Boyd Gaming posts loss, but revenue surges, shares move higher

Boyd Gaming Corp. posted a first-quarter loss Wednesday, reversing a profit in the year-ago period, as the gaming company added new casinos and incurred other one-time costs related to selling noncore assets to strengthen its balance sheet.

The Las Vegas-based company reported a loss of $7.3 million, or 8 cents a share, compared with a year-earlier profit of $5.9 million, or 7 cents a share. Excluding items such as the costs of acquiring Peninsula Gaming LLC, the company reported a penny- per-share profit.

Revenue rose 16.4 percent to $737 million from $633.1 million.

Analysts surveyed by Yahoo Finance expected a loss of 7 cents a share on $734 million in revenue.

The adjusted results beat Wall Street estimates, sending shares to a new 52-week high.

Shares of Boyd Gaming gained $2.03, or 22.68 percent, to close Wednesday at $10.98 on heavy volume of 11.85 million shares traded on the New York Stock Exchange. The company’s stock price reached a new 52-week high of $11.20 with about an hour left in trading Wednesday.

“We saw positive momentum across our operations in March, driving first-quarter results that were ahead of previous expectations,” said Keith Smith, president and CEO of Boyd Gaming.

The company operates gaming properties in Nevada, Illinois, Indiana, Iowa, Kansas, Louisiana and Mississippi. Revenue at Boyd Gaming’s wholly owned business jumped 25 percent to $569.9 million.

Smith said he was “encouraged by improvements” in Las Vegas, “as we were able to generate (earnings) growth for the first time in more than a year.”

In the Las Vegas market, which includes the Suncoast, Gold Coast, The Orleans and Sam’s Town properties, Boyd Gaming reported revenues of $152.8 million compared with $154.8 million in the first quarter of last year. Adjusted cash flow jumped to $39.2 million from $38.5 million as a result of improved operating margins and new slot machine initiatives.

In downtown Las Vegas, the company reported net revenue of $54.1 million, down from $57 million in the first quarter of last year, and cash flow fell to $7.1 million from $8 million. Boyd Gaming operates the Fremont, California and Main Street Station in downtown Las Vegas.

The company attributed the declines to fewer customers in the early part of the quarter.

“We are pleased with Boyd’s operating results in the Las Vegas locals segment,” said Joel Simkins, an analyst with Credit Suisse. “Improved trends may be indicative of a more rational competitive environment with its largest competitor, Station Casinos, as well as the upturn in home prices in the market.”

Simkins said the company’s comments concerning its locals business “was very encouraging, and implied momentum through March.”

Boyd Gaming, which controls one-third of the downtown Las Vegas market, expects to benefit from the revitalization of the area and the new customers it brings.

“We’ll get our fair share of those new customers,” Smith said.

Boyd Gaming’s revenue gains in the quarter were attributable to five former Peninsula Gaming properties, which the company bought in November for $1.45 billion. Peninsula held riverboat and racino properties in Iowa and Louisiana, as well as the Kansas Star Casino.

In Atlantic City, revenues at the Borgata, the company’s 50 percent joint venture, declined to $165.6 million, compared with $176.2 million in the first quarter of last year.

“As we look forward, we are excited by the potential of our online gaming strategy,” Smith said. “New Jersey and Nevada are now laying the regulatory groundwork for online gaming, and other states are considering legalization as well.”

Smith assured analysts that Boyd Gaming would be the first to enter the online market in New Jersey. He said the Borgata brand “will allow us to capture a sizable portion” of the market, while the company is still determining the best way to enter the crowded market in Nevada.

Smith said the emerging business provides Boyd Gaming with an opportunity to significantly grow and diversify its business.

“We intend to take full advantage of it,” he said.

Contact reporter Chris Sieroty at csieroty@review
journal.com or 702-477-3893. Follow @sierotyfeatures on Twitter.