Boyd Gaming, the Las Vegas-based casino company whose local properties include the Orleans, Suncoast and the California, reported its first-quarter earnings today.
Company: Boyd Gaming Corp. (NYSE: BYD)
Revenue: $550.6 million, a 1.8 percent increase from pro forma net revenue in the first quarter last year. Last fall, MGM Resorts International received approval to keep its 50 percent stake in Atlantic City’s Borgata casino, so Boyd, which owns the other half, has to do some accounting maneuvers to make a fair year-over-year comparison. The pro forma amount reflects Borgata’s results “on a comparable equity method basis,” Boyd said in a statement.
Earnings: $35.1 million, compared to a net loss of $6.2 million a year ago. The company said its earnings were boosted by the settlement of an IRS appeal that gave it a $23.2 million reduction in its income tax provision for the quarter. Adjusted earnings were $14.2 million, compared to a loss of $4.1 million in the same quarter last year.
Earnings per share: 31 cents, compared to a loss of 6 cents in the first quarter of 2014. Adjusted earnings per share were 13 cents per share, compared to a loss of 4 cents per share last year.
What it means: The company had a mixed quarter in Las Vegas, with revenue up year over year at its downtown casinos but down slightly at its more locals-oriented properties.
Specifically, Boyd’s downtown Las Vegas casinos reported net revenue of $56.6 million, up 1.6 percent from the same period last year. The company attributed the success to increased gaming revenue from its Hawaiian customers — a key group for Boyd — better pedestrian traffic and lower fuel costs for its Hawaiian charter service.
At its locals-focused casinos, Boyd reported net revenue of $150.3 million, down slightly from $151.4 million in the first quarter of 2014. The company said the decline was due to a “significant business disruption” caused by an “extensive roadway project” next to the Suncoast. A drop in sports book hold from the Super Bowl was also a contributing factor.
In a conference call with analysts, CEO Keith Smith had plenty of positive things to say about the outlook in Las Vegas. He said fundamentals in Boyd’s locals business and the local economy in general “remain solid.”
“The Southern Nevada economy is strengthening, the local population is growing, more people have jobs, visitation is rising and consumers are spending more. This is translating into continued growth throughout our locals business, especially in our nongaming areas,” Smith said.
Asked later to put his optimism about Las Vegas in context with the more pessimistic view recently expressed by Wynn Resorts CEO Steve Wynn, Smith said economic indicators like employment and housing are trending well for Las Vegas.
“I understand what Mr. Wynn said, but I think there are some positive signs out there across the board,” Smith said.
In Atlantic City, the Borgata’s net revenue grew 9.2 percent year over year to $182.6 million. Boyd noted that the casino saw a 7.4 percent gaming revenue increase for the quarter, with growth in both slot and table game win.
The casino was successful online, too: Boyd said the online gaming operations at Borgata produced $1.1 million in earnings before interest, taxes, depreciation and amortization. That’s its third consecutive quarter of profits, Boyd said.
The company also touted the Borgata’s nongaming performance, noting that the hotel added 14,000 room nights during the quarter, while food and beverage revenues jumped 11 percent.
Smith underlined the importance of doing well off the casino floor.
“As we look to the future, it is clear to us that our customer base is changing — we’re seeing a younger demographic of customers who are looking for high-quality and engaging amenities. At the same time, our existing customers have shifted more of their spending away from the casino floor,” he said.
Smith said Boyd is continuing to focus on improving its nongaming offerings. He said gaming remains at the core of the business, but he called the nongaming side essential to the company’s future.
Boyd previously revealed that it has explored the idea of establishing a real estate investment trust, but Smith said today that “when we have something definitive to say, we’ll come out and say it at that point.”
The company’s total debt at the end of the quarter was $3.42 billion.