Dividend no savior as Boyd Gaming’s numbers decline

Aug 5, 2003 4:59 AM

Being third in line with a dividend announcement failed to help Boyd Gaming Corp. (BYD) since the news followed a quarterly report that just didn’t measure up to analysts’ expectations.

Boyd Gaming reported a decline in adjusted earnings from last year’s $0.29 per share to this year’s second quarter of $0.21 a share. Revenues for both periods were relatively flat. After charges including the opening expenses for the Borgata Resort in Atlantic City ”” a property that is half-owned with MGM MIRAGE Inc. (MGG) ”” net income for the period was $4.4 million or $0.07 a share versus the net income of $17 million or $0.26 a share in 2002.

The company’s board has declared a quarterly dividend of $0.075 per share that will be paid on Sept.3 to shareholders of record on Aug. 12. This follows recent dividend declarations announced by Mandalay Resort Group Inc. (MBG) and Harrah’s Entertainment Inc. (HET).

Shining above the company’s many gaming properties was its riverboat in Michigan City, Ind., where the Blue Chip Casino reported revenues were up 11.7%. The riverboat, purchased in 1999 for $273 million, has seen its annual revenue grow from $140 million when purchased to $207 million last year.

Also continuing to produce strong results, the company said, was Sam’s Town Las Vegas on Boulder Highway. The property had a 2% increase in revenues but its EBITDA (earnings before interest, taxes, depreciation and amortization) was up 8.2% to $8.5 million.

Another winner for the company was the racino operation at Delta Downs in Louisiana. The property reported second quarter EBITDA of $7.3 million, easily topping last year’s $6.7 million.

The company plans to expand the Delta Downs property by building a 200-room hotel beginning in early 2004.

Following the financial report, Boyd Gaming shares slipped markedly on Wall Street, falling from last week’s high of $18.28 a share to under $16.

Ameristar Casinos

Buoyed by strong results from its renovated property in St. Charles, Mo., Ameristar Casinos Inc. (ASCA) reported higher second quarter sales and earnings for the second quarter that ended on June 30.

Net profit for the period amounted to $14.5 million or $0.54 a share compared with the $12.6 million or $0.47 a share reported a year ago.

Also, going forward, the company offered earnings guidance for the third quarter of between $0.47 and $0.52.

The company said its St. Charles, property, which was renovated last August, posted a 65.3% increase in quarterly revenues over the previous year. Operating income for the riverboat was $16.2 million up from the $5.7 million earnings in 2002.

Overall, the company said revenues reached a record level of $194.8 million, 17.2% over the prior year.

Mohegan Sun

Continued growth at its Uncasville, Conn., casino resort resulted in record revenues for the third quarter that ended on June 30, according to the Mohegan Tribal Gaming Authority.

Gaming revenues reached $271 million for the quarter, an increase of 11.8% over the corresponding period of a year earlier.

Other highlights for the quarter included:

Gross slot revenues of $199.5 million, an increase of 9.4% over 2002.

Table games revenue of $69.9 million, a 16% increase.

Non gaming revenue of $53.7 million, a 26.6% jump.

Income from operations of $58.2 million, a 17.5% increase.

And, net income for the period of $28.3 million, a 50.9 increase over the corresponding year.

                    Argosy Gaming

Showing the effects of higher taxes both in Illinois and in Indiana, Argosy Gaming Company (AGY) reported a second quarter decline in net income to $6.9 million or $0.24 a share compared to the net income of $11.3 million or $0.38 share reported in the comparable period of 2002.

The company said earnings in the second quarter were impacted by a $5.9 million charge due to new legislation regarding the calculation of the 2002 increase in Indiana gaming tax rates and a $6.5 million write down of barge platforms originally intended for use at the company’s Joliet property.

Officials said they expect the effective gaming and admissions tax rate for full year 2003 to be approximately 35.5% as compared to 30.7% for full year 2002.

For the six months of the current fiscal year, the company said net income was $21.6 million or $0.74 per diluted shares on net revenues of $84.7 million. This compared to last year’s net income of $36 million or $1.22 per diluted share.

Monarch Casino

Despite operating in a difficult environment, Monarch Casino & Resort Inc. (MCRI) reported record second quarter net revenue and net income for the period that ended on June 30.

Net income was $2.3 million or $0.25 a share, an increase of 3.5% over last year.

"Despite experiencing factors that negatively impacted our cash flow, we again achieved record second quarter net income, earnings per share, casino revenue, hotel revenue and net revenue of which we are very proud," said John Farahi, co-chairman and CEO.

He said the company had continued to reduce its debt that "combined with lower interest rates, resulted in a marked reduction in interest expense."

Monarch operates the Atlantic Casino Resort in Reno, Nev.

Magna Entertainment

Acquisitions by North America’s largest operator of pari-mutuel racetracks boosted revenues for Magna Entertainment Corp.(MECA) to record levels during the second quarter of fiscal 2003.

Revenues, excluding proceeds from the sale of non-core real estate, for the period, were $188.3 million, up from last year’s $122.2 million. The increases were due primarily to the purchase of racetracks in Texas and Maryland.

Net income increased to $800,000 compared to last year’s second quarter with diluted earnings per share amounting to $0.01 compared to last year when there was no per share earnings.

Commenting on the quarterly results, Jim McAlpine, president and CEO, said, "The positive impact of these acquisitions was partially offset by declines in revenues and EBITDA over the balance of our businesses. With these important building blocks of our long-term strategic plan firmly in place, we will intensify our focus on synergies, cost reductions and new revenue enhancements designed to fuel future growth."

Scientific Games

A drop in operating revenues resulted in a decline in quarterly earnings for Scientific Games Corporation (SGMS) for the period ended on June 30.

The company reported operating revenues of $114 million compared to last year’s $128 million resulted in earnings per share this year of $0.12. Last year’s second quarter saw earnings per share at $0.14.

However, Lorne Weil, chairman and CEO, reported some "positive developments" for the period. These included:

A 10% increase in instant ticket sales.

$27 million worth of new instant ticket contract extensions.

Larger Powerball jackpots that helped increase online sales during the quarter.

More than $30 million in pari-mutuel contract extensions with customers in California, Illinois, Pennsylvania and Canada.

A 19% increase in Connecticut-based account wagering, part due to promotions using the Trophy Club Player Tracking System.

Weil said the company was maintaining its full year guidance of net income per diluted share of $0.53 to $0.63.