Boyd Gaming reports second-quarter results

27 July 2011

LAS VEGAS, Nevada -- (PRESS RELEASE) -- Boyd Gaming Corporation (NYSE: BYD) today reported financial results for the second quarter ended June 30, 2011.

Net revenues were $574.4 million for the second quarter 2011, a decrease of less than 1% from the same quarter in 2010. Total Adjusted EBITDA(1) was $118.4 million for the quarter, up 4.3% from $113.5 million in the prior year.

Our wholly-owned business reported second-quarter 2011 net revenues of $391.6 million, essentially flat with the year-ago period. Net revenues were impacted by the closure of Sam's Town Tunica for 25 days in May due to flooding along the Mississippi River. Wholly-owned Adjusted EBITDA increased 13.1%, or $9.2 million, to $79.8 million. Borgata, our 50% joint venture, reported second-quarter 2011 net revenues of $182.8 million, down 2.2% from the second quarter of 2010, while Adjusted EBITDA at the property decreased 10.0% to $38.7 million.

For the second quarter 2011, the Company reported a net loss of $3.0 million, or $0.03 per share, compared to net income of $3.4 million, or $0.04 per share, in the same period last year.

Adjusted Earnings(1) for the second quarter 2011 were $0.8 million, or $0.01 per share, compared to earnings of $4.2 million, or $0.05 per share, for the same period in 2010. Certain pre-tax items included in Adjusted Earnings for the second quarter 2011 resulted in a net increase of $6.4 million ($3.8 million, net of tax and noncontrolling interest, or $0.04 per share). By comparison, pre-tax items included in Adjusted Earnings for the second quarter 2010 resulted in a net increase in income of $1.3 million ($0.8 million, net of tax, or $0.01 per share) during the second quarter of 2010. Pre-tax items included in adjusted earnings are listed in a table at the end of this press release.

Commenting on the quarter, Keith Smith, President and Chief Executive Officer of Boyd Gaming, said, "Our results for the second quarter reflect continued positive momentum in our business. The improvements during the quarter were broad-based, as all three operating regions posted year-over-year EBITDA gains, and operating margins in our wholly-owned business rose by 240 basis points. We were especially pleased with the continued strong performance of our Midwest and South properties, which reported a 19% EBITDA gain for the region's third consecutive quarter of growth."


Year-To-Date Results
For the six months ended June 30, 2011, we reported net revenues of $1.14 billion, essentially flat with the six months ended June 30, 2010. Total Adjusted EBITDA was $230.2 million during the period, up slightly from the prior year.(2)
During the six-month period 2011, our wholly-owned operations posted net revenues of $787.5 million, essentially flat with the year-ago period; however, wholly-owned Adjusted EBITDA increased 7.4%, or $11.0 million, to $159.8 million. Borgata reported net revenues of $351.8 million during the six months ended June 30, 2011, a decline of 2.8%, while property Adjusted EBITDA fell 13.1% to $70.3 million.

We reported a net loss for the six months ended June 30, 2011 of $6.5 million, or $0.07 per share. By comparison, we reported net income of $11.8 million, or $0.14 per share, for the six months ended June 30, 2010.
Adjusted Earnings for the six months ended June 30, 2011 reflect a loss of $0.5 million, or break-even on a per-share basis, compared to earnings of $13.1 million, or $0.15 per share, during the comparable period in 2010.
(2) See financial schedules at the end of this release for reconciliations relative to the pro forma effect of the consolidation of Borgata as if such consolidation had occurred as of the beginning of the period presented.

Key Operations Review
Las Vegas Locals

In our Las Vegas Locals segment, second-quarter 2011 net revenues were $151.8 million, down slightly from the second quarter of 2010. Second-quarter 2011 property Adjusted EBITDA was $38.6 million, up 4.8% from the $36.8 million reported in the same quarter of 2010. Results reflect stable business volumes and effective cost-control measures, as our EBITDA margin rose 140 basis points over the prior-year period.

Downtown
Our Downtown Las Vegas properties generated net revenues of $56.6 million for the second quarter 2011, up 2.5% from $55.2 million in the second quarter 2010. Property Adjusted EBITDA was $9.4 million, a slight increase from the same quarter last year. Net revenue growth in our downtown operations was almost entirely offset by significantly higher fuel costs at our Hawaiian charter service.

Midwest and South
In our Midwest and South region, net revenues were $181.8 million, essentially flat from the year-ago quarter. Property Adjusted EBITDA rose 18.8% to $42.3 million, compared to $35.6 million in the second quarter 2010. Operating results were impacted by the flood-related closure of Sam's Town Tunica for 25 days in May; however, all five other properties in the region reported EBITDA growth in the quarter. EBITDA margin for the region improved by 370 basis points. We saw particularly strong growth at Treasure Chest, Delta Downs and Par-A-Dice.

Borgata
Borgata's net revenues for the second quarter 2011 were $182.8 million, down 2.2% from $186.9 million in the second quarter 2010, while property Adjusted EBITDA declined 10.0% to $38.7 million, compared to $43.0 million in the comparable period in 2010. Borgata continued to outperform the market despite heightened regional competition, boosting its market share by 80 basis points. The property also posted increases in non-gaming revenue, primarily from improved hotel ADRs and occupancy. These gains, however, were offset by increased promotional expense.

IP Acquisition Update
The Company is in the final stages of due diligence related to its acquisition of the IP Casino Resort Spa in Biloxi, Mississippi, and expects to complete the process by August 4. Assuming this process is completed satisfactorily, we will pay a $10 million non-refundable deposit to the sellers on this date. We expect to close this transaction early in the fourth quarter.

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