Boyd earnings hurt by competition, construction

Friday, Feb. 25, 2000 | 11:06 a.m.

Boyd Gaming Corp. of Las Vegas on Thursday reported a fourth-quarter profit of $9.4 million or 15 cents per share, about even with the prior year quarter's $9.3 million or 15 cents per share.

The average earnings estimate of five analysts surveyed by Zacks Investment Research was 18 cents. Boyd stock was down 12 cents this morning to $5.38.

Quarterly revenues of $262 million were up 7.1 percent. Operating cash flow from property operations (earnings before interest, taxes, depreciation and amortization, or EBITDA) was up 5.4 percent to $61.8 million.

Boyd reported mixed results from its national casino portfolio, including:

Boyd reported a year-end debt total of $984 million, an increase of $268 million from the $716 million outstanding on Sept. 30 due to the cash acquisition of the Blue Chip.

Because of a $72 million payment for the termination of Boyd's management agreement at Silver Star and other debt reduction efforts during the first quarter of 2000, the company's debt fell to $883 million as of Thursday.

"We are committed to meeting the challenges related to those properties where earnings fell short of our expectations," Chairman and Chief Executive William Boyd said in a statement. "I am gratified that so far in 2000 we have already seen a strong recovery at Treasure Chest and significantly improved results at Sam's Town Las Vegas, as some completed portions of the renovation project appear to be gaining early customer acceptance, confirming the value of reinvesting in our properties."

The company attributed the improvements in downtown Las Vegas to effective marketing programs, including a seventh weekly charter flight from Honolulu to Las Vegas, and cost consolidation efforts. Downtown revenue increased from $54 million to $55.4 million.

At Sam's Town Las Vegas, significant renovation work at the main entrance and in the casino contributed to a decline in gaming revenue. And the inventory liquidation and closing of the Western Emporium retail store to make room for the property expansion caused a year-over-year negative swing of $1.1 million in operating cash flow, Boyd said.

Boyd's Boulder Strip properties, including Sam's Town, produced revenue of $45.8 million, down from $52 million. Cash flow fell from $11 million to $7.7 million.

The Stardust completed its renovation project in the fourth quarter, including the demolition of 550 guest rooms that were too old to renovate. The property's occupancy rate was 86 percent in the quarter, down from 91 percent in last year's fourth quarter, but its average daily rate was up $8.60, or 16.9 percent, from the prior year.

Revenue at the Stardust of $38.9 million was down from $42.2, while its cash flow fell from $6.2 million to $4 million.

At Sam's Town Tunica in the Memphis, Tenn., market, Boyd is launching a $21 million renovation that includes a casino reconfiguration and remodel to bring more of the property's gaming positions onto the first floor, all new restaurant concepts and configurations and a new RV park adjacent to the property.