LAS VEGAS, Nevada -- (PRESS RELEASE) -- Boyd Gaming Corporation
(NYSE:BYD) today reported financial results for the fourth quarter and year
ended December 31, 2007.
Recent Highlights
* Las Vegas Locals region net revenues decline 1.5%; however, Adjusted
EBITDA(1) increases 3.3%, the third consecutive year-over-year
quarterly increase.
* Midwest and South region records 11.4% decline in net revenues and a
13.2% decrease in Adjusted EBITDA for the fourth quarter 2007 versus
the same quarter 2006; Blue Chip is materially impacted by increased
competitive environment and, to a lesser extent, construction
disruption and adverse weather; conversely, four of our other five
Midwest and South casino properties record fourth quarter 2007
increases in Adjusted EBITDA.
* Downtown Las Vegas net revenues decline $2.2 million, or 3.2%, for
the fourth quarter 2007 versus the same period last year; Adjusted
EBITDA declines $2.4 million, or 13.8%, from a near-record level in
the same period 2006.
* Borgata outperforms market in the face of new competition from
Philadelphia-area casinos and prepares for addition of The Water
Club in June; both net revenues and Adjusted EBITDA for the quarter
increase over the same period in 2006.
* Successful phase-one launch of nationwide players club program;
initial phase includes our four primary Las Vegas Locals casinos and
unifies them under a new Club Coast program; the Midwest and South
rollout is scheduled to begin in April 2008.
* Construction on our Echelon development continues to advance as
foundation work is nearly complete for our wholly-owned hotels,
which include Hotel Echelon, The Enclave, and Shangri-La Las Vegas;
we expect to begin erecting steel in the second quarter. We are
also in the midst of identifying the many restaurant and nightlife
venues that will be a part of the Echelon experience.
(1) See footnotes at the end of the release for additional information
relative to non-GAAP financial measures.
Fourth Quarter Results
We reported fourth quarter 2007 income from continuing operations of
$31.0 million, or $0.35 per share, compared with $55.6 million, or $0.63 per
share, in the same period 2006. Including discontinued operations, we
reported net income for the fourth quarter 2007 of $31.2 million, or $0.35 per
share, compared to net income of $56.3 million, or $0.64 per share, reported
in the same period 2006. Per share earnings discussed throughout this release
are reported on a diluted basis.
Adjusted Earnings(1) from continuing operations for the fourth quarter
2007 were $34.9 million, or $0.39 per share, compared to $39.9 million, or
$0.45 per share, for the same period in 2006. During the fourth quarter 2007,
certain adjustments reduced income from continuing operations by $6.6 million
($3.9 million, net of tax, or $0.04 per share), the majority of which are
preopening expenses.
By comparison, the fourth quarter 2006 included certain pre-tax
adjustments that increased income from continuing operations by $23.5 million
($15.7 million, net of tax, or $0.18 per share).
Net revenues were $478.6 million for the fourth quarter 2007, compared to
$520.8 million for the same quarter in 2006, a decrease of 8.1%. Total
Adjusted EBITDA was $134.6 million in the fourth quarter 2007, compared to
$146.3 million for the same period 2006. These declines were chiefly due to
Blue Chip's quarterly performance, which was materially impacted by a new
competitor, a situation that was also aggravated by construction disruption
and inclement weather.
Paul Chakmak, Executive Vice President and Chief Operating Officer of Boyd
Gaming, commented, "In the Las Vegas Locals market, we were able to increase
Adjusted EBITDA and improve margins by more than 150 basis points versus the
prior year in spite of challenging economic conditions. And with the
exception of an increasingly competitive environment at Blue Chip, we were
encouraged by the performances elsewhere in the Midwest and South, where four
of our other five casino properties recorded improved Adjusted EBITDA from the
same quarter a year ago."
(1) See footnotes at the end of the release for additional information
relative to non-GAAP financial measures.
Key Operations Review
In our Las Vegas Locals segment, fourth quarter 2007 net revenues were
$214.4 million versus $217.7 million for the fourth quarter 2006. Fourth
quarter 2007 Adjusted EBITDA was $72.8 million, a 3.3% increase over
$70.4 million in the same quarter 2006.
Our Downtown Las Vegas properties generated net revenues of $66.9 million
and Adjusted EBITDA of $14.8 million for the fourth quarter 2007, versus
$69.1 million and $17.1 million, respectively, for the fourth quarter 2006.
In our Midwest and South region, we recorded $197.3 million in net
revenues for the fourth quarter 2007, compared to $222.9 million for the same
period in 2006; more than 90% of the decline in net revenues in this region
was attributable to Blue Chip. Adjusted EBITDA for the period was $44.0
million. By comparison, Adjusted EBITDA for the fourth quarter 2006 was
$50.7 million.
In Atlantic City, Borgata's operating income for the fourth quarter 2007
was $35.4 million, essentially the same as the fourth quarter 2006. Net
income for Borgata was $29.4 million for the fourth quarter 2007, compared to
$29.2 million in the same period last year, and Adjusted EBITDA was
$53.9 million, compared to $53.2 million for the fourth quarter 2006. Net
revenue for Borgata was $202.7 million for the fourth quarter 2007, an
increase of 2.0% over the same quarter in 2006.
The effects of competition and the economy were also evident in Atlantic
City, where, excluding Borgata, fourth-quarter gaming revenue for the market
was down 10.6% from prior year results. These declines are mainly attributed
to the new slot parlors in Pennsylvania. Despite the fourth-quarter decline
for the total market, Borgata grew gaming revenue by 3.7% and increased market
share from 14.1% to 16.0% over the prior year. Borgata maintained its top
spot in the Atlantic City market for the 2007 fourth quarter, leading in
virtually all key gaming related areas.
Full Year Results
Income from continuing operations for the year ended December 31, 2007 was
$120.9 million, or $1.36 per share, compared to $161.3 million, or $1.80 per
share for the year ended December 31, 2006. Net income, which includes
results from discontinued operations, was $303.0 million, or $3.42 per share,
for the full year 2007 compared to $116.8 million, or $1.30 per share, for the
year ended December 31, 2006. Net income for 2007 includes a $285 million
pre-tax gain on the disposition of the Barbary Coast; net income for 2006
included a $65 million pre-tax impairment charge related to the disposition of
South Coast.
Adjusted Earnings from continuing operations for the year ended December
31, 2007 were $157.3 million, or $1.78 per share, as compared to
$196.4 million, or $2.19 per share for the full year 2006.
Net revenues were $2.0 billion and $2.2 billion for the years ended
December 31, 2007 and 2006, respectively. Total Adjusted EBITDA was
$577.8 million for the full year 2007, compared to $652.3 million total
Adjusted EBITDA for 2006.
Development Update
Development continues to progress on our key growth initiatives:
* In Atlantic City, Borgata is in the final stages of construction of
The Water Club, readying for a June 2008 opening. The Water Club is
an 800-room boutique hotel directly connected to Borgata and will be
the first of its kind in Atlantic City. The $400 million expansion
will also include five swimming pools, a spa in the sky, additional
meeting and retail space and a separate porte cochere and front
desk.
* Our $130 million expansion of Blue Chip in Michigan City, Indiana
remains on schedule for a December 2008 opening. This development
project will add a dramatic 22-story hotel tower that is expected to
top out in April 2008, and will include 300 new upscale guest rooms,
a spa and fitness center, additional meeting and event space, new
dining and nightlife experiences, and a new porte cochere.
* Construction on our Echelon development continues to advance as
foundation work is nearly complete for our wholly-owned hotels,
which include Hotel Echelon, The Enclave, and Shangri-La Las Vegas;
we expect to begin erecting steel in the second quarter 2008. Work
on the Delano and Mondrian is also scheduled to begin in the second
quarter 2008. Echelon is scheduled to open in the third quarter
2010.
Keith Smith, Boyd Gaming President and Chief Executive Officer, said, "We
are excited about what The Water Club and Blue Chip hotel developments will
mean to our businesses in those markets. Importantly, both projects remain on
schedule and on budget. The new additions will elevate each of the respective
brands, as we face increasingly competitive landscapes in both markets. On
the Las Vegas Strip, construction of Echelon continues to advance as expected.
The project remains on track, and we're excited to see that project begin to
take its place on the ever-changing Las Vegas skyline."
Boyd Gaming Branding Initiative
We successfully launched the first phase of our nationwide, consolidated
players club program on January 14. Effective last month, our four primary
Las Vegas Locals casinos (Sam's Town, Suncoast, The Orleans, and Gold Coast)
were unified under a new Club Coast players card program.
For the first time, Club Coast members are rewarded for their play based
on a tiered-card system. Guests qualify for one of three tiers (Ruby, Sapphire
and Emerald), each offering an increasingly attractive series of services and
benefits. The program also allows guests the opportunity to earn and redeem
points at any Club Coast property with a single card, enhancing reward options
for our players.
The introduction of our new players program in Las Vegas is the first
stage of the nationwide rollout. We plan to connect the Club Coast card to
our players clubs at our Downtown Las Vegas properties and in our Midwest and
South region. Once the program is completed, players will be able to use
their cards at Boyd Gaming properties in Nevada, Illinois, Indiana, Louisiana
and Mississippi.
The next phase will rollout in our Midwest and South Region and is
expected to be completed in the second quarter 2008.
Commenting on the launch, Chakmak said, "Our goal is to build and reward
customer loyalty, drive cross-property visitation and offer the ability to
seamlessly earn and redeem rewards at our properties across the country."
Key Financial Statistics
The following is additional information as of and for the three months
ended December 31, 2007:
* December 31 debt balance: $2.27 billion
* December 31 cash: $165.7 million
* Dividends paid in the quarter: $13.2 million
* Maintenance capital expenditures during the quarter: $39.5 million
* Expansion capital expenditures during the quarter: $84.6 million
* Capitalized interest during the quarter: $6.4 million
* Cash distribution to the Company from Borgata in the quarter:
$23.9 million
* December 31 debt balance at Borgata: $722.7 million
Conference Call Information
We will host our fourth quarter 2007 conference call today (Wednesday,
February 27) at 12:00 p.m. EST. The conference call number is 888.680.0890
and the passcode is 99385796. Please call up to 15 minutes in advance to
ensure you are connected prior to the start of the call.