Surprising in-line quarter with decent guidance. BYD's LV/AC exposure becoming an asset vis a vis the other regional operators.



"We are making significant progress toward our strategic goals of strengthening our balance sheet and positioning ourselves for continued growth.  Operating efficiencies and effective marketing programs drove solid growth across our Las Vegas properties.  And Borgata posted year-over-year gains as well, after factoring out the impact of a tax charge.  Our Company is moving in the right direction, and I am optimistic about the outlook for our business."


-Keith Smith, President and CEO of BYD



  • 2 transactions (Echelon and Dania):  Generated $400MM, eliminated $20MM in annual expense
  • Positive momentum in business trends
  • Locals
    • All 4 locals properties had YoY growth in EBITDA
    • Believe operating margins are sustainable
    • Future looks positive
    • More jobs on the way in Nevada
    • Existing home prices up 30% YoY
  • Midwest and South
    • Ex weak results at the IP, EBITDA would have been flat
  • Borgata
    • Well ahead of expectations
    • Positive trends have continued into 3Q
    • Confident in capturing online gaming share - poker, slots, table games
      • On track to be the 1st to offer online gaming in New Jersey, awaiting govt approval
  • Rancheria tribe - early design work under way
  • LV Locals: kept costs down despite no revenue growth
  • Downtown LV:  1) changes to Hawaiian schedule led to efficiencies; refined marketing programs 2) uptick traffic at Fremont Street
  • Midwest and South:  increased capacity affected Gulf Coast properties. Iowa and Kansas impacted by severe weather.  
  • Peninsula:  significant revenue growth at Kansas Star.  Late June, opened 1,600 seat arena - completing phase 1 of expansion plans; confident for margin improvement in Kansas Star.
  • Borgata:  tax court expected to make its ruling by the end of the 3Q - positive tax ruling could occur
    • Table share drop share increased by 300bps
    • Increased promotional activity have not affected Borgata
    • Prepared for online gaming launch in 4Q
  • Debt: $3.7BN ($1.2BN- Peninsula); debt has declined $260MM; $305MM incremental available at Boyd, $30MM available at Peninsula
  • Cash: $119MM (Boyd) $30MM (Peninsula); retired $216MM 6.75% notes (saved $14.5MM in annual interest expense)
  • Secured leverage: 3.7x out of 4.5x; total leverage: 6.5x out of 7.75x
  • Borgata debt: $796MM - $4MM outstanding under $60MM credit facility
  • Borgata Cash: $34MM
  • Borgata will retire $40MM of 2015 senior notes at $103.  Redemption will occur in August
    • Interest expense savings will result in $3MM/year
    • $22.5MM CRDA refund; recorded a $5MM write-down in the quarter
  • Capex: $36MM ($11MM at Peninsula, $7MM at Borgata)
  • 3Q guidance:  wholly-owned EBITDA post corporate:  Boyd $120-125MM; Borgata: $44-46MM
  • 3Q EPS guidance (assuming 35% tax rate):  loss of 2 cents to income of 3 cents

Q & A

  • Continue to be cautiously optimistic
  • Expect modest revenue growth in LV Locals market
  • Visitation trends depend by market; Nevada did better than other markets
  • Borgata:  continue to have opportunities for operating efficiencies
  • Peninsula margins:  Kansas Star had higher operating costs ($1.3MM property tax difference- will appeal on this)
  • Peninsula performing as expected
  • I-gaming:  Bwin providing software; if Bwin launches their own product (B2C) and regulators approve, BYD gets 10% and it will be under the Borgata banner.
  • Locals promotional environment:  last to similar year; marketing expenses flat YoY
  • Borgata guidance:  soft hold in 2Q 2012; expect margin improvements to continue to Q3; expect some revenue growth; momentum has picked up post Sandy; guidance does not include potential tax refunds
  • Gulf Coast market has taken a pause (ex Delta Downs) 
  • Opening of Golden Nugget raised marketing spend in market
  • IP weakness was on the slot side; reduced marketing in 2Q
  • Golden Nugget in Lake Charles:  good news; will drive traffic from Houston
  • Wilton Rancheria project:  surveys will take some time; probably a 2016 opening

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