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Takeaway: BYD completes the regional gaming beat cycle for Q4. Margin improvement is a welcome change.


  • Made meaningful progress in 4Q
  • Gaming and non-gaming growth in LV Locals business
  • Revenue growth remains modest
  • LV Locals:  non-gaming was very strong.  Hotel revenues grew more than 13%, driven by higher room rates. F&B grew as well.
  • Downtown:  Visitation from Hawaii remain strong
  • Regionals:  stabilizing trends in 3Q continued into 4Q
    • Kansas Star:  rev and EBITDA grew.  Op margins grew 65bps YoY to nearly 44%. Positive trends have continued into January.
    • Delta Downs:  +15% EBITDA growth in Q4. EBITDA growth continued into December even with entrance of Golden Nugget. +4.5% gaming revenue growth for January. Cautiously optimistic.
    • Blue Chip:  increased market share by 80bps; grew admissions by 8%.  Strong non-gaming (hotel/spa/entertainment) driving strong growth in visitation esp from Chicago area.
  • Borgota: quarterly record in slot win, table win, poker and GGR. Hotel rev grew 6% in 4Q. Have kept Water Club open for 17 additional days in 2014 (generating an additional 9,500 occupied room nights)
  • Borgata online:  generated $2M in EBITDA in 4Q
  • Going forward, debt reduction remain a priority 
  • By end of 1Q, will complete 400 rooms of SunCoast. Next up:  1,000 rooms at Orleans, more than 400 rooms at the IP and nearly 200 rooms at Blue Chip.
  • In 4Q, opened bar at SunCoast and California noodle house in downtown LV
  • Earmarked $45m to reposition non-gaming (multi-year program)
    • 11 more projects planned in 2015
  • Continue to evaluate REIT option
  • 4Q capex; invested $55mm ($11m Peninsula)
    • 2014 capex: $140m (Boyd/Peninsula)
  • 7m Borgata capex (2014: $19M)
  • Maintenance capex budget: Boyd ($100m), Peninsula ($15m), total: $160m

2015 guidance

  • 2015 capex spend to be slightly higher YoY
  • Borgata capex: $40m ($25m maintenance, $15m property enhancement)
  • D&A: $210-215m  ($140-145m - Boyd, $70m Peninsula)
  • Borgata D&A: $60m
  • Interest expense: $225m (assume no refi)
    • $155m - Boyd, $70m - Peninsula
  • Borgata interest expense: $60-70m
  • Corporate expense: $65m -reflects incremental spending in IT, business analaytics, and marketing
  • Deferred rent: $4m
  • Pre-opening expense: $10m
  • Share-based compensation: $12m
  • 112m- share count
  • LV Locals:  +2-3% EBITDA growth
  • Downtown: flat EBITDA
  • Midwest/South:  flat EBITDA
  • Peninsula: +2-3% EBITDA growth
  • Borgata: $155/160m EBITDA
    • Assume increased real estate tax rate

1Q 2015 guidance

  • LV Locals and Downtown on a combined basis flat YoY
  • Midwest/South/Peninsula: +2-3% EBITDA growth
    • Borgata: $30-35m

Q & A

  • Margin improvement:  have put in several cost initiatives and more effcient marketing costs....getting tougher and tougher to find improvement in margins
  • Downtown Las Vegas ADR:  largely driven by Hawaiian packages (60-65%) which are pre-priced.  Have some ability to drive rate but not significant since not much cash rooms. Visitation on Fremont Street have increased.
  • AC tax settlement:  $88m (agreement's been extended. Have 60 days to create a plan by emergency manager.) Fully expect to get that $88m.
  • Want to find profitable promotions.  Low-end database (casual gamer) certainly more sensitive to promotions
  • New acquisition opportunities:  LV Locals, Pennsylvania
  • Rio Rancho deal in Sacramento progressing as scheduled
  • Low gas price boost? Generally, have a halo effect but it's difficult to tell whether consumers will spend more money on gaming
  • Spent a couple of million on REIT proposal in 2014
  • Unwilling to call a 'trend' at this point
  • 4Q Corporate expense:  timing related expenses 
  • Louisiana affected by low oil?  Not expect tremendous risk from Houston area. Robust economy in Lake Charles area ($9bn infrastructure developments, offsetting some of the energy decline)
  • Asset impairment:  multiple assets from portfolio
  • Want to combine Boyd and Peninsula debt but want to be ready
  • Borgata online:  mostly variable cost; could generate $3-5m EBITDA in 2015.