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Boyd Gaming Q3 2010 Earnings Call Transcript

Boyd Gaming Q3 2010 Earnings Call Transcript

Boyd Gaming (BYD)

Q3 2010 Earnings Call

October 25, 2010 1:00 pm ET


Keith Smith - Chief Executive Officer, President and Director

Josh Hirsberg - Chief Financial Officer, Senior Vice President and Treasurer

Paul Chakmak - Chief Operating Officer and Executive Vice President


Carlo Santarelli - Wells Fargo Securities, LLC

David Bain - Sterne Agee & Leach Inc.

David Katz - Jefferies & Company, Inc.

John Maxwell - Jefferies

Kevin Coyne - Goldman Sachs

Lawrence Klatzkin - Jeffries & Co.

Chris Woronka - Deutsche Bank AG

Adam Steinberg - Merriman Curhan Ford & Co.

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Joseph Greff - JP Morgan Chase & Co

Mark Strawn - Morgan Stanley

Neil Portus

Steven Ruggiero - CRT Capital Group LLC

David Farber



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Good day, ladies and gentlemen, and welcome to the Third Quarter 2010 Boyd Gaming Earnings Conference Call. My name is Kerris, and I will be your coordinator for today. [Operator Instructions] And I would now like to turn the call over to your host for today, Mr. Josh Hirsberg, Chief Financial Officer. Please proceed, sir.

Josh Hirsberg

Thank you, Kerris. Good morning, everyone, and welcome to our third quarter earnings conference call. Joining me on the call this morning are Keith Smith, our President and Chief Executive Officer; and Paul Chakmak, our Executive Vice President and Chief Operating Officer.

Our comments today will include statements relating to our future results including, among others, the financial outlook for the company, our expansion and development projects and other market business and property trends that are forward-looking statements within the Private Securities Litigation Reform Act. All forward-looking statements in our comments are as of today's date, and we undertake no obligation to update or revise the forward-looking statements whether as a result of some new information, future events or otherwise. Actual results may differ materially from those projected in any forward-looking statement as a result of certain risks and uncertainties including, but not limited to, those noted in our earnings release, our periodic reports and our other filings with the SEC.

During our call today, we will make reference to non-GAAP financial measures. For a complete reconciliation of historical non-GAAP to GAAP financial measures, please refer to our earnings press release and our Form 8-K furnished to the SEC today, and both of which are available in the Investor section of our website at

Finally, as a reminder, we are broadcasting this call on our website at and I'd now like to turn the call over to Keith Smith, our President and CEO. Keith?

Keith Smith

Thanks, Josh. Good morning, everyone, or good afternoon, depending on where you're at. Thank you for joining us for our third quarter earnings call. Overall, our results for the third quarter were in line with our expectations. Most notably, we produced our best revenue and EBITDA comparison for the year during the quarter, largely as a result of the continued stabilization and improvement of our core business volumes. And we're pleased to report that the positive trends we've experienced in the third quarter are continuing into October.

Given these trends, we expect our fourth quarter comparisons will be the best of the year. While we are encouraged by our recent results, we continue to watch the broader national economy for additional positive signs, signs of a continuing recovery. And I believe that they are there. The Dow and S&P both rose more than 10% during the third quarter alone. Business travel is rising as our overall occupancies and ADRs in the lodging sector nationwide. The manufacturing sector continues to expand, and business investment is slowly growing. And GDP continues to expand on a quarter-by-quarter basis, albeit at a much slower rate than any of us would like.

These data points show that the national recovery that began last year is continuing, although it is clear that this recovery will be a slow process. As I've said previously, a recovery in the nation's economy is an important predicate for recovery in our business.

So beyond the broader economic recovery, it appears as though Las Vegas is finally beginning its own recovery. There are several effects that support this. First and most importantly, customers continue to show up in increasing numbers every month. September marked the 12th consecutive month of either flat or increased visitor counts to Las Vegas. I believe that constitutes a trend.

Second, taxable sales in July showed the largest increase in nearly two years. Consumer-oriented segments spurred the growth with clothing retailers and furniture stores showing meaningful year-over-year growth. That's not a trend yet, but it's certainly a positive sign, especially when compared to the double-digit declines in taxable sales we saw throughout 2009, and the fact that it was consumer-oriented segments that spurred the growth.

Also, as has been widely reported previously, gaming win in the Las Vegas Strip rose 21% in August. But more importantly, slot win grew 13.2%. And all three Las Vegas Locals sectors, including Boulder Strip in North Las Vegas, reported year-over-year growth in gaming revenue during the month.

As important as all of the above is, equally important is that convention attendance continues to grow, which is not only a positive for Las Vegas but also, I believe, a window into the broader national recovery. Companies devote resources to conventions based on expectations they will secure new business. Rising convention attendance and increased convention square footage reflects rising confidence in the business community at large. As a matter of fact, many of the major conventions in the last 12 months have seen both an increase in attendance and an increase in square footage used by exhibitors, and the calendar for 2011 appears to be very strong.

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