Boyd Gaming posts $8.4 million profit in first quarter

Boyd Gaming Corp.'s first quarter was a mixed bag of news with the company surpassing analysts' expectations on some points but disappointing on others.

One category that peaked Wall Street's interest was the company's performance in the Las Vegas locals market, even though it posted a double-digit cash flow decline when compared to last year's first three months.

Boyd Gaming posted a profit of $8.4 million, or 10 cents per share, for the first quarter ended March 31, a morning filing the Securities and Exchange Commission shows.

That is a sharp swing compared to a loss of $13.8 million, or 16 cents per share, in the same period last year.

A survey of analysts had expected an adjusted profit of 7 cents per share, according to Thomson Reuters.

Revenues slipped 8.4 percent to $398.4 million in the quarter, down from $434.8 million same time last year. Cash flow, reported as earnings before interest, taxes, depreciation and amortization, dropped 20.2 percent to $87.4 million from $109.6 million prior year.

Revenues and cash flow missed Wall Street's expectations of $409 million $92.4 million respectively, JP Morgan Research gaming analyst Joseph Greff said in a morning note to investors.

Boyd Gaming President and Chief Executive Officer Keith Smith said in a statement the company's business trends "clearly reflect the signs of an emerging recovery."

Both analysts and Boyd Gaming were pleased with the company's performance in the Las Vegas locals market even though revenues slipped 7.9 percent to $156.6 million and cash flow dropped 10.8 percent to $40.4 million from the prior year.

Smith said the results were the best for them in the market in two years and points to a larger recovery.

"Business levels are returning to normal seasonal patterns in this region," Smith's statement said. "Given the positive developments in our business, combined with continued improvement in the national economy, we expect to generate year-over-year growth during the second half of 2010."

Greff had anticipated a much sharper decrease in cash flow.

"(This is) the narrowest year-over-year decline since the downturn began," Greff said in a morning note to investors. "Our sense is that the slightly better Las Vegas locals performance is what really matters to investors here."

Boyd Gaming owns and operates the hotel-casinos Sam's Town, The Orleans, Gold Coast and Suncoast in the locals market, as well as casino properties Jokers Wild and Eldorado.

The company is looking to bolster in locals market share by acquiring part or all of competitor Station Casinos, which is currently in bankruptcy.

The company's downtown properties - California, Fremont and Main Street Station - saw revenues decline 8 percent to $54 million and cash flow fall 37.3 percent to $8.4 million from first quarter 2009.

The company said the results reflect lower ticket pricing and higher fuel costs associated with its Hawaiian charter operation, as well as lower-than-expected visitor volumes.

Boyd Gaming owns and operates six casinos in Mississippi, Illinois, Louisiana and Indiana. The company owns 50 percent of the Borgata in Atlantic City, and operates the property.

Partner MGM Mirage has said it plans to sell its share in the property after running afoul of New Jersey regulators due to its relationships in Macau.

Work on Echelon project on the former Stardust site, which halted in 2008, remains suspended.

Boyd Gaming's stock closed at $13.47 per share Monday on the New York Stock Exchange. It was down 3.9 percent to $13 per share during morning trading. The stock is up 51 percent since the first of the year.

Goldman Sachs Global Investment gaming analyst Steven Kent said he believes the company stock will continue to trade on the potential for Boyd Gaming to acquire some of Station Casinos' properties and on MGM Mirage's stake in the Borgata.