Business strong for Boyd Gaming

Thursday, July 12, 2001 | 10:36 a.m.

Boyd Gaming Corp. of Las Vegas rode improved results at its Sam's Town locals franchise to beat analysts' expectations in its second-quarter earnings, the company said today.

The company said it had the second-highest quarterly cash flow in its history and that seven of its eight divisions had improved cash flow for the period ended June 30.

Only the Stardust hotel-casino on the Las Vegas Strip had lower earnings before interest, taxes, depreciation and amortization, with $700,000 in higher utility costs keeping the company from having improvement in all divisions.

Boyd reported revenues of $281.3 million, resulting in earnings of $8.4 million, 14 cents a share, compared with revenue of $264.8 million, and earnings of $6.6 million, 11 cents a share, in the same quarter a year ago.

Eight analysts surveyed by Thomson-First Call had forecast earnings of 12 cents a share for the quarter.

Boyd's stock jumped 8 percent, or 45 cents, on the news this morning to trade at $5.80.

Analysts say Boyd's prospects are bright because it has new revenue generators in the pipeline.

Steve Kent, a gaming analyst with Goldman Sachs, said today interest in Boyd should rise as the opening of the 40-story Borgata hotel-casino in Atlantic City draws nearer.

The Borgata, a $1 billion, 2,010-room resort in Atlantic City's Marina District, is a joint venture with MGM MIRAGE expected to open in 2003. It will be the first major Atlantic City resort to open in a decade.

Don Snyder, president of Boyd Gaming, said today that two-thirds of the project's construction bids have been awarded and construction has climbed to the fourth floor. Snyder said the project is on schedule and on budget.

But while the Borgata is the long-term growth opportunity for Boyd, the company's acquisition of Delta Downs, a race track in Louisiana, is expected to generate revenue for the company later this year.

Snyder said a $35 million expansion and renovation is under way and should be completed by October. The company expects no snags in the licensing process since it already has operations in Louisiana and approvals for 1,700 slot machines at the track are expected in August. The property is expected to draw gamblers from the Houston market.

Boyd's Southern Nevada properties each had higher revenues in the second quarter, with Sam's Town, the company's newly expanded entry in the locals market, leading the pack. Sam's Town revenues were $36.4 million compared with $32.8 million for the same quarter a year ago. The company's downtown division, which includes its Main Street Station, Fremont and California properties and its Hawaiian travel agency affiliate, had revenues of $58 million compared with $57.5 million a year ago.

The Eldorado and Jokers Wild properties in Henderson had combined revenues of $9 million, compared with $8.4 million last year, while the Stardust reported revenue of $37.6 million compared with $37.1 million for the year-ago quarter. The company said EBITDA (cash flow) for the Stardust fell to $3.7 million for the quarter from $4 million a year ago due to higher utility costs.

The company also announced today the offering of $200 million in eight-year senior notes. Ellis Landau, chief financial officer of the company, said proceeds of the offering would be used to refinance other term debt the company has incurred.

The company increased its debt by $102 million during the quarter to acquire Delta Downs and to continue financing construction of the Borgata.