Boyd Gaming says $7.3 million loss related to acquisition of new casinos
Las Vegas-based Boyd Gaming, which operates several downtown Las Vegas properties and the off-Strip Orleans, reported a net quarterly loss of $7.3 million, despite higher revenue.
The loss was attributed to expenses related to Boyd’s recent acquisition of five properties from Peninsula Gaming.
For the quarter that ended March 31, Boyd reported a net loss of 8 cents a share on revenue of $737 million.
In the corresponding quarter in 2012, which had one extra day, the company had earnings of $5.9 million, 7 cents a share, on revenue of $633.1 million.
Boyd’s revenue gains were attributable to five former Peninsula Gaming properties, which the company acquired in November for $1.45 billion.
Peninsula held riverboat and racino properties in Iowa and Louisiana, as well as the Kansas Star, which opened an expanded casino in December. The acquisition was viewed as a geographic diversification move by the company.
Tax and interest expenses from the transaction resulted in the net loss.
In the Las Vegas locals market, which includes the Suncoast, Gold Coast and Sam’s Town properties, Boyd reported revenue of $152.8 million compared with $154.8 million in the first quarter of 2012.
Cash flow climbed to $39.2 million from $38.5 million as a result of improved operating margins associated with new slot machine initiatives.
In downtown Las Vegas, where Boyd operates the Fremont, California and Main Street Station, the company reported net revenue of $54.1 million, down from $57 million a year ago, and cash flow fell to $7.1 million from $8 million.
The company attributed the declines to fewer customers in the early part of the quarter. “We were particularly encouraged by improvements in our Las Vegas locals business, as we were able to generate (cash flow) growth for the first time in more than a year,” Keith Smith, president and CEO of Boyd Gaming, said in a release issued today.
In a conference call conducted by the company today, Chief Operating Officer Paul Chakmak said that while the first two months of the quarter were slow, business picked up in March, particularly at the Orleans, which hosted the West Coast Conference basketball tournament.
Conference champion Gonzaga was the No. 1 team in the country at the time and, Chakmak said, the Orleans benefitted from increased publicity.
He also said Boyd expects to ride the success of downtown Las Vegas revitalization as it progresses with new properties and amenities.
Smith said the company is also encouraged by the potential for online gaming.
“New Jersey and Nevada are now laying the regulatory groundwork for online gaming and other states are considering legalization as well,” he said. “This emerging business provides a compelling opportunity to significantly grow and diversify our business, and we intend to take full advantage of it.”
In the conference call, Smith said he expects Boyd to be one of the first companies to offer online poker when play begins in New Jersey and Nevada. He had no estimate on when that might be.
Smith said he is enthused with the New Jersey market, because Boyd has a greater share of casino poker play in Atlantic City and the market is larger than that of Nevada. He said he expects online poker play would generate more land-based casino customers as it becomes more popular.
Smith also said the company is interested in returning to the Las Vegas Strip “with the right acquisitions and the right markets,” if an opportunity exists.
The company in March sold its Echelon site where the Stardust once stood to the Genting Group for $350 million. Genting plans to develop a major casino on the property.