BOYD GAMING CORP 10-Q

Item 1. Financial Statements ( Unaudited ) BOYD GAMING CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) September 30, December 31, (In thousands, except share data) 2024 2023 ASSETS Current assets Cash and cash equivalents $ 286,281 $ 304,271 Restricted cash 3,928 3,659 Accounts receivable, net 103,475 137,892 Inventories 20,414 20,692 Prepaid expenses and other current assets 67,820 59,293 Income taxes receivable 19,948 3,508 Total current assets 501,866 529,315 Property and equipment, net 2,633,248 2,542,512 Operating lease right-of-use assets 747,018 793,335 Other assets, net 67,028 67,779 Intangible assets, net 1,395,279 1,392,844 Goodwill, net 957,992 947,341 Total assets $ 6,302,431 $ 6,273,126 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable $ 118,690 $ 124,668 Current maturities of long-term debt 44,364 44,275 Accrued liabilities 447,466 427,379 Total current liabilities 610,520 596,322 Long-term debt, net of current maturities and debt issuance costs 3,024,992 2,871,223 Operating lease liabilities, net of current portion 665,382 711,387 Deferred income taxes 313,942 288,826 Other liabilities 55,793 61,266 Commitments and contingencies (Note 7) Stockholders' equity Preferred stock, $ 0.01 par value, 5,000,000 shares authorized — — Common stock, $ 0.01 par value, 200,000,000 shares authorized; 88,849,292 and 96,832,453 shares outstanding 888 968 Additional paid-in capital — — Retained earnings 1,631,949 1,744,232 Accumulated other comprehensive loss ( 1,035 ) ( 1,098 ) Total stockholders' equity 1,631,802 1,744,102 Total liabilities and stockholders' equity $ 6,302,431 $ 6,273,126 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 3 Table of Contents BOYD GAMING CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three Months Ended Nine Months Ended September 30, September 30, (In thousands, except per share data) 2024 2023 2024 2023 Revenues Gaming $ 640,528 $ 641,168 $ 1,925,486 $ 1,966,205 Food & beverage 72,728 70,986 222,361 212,936 Room 50,226 48,720 151,768 148,546 Online 141,312 90,288 417,412 298,153 Management fee 21,030 17,153 64,527 54,629 Other 35,422 34,849 107,725 103,611 Total revenues 961,246 903,164 2,889,279 2,784,080 Operating costs and expenses Gaming 252,213 251,536 749,966 751,330 Food & beverage 62,713 59,672 187,852 177,623 Room 19,674 19,180 57,728 54,880 Online 115,119 79,080 353,269 252,478 Other 12,171 11,549 38,332 34,119 Selling, general and administrative 102,391 99,944 315,709 299,333 Master lease rent expense 28,160 27,236 83,247 81,163 Maintenance and utilities 40,421 41,720 112,111 115,337 Depreciation and amortization 70,344 64,797 198,934 188,577 Corporate expense 27,614 27,872 88,254 88,232 Project development, preopening and writedowns 11,347 2,405 21,954 ( 11,268 ) Impairment of assets — — 10,500 4,537 Other operating items, net ( 906 ) 301 4,947 959 Total operating costs and expenses 741,261 685,292 2,222,803 2,037,300 Operating income 219,985 217,872 666,476 746,780 Other expense (income) Interest income ( 392 ) ( 1,585 ) ( 1,241 ) ( 22,445 ) Interest expense, net of amounts capitalized 46,208 42,352 131,466 128,933 Other, net 189 ( 30 ) 289 596 Total other expense, net 46,005 40,737 130,514 107,084 Income before income taxes 173,980 177,135 535,962 639,696 Income tax provision ( 42,852 ) ( 41,902 ) ( 128,516 ) ( 112,278 ) Net income $ 131,128 $ 135,233 $ 407,446 $ 527,418 Basic net income per common share $ 1.43 $ 1.34 $ 4.30 $ 5.16 Weighted average basic shares outstanding 91,863 100,804 94,769 102,139 Diluted net income per common share $ 1.43 $ 1.34 $ 4.30 $ 5.16 Weighted average diluted shares outstanding 91,893 100,850 94,807 102,187 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 4 Table of Contents BOYD GAMING CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) Three Months Ended Nine Months Ended September 30, September 30, (In thousands) 2024 2023 2024 2023 Net income $ 131,128 $ 135,233 $ 407,446 $ 527,418 Other comprehensive income (loss), net of tax: Fair value adjustments to available-for-sale securities 504 ( 119 ) 360 467 Foreign currency translation adjustments 159 ( 254 ) ( 297 ) ( 54 ) Comprehensive income $ 131,791 $ 134,860 $ 407,509 $ 527,831 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 5 Table of Contents BOYD GAMING CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Unaudited) Accumulated Other Common Stock Additional Retained Comprehensive (In thousands, except share data) Shares Amount Paid-in Capital Earnings Loss Total Balances, January 1, 2024 96,832,453 $ 968 $ — $ 1,744,232 $ ( 1,098 ) $ 1,744,102 Net income — — — 136,473 — 136,473 Fair value adjustments to available-for-sale securities — — — — 250 250 Foreign currency translation adjustments — — — — ( 318 ) ( 318 ) Release of restricted stock units, net of tax 85,597 1 ( 1,586 ) ( 2,049 ) — ( 3,634 ) Release of performance stock units, net of tax 150,063 2 ( 119 ) ( 6,091 ) — ( 6,208 ) Shares repurchased and retired ( 1,658,377 ) ( 17 ) ( 5,155 ) ( 101,133 ) — ( 106,305 ) Dividends declared ($ 0.17 per share) — — — ( 16,264 ) — ( 16,264 ) Share-based compensation costs — — 6,860 — — 6,860 Balances, March 31, 2024 95,409,736 954 — 1,755,168 ( 1,166 ) 1,754,956 Net income — — — 139,845 — 139,845 Fair value adjustments to available-for-sale securities — — — — ( 394 ) ( 394 ) Foreign currency translation adjustments — — — — ( 138 ) ( 138 ) Stock options exercised 23,431 — 271 — — 271 Release of restricted stock units, net of tax 19,837 — ( 1 ) ( 33 ) — ( 34 ) Shares repurchased and retired ( 3,143,995 ) ( 31 ) ( 10,635 ) ( 166,756 ) — ( 177,422 ) Dividends declared ($ 0.17 per share) — — — ( 15,736 ) — ( 15,736 ) Share-based compensation costs — — 10,365 — — 10,365 Balances, June 30, 2024 92,309,009 923 — 1,712,488 ( 1,698 ) 1,711,713 Net income — — — 131,128 — 131,128 Fair value adjustments to available-for-sale securities — — — — 504 504 Foreign currency translation adjustments — — — — 159 159 Release of restricted stock units, net of tax 1,423 — ( 32 ) ( 8 ) — ( 40 ) Shares repurchased and retired ( 3,461,140 ) ( 35 ) ( 7,508 ) ( 196,508 ) — ( 204,051 ) Dividends declared ($ 0.17 per share) — — — ( 15,151 ) — ( 15,151 ) Share-based compensation costs — — 7,540 — — 7,540 Balances, September 30, 2024 88,849,292 $ 888 $ — $ 1,631,949 $ ( 1,035 ) $ 1,631,802 Accumulated Other Common Stock Additional Retained Comprehensive (In thousands, except share data) Shares Amount Paid-in Capital Earnings Loss Total Balances, January 1, 2023 102,816,110 $ 1,028 $ 305,152 $ 1,285,827 $ ( 1,382 ) $ 1,590,625 Net income — — — 199,731 — 199,731 Fair value adjustments to available-for-sale securities — — — — 474 474 Foreign currency translation adjustments — — — — 4 4 Stock options exercised 32,000 — 315 — — 315 Release of restricted stock units, net of tax 45,942 1 ( 1,926 ) — — ( 1,925 ) Release of performance stock units, net of tax 318,878 3 ( 12,777 ) — — ( 12,774 ) Shares repurchased and retired ( 1,726,308 ) ( 17 ) ( 106,994 ) — — ( 107,011 ) Dividends declared ($ 0.16 per share) — — — ( 16,289 ) — ( 16,289 ) Share-based compensation costs — — 7,819 — — 7,819 Balances, March 31, 2023 101,486,622 1,015 191,589 1,469,269 ( 904 ) 1,660,969 Net income — — — 192,454 — 192,454 Fair value adjustments to available-for-sale securities — — — — 112 112 Foreign currency translation adjustments — — — — 196 196 Release of restricted stock units, net of tax 17,871 — ( 63 ) — — ( 63 ) Shares repurchased and retired ( 1,492,451 ) ( 15 ) ( 101,001 ) — — ( 101,016 ) Dividends declared ($ 0.16 per share) — — — ( 16,041 ) — ( 16,041 ) Share-based compensation costs — — 12,198 — — 12,198 Balances, June 30, 2023 100,012,042 1,000 102,723 1,645,682 ( 596 ) 1,748,809 Net income — — — 135,233 — 135,233 Fair value adjustments to available-for-sale securities — — — — ( 119 ) ( 119 ) Foreign currency translation adjustments — — — — ( 254 ) ( 254 ) Release of restricted stock units, net of tax 1,974 — ( 56 ) — — ( 56 ) Shares repurchased and retired ( 1,627,777 ) ( 16 ) ( 107,345 ) — — ( 107,361 ) Dividends declared ($ 0.16 per share) — — — ( 15,804 ) — ( 15,804 ) Share-based compensation costs — — 8,033 — — 8,033 Balances, September 30, 2023 98,386,239 $ 984 $ 3,355 $ 1,765,111 $ ( 969 ) $ 1,768,481 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 6 Table of Contents BOYD GAMING CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Nine Months Ended September 30, (In thousands) 2024 2023 Cash Flows from Operating Activities Net income $ 407,446 $ 527,418 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 198,934 188,577 Amortization of debt financing costs and discounts on debt 5,698 5,854 Non-cash operating lease expense 66,019 59,302 Non-cash expected credit loss (income) on note receivable — ( 34,371 ) Share-based compensation expense 24,765 28,050 Deferred income taxes 25,131 ( 9,995 ) Non-cash impairment of assets 10,500 4,537 Other operating activities 10,143 ( 516 ) Changes in operating assets and liabilities, excluding the impact of acquisition: Accounts receivable, net 34,855 5,473 Inventories 278 1,533 Prepaid expenses and other current assets ( 7,446 ) ( 22,086 ) Income taxes (receivable) payable, net ( 16,440 ) 1,335 Other assets, net 870 3,262 Accounts payable and accrued liabilities 1,979 ( 2,876 ) Operating lease liabilities ( 66,019 ) ( 59,302 ) Other liabilities ( 1,694 ) 1,057 Net cash provided by operating activities 695,019 697,252 Cash Flows from Investing Activities Capital expenditures ( 289,224 ) ( 279,023 ) Payments received on note receivable 208 82,459 Cash paid for acquisition, net of cash received ( 28,774 ) — Other investing activities ( 2,674 ) ( 3,022 ) Net cash used in investing activities ( 320,464 ) ( 199,586 ) Cash Flows from Financing Activities Borrowings under credit facility 1,317,000 1,086,700 Payments under credit facility ( 1,168,700 ) ( 1,232,700 ) Share-based compensation activities ( 9,645 ) ( 14,503 ) Shares repurchased and retired ( 483,218 ) ( 312,656 ) Dividends paid ( 47,510 ) ( 47,805 ) Other financing activities ( 140 ) ( 138 ) Net cash used in financing activities ( 392,213 ) ( 521,102 ) Effect of foreign currency exchange rates on cash, cash equivalents and restricted cash ( 63 ) 5 Change in cash, cash equivalents and restricted cash ( 17,721 ) ( 23,431 ) Cash, cash equivalents and restricted cash, beginning of period 307,930 295,065 Cash, cash equivalents and restricted cash, end of period $ 290,209 $ 271,634 Supplemental Disclosure of Cash Flow Information Cash paid for interest, net of amounts capitalized $ 127,851 $ 124,132 Cash received for interest 213 10,804 Cash paid for income taxes 119,802 120,449 Supplemental Schedule of Non-cash Investing and Financing Activities Payables incurred for capital expenditures $ 21,153 $ 8,091 Dividends declared not yet paid 15,151 15,804 Expected credit loss (income) on note receivable — ( 34,371 ) The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 7 Table of Contents BOYD GAMING CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) as of September 30, 2024 and December 31, 2023 and for the three and nine months ended September 30, 2024 and 2023 ______________________________________________________________________________________________________ NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization Boyd Gaming Corporation (and together with its subsidiaries, the "Company," "Boyd," "Boyd Gaming," "we" or "us") was incorporated in the state of Nevada in 1988 and has been operating since 1975. The Company's common stock is traded on the New York Stock Exchange under the symbol "BYD". We are a geographically diversified operator of 28 wholly owned brick-and-mortar gaming entertainment properties ("gaming entertainment properties"). Headquartered in Las Vegas, Nevada, we have gaming entertainment properties in Nevada, Illinois, Indiana, Iowa, Kansas, Louisiana, Mississippi, Missouri, Ohio and Pennsylvania. In addition, we own and operate Boyd Interactive, a business-to-business ( "B2B" ) and business-to-consumer ( "B2C" ) online gaming business. We also manage the Sky River Casino located in California under a management agreement with Wilton Rancheria. Basis of Presentation The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with the instructions to the Quarterly Report on Form 10 -Q and Article 10 of Regulation S- X and, therefore, do not include all information and footnote disclosures necessary for complete financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP"). These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes for the year ended December 31, 2023 , as filed with the U.S. Securities and Exchange Commission ("SEC") on February 26, 2024. The results for the periods indicated are unaudited but reflect all adjustments, consisting only of normal recurring adjustments, that management considers necessary for a fair presentation of financial position, results of operations and cash flows. Results of operations and cash flows for the interim periods presented herein are not necessarily indicative of the results that would be achieved during a full year of operations or in future periods. The accompanying condensed consolidated financial statements include the accounts of the Company and its subsidiaries. Investments in unconsolidated affiliates, which are 50% or less owned and where we have significant influence and do not meet the controlling financial interest consolidation criteria of the authoritative accounting guidance for voting interest or variable interest entities, are accounted for under the equity method. All intercompany accounts and transactions have been eliminated in consolidation. Cash and Cash Equivalents Cash and cash equivalents include highly liquid investments, which include cash on hand and in banks, interest-bearing deposits and money market funds with maturities of three months or less at their date of purchase. The instruments are not restricted as to withdrawal or use and are on deposit with high credit quality financial institutions. Although these balances may at times exceed the federal insured deposit limit, we believe such risk is mitigated by the quality of the institution holding such deposit. The carrying values of these instruments approximate their fair values as such balances are generally available on demand. Restricted Cash Restricted cash consists primarily of: (i) amounts restricted by regulation for gaming and racing purposes; (ii) amounts restricted by regulation for the value in players' online casino gaming accounts; and (iii) advance payments received for future bookings with our Hawaiian travel agency. These restricted cash balances are invested in highly liquid instruments with a maturity of 90 days or less. These restricted cash balances are held by high credit quality financial institutions. The carrying values of these instruments approximate their fair values due to their short maturities. The following table provides a reconciliation of cash, cash equivalents and restricted cash balances reported within the condensed consolidated balance sheets to the total balance shown in the condensed consolidated statements of cash flows. September 30, December 31, September 30, December 31, (In thousands) 2024 2023 2023 2022 Cash and cash equivalents $ 286,281 $ 304,271 $ 269,155 $ 283,472 Restricted cash 3,928 3,659 2,479 11,593 Total cash, cash equivalents and restricted cash $ 290,209 $ 307,930 $ 271,634 $ 295,065 8 Table of Contents BOYD GAMING CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued) as of September 30, 2024 and December 31, 2023 and for the three and nine months ended September 30, 2024 and 2023 ______________________________________________________________________________________________________ Leases Management determines if a contract is or contains a lease at inception or modification of a contract. A contract is or contains a lease if the contract conveys the right to control the use of an identified asset for a period in exchange for consideration. Control over the use of the identified asset means the lessee has both (a) the right to obtain substantially all of the economic benefits from the use of the asset and (b) the right to direct the use of the asset. Operating lease liabilities are recognized based on the present value of the remaining lease payments, discounted using the discount rate for the lease at the commencement date. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. For our operating leases for which the rate implicit in the lease is not readily determinable, we generally use an incremental borrowing rate based on information available at the commencement date to determine the present value of future lease payments. The incremental borrowing rate is determined based on the weighted average incremental borrowing rate at the lease commencement or modification date that is commensurate with the rate of interest in a similar economic environment that we would have to pay to borrow an amount equal to our future lease payments on a collateralized basis over a similar term, including reasonably certain options to extend or terminate. The determination of the incremental borrowing rate could materially impact our lease liabilities. Operating right-of-use ("ROU") assets and finance lease assets are recognized based on the amount of the initial measurement of the lease liability. Lease expense is recognized on a straight-line basis over the lease term. Lease and non-lease components are accounted for separately. Revenue Recognition The Company’s revenue contracts with customers consist of gaming wagers (including both those made at our gaming entertainment properties and online B2C wagers), hotel room sales, food & beverage offerings and other amenity transactions. See Collaborative Arrangements below for further discussion of revenues earned under our online collaborative arrangements. The transaction price for a gaming wagering contract is the difference between gaming wins and losses, not the total amount wagered. Cash discounts, commissions and other cash incentives to customers related to gaming play are recorded as a reduction of gaming revenues. The transaction price for hotel, food & beverage and other contracts is the net amount collected from the customer for such goods and services. Hotel, food & beverage and other services have been determined to be separate, stand-alone performance obligations and the transaction price for such contracts is recorded as revenue as the good or service is transferred to the customer over their stay at the hotel, when the delivery is made for the food & beverage or when the service is provided for other amenity transactions. We have established a player loyalty point program to encourage repeat business from frequent and active slot machine customers and other patrons. Members earn points based on gaming activity and such points can be redeemed for complimentary slot play, food & beverage, hotel rooms and other free goods and services. Gaming wager contracts involve two performance obligations for those customers earning points under the Company’s player loyalty program and a single performance obligation for customers who do not participate in the program. The Company applies a practical expedient by accounting for its gaming contracts on a portfolio basis as such wagers have similar characteristics and the Company reasonably expects the effects on the financial statements of applying the revenue recognition guidance to the portfolio to not differ materially from that which would result if applying the guidance to an individual wagering contract. For purposes of allocating the transaction price in a wagering contract between the wagering performance obligation and the obligation associated with the loyalty points earned, the Company allocates an amount to the player loyalty contract liability based on the stand-alone selling price of the points earned, which is determined by the value of a point that can be redeemed for a hotel room stay, food & beverage or other amenities. Sales and usage-based taxes are excluded from revenues. An amount is allocated to the gaming wager performance obligation using the residual approach as the stand-alone price for wagers is highly variable and no set established price exists for such wagers. The allocated revenue for gaming wagers, excluding race and sports wagers, is recognized when the wagers occur as all such wagers settle immediately. The allocated revenue for race and sports wagers is recognized when the specific event or game occurs. The player loyalty contract liability amount is deferred and recognized as revenue when the customer redeems the points for a hotel room stay, food & beverage or other amenities and such goods or services are delivered to the customer. See Note 5, Accrued Liabilities , for the balance outstanding related to the player loyalty program. The Company collects advance deposits from hotel customers for future hotel reservations and other future events such as banquets and ticketed events. These advance deposits represent obligations of the Company until the hotel room stay is provided to the customer or the banquet or ticketed event occurs. See Note 5, Accrued Liabilities , for the balance outstanding related to advance deposits. The Company's outstanding chip liability represents the amounts owed in exchange for gaming chips held by a customer. Outstanding chips are expected to be recognized as revenue or redeemed for cash within one year of being purchased. See Note 5, Accrued Liabilities , for the balance related to outstanding chips. The retail value of hotel accommodations, food & beverage, and other services furnished to guests without charge is recorded as departmental revenues. Gaming revenues are net of incentives earned in our player loyalty program and the estimated retail value of complimentary goods and services provided to customers (such as complimentary rooms and food & beverage). The estimated retail values related to goods and services provided to customers without charge or upon redemption of points under our player loyalty program, included in departmental revenues, and therefore reducing our gaming revenues, are as follows: Three Months Ended Nine Months Ended September 30, September 30, (In thousands) 2024 2023 2024 2023 Food & beverage $ 31,621 $ 29,978 $ 94,074 $ 87,573 Room 16,084 15,873 46,424 46,367 Other 2,076 2,328 6,449 6,265 9 Table of Contents BOYD GAMING CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued) as of September 30, 2024 and December 31, 2023 and for the three and nine months ended September 30, 2024 and 2023 ______________________________________________________________________________________________________ Gaming Taxes We are subject to taxes based on gross gaming revenues in the jurisdictions in which we operate. These gaming taxes are assessed based on our gaming revenues and are recorded in the condensed consolidated statements of operations as a gaming expense for gaming entertainment properties and online expense for Boyd Interactive operations. Gaming taxes recorded as gaming expense totaled approximately $ 129.5 million and $ 128.1 million for the three months ended September 30, 2024 and 2023 , respectively, and were $ 386.4 million and $ 387.8 million for the nine months ended September 30, 2024 and 2023 , respectively. Gaming taxes recorded as online expense, excluding taxes paid under collaborative arrangements (see Collaborative Arrangements below for further discussion), totaled $ 3.7 million and $ 2.1 million for the three months ended September 30, 2024 and 2023 , respectively, and $ 9.3 million and $ 3.9 million for the nine months ended September 30, 2024 and 2023 , respectively. Income Taxes Income taxes are recorded under the asset and liability method, whereby deferred tax assets and liabilities are recognized based on the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. We reduce the carrying amounts of deferred tax assets by a valuation allowance if, based on the available evidence, it is more likely than not that such assets will not be realized. Use of the term "more likely than not" indicates the likelihood of occurrence is greater than 50%. Accordingly, the need to establish valuation allowances for deferred tax assets is continually assessed at a minimum quarterly, and as facts and circumstances change, based on a more-likely-than- not realization threshold. This assessment considers, among other matters, the nature, frequency and severity of current and cumulative losses, forecasts of profitability and taxable income, the duration of statutory carryforward periods, our experience with the utilization of operating loss and tax credit carryforwards before expiration and tax planning strategies. In making such judgments, significant weight is given to evidence that can be objectively verified. In performing our second quarter 2023 valuation allowance analysis, we determined that the positive evidence in favor of releasing a portion of our valuation allowance for certain state jurisdictions, outweighed the negative evidence. We utilize a rolling twelve quarters of pre-tax income adjusted for permanent book to tax differences as a measure of cumulative results in recent years. We transitioned from a cumulative loss position to a cumulative income position over the rolling twelve quarters ended June 30, 2023. Other evidence considered in the analysis included, but was not limited to, a trend reflective of improvement in recent earnings, forecasts of profitability and taxable income and the reversal of existing temporary differences. The change in these conditions during the three months ended June 30, 2023 provided positive evidence that supported the release of the valuation allowance against a significant portion of our state deferred tax assets. As such, we concluded that it was more likely than not that the benefit from our deferred tax assets would be realized. As a result, during the second quarter of 2023, we released $ 35.9 million of valuation allowance on our state income tax net operating loss carryforwards and other deferred tax assets. Other Long-Term Tax Liabilities The Company's income tax returns are subject to examination by the Internal Revenue Service ("IRS") and other tax authorities in the locations where it operates. The Company assesses potentially unfavorable outcomes of such examinations based on accounting standards for uncertain income taxes, which prescribe a minimum recognition threshold a tax position is required to meet before being recognized in the financial statements. Uncertain tax position accounting standards apply to all tax positions related to income taxes. These accounting standards utilize a two -step approach for evaluating tax positions. Recognition occurs when the Company concludes that a tax position, based on its technical merits, is more likely than not to be sustained upon examination. Measurement is only addressed if the position is deemed to be more likely than not to be sustained. The tax benefit is measured as the largest amount of benefit that is more likely than not to be realized upon settlement. Tax positions failing to qualify for initial recognition are recognized in the first subsequent interim period that they meet the "more likely than not" standard. If it is subsequently determined that a previously recognized tax position no longer meets the "more likely than not" standard, it is required that the tax position is derecognized. Accounting standards for uncertain tax positions specifically prohibit the use of a valuation allowance as a substitute for derecognition of tax positions. As applicable, the Company will recognize accrued penalties and interest related to unrecognized tax benefits in the provision for income taxes. If applicable, accrued interest and penalties are included in other long-term tax liabilities on the condensed consolidated balance sheets. The IRS has selected our federal corporate income tax return for the tax year ended December 31, 2021, for examination. The IRS examination began in the second quarter of 2024 and is early in the process. As of September 30, 2024 , and for the three and nine months then ended, there were no changes to our unrecognized tax benefits to date. Collaborative Arrangements We hold a five percent equity ownership in and have a strategic partnership with FanDuel Group ("FanDuel"), the nation's leading sports-betting operator, to pursue sports-betting opportunities across the country, both at our gaming entertainment properties and online. Subject to state law and regulatory approvals, we have established a presence in the sports wagering industry, both at our gaming entertainment properties and online, by leveraging FanDuel's technology and related services. We offer online sports wagering under the FanDuel brand or under market access agreements with other companies in Illinois, Indiana, Iowa, Kansas, Louisiana, Ohio and Pennsylvania. We also operate sportsbooks under the FanDuel brand at one of our Downtown Las Vegas gaming entertainment properties, our gaming entertainment properties in Mississippi and all of the gaming entertainment properties in the states where we offer online sports wagering. Under our online collaborative arrangements with FanDuel and other third parties, we receive a revenue share from FanDuel or the other third -party operators based on actual wagering wins and losses. The activities under these collaborative arrangements related to online wagering, are recorded in online revenue and online expense on the condensed consolidated statements of operations. The activities under these collaborative arrangements related to sportsbooks at our gaming entertainment properties, are recorded in gaming revenue and gaming expense. Under certain of our collaborative arrangements, we are the primary obligor and are responsible for paying gaming taxes and other license payments owed as the gaming licensee for the related online gaming activities. We are reimbursed for these taxes and other payments by the third -party operators. We report these gaming taxes and other expenses paid as online expense and the reimbursements we receive as online revenues. These taxes and other payments totaled approximately $ 103.2 million and $ 71.4 million for the three months ended September 30, 2024 and 2023 , respectively, and $ 322.7 million and $ 230.6 million for the nine months ended September 30, 2024 and 2023 , respectively. 10 Table of Contents BOYD GAMING CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued) as of September 30, 2024 and December 31, 2023 and for the three and nine months ended September 30, 2024 and 2023 ______________________________________________________________________________________________________ Our five percent equity ownership in FanDuel is recorded at cost in accordance with the measurement alternative allowed under Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 321, Accounting for Investments in Equity Securities . We do not have the ability to exercise significant influence over FanDuel's operating and financial policies. We evaluate the investment for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. We evaluate the recorded value of the investment when any observable price changes in orderly transactions for an identical or similar investment would require an adjustment of the investment to fair value. Currency Translation The Company translates the financial statements of its foreign subsidiary that are not denominated in U.S. dollars. Balance sheet accounts are translated at the exchange rate in effect at each balance sheet date. Income statement accounts are translated at the average rate of exchange prevailing during the period. If a material income statement event occurs, the transaction would be translated at the exchange rate in effect on the date of occurrence. Translation adjustments are recorded in other comprehensive income (loss). Gains or losses from foreign currency transaction remeasurements are recorded as other non-operating income (expense). Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Recently Issued Accounting Pronouncements A variety of proposed or otherwise potential accounting standards are currently being studied by standard-setting organizations and certain regulatory agencies. Because of the tentative and preliminary nature of such proposed standards, we have not yet determined the effect, if any, that the implementation of such proposed standards would have on our condensed consolidated financial statements. NOTE 2. ACQUISITION Resorts Digital Gaming, LLC On September 1, 2024, Boyd Interactive Gaming, Inc. ("Boyd Interactive"), a wholly owned subsidiary of the Company, completed its acquisition of Resorts Digital Gaming, LLC ("Resorts Digital"), pursuant to a Membership Interest Purchase Agreement (the "Membership Agreement"), entered into on May 15, 2024, by and among Boyd Interactive, DGMB Casino Holding, LLC and DGMB Casino SPE Corp. Resorts Digital is now a wholly owned subsidiary of Boyd Interactive. Resorts Digital is an online casino operator based in New Jersey, operating a dual-brand strategy across Resorts Casino and Mohegan Sun. This acquisition is another step forward in building out our online casino business. In addition to acquiring the existing online business under both brands, the acquisition includes a 20 -year marketing agreement with a 10 -year renewal option that provides for marketing and promotional services at Resorts Casino in Atlantic City, New Jersey. This marketing agreement allows us to provide our online customers in New Jersey access to a gaming entertainment property where they can redeem points earned under a loyalty program for such amenities as complimentary food & beverage and hotel rooms. The acquired company is aggregated into our Online segment (See Note 10, Segment Information ). Consideration Transferred The fair value of the consideration transferred for the membership interests of Resorts Digital included the purchase price of the net assets transferred. The total gross consideration was $ 34.0 million (with $ 3.7 million of cash and restricted cash acquired and $ 1.5 million not paid as of September 30, 2024, for total cash paid for acquisition, net of cash received as of September 30, 2024 of $ 28.8 million). Status of Purchase Price Allocation The Company is following the acquisition method of accounting pursuant to FASB Accounting Standards Codification Topic 805 ("ASC 805" ). For purposes of these condensed consolidated financial statements, we have allocated the purchase price to the assets acquired and the liabilities assumed based on preliminary estimates of fair value as determined by management with the assistance from third -party specialists. The excess of the purchase price over the preliminary estimated fair value of the assets acquired and liabilities assumed has been recorded as goodwill. The Company has recognized the assets acquired and liabilities assumed in the acquisition based on fair value estimates as of the date of the acquisition. The determination of the fair values of all the acquired intangible assets and the related determination of their estimated lives is currently in process. This determination requires significant judgment and as such, management has not completed its valuation analysis and calculations in sufficient detail necessary to finalize the determination of the fair value of the intangible assets acquired, along with the related allocation of goodwill. The final fair value determinations may be different than those reflected in the condensed consolidated financial statements at September 30, 2024 . 11 Table of Contents BOYD GAMING CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued) as of September 30, 2024 and December 31, 2023 and for the three and nine months ended September 30, 2024 and 2023 ______________________________________________________________________________________________________ The following table summarizes the preliminary allocation of the purchase price: (In thousands) As Recorded Current assets $ 4,316 Other assets 110 Intangible assets 22,800 Total acquired assets 27,226 Current liabilities 3,918 Other liabilities 28 Total liabilities assumed 3,946 Net identifiable assets acquired 23,280 Goodwill 10,700 Net assets acquired $ 33,980 The following table summarizes the preliminary values assigned to acquired intangible assets and preliminary weighted average useful lives of definite-lived intangible assets: Useful Lives (In thousands) (in years) As Recorded Gaming license right Indefinite $ 15,000 Customer relationships 5 3,300 Marketing agreement 20 4,500 Total intangible assets acquired $ 22,800 The goodwill recognized is the excess of the purchase price over the preliminary values assigned to the assets acquired and liabilities assumed. All of the goodwill was assigned to the Online reportable segment. The Company expensed $ 0.1 million of acquisition related costs for the three and nine months ended September 30, 2024 . These costs are included in project development, preopening and writedowns on the condensed consolidated statements of operations. The revenue and earnings from the acquisition are not material for the period subsequent to acquisition through September 30, 2024 . The pro-forma revenue and earnings from the acquisition assuming all impacts as if it had been completed on January 1, 2024, are not material through September 30, 2024 . NOTE 3. PROPERTY AND EQUIPMENT, NET Property and equipment, net consists of the following: September 30, December 31, (In thousands) 2024 2023 Land $ 338,469 $ 338,469 Buildings and improvements 3,392,404 3,237,863 Furniture and equipment 1,843,325 1,742,666 Riverboats and barges 241,758 241,826 Construction in progress 119,753 182,710 Total property and equipment 5,935,709 5,743,534 Less accumulated depreciation ( 3,302,461 ) ( 3,201,022 ) Property and equipment, net $ 2,633,248 $ 2,542,512 Depreciation expense is as follows: Three Months Ended Nine Months Ended September 30, September 30, (In thousands) 2024 2023 2024 2023 Depreciation expense $ 66,190 $ 60,586 $ 186,566 $ 176,051 12 BOYD GAMING CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued) as of September 30, 2024 and December 31, 2023 and for the three and nine months ended September 30, 2024 and 2023 ______________________________________________________________________________________________________ NOTE 4. GOODWILL AND INTANGIBLE ASSETS, NET Intangible assets, net consist of the following: September 30, 2024 Weighted Useful Life Gross Accumulated Effect of Foreign Remaining Carrying Accumulated Impairment Currency Intangible (In thousands) (in years) Value Amortization Losses Exchange Assets, Net Amortizing intangibles Customer relationships 2.4 $ 7,225 $ ( 3,915 ) $ — $ — $ 3,310 Host agreements 8.7 58,000 ( 24,489 ) — — 33,511 Development agreement 4.9 21,373 ( 6,488 ) — — 14,885 Developed technology 7.6 42,659 ( 7,867 ) — 70 34,862 B2B relationships 5.3 28,000 ( 7,502 ) — 17 20,515 B2C relationships 10.1 13,000 ( 2,076 ) — — 10,924 Marketing agreement 20.0 4,500 — — — 4,500 174,757 ( 52,337 ) — 87 122,507 Indefinite lived intangible assets Trademarks Indefinite 199,900 — ( 32,275 ) — 167,625 Gaming license rights Indefinite 1,393,081 ( 33,960 ) ( 253,974 ) — 1,105,147 1,592,981 ( 33,960 ) ( 286,249 ) — 1,272,772 Balances, September 30, 2024 $ 1,767,738 $ ( 86,297 ) $ ( 286,249 ) $ 87 $ 1,395,279 December 31, 2023 Weighted Useful Life Gross Accumulated Effect of Foreign Remaining Carrying Accumulated Impairment Currency Intangible (In thousands) (in years) Value Amortization Losses Exchange Assets, Net Amortizing intangibles Customer relationships 0.1 $ 35,050 $ ( 35,010 ) $ — $ — $ 40 Host agreements 9.4 58,000 ( 21,589 ) — — 36,411 Development agreement 5.6 21,373 ( 4,198 ) — — 17,175 Developed technology 8.5 39,981 ( 4,482 ) — 225 35,724 B2B relationships 6.0 28,000 ( 4,566 ) — 52 23,486 B2C relationships 10.8 13,000 ( 1,264 ) — — 11,736 195,404 ( 71,109 ) — 277 124,572 Indefinite lived intangible assets Trademarks Indefinite 199,900 — ( 32,275 ) — 167,625 Gaming license rights Indefinite 1,378,081 ( 33,960 ) ( 243,474 ) — 1,100,647 1,577,981 ( 33,960 ) ( 275,749 ) — 1,268,272 Balances, December 31, 2023 $ 1,773,385 $ ( 105,069 ) $ ( 275,749 ) $ 277 $ 1,392,844 The following table presents the future amortization expense for our amortizing intangible assets as of September 30, 2024 : (In thousands) Customer Relationships Host Agreements Development Agreement Developed Technology B2B Relationships B2C Relationships Marketing Agreement Total For the year ending December 31, 2024 (excluding nine months ended September 30, 2024) $ 230 $ 967 $ 763 $ 1,362 $ 995 $ 271 $ 75 $ 4,663 2025 660 3,867 3,053 4,924 3,914 1,083 225 17,726 2026 660 3,867 3,053 4,909 3,914 1,083 225 17,711 2027 660 3,867 3,053 4,907 3,914 1,083 225 17,709 2028 660 3,867 3,053 4,647 3,914 1,083 225 17,449 Thereafter 440 17,076 1,910 14,113 3,864 6,321 3,525 47,249 Total future amortization $ 3,310 $ 33,511 $ 14,885 $ 34,862 $ 20,515 $ 10,924 $ 4,500 $ 122,507 13 Table of Contents BOYD GAMING CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued) as of September 30, 2024 and December 31, 2023 and for the three and nine months ended September 30, 2024 and 2023 ______________________________________________________________________________________________________ During the nine months ended September 30, 2024 , as a result of our first quarter 2024 impairment review, the Company recorded an impairment charge of $ 10.5 million for a gaming license right related to our Midwest & South segment. This noncash impairment charge is recorded in impairment of assets on the condensed consolidated statement of operations. Goodwill consists of the following: September 30, 2024 Effect of Gross Accumulated Foreign Carrying Accumulated Impairment Currency Goodwill, (In thousands) Value Amortization Losses Exchange Net Goodwill, net by Segment Las Vegas Locals $ 593,567 $ — $ ( 188,079 ) $ — $ 405,488 Downtown Las Vegas 6,997 ( 6,134 ) — — 863 Midwest & South 636,269 — ( 107,470 ) — 528,799 Online 104,737 — ( 82,000 ) 105 22,842 Managed & Other 30,529 — ( 30,529 ) — — Balances, September 30, 2024 $ 1,372,099 $ ( 6,134 ) $ ( 408,078 ) $ 105 $ 957,992 December 31, 2023 Effect of Gross Accumulated Foreign Carrying Accumulated Impairment Currency Goodwill, (In thousands) Value Amortization Losses Exchange Net Goodwill, net by Segment Las Vegas Locals $ 593,567 $ — $ ( 188,079 ) $ — $ 405,488 Downtown Las Vegas 6,997 ( 6,134 ) — — 863 Midwest & South 636,269 — ( 107,470 ) — 528,799 Online 94,037 — ( 82,000 ) 154 12,191 Managed & Other 30,529 — ( 30,529 ) — — Balances, December 31, 2023 $ 1,361,399 $ ( 6,134 ) $ ( 408,078 ) $ 154 $ 947,341 NOTE 5. ACCRUED LIABILITIES Accrued liabilities consist of the following: September 30, December 31, (In thousands) 2024 2023 Payroll and related $ 76,426 $ 82,327 Interest 18,766 17,841 Gaming 68,345 68,749 Player loyalty program 18,049 23,850 Advance deposits 25,535 15,511 Outstanding chips 6,592 8,164 Dividends payable 15,151 15,508 Operating leases 100,319 98,867 Other 118,283 96,562 Total accrued liabilities $ 447,466 $ 427,379 14 Table of Contents BOYD GAMING CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued) as of September 30, 2024 and December 31, 2023 and for the three and nine months ended September 30, 2024 and 2023 ______________________________________________________________________________________________________ NOTE 6. LONG-TERM DEBT Long-term debt, net of current maturities and debt issuance costs, consists of the following: September 30, 2024 Interest Unamortized Rates at Origination September 30, Outstanding Fees and Long-Term (In thousands) 2024 Principal Costs Debt, Net Credit facility 6.685 % $ 1,194,600 $ ( 10,177 ) $ 1,184,423 4.750% senior notes due 2027 4.750 % 1,000,000 ( 6,331 ) 993,669 4.750% senior notes due 2031 4.750 % 900,000 ( 9,100 ) 890,900 Other 5.208 % 364 — 364 Total long-term debt 3,094,964 ( 25,608 ) 3,069,356 Less current maturities 44,364 — 44,364 Long-term debt, net $ 3,050,600 $ ( 25,608 ) $ 3,024,992 December 31, 2023 Interest Unamortized Rates at Origination December 31, Outstanding Fees and Long-Term (In thousands) 2023 Principal Costs Debt, Net Credit facility 7.164 % $ 1,046,300 $ ( 13,403 ) $ 1,032,897 4.750% senior notes due 2027 4.750 % 1,000,000 ( 7,792 ) 992,208 4.750% senior notes due 2031 4.750 % 900,000 ( 10,111 ) 889,889 Other 5.208 % 504 — 504 Total long-term debt 2,946,804 ( 31,306 ) 2,915,498 Less current maturities 44,275 — 44,275 Long-term debt, net $ 2,902,529 $ ( 31,306 ) $ 2,871,223 The outstanding principal amounts under the Credit Facility are comprised of the following: September 30, December 31, (In thousands) 2024 2023 Revolving Credit Facility $ 380,000 $ 180,000 Term A Loan 770,000 803,000 Swing Loan 44,600 63,300 Total outstanding principal amounts $ 1,194,600 $ 1,046,300 With a total revolving credit commitment of $ 1,450.0 million available under the Credit Facility, $ 380.0 million and $ 44.6 million in borrowings outstanding on the Revolving Credit Facility and the Swing Loan, respectively, and $ 13.0 million allocated to support various letters of credit, there was a remaining contractual availability under the Credit Facility of $ 1,012.4 million as of September 30, 2024 . Covenant Compliance As of September 30, 2024 , we were in compliance with the financial covenants of our debt instruments. 15 BOYD GAMING CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued) as of September 30, 2024 and December 31, 2023 and for the three and nine months ended September 30, 2024 and 2023 ______________________________________________________________________________________________________ NOTE 7. COMMITMENTS AND CONTINGENCIES Wilton Rancheria Agreements In 2012, the Company entered into a development agreement and a management agreement with Wilton Rancheria. The development agreement obligated us to fund certain pre-development costs to assist Wilton Rancheria in its development and oversight of the gaming facility construction. The pre-development costs financed by us were to be repaid under the terms of a note receivable with Wilton Rancheria bearing interest at 12.5 % with payment timing and the payment amount subject to an excess cash flow waterfall payment prioritization and maintenance of a certain leverage ratio, among other restrictions under Wilton Rancheria’s third -party credit agreement that provided funding for the construction project. Given the significant barriers of the project, a majority of the advances made during the 10 -year period prior to the Sky River Casino opening were historically reserved in full when advanced. The Sky River Casino opened on August 15, 2022 and after generating cash flows from operations, we updated our evaluation of expected losses on the note receivable which resulted in a partial release of the allowance during the fourth quarter of 2022. The Wilton Rancheria amended their third -party credit agreement in March 2023 and such amendment effectively allowed Sky River Casino to begin making previously disallowed distributions, under the excess cash flow waterfall. Given the amendment in the first quarter of 2023, the Company updated its evaluation of its expected losses on the note receivable. As the amendment allowed for quarterly payments to begin and given the sustained operating strength of the recently opened property, the Company concluded it expected to receive all payments due under the note receivable. As such, the Company removed the remaining allowance on the note receivable in the first quarter of 2023, which represented a reserve on both the development advances and interest on the note. The allowance reduction was thus allocated accordingly and $ 20.1 million is recorded in project development, preopening and writedowns and $ 14.3 million is recorded in interest income, both reflected in the condensed consolidated statement of operations for the nine months ended September 30, 2023 . The Company received $ 0.2 mi llion in principal payments and $ 0.2 million in interest due under the note receivable during the nine months ended September 30, 2024 , and $ 82.5 mi llion in principal payments and $ 10.8 million in interest due under the note receivable during the nine months ended September 30, 2023 . As of September 30, 2024 , the principal and interest outstanding on the note receivable was fully repaid. Separately, the management agreement provides for us to manage the gaming facility upon opening for a period of seven years and receive a monthly management fee for our services based on the monthly performance of the gaming facility. The management fee of $ 21.0 million and $ 17.2 million for our management services for the three months ended September 30, 2024 and 2023 , respectively, and $ 64.5 million and $ 54.6 million for the nine months ended September 30, 2024 and 2023 , respectively, is paid monthly and recorded in management fee revenue on the condensed consolidated statements of operations. On September 27, 2024, the Company entered into an amendment to the management agreement with Wilton Rancheria that became effective October 2, 2024, and provides for the Company to serve as manager of the Wilton Rancheria expansion to the Sky River Casino inclusive of 400 additional slots, a parking garage, a 300 -room hotel and spa, two additional food and beverage outlets and an entertainment and events center. The Company is not obligated to fund the construction and the management fee remains unchanged. Commitments As of September 30, 2024 , there have been no material changes to our commitments described under Note 9, Commitments and Contingencies , in our Annual Report on Form 10 -K for the year ended December 31, 2023 , as filed with the SEC on February 26, 2024. Contingencies Legal Matters We are parties to various legal proceedings arising in the ordinary course of business. We believe that all pending claims, if adversely decided, would not have a material effect on our business, financial position, results of operations or cash flows. NOTE 8. STOCKHOLDERS' EQUITY AND STOCK INCENTIVE PLANS Share Repurchase Program On October 21, 2021, our Board of Directors authorized a share repurchase program of $ 300.0 million (the "Share Repurchase Program"). In addition, our Board of Directors authorized increases to the Share Repurchase Program of $ 500.0 million on each of June 1, 2022, May 4, 2023 and May 9, 2024. As of September 30, 2024 , $ 343.1 million remains available under the Share Repurchase Program. Under the Share Repurchase Program, the Company may repurchase shares of its common stock from time to time on the open market or in privately negotiated transactions. Repurchases of common stock may also be made under Rule 10b5 - 1 plans, which would permit common stock to be repurchased when the Company might otherwise be precluded from doing so under insider trading laws. We are not obligated to repurchase any shares under this program. The timing, volume and nature of share repurchases will be at the sole discretion of management, dependent on market conditions, applicable securities laws and other factors, and may be suspended or discontinued at any time. The following table provides information regarding share repurchases during the referenced periods ( 1 ) . Three Months Ended Nine Months Ended September 30, September 30, (In thousands, except per share data) 2024 2023 2024 2023 Shares repurchased (2) 3,461 1,628 8,264 4,847 Total cost, including brokerage fees (3) $ 202,032 $ 106,302 $ 483,218 $ 312,656 Average repurchase price per share (4) $ 58.37 $ 65.30 $ 58.48 $ 64.51 ( 1 ) Shares repurchased reflect repurchases settled during the three and nine months ended September 30, 2024 and 2023 . These amounts exclude repurchases, if any, traded but not yet settled on or before September 30, 2024 and 2023 , respectively. ( 2 ) All shares repurchased have been retired and constitute authorized but unissued shares. ( 3 ) Costs exclude 1% excise tax on corporate stock buybacks. ( 4 ) Amounts in the table may not recalculate exactly due to rounding. Average repurchase price per share is calculated based on unrounded numbers and excludes the 1% excise tax. 16 Table of Contents BOYD GAMING CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued) as of September 30, 2024 and December 31, 2023 and for the three and nine months ended September 30, 2024 and 2023 ______________________________________________________________________________________________________ Dividends The dividends declared by the Board of Directors and reflected in the periods presented are: Declaration date Record date Payment date Amount per share December 8, 2022 December 19, 2022 January 15, 2023 $ 0.15 February 14, 2023 March 15, 2023 April 15, 2023 0.16 May 4, 2023 June 15, 2023 July 15, 2023 0.16 August 15, 2023 September 15, 2023 October 15, 2023 0.16 December 7, 2023 December 22, 2023 January 15, 2024 0.16 February 28, 2024 March 15, 2024 April 15, 2024 0.17 May 9, 2024 June 15, 2024 July 15, 2024 0.17 August 20, 2024 September 15, 2024 October 15, 2024 0.17 Share-Based Compensation We account for share-based awards exchanged for employee services in accordance with the authoritative accounting guidance for share-based payments. Under the guidance, share-based compensation expense is measured at the grant date, based on the estimated fair value of the award, and is recognized as expense, net of estimated forfeitures, over the employee's requisite service period. The following table provides classification detail of the total costs related to our share-based employee compensation plans reported in our condensed consolidated statements of operations. Three Months Ended Nine Months Ended September 30, September 30, (In thousands) 2024 2023 2024 2023 Gaming $ 254 $ 278 $ 778 $ 806 Food & beverage 49 53 149 154 Room 22 26 70 74 Selling, general and administrative 1,295 1,415 3,958 4,098 Corporate expense 5,920 6,261 19,810 22,918 Total share-based compensation expense $ 7,540 $ 8,033 $ 24,765 $ 28,050 Performance Shares Our stock incentive plan provides for the issuance of Performance Share Units ("PSU") grants which may be earned, in whole or in part, upon the passage of time and the attainment of performance criteria. We periodically review our estimates of performance against the defined criteria to assess the expected payout of each outstanding PSU grant and adjust our stock compensation expense accordingly. The PSU grants awarded in third quarter 2021 and fourth quarter 2019 fully vested during the first quarter of 2024 and 2023, respectively. Common shares under the 2021 grant were issued based on the determination by the Compensation Committee of the Board of Directors ("Compensation Committee") of our actual achievement of Earnings Before Interest, Taxes, Depreciation and Amortization and Rent under master leases ("EBITDAR") and return on invested capital for the two -year performance period from July 2021 to June 2023. Common shares under the 2019 grant were issued based on the determination by the Compensation Committee of net revenue growth and EBITDAR growth for the three -year performance period of the grant. As provided under the provisions of our stock incentive plan, certain of the participants elected to surrender a portion of the shares to be received to pay the withholding and other payroll taxes payable on the compensation resulting from the vesting of the PSUs. The PSU grant awarded in July 2021 resulted in a total of 241,277 shares being issued during the first quarter of 2024, representing approximately 1.94 shares per PSU. Of the 241,277 shares issued, a total of 94,862 were surrendered by the participants for payroll taxes, resulting in a net issuance of 146,415 shares due to the vesting of the 2021 grant. The actual achievement level under the award metrics approximated the estimated performance as of the year-end 2023; therefore, the vesting of the PSUs had minimal impact to compensation costs of $ 0.8 million in our condensed consolidated statement of operations for the nine months ended September 30, 2024. The PSU grant awarded in December 2019 resulted in a total of 519,782 shares being issued during the first quarter of 2023, representing approximately 2.00 shares per PSU. Of the 519,782 shares issued, a total of 200,904 were surrendered by the participants for payroll taxes, resulting in a net issuance of 318,878 shares due to the vesting of the 2019 grant. The actual achievement level under the award metrics equaled the estimated performance as of the year-end 2022; therefore, the vesting of the PSUs did not impact compensation costs in our 2023 condensed consolidated statement of operations. Unamortized Stock Compensation Expense and Recognition Period As of September 30, 2024 , there was approximately $ 11.0 million, $ 3.0 million and $ 1.6 million of total unrecognized share-based compensation costs related to unvested restricted stock units ("RSUs"), PSUs and career shares, respectively. As of September 30, 2024 , the unrecognized share-based compensation costs related to our RSUs, PSUs and career shares are expected to be recognized over approximately 2.0 years, 1.9 years and 3.5 years, respectively. NOTE 9. FAIR VALUE MEASUREMENTS We have adopted the authoritative accounting guidance for fair value measurements, which does not determine or affect the circumstances under which fair value measurements are used, but defines fair value, expands disclosure requirements around fair value and specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company's market assumptions. 17 Table of Contents BOYD GAMING CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued) as of September 30, 2024 and December 31, 2023 and for the three and nine months ended September 30, 2024 and 2023 ______________________________________________________________________________________________________ These inputs create the following fair value hierarchy: Level 1 : Quoted prices for identical instruments in active markets. Level 2 : Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. Level 3 : Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. As required by the guidance for fair value measurements, financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Thus, assets and liabilities categorized as Level 3 may be measured at fair value using inputs that are observable (Levels 1 and 2 ) and unobservable (Level 3 ). Management's assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of assets and liabilities and their placement within the fair value hierarchy levels. Balances Measured at Fair Value The following tables show the fair values of certain of our financial instruments: September 30, 2024 (In thousands) Balance Level 1 Level 2 Level 3 Assets Cash and cash equivalents $ 286,281 $ 286,281 $ — $ — Restricted cash 3,928 3,928 — — Investment available for sale 13,202 — — 13,202 December 31, 2023 (In thousands) Balance Level 1 Level 2 Level 3 Assets Cash and cash equivalents $ 304,271 $ 304,271 $ — $ — Restricted cash 3,659 3,659 — — Investment available for sale 13,327 — — 13,327 Cash and Cash Equivalents and Restricted Cash The fair values of our cash and cash equivalents and restricted cash, classified in the fair value hierarchy as Level 1, are based on statements received from our banks as of September 30, 2024 and December 31, 2023 . Investment Available for Sale We have an investment in a single municipal bond issuance of $ 16.4 million aggregate principal amount of 7.5 % Urban Renewal Tax Increment Revenue Bonds, Taxable Series 2007 that is classified as available for sale with a maturity date of June 1, 2037. We are the only holder of this instrument and there is no quoted market price for this instrument. As such, the fair value of this investment is classified as Level 3 in the fair value hierarchy. The estimate of the fair value of such investment was determined using a combination of current market rates and estimates of market conditions for instruments with similar terms, maturities and degrees of risk and a discounted cash flows analysis as of September 30, 2024 and December 31, 2023 . The significant unobservable input used to determine fair value of the instrument in the discounted cash flows analysis at September 30, 2024 and December 31, 2023 is a discount rate of 12.3 % and 12.4 %, respectively. Unrealized gains and losses on this instrument resulting from changes in the fair value of the instrument are not charged to earnings, but rather are recorded as other comprehensive income (loss) in the stockholders' equity section of the condensed consolidated balance sheets and in the condensed consolidated statements of other comprehensive income. As of September 30, 2024 and December 31, 2023 , $ 0.8 million and $ 0.7 million, respectively, of the carrying value of the investment available for sale is included as a current asset in prepaid expenses and other current assets, and at September 30, 2024 and December 31, 2023 , $ 12.4 million and $ 12.6 million, respectively, is included in other assets, net on the condensed consolidated balance sheets. The discount associated with this investment of $ 1.9 million and $ 2.0 million as of September 30, 2024 and December 31, 2023 , respectively, is netted with the investment balance and is being accreted over the life of the investment using the effective interest method. The accretion of such discount is included in interest income on the condensed consolidated statements of operations. The following table summarizes the changes in fair value of the Company's Level 3 investment available for sale asset: Three Months Ended Nine Months Ended September 30, September 30, (In thousands) 2024 2023 2024 2023 Balance at beginning of reporting period $ 12,495 $ 13,215 $ 13,327 $ 13,670 Total gains (realized or unrealized): Included in interest income 43 41 132 128 Included in other comprehensive income (loss) 664 ( 158 ) 473 ( 20 ) Purchases, sales, issuances and settlements: Settlements — — ( 730 ) ( 680 ) Balance at end of reporting period $ 13,202 $ 13,098 $ 13,202 $ 13,098 18 Table of Contents BOYD GAMING CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued) as of September 30, 2024 and December 31, 2023 and for the three and nine months ended September 30, 2024 and 2023 ______________________________________________________________________________________________________ We are exposed to valuation risk on our Level 3 financial instruments. We estimate our risk exposure using a sensitivity analysis of potential changes in the significant unobservable inputs of our fair value measurements. Our Level 3 financial instruments are most susceptible to valuation risk caused by changes in the discount rate. If the discount rate in our fair value measurements increased or decreased by 100 basis points, the change would not cause the value of our fair value measurements to change significantly. The fair value of indefinite-lived intangible assets, classified in the fair value hierarchy as Level 3, is utilized in performing the Company's impairment analyses. The value of our gaming licenses is determined using a multi-period excess earnings method, which is a specific discounted cash flow model which utilized Level 3 inputs. Balances Disclosed at Fair Value The following tables provide the fair value measurement information about our obligation under assessment agreements and note receivable. As of September 30, 2024 , the outstanding principal balance under the note receivable was paid in full. September 30, 2024 Outstanding Carrying Estimated Fair Value (In thousands) Face Amount Value Fair Value Hierarchy Liabilities Obligation under assessment arrangements $ 18,494 $ 16,418 $ 21,221 Level 3 December 31, 2023 Outstanding Carrying Estimated Fair Value (In thousands) Face Amount Value Fair Value Hierarchy Asset Note receivable $ 419 $ 419 $ 419 Level 3 Liabilities Obligation under assessment arrangements 20,199 17,752 23,282 Level 3 The following tables provide the fair value measurement information about our long-term debt: September 30, 2024 Outstanding Carrying Estimated Fair Value (In thousands) Face Amount Value Fair Value Hierarchy Credit facility $ 1,194,600 $ 1,184,423 $ 1,173,425 Level 2 4.750% senior notes due 2027 1,000,000 993,669 988,750 Level 1 4.750% senior notes due 2031 900,000 890,900 857,250 Level 1 Other 364 364 364 Level 3 Total debt $ 3,094,964 $ 3,069,356 $ 3,019,789 December 31, 2023 Outstanding Carrying Estimated Fair Value (In thousands) Face Amount Value Fair Value Hierarchy Credit facility $ 1,046,300 $ 1,032,897 $ 1,021,206 Level 2 4.750% senior notes due 2027 1,000,000 992,208 957,500 Level 1 4.750% senior notes due 2031 900,000 889,889 819,000 Level 1 Other 504 504 504 Level 3 Total debt $ 2,946,804 $ 2,915,498 $ 2,798,210 The estimated fair value of our obligation under assessment arrangements is based on a discounted cash flows approach after giving consideration to the changes in market rates of interest, creditworthiness of both parties and credit spread. The fair value of our note receivable as of December 31, 2023 , was estimated to equal its carrying value after consideration of the expected repayment timing of the remaining balance. The estimated fair value of our Credit Facility is based on a relative value analysis performed on or about September 30, 2024 and December 31, 2023 . The estimated fair values of our senior notes are based on quoted market prices as of September 30, 2024 and December 31, 2023 . The other debt is fixed-rate debt consisting of finance leases with various maturity dates from 2024 to 2025. The other debt is not traded and does not have an observable market input; therefore, we have estimated fair value to be equal to the carrying value for these obligations. There were no transfers between Level 1, Level 2 and Level 3 measurements during the nine months ended September 30, 2024 and 2023 . 19 Table of Contents BOYD GAMING CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued) as of September 30, 2024 and December 31, 2023 and for the three and nine months ended September 30, 2024 and 2023 ______________________________________________________________________________________________________ NOTE 10. SEGMENT INFORMATION The Company has the following four reportable segments: (i) Las Vegas Locals; (ii) Downtown Las Vegas; (iii) Midwest & South; and (iv) Online, (collectively "Reportable Segments"). The Las Vegas Locals, Downtown Las Vegas and Midwest & South segments include the operating results of our gaming entertainment properties. The table below lists the Reportable Segment classification of each of our gaming entertainment properties, which are each also operating segments, 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. The Online segment includes the operating results of Boyd Interactive, including the operating results of Resorts Digital upon acquisition on September 1, 2024, and our online gaming operations through collaborative arrangements with third parties throughout the United States, both of which are also operating segments. 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. 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 Eastside Cannery 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 has remained closed since March 18, 2020, when it closed 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, interest income, 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 gaming entertainment 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 focus their marketing efforts on gaming customers from Hawaii. 20 Table of Contents BOYD GAMING CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued) as of September 30, 2024 and December 31, 2023 and for the three and nine months ended September 30, 2024 and 2023 ______________________________________________________________________________________________________ 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, 2024 Food & Management Gaming Beverage Room Online Fee Other Total (In thousands) Revenue Revenue Revenue Revenue Revenue Revenue Revenue Revenues Las Vegas Locals $ 155,683 $ 20,545 $ 21,749 $ — $ — $ 13,884 $ 211,861 Downtown Las Vegas 33,586 10,622 6,309 — — 2,783 53,300 Midwest & South 440,823 41,561 22,168 — — 17,848 522,400 Online — — — 141,312 — — 141,312 Managed & Other 10,436 — — — 21,030 907 32,373 Total Revenues $ 640,528 $ 72,728 $ 50,226 $ 141,312 $ 21,030 $ 35,422 $ 961,246 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 Nine Months Ended September 30, 2024 Food & Management Gaming Beverage Room Online Fee Other Total (In thousands) Revenue Revenue Revenue Revenue Revenue Revenue Revenue Revenues Las Vegas Locals $ 480,054 $ 66,340 $ 72,202 $ — $ — $ 43,941 $ 662,537 Downtown Las Vegas 104,032 32,122 19,770 — — 8,608 164,532 Midwest & South 1,309,360 123,899 59,796 — — 51,861 1,544,916 Online — — — 417,412 — — 417,412 Managed & Other 32,040 — — — 64,527 3,315 99,882 Total Revenues $ 1,925,486 $ 222,361 $ 151,768 $ 417,412 $ 64,527 $ 107,725 $ 2,889,279 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 21 Table of Contents BOYD GAMING CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued) as of September 30, 2024 and December 31, 2023 and for the three and nine months ended September 30, 2024 and 2023 ______________________________________________________________________________________________________ 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: Three Months Ended Nine Months Ended September 30, September 30, (In thousands) 2024 2023 2024 2023 Adjusted EBITDAR Las Vegas Locals $ 96,414 $ 105,985 $ 316,105 $ 350,540 Downtown Las Vegas 16,511 15,857 56,344 57,876 Midwest & South 196,867 190,588 573,316 591,105 Online 26,005 11,005 63,538 45,028 Managed & Other 22,529 18,997 70,450 60,094 Corporate expense ( 21,694 ) ( 21,611 ) ( 68,444 ) ( 65,314 ) Adjusted EBITDAR 336,632 320,821 1,011,309 1,039,329 Other operating costs and expenses Deferred rent 162 177 486 531 Master lease rent expense 28,160 27,236 83,247 81,163 Depreciation and amortization 70,344 64,797 198,934 188,577 Share-based compensation expense 7,540 8,033 24,765 28,050 Project development, preopening and writedowns 11,347 2,405 21,954 ( 11,268 ) Impairment of assets — — 10,500 4,537 Other operating items, net ( 906 ) 301 4,947 959 Total other operating costs and expenses 116,647 102,949 344,833 292,549 Operating income 219,985 217,872 666,476 746,780 Other expense (income) Interest income ( 392 ) ( 1,585 ) ( 1,241 ) ( 22,445 ) Interest expense, net of amounts capitalized 46,208 42,352 131,466 128,933 Other, net 189 ( 30 ) 289 596 Total other expense, net 46,005 40,737 130,514 107,084 Income before income taxes 173,980 177,135 535,962 639,696 Income tax provision ( 42,852 ) ( 41,902 ) ( 128,516 ) ( 112,278 ) Net income $ 131,128 $ 135,233 $ 407,446 $ 527,418 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: September 30, December 31, (In thousands) 2024 2023 Assets Las Vegas Locals $ 1,618,234 $ 1,634,732 Downtown Las Vegas 289,410 295,494 Midwest & South 3,814,474 3,805,301 Online 184,678 155,356 Managed & Other 115,803 124,161 Corporate 279,832 258,082 Total Assets $ 6,302,431 $ 6,273,126 NOTE 11. SUBSEQUENT EVENTS We have evaluated all events or transactions that occurred after September 30, 2024 . During this period, up to the filing date, we did not identify any subsequent events, the effects of which would require disclosure or adjustment to our financial position or results of operations. 22 Table of Contents