Boyd Gaming reports profitable quarter, boosted by sale of stake in Borgata

Las Vegas-based Boyd Gaming Corp. recorded a profitable third quarter with its Las Vegas locals market delivering double-digit percentage increases in cash flow for the fifth time in six quarters.

The company on Tuesday reported a dramatic increase in income resulting from the closing during the quarter of the sale of its share in Atlantic City’s Borgata property.

The company completed the $900 million sale of its half of the Borgata, one of Atlantic City’s top performers, to MGM Resorts International on Aug. 1.

The company also has begun seeing revenue through its acquisition of the Aliante Hotel in North Las Vegas and is now setting its sights on completing its purchase of Southern Nevada’s two Cannery hotel-casinos by year’s end.

For the quarter that ended Sept. 30, the company reported net income of $342.6 million, $2.97 a share, on revenue of $531.9 million compared with net income of $25.4 million, 22 cents a share, on revenue of $546.3 million from the same quarter a year earlier.

“The Southern Nevada economy is strong and the future is bright,” Boyd President and CEO Keith Smith said in a conference call with investors Tuesday afternoon. “The economy continues to strengthen and citywide, there’s been a 12 percent growth in convention business and the city has added 26,000 jobs over the last 12 months.”

Smith said Southern Nevada’s economic boom has been particularly beneficial to Boyd properties with visitation to downtown Las Vegas strong and with the transformation of North Las Vegas, where Aliante and one of the Cannery properties are located, to an industrial hub.

Electric car maker Faraday Future and transportation innovator Hyperloop One have begun growing their presence in North Las Vegas.

The Aliante deal was completed Sept. 27 and executives say it should continue to boost the company’s fortunes in Southern Nevada, its top-performing market. Cash flow was up 12 percent in the third quarter.

Smith said he expects cash flow growth to continue due to Aliante’s performance and the company hasn’t even taken the potential of the Cannery into account in its guidance to investors for 2017. The company won’t link its B Connected loyalty card club into Aliante until the middle of next year.

Downtown business, Smith said, has been good despite renovations at the company’s California property, which had 14 percent fewer rooms to offer because of the project that began in September and completed by the end of the year.

“Our financial results (from Aliante) are exceeding our previously estimated projections,” Smith said. “Pending regulatory approval, we still expect to close on the acquisition of the Cannery properties by the end of the year.”

Southern Nevada’s performance offset sluggish results in Boyd’s other regions, but were in line with what company executives expected.

Smith said the company is dealing with isolated issues in different markets. In Louisiana, for example, Smith said the company saw downturns as a result of regional flooding and the company’s Delta Downs property in Vinton, Louisiana, operated through construction of a new room tower and renovations to existing rooms.

The company realized additional gains by refinancing its debt. Not only did the company simplify its balance sheet, but it reduced its annual interest expense, Smith said.

Shares of Boyd fell 26 cents, or 1.46 percent, to close at $17.60. They fell further in after-hours trade.

Contact Richard N. Velotta at rvelotta@reviewjournal.com or 702-477-3893. Follow @RickVelotta on Twitter.