Boyd Gaming Reports Second-Quarter 2016 Results

LAS VEGAS, Aug. 3, 2016 /PRNewswire/ -- Boyd Gaming Corporation (NYSE: BYD) today reported financial results for the second quarter ended June 30, 2016.  

Boyd Gaming reported second-quarter 2016 net revenues of $544.9 million, compared to $559.9 million in the year-ago quarter.  On a GAAP basis, and including discontinued operations, the Company reported net income of $30.0 million, or $0.26 per share, for the second quarter of 2016, compared to a net loss of $6.4 million, or $0.06 per share, for the year-ago period.  Income from continuing operations, net of tax, for the second quarter was $11.3 million, or $0.10 per share, compared to a net loss of $12.4 million, or $0.11 per share, in the prior-year second quarter.  Prior-year results were impacted by pretax losses on the early extinguishments of debt of $31.0 million.  During the second quarter of 2016, the Company announced an agreement to sell its 50% equity interest in the parent company of Borgata Hotel Casino & Spa.  As a result of this agreement, the Company's share of Borgata's net income is reflected as discontinued operations in the accompanying consolidated financial statements. 

Total Adjusted EBITDA⁽¹⁾ was $137.9 million, compared to $140.6 million in the second quarter of 2015. Adjusted Earnings⁽¹⁾ for the second quarter 2016 were $18.1 million, or $0.16 per share, compared to Adjusted Earnings of $20.9 million, or $0.19 per share, for the same period in 2015.  Adjusted EBITDA and Adjusted Earnings exclude discontinued operations.

Keith Smith, President and Chief Executive Officer of Boyd Gaming, said: "The second quarter of 2016 was a significant time for our Company, as we executed several transactions that will strengthen our financial foundation and position us for continued growth.  With the acquisitions of Aliante and the Cannery properties, we will be expanding our presence in the high-growth Las Vegas locals market.  And we unlocked the significant value in our Borgata joint venture, allowing us to further accelerate our deleveraging efforts."

Smith continued, "In terms of our operational performance, results across our business segments were varied.  In Las Vegas, strong performances in our Locals operations in April and June were tempered by a tough year-over-year comparison in May, while our Downtown Las Vegas operations continued to deliver a high level of performance.  In the Midwest and South segment, our performance improved modestly from trends earlier in the year, while the Peninsula segment performed below our expectations, largely due to a weaker than expected gaming market in Kansas. We continue to make significant progress in the execution of our growth strategy, and are optimistic about the future."

Key Operations Review

Las Vegas Locals
In the Las Vegas Locals segment, second-quarter 2016 net revenues were $154.9 million, an increase of 1.2% from $153.0 million in the year-ago quarter.  Second-quarter 2016 Adjusted EBITDA was $43.2 million, up 2.4% from $42.2 million in the second quarter of 2015.

The segment achieved its fifth consecutive quarter of revenue growth, Adjusted EBITDA growth and margin improvements.  Additionally, the Company's amenity investment initiative continued to drive growth in non-gaming revenue during the quarter.   Solid operating performances in April and June were partially offset by challenging year-over-year comparisons in May. In May 2015, one-time citywide events drove unusually strong visitation to the Las Vegas market. 

Downtown Las Vegas
In the Downtown Las Vegas segment, net revenues were $59.2 million in the second quarter of 2016, up 1.3% from $58.4 million in the year-ago period.  Adjusted EBITDA increased 15.9% to $14.3 million, compared to $12.3 million in the second quarter of 2015.

The Downtown Las Vegas segment delivered its sixth straight quarter of revenue and double-digit Adjusted EBITDA gains, driven by growth in Hawaiian business and further increases in visitation to the downtown area. Results also benefitted from continued operational efficiencies, as operating margins improved by 300 basis points during the quarter.

Midwest and South; Peninsula
In the Midwest and South segment, net revenues were $207.8 million, compared to $217.8 million in the second quarter of 2015, while Adjusted EBITDA was $50.1 million versus $51.8 million in the year-ago period. The Peninsula segment reported net revenues of $122.9 million, compared to $130.6 million in the second quarter of 2015, and Adjusted EBITDA of $44.7 million versus $49.2 million in the year-ago period.

In the Midwest and South, five of the segment's seven properties achieved Adjusted EBITDA above prior-year levels, and overall operating margins improved. Results reflect declines at IP and Par-A-Dice, as both properties continued to contend with new competition in their markets.  Overall, the segment's Adjusted EBITDA performance reflected a slight improvement over first-quarter trends.

Peninsula segment results were largely impacted by revenue and Adjusted EBITDA declines at the Kansas Star, due to general softness in visitation across the state's gaming market.  Additionally, results at Evangeline Downs and Amelia Belle reflect continued economic weakness in south-central Louisiana.

Borgata
Borgata reported second quarter 2016 net revenues of $203.3 million, up from $191.2 million in revenues in the year-ago period. Adjusted EBITDA was $60.8 million, compared to $44.5 million in the year-ago period.

Year-over-year growth was primarily driven by higher slot volumes, normalized table game hold compared to the year-ago quarter, and a $5 million recovery from the Casino Reinvestment Development Authority, related to certain capital improvement projects.

The Company's share of Borgata's net income is reported as discontinued operations, and was $18.7 million for the second quarter of 2016, compared to $6.0 million in the year-ago period. 

Balance Sheet Statistics
As of June 30, 2016, Boyd Gaming had cash on hand of $628.3 million, including $23.6 million related to Peninsula.  Total debt was $3.71 billion, of which $960.5 million was related to Peninsula.

Borgata's cash and debt balances are not included in the Company's balance sheet. Borgata had cash on hand of $31.3 million and total debt of $603.0 million at June 30, 2016. 

Full Year 2016 Guidance
Following Boyd Gaming's divestiture of its 50% equity interest in Borgata, the Company is excluding Borgata's results from its guidance for the full year 2016.

Boyd Gaming projects wholly-owned Adjusted EBITDA of $535 million to $555 million for the full year 2016, which includes anticipated fourth-quarter contributions from Aliante and the Cannery properties.   Excluding these pending acquisitions, the Company projects wholly-owned Adjusted EBITDA of $535 million to $545 million for the full year 2016.

Conference Call Information
Boyd Gaming will host its conference call to discuss second-quarter 2016 results and provide an update on its pending acquisitions today, August 3, at 5:00 p.m. Eastern.  The conference call number is (888) 317-6003, passcode 5148733.  Please call up to 15 minutes in advance to ensure you are connected prior to the start of the call. 

The conference call will also be available live on the Internet at www.boydgaming.com, or: https://www.webcaster4.com/Webcast/Page/964/16471

Following the call's completion, a replay will be available by dialing (877) 344-7529 today, August 3, beginning at 7:00 p.m. Eastern and continuing through Wednesday, August 10, at 11:59 p.m. Eastern.  The passcode for the replay will be 10090638.  The replay will also be available on the Internet at www.boydgaming.com.