Boyd Gaming Reports Third-Quarter 2016 Results

LAS VEGAS, Nov. 1, 2016 /PRNewswire/ -- Boyd Gaming Corporation (NYSE: BYD) today reported financial results for the third quarter ended September 30, 2016.  

Keith Smith, President and Chief Executive Officer of Boyd Gaming, said: "Our Nevada operations continued their strong performance in the third quarter, as our Las Vegas Locals segment delivered double-digit EBITDA growth for the fifth time in the last six quarters. Outside of Nevada, results were primarily impacted by continued softness at IP and Par-A-Dice, while the remainder of our regional operations generally performed in-line with our expectations.  Looking ahead, the acquisition of Aliante positions us well for future growth, as we expand our presence in our top-performing market.   We also continued to strengthen our financial foundation with the completion of a major refinancing, simplifying the Company's capital structure and significantly reducing interest expense."

Boyd Gaming reported third-quarter 2016 net revenues of $531.9 million, compared to $546.3 million in the year-ago quarter.  Income from continuing operations, net of tax, for the third quarter was $161.9 million, or $1.40 per share, compared to $7.0 million, or $0.06 per share, in the prior-year third quarter.  The Company reported net income, which includes discontinued operations, of $342.6 million, or $2.97 per share, for the third quarter of 2016, compared to $25.4 million, or $0.22 per share, for the year-ago period.

The Company's third quarter results were favorably impacted by $190.4 million of noncash income tax benefits resulting from the release of a previously recorded deferred tax asset valuation allowance. Third-quarter 2016 results were also impacted by pretax losses of $41.5 million related to the early extinguishments and modification of debt during the quarter.  Discontinued operations for third quarter 2016 included a $181.7 million after-tax gain from the previously announced sale of the Company's 50% equity interest in the parent company of Borgata Hotel Casino & Spa, which was completed on August 1, 2016.

Total Adjusted EBITDA⁽¹⁾ was $121.9 million, compared to $125.2 million in the third quarter of 2015. Adjusted Earnings⁽¹⁾ for the third quarter 2016 were $16.7 million, or $0.14 per share, compared to Adjusted Earnings of $8.0 million, or $0.07 per share, for the same period in 2015.  Adjusted EBITDA and Adjusted Earnings exclude discontinued operations.

Key Operations Review

Las Vegas Locals
In the Las Vegas Locals segment, third-quarter 2016 net revenues were $148.9 million, up slightly from $148.0 million in the year-ago quarter.  Third-quarter 2016 Adjusted EBITDA was $36.2 million, up 12.1% from $32.3 million in the third quarter of 2015.

The Las Vegas Locals segment recorded its sixth consecutive quarter of Adjusted EBITDA growth and margin improvement. Every property in the segment grew both Adjusted EBITDA and operating margins during the quarter.  Continued operating efficiencies and refinements to marketing programs drove substantial Adjusted EBITDA gains, as margins improved 250 basis points year-over-year.  Results for the segment also reflect four days of contributions from Aliante, acquired by the Company on September 27, 2016.

Downtown Las Vegas
In the Downtown Las Vegas segment, net revenues were $56.6 million in the third quarter of 2016, while Adjusted EBITDA was $10.0 million, both essentially even with the year-ago period.

The Downtown Las Vegas market remains strong as visitation continues to grow.  Despite the impact of construction disruption at the California related to various renovation projects, results for the segment were near record levels.

Midwest and South
As a result of the refinancing completed during the third quarter of 2016, the Company has combined its Midwest and South and Peninsula segments into a single reportable Midwest and South segment.

In this segment, net revenues were $326.4 million, compared to $341.6 million in the third quarter of 2015.  Adjusted EBITDA was $90.6 million, versus $96.3 million in the year-ago period.

Results reflect declines at IP and Par-A-Dice, which continue to be challenged by increased competition in their markets, as well as the impact of flooding in southern Louisiana in August.  The remainder of the segment's properties generally performed in-line with the Company's expectations. 

Borgata
In addition to the gain on the sale of its equity interest in Borgata, discontinued operations for the third quarter of 2016 included $10.9 million for the Company's share of Borgata's net income through the date of the sale, as well as $4.3 million in income for cash received by the Company for its share of property tax benefits realized by Borgata subsequent to the closing of the sale.

Release of Tax Valuation Allowance
As discussed above, the Company's third quarter tax provision includes a nonrecurring tax benefit of $190.4 million, which reflects the release of the valuation allowance on deferred tax assets. In prior periods, the Company concluded that it was more likely than not that a portion of its deferred tax assets would not be realized, and it recorded a valuation allowance to reduce the carrying amounts of those assets.  As of the end of third quarter 2016, the Company believes the valuation allowance is no longer warranted, given recent positive trends in its quarterly pretax income and projected future income sufficient to realize the benefits associated with these deferred tax assets.

Balance Sheet Statistics
As of September 30, 2016, Boyd Gaming had cash on hand of $159.7 million, and total debt of $3.04 billion.

Full Year 2016 Guidance
Based on third-quarter results in the Midwest and South segment and our current expectations for the fourth quarter, the Company now projects Adjusted EBITDA of $530 million to $538 million for the full year 2016.  This guidance includes fourth-quarter contributions from Aliante, and excludes any contribution from the pending acquisition of the Cannery properties.

Conference Call Information
Boyd Gaming will host a conference call to discuss third-quarter 2016 results today, November 1, at 5:00 p.m. Eastern.  The conference call number is (888) 317-6003, passcode 7254357.  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/964/17886

Following the call's completion, a replay will be available by dialing (877) 344-7529 today, November 1, beginning at 7:00 p.m. Eastern and continuing through Tuesday, November 8, at 11:59 p.m. Eastern.  The conference number for the replay will be 10095114.  The replay will also be available on the Internet at www.boydgaming.com.