Boyd Gaming sees second quarter profits plunge

4 August 2010

LAS VEGAS, Nevada -- Boyd Gaming Corp. executives weren't taking the bait.

With the Las Vegas-based casino operator dropping out of Friday's planned bankruptcy court auction of several Station Casinos' properties, Wall Street speculated on the next potential acquisition target for the Las Vegas-based casino operator.

But company leaders didn't go along.

Boyd Gaming had just explained Tuesday how the recession left consumers skittish, causing the company's second-quarter profits to fall 73 percent, when the questions started.

Union Gaming Group Principal Bill Lerner asked point blank if Boyd Gaming had participated in a rumored privately held bank-back auction of M Resort. Company Chief Financial Officer Josh Hirsberg was noncommittal.

"We don't comment on speculation," Hirsberg said. "We do believe the best opportunities for us are in the locals market. Buying an existing property is a much better opportunity than building something from the ground up."

Which means Echelon, the company's mothballed $4.8 billion Strip development, which halted construction two years ago, will sit well into the next decade until the market turns.

Until then, Boyd executives will keep their interests focused on buying opportunities around the country.

"We have confidence in the locals market. We believe it will recover," said Boyd Gaming CEO Keith Smith. "We believe there will be opportunities that will present themselves and will be a strategic fit for our company."

Boyd earned $3.4 million during the three-month period that ended June 30, or 4 cents a share. A year ago, Boyd Gaming reported net income of $12.8 million, or 15 cents a share. Analysts polled by FactSet Research expected a profit of 10 cents a share.

Net revenues during the quarter declined 5.9 percent to $578.4 million compared with $614.5 million collected a year ago.

"The lingering effects of the recession have left consumers unusually sensitive to shifts in the economy, and they now react more quickly to economic data and other developments, such as fluctuations in the stock market," Smith said. "Although conditions remain uncertain, we believe long-term stabilizing trends are still in place, and that year-over-year growth is achievable by the end of 2010."

Wall Street analysts said they were somewhat disappointed by the company's results but were more interested in hearing about future plans following Friday's announcement it was no longer interested in pursuing a purchase of assets from bankrupt Station Casinos.

Boyd didn't provide much information about buying MGM Resorts International's up-for-sale 50 percent share of the Borgata in Atlantic City, which the company operates.

Net revenues fell from $191.5 million to $186.9 million at Borgata. Adjusted cash flow was off 9.9 percent. Boyd said Borgata's performance was hurt by higher promotional activity from competitors in Pennsylvania, higher utility costs due to unseasonably hot weather and reduced day-trip visitation to Atlantic City during June.

"It's MGM's process to run with and we'll see how that unfolds," Smith said. "Once MGM has a third-party offer, they will bring it to us and we have a chance to match it."

During the quarter, Boyd Gaming's revenues and cash flows were down in every operating segment.

"Property results were lower than our estimates in most markets," Jefferies and Co. gaming analyst David Katz said.

In the Las Vegas locals market, net revenues were $153.1 million, down from $166.1 million, while adjusted cash flows declined 16.2 percent. The company's downtown casinos generated net revenues of $55.2 million, compared to $57.6 million a year ago, while adjusted cash flow was off 21.2 percent.

The results weren't better in the Midwest and South, where Boyd Gaming recorded $181.7 million in net revenues, compared with $197.3 million in the same quarter of 2009. Adjusted cash flows were off 20.9 percent.

Related Links
Boyd Gaming Corporation Gaming Vendor Information
Nevada Gambling


Copyright GamingWire. All rights reserved.
Featured Vendors
Betson Imperial Parts & Service
Casino Network
Betson Imperial Parts & Service
Your one stop shop for all your gaming and OEM needs!
Casino Network
20+ years experience selling refurbished slot machines, parts & glass for all major brands
Casino Schedule Ease
AmericanChecked
Casino Schedule Ease
Full Featured & customizable for the complex scheduling needs of table games & other casino depts
AmericanChecked
Background checks for the gaming industry with key & non-key packages & fingerprinting solutions
Rymax Marketing Services, Inc.
.Dot-iGaming.com
Rymax Marketing Services, Inc.
Leader in creating award winning player & employee loyalty programs & events proven to increase ROI
.Dot-iGaming.com
Fully loaded advanced casino platform. One time (low) fee, 100% your property, start now!
Sunkist Graphics, Inc.
TOP ONE TECH LIMITED
Sunkist Graphics, Inc.
Specializing in the creation of best-of-breed gaming graphics - slot glass, sign faces, and more
TOP ONE TECH LIMITED
GLOBAL TOUCH SOLUTION PARTNER OF CHOICE,10+ years OEM manufacturing,100+ thousand units application
Slot Machines Unlimited
Talisman Group Creators of EZ Baccarat
Slot Machines Unlimited
Exporter of IGT, Williams, AVP, Trimline, Aristocrat, Konami, Bally, & parts over 20 yrs experience
Talisman Group Creators of EZ Baccarat
With over 800 tables in 150+ casinos, EZ Baccarat is the number one brand in baccarat.
New Level Radio
Broadband Hospitality
New Level Radio
Your Casino. Your Music. Your Message.
Broadband Hospitality
Improve these critical guest-facing amenities: In-room TV, Wi-Fi, Mobile App. Priced right. All here


Your Guide to 15,291 Gaming Industry Suppliers