Boyd Gaming reports Q3 results

2 November 2012

LAS VEGAS, Nevada -- (PRESS RELEASE) -- Boyd Gaming Corporation (BYD) today reported financial results for the third quarter ended September 30, 2012.

Net revenues were $613.3 million for the third quarter 2012, an increase of 3.9% from $590.2 million during the same quarter in 2011. Total Adjusted EBITDA(1) for the quarter was $103.6 million, compared to $122.0 million in the prior year. Results for the third quarter 2012 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 third-quarter 2012 net revenues of $426.2 million, up 9.8% from the year-ago period. Wholly-owned Adjusted EBITDA for the quarter was $70.3 million, compared to $71.8 million in the year-ago period. The Adjusted EBITDA comparison was adversely impacted by business disruptions from Hurricane Isaac and a favorable property tax adjustment in the year-ago quarter. Borgata, the Company's 50% joint venture, reported third-quarter 2012 net revenues of $187.1 million, compared to $202.0 million in the third quarter of 2011. Adjusted EBITDA at the property was $33.4 million, compared to $50.3 million in the year-ago quarter. Both revenue and Adjusted EBITDA were impacted by lower table game hold percentage and volume.

For the third quarter 2012, the Company reported a net loss of $15.8 million, or $0.18 per share, compared to net income of $3.1 million, or $0.04 per share, in the same period last year. Net results reflect lower operating income and increased interest expense, including interest related to the Peninsula Gaming acquisition financing.

Adjusted Earnings(1) for the third quarter 2012 reflect a loss of $9.4 million, or $0.11 per share, compared to income of $4.6 million, or $0.05 per share, for the same period in 2011. Certain pre-tax items included in Adjusted Earnings for the third quarter of 2012 resulted in a net increase of $7.1 million ($6.3 million, net of tax and noncontrolling interest, or $0.07 per share). By comparison, pre-tax items included in Adjusted Earnings for the third quarter 2011 resulted in a net increase of $2.4 million ($1.5 million, net of tax and noncontrolling interest, or $0.01 per share). Pre-tax items included in Adjusted Earnings are listed in a table at the end of this press release.

"We are encouraged by continued strength in our Midwest and South region, which recorded its eighth consecutive quarter of EBITDA growth," said Keith Smith, President and Chief Executive Officer of Boyd Gaming. "With the acquisition of Peninsula Gaming, more than two-thirds of our wholly-owned EBITDA will be generated by our Midwest and South properties, further expanding our operations in the strongest segment of the domestic gaming industry. Moving forward, our focus will be on generating sustainable long-term growth, continuing to manage our operations efficiently and strengthening our balance sheet."

(1)


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

Year-To-Date Results

For the nine months ended September 30, 2012, we reported net revenues of $1.86 billion, an increase of 7.6% compared to the nine months ended September 30, 2011. Total Adjusted EBITDA was $351.2 million during the period, even with the prior year.

During the nine-month period in 2012, our wholly-owned operations posted net revenues of $1.32 billion, up 12.5% from the year-ago period, while wholly-owned Adjusted EBITDA increased 7.2% to $248.3 million. Borgata reported net revenues of $538.7 million, compared to $553.9 million in the year-ago period, while Adjusted EBITDA was $103.0 million, compared to $120.6 million in the third quarter of 2011.

We reported a net loss of $9.0 million for the nine months ended September 30, 2012, or $0.10 per share. By comparison, we reported a net loss of $3.4 million, or $0.04 per share, for the nine months ended September 30, 2011.

Adjusted Earnings for the nine months ended September 30, 2012 were $2.5 million, or $0.03 per share, compared to $4.0 million, or $0.05 per share, during the comparable period in 2011.

Operations Review

Las Vegas Locals

In the Las Vegas Locals segment, third-quarter 2012 net revenues were $138.8 million, compared to $145.9 million in the year-ago period. Third-quarter 2012 Adjusted EBITDA was $24.3 million, compared to $30.8 million in the third quarter of 2011. To improve our performance in the Locals market, we are implementing measures to grow business volumes from casual players, including a significant expansion of our low-denomination slot product.

Downtown

The Company's Downtown Las Vegas business generated net revenues of $53.5 million for the third quarter 2012, up slightly from the third quarter 2011. Adjusted EBITDA was $6.4 million, an increase of 5.8% from the year-ago quarter. Growth was driven primarily by effective marketing campaigns aimed at our Hawaiian customer base. Additionally, we saw improved revenue and profitability at our Hawaiian charter service, as changes in our weekly flight schedule allowed us to grow revenue-per-seat by about 12%.

Midwest and South

In the Midwest and South region, net revenues were $233.0 million, up 24.0% from the year-ago quarter, while Adjusted EBITDA rose 9.4%, or $4.2 million, to $48.7 million. Regional results were impacted by Hurricane Isaac, which forced the closure of the IP and Treasure Chest in late August, and disrupted business throughout the Gulf Coast region through mid-September. In addition, results reflect a favorable property tax adjustment in the year-ago quarter.

The IP contributed $49.1 million in net revenues and $9.6 million in EBITDA to regional results during the quarter. Net revenues at the property were even with the third quarter 2011 as compared to the property's historical results, while EBITDA rose 35.4%. Improved operating efficiencies and the introduction of our B Connected player loyalty program drove significant EBITDA growth at the IP.

Borgata

Borgata reported third-quarter 2012 net revenues of $187.1 million, compared to $202.0 million in the third quarter of 2011. Adjusted EBITDA at the property was $33.4 million, compared to $50.3 million in the year-ago quarter. The declines were primarily the result of lower table game hold percentage and volume. We remain encouraged by strength in other segments of the business, as slot and hotel revenue increased year-over-year.

Peninsula Gaming Acquisition

The Company continues to make progress toward completing the acquisition of Peninsula Gaming, LLC. The transaction, announced on May 16, will add five properties to Boyd Gaming's portfolio: the Kansas Star Casino, Hotel and Event Center in Mulvane, Kansas; Diamond Jo Casino in Dubuque, Iowa; Diamond Jo Casino in Worth County, Iowa; Evangeline Downs Racetrack and Casino in Opelousas, Louisiana; and Amelia Belle Casino in Amelia, Louisiana.

"We look forward to successfully completing this transformative transaction, which will strengthen our balance sheet and further diversify our operations," Keith Smith said. "We have already secured regulatory approvals from Iowa and Louisiana, and Kansas regulators are scheduled to consider the transaction the week of November 12. Subject to regulatory approvals, we expect to complete the acquisition of Peninsula Gaming in the fourth quarter."

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