Boyd Gaming's CEO Discusses Q1 2012 Results - Earnings Call Transcript

Boyd Gaming (BYD)

Q1 2012 Earnings Call

April 24, 2012 12:00 pm ET

Executives

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

Keith E. Smith - Chief Executive Officer, President and Director

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

William J. Lerner - Principal

Analysts

Felicia R. Hendrix - Barclays Capital, Research Division

Harry C. Curtis - Nomura Securities Co. Ltd., Research Division

Steven E. Kent - Goldman Sachs Group Inc., Research Division

Mark Strawn - Morgan Stanley, Research Division

Joel H. Simkins - Crédit Suisse AG, Research Division

Carlo Santarelli - Deutsche Bank AG, Research Division

Cameron Philip Sean McKnight - Wells Fargo Securities, LLC, Research Division

Brian D. Egger - Topeka Capital Markets Inc., Research Division

Joseph Greff - JP Morgan Chase & Co, Research Division

Shaun C. Kelley - BofA Merrill Lynch, Research Division

Kevin Coyne - Goldman Sachs Group Inc., Research Division

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

Presentation

Operator

Good afternoon, and welcome to the Boyd Gaming First Quarter 2012 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. And I'll now turn the conference over to Mr. Josh Hirsberg. Please go ahead.

Josh Hirsberg

Thank you very much, operator. Good morning, everyone, and welcome to our first 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 second quarter, 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 new information, future events or otherwise. Actual results may differ materially from those projected in any forward-looking statements 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 Investors 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 project special charges and certain expenses.

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

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

Keith E. Smith

Thanks, Josh. Good morning, everyone. Thank you for joining us for our first quarter earnings call. I'm pleased to report that the positive trends we have been experiencing in previous quarters continued in the first quarter. Our business clearly continues to move in the right direction, and we expect this momentum to continue for the remainder of the year.

Our strong performance and continued confidence is rooted in 3 factors: first, the economic fundamentals supporting our business are strengthening, and we anticipate this trend will continue; second, our strategy of having a geographically diverse collection of properties is allowing us to capitalize on the strengthening conditions in our Midwest and South region; and third, our focus on driving profitable revenue, along with growing EBITDA, will help us deleverage the business.

When you look at the first quarter from an operating perspective, it was extremely encouraging as we reported widespread strength in the Midwest and South region and strong results to Borgata. All of these helped us to beat expectations. On a wholly-owned basis, including the IP, we reported our fourth straight quarter of revenue growth and fifth quarter of EBITDA growth. But even without the IP, our wholly-owned revenues grew for the fourth consecutive quarter, and our wholly-owned EBITDA increased for the fifth straight quarter.

Focusing on the IP, first quarter results were very encouraging and provide us just a glimpse of the full potential of this acquisition. We generated EBITDA growth of more than 10% of the property during our first full quarter of ownership primarily due to more effective marketing initiatives and stronger management. It is notable that we achieved this growth without the benefits of our B Connected player program, which is just being rolled out.

This performance is not an accident. It is the result of the expertise and experience of our management team as they unlock the full value of this asset. And we are confident the IP will continue to perform at a high level in the coming quarters, ultimately making the multiple for this acquisition well below 7x.

I would like to take a moment to commend our entire team for the progress they have made so far at the IP. In addition, our management and team members throughout the Midwest and South region have done a terrific job in marketing effectively even as they have diligently controlled expenses. The results speak for themselves.

Apart from the IP, our Midwest and South region had an outstanding quarter with broad-based growth across the region as we outperformed our competition, and we were able to grow revenues, EBITDA and margins. While this strong performance was led by Delta Downs, Treasure Chest and the IP, the majority of our properties in the region posted double-digit EBITDA gains. Paul will provide more color during his comments.

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

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