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StumbleBoyd Gaming sees profit fall as locals market takes hit
Published Tuesday, Oct. 27, 2009 | 8:13 a.m.
Updated Tuesday, Oct. 27, 2009 | 11:19 a.m.
Boyd Gaming Financial Information
| 4Q 2009 | 4Q 2008 | % Change | 3Q 2009 | |
|---|---|---|---|---|
| Revenue | $384.9 million | $422.6 million | -9% | $398.2 million |
| Net income | ($1 million) | ($220.8 million) | N/A | $6.3 million |
| Net income per share | (1 cent) | ($2.51) | N/A | 7 cents |
Boyd Gaming Corp. of Las Vegas today said it remained profitable in the third quarter, despite a decline in revenue for its biggest hotel-casinos in Las Vegas, where unemployment is running at an unprecedented 13.9 percent.
The company earned $6.3 million or 7 cents per share in the quarter, down from $8.7 million or 10 cents in the year-ago quarter. Net revenue fell 6.6 percent to $398.2 million.
The operating measure of adjusted EBITDA -- earnings before interest, taxes, depreciation and amortization -- fell 4.5 percent to $96.6 million.
"We are encouraged that we were able to produce both increased EBITDA and operating margins in three of our four regions during the quarter. Improved results in our Downtown Las Vegas, Borgata (Atlantic City) and Midwest and South regions helped offset softness in the Las Vegas Locals market. While visitation levels remained fairly constant, spend per visitor continues to be down significantly year-over-year, as consumers are still being cautious with their spending," Chief Executive Officer Keith Smith said in a statement.
Boyd's big Las Vegas properties outside of downtown, catering to both visitors and locals, include Sam's Town, the Orleans, Gold Coast and Suncoast. They posted net revenue of $150.7 million, down from $181.8 million in the year-ago quarter. Adjusted EBITDA for this group fell 31.3 percent to $31.4 million.
"Results in the region continue to be impacted by lower consumer spending and room rate pressures throughout the entire market, as Las Vegas remains one of the hardest-hit metropolitan areas," Boyd said in a statement.
Boyd reiterated its interest in acquiring some or all of the assets of bankrupt Station Casinos Inc. and said it anticipates that work on its Echelon project on the Las Vegas Strip will remain suspended for three to five years.
Smith, during a conference call, signaled Boyd remains intensely interested in Station and asserted Boyd will offer more value to creditors than any reorganization plan Station may propose.
"We stand ready to discuss our proposal and begin due diligence as soon as the bankruptcy court allows us," he said.
"We cannot be more serious. We are very serious about acquiring some of all of the Station assets," he said.
Saying Boyd's national player loyalty marketing program would fit in with a Station acquisition, he said "We believe an acquisition would deliver immediate value to our shareholders, and represents a very attractive and timely solution for Station, its creditors, employees and customers."
Station, however, said in a court filing last month that: "Due consideration was given to Boyd and will be given to any other bona fide offers."
Station said in the court papers that Boyd's interest in an acquisition, first revealed in February, was rejected after evaluations that included discussions with legal and financial advisors as well as certain creditors.
Station said in the court papers its "OpCo" operating company "continues to believe that a comprehensive debt-restructuring plan is in the best interest of the debtors' estate, rather than pursuit of a distressed-sale transaction under the present circumstances with a primary competitor such as Boyd."
On Echelon, the company suspended construction of the megaresort in August 2008 and at that time said it expected the suspension to last three to four quarters. Since then, the economy has deteriorated and Boyd executives today said financing is not available for such a project as the Las Vegas market still needs to absorb 10,000 rooms coming online at CityCenter and other hotel-casino projects.
"Neither us nor anyone else anticipated the recession would be as deep as it has been," Smith said on the conference call.
"We continue to believe in the long-term viability of the Las Vegas market. But given the ongoing weak economic conditions, the significant new supply coming online and a difficult capital market environment for projects of this nature, resuming construction in the near term is not an option," Smith said in a company statement. "We remain committed to having a significant presence on the Las Vegas Strip as part of our long-term growth strategy and we continue to view this site as a major strategic asset. We will use the time this ongoing suspension creates to ensure that the project that is ultimately built is appropriately positioned and competitive in the marketplace."
Executives on the call also said that after an extremely soft August, business picked up in Las Vegas in September.
The company's downtown Las Vegas properties, benefiting from an established visitor base in Hawaii, generated net revenue of $54.9 million in the third quarter, down slightly from $55.6 million in the third quarter of 2008. Adjusted EBITDA for the third quarter at those properties was $8.7 million, a 26.1% increase from the $6.9 million reported in the third quarter 2008.
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As Californians visiting my parents, my wife and I absolutely loved Samstown from 1984 until recently. As new locals we won't be going back. Thier employees used to be especially friendly and the machines were comparibly generous. Every 'improvement' they've made has been a disaster beginning with the elimination of Mary's Diner. I don't think the current management has a clue. Can anyone recommend a local casino that offers good play, good food and friendly service? Thank you.
good play-nowhere. just stayed at the orleans and went to gold coast every morning to play bingo. places are clean as a whistle, bathrooms better than strip ones. food ok but nothing to brag about. orleans was busy, kinda like stations used to be.
What will Echelon look like if Boyd does nothing with it for "3 to 5 years"?
Adviceischeap-I remember Mary's diner and it was a great place to eat and cheap. I'm from Vegas and the local casino's are not what they used to be. Arizona Charlies on Decatur was a great place back in late 80's and 90's but haven't been there in a long time. Bailey's on Sunset is a small place but very friendly and good food. The South Point is nice but good luck winning anything. Find a nice neighborhood bar with good food and play there.
Suncoast is probably my favorite place to play slot machines in all of Las Vegas. The place is spacious and at least as friendly as the tribal casinos here in Phoenix. Good location and security that's there but not staring you down when you start winning. Machines vary in tightness and at different times, but I have had the best luck on the Suncoast machines of them all.
However, I won't stay in their hotel any more, because they have the "service fee" for amenities that should be included in the room rate, like wireless Internet, which I can't live without when I'm traveling.
I tried Gold Coast but couldn't win anything (this was 4am which is probably a bad time to play slots anywhere).
Sam's Town rules. that's the place to play and stay.
to adviceischeap. i would stay downtown at Golden Nugget. They have a new tower and u can get good rates Sun -Thurs. As for restaurants Golden Nugget has a good steak one Vic and Anthony. They also have an Italian restaurant Grotto. If u are looking for a more elegant but a bit pricey Hugo's Cellar steakhouse is at the 4 Queens and has been around for quite awhile. Hope that helps. As for playing Video Poker just play the full pay machines at the casinos.
Lets talk about what used to stand on the property which was Boyd's flagship Strip presence, the Stardust. Boyd should take that Brand and re-build a new Stardust . My idea is a whacky one, but I would take some existing capital which Boyd has from the Echelon disaster, and build a scaled down recreation of the original 1950s Stardust Casino which stood on the sight. It could be a temporary business until they get the financing to build whatever they are going to build. It could have a small tower, perhaps a completion of the existing structure that was started there, but recreate the original vintage Stardust sign and all! What fun that would be! and a tourist attraction! and generate some money for Boyd. I'm sure this idea would be laughed at, but wouldn't it be fun? We must try to remember that Vegas used to be fun!
out with the old and in with the new. no point in living in the past.
vegasfun01 : The past was a heck of a lot better than the present! I'm willing to bet that the future ain't looking very fabulous either!
BOYD GAMING DOES NOT WANT TO RECOGNIZE THAT DISCRETIONARY SPENDING FOR THE MIDDLE CLASS HAS BEEN FRACTURED & THERE CHASING OF STATION CASINOS WILL PUT THEM IN A DEEPER FINANCIAL HOLE - UNLESS THEY HAVE DEEP POCKETS THAT CAN ALLOW THEM TO RIDE OUT THE FINANCIAL STORM - IN ABOUT FIVE YEARS !!! -- IF THEY PURCHASE STATION CASINOS THERE STOCK WILL REFLECT THE PURCHASE OVER THE NEXT YEAR OR PERHAPS THREE YEARS !!!-- AMBITION IS GREAT - ONLY IF YOU HAVE BOTH FEET ON THE GROUND !!!
THE ECHELON PROJECT NEVER MADE FINANCIAL SENSE AT ABOUT - ALMOST FIVE BILLION DOLLARS !!!
BOYD IS LUCKY THEY HAD TO FACE REALITY & TAKE THERE HEADS OUT OF THE SAND -- BOYD IS VERY SUCCESSFUL IN THE MEDIUM TO LOW END MARKET & DOES NOT HAVE THE CREATIVE & VISIONARY MARKETING TALENT TO LAUNCH A PROJECT TO RIVAL CAESARS PALACE - VENETIAN - BELLAGIO OR THE WYNN !!!
YOU CAN'T BE ALL THINGS TO ALL PEOPLE ----
YOU INHERITED A BUSINESS MODEL THAT WORKS & IS VERY SUCCESSFUL & DO NOT TRY TO EMBARK ON UNCHARTED WATERS - YOU DO NOT HAVE THOSE VERY UNIQUE & SPECIALIZED SKILLS !!!
LEARN FROM SAM ZELL WHO USED TO OWN EQUITY OFFICE PROPERTIES - WHO SUCCESSFULLY SOLD OUT TO THE BLACKSTONE GROUP FOR ABOUT 38 BILLION DOLLARS - HE THEN BOUGHT THE CHICAGO TRIBUNE & FAILED & FILED FOR BANKRUPTCY - EGO CAN BE VERY DANGEROUS - IF IT IS NOT USED PROPERLY !!!!
AMEN BELAIR!!!
Until people have discretionary income again (and who knows when that will happen), no matter what ANY of the casinos do - they will keep losing money UNTIL people have money to spend to gamble, eat, see shows and if they have to fly into Vegas - air fares go down. It will take years for Vegas to bounce back and no amount of cheap rooms, freebies, lose machines will make a difference until the people coming to Vegas HAVE MONEY TO SPEND.
Sam Boyd was a pioneer in gaming. We loved him as a good human being. He always gave us our monies worth staying at his places. We hope Boyd gaming gets through these tough times.
Everyone here acknowledges that Boyd is hurting by not having any income revenue from the strip.
I still contend that Boyd has a GREAT oppertunity in purchasing the almost completed Fontainbleu, renaming it the Stardust, and appeal to the middle market consumer who won't fork out 200 bucks a night to party and play in Vegas.
One poster here wrote that Echelon is half finished....I DON"T THINK SO!!!
Tear down the sticks of Echelon, open the new Stardust (Fountainbleu) accross the street for pennies on the dollar and call it a day! The old Stardust, as nostalgic as it was, needed more than just a sprucing up.
They may even have enough left in their line of credit, (2 billion according to this article) to make a play for some of Station's assets.
Stuart & Robert Wyman-Cahall
Las Vegas, NV 89142
I like the way you think environprotector. I wish Boyd gaming would have left the Stardust up for a few more years. It would have been great to see her turn 50 years old. I get tired of all these big companies spending money that they don't have and then go bankrupt. Boyd gaming should leave the thought of buying Stations along and focus on their own future. Spending money now to buy them might not be a good thing with the economy and that also I just read that US Airways is going to cut flights to Vegas by the end of Feb.
vdoog : The Stardust was my base of operational bliss for over fifteen years. They treated me like royalty with free rooms, comps to their restaurants and a lot of the time William B's no less.. I was not a high roller by any means of the word, just a consistent player who returned over and over again. They saw the value in me as a loyal customer, and returned that respect in kind. This is the Las Vegas I choose to remember. I don't know this place anymore..
Sam Boyd took care of the people from Hawaii.After he died his son neglected what made Boyd Gaming, folks from Hawaii.We are now crammed in crappy airplanes, the staff aren't as friendly as they were 20 years ago.The flight time leaving Las Vegas is the least to desired.To top it off after losing your money in their establishment you are served a cold hard sandwich on the flight back home. I can remember when there was hot meals coming and going.But what was the straw that broke the back was a few years ago University of Hawaii was playing a game that wasn't on ESPN.With all the folks from Hawaii that stay at their properties you would think Boyd Gaming would broadcast the game.
I now stay at the Golden Nugget when I visit but eat meals at the Cal,Fremont,or Main Street as it is cheaper even with coupons from GN.I also frequent a place Kerry's Sport Bar on Rancho.Friday is Kanekapila night,
Most of the clientele I see (@ the Cal) are older folks, the over 60's crowd.Die hards but they are thinning out.The younger crowd are staying on the Strip or with family.Boyd Gaming needs to look at how they cater to folks from Hawaii like Sam Boyd did before it's too late.
Boyd Gaming is a cool company. Compared to all these conservative European Casinos on our continent, thease casinos look like paradise to us. Even the old places such as California or the Fremont or the Main Street Station Casino are unique. However, what brings the big money in, that's the Orleans. A sensational locals casino that I have been visiting for so many years. It got a bit too big for my means, but it was necessary due to the high popularity among the locals.
Many tourists don't even know that there are other properties, such as the SunCoast Hotel in Summerlin, which is another fantastic casino for us Europeans. For the golf enthusiast, this is just the perfect hideout. And still, the free shuttle to the Strip keeps these tourists connected to the heart of Vegas. I love to stay at the SunCoast. It's quiet, but offers everything I need. Cool Pool, a little gym, the movie theatres, simply everything I need is there. And for more poker action, it's just minutes away from the Red Rock.
I am not sure what made the stock price fall so much recently. Boyd Gaming is a cool company, regardless. Let's hope that this crisis will be over some day and business will pull up again.
From Switzerland
Wow, me and my buddies here on the east coast are always talking about what a shame it was they took down the Stardust, instead of fixing her up. "Living in the past"? It's a friggen building, a theme, it's history. If Vegas didn't have a past I would go to Foxwoods down the street in Connecticut instead.
Spending our winter months in Vegas we have found that Boyds smaller casinos very friendly and good bargins. Jokers Wild and the Eldorado have low limit table games,fairly loose slots,and decent food at reasonable prices.