Boyd Q1 results hit by $3.2m loss from NJ online gaming operations

US casino operator Boyd Gaming generated net revenue of $7.7m from its New Jersey real-money online gaming operations during the first quarter of 2014, although the company posted a £3.2m loss from the newly launched business due primarily to one-off non-recurring expenses.

The growth in online gaming helped revenue from the Borgata, Boyd’s 50 per cent joint venture, increase by 1 per cent to $167.3m during the quarter. Boyd now expects results from the Borgata business, including both land-based and online, to be about even with its performance last year.

Overall, Boyd reported a 4 per cent drop in net revenue to $708.3m, with total adjusted EBITDA dropping 12 per cent to $144.5m, with results impacted by reduced visitation due to unusually severe winter weather at the company’s operations outside Nevada.

“Boyd Gaming continued to make steady progress in the first quarter, delivering results at the high end of our guidance,” said Boyd Gaming president and CEO Keith Smith. “The refinements we have made to our operations are paying clear dividends in all segments of our business, and we expect additional benefits as the economy recovers.”

In an earnings call following the release of its Q1 results Wednesday, Smith said that the company remains “optimistic” about future growth in its core business, with growth coming from other sources as well.

“One promising area is real money online gaming,” he said. “We have led the New Jersey market every single month since online gaming began, and our Borgata brand represents nearly 1/3 of the total market. We have demonstrated our ability to deliver high-quality, market-leading online product. And we are well positioned for similar success elsewhere as other states move forward.”

Smith said that the company was “quite pleased” with its initial results in New Jersey, having built up a combined market share of nearly 40 per cent with its partner bwin.party.

“Like any start-up business, we invested heavily in marketing and advertising,” said Smith.

Of the $3.2m operating loss reported by the company’s online business during the quarter, approximately $2m was due to one-off non-recurring marketing and advertising expenses.

“We continue to make good progress refining the product and technology and enhancing our game offerings with third-party content from a variety of suppliers,” said Smith. “And we've expanded our payment options for our customers, including our recent addition of Neteller, a popular prepaid account service.”

Q1 2014 Results

Total net revenue fell by 4 per cent to $708.3m for the first quarter, with operating income down 16 per cent to $68.5m. Net loss improved by 3 per cent to $11.2m during the period, of which $6.2m was attributable to Boyd and $5.0m to non-controlling interests.

“We further strengthened our financial position as well, repaying an additional $55m in debt in the first quarter,” added Smith. “We are diligently focused on building long-term value for our shareholders, and I remain confident about our future prospects.”

As of March 31st, Boyd had cash in hand of $162.9m, including $27.9m related to Peninsula and $29.0m related to Borgata.

Shares in Boyd Gaming Corporation (Co. Data) (NASDAQ:BYD) closed yesterday at $11.82 per share in New York.