Boyd Gaming Reports First-Quarter Results - Midwest and South Drives Fifth Straight Quarter of Wholly-Owned EBITDA Growth -

- IP Posts Double-Digit EBITDA Gains in First Full Quarter After Acquisition -

LAS VEGAS, April 24, 2012 /PRNewswire/ -- Boyd Gaming Corporation (NYSE: BYD) today reported financial results for the first quarter ended March 31, 2012.

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Net revenues were $633.1 million for the first quarter 2012, an increase of 12.1% from $564.9 million during the same quarter in 2011. Total Adjusted EBITDA(1) rose 19.7% to $133.8 million, compared to $111.7 million in the prior year. These results include the operations of the IP Casino Resort Spa, acquired by the Company on October 4, 2011.

Boyd Gaming's wholly-owned business, including the IP, reported first-quarter 2012 net revenues of $456.9 million, up 15.4% from the year-ago period. On a same-store basis, net revenue in our wholly-owned business grew for the fourth consecutive quarter. Wholly-owned Adjusted EBITDA rose 18.6% to $94.9 million, up from $80.1 million in the year-ago period. Borgata, the Company's 50% joint venture, reported first-quarter 2012 net revenues of $176.2 million, up 4.2% from the first quarter of 2011, while Adjusted EBITDA at the property increased 22.7% to $38.9 million.

For the first quarter 2012, the Company reported net income of $5.8 million, or $0.07 per share, compared to a net loss of $3.5 million, or $0.04 per share, in the same period last year. Adjusted Earnings(1) for the first quarter 2012 were $8.4 million, or $0.10 per share, compared to a loss of $1.2 million, or $0.01 per share, for the same period in 2011. Certain pre-tax items included in Adjusted Earnings for the first quarter of 2012 resulted in a net increase of $4.0 million ($2.6 million, net of tax and noncontrolling interest, or $0.03 per share). By comparison, pre-tax items included in Adjusted Earnings for the first quarter 2011 resulted in a net increase of $6.0 million ($2.3 million, net of tax and noncontrolling interest, or $0.03 per share). Pre-tax items included in Adjusted Earnings are listed in a table at the end of this press release.

"Our first quarter results were led by strong performances at our operations outside of Nevada, with double-digit EBITDA growth at a majority of these properties," said Keith Smith, President and Chief Executive Officer of Boyd Gaming. "We were particularly pleased that the IP was accretive to EPS during the first full quarter since we acquired it, generating significant EBITDA growth even before most synergies have been fully realized. These results were only a preview of the IP's full potential, and show the tremendous value of this acquisition."

Smith continued, "In Atlantic City, Borgata contributed significantly to our positive results as the property reinforced its position as the leading resort in the market, posting substantial growth against heightened regional competition. While it is early, we would note that we have not seen any meaningful impact on Borgata's business from the opening of a new competitor. Looking ahead on a Companywide basis, we expect that the positive performance we posted in the first quarter will continue."

(1) See footnotes at the end of the release for additional information relative to non-GAAP financial measures.

Key Operations Review

Las Vegas Locals

In the Las Vegas Locals segment, first-quarter 2012 net revenues were $154.8 million, up slightly from the first quarter of 2011. First-quarter 2012 Adjusted EBITDA declined 2.9% to $38.5 million. Business volumes remained steady year-over-year; however, EBITDA was impacted by slightly elevated expenses associated with targeted marketing programs, as well as lower year-over-year table game hold at several properties.

Downtown

The Company's Downtown Las Vegas properties generated net revenues of $57.0 million for the first quarter 2012, up 2.4% from $55.7 million in the first quarter 2011. Adjusted EBITDA was $8.4 million, down 6.4% from the year-ago quarter. Revenues rose for the fifth consecutive quarter, driven by strength in our Hawaiian customer base. However, EBITDA was impacted by higher fuel expense associated with our charter service.

Midwest and South

In the Midwest and South region, net revenues were $243.7 million, up 32.4% from the year-ago quarter, while Adjusted EBITDA rose 41.1% to $58.1 million. Growth in EBITDA was broadbased, led by strong performances at Delta Downs, Treasure Chest and the IP. The region also benefited from revenue growth at most of our properties and continued efficiencies in operations, as EBITDA margins rose by 150 basis points to 23.9%.

The IP contributed $49.0 million in net revenues and $12.7 million in EBITDA to regional results during the quarter. Net revenues at the property declined 4.6% from the first quarter of 2011, while EBITDA rose 10.0%. The gains in EBITDA on lower revenues reflect more effective marketing programs, the initial benefits of efficiency initiatives, and more productive overall management of the property. We expect continued improvements at the IP in the quarters ahead, as we fully realize the benefits of anticipated synergies and the impact of our cross-property marketing program, B Connected, which will be rolled out early next month.

Borgata

Borgata's net revenues for the first quarter 2012 were $176.2 million, up 4.2% from the first quarter 2011, while Adjusted EBITDA rose 22.7% to $38.9 million in the same period. The gains were driven by increases in table game hold percentage year-over-year, as well as increased non-gaming revenue. Improvements in non-gaming revenue were led by our hotel business – which posted increases in both occupied room nights and cash ADRs – as well as growth in our food and beverage business. Borgata also benefited from greater overall operating efficiencies, including lower customer reinvestment, as profit margins improved by more than 330 basis points.

Commenting on Company operations, Paul Chakmak, Executive Vice President and Chief Operating Officer, said, "Our Midwest and South properties posted an exceptional operating performance in the first quarter, as we continued to grow revenues, market share and margins. In Nevada, business volumes are holding steady, and we anticipate we will see more substantial growth once economic recovery takes firmer hold. Our focus on delivering high-value entertainment experiences and superior guest service is a significant competitive advantage, and continues to drive overall growth in our operations."

Conference Call Information

Boyd Gaming will host its first-quarter 2012 conference call today, April 24, at 12:00 p.m. Eastern, on which the Company will provide guidance for the second quarter 2012. The conference call number is (866) 524-3160. Please call up to 15 minutes in advance to ensure you are connected prior to the start of the call.

The conference call will also be available live on the Internet at www.boydgaming.com, or: http://www.videonewswire.com/event.asp?id=86536

Following the call's completion, a replay will be available by dialing (877) 344-7529 today, April 24, beginning at 2:00 p.m. Eastern and continuing through Wednesday, May 2, at 9 a.m. Eastern. The conference number for the replay will be 10013043. The replay will also be available on the Internet at www.boydgaming.com.

The results of IP are included in our condensed consolidated statements of operations for the three months ended March 31, 2012.

 


Three Months Ended


March 31,


2012

2011


(In thousands, except per share data)

Revenues



Gaming

$         535,748

$         481,935

Food and beverage

106,132

92,077

Room

65,997

56,591

Other

35,832

33,031

Gross revenues

743,709

663,634

Less promotional allowances

110,626

98,688

    Net revenues

633,083

564,946




Costs and expenses



Gaming

248,955

226,609

Food and beverage

54,078

47,568

Room

14,135

12,821

Other

26,061

26,239

Selling, general and administrative

109,717

95,788

Maintenance and utilities

38,763

37,415

Depreciation and amortization

50,014

50,584

Corporate expense

12,871

13,280

Preopening expenses

1,660

1,831

Other operating charges, net

247

4,707

     Total costs and expenses

556,501

516,842

Operating income

76,582

48,104




Other expense (income)



Interest income

(4)

(5)

Interest expense, net of amounts capitalized

63,828

57,291

Fair value adjustment of derivative instruments

-

217

Loss on early retirements of debt, net

-

20

     Total other expense, net

63,824

57,523




Income (loss) before income taxes

12,758

(9,419)

Income taxes

(6,283)

3,108

Net income (loss)

6,475

(6,311)

Noncontrolling interest

(623)

2,790

Net income (loss) attributable to Boyd Gaming Corporation

$             5,852

$           (3,521)




Basic net income (loss) per common share

$               0.07

$             (0.04)




Weighted average basic shares outstanding

87,530

87,157




Diluted net income (loss) per common share

$               0.07

$             (0.04)




Weighted average diluted shares outstanding

87,987

87,157

 

The following table sets forth the impact of the consolidation of Borgata and LVE during the three months ended March 31, 2012. The wholly-owned column reflects the equity method of accounting for Borgata. The consolidating columns are presented for purposes of additional disclosure and as a reconciliation to the current GAAP presentation of Boyd Gaming Corporation.

 


Three Months Ended March 31, 2012


Boyd Gaming  Wholly-Owned


Borgata


Borgata Eliminations


Boyd/Borgata Subtotal


LVE (Variable Interest Entity)


LVE Eliminations


Boyd Gaming Consolidated


(in thousands, except per share data)

Revenues














Gaming

$         380,295


$       155,453


$               -


$        535,748


$                 -


$             -


$       535,748

Food and beverage

69,886


36,246


-


106,132


-


-


106,132

Room

38,840


27,157


-


65,997


-


-


65,997

Other

27,254


8,578


-


35,832


2,724


(2,724)


35,832

Gross revenues

516,275


227,434


-


743,709


2,724


(2,724)


743,709

Less promotional allowances

59,342


51,284


-


110,626


-


-


110,626

     Net revenues

456,933


176,150


-


633,083


2,724


(2,724)


633,083















Costs and expenses














Gaming

185,907


63,048


-


248,955


-


-


248,955

Food and beverage

36,237


17,841


-


54,078


-


-


54,078

Room

10,933


3,202


-


14,135


-


-


14,135

Other

19,730


6,331


-


26,061


-


-


26,061

Selling, general and administrative

77,175


32,539


-


109,714


3


-


109,717

Maintenance and utilities

24,456


14,307


-


38,763


-


-


38,763

Depreciation and amortization

34,884


15,130


-


50,014


-


-


50,014

Corporate expense

12,871


-


-


12,871


-


-


12,871

Preopening expenses

4,252


132


-


4,384


-


(2,724)


1,660

Other operating charges, net

275


(28)


-


247


-


-


247

     Total costs and expenses

406,720


152,502


-


559,222


3


(2,724)


556,501















Operating income from Borgata

11,824




(11,824)


-


-


-


-

Operating income

62,037


23,648


(11,824)


73,861


2,721


-


76,582















Other expense (income)














Interest income

(4)


-


-


(4)


-


-


(4)

Interest expense, net of amounts capitalized

39,953


20,482


-


60,435


3,393


-


63,828

Other non-operating expenses from Borgata, net

10,530


-


(10,530)


-


-


-


-

     Total other expense, net

50,479


20,482


(10,530)


60,431


3,393


-


63,824















Income (loss) before income taxes

11,558


3,166


(1,294)


13,430


(672)


-


12,758

Income taxes

(5,706)


(577)


-


(6,283)


-


-


(6,283)















Net income (loss)

5,852


2,589


(1,294)


7,147


(672)


-


6,475

Net income (loss) attributable to noncontrolling interest

-


-


(1,295)


(1,295)


672


-


(623)

Net income (loss) attributable to Boyd Gaming

Corp

$            5,852


$           2,589


$         (2,589)


$           5,852


$                 -


$             -


$           5,852















Basic net income (loss) per common share

$              0.07












$            0.07

Weighted average basic shares outstanding

87,530












87,530

Diluted net income (loss) per common share

$              0.07












$            0.07

Weighted average diluted shares outstanding

87,987












87,987

 

The following table sets forth the impact of the consolidation of Borgata and LVE during the three months ended March 31, 2011. The wholly-owned column reflects the equity method of accounting for Borgata. The consolidating columns are presented for purposes of additional disclosure and as a reconciliation to the current GAAP presentation of Boyd Gaming Corporation.

 


Three Months Ended March 31, 2011


Boyd Gaming  Wholly-Owned


Borgata


Borgata Eliminations


Boyd/Borgata Subtotal


LVE (Variable Interest Entity)


LVE Eliminations


Boyd Gaming Consolidated


(In thousands, except per share data)















Revenues














Gaming

$         330,079


$       151,856


$               -


$        481,935


$                 -


$             -


$       481,935

Food and beverage

57,612


34,465


-


92,077


-


-


92,077

Room

30,300


26,291


-


56,591


-


-


56,591

Other

23,727


9,304


-


33,031


2,641


(2,641)


33,031

Gross revenues

441,718


221,916


-


663,634


2,641


(2,641)


663,634

Less promotional allowances

45,862


52,826


-


98,688


-


-


98,688

     Net revenues

395,856


169,090


-


564,946


2,641


(2,641)


564,946















Costs and expenses














Gaming

161,633


64,976


-


226,609


-


-


226,609

Food and beverage

31,643


15,925


-


47,568


-


-


47,568

Room

9,684


3,137


-


12,821


-


-


12,821

Other

19,167


7,072


-


26,239


-


-


26,239

Selling, general and administrative

64,941


30,847


-


95,788


-


-


95,788

Maintenance and utilities

21,067


15,451


-


36,518


897


-


37,415

Depreciation and amortization

31,718


18,866


-


50,584


-


-


50,584

Corporate expense

13,280


-


-


13,280


-


-


13,280

Preopening expenses

4,472


-


-


4,472


-


(2,641)


1,831

Other operating charges, net

(309)


5,016


-


4,707


-


-


4,707

     Total costs and expenses

357,296


161,290


-


518,586


897


(2,641)


516,842















Operating income from Borgata

3,900


-


(3,900)


-


-


-


-

Operating income

42,460


7,800


(3,900)