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Note 10 - Segment Information

9 Months Ended

Sep. 30, 2023

Segment Reporting Disclosure [Text Block]

NOTE 10. SEGMENT INFORMATION

During the first quarter of 2023, the Company evaluated its reportable segments and changed them from three reportable segments consisting of: (i) Las Vegas Locals; (ii) Downtown Las Vegas; and (iii) Midwest & South, to the following four reportable segments: (i) Las Vegas Locals; (ii) Downtown Las Vegas; (iii) Midwest & South; and (iv) Online, (collectively "Reportable Segments"). This change reflects the growth of the Company beyond its traditional wholly owned gaming entertainment properties and the increasing importance to the Company of other growth sources. The Online segment includes the operating results of our online gaming operations through collaborative arrangements with third parties throughout the United States and the operations from our recent acquisition of Pala Interactive and Pala Canada (individually and collectively rebranded, "Boyd Interactive") on November 1, 2022, and such operating results were previously included with the Midwest & South segment. To reconcile Reportable Segments information to the condensed consolidated information, the Company has aggregated nonreportable operating segments into a Managed & Other category. The Managed & Other category includes management fees earned under our management contract with Wilton Rancheria for the management of Sky River Casino in northern California and the operating results of Lattner Entertainment Group Illinois, LLC, our Illinois distributed gaming operator. These nonreportable operating segments were previously aggregated with our Midwest & South segment. The table below lists the Reportable Segment classification of each of our gaming entertainment properties that were aggregated based on their similar economic characteristics, types of customers, types of services and products provided, the regulatory environments in which they operate and their management and reporting structure.

Las Vegas Locals
Gold Coast Hotel and Casino		Las Vegas, Nevada
The Orleans Hotel and Casino		Las Vegas, Nevada
Sam's Town Hotel and Gambling Hall		Las Vegas, Nevada
Suncoast Hotel and Casino		Las Vegas, Nevada
EastsideCannery Casino and Hotel ⁽¹⁾		Las Vegas, Nevada
Aliante Casino + Hotel + Spa		North Las Vegas, Nevada
Cannery Casino Hotel		North Las Vegas, Nevada
Jokers Wild		Henderson, Nevada
Downtown Las Vegas
California Hotel and Casino		Las Vegas, Nevada
Fremont Hotel & Casino		Las Vegas, Nevada
Main Street Station Hotel and Casino		Las Vegas, Nevada
Midwest & South
Par-A-Dice Casino		East Peoria, Illinois
Belterra Casino Resort ⁽²⁾		Florence, Indiana
Blue Chip Casino Hotel Spa		Michigan City, Indiana
Diamond Jo Casino		Dubuque, Iowa
Diamond Jo Worth		Northwood, Iowa
Kansas Star Casino		Mulvane, Kansas
Amelia Belle Casino		Amelia, Louisiana
Delta Downs Racetrack Hotel & Casino		Vinton, Louisiana
Evangeline Downs Racetrack & Casino		Opelousas, Louisiana
Sam's Town Shreveport		Shreveport, Louisiana
Treasure Chest Casino		Kenner, Louisiana
IP Casino Resort Spa		Biloxi, Mississippi
Sam's Town Hotel and Gambling Hall Tunica		Tunica, Mississippi
Ameristar Casino * Hotel Kansas City ⁽²⁾		Kansas City, Missouri
Ameristar Casino * Resort * Spa St. Charles ⁽²⁾		St. Charles, Missouri
Belterra Park ⁽²⁾		Cincinnati, Ohio
Valley Forge Casino Resort		King of Prussia, Pennsylvania

⁽¹⁾ Due to the current levels of demand in the market, Eastside Cannery remains closed since it was closed on March 18, 2020, in compliance with orders issued by state officials as precautionary measures intended to slow the spread of the COVID-19 virus.

⁽²⁾ Property is subject to a master lease agreement with a real estate investment trust.

Results of Operations - Total Reportable Segment Revenues and Adjusted EBITDAR

We evaluate profitability based on Adjusted EBITDAR, which represents earnings before interest expense, income taxes, depreciation and amortization, deferred rent, share-based compensation expense, project development, preopening and writedown expenses, impairments of assets, other operating items, net, gain or loss on early extinguishments and modifications of debt, other items, net and master lease rent expense, as applicable. Total Reportable Segment Adjusted EBITDAR is the aggregate sum of the Adjusted EBITDAR for each of the properties included in our Las Vegas Locals, Downtown Las Vegas and Midwest & South segments and Adjusted EBITDAR related to the online operations in our Online segment. Results for Downtown Las Vegas include the results of our Hawaii-based travel agency and captive insurance company as our Downtown Las Vegas properties cater to the Hawaiian market.

BOYD GAMING CORPORATION AND SUBSIDIARIES

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

as of September 30, 2023 and December 31, 2022 and for the three and nine months ended September 30, 2023 and 2022

______________________________________________________________________________________________________

EBITDAR is a commonly used measure of performance in our industry that we believe, when considered with measures calculated in accordance with GAAP, facilitates comparisons between us and our competitors and provides our investors a more complete understanding of our operating results before the impact of investing transactions, financing transactions and income taxes. Management has historically adjusted EBITDAR when evaluating operating performance because we believe that the inclusion or exclusion of certain recurring and non-recurring items is necessary to provide a full understanding of our core operating results and as a means to evaluate period-to-period results.

The following tables set forth, for the periods indicated, departmental revenues for our Reportable Segments and our Managed & Other category to reconcile to total revenues:

	*Three Months Ended September 30, 2023*
			*Food &*						*Management*
	*Gaming*		*Beverage*		*Room*		*Online*		*Fee*		*Other*		*Total*
*(In thousands)*	*Revenue*		*Revenue*		*Revenue*		*Revenue*		*Revenue*		*Revenue*		*Revenue*
Revenues
Las Vegas Locals	$	165,153	$	21,454	$	21,324	$	—	$	—	$	13,902	$	221,833
Downtown Las Vegas		31,916		9,876		5,312		—		—		2,441		49,545
Midwest & South		433,650		39,656		22,084		—		—		17,638		513,028
Online		—		—		—		90,288		—		—		90,288
Managed & Other		10,449		—		—		—		17,153		868		28,470
Total Revenues	$	641,168	$	70,986	$	48,720	$	90,288	$	17,153	$	34,849	$	903,164

	*Three Months Ended September 30, 2022 (1)*
			*Food &*						*Management*
	*Gaming*		*Beverage*		*Room*		*Online*		*Fee*		*Other*		*Total*
*(In thousands)*	*Revenue*		*Revenue*		*Revenue*		*Revenue*		*Revenue*		*Revenue*		*Revenue*
Revenues
Las Vegas Locals	$	172,263	$	21,120	$	19,982	$	—	$	—	$	12,426	$	225,791
Downtown Las Vegas		31,872		9,583		5,552		—		—		2,500		49,507
Midwest & South		452,052		37,089		21,138		—		—		17,257		527,536
Online		—		—		—		52,353		—		—		52,353
Managed & Other		11,788		—		—		—		10,159		129		22,076
Total Revenues	$	667,975	$	67,792	$	46,672	$	52,353	$	10,159	$	32,312	$	877,263

	*Nine Months Ended September 30, 2023*
			*Food &*						*Management*
	*Gaming*		*Beverage*		*Room*		*Online*		*Fee*		*Other*		*Total*
*(In thousands)*	*Revenue*		*Revenue*		*Revenue*		*Revenue*		*Revenue*		*Revenue*		*Revenue*
Revenues
Las Vegas Locals	$	513,460	$	66,436	$	70,000	$	—	$	—	$	43,147	$	693,043
Downtown Las Vegas		102,765		30,515		17,797		—		—		8,016		159,093
Midwest & South		1,317,175		115,985		60,749		—		—		50,138		1,544,047
Online		—		—		—		298,153		—		—		298,153
Managed & Other		32,805		—		—		—		54,629		2,310		89,744
Total Revenues	$	1,966,205	$	212,936	$	148,546	$	298,153	$	54,629	$	103,611	$	2,784,080

	*Nine Months Ended September 30, 2022 (1)*
			*Food &*						*Management*
	*Gaming*		*Beverage*		*Room*		*Online*		*Fee*		*Other*		*Total*
*(In thousands)*	*Revenue*		*Revenue*		*Revenue*		*Revenue*		*Revenue*		*Revenue*		*Revenue*
Revenues
Las Vegas Locals	$	522,728	$	64,257	$	62,528	$	—	$	—	$	40,301	$	689,814
Downtown Las Vegas		99,249		29,865		17,152		—		—		6,624		152,890
Midwest & South		1,363,445		107,712		59,305		—		—		49,072		1,579,534
Online		—		—		—		164,203		—		—		164,203
Managed & Other		35,432		—		—		—		10,159		424		46,015
Total Revenues	$	2,020,854	$	201,834	$	138,985	$	164,203	$	10,159	$	96,421	$	2,632,456

(1) Revenues for the three and nine months ended September 30, 2022 have been recast to reflect the breakout of online revenue and management fee revenue from other revenue and the segment changes made during the first quarter of 2023.

BOYD GAMING CORPORATION AND SUBSIDIARIES

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

as of September 30, 2023 and December 31, 2022 and for the three and nine months ended September 30, 2023 and 2022

______________________________________________________________________________________________________

The following table reconciles, for the periods indicated, our Reportable Segments and our Managed & Other category Adjusted EBITDAR to net income, as reported in our accompanying condensed consolidated statements of operations with Adjusted EBITDAR for the three and nine months ended September 30, 2022 recast to reflect the segment changes made during the first quarter of 2023:

	*Three Months Ended*						*Nine Months Ended*
	*September 30,*						*September 30,*
*(In thousands)*	*2023*			*2022 (1)*			*2023*			*2022 (1)*
Adjusted EBITDAR
Las Vegas Locals	$	105,985		$	111,733		$	350,540		$	355,762
Downtown Las Vegas		15,857			17,704			57,876			58,216
Midwest & South		190,588			211,292			591,105			642,351
Online		11,005			6,350			45,028			22,916
Managed & Other		18,997			12,553			60,094			17,458
Corporate expense		(21,611	)		(21,934	)		(65,314	)		(66,296	)
Adjusted EBITDAR		320,821			337,698			1,039,329			1,030,407
Other operating costs and expenses
Deferred rent		177			192			531			576
Master lease rent expense		27,236			26,828			81,163			79,788
Depreciation and amortization		64,797			64,956			188,577			194,191
Share-based compensation expense		8,033			5,653			28,050			28,486
Project development, preopening and writedowns		2,405			9,645			(11,268	)		528
Impairment of assets		—			5,575			4,537			5,575
Other operating items, net		301			(12,610	)		959			(12,324	)
Total other operating costs and expenses		102,949			100,239			292,549			296,820
Operating income		217,872			237,459			746,780			733,587
Other expense (income)
Interest income		(1,585	)		(2,073	)		(22,445	)		(2,976	)
Interest expense, net of amounts capitalized		42,352			36,001			128,933			110,125
Loss on early extinguishments and modifications of debt		—			—			—			19,809
Other, net		(30	)		170			596			3,667
Total other expense, net		40,737			34,098			107,084			130,625
Income before income taxes		177,135			203,361			639,696			602,962
Income tax provision		(41,902	)		(46,359	)		(112,278	)		(136,269	)
Net income	$	135,233		$	157,002		$	527,418		$	466,693

(1) Adjusted EBITDAR for the three and nine months ended September 30, 2022 has been recast to reflect the segment changes made during the first quarter of 2023.

For purposes of this presentation, corporate expense excludes its portion of share-based compensation expense. Corporate expense represents unallocated payroll, professional fees, rent, aircraft expenses and various other expenses that are not directly related to our casino, hotel and online operations.

Total Reportable Segment Assets

The Company's assets by Reportable Segment and Managed & Other category consisted of the following amounts with assets as of December 31, 2022 recast to reflect the segment changes made during the first quarter of 2023:

	*September 30,*		*December 31,*
*(In thousands)*	*2023*		*2022*
Assets
Las Vegas Locals	$	1,612,047	$	1,613,553
Downtown Las Vegas		291,815		265,876
Midwest & South		3,759,733		3,745,476
Online		223,566		226,800
Managed & Other		154,187		207,962
Corporate		270,263		251,460
Total Assets	$	6,311,611	$	6,311,127

- Definition

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

+ References

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