Boyd Gaming’s second-quarter earnings report failed to live up to expectations, but chief executive Keith Smith sought to ensure investors that the rocky performance was an anomaly and that the company remains well-positioned for executing its growth strategy moving ahead.
Boyd reported net revenues of $544.9 million for the second quarter of 2016, a slight 0.84 percent dip from the $559.9 million posted during the prior year quarter. Total adjusted EBITDA – earnings before interest, taxes, depreciation and amortization – for the quarter also fell by two percent year-over-year to $137.9 million.
The performance “clearly did not perform to the same high level we have seen over the last several quarters,” Smith told investors on a Wednesday afternoon conference call.
While the company’s Las Vegas locals and downtown Las Vegas segments performed well, posting their fifth and sixth consecutive respective quarters of revenue and EBITDA growth, the Midwest and South and Peninsula segments struggled – declining by 4.6 percent and 6.3 percent, respectively.
Smith attributed these slumps to both new competition in local gaming markets and external factors, such as the ripple effects of low oil prices on the Louisiana economy.
“In the Midwest and South segment, our performance improved modestly from trends earlier in the year, while the Peninsula segment performed below our expectations, largely due to a weaker than expected gaming market in Kansas,” Smith added.
Other encouraging signs in the earnings report included a net income of $30 million – or $0.26 per share, compared to a net loss of $6.4 million – $0.06 per share – for the prior year period. Smith also highlighted Boyd’s recent sell-off of its 50 percent stake in Atlantic City’s Borgata to MGM. He said that the $589 million in net proceeds from the transaction would be used to pay down the company’s outstanding debt.
Further, Boyd took steps in the second quarter to reinforce its presence in the bread-and-butter Las Vegas market by acquiring three key assets, most notably the Aliante and the Cannery properties.
“The second quarter of 2016 was a significant time for our Company, as we executed several transactions that will strengthen our financial foundation and position us for continued growth,” Smith said.
Southern Nevada’s improving economic fundamentals – including increases in wages, home prices, tourism visitation rates and the expansion of the construction sector in recent months – bode well for continued growth in both the locals and downtown segments.
“Nearly every data point shows a strengthening local and regional economy, giving us continued confidence that economic growth trends will continue to benefit our locals business,” Smith affirmed.
