Wednesday, October 27, 2004
Copyright © Las Vegas Review-Journal

CASINO EARNINGS: Buyout, Borgata help boost Boyd

Aftereffects of merger with Coast Casinos help company to record third quarter

Cars exit the garage by The Orleans on Tuesday. Boyd Gaming Corp., which acquired The Orleans in its merger with Coast Casinos, posted record third-quarter profits. Photo by Clint Karlsen.

Boyd Gaming Corp. on Tuesday posted record earnings in the third quarter, thanks largely to its recent $1.3 billion buyout of Coast Casinos and the sterling performance of the Borgata in Atlantic City.

The company had net income of $35.5 million, or 38 cents a share, in the quarter ended Sept. 30, up more than fourfold from $7.7 million, or 15 cents a share, in the same period a year earlier. Analysts had been expecting 37 cents a share.

Joe Greff, gaming analyst at Fulcrum Global Partners, an independent Wall Street investment research firm, said a strong performance from the company's Nevada properties as well as the Borgata led Boyd to top expectations.

"Borgata is really doing better earlier than anyone expected, which is leading (Boyd) to plan a couple of phases of expansion to capture the demand in the Atlantic City market. And, as with Station (Casinos), the Las Vegas locals market is on fire," he said.

Susquehanna Financial Group gaming analyst Eric Hausler said surging demand on the Boulder Strip for Sam's Town and the performance of the recently acquired Coast properties combined for a "staggering" performance.

Boyd's total adjusted earnings before interest, taxes, depreciation and amortization was $133.4 million, more than double the $63.7 million in EBIDTA, or cash flow, it had a year earlier.

Revenue rose 68 percent to $522.5 million from $310.5 million.

Boyd Chairman Bill Boyd said only two properties earned less in the third quarter than they did the year before: The California Hotel in downtown Las Vegas, where rooms were being remodeled; and Delta Downs in Louisiana, which was disrupted by construction.

"Every other property exceeded prior year EBIDTA results," he said. "And Coast is not only growing revenues and earnings at an excellent rate, it is turning out to be a great fit with our company as well."

Wall Street was bullish on the company's prospects, particularly because of the growth of Las Vegas' locals gaming market.

Hausler said all measures of financial performance as well as substantial plans for expansion are on track at Boyd.

Boyd President Don Snyder said the Stardust site on the Strip across from the Sahara is the most visible of the company's future development sites. He said Boyd is creating a master plan to determine the highest and best use and decide other development details.

At the Borgata, Bob Boughner, chief executive officer of the property, said preliminary expansion plans call for a new 500-room tower, with construction expected to start in July and finish in two years. The hotel-casino is a joint venture with MGM Mirage.

He also said the walkout of 10,000 Local 54 Hotel Employees and Restaurant Employees casino workers from seven Atlantic City properties is having little effect on the Borgata, which is not one of the hotels being struck, even though it may be cutting into total visitor numbers in New Jersey.

"Our October has been a continuation of the summer," Boughner said. "Summer never really stopped for us. There may be less visitation into the market, but the Borgata is getting a little more than its normal share."

Boyd Gaming shares fell 31 cents, or 1.06 percent, Tuesday to close at $29.