In preparation for the BYD Q2 earnings release on August 3rd, we’ve put together the pertinent forward looking commentary from BYD's Q1 earnings release/call.
Post Q1 Conference Commentary
- “We’re starting to see a more rational promotional environment in the locals business and we’re very aggressive about our sales pulling back on the promotional activity of our properties early in ‘08, because we felt like that business activity would not generate profitable revenues.”
- “We’re seeing our customers come more frequently now. In particular, our rated customers are starting to show up more. Now they are still spending less and that’s been the issue throughout and we won’t see a full recovery until those customers start spending more money. But right now, they’re starting to show up more frequently.”
- “I would say that our belief that the second half of the year will be better and kind of flattish relative to second half last year is really driven by the belief that the business has kind of plateaued, not so much that we expect consumers to really start spending more.”
- “In our downtown business, it’s a smaller segment for us. It only represents about 12 to 15% of our EBITDA. That business is very well run. The volatility that you see in that business largely comes from fuel costs associated with our charter business there. But absent that volatility, the businesses themselves are very stable and very well run. So, we really don’t see any issues there.”
- [Louisiana] “It’s kind of picking up at pre-hurricane levels.”
- “The outlook from Paradise is pretty good.”
- [Borgata] “That property has been very stable and we really see no change in that property going forward, given the ability of the management team to recognize what it needs to do from a competitive perspective--adjust and execute…. I think we feel pretty good about our ability to continue to manage the business at the levels of EBITDA that we’ve seen historically.”
- [Foxwoods license] In Pennsylvania, I think we would look at a little bit harder and I think the issue for us really again is just how much capital is required before you get the benefit of that investment. We are really kind of attuned to making sure that we either have minimal Capex upfront and have it more timed to when we align with when we will generate the EBITDA or either outright buying the EBITDA at kind of the right multiples.”
- “Our first priority is to deleverage Boyd and so if we were to refinance Borgata and we were able to extract a distribution of some sort for each of the partners there, the first priority would be to deleverage the company. Any acquisitions that we would do would be along the same lines. We would not be doing acquisitions to kind of all-in-all leverage up the company from a covenant perspective…. We want to run the company kind of four to five times leverage.”
- “We’ve reduced the year-over-year EBITDA GAAP to 10% in the first quarter and expect a similar EBITDA GAAP in the second quarter before returning to year-over-year growth in the second half of 2010.”
- “Our leverage calculated in accordance with our credit facility was 6.5 times versus a covenant of 6.75 times. Our covenant steps up in the second quarter to seven times.”
- “Corporate expense excluding share-based compensation for the quarter was approximately $10 million, and that should be a good quarterly run rate for the remainder of the year. Depreciation is estimated at about $150 million for 2010, and Borgata will add about $50 million in total for the final three quarters of the year.”
- “Interest expense was approximately $28 million during the quarter and is expected to be approximately $125 million in total for the year. In addition, due to the consolidation, we will include Borgata’s interest expense, which runs approximately $5 to $6 million per quarter. Given the maturity of the existing Borgata credit facility in January of next year, the run rate of interest expense at Borgata will be impacted by any refinancing of that debt.”
- “The opening expense recorded in the quarter was related to Echelon. We expect 8 to $10 million for this item for the full year. Share-based compensation is estimated to be approximately 10 to $11 million for the year and the tax rate was 32% in the quarter. From a capital expenditure perspective at Boyd, our forecasted capital needs are primarily maintenance-related and run about 50 to $55 million for the year. And just as an FYI, Borgata’s forecasted maintenance capital runs about 15 to $20 million per year."