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Guidance didn't seem to match up with management's enthusiastic qualitative outlook.

"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."  

- Keith Smith, President and Chief Executive Officer of Boyd Gaming


  • Improving economic activity across the country and their focus on cost control helped their results
  • Good economic indicators in Nevada
    • Last year was the second best year for visitation to Las Vegas
    • Core employment in Vegas grew; unemployment declined 2% in 2011
    • Saw a 6% gain sales in Nevada in November
  • Florida legislation is dead for the quarter, but it was clear that any gaming expansion will give parity rights to existing operators
  • While they believe that Federal legislation is preferable for online gaming, they will also go the state by state route if necessary and have already applied for a license in Nevada
  • Las Vegas locals: Their margins are now identical to their largest competitor.  STN grew revenues by 7% YoY but not EBITDA
    • Optimistic about long term growth 
    • Expect that 2012 will be a year of revenue and EBITDA expansion
  • Downtown: Flat EBITDA margin was due to $1MM fuel charge for their Hawaiian business
    • New non-gaming businesses are moving to the area
    • Smith Center will open its doors next month
    • Fremont Street is seeing improvements - area "renaissance" 
  • Double digit gains in EBITDA at Delta Downs and Blue Chip
    • Delta Downs' second best quarter 
    • IP: expect to generate additional savings in insurance, purchasing and utility costs.  B Connected will also help drive their top line - on track to be rolled out in the 2Q12
  • Borgata: Improvements driven by gaming growth. 
    • Cash ADR: $168
  • B Connected Online: The most visited website of its kind. They are enhancing B-Connected 2.0; which will be ready in 2Q
  • Debt: $2.6BN; $1.6BN under R/C. Leverage improved 1 full turn since early 2011 despite increased debt
    • Secured Leverage: 4.2x vs. 4.5x
    • Total Leverage: 6.70x vs. 7.75x
    • Cash: $132MM
    • $216MM maturity in April 2014 - expect to refinance it before it "goes current"
    • Borgata: $75MM under R/C and $46MM of cash
  • 2012 guidance:
    • Corporate expense: $44MM
    • D&A: $200-205MM ($135-$140MM to BYD; remainder Borgata)
    • Stock Comp: $10MM
    • Pre-opening: 4Q is a good quarterly run rate in 2012 - includes $1MM/month to Las Vegas Energy
    • Interest expense: $160MM ($85MM for Borgata)
    • Tax: 35% 
  • 1Q12 guidance:
    • Wholly owned EBITDA: $88-93MM
    • Borgata EBITDA: $32-34MM
    • EPS: $0.05-$0.09
  • Other income in the Q: accounting for the IP acquisition gain ($4MM) and the deposit for Dania ($6MM).  


  • Thinks that STN is buying revenue growth in the locals market with promotional spending
  • Visitation was steady in the quarter, but seeing some growth in spend per visitor
  • Sees 60% flowthrough on any revenue improvement in 2012
  • Online gaming: were hoping that it would get attached to the payroll tax extension but it wasn't. Are hopeful that it can still get attached later this year
  • They are waiting for their online gaming application license to be processed by Nevada and for what the ultimate rules will be in Nevada
  • $25MM tribal contract/investment? 
    • It's in California, but they are in very early stages and aren't ready to report anything further
  • IP D&A was $4.8MM in 4Q
  • Are not planning on announcing any acquisitions over the next few months
  • Revenue growth in the locals LV market is modest. Thinking low single digit growth for 2012.
  • IP synergies: Labor saving changes were implemented in January
    • Insurance renewal in 2Q
    • Think that they will be in excess of $5MM
  • All of their key management employees are still there at Borgata, but they have lost some employees to Revel
  • Margaritaville Casino is scheduled to open with no hotel rooms in Biloxi.  Don't see it impacting their business given the challenging location of the property.
  • They will provide more disclosure on the IP results in their 10k


  • Las Vegas Locals: "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."
  • "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."
  • "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."
  • "Borgata continued to lead the market, achieving an all-time record market share of 21.2% in the fourth quarter."