Boyd Gaming posts loss, warns of mediocre first quarter

Friday, Feb. 16, 2001 | 11:20 a.m.

Boyd Gaming Corp. of Las Vegas, hit hard by weather and construction problems at its casinos around the nation, today reported a loss for the fourth quarter ending Dec. 31 of of $4.6 million or 7 cents per share vs. a profit in the year-ago quarter of $9.4 million or 15 cents.

Just as significantly, Boyd said it expects only a mediocre profit in the current first quarter as it tries to improve business at two key Sam's Town properties in Las Vegas and Mississippi.

Before pre-opening expenses, the 2000 quarter's loss was 6 cents per share. That was in line with a Boyd announcement in January warning of a loss because of poor weather in the South and Midwest, tough competition and construction disruptions at Sam's Town in Tunica, Miss.; and lower than expected revenues and higher start-up costs for the renovation and expansion of Sam's Town in Las Vegas. The prior-year fourth quarter results included earnings of $12.2 million or 12 cents per share from the firm's Silver Star (Miss.) management contract that ended in January 2000.

The current quarter results include a full quarter of operations from the Blue Chip (Ind.) Casino, which was acquired in November 1999.

Besides the loss of management fee income from Silver Star, Sam's Town Tunica and Sam's Town Las Vegas were the primary contributors to the negative quarterly year-over-year comparisons.

"On the positive side, the downtown Las Vegas properties reported their second highest quarterly operating cash flow ever in the fourth quarter, and the Stardust (Las Vegas) posted a 10.7 percent increase in operating cash flow in the fourth quarter versus the same period in 1999," Boyd said.

Revenues for the fourth quarter were flat at $261 million. Operating cash flow fell from $61.8 million to $42.5 million.

"I am clearly disappointed with the fourth quarter results. Setting aside the uncontrollable factor of the weather, our poor results in the quarter were primarily isolated to the two Sam's Town properties," said Chairman and Chief Executive William Boyd. "While both operate in competitive markets, both are excellent properties, particularly after the capital improvements that were recently completed. We are extremely committed and working diligently to improve results at the two Sam's Town properties, but expect that it will take several quarters to achieve desired earnings levels. In that regard, we expect earnings per share in the first quarter of 2001 to be in single digits."

Analysts had projected full-year earnings of 36 cents in 2001. Boyd stock was down slightly on the news this morning, trading at $3.84, off 11 cents per share.