Boyd Gaming Reports Fourth-Quarter, Full-Year Results

LAS VEGAS, Feb. 21, 2012 /PRNewswire/ -- Boyd Gaming Corporation (NYSE: BYD) today reported financial results for the fourth quarter and full year ended December 31, 2011.

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Net revenues were $606.7 million for the fourth quarter 2011, an increase of 9.9% from $551.9 million during the same quarter in 2010.  Total Adjusted EBITDA(1) rose 14.3% to $114.3 million, compared to $100.0 million in the prior year.  These results include the operations of the IP Casino Resort Spa, acquired by the Company on October 4, 2011.

Boyd Gaming's wholly-owned business, including the IP, reported fourth-quarter 2011 net revenues of $428.9 million, up 12.3% from the year-ago period.  Wholly-owned Adjusted EBITDA rose 15.9% to $76.4 million.  Borgata, the Company's 50% joint venture, reported fourth-quarter 2011 net revenues of $176.4 million, up 4.5% from the fourth quarter of 2010, while Adjusted EBITDA at the property increased 11.0% to $37.9 million.  

For the fourth quarter 2011, the Company reported a net loss of $0.5 million, or $0.01 per share, compared to a net loss of $7.1 million, or $0.08 per share, in the same period last year.  

Adjusted Earnings(1) for the fourth quarter 2011 were a loss of $2.9 million, or $0.03 per share, compared to a loss of $3.9 million, or $0.05 per share, for the same period in 2010.  Certain pre-tax items included in Adjusted Earnings for the fourth quarter 2011 resulted in a net decrease of less than $0.1 million ($2.4 million, net of tax and noncontrolling interest, or $0.02 per share).  By comparison, pre-tax items included in Adjusted Earnings for the fourth quarter 2010 resulted in a net increase in income of $4.9 million ($3.2 million, net of tax and noncontrolling interest, or $0.03 per share). Pre-tax items included in adjusted earnings are listed in a table at the end of this press release.

Commenting on the quarter, Keith Smith, President and Chief Executive Officer of Boyd Gaming, said, "We continued to produce consistent growth across the business in the fourth quarter. Our focus on profitable revenue growth and creating efficiencies allowed us to produce gains in EBITDA every quarter in 2011 and, for the first time in several years, we reported revenue increases in each of our business segments during the quarter.  As economic conditions strengthen in our core markets, we are confident that our strategy of keeping a tight rein on costs, generating profitable new revenues and diversifying our sources of cash flow will deliver bottom-line results."  

Full-Year 2011 Results

For the year ended December 31, 2011, Boyd Gaming reported net revenues of $2.34 billion, an increase of 1.6% from the year ended December 31, 2010.  Total Adjusted EBITDA was $466.1 million during the period, an increase of 4.7% from the year 2010. (2)  Full-year 2011 results include the operations of the IP, acquired by the Company on October 4, 2011.  

During the full-year 2011, the Company's wholly-owned operations posted net revenues of $1.60 billion, up 3.0% from the year-ago period, while wholly-owned Adjusted EBITDA rose 11.7% to $308.0 million.  Borgata reported net revenues of $730.3 million during the year ended December 31, 2011, a decline of 1.1%, while property Adjusted EBITDA was down 6.7% to $158.1 million.

The Company reported a net loss for the year ended December 31, 2011 of $3.9 million, or $0.04 per share.  By comparison, we reported net income of $10.3 million, or $0.12 per share, for the year ended December 31, 2010.

Adjusted Earnings for the Company for the year ended December 31, 2011 were $1.1 million, or $0.01 per share, compared to earnings of $10.6 million, or $0.12 per share, during the full-year 2010.

Key Operations Review

Las Vegas Locals

In the Las Vegas Locals segment, fourth-quarter 2011 net revenues were $152.7 million, up slightly from the fourth quarter of 2010.  Fourth-quarter 2011 Adjusted EBITDA increased 8.0% to $36.8 million, marking the region's third consecutive quarter of positive EBITDA comparisons.  All four major properties in the region posted year-over-year EBITDA growth, as we improved operating margins by 170 basis points despite a heightened promotional environment.

For the full year 2011, Adjusted EBITDA for the Las Vegas Locals region increased $8.4 million, or 6.1%, to $145.8 million, while net revenues were essentially flat at $605.0 million. More productive marketing initiatives and effective cost-control measures helped drive full-year EBITDA growth.

Downtown

The Company's Downtown Las Vegas properties generated net revenues of $58.7 million for the fourth quarter 2011, up 2.7% from $57.1 million in the fourth quarter 2010. Adjusted EBITDA was $10.8 million, flat with the same quarter last year.  EBITDA at the three Downtown properties rose 7.2% during the fourth quarter; however, this strong performance was offset by significantly higher fuel expense associated with the Company's Hawaiian charter service.  

During the year ended December 31, 2011, Adjusted EBITDA rose 2.9% to $35.2 million, and net revenues increased 2.8% to $224.3 million. At the property operating level, EBITDA at the three Downtown properties increased $4.1 million, or 9.7%, to $47.6 million. Full-year results benefitted from increased visitation and play by our Hawaiian customer segment, offset almost entirely by higher fuel expense.

Midwest and South

In the Midwest and South region, net revenues were $217.6 million, up 26.1% from the year-ago quarter, while Adjusted EBITDA rose 28.5% to $39.1 million. Regional results reflect the acquisition of the IP, as well as strong operating performances at Blue Chip and Delta Downs.  The IP contributed $44.6 million in net revenues and $8.4 million in EBITDA to regional results following our acquisition of the property on October 4.

For the full year 2011, Adjusted EBITDA in the Midwest and South region increased 16.3% to $167.1 million, while revenues rose 5.8% to $771.4 million. Full-year results reflect strong operating performances and margin improvements at a majority of our properties, as well as the addition of the IP to regional operations.

Borgata

Borgata's net revenues for the fourth quarter 2011 were $176.4 million, up 4.5% from the fourth quarter 2010, while Adjusted EBITDA rose 11.0% to $37.9 million in the same period.  The EBITDA growth was driven by a 7% increase in gross gaming revenue, as well as a 110 basis point improvement in operating margins.  Borgata continued to lead the market, achieving an all-time record market share of 21.2% in the fourth quarter.

For the full year, Borgata's net revenues fell 1.1% to $730.3 million, while Adjusted EBITDA declined 6.7% to $158.1 million.  Full-year results were impacted by heightened competition in the region, as well as the three-day hurricane-related closure of the property over a weekend in late August.

Commenting on Company operations, Paul Chakmak, Executive Vice President and Chief Operating Officer of Boyd Gaming, said, "Our strategy of maintaining efficiencies and pursuing profitable revenue growth is succeeding, as shown by our full-year results.  We remain focused on developing new ways to enhance the guest experience, and will take an important step in that direction early in the second quarter when we launch an enhanced version of B Connected Online, our award-winning player loyalty website."

Conference Call Information

Boyd Gaming will host its fourth-quarter 2011 conference call today, February 21, at 12:00 p.m. Eastern, on which the Company will provide guidance for the first quarter 2012.  The conference call number is (866) 524-3160.  Please call up to 15 minutes in advance to ensure you are connected prior to the start of the call.  

The conference call will also be available live on the Internet at www.boydgaming.com, or: http://www.videonewswire.com/event.asp?id=84986

Following the call's completion, a replay will be available by dialing (877) 344-7529 today, February 21, beginning at 2:00 p.m. Eastern and continuing through Tuesday, February 28 at 9 a.m. Eastern.  The conference number for the replay will be 10009798.  The replay will also be available on the Internet at www.boydgaming.com.

The results of Borgata for the period from October 1 through December 31 are included in our condensed consolidated statements of operations for the three months ended December 31, 2011 and 2010, respectively; and its results for the period from January 1, 2011 through December 31, 2011 and from March 24, 2010 through December 31, 2010 are included in the condensed consolidated statements of operations for the years ended December 31, 2011 and 2010, respectively. The results of LVE are consolidated in our condensed consolidated statements of operations for the three months and years ended December 31, 2011 and 2010. The previously reported results for the three months and year ended December 31, 2010 have been revised to reflect the correction of an immaterial error related to the consolidation of LVE. These revisions had no effect on net income, as previously reported in these periods.

The following table sets forth the impact of the consolidation of Borgata and LVE during the three months ended December 31, 2011. For the purposes of this presentation, and consistent with GAAP, Borgata and LVE have both been consolidated for the entire period. The wholly-owned column reflects the equity method of accounting for Borgata. The consolidating columns are presented for purposes of additional disclosure and as a reconciliation to the current GAAP presentation of Boyd Gaming Corporation.

The following table sets forth the impact of the consolidation of Borgata and LVE during the three months ended December 31, 2010. For the purposes of this presentation, and consistent with GAAP, Borgata and LVE have both been consolidated for the entire period. The wholly-owned column reflects the equity method of accounting for Borgata. The consolidating columns are presented for purposes of additional disclosure and as a reconciliation to the current GAAP presentation of Boyd Gaming Corporation. The previously reported results for the three months ended December 31, 2010 have been revised to reflect the correction of an immaterial error related to the consolidation of LVE. These revisions had no effect on net income, as previously reported in this period.

The following table sets forth the impact of the consolidation of Borgata and LVE during the year ended December 31, 2011. For the purposes of this presentation, and consistent with GAAP, Borgata and LVE have both been consolidated for the period from January 1, 2011 through December 31, 2011. The wholly-owned column reflects the equity method of accounting for Borgata. The consolidating columns are presented for purposes of additional disclosure and as a reconciliation to the current GAAP presentation of Boyd Gaming Corporation.

The following table sets forth the impact of the consolidation of Borgata and LVE during the year ended December 31, 2010. For the purposes of this presentation, and consistent with GAAP, Borgata has been consolidated for the period from March 24, 2010 through December 31, 2010, and LVE has been consolidated for the period from January 1, 2010 through December 31, 2010. The wholly-owned column reflects the equity method of accounting for Borgata. The consolidating columns are presented for purposes of additional disclosure and as a reconciliation to the current GAAP presentation of Boyd Gaming Corporation. The previously reported results for the year ended December 31, 2010 have been revised to reflect the correction of an immaterial error related to the consolidation of LVE. These revisions had no effect on net income, as previously reported in this period.

The following supplemental pro forma information presents pro forma consolidated financial results as if the effective control of Borgata had occurred on January 1, 2010 (rather than March 24, 2010). The Boyd Gaming Corp column reflects the full consolidation of LVE and presents Borgata using the equity method of accounting. This supplemental pro forma information has been prepared for comparative purposes and does not purport to be indicative of what the actual results would have been had the consolidation of Borgata been completed as of the earlier dates, nor are they indicative of any future results. The previously reported results for the year ended December 31, 2010 have been revised to reflect the correction of an immaterial error related to the consolidation of LVE. These revisions had no effect on net income, as previously reported in this period.

The following tables reconcile Adjusted earnings (loss) and Adjusted earnings (loss) per share to Net income (loss) attributable to Boyd Gaming Corporation and Net income (loss) per share, respectively, as reported in accordance with GAAP. The weighted average shares outstanding represent the shares used in the diluted net income per share computations, except to the extent such common share equivalents are anti-dilutive. Also, during periods in which our adjusted earnings result in a loss, our basic shares outstanding are used in the computation of Adjusted loss per share, as any common share equivalents would be anti-dilutive.

The following table presents Net Revenues and Adjusted EBITDA by operating segment and reconciles Adjusted EBITDA to Net income (loss) attributable to Boyd Gaming Corporation on our condensed consolidated statements of operations for the three months and years ended December 31, 2011 and 2010. Note that the results from Dania Jai-Alai are classified as part of total other operating costs and expenses and are not included in Adjusted EBITDA. Additionally, the results for the three months ended December 31, 2011 and 2010 and for the year ended December 31, 2011, as reported in the table below, reflect the consolidation of Borgata and LVE for the entire period. The results for the year ended December 31, 2010 reflect the consolidation of Borgata for the period from March 24, 2010 through December 31, 2010. The previously reported results for the three months and year ended December 31, 2010 have been revised to reflect the correction of an immaterial error related to the consolidation of LVE. These revisions had no effect on net income, as previously reported in these periods.

The following supplemental pro forma information presents pro forma consolidated financial results as if the effective control of Borgata had occurred on January 1, 2010 (rather than March 24, 2010). The Boyd Gaming Corp column reflects the full consolidation of LVE and presents Borgata using the equity method of accounting. This supplemental pro forma information has been prepared for comparative purposes and does not purport to be indicative of what the actual results would have been had the consolidation of Borgata been completed as of the earlier dates, nor are they indicative of any future results. The previously reported results for the year ended December 31, 2010 have been revised to reflect the correction of an immaterial error related to the consolidation of LVE. These revisions had no effect on net income, as previously reported in this period.

The following table reconciles the presentation of corporate expense on our condensed consolidated statements of operations to the presentation on the accompanying table.

The following table reconciles the presentation of operating income from Borgata, as reported on our condensed consolidated statements of operations to the presentation on the accompanying table.

The following table presents Borgata's condensed consolidated statements of operations as reflected, or partially reflected as during the year ended December 31, 2010, in our condensed consolidated statements presented herein. These results present the impact of certain valuation adjustments made upon consolidation; however, these adjustments were not pushed down to Borgata and are therefore not reflected in Borgata's stand alone financial statements.

Footnotes and Safe Harbor Statements

Non-GAAP Financial Measures

Regulation G, "Conditions for Use of Non-GAAP Financial Measures," prescribes the conditions for use of non-GAAP financial information in public disclosures. We believe that our presentations of the following non-GAAP financial measures are important supplemental measures of operating performance to investors: earnings before interest, taxes, depreciation and amortization (EBITDA), Adjusted EBITDA, Adjusted Earnings, Adjusted Earnings Per Share (Adjusted EPS) and certain line items which intentionally exclude the effects of the consolidation of Borgata and/or LVE and/or both. The following discussion defines these terms and why we believe they are useful measures of our performance.

In the accompanying release, and the Company's periodic reports filed with the Securities and Exchange Commission, Dania Jai-Alai's results are included as part of total other operating costs and expenses. In addition, as of the same date, we reclassified the reporting of corporate expense to exclude it from our subtotal for Reportable Segment Adjusted EBITDA and include it as part of total other operating costs and expenses. Furthermore, in the Company's periodic reports, corporate expense is presented to include its portion of share-based compensation expense.

EBITDA and Adjusted EBITDA

EBITDA is a commonly used measure of performance in our industry which we believe, when considered with measures calculated in accordance with GAAP, gives investors a more complete understanding of operating results before the impact of investing and financing transactions and income taxes and facilitates comparisons between us and our competitors. Management has historically adjusted EBITDA when evaluating operating performance because we believe that the inclusion or exclusion of certain recurring and non-recurring items is necessary to provide the most accurate measure of our core operating results and as a means to evaluate period-to-period results. We have chosen to provide this information to investors to enable them to perform more meaningful comparisons of past, present and future operating results and as a means to evaluate the results of core on- going operations. We do not reflect such items when calculating EBITDA; however, we adjust for these items and refer to this measure as Adjusted EBITDA. We have historically reported this measure to our investors and believe that the continued inclusion of Adjusted EBITDA provides consistency in our financial reporting. We use Adjusted EBITDA in this press release because we believe it is useful to investors in allowing greater transparency related to a significant measure used by management in its financial and operational decision-making. Adjusted EBITDA is among the more significant factors in management's internal evaluation of total company and individual property performance and in the evaluation of incentive compensation related to property management. Management also uses Adjusted EBITDA as a measure in determining the value of acquisitions and dispositions. Adjusted EBITDA is also widely used by management in the annual budget process. Externally, we believe these measures continue to be used by investors in their assessment of our operating performance and the valuation of our company. Adjusted EBITDA reflects EBITDA adjusted for deferred rent, preopening expenses, share-based compensation expense, write-downs and other charges, net, increase in value of derivative instruments, gain on early retirements of debt, other non-operating expenses, and our share of Borgata's non-operating expenses, preopening expenses and other items and write-downs, net. In addition, Adjusted EBITDA includes corporate expense. A reconciliation of Adjusted EBITDA to net income (loss), based upon GAAP, is included in the financial schedules accompanying this release.

Adjusted Earnings and Adjusted EPS

Adjusted Earnings is net income (loss) before preopening expenses, adjustments to prior-year property taxes, increase in value of derivative instruments, write-downs and other charges, net, gain on early retirements of debt, acquisition-related expenses, expenses related to a property closure due to flooding, other non-operating expenses, valuation adjustments related to the consolidation of Borgata, and our share of Borgata's preopening expenses and other items and write-downs, net. Adjusted Earnings and Adjusted EPS are presented solely as supplemental disclosures because management believes that they are widely used measures of performance in the gaming industry. A reconciliation of net loss based upon GAAP to Adjusted Earnings and Adjusted EPS are included in the financial schedules accompanying this release.

Pro Forma Effect of Consolidation of Borgata and LVE

The effective change in control of Borgata was triggered at the end of the first quarter 2010, and its results were consolidated prospectively beginning late in the first quarter 2010; the consolidation of our variable interest in LVE was initially reported during the year ended December 31, 2010, but not in any specific quarter therein. For purposes of comparability throughout this release, certain results reported on a consolidated basis are presented by respective entity or on a Boyd wholly-owned historical basis. Additionally, for further purposes of comparability, certain year to date amounts have been presented on a pro forma basis, as if the consolidation of Borgata had occurred as of the beginning of the period presented (i.e. January 1, for the year ended December 31, 2010, as applicable).

Limitations on the Use of Non-GAAP Measures

The use of EBITDA, Adjusted EBITDA, Adjusted Earnings, Adjusted EPS and certain other non-GAAP financial measures has certain limitations. Our presentation of EBITDA, Adjusted EBITDA, Adjusted Earnings, Adjusted EPS or certain other non-GAAP financial measures may be different from the presentation used by other companies and therefore comparability may be limited. Depreciation and amortization expense, interest expense, income taxes and other items have been and will be incurred and are not reflected in the presentation of EBITDA or Adjusted EBITDA. Each of these items should also be considered in the overall evaluation of our results. Additionally, EBITDA and Adjusted EBITDA do not consider capital expenditures and other investing activities and should not be considered as a measure of our liquidity. We compensate for these limitations by providing the relevant disclosure of our depreciation and amortization, interest and income taxes, capital expenditures and other items both in our reconciliations to the GAAP financial measures and in our consolidated financial statements, all of which should be considered when evaluating our performance.

EBITDA, Adjusted EBITDA, Adjusted Earnings, Adjusted EPS and certain other non-GAAP financial measures are used in addition to and in conjunction with results presented in accordance with GAAP. EBITDA, Adjusted EBITDA, Adjusted Earnings, Adjusted EPS and certain other non-GAAP financial measures should not be considered as an alternative to net income, operating income, or any other operating performance measure prescribed by GAAP, nor should these measures be relied upon to the exclusion of GAAP financial measures. EBITDA, Adjusted EBITDA, Adjusted Earnings, Adjusted EPS and certain other non-GAAP financial measures reflect additional ways of viewing our operations that we believe, when viewed with our GAAP results and the reconciliations to the corresponding GAAP financial measures, provide a more complete understanding of factors and trends affecting our business than could be obtained absent this disclosure. Management strongly encourages investors to review our financial information in its entirety and not to rely on a single financial measure.

Forward Looking Statements and Company Information

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements contain words such as "may," "will," "might," "expect," "believe," "anticipate," "could," "would," "estimate," "continue," "pursue," or the negative thereof or comparable terminology, and may include (without limitation) information regarding the Company's expectations, goals or intentions regarding future performance.  In addition, forward-looking statements in this press release include statements regarding: maintaining an exceptional customer experience, keeping a tight rein on costs and delivering strong results; that the IP Casino Resort Spa gives the Company a leading presence in an important market, that it will be integrated into the Company's business, and that the Company believes that it will be able to drive significant efficiencies and generate additional revenue through cross-marketing opportunities; the Company's belief that Borgata would have achieved both revenue and EBITDA growth but for Hurricane Irene; and that the Company's B Connected Online and B Connected Mobile tools will continue to contribute to growth among its customers.  Forward-looking statements involve certain risks and uncertainties, and actual results may differ materially from those discussed in any such statement. These risks and uncertainties include, but are not limited to: fluctuations in the Company's operating results; recovery of its properties in various markets; the state of the economy and its effect on consumer spending and the Company's results of operations; the timing for economic recovery, its effect on the Company's business and the local economies where the Company's properties are located; consumer reaction to fluctuations in the stock market and economic factors; the fact that the Company's expansion, development and renovation projects (including enhancements to improve property performance) are subject to many risks inherent in expansion, development or construction of a new or existing project; the effects of events adversely impacting the economy or the regions from which the Company draws a significant percentage of its customers; competition; litigation; financial community and rating agency perceptions of the Company and its subsidiaries; changes in laws and regulations, including increased taxes; the availability and price of energy, weather, regulation, economic, credit and capital market conditions; and the effects of war, terrorist or similar activity. Additional factors that could cause actual results to differ are discussed under the heading "Risk Factors" and in other sections of the Company's Annual Report on Form 10-K, its Quarterly Reports on Form 10-Q, and in the Company's other current and periodic reports filed from time to time with the SEC. All forward-looking statements in this press release are made as of the date hereof, based on information available to the Company as of the date hereof, and the Company assumes no obligation to update any forward-looking statement.

About Boyd Gaming

Headquartered in Las Vegas, Boyd Gaming Corporation (NYSE: BYD) is a leading diversified owner and operator of 17 gaming entertainment properties located in Nevada, New Jersey, Mississippi, Illinois, Indiana, and Louisiana.  Boyd Gaming press releases are available at www.prnewswire.com.  Additional news and information on Boyd Gaming can be found at www.boydgaming.com.

SOURCE Boyd Gaming Corporation