Boyd Gaming earnings beat Street estimates by 10 cents

Apr 26, 2005 6:38 AM

Some Wall Street investors dropped the ball on Friday, betting that Boyd Gaming Corp. (BYD) would not report earnings as spectacular as others were predicting, eventually knocking the price of the shares down by nearly 9%.

They obviously were wrong.

On Monday, Boyd Gaming reported first quarter earnings of $0.62 per share, easily topping the street consensus of $0.52 a share.

The blowout quarter, up 121% over last year’s $0.29 per share, was the third quarter in a row in which adjusted earnings per share were more than double the comparable quarter in the prior year. And the results were directly attributable to the company’s acquisition of Coast Casinos last July.

Revenues for the quarter were a record $567 million, an increase of 72% over the $330 million reported in the first quarter of last year.

"I am extremely please with the results of our company’s operations in the first quarter," said Bill Boyd, chairman and CEO. Revenue and earnings gains were made across the board. In the booming Nevada market, our quarterly EBITDA (earnings before interest, taxes, depreciation and amortization) broke the $100 million mark for the first time, nearly three and a half-times what it was in last year’s first quarter. The Las Vegas market remains one of the best places to operate in our business."

Also booming for the company, in addition to its Las Vegas properties, was its Atlantic City flagship, the Borgata Hotel Casino and Spa, which it operates as a 50% partner with MGM MIRAGE Inc. (MGG). Gaming revenue for the quarter at the Borgata reached $162 million, an increase of 15.6% over the first quarter of 2004. Net revenues for the quarter were $172 million. Hotel occupancy was 93% with an average daily room rate of $123.

It also was announced on Monday that the board of directors had declared a quarterly dividend of $0.125 per share payable on June 1 to shareholders of record of May 13.

MGM MIRAGE

While MGM MIRAGE Inc. (MGG) expected to close on its acquisition of Mandalay Resort Group (MBG), possibly as early as Monday, April 25, the company continued to post solid numbers with earnings for the first quarter of 2005 reaching $111 million, or $0.75 per share compared to last year’s $105.8 million o $0.72 per share.

The company said its revenues grew nearly 13% to $1.20 billion from $1.07 billion in 2004. Revenues per available room moved higher to $167, an increase of 15% from a year ago. Baccarat helped increase table games volume by 9% while its slot revenue was up 13%.

Meanwhile the Illinois Gaming Board removed the last hurdle needed by the company to complete its MBG merger. The merger was supposed to close during the month of March, shortly after they received the approval of the Federal Trade Commission but was delayed because of a problem within the Illinois Gaming Board whose approval of the sale of Grand Victory Casino in Elgin was required.

John Redmond, president and CEO of MGM Grand Resorts, said he was "ecstatic" following the Illinois regulators’ action, adding that "we’ve been doing this since June and we just can’t wait to move forward."

Harrah’s Entertainment

Expectations from Harrah’s Entertainment Inc. (HET) for the company’s first quarter were high following an increased guidance from the company officials a few weeks ago. So last week’s announcement that first quarter revenues of $1.26 billion produced general income from operations of $232.8 million came as no surprise.

Adjusted earnings per share increased to $0.97, a jump of 27.6% from the $0.76 per share reported in 2004.

Boosting both revenues and earnings was the acquisition of three Horseshoe casinos purchased by Harrah’s last July.

Reported as discontinued operations were the results from Harrah’s East Chicago and Harrah’s Tunica, both of which are being sold to an affiliate of Colony Capital LLC.

"The progress of the Horseshoe integration," said Gary Loveman, chairman, president and CEO, "is further grounds for optimism. We plan to apply the lessons learned during this successful process to the pending integration of Caesars."

The purchase of Caesars Entertainment Inc. (CZR) for $9.4 billion is awaiting federal approval.

International
Game Tech

International Game Technology (IGT) failed to come close to the profit reported in the corresponding period for the second fiscal quarter that ended on March 31. But the results were not unexpected by gaming investors who had been advised that sales were down because the casinos had completed their ticket-in/ticket out machine purchases and were awaiting the newer products that would incorporate more innovative features.

Net income for the second quarter reached $93.9 million or $0.26 per diluted share compared to last year’s net income of $116.9 million or $0.32 per share. For the six months that ended on March 31, income from continuing operations totaled $216.4 million or $0.59 per share compared to $234.3 million or $0.63 per share in 2004.

The company also noted that second quarter results were adversely affected by charges related to technical obsolescence of certain gaming operations. These charges totaled $21.8 million before tax, $13.9 million after tax or $0.04 per fully diluted share.

Showing an increase was the company’s gaming operations whose revenues totaled $209.9 million, a jump of 9% over the previous year. For the six-month period, gaming operations revenue totaled $585.8 million, an increase of 6% from the $551.3 million in the first half of the previous year.

Despite the quarter’s decline, management remained optimistic about the future. "We are deploying several new products including Fort Knox, our new penny progressive on both the Reel Touch and Video Reel Touch platforms," explained TJ Matthews, company CEO. "During the quarter we also placed over 1,000 games into the Alabama charitable bingo and Class II Native American markets."