It has been a difficult stretch for Boyd Gaming
Unfortunately, there was little in Thursday's third-quarter earnings report to suggest that a quick turnaround was under way. In fact, the latest numbers generated by Boyd's key locals segment can charitably be described as lackluster. Despite heavy promotional spending, revenues from locals properties slipped from $214 million to $200 million, while EBITDA plunged 21% to $56.2 million.
On the positive side, that weakness was more than offset by robust growth in the central region, whose six resorts now produce the bulk of Boyd's revenues. For the period, revenues in the central region climbed 15% to $241 million. A good chunk of that came from the Blue-Chip Casino, a rising star in the Northern Indiana market that has just been scheduled for a $130 million expansion and facelift.
Meanwhile, the Borgata, which is jointly owned with MGM Mirage
Disregarding the results from Boyd's Stardust property -- which will soon be leveled to make room for the new Echelon Place -- that just leaves the downtown Las Vegas group. For the quarter, the downtown region booked record operating profits, despite a slight dip in revenues.
All told, the mixed results led to net revenues of $530 million -- a 1.4% improvement over last year's third quarter. After backing out a slew of one-time charges, adjusted earnings from continuing operations fell 24% to $38.8 million, or $0.44 per share.
Those numbers won't have anyone elbowing for a spot at the Boyd shareholder table, but I'm betting this slowdown is temporary. The Las Vegas locals market simply needs more time to absorb a significant increase in capacity, most notably the addition of rival Station Casinos'
In the meantime, there are plenty of exciting developments on the horizon. It's no secret that Boyd wants to encourage more of its customer base in the heartland to visit its Las Vegas resorts. To that end, management is now converting its fragmented customer loyalty programs into a unified, one-card system to stimulate cross-market play -- a marketing technique that industry leader Harrah's Entertainment
Aside from finally bringing the Boyd and Coast (which was acquired two years ago) families closer together, this enhanced customer rewards/loyalty program will help drive increased traffic to Las Vegas -- where, thanks to a recent asset swap with Harrah's, the firm has just picked up another 24 acres of prime strip real estate.
After handing over control of the aging Barbary Coast casino, Boyd will now own 87 uninterrupted acres (a quarter of a mile) along the Las Vegas strip.
That valuable land (along with $400 million in cash proceeds from the recent sale of the South Coast) should give Boyd ample space to expand its footprint over the next few years.
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