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Boyd Gaming Reports Third Quarter Results |
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For the quarter, the company reported income from continuing operations of $8.7 million, or $0.10 per share, compared to $31.9 million, or $0.36 per share, in the same period last year. |
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Boyd Gaming Corporation (NYSE:BYD) today reported financial results for the third quarter ended September 30, 2008.
For the quarter, the company reported income from continuing operations of $8.7 million, or $0.10 per share, compared to $31.9 million, or $0.36 per share, in the same period last year. Our results were impacted by a continued deterioration in overall consumer spending, the addition of new competitors near Blue Chip, storm-related closures of Delta Downs and Treasure Chest, and disruption in the Louisiana and Mississippi markets from the Gulf Coast hurricanes.
Adjusted Earnings(1) from continuing operations for the third quarter 2008 were $14.0 million, or $0.16 per share, compared to $38.4 million, or $0.43 per share, for the same period in 2007. During the third quarter 2008, certain pre-tax adjustments, such as preopening expenses and write downs and other charges, reduced income from continuing operations by $9.0 million ($5.3 million, net of tax, or $0.06 per share). By comparison, the third quarter 2007 included certain pre-tax adjustments that had a net effect of reducing income from continuing operations by $10.1 million ($6.5 million, net of tax, or $0.07 per share). Adjusted Earnings for the third quarter 2008 were also adversely impacted by the closures of Treasure Chest and Delta Downs due to the Gulf Coast hurricanes, and reflect a full quarter of capitalized interest related to Echelon.
Net revenues were $426.5 million for the third quarter 2008, compared to $490.1 million for the same quarter in 2007, a decrease of 13.0%. Total Adjusted EBITDA was $101.2 million for the quarter, compared to $144.0 million in the prior year.
Keith Smith, President and Chief Executive Officer of Boyd Gaming, commented on the results, "The dynamics we've been dealing with for the last year continued during the quarter, as our nation's economic downturn accelerated and consumers across the country continued to face new challenges. Fortunately, people are still visiting our casinos, although they are more cautious with their discretionary spending. These are tough economic times, but our balance sheet remains strong, and we continue to produce significant cash flow. The company are well-positioned to weather the current economic environment, and we will continue to look for innovative ways to adjust to challenges as they arise."
Year-To-Date Results
The company reported a loss from continuing operations for the nine months ended September 30, 2008 of $2.2 million, or $0.03 per share, which includes an $84.0 million pre-tax impairment charge, principally related to the write-off of the Dania Jai-Alai intangible license right. By comparison, we reported income from continuing operations of $89.9 million, or $1.01 per share for the nine months ended September 30, 2007. Including discontinued operations, we reported net income for the nine months ended September 30, 2007 of $271.8 million, or $3.07 per share. Net income for the 2007 period includes a $285 million gain on the disposition of the Barbary Coast. There were no such discontinued operations reported during the 2008 period.
Adjusted Earnings from continuing operations for the nine months ended September 30, 2008 were $70.0 million, or $0.80 per share, as compared to $122.3 million, or $1.38 per share for the nine-month period in 2007.
Net revenues were $1.4 billion and $1.5 billion for the nine months ended September 30, 2008 and 2007, respectively. Total Adjusted EBITDA was $348.5 million for the current nine-month period. By comparison, total Adjusted EBITDA for the 2007 period was $443.2 million (or $446.3 million, excluding a $3.2 million estimated retroactive property tax charge for an unanticipated increase in assessed property value at Blue Chip).
Key Operations Review
Las Vegas Locals
In our Las Vegas Locals segment, third quarter 2008 net revenues were $181.8 million versus $203.8 million for the third quarter 2007. Third quarter 2008 Adjusted EBITDA was $45.7 million, a 25.5% decrease from the $61.3 million in the same quarter 2007. The decreases reflect lower citywide room rates and the varied economic factors weighing on consumers in the Las Vegas Valley during this difficult period, including continued declines in the local housing market and rising unemployment.
Downtown
Our Downtown Las Vegas properties generated net revenues of $55.6 million and Adjusted EBITDA of $6.9 million for the third quarter 2008, versus $59.3 million and $10.3 million, respectively, for the third quarter 2007. Contributing to the $3.4 million decrease in Adjusted EBITDA were declining economic conditions, as well as a significant reduction in commercial airline seat capacity from Hawaii, which adversely affected leisure travel from this primary feeder market.
Midwest and South
In our Midwest and South region, we recorded $189.1 million in net revenues for the third quarter 2008, compared to $226.9 million for the same period in 2007. Adjusted EBITDA for the current period was $39.1 million, versus $56.4 million in the third quarter 2007. Numerous factors were behind the region's decline, including increased competition and construction disruption at Blue Chip, the storm-related closures of Delta Downs and Treasure Chest, and disruption in the Louisiana and Mississippi markets from the Gulf Coast hurricanes.
The hurricanes adversely and directly impacted two of our three Louisiana operations. Treasure Chest closed Saturday, August 30, for eight days over Labor Day weekend, as the New Orleans area was under mandatory evacuation orders during Hurricane Gustav. Hurricane Ike resulted in a two-day closure starting September 12 at Treasure Chest. At Delta Downs, Gustav forced us to close for six days -- Saturday, August 30 to Thursday, September 4 -- and Hurricane Ike led to a second closure from September 11 to September 17. The hurricane closures totaled 10 days for Treasure Chest and 13 days for Delta Downs, including two full weekends at both properties.
Borgata
Borgata's operating income for the third quarter 2008 was $39.5 million, versus $54.5 million for the third quarter 2007. Net revenues for Borgata were $239.9 million for the third quarter 2008, up slightly compared to the $230.1 million recorded in the same quarter in 2007, due to the addition of The Water Club during the quarter. Adjusted EBITDA was $59.8 million, compared to $72.6 million for the third quarter 2007. The decline was primarily due to poor economic conditions, increased competition from slot operations in Pennsylvania, the addition of new hotel capacity in the Atlantic City market, and higher operating expenses related to the launch of The Water Club.
Paul Chakmak, Executive Vice President and Chief Operating Officer, said, "Like all consumer-driven businesses, we are feeling the impact of the current economic downturn. Although customers have become more selective with their discretionary spending, we believe we've made our product more competitive than ever over the last year. Throughout the Las Vegas region, we've undertaken a campaign to refresh our restaurant offerings and bring in nationally recognized brands. In Atlantic City, The Water Club at Borgata has set a new standard in that market. And at Blue Chip, we will open our new hotel product on January 22 (2009) allowing us to draw customers from more distant markets than before."
Key Financial Statistics
The following is additional information as of and for the three months ended September 30, 2008:
• September 30 debt balance: $2.6 billion
• September 30 cash: $123.6 million
• Maintenance capital expenditures during the quarter: $21.4 million
• Expansion capital expenditures during the quarter: $177.6 million
-- Echelon: $141.3 million
-- Blue Chip: $27.0 million
-- Other: $9.3 million
-- Capitalized interest during the quarter: $10.8 million
-- September 30 debt balance at Borgata: $702.9 million
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