Boyd Gaming (BYD) Q2 2012 Earnings Call July 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 Analysts Felicia R. Hendrix - Barclays Capital, Research Division Shaun C. Kelley - BofA Merrill Lynch, Research Division Joseph Greff - JP Morgan Chase & Co, Research Division Steven E. Kent - Goldman Sachs Group Inc., Research Division Harry C. Curtis - Nomura Securities Co. Ltd., Research Division John Maxwell - Jefferies & Company, Inc., Research Division David Farber Brian D. Egger - Topeka Capital Markets Inc., Research Division Kevin Coyne - Goldman Sachs Group Inc., Research Division David Hargreaves - Sterne Agee & Leach Inc., Research Division Presentation Operator
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 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, as a reminder, today's conference call is also being webcast live on boydgaming.com and will be available for reply 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 E. Smith Thanks, Josh. Good morning, everyone, and we appreciate you joining us this morning for our second quarter earnings call. In addition to reviewing our second quarter financial results, we have 2 new development opportunities to share with you. In a few minutes, I will have Paul Chakmak take you through details of each of our business segments. But first, let me start with a top line review. The results for the second quarter clearly were not in line with our expectations or the guidance we provided on our last earnings call. At the time of our last earnings call, we have seen several consecutive quarters of encouraging trends in the business, both in Nevada and in the Midwest and South. There were no signs that these trends would change in a material way. Starting in May, we began to see some weakness in economic trends, both locally and nationally. Manufacturing, job creation and consumer spending all started to slow. The slowdown in economic activity clearly showed up in our business in May and June and impacted our overall results.
Beyond the slowing economy, each region had its own unique challenges in the quarter. In Nevada, our Las Vegas Locals region was impacted by low sports hold and higher employee benefit expenses. In Atlantic City, the market continues to face increasing competition, both in New Jersey and the nearby jurisdictions, and that has reflected in our business. However, the Borgata continues to increase its market share, and we believe it will remain the dominant resort in the region for years to come.In our Midwest and South region, results were more encouraging. We maintained or grew market share in every market where we operate. This has been the strongest region of the country for the domestic gaming industry for some time now, and it is also our most robust business segment. That is why we are so excited about our pending acquisition of Peninsula Gaming. Acquiring properties in Kansas, Iowa and Louisiana is a clear indication of our confidence in these markets. Peninsula markets, team members and customer base provide an extraordinarily strong foundation for delivering positive future financial performance. We continue to make good progress toward completing this transaction. The Federal Trade Commission has granted us early termination of the Hart-Scott-Rodino review period, and we have filed applications with gaming regulators in Kansas, Iowa and Louisiana. Based on our progress to date, we anticipate this transaction will close as intended sometime in the second half of the fourth quarter. Once again, it makes compelling sense to expand our footprint in the area of the country where the gaming industry is strongest, and that is precisely what the Peninsula acquisition does. Though pending acquisition of Peninsula gaming is a huge milestone and easily the most significant near-term growth opportunity for our company, we're also excited about the 2 new development agreements we announced this morning. These agreements provide the foundation for future growth. First of these new agreements is with Wilton Rancheria, a federally recognized tribe located about 30 miles southeast in Sacramento, California. This project will provide us our first entry into California, further diversifying our geographic footprint and extending our brand in an attractive new market. We are early in the process of this development and anticipate it will take approximately 24 months to receive all the required approvals to proceed. Read the rest of this transcript for free on seekingalpha.com