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Best of Howard Stutz

Gaming Guru

Howard Stutz

Boyd keeping mum about REIT plans

24 July 2015

The investment community knew the answer going into Boyd Gaming Corp.'s second-quarter earnings conference call.

The casino operator wasn't providing additional commentary on a possible real estate investment trust or strategic corporate option. The answer has been the same since Boyd first brought up the idea last year.

"It's something that we've said we're not going to discuss publicly until we have a definitive direction," Boyd Gaming CEO Keith Smith said Thursday.

Two days after regional gaming rival Pinnacle Entertainment struck a $4.75 billion deal to sell and lease back its casinos to Gaming and Leisure Properties, Smith knew the questions about a potential Boyd REIT or acquiring casinos were coming.

"It's something we will continue to study and it's difficult to provide any answers," Smith said without commenting directly on the GLPI-Pinnacle deal. "These are very company-specific issues and each company has a different set of facts to consider."

Smith and Boyd Chief Financial Officer Josh Hirsberg told analysts the company is always looking to expand the business through transactions.

In the quarter that ended June 30, Boyd Gaming grew revenue 3.5 percent, but recorded a net loss due to pretax losses after an early retirement of $31 million in debt.

Still, Smith termed the three-month period a success. Boyd saw revenue increases across all divisions and double-digit growth in cash flow for the third straight quarter.

"The upgrades we are making to enhance our amenities also contributed to revenue growth across the portfolio," Smith said. "We are pleased with the progress we have made so far this year."

Overall, Boyd Gaming had net revenue of $559.9 million. However, the net loss of $6.4 million, or 6 cents per share, compared to a net income of $5.3 million in the same quarter a year ago.

Cash flow of $162.9 million was a 17 percent increase from the prior year.

In the company's Las Vegas locals segment, which includes the Coast Casinos brands and Sam's Town Hotel & Gambling Hall, Boyd grew revenue 3.2 percent and cash flow jumped 15.3 percent. In a statement, the company said Suncoast Hotel and Casino and Sam's Town had "significant disruption from roadwork" but still achieved cash flow growth.

Boyd's three downtown Las Vegas casinos grew revenue 5 percent to while cash flow was up 44 percent.

The company has plans to add 20 different nongaming amenities to its properties in eight states. Smith said a large portion of the concepts will be directed to its Las Vegas resorts. For example, next week, a new bar is opening at the Fremont.

The Borgata Hotel Casino and Spa in Atlantic City saw revenue increase 5.1 percent and cash flow jump 4.4 percent.

Smith said the cumulative $151 million Atlantic City owes the company in property tax refunds going back to 2009 has not been paid and it's unclear when the company will see the funds.

"We are still waiting to have an active dialogue with the city," Smith said. "There is no clarity on when we will get paid."

Boyd Gaming had total debt of $3.4 billion as if June 30. Shares of Boyd closed at $16.82 on the New York Stock Exchange Thursday, up 10 cents or 0.60 percent.
Boyd keeping mum about REIT plans is republished from