Boyd Gaming returns to profit, notes improving economy

By Amanda Finnegan

Published Tuesday, May 4, 2010 | 7:39 a.m.

Updated Tuesday, May 4, 2010 | 10:06 a.m.

Boyd Gaming swung to a profit during the first quarter of 2010, citing improving business trends in some of its markets.

The Las Vegas-based casino operator reported net income of $8.4 million, or 10 cents per share, during the first quarter of 2010 compared to a loss of $13.8 million, or 16 cents per share, in the same period last year. Tuesday’s quarterly report shows the company cut costs and expenses across several parts of its business.

Net revenue fell 8.4 percent during the quarter to $398.4 million from to $434.8 million in 2009.

“We continue to be encouraged by improving trends in our business, which clearly reflect the signs of an emerging recovery. Our Las Vegas locals market reported the best year-over-year comparison in nearly two years, and business levels are returning to normal seasonal patterns in this region. Given the positive developments in our business, combined with continued improvement in the national economy, we expect to generate year-over-year growth during the second half of 2010,” Keith Smith, president and chief executive officer of Boyd Gaming, said in the quarterly report.

In its Las Vegas locals market, net revenue was $156.6 million during the first quarter of 2010 versus $170.1 million in the first quarter 2009. Earnings before interest, taxes, depreciation and amortization fell 10 percent to $40.4 million from $45.3 million.

Boyd's Las Vegas properties outside of downtown include Sam's Town, the Orleans, Gold Coast and Suncoast.

At Boyd’s downtown Las Vegas casinos, which include the Fremont, California and Main Street Station, net revenue fell to $54 million from $58.7 million during the year-over-year period. EBITDA for the first quarter of 2010 fell 37.3 percent to $8.4 million from $13.4 million in the first quarter of 2009. The company said the results reflect lower ticket pricing and higher fuel costs associated with its Hawaiian charter operation, as well as lower downtown visitor numbers.

In its Midwest and South region, Boyd said it recorded $187.8 million in net revenue for the first quarter 2010, compared to $206.1 million for the same period in 2009.

At the Borgata in Atlantic City, net revenue was $175.1 million for the first quarter 2010, compared to $187.9 million recorded in the same quarter in 2009. Boyd Gaming owns 50 percent of the New Jersey property. Smith said on March 24 that MGM Mirage officially transferred its 50 percent ownership of the Borgata into a divesture trust. The company agreed to sell its interest in the casino after disagreements with New Jersey gaming regulators on its business partner in Macau.

“Our partnership agreement with MGM Mirage gives us the right of first refusal on sales or interest and we will monitor this situation and act in the best interest of our company,” Smith said.

During Tuesday’s conference call, Smith said Boyd is still aggressively pursuing the acquisition of Station Casinos’ assets.

In December, Boyd made an offer to purchase Station Casinos’ assets in an effort to expand its locals market. The offer was $2.45 billion for the company’s 18 casinos and casino-hotels in Southern Nevada.

“We welcome the opportunity to compete for Station [Casinos] assets so long as the process is competitive, open and fair and as long as the assets have not been devalued to a point where it no longer makes financial sense,” Smith said.