Boyd narrows losses; CEO says company ‘turning a corner’
Boyd Gaming Corp. Results
- Net revenue
- Earnings per share
2q 2011: $574.4 million
2q 2010: $578.4 million
Change: - .7 percent
1q 2011 - $564.9 million
2q 2011 - ($3 million)
2q 2010: ($3.4 million)
1q 2011: ($3.5 million)
2q 2011: (3 cents)
2q 2010: (4 cents
1q 2011: (4 cents)
Boyd Gaming Corp. CEO Keith Smith said today his company, driven by improving results in Las Vegas, the Midwest and South, is finally “turning a corner” after three difficult years.
In Las Vegas, the company reported a 1 percent, year-over-year decline in net revenue among its off-Strip casinos for locals and a 3 percent increase in net revenue among its downtown casinos compared with the same period a year ago.
Executives said the results are incremental improvement from a few months ago and a sign of a brightening Las Vegas economy.
“This is a significant step for our company and we expect growth to continue the rest of the year,” Boyd Chief Operating Officer Paul Chakmak said.
Earnings before interest, taxes, depreciation and amortization — a key performance indicator for casinos — rose 5 percent at Boyd’s local Las Vegas casinos from a year ago.
Some analysts weren't impressed with the company's performance in Las Vegas.
"Although revenues and EBITDA show early signs of improvement, we believe a recovery is not imminent," Union Gaming Group stock analyst Bill Lerner wrote in a research note to investors today. Boyd faces aggressive competition from Station Casinos, a primary competitor that is better capitalized after recently emerging from bankruptcy, Lerner said.
The company’s strongest performer, the Orleans, reported a 7 percent increase in earnings before interest, taxes, depreciation and amortization compared with a year ago. That was the Orleans’ third consecutive quarter of growth, executives said.
Boyd’s off-Strip casinos are busy though spending remains depressed, Chakmak said. The company’s biggest gamblers, from a historical perspective, are starting to spend more and the company could start to expand employee hours as business recovers, he said.
The company’s customer service scores remain high despite efforts in recent years to trim costs, he added.
Boyd’s downtown casinos reported a 1 percent increase in earnings before interest, taxes, depreciation and amortization. Downtown earnings would have been higher if not for higher fuel prices that cut into the company’s charter flight service from Hawaii, executives said. A significant chunk of the company’s downtown customers are Hawaiians flown in for package stays.
Boyd expects to upgrade to a Boeing 767 in October, which will enable 6,200 additional customers to fly into Las Vegas from Hawaii each year based on a rotation of five flights per week.
Executives said the company isn’t cutting back on efforts to market to customers, as the competitive landscape remains fierce in Las Vegas. But it’s spending money wisely by sticking to mailers and emails rather than big, expensive marketing campaigns.
Overall, Boyd’s net losses narrowed slightly in the second quarter as the company squeezed more earnings out of most of its casinos nationwide.
Boyd lost $3 million, or 3 cents per share, in the second quarter compared with a profit of $3.4 million, or 4 cents per share, for the same period a year ago. Analysts polled by Thomson Reuters expected Boyd to earn 2 cents per share in the second quarter.
The temporary closure of Sam’s Town Tunica in May because of flooding along the Mississippi River hurt results, the company said.
Net revenue fell 1 percent to $574.4 million in the second quarter and earnings before interest, taxes, depreciation and amortization rose 4 percent to $118.4 million.
Strong results in the Midwest and South were offset by worsening trends in Atlantic City, where the company's Borgata resort reported a 2 percent decline in net revenue and a 10 percent dip in earnings before interest, taxes and depreciation.
Increasing competition from Pennsylvania casinos as well as new casinos in Maryland and New York will continue to dampen earnings in Atlantic City, Lerner said. New resorts underway could help boost tourism in future years, however, he said.
Regarding the company’s stalled Echelon resort on the Strip, Smith said there’s no immediate plans to restart the project, which remains an important part of the company’s growth strategy.
Boyd stopped work on the $4.8 billion resort in August 2008 because of the sagging economy. Echelon had been scheduled to open in 2010.