Boyd Gaming
Reports Second Quarter Results
- E.P.S. More Than Double
for Fourth Straight Quarter -
- Fourth Consecutive Quarter for Across-the-Board
EBITDA Gains -
Second Quarter Results
The Company reported EBITDA of $159 million for
the second quarter, an increase of 87% over the
$85 million reported for the second quarter last
year. On a same-store basis (properties operated
by the Company fully in both quarters), EBITDA for
the quarter was 14.1% above the second quarter 2004.
All six of the Company's operating units reported
year-over-year increases in quarterly revenue and
EBITDA. In fact, the second quarter was the fourth
quarter in a row that every operating unit reported
a quarter-over-quarter EBITDA gain. The widespread
nature of the EBITDA gains in this year's second
quarter versus the prior year is evidenced by the
following statistics:
-- Boulder Strip EBITDA increased 32%
-- Coast Casinos EBITDA, as compared to its second
quarter results when
it operated as an independent company, increased
32%
-- Stardust EBITDA increased 23%
-- Downtown Properties EBITDA increased 63%
-- Central Region EBITDA increased 7.8% (a 5.8%
increase on a
same-store basis)
-- The Company's share of Borgata's operating income
(before amortization
expenses) increased 13.5%
Revenues for the second quarter were $554 million,
an increase of 62% over the $342 million reported
for the second quarter last year, principally due
to the addition of Coast Casinos' revenues in the
current quarter. On a same- store basis, revenues
were up 4.7% for the quarter versus the comparable
quarter in the prior year. Net income for the second
quarter was $48.6 million, or $.54 per share, versus
$15.5 million, or $.23 per share, reported for the
second quarter 2004. In this year's second quarter,
the Company's weighted average diluted shares were
22.1 million greater than last year's average for
the comparable quarter, due principally to shares
issued in the Coast Casinos merger.
Bill Boyd, Chairman and Chief Executive Officer
of Boyd Gaming, commented, "Once again I can
report how very pleased I am with our Company's
performance. Doubling earnings per share four quarters
in a row is quite an accomplishment. Our Las Vegas
locals business, represented by our Boulder Strip
and Coast Casino units, again delivered excellent
results with second quarter combined revenues and
EBITDA growing 10.4% and 32%, respectively, when
compared to the prior year's second quarter. And
we're building to our strength with South Coast,
a major addition to our Las Vegas locals franchise
expected to open sometime after the start of 2006.
Our Downtown Las Vegas properties also had a great
quarter, producing record results despite continuing
high fuel costs in our Hawaiian air charter operations.
Delta Downs reported excellent results in its first
full quarter after the opening of its new hotel,
event center, lounge and food court. And Borgata
had another strong quarter, with revenues at the
property up 11.8% and EBITDA up 8.5% in the quarter
versus the second quarter 2004."
In footnote (1), you will find a discussion of
how and why the Company uses adjusted earnings,
adjusted earnings per share, EBITDA (non-GAAP measures
of earnings as defined in footnote (1)) and EBITDA
margin, performance measurements widely used in
the gaming industry. As used in this release, EBITDA
for a particular operating segment (adjusted EBITDA)
is before corporate expense. Further in this release
you will also find tables that reconcile certain
non-GAAP measurements to GAAP financial information.
Six-month Results
Revenues for the first six months of 2005 were
$1.121 billion, an increase of 67% over the $672
million reported in the first six months of 2004.
The increase was primarily attributable to the addition
of Coast Casinos and Sam's Town Shreveport in 2004;
on a same-store basis, revenues in the first six
months increased 3.9% over the first six months
of 2004. EBITDA for the first six months was $330
million versus $166 million reported in the same
period last year, an increase of 99%. On a same-store
basis, six-month EBITDA rose 15.6% versus the comparable
six months in 2004, with all units reporting strong
gains when comparing both six-month periods. Adjusted
earnings for the first six months were $1.19 per
share versus $.55 per share for the comparable period
in 2004, an increase of 116%. Net income for the
first six months of 2005 was $88.7 million, or $.98
per share, versus $29.0 million, or $.43 per share,
in the first six months of 2004. In addition to
the earnings adjustments described in the first
paragraph of this report, net income for the first
six months of 2005 includes, and adjusted earnings
for that period exclude, a cumulative effect of
a change in accounting principle. Net income for
the first six months of 2004 includes, and adjusted
earnings for that period exclude, an Indiana State
income tax assessment.
Borgata
The Company also reported second quarter results
for Borgata Hotel Casino and Spa, the Company's
joint venture property in Atlantic City. As an unconsolidated
joint venture, Borgata's results appear in only
two lines of the Company's consolidated statements
of operations; therefore, more detailed financial
information is presented in tables later in this
release.
For the second quarter, Borgata reported gaming
revenue of $170 million, an increase of 13.1% over
the second quarter 2004, and non-gaming revenue
of $61.0 million, an increase of 7.8% over the second
quarter last year. Net revenues for the quarter
were $184 million, a gain of 11.8% over last year's
second quarter. Borgata reported EBITDA for the
second quarter of $56.7 million, an 8.5% increase
over the $52.3 million reported in last year's second
quarter. Borgata's EBITDA margin for the quarter
was 30.8% versus 31.7% reported in the prior period.
Hotel occupancy for the quarter was 96% and the
average daily room rate was $132, both well ahead
of the same measures reported for last year's second
quarter.
Borgata's casino win for the second quarter was
the highest in the Atlantic City market, $11.2 million
more than the much larger Bally's, which had the
second highest casino win. Borgata's market-leading
table game win for the quarter was up 14.1% over
the same quarter last year, and the property's slot
win for the quarter gained 9.8%. In win per unit,
Borgata's tables won $4,737 per day for the quarter
and its slots won $334 per day for the quarter,
both leading the market by wide measures.
Bob Boughner, Chief Executive Officer of Borgata,
said, "It is gratifying that after two years
of operations, Borgata continues to both lead and
grow the Atlantic City market, while producing strong
and growing earnings for our Company. We are very
proud to report that the property produced EBITDA
of $237 million in its second four quarters of operation
ended June 30, 2005 versus EBITDA of $157 million
in its first four quarters, an increase of 51%.
"Borgata's commitment to continuing growth
is evidenced by our two expansions. The $200 million
public space expansion is on budget and on schedule
for a second quarter 2006 opening. We are looking
forward to providing more of the excellent casino,
dining and entertainment experiences that have been
Borgata's hallmark. Around the start of 2006, we
expect to begin construction of a new $325 million
hotel and spa at Borgata. Current plans call for
800 hotel rooms, including 50 suites, a new spa
and three swimming pools to complement our popular
existing spa and pool complex. Completion is expected
in the fourth quarter 2007. We believe Borgata will
continue to be the leading gaming entertainment
resort in the mid-Atlantic region for years to come."
Wholly-owned Properties
The Company reports results from its wholly-owned
properties in five segments. For a listing of the
specific properties in each unit, see the introduction
to the tables appearing after the text of this release.
-- Boulder Strip
The Las Vegas locals-oriented Boulder Strip properties,
principally Sam's Town, continued to benefit from
a strong Las Vegas economy and reported its second-best
EBITDA and EBITDA margin ever, surpassed only by
the seasonally stronger previous quarter. For this
year's second quarter, revenues were up 8.4%, EBITDA
was up 32% and EBITDA margin was up 5.6 percentage
points, all as compared to the second quarter 2004.
Notably, virtually all of the second quarter revenue
gains versus the prior year were brought to the
EBITDA line.
-- Coast Casinos
As the merger with Coast Casinos was completed
on July 1, 2004, there are no results for Coast
for the second quarter 2004 in the Company's financial
statements. Therefore, all comparisons presented
here are with Coast's pre- merger results of operations
when they were an independent company, which results
are reconciled in a table later in this release.
Coast's revenues for the second quarter were $180
million, an increase of 10.9% over the second quarter
last year. EBITDA for the second quarter was $61.2
million, a 32% increase over the prior period. EBITDA
margin for the second quarter was 34.0%, up from
28.5% for the second quarter 2004, as 84% of incremental
revenue flowed through to the EBITDA line. These
results continue to demonstrate the strength of
the Las Vegas economy. An additional factor contributing
to the unit's strong performance was the 461 new
hotel rooms at The Orleans that came on line in
the fourth quarter 2004.
-- Stardust
The Stardust reported a 0.9% revenue gain in the
second quarter versus the second quarter last year.
Negatively affecting total revenue was lower showroom
revenue due to a change in entertainment policy,
an action that enhanced profitability. EBITDA for
the quarter was $5.7 million, a 23% gain over the
second quarter 2004. The second quarter marked the
sixth straight quarter of EBITDA increases versus
the comparable quarter in the prior year.
-- Downtown Properties
Revenues for the Downtown Properties increased
13.9% for the second quarter as compared to last
year's second quarter. EBITDA for the second quarter
was $14.3 million, a 63% increase over the prior
year's quarter and a record EBITDA for the Downtown
unit. All three casino hotels, while increasing
revenues, reduced expenses in the second quarter
versus the prior year to produce large increases
in EBITDA margins. Including the travel agency,
which experienced a $1.5 million increase in fuel
costs in its air charter operations in the quarter
versus the prior year's second quarter, the unit's
EBITDA margin grew 6.4 percentage points in the
second quarter versus the second quarter 2004.
-- Central Region
The six Central Region properties reported a 9.9%
increase in revenues and a 7.8% increase in EBITDA
for the second quarter versus the comparable quarter
in 2004. This quarter's results include a full quarter
of Sam's Town Shreveport, which the Company acquired
in mid-May 2004. On a same-store basis, second quarter
revenues increased 1.6% and EBITDA rose 5.8% over
the second quarter 2004. The significant contributor
to the EBITDA increase was Delta Downs, where EBITDA
rose 45% in the second quarter versus the prior
year due to a 24% increase in slot revenue following
the opening of the new hotel and other amenities
in March 2005. The only other significant variance
in comparable quarter-over quarter results was at
Sam's Town Tunica where EBITDA declined $2.2 million
in the second quarter due to a decline in revenues.
Financial Statistics
The Company provided the following additional information
for the second quarter ended June 30, 2005:
-- June 30 debt balance: $2.360 billion
-- June 30 cash: $149 million
-- Dividends paid in the quarter: $11.0 million
-- Maintenance capital expenditures during the quarter:
$26 million
-- Expansion capital expenditures for projects during
the quarter: Blue Chip - $26 million
South Coast - $87 million
-- Number of shares outstanding on June 30: 88.6
million
-- Capitalized interest during the quarter: $5.0
million
-- The Company received its second distribution
from Borgata during the
quarter: $6.6 million, representing 35% of the Company's
half of Borgata's pre-tax income for the first quarter
2005
-- June 30 debt balance for Borgata: $366 million
(1) Adjusted Earnings are earnings before preopening
expenses, gain on sales of undeveloped land, acquisition
and transition related expenses, charges associated
with an Indiana state tax assessment and a cumulative
effect of a change in accounting principle. Adjusted
Earnings (and Adjusted EPS) are presented solely
as a supplemental disclosure because management
believes that it is a widely used measure of performance
in the gaming industry and as this measure is considered
by many to be a better measure on which to base
expectations of future results than net income computed
in accordance with generally accepted accounting
principles ("GAAP"). A reconciliation
of net income, based upon GAAP, to Adjusted Earnings
and the presentation of Adjusted EPS are each included
in the financial schedules accompanying this release.
EBITDA is earnings before interest, taxes, depreciation,
amortization, preopening expenses, deferred rent,
merger, acquisition and transition related expenses,
the gain on sales of undeveloped land, our share
of Borgata's non-operating expenses, and a cumulative
effect of a change in accounting principle. EBITDA
and EBITDA margin are presented solely as supplemental
disclosures because the Company believes that they
are widely used measures of operating performance
in the gaming industry and EBITDA is a principal
basis for valuation of gaming companies. Specifically,
EBITDA is presented before preopening expenses as
it represents a measure of performance of the Company's
existing operational activities. The Company uses
property EBITDA (EBITDA before corporate expense)
as the primary measure of the operating performance
of each of its properties, including the evaluation
of operating personnel. EBITDA should not be construed
as an alternative to operating income, as an indicator
of the Company's operating performance or as an
alternative to cash flow from operating activities,
as a measure of liquidity, or as any other measure
determined in accordance with GAAP. The Company
has significant uses of cash flows, including capital
expenditures, interest payments, income taxes and
debt principal repayments which are not reflected
in EBITDA. Also, other gaming companies that report
EBITDA information may calculate EBITDA in a different
manner than the Company. EBITDA from Coast Casinos
for the three months ended June 30, 2004 is reconciled
in a table later in this release.
Source: Boyd Gaming Corporation.
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