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Boyd Gaming Reports First-Quarter 2016 Results

The following excerpt is from the company's SEC filing.

First-Quarter 2016 Highlights

Companywide Revenue, Adjusted EBITDA Increase for 7

Consecutive Quarter

Companywide Operating Margins Improve Nearly 200 Basis Points

Las Vegas Locals Posts Revenue, Double-Digit Adjusted EBITDA Growth for 4

Straight Quarter

Boyd Gaming Corporation

(NYSE: BYD)

today reported financial results for the first quarter ended March 31, 2016.

Boyd Gaming reported first-quarter 2016 net revenues of $552.4 million, up from $550.6 million in the year-ago quarter. Total Adjusted EBITDA
< br>was $160.4 million, up 7.5% from $149.2 million in the first quarter of 2015.

Keith Smith, President and Chief Executive Officer of Boyd Gaming, said: “Our Company continues to perform at a high level and deliver strong results, as the positive trends we saw in 2015 carried into the first quarter of 2016. Thanks to a strengthening southern Nevada economy, growth accelerated throughout our Las Vegas Locals business, which achieved its best year-over-year revenue comparisons in more than a decade. Recent investments across our portfolio delivered strong returns, driving increases in both visitation and revenues. And we used our substantial free cash flow to further deleverage our balance sheet, paying down nearly $125 million in debt during the quarter. In all, this was another great quarter

for our Company as we continued to successfully execute our strategy, and we remain optimistic about our long-term growth potential.”

Commenting on the Company’s recently announced acquisitions of Aliante Casino Hotel & Spa and the Las Vegas assets of Cannery Casino Resorts, Smith added: “The Las Vegas Valley’s growth prospects are compelling. We are excited to add three more assets that will expand and further diversify our presence in this high-growth market, and believe these acquisitions will deliver strong long-term returns for our shareholders.”

Adjusted Earnings

for the first quarter 2016 were $34.0 million, or $0.30 per share, compared to earnings of $14.2 million, or $0.13 per share, for the same period in 2015.

On a GAAP basis, the Company reported net income of $33.2 million, or $0.29 per share, for the first quarter 2016, compared to net income of $35.1 million, or $0.31 per share, for the year-ago period. Settlements of previous years’ income tax appeals reduced the first-quarter 2015 income tax provision by $23.2 million. The impact of the settlements is not included in the prior year’s Adjusted Earnings or Adjusted Earnings per share.

See footnotes at the end of the release for additional information relative to non-GAAP financial measures.

Key Operations Review

In the Las Vegas Locals segment, first-quarter 2016 net revenues were $158.4 million, an increase of 5.4% from $150.3 million in the year-ago quarter. First-quarter 2016 Adjusted EBITDA was $44.3 million, up 13.9% from $38.9 million in the first quarter of 2015.

The first quarter of 2016 marked the fourth consecutive quarter of revenue and double-digit Adjusted EBITDA gains for the segment, as all major Locals properties achieved both higher revenues and Adjusted EBITDA. A strengthening local economy and recent investments in property amenities drove growth in visitation, gaming revenues and non-gaming revenues. Adjusted EBITDA gains reflect strong flow-through of incremental revenues, as operating margins improved more than 200 basis points.

Downtown Las Vegas

In the Downtown Las Vegas segment, net revenues were $58.6 million in the first quarter of 2016, up 3.5% from $56.6 million in the year-ago period. Adjusted EBITDA increased 18.8% to $12.7 million, compared to $10.7 million in the first quarter of 2015.

All properties in the segment grew revenue and Adjusted EBITDA during the quarter - led by a record first-quarter Adjusted EBITDA performance at the Fremont - as operating margins improved 280 basis points across the segment. Positive results reflect continued growth in visitation throughout the Downtown area, as well as strengthening business volumes from the Company’s Hawaiian customer segments.

Midwest and South; Peninsula

In the Midwest and South segment, net revenues were $209.2 million, compared to $217.8 million in the first quarter of 2015. Adjusted EBITDA was $48.8 million versus $51.0 million in the year-ago period.

The Peninsula segment reported net revenues of $126.2 million, compared to $125.9 million in the first quarter of 2015. Adjusted EBITDA rose 1.6% to $47.1 million, versus $46.4 million in the year-ago period.

Improved operating trends continued at a number of properties in the segments, with both revenue and Adjusted EBITDA growth at Blue Chip, Diamond Jo Dubuque, Diamond Jo Worth, Treasure Chest and Kansas Star. Strong performances at these properties were offset by the impact of severe regional flooding in March, which affected operations in portions of Louisiana and Mississippi. Additionally, results at the IP reflect the short-term impact of the recent opening of a new competitor in the Biloxi market.

Borgata

Borgata reported first quarter 2016 net revenues of $190.3 million, an increase of 4.2% from $182.6 million in revenues in the year-ago period. Adjusted EBITDA at Borgata was $45.3 million, an increase of 19.9% from $37.8 million in the first quarter of 2015.

Borgata recorded its strongest first-quarter Adjusted EBITDA performance since 2009, led by significant growth in slot volumes. The property continued to successfully maintain operating efficiencies, improving operating margins by more than 300 basis points.

The Company accounts for its 50% investment in Borgata by applying the equity method of accounting. The Company’s share of Borgata’s Adjusted EBITDA was $22.7 million for the first quarter of 2016, compared to $18.9 million in the year-ago period.

Balance Sheet Statistics

Including operating cash balances and excess cash proceeds from its recent bond offering, Boyd Gaming had cash on hand of $616.2 million, including $27.2 million related to Peninsula, as of March 31, 2016. Total debt was $3.75 billion, of which $0.99 billion was related to Peninsula.

Borgata’s cash and debt balances are not included in the Company’s balance sheet. Borgata had cash on hand of $29.8 million and total debt of $651.5 million at March 31, 2016.

Full Year 2016 Guidance

For the full year 2016, the Company is re-affirming its previously provided guidance of total Adjusted EBITDA, including Peninsula and 50% of Borgata’s Adjusted EBITDA, of $635 million to $655 million. This guidance excludes the Company’s recently announced acquisitions.

Conference Call Information

Boyd Gaming will host its conference call to discuss first-quarter 2016 results today, April 26, at 5:00 p.m. Eastern. The conference call number is

(888) 317-6003

, passcode

1870859.

Please call up to 15 minutes in advance to ensure you are connected prior to the start of the call.

The conference call will also be available live on the Internet at

www.boydgaming.com

https://www.webcaster4.com/Webcast/Page/964/14670

Following the call’s completion, a replay will be available by dialing (877) 344-7529 today, April X26, beginning at 7:00 p.m. Eastern and continuing through Tuesday, May 3, at 11:59 p.m. Eastern. The conference number for the replay will be 10084676. The replay will also be available on the Internet at

BOYD GAMING CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

Three Months Ended

(In thousands, except per share data)

Revenues

462,551

464,757

Food and beverage

76,800

76,296

41,875

39,353

31,466

29,685

Gross revenues

612,692

610,091

Less promotional allowances

60,314

59,513

Net revenues

552,378

550,578

Operating costs and expenses

223,525

226,697

41,803

41,567

10,499

10,047

19,332

19,646

Selling, general and administrative

81,851

81,689

Maintenance and utilities

23,848

25,319

Depreciation and amortization

47,653

51,942

Corporate expense

17,907

19,652

Project development, preopening and writedowns

Impairments of assets

Other operating items, net

Total operating costs and expenses

470,128

478,695

Boyd's share of Borgata's operating income

18,836

11,675

Operating income

101,086

83,558

Other expense (income)

Interest income

Interest expense, net of amounts capitalized

53,065

56,935

Loss on early extinguishments of debt

Other, net

Boyd's share of Borgata's non-operating items, net

Total other expense, net

60,278

65,251

Income before income taxes

40,808

18,307

Income taxes benefit (provision)

(7,618

16,796

Net income

33,190

35,103

Basic net income per common share

Weighted average basic shares outstanding

114,109

111,446

Diluted net income per common share

Weighted average diluted shares outstanding

114,868

112,358

SUPPLEMENTAL INFORMATION

Reconciliation of Adjusted EBITDA to Operating Income

(In thousands)

Net Revenues by Reportable Segment

158,398

150,302

58,605

56,603

209,185

217,764

126,190

125,909

Adjusted EBITDA by Reportable Segment

44,271

38,877

12,681

10,677

48,813

50,984

47,112

46,363

Wholly owned property Adjusted EBITDA

152,877

146,901

Corporate expense (a)

(15,185

(16,642

Wholly owned Adjusted EBITDA

137,692

130,259

22,668

18,913

160,360

149,172

Other operating costs and expenses

Deferred rent

Share-based compensation expense

Boyd's share of Borgata's other operating costs and expenses

Total other operating costs and expenses

59,274

65,614

Operating income

(Continued)

_______________________________________________

(a) Reconciliation of corporate expense:

Corporate expense as reported on Consolidated Statements of Operations

Corporate share-based compensation expense

(2,722

(3,010

Corporate expense as reported on the above table

Reconciliation of Net Income to Adjusted Earnings and Net Income Per Share to

Adjusted Earnings Per Share

Pretax adjustments related to Boyd Gaming:

Boyd's share of pretax adjustments related to Borgata:

Preopening expenses

Recovery of property taxes

(3,380

Total adjustments

Income tax effect for above adjustments

(1,004

Impact of tax audit settlements on provision

(23,196

Adjusted earnings

33,960

14,249

Net income per share

Adjusted earnings per share

Weighted average shares outstanding

Condensed Consolidating Statements of Operations

Three Months Ended March 31, 2016

Excluding

Eliminations

345,306

117,245

67,275

31,981

(4,878

486,437

131,133

55,371

431,066

169,724

53,801

35,433

17,062

68,303

13,548

20,759

34,070

13,583

17,498

376,907

98,099

72,995

28,091

35,254

17,811

42,410

17,868

30,585

10,223

Income taxes provision

(2,013

(5,605

28,572

Three Months Ended March 31, 2015

Peninsula Segment

347,714

117,043

66,317

30,608

(4,828

483,992

130,927

54,495

429,497

172,417

54,280

35,198

17,264

68,433

13,256

22,060

34,954

16,988

19,247

381,582

101,941

59,590

23,968

38,265

18,670

46,379

18,872

13,211

21,294

(4,498

34,505

MARINA DISTRICT DEVELOPMENT COMPANY, LLC

dba BORGATA HOTEL CASINO AND SPA

174,013

165,128

33,758

34,468

28,628

27,604

245,526

235,710

55,233

53,121

190,293

182,589

67,793

66,919

16,784

17,687

35,422

34,153

14,367

15,991

14,349

14,799

(6,758

152,620

159,239

37,673

23,350

11,755

16,657

12,080

17,149

Income before state income taxes

25,593

State income tax benefit (expense)

(2,332

23,261

45,335

37,825

Non-GAAP Financial Measures

Regulation G, "Conditions for Use of Non-GAAP Financial Measures," prescribes the conditions for use of non-GAAP financial information in public disclosures. We believe that our presentations of the following non-GAAP financial measures are important supplemental measures of operating performance to investors: earnings before interest, taxes, depreciation and amortization (EBITDA), Adjusted EBITDA, Adjusted Earnings and Adjusted Earnings Per Share (Adjusted EPS). The following discussion defines these terms and why we believe they are useful measures of our performance. We do not provide a reconciliation of forward-looking non-GAAP financial measures to the corresponding forward-looking GAAP measure due to our inability to project special charges and certain expenses.

EBITDA and Adjusted EBITDA

EBITDA is a commonly used measure of performance in our industry that we believe, when considered with measures calculated in accordance with accounting principles generally accepted in the United States (“GAAP”), provides our investors a more complete understanding of our operating results before the impact of investing and financing transactions and income taxes and facilitates comparisons between us and our competitors. Management has historically adjusted EBITDA when evaluating operating performance because we believe that the inclusion or exclusion of certain recurring and non-recurring items is necessary to provide the most accurate measure of our core operating results and as a means to evaluate period-to-period results. We refer to this measure as Adjusted EBITDA. We have chosen to provide this information to investors to enable them to perform more meaningful comparisons of past, present and future operating results and as a means to evaluate the results of core on-going operations. We have historically reported this measure to our investors and believe that the continued inclusion of Adjusted EBITDA provides consistency in our financial reporting. We use Adjusted EBITDA in this press release because we believe it is useful to investors in allowing greater transparency related to a significant measure used by our management in their financial and operational decision-making. Adjusted EBITDA is among the more significant factors in management's internal evaluation of total company and individual property performance and in the evaluation of incentive compensation related to property management. Management also uses Adjusted EBITDA as a measure in the evaluation of potential acquisitions and dispositions. Adjusted EBITDA is also used by management in the annual budget process. Externally, we believe these measures continue to be used by investors in their assessment of our operating performance and the valuation of our company. Adjusted EBITDA reflects EBITDA adjusted for deferred rent, share-based compensation expense, project development, preopening and write-down expenses, impairments of assets, loss on early extinguishments of debt and other operating items, net, and Boyd’s share of Borgata's non-operating expenses, preopening expenses and other items and write-downs, net.

Adjusted Earnings and Adjusted EPS

Adjusted Earnings is net income (loss) before project development, preopening and write-down expenses, impairments of assets, certain adjustments to property tax accruals, other items, net, gain or loss on early extinguishments of debt, other non-recurring adjustments, net, the impact on Boyd’s income tax provision of tax audit settlements, and Boyd’s share of Borgata's preopening expenses and other items, losses on early extinguishments of debt, write-downs, net, and the income tax provision of tax audit settlements. Adjusted Earnings and Adjusted EPS are presented solely as supplemental disclosures because management believes that they are widely used measures of performance in the gaming industry.

Limitations on the Use of Non-GAAP Measures

The use of EBITDA, Adjusted EBITDA, Adjusted Earnings, Adjusted EPS and certain other non-GAAP financial measures has certain limitations. Our presentation of EBITDA, Adjusted EBITDA, Adjusted Earnings, Adjusted EPS or certain other non-GAAP financial measures may be different from the presentation used by other companies and therefore comparability may be limited. Depreciation and amortization expense, interest expense, income taxes and other items have been and will be incurred and are not reflected in the presentation of EBITDA or Adjusted EBITDA. Each of these items should also be considered in the overall evaluation of our results. Additionally, EBITDA and Adjusted EBITDA do not consider capital expenditures and other investing activities and should not be considered as a measure of our liquidity. We compensate for these limitations by providing the relevant disclosure of our depreciation and amortization, interest and income taxes, capital expenditures and other items both in our reconciliations to the historical GAAP financial measures and in our consolidated financial statements, all of which should be considered when evaluating our performance.

EBITDA, Adjusted EBITDA, Adjusted Earnings, Adjusted EPS and certain other non-GAAP financial measures are used in addition to and in conjunction with results presented in accordance with GAAP. EBITDA, Adjusted EBITDA, Adjusted Earnings, Adjusted EPS and certain other non-GAAP financial measures should not be considered as an alternative to net income, operating income, or any other operating performance measure prescribed by GAAP, nor should these measures be relied upon to the exclusion of GAAP financial measures. EBITDA, Adjusted EBITDA, Adjusted Earnings, Adjusted EPS and certain other non-GAAP financial measures reflect additional ways of viewing our operations that we believe, when viewed with our GAAP results and the reconciliations to the corresponding historical GAAP financial measures, provide a more complete understanding of factors and trends affecting our business than could be obtained absent this disclosure. Management strongly encourages investors to review our financial information in its entirety and not to rely on a single financial measure.

Forward-looking Statements and Company Information

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements contain words such as “may,” “will,” “might,” “expect,” “believe,” “anticipate,” “could,” “would,” “estimate,” “continue,” “pursue,” or the negative thereof or comparable terminology, and may include (without

limitation) information regarding the Company's expectations, goals or intentions regarding future performance. In addition, forward-looking statements in this press release include statements regarding: the strengthening southern Nevada economy, growth in the Las Vegas Locals business, optimism regarding long-term growth, Las Vegas Valley’s long-term growth potential, discussions regarding the recently announced transactions to acquire

Aliante Casino Hotel & Spa and the Las Vegas assets of Cannery Casino Resorts, and the belief that these transactions will deliver strong long-term returns to the Company’s shareholders, and all of the statements under the heading “Full-Year 2016 Guidance.” Forward-looking statements involve certain risks and uncertainties, and actual results may differ materially from those discussed in any such statement. These risks and uncertainties include, but are not limited to: fluctuations in the Company's operating results; recovery of its properties in various markets; the state of the economy and its effect on consumer spending and the Company's results of operations; the timing and ability to close the pending acquisitions, the ability to successfully integrate the companies or to recognize synergies from the pending acquisitions, if the transactions close, the timing for economic recovery, its effect on the Company's business and the local economies where the Company's properties are located; the receipt of legislative, and other state, federal and local approvals for the Company's development projects; whether online gaming will become legalized in various states, the Company's ability to operate online gaming profitably, or otherwise; consumer reaction to fluctuations in the stock market and economic factors; the fact that the Company's expansion, development and renovation projects (including enhancements to improve property performance) are subject to many risks inherent in expansion, development or construction of a new or existing project; the effects of events adversely impacting the economy or the regions from which the Company draws a significant percentage of its customers; competition; litigation; financial community and rating agency perceptions of the Company and its subsidiaries; changes in laws and regulations, including increased taxes; the availability and price of energy, weather, regulation, economic, credit and capital market conditions; and the effects of war, terrorist or similar activity. Additional factors that could cause actual results to differ are discussed under the heading “Risk Factors” and in other sections of the Company's Annual Report on Form 10-K, its Quarterly Reports on Form 10-Q, and in the Company's other current and periodic reports filed from time to time with the SEC. All forward-looking statements in this press release are made as of the date hereof, based on information available to the Company as of the date hereof, and the Company assumes no obligation to update any forward-looking statement.

About Boyd Gaming

Headquartered in Las Vegas, Boyd Gaming Corporation

is a leading diversified owner and operator of 22 gaming entertainment properties located in Nevada, Illinois, Indiana, Iowa, Kansas, Louisiana, Mississippi and New Jersey. Boyd Gaming press releases are available at

www.prnewswire.com

. Additional news and information on Boyd Gaming can be found at

The above information was disclosed in a filing to the SEC. To see the filing, click here.

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Other recent filings from the company include the following:

Boyd Gaming To Acquire Las Vegas Assets Of Cannery Casino Resorts - April 25, 2016
Boyd Gaming To Acquire Aliante Casino, Hotel And Spa, EXPANDING PRESENCE IN HIGH-GROWTH LAS VEGAS LOCALS MARKET - April 21, 2016
Boyd Gaming Corporation director was just granted 6,888 restricted shares - April 18, 2016
Boyd Gaming Corporation director was just granted 6,888 restricted shares - April 18, 2016