Boyd Gaming Reports Second-Quarter 2014 Results

LAS VEGAS, July 31, 2014 /PRNewswire/ -- Boyd Gaming Corporation (NYSE: BYD) today reported financial results for the second quarter ended June 30, 2014.  

Boyd Gaming reported second-quarter 2014 net revenues of $722.5 million, compared to $738.7 million during the same quarter in 2013. Total Adjusted EBITDA(1)  was $160.6 million, up slightly from $160.2 million in the year-ago quarter.  Adjusted EBITDA in the current quarter included a benefit of $11.8 million related to Borgata's recent property tax settlement with the City of Atlantic City.  

Keith Smith, President and Chief Executive Officer of Boyd Gaming, said: "Our second-quarter results were below expectations, principally due to continued weakness in casual play.  We are actively addressing this on several fronts, including strengthening our senior management team, refining our marketing strategies, and repositioning targeted non-gaming amenities.  We also continue to strengthen our balance sheet, and are on track for $200 million in additional debt reduction in 2014. Despite a tough operating environment, we remain diligently focused on improving our performance and generating long-term growth."    

Adjusted Earnings(1) for the second quarter 2014 were $5.2 million, or $0.05 per share, compared to a loss of $0.1 million, or breakeven on a per-share basis, for the same period in 2013.  The calculations of Adjusted Earnings and Adjusted Earnings per share are presented in a table at the end of this press release.

On a GAAP basis, the Company reported net income of $0.7 million, or $0.01 per share, for the second quarter 2014, compared to net income of $11.6 million, or $0.13 per share, for the year-ago period.  The prior-year period included income from discontinued operations of $11.8 million, net of tax, reflecting the operating results and the gain on the sale of Dania Jai-Alai, which was sold in the second quarter of 2013.

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

Operations Review

Las Vegas Locals
In the Las Vegas Locals segment, second-quarter 2014 net revenues were $148.3 million, compared to $149.7 million in the year-ago quarter, while second-quarter 2014 Adjusted EBITDA was $36.6 million versus $38.7 million in the second quarter of 2013.  Revenue and EBITDA during the quarter benefitted from continued growth in our non-gaming business, offset by lower hold and significantly higher utility costs.

Downtown  
In the Downtown Las Vegas segment, net revenues were $55.6 million in the second quarter of 2014, versus $56.1 million in the year-ago period.  Adjusted EBITDA was $8.6 million in the current period, compared to $9.3 million in the second quarter of 2013. Though the entire Fremont Street area saw unusually low visitation levels in May and June, we increased our market share in Downtown Las Vegas during the quarter. Visitation has since recovered.

Midwest and South; Peninsula
In the Midwest and South segment, net revenues were $209.1 million, compared to $224.3 million in the second quarter of 2013.  Adjusted EBITDA was $42.2 million versus $48.6 million in the year-ago period.

Increased gaming capacity impacted our operations in the Biloxi, Shreveport and central Illinois markets.  These markets accounted for virtually all of the EBITDA decline in the Midwest and South segment. 

During the second quarter of 2014, the Peninsula segment reported net revenues of $127.8 million and Adjusted EBITDA of $45.3 million.  This compares to net revenues of $135.8 million and Adjusted EBITDA of $48.3 million in the second quarter of 2013. 

Kansas Star's year-over-year EBITDA trends improved from the first quarter to the second.  On a year-over-year basis, Kansas Star increased margins in the second quarter by 255 basis points to 45.2%. The Company also continued the introduction of the B Connected player loyalty program at the five Peninsula properties, and expects to complete the rollout by the end of the third quarter of 2014.   

Borgata
Borgata, the Company's 50% joint venture, reported second-quarter 2014 net revenues of $181.9 million, including $6.7 million from its online gaming operations.  This compares to $172.9 million in revenues reported in the year-ago period. Adjusted EBITDA, which included an $11.8 million property tax-related benefit, was $42.6 million in the second quarter of 2014, up from $27.8 million in the year-ago period.  Excluding the tax-related benefit, Borgata's Adjusted EBITDA rose nearly 11% year-over-year.

The property saw growth in slots, table games and hotel revenues. Borgata continued to outperform the competition, growing its share of the Atlantic City gaming market by more than 240 basis points during the quarter.

Year-To-Date Results
For the six months ended June 30, 2014, Boyd Gaming reported net revenues of $1.43 billion, compared to $1.47 billion in the prior-year period.  Total Adjusted EBITDA was $305.1 million, versus $323.7 million in the second quarter of 2013.

Adjusted Earnings for the current period were $1.1 million, or $0.01 per share, compared to $1.3 million, or $0.01 per share, during the first six months of 2013.

On a GAAP basis, the Company reported a net loss of $5.5 million, or $0.05 per share, for the six months ended June 30, 2014.  This compares to net income of $4.3 million, or $0.05 per share, in the year-ago period.  The prior-year period included income of $10.8 million, after tax, related to discontinued operations.

Balance Sheet Statistics
As of June 30, 2014, Boyd Gaming had cash on hand of $162.5 million, including $28.0 million related to Peninsula and $32.8 million related to Borgata.

Total debt was $4.33 billion, of which $1.12 billion was related to Peninsula and $804.7 million was related to Borgata. 

Full-Year Guidance
Given current business trends, Boyd Gaming is revising its previously provided full-year guidance. For the full-year 2014, the Company now projects total Adjusted EBITDA of $580 million to $600 million.  This revised guidance assumes that results for the third and fourth quarter will be similar to comparable periods last year.

Conference Call Information
Boyd Gaming will host its conference call to discuss second-quarter 2014 results today, July 31, at 5:00 p.m. Eastern.  The conference call number is (888) 317-6003, passcode 2654057.  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=100136

Following the call's completion, a replay will be available by dialing (877) 344-7529 today, July 31, beginning at 7:00 p.m. Eastern and continuing through Friday, August 8, at 9 a.m. Eastern.  The conference number for the replay will be 10050177.  The replay will also be available on the Internet at www.boydgaming.com.

 

 

 













BOYD GAMING CORPORATION

Condensed Consolidated Statements of Operations

(Unaudited)


























Three Months Ended


Six Months Ended


June 30,


June 30,

(In thousands, except per share data)

2014


2013


2014


2013

Revenues








Gaming

$

618,914


$

627,926


$

1,227,671


$

1,260,485

Food and beverage

110,353


112,804


216,996


224,578

Room

70,362


67,154


134,742


131,009

Other

41,173


41,898


80,133


81,209

Gross revenues

840,802


849,782


1,659,542


1,697,281

Less promotional allowances

118,268


111,034


228,659


222,949

Net revenues

722,534


738,748


1,430,883


1,474,332









Costs and expenses








Gaming

288,214


287,801


573,388


585,063

Food and beverage

61,196


64,242


118,465


124,295

Room

14,481


15,955


27,651


29,055

Other

30,362


31,199


58,154


59,373

Selling, general and administrative

111,379


127,000


236,058


251,028

Maintenance and utilities

43,023


41,042


86,287


80,251

Depreciation and amortization

65,898


70,318


132,077


140,356

Corporate expense

17,621


15,148


37,541


30,504

Preopening expenses

1,790


789


2,574


3,154

Impairments of assets

293


5,032


1,926


5,032

Asset transactions costs

1,859


614


2,014


3,627

Other operating charges and credits, net

(561)


229


(747)


1,795

Total costs and expenses

635,555


659,369


1,275,388


1,313,533

Operating income

86,979


79,379


155,495


160,799









Other expense (income)








Interest income

(470)


(570)


(946)


(1,226)

Interest expense, net of amounts capitalized

75,296


88,126


150,799


183,808

Loss on early extinguishments of debt

904


2,372


1,058


2,372

Other, net

670


47


382


(471)

Total other expense, net

76,400


89,975


151,293


184,483









Income (loss) from continuing operations before income 
    taxes

10,579


(10,596)


4,202


(23,684)

Income taxes

(5,241)


4,102


(10,089)


6,526

Income (loss) from continuing operations, net of tax

5,338


(6,494)


(5,887)


(17,158)

Income from discontinued operations, net of tax


11,753



10,790

Net income (loss)

5,338


5,259


(5,887)


(6,368)

Net (income) loss attributable to noncontrolling interest

(4,669)


6,368


374


10,711

Net income (loss) attributable to Boyd Gaming Corporation

$

669


$

11,627


$

(5,513)


$

4,343









Basic net income (loss) per common share








Continuing operations

$

0.01


$


$

(0.05)


$

(0.07)

Discontinued operations


0.13



0.12

Basic net income (loss) per common share

$

0.01


$

0.13


$

(0.05)


$

0.05

Weighted average basic shares outstanding

109,884


89,230


109,819


88,606









Diluted net income (loss) per common share








Continuing operations

$

0.01


$


$

(0.05)


$

(0.07)

Discontinued operations


0.13



0.12

Diluted net income (loss) per common share

$

0.01


$

0.13


$

(0.05)


$

0.05

Weighted average diluted shares outstanding

110,813


90,265


109,819


89,447

 













BOYD GAMING CORPORATION

SUPPLEMENTAL INFORMATION

Reconciliation of Adjusted EBITDA to Operating Income (Loss)

(Unaudited)


























Three Months Ended


Six Months Ended


June 30,


June 30,

(In thousands)

2014


2013


2014


2013

Net Revenues by Reportable Segment








Las Vegas Locals

$

148,270


$

149,690


$

299,713


$

302,517

Downtown Las Vegas

55,552


56,128


111,285


110,211

Midwest and South

209,104


224,273


420,740


453,390

Peninsula

127,754


135,780


250,027


269,693

Borgata

181,854


172,877


349,118


338,521

  Net revenues

$

722,534


$

738,748


$

1,430,883


$

1,474,332









Adjusted EBITDA by Reportable Segment








Las Vegas Locals

$

36,581


$

38,723


$

76,588


$

77,928

Downtown Las Vegas

8,551


9,297


17,878


16,408

Midwest and South

42,199


48,625


86,297


98,307

Peninsula

45,282


48,323


90,043


99,035

  Wholly owned property Adjusted EBITDA

132,613


144,968


270,806


291,678

Corporate expense (1)

(14,625)


(12,628)


(28,795)


(24,266)

  Wholly owned Adjusted EBITDA

117,988


132,340


242,011


267,412

Borgata

42,598


27,847


63,044


56,252

  Adjusted EBITDA

160,586


160,187


305,055


323,664









Other operating costs and expenses








Deferred rent

904


958


1,811


1,915

Depreciation and amortization

65,898


70,318


132,077


140,356

Preopening expenses

1,790


789


2,574


3,154

Share-based compensation expense

3,424


2,894


9,905


6,985

Impairments of assets

293


5,032


1,926


5,032

Asset transactions costs

1,859


614


2,014


3,627

Other operating charges and credits, net

(561)


203


(747)


1,796

Total other operating costs and expenses

73,607


80,808


149,560


162,865

Operating income

86,979


79,379


155,495


160,799

Other non-operating items








Interest expense, net

74,826


87,556


149,853


182,582

Loss on early extinguishments of debt

904


2,372


1,058


2,372

Other, net

670


47


382


(471)

Total other non-operating items, net

76,400


89,975


151,293


184,483

Income (loss) from continuing operations before income taxes

10,579


(10,596)


4,202


(23,684)

Income taxes

(5,241)


4,102


(10,089)


6,526

Income (loss) from continuing operations, net of tax

5,338


(6,494)


(5,887)


(17,158)

Income from discontinued operations, net of tax


11,753



10,790

Net income (loss)

5,338


5,259


(5,887)


(6,368)

Net (income) loss attributable to noncontrolling interest

(4,669)


6,368


374


10,711

Net income (loss) attributable to Boyd Gaming Corporation

$

669


$

11,627


$

(5,513)


$

4,343

_______________________________________________

(1) Reconciliation of corporate expense:














Three Months Ended


Six Months Ended


June 30,


June 30,

(In thousands)

2014


2013


2014


2013

Corporate expense as reported on Consolidated Statements of
   Operations

$

17,621


$

15,148


$

37,541


$

30,504

Corporate share-based compensation expense

(2,996)


(2,520)


(8,746)


(6,238)

Corporate expense as reported on the above table

$

14,625


$

12,628


$

28,795


$

24,266

 













BOYD GAMING CORPORATION

SUPPLEMENTAL INFORMATION

Reconciliation of Net Income (Loss) to Adjusted Earnings (Loss) and Net Income (Loss) Per Share to Adjusted Earnings (Loss) Per Share

(Unaudited)


























Three Months Ended


Six Months Ended


June 30,


June 30,

(In thousands, except per share data)

2014


2013


2014


2013

Net income (loss) attributable to Boyd Gaming Corporation

$

669


$

11,627


$

(5,513)


$

4,343

Less: income from discontinued operations, net of tax (1)


(11,753)



(10,790)

Adjusted net income (loss) attributable to Boyd Gaming Corporation

669


(126)


(5,513)


(6,447)









Pretax adjustments related to Boyd Gaming:








  Preopening expenses, excluding impact of LVE

1,554


735


2,305


5,033

  Loss on early extinguishments of debt

904


2,372


1,058


2,372

  Impairments of assets

293



1,926


  Asset transactions costs

1,858


544


2,015


3,223

  Other operating charges and credits, net

(561)


229


(345)


1,795

  Other (income) loss

670



295


(817)









Pretax adjustments related to Borgata:








  Preopening expenses

236


54


269


54

  Valuation adjustments related to consolidation, net

(634)


(243)


(1,268)


(502)

  Impairments of assets


5,032



5,032

  Asset transactions costs

1


70


(1)


404

  Other operating charges and credits, net



(402)


 Total adjustments

4,321


8,793


5,852


16,594









Income tax effect for above adjustments

18


(6,337)


63


(6,368)

Impact on noncontrolling interest, net

199


(2,458)


703


(2,496)

Adjusted earnings (loss)

$

5,207


$

(128)


$

1,105


$

1,283









Net income (loss) per share attributable to Boyd Gaming Corporation

$

0.01


$

0.13


$

(0.05)


$

0.05

Less: income from discontinued operations, net of tax (1)


(0.13)



(0.12)

Adjusted net income (loss) per share attributable to Boyd Gaming
  Corporation

0.01



(0.05)


(0.07)

Pretax adjustments related to Boyd Gaming:








  Preopening expenses, excluding impact of LVE

0.01


0.01


0.02


0.06

  Loss on early extinguishments of debt

0.01


0.02


0.01


0.02

  Impairments of assets



0.01


  Asset transactions costs

0.02


0.01


0.02


0.04

  Other operating charges and credits, net




0.02

  Other (income) loss

0.01




(0.01)









Pretax adjustments related to Borgata:








  Preopening expenses




  Valuation adjustments related to consolidation, net

(0.01)



(0.01)


(0.01)

  Impairments of assets


0.06



0.06

  Asset transactions costs




  Other operating charges and credits, net




 Total adjustments

0.04


0.10


0.05


0.18









Income tax effect for above adjustments


(0.07)



(0.07)

Impact on noncontrolling interest, net


(0.03)


0.01


(0.03)

Adjusted earnings per share

$

0.05


$


$

0.01


$

0.01









Weighted average shares outstanding

110,813


89,230


109,819


89,447

_______________________________________________

(1)

Results for the prior year period are adjusted to exclude the financial results of Dania Jai-Alai, which was sold during the second quarter of 2013.

 























BOYD GAMING CORPORATION

SUPPLEMENTAL INFORMATION

Condensed Consolidating Statements of Operations

Three Months Ended June 30, 2014

(Unaudited)

























Boyd Gaming Wholly Owned







(In thousands, except per share data)


Excluding

Peninsula

Segment


Peninsula

Segment


Eliminations


Total


Borgata (1)


Eliminations


Boyd Gaming

Consolidated

Revenues















Gaming


$

334,090


$

118,225


$


$

452,315


$

166,599


$


$

618,914

Food and beverage


66,679


9,610



76,289


34,064



110,353

Room


40,760




40,760


29,602



70,362

Other


30,861


4,825


(4,821)


30,865


10,308



41,173

Gross revenues


472,390


132,660


(4,821)


600,229


240,573



840,802

Less promotional allowances


54,643


4,906



59,549


58,719



118,268

  Net revenues


417,747


127,754


(4,821)


540,680


181,854



722,534
















Costs and expenses















Gaming


166,260


56,954



223,214


65,000



288,214

Food and beverage


36,786


6,165



42,951


18,245



61,196

Room


10,788




10,788


3,693



14,481

Other


18,338


8,201


(4,821)


21,718


8,644



30,362

Selling, general and administrative


70,231


12,593



82,824


28,555



111,379

Maintenance and utilities


24,520


3,382



27,902


15,121



43,023

Depreciation and amortization


33,443


18,325



51,768


14,130



65,898

Corporate expense


17,236


385



17,621




17,621

Preopening expenses


1,130


424



1,554


236



1,790

Impairments of assets


293




293




293

Asset transactions costs


1,755


103



1,858


1



1,859

Other, net


(578)


17



(561)




(561)

  Total costs and expenses


380,202


106,549


(4,821)


481,930


153,625



635,555
















Operating income from Borgata


14,115




14,115



(14,115)

















Operating income


51,660


21,205



72,865


28,229


(14,115)


86,979
















Other expense (income)















Interest income



(470)



(470)




(470)

Interest expense, net of amounts capitalized


38,293


19,175



57,468


17,828



75,296

Loss on early extinguishments of debt



904



904




904

Other, net


756


(86)



670




670

Other non-operating expenses from Borgata, net


9,446




9,446



(9,446)


     Total other expense, net


48,495


19,523



68,018


17,828


(9,446)


76,400
















Income (loss) from continuing

   operations before taxes


3,165


1,682



4,847


10,401


(4,669)


10,579

Income taxes


(3,686)


(492)



(4,178)


(1,063)



(5,241)

Income (loss) from continuing

   operations, net of tax


(521)


1,190



669


9,338


(4,669)


5,338

Income (loss) from discontinued operations, net of tax








Net income (loss)


(521)


1,190



669


9,338


(4,669)


5,338

Net income attributable to noncontrolling interest







(4,669)


(4,669)

Net income (loss) attributable to Boyd Gaming Corporation


$

(521)


$

1,190


$


$

669


$

9,338


$

(9,338)


$

669



















BOYD GAMING CORPORATION

SUPPLEMENTAL INFORMATION

Condensed Consolidating Statements of Operations

Three Months Ended June 30, 2014

(Unaudited)

























Boyd Gaming Wholly Owned








(In thousands, except per share data)


Excluding

Peninsula

Segment


Peninsula

Segment


Eliminations


Total


Borgata (1)


Eliminations


Boyd Gaming

Consolidated

Basic net income per common share















Continuing operations








$

0.01






$

0.01

Discontinued operations













    Basic net income per common share








$

0.01






$

0.01

Weighted average basic shares outstanding








109,884






109,884
















Diluted net income per common share















Continuing operations








$

0.01






$

0.01

Discontinued operations













    Diluted net income per common share








$

0.01






$

0.01

Weighted average diluted shares outstanding








110,813






110,813

_______________________________________________

(1)

Borgata's financial results include the impact of certain valuation adjustments made upon consolidation. These valuation adjustments are not pushed down to Borgata and are therefore not reflected in Borgata's standalone financial statements.

 























BOYD GAMING CORPORATION

SUPPLEMENTAL INFORMATION

Condensed Consolidating Statements of Operations

Three Months Ended June 30, 2013

(Unaudited)

























Boyd Gaming Wholly Owned







(In thousands, except per share data)


Excluding

Peninsula

Segment


Peninsula Segment


Eliminations


Total


Borgata (1)


Eliminations


Boyd Gaming

Consolidated

Revenues















Gaming


$

351,927


$

126,617


$


$

478,544


$

149,382


$


$

627,926

Food and beverage


67,606


10,075



77,681


35,123



112,804

Room


38,679




38,679


28,475



67,154

Other


31,584


4,570


(5,106)


31,048


10,850



41,898

Gross revenues


489,796


141,262


(5,106)


625,952


223,830



849,782

Less promotional allowances


54,600


5,481



60,081


50,953



111,034

  Net revenues


435,196


135,781


(5,106)


565,871


172,877



738,748
















Costs and expenses















Gaming


172,811


59,798



232,609


55,192



287,801

Food and beverage


36,369


6,814



43,183


21,059



64,242

Room


10,749




10,749


5,206



15,955

Other


18,457


8,350


(5,106)


21,701


9,498



31,199

Selling, general and administrative


73,016


14,362



87,378


39,622



127,000

Maintenance and utilities


23,348


3,241



26,589


14,453



41,042

Depreciation and amortization


32,547


22,268



54,815


15,503



70,318

Corporate expense


14,367


781



15,148




15,148

Preopening expenses


644


91



735


54



789

Impairments of assets






5,032



5,032

Asset transactions costs


491


53



544


70



614

Other, net


94


135



229




229

  Total costs and expenses


382,893


115,893


(5,106)


493,680


165,689



659,369
















Operating income from Borgata


3,594




3,594



(3,594)

















Operating income


55,897


19,888



75,785


7,188


(3,594)


79,379
















Other expense (income)















Interest income


(17)


(553)



(570)




(570)

Interest expense, net of amounts capitalized


46,469


20,813




67,282


20,844



88,126

Loss on early extinguishments of debt


2,372




2,372




2,372

Other, net


(2,793)


2,840



47




47

Other non-operating expenses from Borgata, net


9,961




9,961



(9,961)


     Total other expense, net


55,992


23,100



79,092


20,844


(9,961)


89,975
















Income (loss) from continuing

   operations before taxes


(95)


(3,212)



(3,307)


(13,656)


6,367


(10,596)

Income taxes


5,381


(2,200)



3,181


921



4,102

Income (loss) from continuing

   operations, net of tax


5,286


(5,412)



(126)


(12,735)


6,367


(6,494)

Income from discontinued operations, net of tax


11,753




11,753




11,753

Net income (loss)


17,039


(5,412)



11,627


(12,735)


6,367


5,259

Net loss attributable to noncontrolling interest







6,368


6,368

Net income (loss) attributable to Boyd Gaming Corporation


$

17,039


$

(5,412)


$


$

11,627


$

(12,735)


$

12,735


$

11,627
































BOYD GAMING CORPORATION

SUPPLEMENTAL INFORMATION

Condensed Consolidating Statements of Operations

Three Months Ended June 30, 2013

(Unaudited)











Boyd Gaming Wholly Owned








(In thousands, except per share data)


Excluding

Peninsula

Segment


Peninsula Segment


Eliminations


Total


Borgata (1)


Eliminations


Boyd Gaming

Consolidated

Basic net income per common share















Continuing operations








$






$

Discontinued operations








0.13






0.13

  Basic net income per common share








$

0.13






$

0.13

Weighted average basic shares outstanding








89,230






89,230
















Diluted net income per common share















Continuing operations








$






$

Discontinued operations








0.13






0.13

  Diluted net income per common share








$

0.13






$

0.13

Weighted average diluted shares outstanding








90,265






90,625

_______________________________________________

(1)

Borgata's financial results include the impact of certain valuation adjustments made upon consolidation. These valuation adjustments are not pushed down to Borgata and are therefore not reflected in Borgata's standalone financial statements.