BYD 1Q 2015 CONFERENCE CALL NOTES

Takeaway: Margin improvement drove FY guidance slightly higher. LV Locals missed expectations.

CONF CALL

  • Non-gaming initiatives working out
  • Consumers growing more confident and spending more
  • Locals market solid- non-gaming grew in 7th consecutive quarter.  Orleans and Suncoast did well. 
    • EBITDA fell due to $1m disruption at Suncoast (will continue until road work ends in June). 
    • Sports book win down 80% related to Super Bowl bets
  • Downtown LV:  solid Hawaiian play and increased Fremont Street. Non-gaming up 3%. Lower fuel costs from Hawaiian service.
  • Regionals:  Kansas Star (improved marketing plans).  IP (strong flowthrough). Blue Chip (revenue and EBITDA grew). Treasure Chest (revs up 8% thanks to visitation and slot play). Par-a-Dice:  adapting to new competitive landscape well. Delta Downs (well ahead of expectations, strong visitation from core customers)
  •  Borgata:  $5.5m property tax benefits; solid gaming volumes; more cost efficiencies. Contributed to 14,000 more room nights in 1Q.  
  • AC Same-store gaming revenues grew 5% in 1Q 2015
  • Customer is changing:  younger demographic of customers; need to reposition non-gaming amenities
  • Cash room rates at LV: +14%
  • Orleans/Blue Chip renovation scheduled to be completed by end of 2015
  • 20 new F&B concepts will open in next 12 months
  • Debt reduced by $80m in 1Q
  • 1Q capex: $19m ($7m Peninsula, $5m Borgata); will meet previously issued FY capex ($100m maintenance (Boyd), $15m maintenance (Peninsula) $45m project capex, Borgata around $25m)
  • Guidance raised:  
    • Expect LV road construction to impact 2Q (about ~$1mm)
    • Expect LV Locals and Downtown EBITDA to grow 2-3% : also for Q2
    • Expect Midwest/South EBITDA to grow 3-4%: also for Q2
    • Expect Borgata EBITDA ($160-165m) 
  • Borgata leverage ratio: 4.2x (down from 7.0x leverage in March 2014)

Q & A

  • Margins are sustainable, particularly in payroll/marketing
  • Delta Downs:  through April, continue to be very strong
  • LV Q2: trends from Q1 are continuing into Q2.  April is similar to Q1. May is looking good. June is looking soft. Nothing that gives them concern. 
  • REIT option - continue to evaluate
  • LV Downtown: cost cuts (half of it was due to lower fuel costs)
  • Raised FY guidance all due to stronger Q1 results
  • Pacquiao fight and Rock in Rio:  will take advantage by levering up rates
  • Slot replacement cycle is fairly normal