Boyd Gaming Corporation News
Boyd Gaming Reports First Quarter Results
(Logo: http://www.newscom.com/cgi-bin/prnh/20030219/BOYDLOGO) Recent Highlights — First quarter 2008 net revenues for the Las Vegas Locals region decline 5.6% and Adjusted EBITDA(1) decreases 10.6% compared to the first quarter 2007, as an increasingly difficult economic climate impacts consumer spending. — Midwest and South records 13.1% decline in net revenues and 20.4% decline in Adjusted EBITDA for the first quarter 2008, chiefly due to Blue Chip, which continues to be materially impacted by an increased competitive environment and significant construction disruption. — Downtown Las Vegas net revenues decline 4.6% and Adjusted EBITDA declines 26.7%, due to sharply higher fuel costs, as well as a reduction in consumer spending due to tougher economic conditions. — Borgata's first quarter 2008 net revenues were essentially flat with prior year results and Adjusted EBITDA declined 8.4% primarily due to lower gaming revenues, partially offset by lower promotional expenses, and slightly higher operating expenses. — Initial launch of nationwide players club program leads to 21% increase in new Las Vegas Local member sign-ups for the first quarter 2008 versus the same period last year; the Midwest and South phase begins with successful players club launch at Blue Chip in April, with the remaining properties to follow over the course of the next two months. (1) See footnotes at the end of the release for additional information relative to non-GAAP financial measures.
First Quarter Results
We reported a first quarter 2008 loss from continuing operations of
During the first quarter 2008, we completed our valuation of the acquisition of Dania Jai-Alai, which was purchased in
Including discontinued operations, we reported net income for the first quarter 2007 of
Adjusted Earnings(1) from continuing operations for the first quarter 2008 were
— $90.3 million for write-downs and other charges, primarily consisting of an $84.0 million non-cash impairment charge related to Dania Jai-Alai; and — $4.7 million for other items, primarily consisting of preopening expenses associated with our Echelon development.
By comparison, the first quarter 2007 included certain pre-tax adjustments that reduced income from continuing operations by
— $9.0 million for write-downs and other charges, mainly consisting of closure costs at Stardust; and — $5.0 million for other items, primarily consisting of preopening expenses associated with our Echelon development.
Net revenues were
(1) See footnotes at the end of the release for additional information relative to non-GAAP financial measures.
Key Operations Review
In our Las Vegas Locals segment, first quarter 2008 net revenues were
Our
In our Midwest and South region, we recorded
In
Development Update Development continues to progress on our key growth initiatives: — In Atlantic City, The Water Club is in the final stages of construction and recently began taking reservations. Readying for a June 2008 opening, The Water Club is an 800-room boutique hotel directly connected to Borgata and will be the first of its kind in Atlantic City. The $400 million expansion will include five swimming pools, a spa in the sky, additional meeting and retail space and a separate porte cochere and front desk. — Our $130 million expansion of Blue Chip in Michigan City, Indiana remains on schedule for a December 2008 opening. This development project will add a dramatic 22-story hotel tower, which we topped-off earlier this month. The hotel will include 300 new upscale guest rooms, a spa and fitness center, additional meeting and event space, new dining and nightlife experiences, and a new porte cochere. — Construction on our Echelon development continues to advance as foundation work is complete for our wholly-owned hotels, which include Hotel Echelon, The Enclave, and Shangri-La Las Vegas; we began erecting steel for the lowrise this week, which encompasses much of the common area for three of the five hotels. Excavation for High Street (retail promenade) and The Meeting Center is complete and foundation work is well underway. Echelon remains on-schedule and on-budget.
Boyd Gaming Branding Initiative
The second phase of our branding initiative is underway, as Blue Chip recently introduced its new players club program to widespread customer acceptance. We successfully launched the first phase of our nationwide, consolidated players club program last quarter, when our Las Vegas Locals properties were united under a new Club Coast card. The current phase involves the rollout of the program across the Midwest and South Region under the "B Connected" brand. When the program launch is completed later this quarter, players will be able to use their cards at Boyd Gaming properties in
Commenting on the launch,
and we're confident that the defining aspects of our One Card program will provide us a key competitive advantage in the coming months and years."
Dividend
Our Board of Directors declared a quarterly dividend of
Key Financial Statistics
The following is additional information as of and for the three months ended
— March 31 debt balance: $2.4 billion — March 31 cash: $152.5 million — Dividends paid in the quarter: $13.2 million — Maintenance capital expenditures during the quarter: $14.0 million — Expansion capital expenditures during the quarter: $169.0 million — Capitalized interest during the quarter: $6.7 million — Cash distribution to the Company from Borgata in the quarter: $14.7 million — March 31 debt balance at Borgata: $751.8 million
Conference Call Information
We will host our first quarter 2008 conference call today (
The conference call will also be available live on the Internet at http://www.boydgaming.com or http://phx.corporate-ir.net/phoenix.zhtml?p=irol- eventDetails&c=95703&eventID=1816614
Following the call's completion, a replay will be available by dialing 888.286.8010 beginning two hours after the completion of the call and continuing through
The following table presents Net Revenues and Adjusted EBITDA by operating segment and reconciles Adjusted EBITDA to income (loss) from continuing operations for the three months ended
Three Months Ended March 31, 2008 2007 Net Revenues (In thousands) Las Vegas Locals $206,494 $218,688 Downtown Las Vegas (a) 60,929 63,833 Midwest and South 203,695 234,509 Net revenues $471,118 $517,030 Adjusted EBITDA Las Vegas Locals $66,655 $74,579 Downtown Las Vegas 10,169 13,881 Midwest and South 45,599 57,281 Wholly-owned property Adjusted EBITDA 122,423 145,741 Corporate expense (c) (13,746) (12,193) Wholly-owned Adjusted EBITDA 108,677 133,548 Our share of Borgata's operating income before net amortization, preopening and other items (d) 19,005 21,872 Adjusted EBITDA (e) 127,682 155,420 Other operating costs and expenses Deferred rent 1,134 1,130 Depreciation and amortization (f) 43,494 40,936 Preopening expenses 5,579 4,450 Our share of Borgata's preopening expenses 408 470 Our share of Borgata's write-downs and other charges, net 70 (34) Share-based compensation expense 2,969 4,184 Write-downs and other charges 90,313 9,008 Total other operating costs and expenses 143,967 60,144 Operating income (loss) (16,285) 95,276 Other non-operating items Interest expense, net (b) 30,253 36,548 (Increase) decrease in value of derivative instruments (442) 76 Gain on early retirement of debt (950) - Our share of Borgata's non-operating expenses, net 4,605 3,801 Total other non-operating costs and expenses, net 33,466 40,425 Income (loss) from continuing operations before income taxes (49,751) 54,851 Benefit from (provision for) income taxes 17,164 (19,746) Income (loss) from continuing operations $(32,587) $35,105 (a) Includes revenues related to Vacations Hawaii and other travel agency related entities of $10.0 million and $10.7 million for the three months ended March 31, 2008 and 2007, respectively. (b) Net of interest income and amounts capitalized. (c) The following table reconciles the presentation of corporate expense on our condensed consolidated statements of operations to the presentation on the accompanying table: Three Months Ended March 31, 2008 2007 (In thousands) Corporate expense as reported on our condensed consolidated statements of operations $15,773 $15,271 Corporate share-based compensation expense (2,027) (3,078) Corporate expense as reported on the accompanying table $13,746 $12,193 (d) The following table reconciles the presentation of our share of Borgata's operating income on our condensed consolidated statements of operations to the presentation of our share of Borgata's results on the accompanying table: Three Months Ended March 31, 2008 2007 (In thousands) Operating income from Borgata, as reported on our condensed consolidated statements of operations $18,203 $21,112 Add back: Net amortization expense related to our investment in Borgata 324 324 Our share of preopening expenses 408 470 Our share of write-downs and other charges, net 70 (34) Our share of Borgata's operating income before net amortization, preopening and other items $19,005 $21,872 (e) The following table reconciles Adjusted EBITDA to EBITDA and income (loss) from continuing operations: Three Months Ended March 31, 2008 2007 (In thousands) Adjusted EBITDA $127,682 $155,420 Deferred rent 1,134 1,130 Preopening expenses 5,579 4,450 Our share of Borgata's preopening expenses 408 470 Our share of Borgata's write-downs and other charges, net 70 (34) Share-based compensation expense 2,969 4,184 Write-downs and other charges 90,313 9,008 (Increase) decrease in value of derivative instruments (442) 76 Gain on early retirement of debt (950) - Our share of Borgata's non- operating expenses, net 4,605 3,801 EBITDA 23,996 132,335 Depreciation and amortization 43,494 40,936 Interest expense, net 30,253 36,548 (Benefit from) provision for income taxes (17,164) 19,746 Income (loss) from continuing operations $(32,587) $35,105 (f) The following table reconciles the presentation of depreciation and amortization on our condensed consolidated statements of operations to the presentation on the accompanying table: Three Months Ended March 31, 2008 2007 (In thousands) Depreciation and amortization as reported on our condensed consolidated statements of operations $43,170 $40,612 Net amortization expense related to our investment in Borgata 324 324 Depreciation and amortization as reported on the accompanying table $43,494 $40,936 BOYD GAMING CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three Months Ended March 31, 2008 2007 (In thousands, except per share data) Revenues Gaming $392,966 $431,931 Food and beverage 66,926 68,306 Room 38,355 39,972 Other 29,664 32,884 Gross revenues 527,911 573,093 Less promotional allowances 56,793 56,063 Net revenues 471,118 517,030 Costs and expenses Gaming 177,035 197,623 Food and beverage 39,278 41,237 Room 11,424 11,372 Other 22,090 23,369 Selling, general and administrative 77,907 77,246 Maintenance and utilities 23,037 22,678 Depreciation and amortization 43,170 40,612 Corporate expense 15,773 15,271 Preopening expenses 5,579 4,450 Write-downs and other charges 90,313 9,008 Total costs and expenses 505,606 442,866 Operating income from Borgata 18,203 21,112 Operating income (loss) (16,285) 95,276 Other (income) expense Interest income (8) - Interest expense, net of amounts capitalized 30,261 36,548 (Increase) decrease in value of derivative instruments (442) 76 Gain on early retirement of debt (950) - Other non-operating expenses from Borgata, net 4,605 3,801 Total 33,466 40,425 Income (loss) from continuing operations before income taxes (49,751) 54,851 Benefit from (provision for) income taxes 17,164 (19,746) Income (loss) from continuing operations (32,587) 35,105 Discontinued operations: Income from discontinued operations (including a gain on disposition of $285,189 during 2007) - 282,956 Provision for income taxes - (100,195) Net income from discontinued operations - 182,761 Net income (loss) $(32,587) $217,866 Basic Net Income (Loss) Per Common Share Income (loss) from continuing operations $(0.37) $0.40 Net income from discontinued operations - 2.10 Net income (loss) $(0.37) $2.50 Average Basic Shares Outstanding 87,809 87,240 Diluted Net Income (Loss) Per Common Share Income (loss) from continuing operations $(0.37) $0.40 Net income from discontinued operations - 2.06 Net income (loss) $(0.37) $2.46 Average Diluted Shares Outstanding 87,809 88,460
The following table reconciles income (loss) from continuing operations based upon
Three Months Ended March 31, 2008 2007 (In thousands, except per share data) Income (loss) from continuing operations $(32,587) $35,105 Adjustments: Preopening expenses 5,579 4,450 Our share of Borgata's preopening expenses 408 470 Our share of Borgata's write-downs and other charges, net 70 (34) (Increase) decrease in value of derivative instruments (442) 76 Gain on early retirement of debt (950) - Write-downs and other charges 90,313 9,008 Income tax effect for above adjustments (32,767) (5,029) Adjusted earnings $29,624 $44,046 Adjusted earnings per diluted share (Adjusted EPS) $0.34 $0.50 Weighted average diluted shares outstanding 87,809 88,460 The following table reports Borgata's financial results: Three Months Ended March 31, 2008 2007 (In thousands) Gaming revenue $178,636 $187,269 Non-gaming revenue 68,106 66,737 Gross revenues 246,742 254,006 Less promotional allowances 44,718 50,276 Net revenues 202,024 203,730 Expenses 146,558 143,161 Depreciation and amortization 17,455 16,826 Preopening expenses 816 941 Write-downs and other charges, net 140 (69) Operating income 37,055 42,871 Interest expense, net (6,457) (7,693) (Provision for) benefit from income taxes (2,754) 90 Total non-operating expenses (9,211) (7,603) Net income $27,844 $35,268
The following table reconciles our share of Borgata's financial results to the amounts reported on our condensed consolidated statements of operations:
Three Months Ended March 31, 2008 2007 (In thousands) Our share of Borgata's operating income $18,527 $21,436 Net amortization expense related to our investment in Borgata (324) (324) Operating income from Borgata, as reported on our condensed consolidated statements of operations $18,203 $21,112 Other non-operating net expenses from Borgata, as reported on our condensed consolidated statements of operations $4,605 $3,801 The following table reconciles operating income to Adjusted EBITDA for Borgata: Three Months Ended March 31, 2008 2007 (In thousands) Operating income $37,055 $42,871 Depreciation and amortization 17,455 16,826 Preopening expenses 816 941 Write-downs and other charges, net 140 (69) Adjusted EBITDA $55,466 $60,569 The following table reconciles Adjusted EBITDA to EBITDA and Net income for Borgata: Three Months Ended March 31, 2008 2007 (In thousands) Adjusted EBITDA $55,466 $60,569 Preopening expenses 816 941 Write-downs and other charges, net 140 (69) EBITDA 54,510 59,697 Depreciation and amortization 17,455 16,826 Interest expense, net 6,457 7,693 Provision for (benefit from) income taxes 2,754 (90) Net income $27,844 $35,268 Footnotes and Safe Harbor Statements
Non-GAAP Financial Measures
Regulation G, "Conditions for Use of Non-GAAP Financial Measures," prescribes the conditions for use of non-GAAP financial information in public disclosures. We believe that our presentations of the following non-GAAP financial measures are important supplemental measures of operating performance to investors: earnings before interest, taxes, depreciation and amortization (EBITDA), Adjusted EBITDA, Adjusted Earnings and Adjusted Earnings Per Share (Adjusted EPS). The following discussion defines these terms and why we believe they are useful measures of our performance.
EBITDA and Adjusted EBITDA
EBITDA is a commonly used measure of performance in our industry which we believe, when considered with measures calculated in accordance with United States Generally Accepted Accounting Principles (GAAP), gives investors a more complete understanding of operating results before the impact of investing and financing transactions and income taxes and facilitates comparisons between us and our competitors. Management has historically adjusted EBITDA when evaluating operating performance because we believe that the inclusion or exclusion of certain recurring and non-recurring items is necessary to provide the most accurate measure of our core operating results and as a means to evaluate period-to-period results. We have chosen to provide this information to investors to enable them to perform more meaningful comparisons of past, present and future operating results and as a means to evaluate the results of core on-going operations. We do not reflect such items when calculating EBITDA; however, we adjust for these items and refer to this measure as Adjusted EBITDA. We have historically reported this measure to our investors and believe that the continued inclusion of Adjusted EBITDA provides consistency in our financial reporting. We use Adjusted EBITDA in this press release because we believe it is useful to investors in allowing greater transparency related to a significant measure used by management in its financial and operational decision-making. Adjusted EBITDA is among the more significant factors in management's internal evaluation of total company and individual property performance and in the evaluation of incentive compensation related to property management. Management also uses Adjusted EBITDA as a measure in determining the value of acquisitions and dispositions. Adjusted EBITDA is also widely used by management in the annual budget process. Externally, we believe these measures continue to be used by investors in their assessment of our operating performance and the valuation of our company. Adjusted EBITDA reflects EBITDA adjusted for deferred rent, preopening expenses, share-based compensation expense, write-downs and other charges, change in value of derivative instruments, gain/loss on early retirements of debt, and our share of Borgata's non-operating expenses, preopening expenses and write-downs and other charges, net. A reconciliation of Adjusted EBITDA to EBITDA and income (loss) from continuing operations, based upon GAAP, is included in the financial schedules accompanying this release.
Adjusted Earnings and Adjusted EPS
Adjusted Earnings is income (loss) from continuing operations before preopening expenses, change in value of derivative instruments, write-downs and other charges, gain/loss on early retirements of debt, and our share of Borgata's preopening expenses and write-downs and other charges, net. Adjusted Earnings and Adjusted EPS are presented solely as supplemental disclosures because management believes that they are widely used measures of performance in the gaming industry. A reconciliation of Adjusted EBITDA to EBITDA and income (loss) from continuing operations, based upon GAAP, and the presentation of Adjusted EPS are each included in the financial schedules accompanying this release.
Limitations on the Use of Non-GAAP Measures
The use of EBITDA, Adjusted EBITDA, Adjusted Earnings and Adjusted EPS has certain limitations. Our presentation of EBITDA, Adjusted EBITDA, Adjusted Earnings and Adjusted EPS may be different from the presentation used by other companies and therefore comparability may be limited. Depreciation and amortization expense, interest expense, income taxes and other items have been and will be incurred and are not reflected in the presentation of EBITDA or Adjusted EBITDA. Each of these items should also be considered in the overall evaluation of our results. Additionally, EBITDA and Adjusted EBITDA do not consider capital expenditures and other investing activities and should not be considered as a measure of our liquidity. We compensate for these limitations by providing the relevant disclosure of our depreciation and amortization, interest and income taxes, capital expenditures and other items both in our reconciliations to the GAAP financial measures and in our consolidated financial statements, all of which should be considered when evaluating our performance.
EBITDA, Adjusted EBITDA, Adjusted Earnings and Adjusted EPS are used in addition to and in conjunction with results presented in accordance with GAAP. EBITDA, Adjusted EBITDA, Adjusted Earnings and Adjusted EPS should not be considered as an alternative to net income, operating income, or any other operating performance measure prescribed by GAAP, nor should these measures be relied upon to the exclusion of GAAP financial measures. EBITDA, Adjusted EBITDA, Adjusted Earnings and Adjusted EPS reflect additional ways of viewing our operations that we believe, when viewed with our GAAP results and the reconciliations to the corresponding GAAP financial measures, provide a more complete understanding of factors and trends affecting our business than could be obtained absent this disclosure. Management strongly encourages investors to review our financial information in its entirety and not to rely on a single financial measure.
Forward Looking Statements and Company Information
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements contain words such as "may," "will," "might," "expect," "believe," "anticipate," "could," "would," "estimate," "continue," "pursue," or the negative thereof or comparable terminology, and may include (without limitation) information regarding the Company's expectations, goals or intentions regarding the future, including, but not limited to, statements regarding the Company's strategy, expenses, revenue, earnings, cash flow, Adjusted EBITDA, Adjusted Earnings or Earnings Per Share. In addition, forward-looking statements include statements regarding the effects of competition and construction disruption on Blue Chip's operating results, the slowing economy and reduced consumer spending, the aggregate amount of construction hard costs covered by contracts on Echelon, the factors that led to the impairment charge at
About Boyd Gaming
Headquartered in
SOURCE Boyd Gaming Corporation
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