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Boyd Gaming Corp. Reports Operating Results (10-Q)

October 27, 2010 | About:
10qk

10qk

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Boyd Gaming Corp. (BYD) filed Quarterly Report for the period ended 2010-09-30.

Boyd Gaming Corp. has a market cap of $678.3 million; its shares were traded at around $8.25 with a P/E ratio of 32.8 and P/S ratio of 0.4. BYD is in the portfolios of Private Capital of Private Capital Management, John Paulson of Paulson & Co., Mario Gabelli of GAMCO Investors, Bruce Kovner of Caxton Associates, Steven Cohen of SAC Capital Advisors.

Highlight of Business Operations:

On a comparable basis to the prior year, excluding the effect of the consolidation of Borgata, operating income and net income decreased by 24.2% and 11.5%, respectively, during the three months ended September 30, 2010 compared to the corresponding period of the prior year. The degradation in income was greater than the correlated decline in net revenues primarily due to the seasonal effect on a large portion of our business, coupled with a decline in operating income from Borgata. The decline in Borgata's operating income of 51.0%, on a quarter over quarter basis, was due to the non-recurring gain on an insurance settlement of $28.6 million recognized in the three months ended September 30, 2009.

Without giving effect to the consolidation of Borgata, net revenues were $1.18 billion for the nine months ended September 30, 2010, a 6.2% decline as compared to the corresponding period of the prior year. The decline was primarily due to reduced visitation during much of the period, resulting in lower levels of consumer spending. Net revenues of Borgata, on a proforma consolidated basis during the nine months ended September 30, 2010 and 2009, declined 5.4% , primarily due to the impact of adverse weather conditions early in the year, followed by a significant decline in table games hold this most recent quarter.

On a comparable basis to the prior year, excluding the effect of the consolidation of Borgata, operating income decreased by 11.5% during the nine months ended September 30, 2010 compared to the corresponding period of the prior year. The degradation in income was greater than the correlated decline in net revenues primarily due to the seasonal effect on a large portion of our business, coupled with a decline in operating income from Borgata. The year to date decline in Borgata's operating income was 36.7%, primarily due to the non-recurring gain on an insurance settlement of $28.6 million recognized in the nine months ended September 30, 2009, coupled with the effects of the decline in business early this year due to adverse weather.

We derive the majority of our gross revenues from our gaming operations, which generated approximately 72% and 75% of gross revenues for the three months ended September 30, 2010 and 2009, respectively, and approximately 73% and 75% of gross revenues for the nine months ended September 30, 2010 and 2009, respectively. Food and beverage gross revenues contributed approximately 14% and 13% of gross revenues for the three months ended September 30, 2010 and 2009, respectively, and approximately 14% and 12% of gross revenues for the nine months ended September 30, 2010 and 2009, respectively, and represent the next most significant revenue source, followed by room and other, which separately resulted in less than 10% of gross revenues during all of these periods.

Gaming revenues are significantly comprised of the net win from our slot machine operations and to a lesser extent from table games win. Overall, the $5.1 million, or 1.6%, decrease in gaming revenues during the three months ended September 30, 2010 as compared to the corresponding period of the prior year is due to a 2.2% decrease in slot handle, which was offset by a slight increase of 0.12 percentage points in slot win percentage, a 1.9% increase in our table games drop and an increase of 0.29 percentage points in our table games win percentage. As noted earlier, we believe the decrease in gaming volumes reflect the ongoing constraints in consumer spending resulting from the weakened economy.

As noted above, gaming revenues are significantly comprised of the net win from our slot machine operations and to a lesser extent from table games win. Overall, the $64.7 million, or 6.2%, decrease in gaming revenues during the nine months ended September 30, 2010 as compared to the corresponding period of the prior year is due to a 6.2% decrease in slot handle, which was offset by a slight increase of 0.12 percentage points in slot win percentage, and a 3.0% decrease in our table games drop in addition to a decline of 0.54 percentage points in our table games win percentage. As noted earlier, we believe the decrease in gaming volumes reflect the ongoing constraints in consumer spending.

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