Borgata, Coast merger boost
Boyd Gaming 3Q earnings

Nov 2, 2004 4:15 AM

Benefiting from two strategic moves, Boyd Gaming Corporation (BYD) reported record adjusted earnings for the third quarter of their fiscal year that ended on Sept. 30. Boosting the company’s business were the amazing success it incurred at the Borgata Hotel/Casino in Atlantic City and its acquisition of the Coast Casinos properties in Las Vegas.

Boyd Gaming operates the Borgata but shares its revenues with its 50% partner, MGM MIRAGE Inc. (MGG).

Revenues for the third fiscal quarter reached $522 million, a 68% increase over the $311 million reported a year ago. However, adjusted earnings jumped 153% to $0.38 per share compared to last year’s $0.15 a share.

William S. Boyd, chairman and CEO of Boyd Gaming, credited the company’s individual operators for the success. They are Keith Smith for the Boyd properties, Michael Gaughan, who runs the Coast Casinos, and Bob Boughner, president and CEO of Borgata.

"Looking at properties that we have operated in both this year’s and last year’s third quarter," Boyd remarked, "only two, Delta Downs with construction disruption and the California (Hotel in downtown Las Vegas) with a rooms remodel, had comparatively down quarters. Every other property exceeded prior year EBITDA (earnings before interest, taxes, depreciation and amortization) results in the quarter."

Sparking interest among analysts and investors was the announcement that a second phase expansion at the Borgata will follow the $200 million 500-room hotel tower that will see construction begin next month.

The second phase will be for an 800-room hotel tower that will feature both suites and a resort condominium.

Still to be decided is development of the large real estate holding at the Stardust Hotel/Casino and the Barbary Coast Hotel/Coast at the intersection of the Las Vegas Strip and Flamingo Boulevard.

WMS Industries

A 90% increase in gaming machine shipments became the focus of the quarterly report from WMS Industries Inc. (WMS) overshadowing the modest net income of $2.4 million or $0.08 per share. Last year, the company, in the midst of a turnaround, reported a net loss of $1.9 million or $0.06 loss per diluted share.

Total revenues for this, the first quarter of fiscal 2005, increased 61% or $28.4 million to $75.1 million.

The quarterly results were in line with the financial guidance targets given by the company earlier in the year. Also, the company said it expected shipments to range from 4,100 to 4,300 machines. As it turned out, the quarter registered new unit shipments of 4,220 machines.

The company reiterated its fiscal 2005 revenue guidance range of $340 million to $360 million based on the expected shipments of between 21,000 and 22,500 units.

Penn National

Despite "difficult weather" caused by the hurricanes that impacted the company’s three Gulf Coast resorts, Penn National Gaming Inc. (PENN) reported revenues of $288.7 million and earnings of $0.41 a share for the quarter that ended on Sept. 30. This compared favorably with last year’s revenues of $271 million or $0.34 per share.

Registering a strong performance for the company was its Charles Town Races & Slots facility in West Virginia, It provided $104.5 million in revenues, up from last year’s $90 million.

Even knowing that the Charles Town facility has further growth potential, the company scrapped plans to install an additional 700 new slot machines in the third quarter of 2005 and has reduced that number to 200 machines.

Penn National recently announced that it was selling its Pocono Downs harness racetrack in Pennsylvania to the Mohegan Tribe of Connecticut.

Ameristar Casinos

The third quarter saw a record performance turned in by Ameristar Casinos Inc. (ASCA) that reported net revenues of $215.7 million, an increase of $14.1 million over the comparable period of 2003.

Consolidated operating income for the period also was a record, reaching $40.3 million, or a 17.9% increase of last year.

Diluted earnings per share was $0.60 compared to last year’s $0.44.

The company said that based on the results experienced during October it expects diluted earnings per share for the fourth to be between $0.41 and $0.45.

Argosy Gaming

Revenues and earnings continued to climb at Argosy Gaming Company (AGY) despite increased taxes in both Indiana and Illinois.

Net revenues for the third quarter that ended on Sept. 30 were $266.5 million, a 9.7% increase over last year’s $242.9 million. Net income per diluted share rose to $0.71 on net income of $21.1 million as compared to $0.71 per share on last year’s net income of $0.56.

The company took a charge of $5.9 million due to new legislation regarding the calculation of the 2002 Indiana gaming tax rate and a $6.5 million write-down of barge platforms originally intended for use in Illinois. These plans were changed when Illinois lawmakers raised the gaming tax to a maximum of 70%, largest in the nation.

For the full year of 2004, the company said it expected earnings per share to be in the range of $1.95 and $2.00.

As for developments, the company noted that it had recently purchased Raceway Park, a harness racing track in Toledo, Ohio, for about $20 million to be prepared should Ohio approve racetrack slots.