Boyd reports drop in 3rd-quarter earnings, but sees improvements in Las Vegas
25 October 2011
Boyd Gaming, which operates three downtown Las Vegas properties and four locals resorts in Southern Nevada, today reported a third-quarter decline in earnings on flat revenue compared to the same quarter a year ago.
Executives of the company, which also has riverboat casinos in the South and Midwest and a 50 percent stake in Atlantic City’s Borgata property, said in a conference call this morning that cash flow has improved dramatically in Las Vegas, indicating a continued improvement in the local economy.
Keith Smith, president and CEO of Boyd, said in today’s conference call that the company will continue to pursue its Internet gambling strategy, even if federal lawmakers don’t approve online gambling in the current legislative session. He also confirmed that Boyd would not pursue a gaming license in Massachusetts.
The company reported earnings of $3.1 million, 4 cents a share, on revenue of $590.2 million, on the quarter that ended Sept. 30 compared with earnings of $5.6 million, 6 cents a share, on revenue of $595.4 million a year earlier.
“Our business continued to show improvement as we achieved (cash flow) growth in our wholly owned operations for the third straight quarter,” Smith said in a statement preceding a conference call with investors this morning.
“Our strategy of building a diversified portfolio and maintaining an exceptional customer experience, while keeping a tight rein on costs, is delivering strong results,” he said.
Citing increased visitation to Las Vegas and higher room rates over the past 18 months, Smith said, “it’s clear we’re headed in the right direction.”
Smith said he thinks the company has not been affected by the aggressive marketing and advertising tactics undertaken by Station Casinos Inc.
Chief Operating Officer Paul Chakmak said every Boyd region showed improvements in cash flow, calling the Las Vegas results “exceptional.” He particularly noted a 28 percent increase in cash flow at the company’s Orleans property.
The company is continuing to capitalize on the strength of bringing customers from Hawaii to downtown Las Vegas. The company recently chartered a larger Boeing 767 to fly customers to and from Hawaii five times a week. The wide-bodied jet will enable the company to fly 6,000 additional customers per year, a 6 percent increase.
While Smith said he’s seeing improvement in the company’s Las Vegas and southern markets, Atlantic City’s Borgata proved to be the quarter’s biggest disappointment, primarily because of the casino’s late August closure as a result of Hurricane Irene. The three-day closure, over a weekend, contributed to a $3.9 million net loss attributed to non-controlling interests.
But Smith also anticipates growth for the company with strategic acquisitions like the acquisition of the IP Casino Resort Spa in Biloxi, Miss., for $278 million, plus a $10 million contribution to the Engelstad Family Foundation. He said the property would be cross-marketed to other Boyd locations through the company’s B Connected loyalty card.
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