destination, applies across Las Vegas in the Midwest and South. 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 [indiscernible] the anniversary the destination business, we thought it was going to be down, but just down less. What we're saying is, is that in Q3 the softness in destination got worse than the trend that we had seen in the first -- in the preceding 4 quarters. Going into the fourth quarter, we attribute a lot of the -- or 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, i.e., it's not just our business, it's a market-driven kind of demand issue with destination business. That's when visibility change on that, that's when we'll change in our business.

David Strow

Our next question comes from David [ Bain ] of Texas Capital Bank.

Unknown Analyst

Great. I guess, first, what Suncoast renovations are fully complete and operational disruption kind of clears if you will. Can Locals margins recapture that 2025 level next year? I mean it seems like a yes, given John's 3Q 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

When you look at the Suncoast and you look at the Locals portfolio, Josh, I think, indicated that ex Suncoast and Orleans margins were 47%. It is a soft summer quarter. I think the most other quarters, we're 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 intent and purpose done with the exception of the rules, which will have 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.

Unknown Analyst

Okay. Great. And then I hate to beat this up, 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 we're -- is that what I'm kind of getting?

Keith Smith

Think you assessed it right, there was noPromotional activity in the quarter that significantly changed the cadence of destination business. in our Locals 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. The Locals promotions to the Las Vegas residents generally don't have an impact regardless that happens every so often. So yes, nothing unusual in the quarter that would have exaggerated that.

David Strow

Our next question comes from Ben Chaiken of Mizuho.

Benjamin Chaiken

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 flush out what you're solving for. Is it just the hotel rooms for peak periods that you're referring to, Keith, I think a few questions ago. I guess I asked because it seems to serve one of the -- obviously, it serves some 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

I think I understand what's trying to ask. First of all, the hotel rooms 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. In those -- just -- we have 1,800 hotel rooms there, so it took a long time to get through. So that's 1 issue. In terms of the broader renovation of the Orleans, it's just -- it's time. I mean the property is in its current form, probably 30 years old and while we've maintained it, it needs to simply 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

Ben, what I would add to that is like our -- we're effectively doing the same thing at the Suncoast and we're kind of bringing the property up to the current 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 reengagement 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

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

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. So and it will be a different type of rollout.

Benjamin Chaiken

Okay. That's all very helpful. And then just 1 quick one. In downtown, you mentioned both airfares and storms -- sorry, air fares and so on, both of which make sense. Is there any way to kind of like quantify and delineate between the 2?

Keith Smith

There really isn't that kind of happened simultaneously. The last 6 weeks of the quarter, you had 4 storms impact the Hawaiian islands. So it's unprecedented over the years. It just doesn't happen in 6 weeks. And at the same time, you saw airfare spike. -- airfares around the country are generally up in the 20% category, you saw airfare spike significantly higher than that. They've begun to recede and moderate but they're still high.

David Strow

Our next question comes from Joe Stauff of Susquehanna.

Joseph Stauff

Keith, Josh. Could you give us maybe an update, building on the last couple of questions around the Orleans, about the competitive situation, right? We've been talking about this for I guess, now approximately 2 years. I'm just wondering 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

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 -- in today's world, it's day-to-day combat simply fighting through expenses and trying to make adjustments and ensure we maintain margins where they need to be and kind of stick to our very disciplined approach, and we've been executing post-COVID. I'm not sure I fully understood the first half of your question.

Joseph Stauff

First, it's just the promotional levels, especially impacting likely Orleans from [ Palms ] and some of the other casinos that's occurred over the past, say, a year to 2, and where that is?

Josh Hirsberg

Yes, I'll take a shot at it. Look, I think, first of all, think back to the question just before years from Ben, in terms of the philosophy behind investment in the 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 the -- 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 of that promotional activity rather had really started to stabilize, Gold Coast has stabilized and started to improve, and the Orleans have just started to stabilize. So -- and then destination start 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 adjusted at the Orleans in particular, we are and we have been for several quarters now adjusting how we operate to meet -- match kind of 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 drive profitable, that is driving profitable revenue. There's no reason to promote or discount rooms aggressively. And so as we think -- 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. So...

David Strow

Our next question comes from Leslie Dove of Goldman Sachs.

Unknown Analyst

I just wanted to kind of broaden it out, I guess, to the consumer environment more broadly. I think it's hard to separate out just from the destination market and [indiscernible] 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 local market or more on the Midwest and south side of things? And if you could comment any kind of recent trends quarter-to-date.

Keith Smith

So looking at the third quarter, what I would say is, and we talked about this in our prepared remarks, we saw a strong growth from our core customers. We saw strong growth in unrated play, both here in Las Vegas. We've got ex 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. Then 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, that comment 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.

Unknown Analyst

Got it. Makes sense. And then you've had those pretty consistent trends in the Midwest and South, adjusting for the tax and whatnot this quarter, this year. I guess as you look to next year on a kind of normalized basis ex the sale, how do you think about, were there were some tailwinds this year, especially earlier in the year from tax refunds and whatnot potentially. But as you look to next year, just kind of the sustainability of this kind of underlying growth that you've seen?

Josh Hirsberg

Yes. 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 to the same -- the same thing that's happening in Las Vegas outside of the Orleans and Gold Coast -- Suncoast, rather. And that is people naturally are staying a little bit closer to home. They're spending more closer to home. Secondly, they probably 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're also -- whenever we have 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 a 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 to -- 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 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, 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.

David Strow

Our next question comes from Trey Bowers of Wells Fargo.

Unknown Analyst

Just 2 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 is undervalued, but if something came along, would when the stock is down like this kind of possibly impact the thought process of doing a deal.

Keith Smith

Hard to, I think, address that or answer that in the abstract, right? It is really all fact and 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 what -- where leverage would go to depending on the type of acquisition, the significance of the acquisition, is it a smaller tuck-in? Is it larger, more strategic? Where is the stock and how much should 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've used 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.

Josh Hirsberg

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 forgo opportunities as they come along, obviously, all within reason. So we don't -- like just because we have a strong balance sheet, it doesn't mean we're going to run out and just spend it frivolously or without discipline. We've shown that we are -- 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, we feel like it 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 when coming out of COVID, people highly question whether we should have the leverage where we are. And 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 then as long as everything is 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 levels again. and just reset for the next time.

Keith Smith

It is the strength of the position that we occupy and the strength of the position of the company has put itself in is to be able to have that flexibility. So we'll use it carefully, but -- we don't have to make choices.

Unknown Analyst

And then a quick follow-up. Just given the amount of time we've 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?

Keith Smith

Interesting thought. Look, it is interesting to 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 even smaller segment within the total Boyd portfolio, when you think about the Midwest and South in 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 Orleans. It's a part of the Orleans business. It's not all of the Orleans business. And yes, 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, [indiscernible] our portfolio is performing extremely well.

Josh Hirsberg

Yes. I think to that point into 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 -- we were down 1% in revenues and EBITDA, right? The business has been consistent all year long and the stocks vastly underperformed that level of consistent performance.

David Strow

Our next question comes from David Katz of Jefferies.

David Katz

I wanted 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

Yes, 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. 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.

David Katz

Understood. And presumably, you would use the assets, brands or whatever it is that you already own in pursuing that, correct?

Keith Smith

TBD. It just depends once again on facts and circumstances. We have largely used the [indiscernible] brand up in Canada and in Pennsylvania and in New Jersey, where we launch it. We also have a couple of other brands we're using in those states. So it just kind of depends on how many skins there are, what the opportunities are. And like I said, it is a little bit fact based. So it's hard to answer right now.

David Strow

Our next question comes from Chad Beynon of Macquarie. .

Chad Beynon

I 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 [indiscernible] and the opportunities to expand into that market?

Josh Hirsberg

Yes. 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, 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 at this point.

Keith Smith

Yes. look, the Lattner her 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.

Josh Hirsberg

Yes. It's a well-run piece of our business, but unfortunately, a small piece.

Chad Beynon

And then 1 more on potential expansion or M&A, does the return to seasonality on the Strip or destination markets, particularly with, let's call it, mid-end or below properties and what we've seen with financials in the first half of the year, what we saw in 2025, does that change how you're thinking about M&A opportunities. And what I'm getting at is, I think, the operational leverage for these low to mid-end focused 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 6 months from other strip operators.

Keith Smith

Yes. Look, I would say that today's conditions really don't change our calculus on how we look at M&A I go back to the litany of things that are important to us higher quality assets at the right price and 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 may be or price right. They have to be a high-quality asset. They have to produce a significant amount of EBITDA for us to move the needle for us, for us to be interested and have to be in stable tax and regulatory jurisdictions. And so 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.

David Strow

Our next question comes from Brandt Montour of Barclays.

Brandt Montour

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, 3 years, which I think you kind of typically did something like mid- to high teens. Is there anything -- any reason why it wouldn't look like that this year? And then just sort of an embedded question there. 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

Yes. So 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 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 for your question.

Josh Hirsberg

Yes. So Brandt, I think ultimately, Sequentially, it's difficult to talk about. I feel more comfortable without the numbers in front of me just saying like year-over-year. When you look at the business, again, excluding 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, as 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, hopefully hesitant to do that on the fly, we tried to do it in the past and hopefully have learned to stop doing that.

Brandt Montour

So I think I prefer to just talk about it year-over-year. So...

David Strow

Our last question comes from John DeCree of CBRE.

John DeCree

Great. Just want 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&A but greater maybe investment in brand or customer acquisition. Do you think that could be a bigger piece of the business over time?

Keith Smith

A couple of comments. I think as we think about today's online business, it's performing at a very high level, strong margins. We're comfortable with what our are in terms of what we're paying to acquire customers. I 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 potential M&A in that world, it's not unlike brick-and-mortar land-based M&A. It's got to provide a high return. It's got to be additive to the overall business, i.e., had 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&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&A from any online opportunities. It's kind of all part of the same calculus.

Josh Hirsberg

John, your question is a good one because I think, ultimately, most people think about our M&A just on the [ Lattern-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-size 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.

David Strow

This concludes our question-and-answer session. I'd now like to turn the call over to Josh for concluding remarks.

Josh Hirsberg

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. Thank you.