Boyd Gaming's CEO Discusses Q4 2011 Results - Earnings Call Transcript

Boyd Gaming (BYD)

Q4 2011 Earnings Call

February 21, 2012 12:00 pm ET

Executives

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

Keith Smith - Chief Executive Officer, President and Director

Paul J. Chakmak - Chief Operating Officer and Executive Vice President

Analysts

Felicia R. Hendrix - Barclays Capital, Research Division

Shaun C. Kelley - BofA Merrill Lynch, Research Division

Dennis I. Forst - KeyBanc Capital Markets Inc., Research Division

Carlo Santarelli - Deutsche Bank AG, Research Division

Kevin Coyne - Goldman Sachs Group Inc., Research Division

David Hargreaves - Sterne Agee & Leach Inc., Research Division

John Maxwell - Jefferies & Company, Inc., Research Division

Presentation

Operator

Compare to:
Previous Statements by BYD
» Boyd Gaming's CEO Discusses Q3 2011 Results - Earnings Call Transcript
» Boyd Gaming's CEO Discusses Q2 2011 Results - Earnings Call Transcript
» Boyd Gaming's CEO Discusses Q1 2011 Results - Earnings Call Transcript

Good day, and welcome to the Boyd Gaming Fourth Quarter 2011 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Josh Hirsberg, Senior Vice President and Chief Financial Officer. Please go ahead.

Josh Hirsberg

Thank you, Emily. Good morning, and welcome to our Fourth 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 estimated future results including, among others, guidance for the first quarter, financial outlook for the company, our capital expenditure plans 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 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 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 boydgaming.com. We do not provide a reconciliation of forward-looking non-GAAP financial measures due to our inability to predict special charges and certain expenses.

Finally, as a reminder, today's conference call is also being webcast live on boydgaming.com and will be available for replay on the Investor Relations section of that website shortly after the completion of this call.

I'd now like to turn the call over to Keith Smith, our President and CEO. Keith?

Keith Smith

Thanks, Josh, and good morning, everyone. Thank you for joining us for our fourth quarter earnings call. I'm pleased to result that our results for the final quarter of 2011 showed a continuation of the growth trends we have seen throughout the year. In our wholly owned businesses, revenue grew for the third straight quarter while EBITDA rose for the fourth consecutive quarter even before the addition of IP. Key indicator that our business is continuing to improve is that all 4 of our operating segments, including Borgata, showed both revenue and EBITDA growth on a year-over-year basis for the first time in several years. As we said throughout 2011, our business is clearly moving in the right direction, and we anticipate continued growth in 2012.

Our confidence that these positive trends will continue is primarily driven by 2 factors: Improving economic conditions across the country, including here in Las Vegas; and relentless, strategic focus on building profitable revenue and maintaining a tight control on costs.

Looking back at 2011, one of the more encouraging developments was the continued recovery of the southern Nevada economy and more importantly, the beginnings of a recovery of our Las Vegas Locals business.

As we all know, over the last 18 months, Las Vegas has experienced consistent improvements in many critical key economic indicators. This included visitor volumes, gaming revenues, taxable sales and employment. Gaming revenue generated by Nevada's casino's industry in 2011 was $10.7 billion, a 2.8% increase over 2010. It was the second straight year of growth and the highest annual increase in 4 years. In addition, 2011 was the second best year ever for Las Vegas visitor volume, it was 300,000 short of the record of 39.2 million visitors in 2007. We're confident that 2012 will see Las Vegas set a record and surpass the 40 million visitor mark. 2011, saw an all-time record for occupied room nights as well.

Looking at other metrics. Core employment continues to grow with gains in the leisure and hospitality, education healthcare business and professional services segments. As a result, the area's unemployment rate has declined by more than 2 percentage points in the last year. Positive economic news is perhaps most evident in increased consumer spending. We saw an 8.6% gain in taxable sales in southern Nevada in November, marking the 13th increase in the last 14 months. These trends bode well for our Las Vegas Locals business as we are starting to experience revenue increases in this business for the first time in years.

Because we've kept a tight rein on cost in this business, we have significant operating leverage and are able to drive a substantial portion of the revenue gains through to the bottom line.

In the Midwest and South region, improvements we reported during the first 3 quarters of 2011 continued into the fourth quarter, as we recorded our fifth straight quarter of EBITDA growth. The addition to the IP to our portfolio during the quarter provides us the opportunity to expand this already strong and growing segment of our business. While there's been only 5 months since we acquired the IP, we are confident it will be a significant contributor to this region.

Read the rest of this transcript for free on seekingalpha.com