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Didn't think we'd ever see it but BYD creates value by selling Echelon which overshadows still difficult fundamentals

"Our highest priority is strengthening our balance sheet.  The sale of the Echelon site is another important step in the ongoing effort to improve our long-term financial position. While we remain committed to the Las Vegas market, we determined that developing a large-scale project on the Las Vegas Strip was not consistent with our current strategy. We were also encouraged to see sequential improvement throughout the quarter in our Las Vegas Locals business, as our initiatives in this market began to pay off.  We remain focused on improving our core business, successfully integrating the Peninsula assets, and finding new ways to drive revenue and EBITDA growth throughout the business."

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


  • Echelon transaction: was completed this morning and funds have been received ($157MM); will use proceeds to repay debt; the sale will remove $16MM in annual costs associated with this site 
  • Customers have turned cautious in past couple of months due to economic uncertainities (i.e. fiscal cliff); higher payroll tax also affecting consumer behavior.
  • North California/South Florida agreements offer additional opportunities
  • LV locals:  low hold at sports book affected results.  Trends improved in December and it has continued into the 1st Quarter.
    • Also introduced 1,000 new penny slot games 
  • Promotional environment in locals markets is stabilizing
  • Sees modest improvement in LV Locals in 2013
  • Visitation from Hawaiian base has been good; gained 250bps in share in Downtown market; believes that the performance will continue to be strong.
  • Midwest/South: remain competitive market; while core players held up, casual gamers spending and visitation declined
  • Delta Downs:  annual record in EBITDA and coin-in
  • Kansas Star:  property opened 5 new F&B outlets in December; will open 4,200 ft arena by mid-2013
    • 1Q guidance:  will see higher marketing spend; winter weather has been a challenge. But still optimsitc on generating $100MM in EBITDA annually
  • Borgata: forced to close Oct 28-Nov 2 due to Sandy; saw 5,000 room cancelations in Oct/Nov.  23% market share in January.
  • Peninsula:  prelim purchase price accounting for the acquisition will impact D&A and interest expense:
  • Corporate overhead from Peinsula - will allocate $3MM in 2013
  • Total debt: $4BN ($1.2BN-Peninsula, $1.5BN outstanding on credit facility)
  • Cash: $158MM ($32MM Peninsula)
  • Secured leverage ratio: 3.89 vs 4.25x covenant
  • Total leverage ratio:  7.35x vs 7.7 covenant
  • Dania/Echelon will allow ratio to improve by a half turn
  • Borgata debt: $811MM ($20MM oustanding under their $60MM credit facility); cash balance was $34MM
  • 2013 corporate expense: $46MM ($4.5MM from Peninsula)
  • 2013 depreciation: $90MM (Peninsula), $137MM (Boyd), Borgata ($60MM)
  • 2013 Boyd interest expense: $285MM ($86MM Peninsula-$15MM related to purchase price accounting for Peninsula note, $84MM Borgata)
  • 2013 capex: a little above 100MM ($15MM Peninsula, $11MM Kansas expansion $20MM Borgata)
  • 1Q guidance:  Wholly-owned EBITDA after corp expense: $125-$130MM; (Borgata $25-27MM)
  • 1Q EPS: loss of 5 cents to loss of 10 cents (includes purchase price accounting representing 11 cents or $15MM)


  • I-gaming NJ opportunity: $200MM-$1BN; will leverage opportunity with Bwin
  • Kansas Star trends:  has already developed a very strong following. 
  • EBITDA impact from LV sports book unfavorable win:  half of the difference in YoY EBITDA; 
  • Focused on improving balance sheet
  • LV locals: customer count is up; spend per visitor is down; higher end of database continue to do well
  • Peninsula acquisition mgmt fee structured: 2% of net revenues and 5% of EBITDA (effective as of closing of transition and also in release)
  • Echelon:  LVE will receive $187MM
  • Echelon:  $16MM recorded as returned pre-opening (storage, insurance, security, property tax)
  • Delay in tax refunds hurting consumer
  • Dania: was running at a loss of $4MM per year
  • Refinancing of sub notes? Possible.
  • LV locals:  MGM building arena in 2013 will create jobs.  A lot of momentum coming from current LV projects.
  • I-gaming will operate under the Borgata license; MGM, as 50% owner, will also participate in the site.
  • Tax loss carryforwards:  Echelon: $750MM tax loss; Dania: $60MM tax loss
  • Average interest cost on Borgata debt:  $400MM at 9.5%; $400MM at 9.75%
  • Southern Lousisiana: strongest consumer market in the country based on strong gas/oil markets in Texas
  • Borgata property tax appeal:  going to trial in late March
    • Other AC property tax appeals:  have already settled with the city and received substantial tax credits
  • Capital allocation:  will use FCF in maintenance capital and debt repayments; acquisitions will only be in the future (greenfield will be the farthest on the list)


  • Echelon transaction:  A portion of the proceeds will be paid to a third party to fulfill the Company's obligations to LVE Energy Partners, LLC.  Following this payment and other closing costs, Boyd Gaming expects to receive approximately $157 million in net proceeds from the transaction.
  • 4Q Adjusted EBITDA was $100.9 million, compared to $114.3 million in the year-ago quarter. 
  • 4Q Wholly-owned Adjusted EBITDA was $86.8 million, an increase of 13.7% from the fourth quarter of 2011. 
  • Significant items excluded from Adjusted Earnings in the 4Q 2012 include the $993.9 million impairment charge associated with the Echelon site; $39.4 million of impairment charges associated with the Company's excess land holdings in North Las Vegas and Pennsylvania; and a $17.5 million impairment charge associated with the Company's gaming license in Shreveport, La.
  • LV Locals:  Business levels strengthened at our Locals properties toward the end of the quarter.  This was primarily attributable to the introduction of an expanded offering of low-denomination slot product throughout the market, and related marketing programs
  • Downtown:  Due to previously announced reductions in BYD's weekly flight schedule, revenues declined at their Hawaiian charter service.  EBITDA at our Downtown operations was flat YoY before several one-time charges.
  • Midwest and South:   Regional operations were impacted by softness in visitation among casual players.
  • Peninsula:  From November 20 to December 31, 2012, the five Peninsula Gaming properties contributed net revenues of $56.9 million, and Adjusted EBITDA of $21.2 million.  The segment reported substantial growth from the prior year when Peninsula was a standalone company, due to a full quarter of contributions from the Kansas Star Casino, which commenced operations on December 20, 2011.
  • Borgata:  Adjusted EBITDA was $14.0 million, down from the $37.9 million reported in the fourth quarter of 2011.  Results were impacted by the effects of Superstorm Sandy, including the closure of the property for five days.