Boyd Gaming Corporation today reported financial results for the fourth quarter and full year ended December 31, 2012.
The Company also announced that it has entered into a definitive agreement to sell the Echelon site on the Las Vegas Strip to the Genting Group for $350 million in cash.
The sale agreement includes both the 87-acre land parcel as well as all improvements to the site. Subject to the terms of the definitive purchase agreement and satisfaction of various conditions, the transaction is expected to close today. A portion of the proceeds will be paid to a third party to fulfill the Company's obligations to LVE Energy Partners, LLC. Following this payment and other closing costs, Boyd Gaming expects to receive approximately $157 million in net proceeds from the transaction.
Based on the Company's decision not to proceed with development of the Echelon site, Boyd Gaming recorded a one-time, non-cash pretax impairment charge of approximately $994 million, which is reflected in the Company's fourth-quarter 2012 results.
"Our highest priority is strengthening our balance sheet. The sale of the Echelon site is another important step in the ongoing effort to improve our long-term financial position," said Keith Smith, President and Chief Executive Officer of Boyd Gaming. "While we remain committed to the Las Vegas market, we determined that developing a large-scale project on the Las Vegas Strip was not consistent with our current strategy."
Fourth-Quarter Results
For the fourth quarter of 2012, Boyd Gaming reported net revenues of $625.8 million, an increase of 3.2% from $606.7 million during the same quarter in 2011. Total Adjusted EBITDA(1) was $100.9 million, compared to $114.3 million in the year-ago quarter. Results reflect the addition of the operations of Peninsula Gaming, LLC, acquired by the Company on November 20, 2012.
Boyd Gaming's wholly-owned business reported fourth-quarter 2012 net revenues of $477.1 million, up 11.2% from the year-ago period. Wholly-owned Adjusted EBITDA was $86.8 million, an increase of 13.7% from the fourth quarter of 2011. Borgata, the Company's 50% joint venture, reported fourth-quarter 2012 net revenues of $147.6 million, compared to $176.4 million in the year-ago period, while Adjusted EBITDA was $14.0 million, down from the $37.9 million reported in the fourth quarter of 2011.
Adjusted Earnings(1) for the fourth quarter 2012 were a loss of $27.7 million, or $0.31 per share, compared to a loss of $2.9 million, or $0.03 per share, for the same period in 2011. The calculations of Adjusted Earnings and Adjusted Earnings per share are presented in a table at the end of this press release.
Significant items excluded from Adjusted Earnings in the fourth quarter 2012 include the $993.9 million impairment charge associated with the Echelon site; $39.4 million of impairment charges associated with the Company's excess land holdings in North Las Vegas and Pennsylvania; and a $17.5 million impairment charge associated with the Company's gaming license in Shreveport, La.
Including these items, for the fourth quarter 2012 the Company reported a net loss of $899.9 million, or $10.24 per share, compared to a net loss of $0.5 million, or $0.01 per share, in the same period last year.
Commenting on the quarter, Keith Smith said, "We continued to make significant progress executing our Company's strategic plan. The completion of the Peninsula acquisition further diversifies our operations, and will strengthen our balance sheet by greatly expanding our free cash flow. We were also encouraged to see sequential improvement throughout the quarter in our Las Vegas Locals business, as our initiatives in this market began to pay off. We remain focused on improving our core business, successfully integrating the Peninsula assets, and finding new ways to drive revenue and EBITDA growth throughout the business."
Full-Year 2012 Results
For the year ended December 31, 2012, Boyd Gaming reported net revenues of $2.49 billion, an increase of 6.5% from the year ended December 31, 2011. Total Adjusted EBITDA was $452.1 million during the period, compared to $466.1 million in the full year 2011. Full-year 2012 results include the operations of Peninsula Gaming, acquired by the Company on November 20, 2012; as well as a full year of contributions from the IP Casino Resort Spa in Biloxi, Mississippi, acquired on October 4, 2011.
During the full-year 2012, the Company's wholly-owned operations posted net revenues of $1.80 billion, up 12.2% from the year-ago period. Wholly-owned Adjusted EBITDA increased 8.8% to $335.1 million, compared to $308.0 million in 2011. Borgata reported net revenues of $686.2 million during the year ended December 31, 2012, compared to $730.3 million in the full-year 2011, while property Adjusted EBITDA was $117.0 million in the current period, compared to $158.1 million in the year ended December 31, 2011.
Adjusted Earnings for the Company for the year ended December 31, 2012 reflect a loss of $24.7 million, or $0.28 per share, compared to earnings of $1.1 million, or $0.01 per share, during the full-year 2011.
Including the significant one-time charges recorded in the fourth quarter of 2012, the Company reported a net loss for the year ended December 31, 2012 of $908.9 million, or $10.37 per share. By comparison, the Company reported a net loss of $3.9 million, or $0.04 per share, for the year ended December 31, 2011.
Key Operations Review
Las Vegas Locals
In the Las Vegas Locals segment, fourth-quarter 2012 net revenues were $148.7 million, compared to $152.7 million in the fourth quarter of 2011. Fourth-quarter 2012 Adjusted EBITDA was $31.5 million, down from $36.8 million in the year-ago period. Business levels strengthened at our Locals properties toward the end of the quarter. This was primarily attributable to our introduction of an expanded offering of low-denomination slot product throughout the market, and related marketing programs.
Downtown
The Company's Downtown Las Vegas properties reported net revenues of $57.7 million for the fourth quarter 2012, down from $58.7 million in the year-ago period. Adjusted EBITDA was $9.9 million, compared to $10.8 million in the fourth quarter of 2011. Due to previously announced reductions in our weekly flight schedule, revenues declined at our Hawaiian charter service. EBITDA at our Downtown operations was flat year-over-year before several one-time charges.
Midwest and South
In the Midwest and South region, net revenues were $213.8 million, compared to $217.6 million in the fourth quarter of 2011. Adjusted EBITDA was $34.5 million versus $39.1 million in the year-ago period. Our regional operations were impacted by softness in visitation among casual players.
Peninsula
From November 20 to December 31, 2012, the five Peninsula Gaming properties contributed net revenues of $56.9 million, and Adjusted EBITDA of $21.2 million. The segment reported substantial growth from the prior year when Peninsula was a standalone company, due to a full quarter of contributions from the Kansas Star Casino, which commenced operations on December 20, 2011.
Borgata
Borgata, the Company's 50% joint venture, reported fourth-quarter 2012 net revenues of $147.6 million, compared to $176.4 million in the year-ago period, while Adjusted EBITDA was $14.0 million, down from the $37.9 million reported in the fourth quarter of 2011. Results were impacted by the effects of Superstorm Sandy, including the closure of the property for five days.
Conference Call Information
Boyd Gaming will host its fourth-quarter 2012 conference call today, March 4, at 12:00 p.m. Eastern, on which the Company will provide guidance for the first quarter 2013. The conference call number is (888) 317-6003, passcode 8459751. Please call up to 15 minutes in advance to ensure you are connected prior to the start of the call.
The conference call will also be available live on the Internet at www.boydgaming.com, or: http://www.videonewswire.com/event.asp?id=92591
Following the call's completion, a replay will be available by dialing (877) 344-7529 today, March 4, beginning at 2:00 p.m. Eastern and continuing through Tuesday, March 12, at 9 a.m. Eastern. The conference number for the replay will be 10025828. The replay will also be available on the Internet atwww.boydgaming.com.
