Boyd Gaming Reports Fourth Quarter Results
- Full Year E.P.S. Increases 27% -
LAS VEGAS, Feb. 24 /PRNewswire/ -- Boyd Gaming Corporation (NYSE: BYD - news) today announced that in the fourth quarter ended December 31, 1999, the Company earned $9.4 million, or $0.15 per share, compared with earnings of $9.3 million, or $0.15 per share, in the fourth quarter of 1998. Per share amounts are presented on a diluted basis. Although earnings per share were unchanged on a comparative basis, there were several positive trends at the Company's diversified portfolio of gaming properties which were offset at certain locations by the impact of construction and increased competition. Among the positive results in the quarter were:
-- A strong initial earnings contribution from 52 days of operations of
Blue Chip Casino, acquired by the Company on November 10;
-- A 49% year-over-year increase in operating cash flow at Par-A-Dice;
-- Record operating cash flow in the quarter at the Downtown Las Vegas
properties, exceeding $10 million for the first time;
-- A 33% increase in earnings from the Company's management of Silver
Star; and
-- Exclusive of the financing for the Blue Chip acquisition, reduced
interest expense as a result of the Company's ongoing aggressive debt
reduction program.
Offsetting the positive results were declines at:
-- The Stardust related to the effects of the final phases of its
renovation and increased competition on the Las Vegas Strip;
-- Sam's Town Las Vegas primarily due to construction disruption related
to its ongoing $86 million renovation and expansion;
-- Sam's Town Tunica as a result of heightened market competition; and
-- Treasure Chest where the October opening of a large land-based casino
in New Orleans initially caused sizable revenue declines, which have
been steadily diminishing since the competitor's opening.
Revenues for the quarter were $262 million, up 7.1% from the $245 million reported in the fourth quarter last year. Operating cash flow from property operations (as defined by earnings before interest, taxes, depreciation and amortization, or EBITDA) in the quarter was $61.8 million, versus $58.7 million in the prior year's fourth quarter, an increase of 5.4%.
The Company reported a year-end debt balance of $984 million, an increase of $268 million from the $716 million outstanding on September 30, 1999 due primarily to the cash acquisition of the Blue Chip Casino in November 1999. As a result of the $72 million payment in connection with the termination of the Company's management agreement at Silver Star and other debt reduction efforts during the first quarter of 2000, the Company's debt is $883 million as of the date of this release, a reduction of over $100 million in the eight weeks since the start of the year.
For the full year 1999, earnings per share before preopening expenses were $.66, an increase of 27% over the $.52, before a restructuring charge, reported in 1998. Operating cash flow from the Company's properties was $238 million in the 12 months, up 6.8% from the $223 million reported in the prior year. Revenues for the 12 month period were $987 million, up from $975 million reported last year.
Commenting on the quarterly results, William S. Boyd, Chairman and Chief Executive Officer of Boyd Gaming said, ``I am very pleased with the many positive aspects of the fourth quarter, especially the completion of the acquisition of Blue Chip Casino, which I feel is an excellent addition to our Company's diversified portfolio of properties. We are committed to meeting the challenges related to those properties where earnings fell short of our expectations. I am gratified that so far in 2000 we have already seen a strong recovery at Treasure Chest and significantly improved results at Sam's Town Las Vegas, as some completed portions of the renovation project appear to be gaining early customer acceptance, confirming the value of reinvesting in our properties.'
Property Highlights
In Nevada, the Downtown Properties earned record operating cash flow in the quarter of $10.3 million, up 10.8% from the prior year. For the year, operating cash flow was $38.6 million, up 37% from 1998, and operating cash flow margin increased 1.5 percentage points in the quarter and 4.1 percentage points for the full year versus comparable periods in the prior year. Each of the three Downtown Properties reported record or near record operating cash flow for the full year 1999. A combination of effective marketing programs, including a seventh weekly charter flight from Honolulu to Las Vegas, and cost consolidation contributed to the exceptional results. The seventh charter flight, which was in operation for only three months in 1999, will resume on a full-time basis in March 2000. Sam's Town Las Vegas was affected in the quarter by its renovation and expansion program in two significant areas. First, significant renovation work at the main entrance and in the casino contributed to a decline in gaming revenue, and second, the inventory liquidation and subsequent closing of the Western Emporium retail store to make room for the property expansion caused a year-over-year negative swing of $1.1 million in operating cash flow. With the renovation partially complete, gaming revenue and estimated operating cash flow for the first seven-and-a-half weeks of 2000 are ahead of the comparable period in the prior year. The Stardust completed its renovation project in the fourth quarter of 1999, including the demolition of 550 guest rooms that were too old to renovate. The property's occupancy rate was 86% in the quarter, down from 91% in last year's fourth quarter, but its average daily rate was up $8.60, or 16.9%, from the prior year's number.
In the Central Region, Par-A-Dice reported a 25% increase in gaming revenue in the quarter versus the prior year, primarily as the result of dockside operations that began in late June 1999. This resulted in a 49% increase in operating cash flow and a 5.9 percentage point increase in operating cash flow margin over the comparable 1998 quarter. Blue Chip Casino was a solid producer of revenue and cash flow in the quarter in only 52 days with the Company since its November 10 acquisition. Revenues were $23.3 million and operating cash flow was $9.5 million. For the full year, Blue Chip reported gaming revenue of $162 million and operating cash flow of $73.3 million. The Company's acquisition price, including a new hotel that opened in February 2000, was $274 million. The Company reported management fee income from Silver Star of $12.2 million in the fourth quarter. As previously reported, the Company has terminated its management agreement for Silver Star effective January 31, 2000. Sam's Town Tunica struggled in the quarter due to increased competition in the Tunica gaming market. The Company has taken steps to combat the decline in revenue and cash flow by reinvigorating property management with many of Silver Star's transferred management personnel and with a $21 million renovation program expected to begin shortly and be completed by year end. The program includes: a casino reconfiguration and remodel to bring more of the property's gaming positions onto the first floor; all new restaurant concepts and configurations, including the creation of what we expect will be the best buffet in the Tunica market; and a new RV park adjacent to the property. Treasure Chest quarterly results were hit hard initially with the late October opening of a large, land-based casino in downtown New Orleans, causing employee defections and new-property trial by Treasure Chest customers. Gaming revenue compared to the comparable period in the prior year was down 22% in November, 16% in December, 11% in January, and 7% for the first 21 days of February, indicating a positive recovery trend.
The following table reports December quarterly and calendar year-to-date net revenues and EBITDA for the Company's properties. Boulder Strip properties include Sam's Town Las Vegas, the Eldorado Casino and Jokers Wild Casino; Downtown Properties include the California Hotel and Casino; the Fremont Hotel and Casino, and Main Street Station; Central Region includes Sam's Town Tunica, Sam's Town Kansas City (closed July 1998), Par-A-Dice Hotel and Casino, Treasure Chest Casino, Blue Chip Casino (acquired November 1999); and management fee income from Silver Star Resort and Casino:
($000 in thousands) Three Months Ended Twelve Months Ended
December 31, December 31,
1999 1998 1999 1998
Net Revenues
Stardust $38,961 $42,169 $148,321 $162,628
Boulder Strip Properties 45,799 51,971 186,354 192,021
Downtown Properties (a) 55,373 54,097 218,800 207,510
Nevada Region 140,133 148,237 553,475 562,159
Central Region 122,199 96,739 433,566 412,937
Total Properties $262,332 $244,976 $987,041 $975,096
EBITDA
Stardust $4,068 $6,189 $14,403 $22,114
Boulder Strip Properties 7,654 11,009 34,517 39,500
Downtown Properties 10,330 9,327 38,649 28,314
Nevada Region 22,052 26,525 87,569 89,928
Central Region 39,790 32,131 150,516 133,086
Total Properties $61,842 $58,656 $238,085 $223,014
(a) Includes revenues related to Vacations Hawaii, a Honolulu travel
agency, of $8,889 and $8,272, respectively, for the quarters ended
December 31, 1999 and 1998 and revenues of $37,522 and $32,341,
respectively, for the twelve month periods ended December 31, 1999
and 1998.
This press release contains forward-looking statements regarding operating trends and the completion of renovation projects, which are subject to change. The actual results may differ materially from those described in any forward-looking statements. In that regard, there can be no assurance that the Company's steps to address underperforming properties will be successful. In addition, there can be no assurance that the trends through the first seven weeks of 2000 for specific properties will be indicative of results for the entire quarter. Additional information concerning potential factors that could affect the Company's financial results are included in the Company's Form 10-K for the year ended 1998.
BOYD GAMING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended Twelve Months Ended
December 31, December 31,
(In thousands, except
per share data) 1999 1998 1999 1998
Revenues
Casino $200,144 $181,121 $733,677 $722,124
Food and beverage 40,203 40,485 158,982 161,582
Room 17,666 18,943 71,478 74,053
Other 16,428 18,752 69,988 70,903
Management fee 12,643 9,600 47,463 40,206
Gross revenues 287,084 268,901 1,081,588 1,068,868
Less promotional allowances 24,752 23,925 94,547 93,772
Net revenues 262,332 244,976 987,041 975,096
Costs and expenses
Casino 102,623 90,597 371,400 366,746
Food and beverage 26,197 26,681 103,439 106,195
Room 4,554 6,081 22,532 24,724
Other 14,982 16,679 63,825 65,626
Selling, general and
administrative 41,136 36,207 145,788 147,647
Maintenance and utilities 10,998 10,075 41,972 41,144
Depreciation 17,363 17,031 67,793 67,656
Amortization of intangible
license rights and
acquisition costs 2,011 1,438 6,325 5,751
Corporate expense 7,769 6,239 25,867 19,994
Preopening expense 281 -- 1,489 --
Restructuring charge -- -- -- 5,925
Total 227,914 211,028 850,430 851,408
Operating income 34,418 33,948 136,611 123,688
Other income (expense)
Interest income 13 72 253 365
Interest expense, net of
amounts capitalized (18,898) (17,700) (69,230) (74,162)
Total (18,885) (17,628) (68,977) (73,797)
Income before provision for
income taxes and
cumulative effect
of a change in accounting
principle 15,533 16,320 67,634 49,891
Provision for income taxes 6,176 7,015 27,595 21,291
Income before cumulative
effect of a change in
accounting principle 9,357 9,305 40,039 28,600
Cumulative effect of a change
in accounting for start-up
activities, net
of tax benefit of $936 -- -- (1,738) --
Net income $9,357 $9,305 $38,301 $28,600
Basic and Diluted Net income
per common share
Income before cumulative
effect of a change in
accounting principle $0.15 $0.15 $0.65 $0.46
Cumulative effect of a change
in accounting for start-up
activities, net of tax -- -- (0.03) --
Net income $0.15 $0.15 $0.62 $0.46
Average Basic Shares
Outstanding 62,222 61,828 62,124 61,749
Average Diluted Shares
Outstanding 62,567 61,828 62,293 61,850
SOURCE: Boyd Gaming Corporation |
