Boyd Gaming 1st quarter
I don't know if there are any business owners on this blog, but when I read the details of the press release every geographic segment of their business dropped an average of 8% in revenue and 18% in cash flow.
The primary difference is that the company last year took a non-cash, pre-tax impairment charge of $28.4 million related to the write-off of goodwill incurred as a result of the finalization of our purchase price for Dania Jai-Alai in January 2009. The difference means that the company went from losing $13.8 million to making $8.4 million.
The way I would read this is that the company is doing worse than it was the year before, except for accounting (i.e. write-downs). I am increasingly amazed at how they eek a good headline out of what seems to be increasingly bad news.
Does anyone else have thoughts?
Quote: pacomartinBoyd Gaming Boyd Gaming executives optimistic after first-quarter profit is a newspaper headline.
I don't know if there are any business owners on this blog, but when I read the details of the press release every geographic segment of their business dropped an average of 8% in revenue and 18% in cash flow.
The primary difference is that the company last year took a non-cash, pre-tax impairment charge of $28.4 million related to the write-off of goodwill incurred as a result of the finalization of our purchase price for Dania Jai-Alai in January 2009. The difference means that the company went from losing $13.8 million to making $8.4 million.
The way I would read this is that the company is doing worse than it was the year before, except for accounting (i.e. write-downs). I am increasingly amazed at how they eek a good headline out of what seems to be increasingly bad news.
Does anyone else have thoughts?
Being an older baby boomer I see no problem trying to make things "look" better than they really are. and it is OK for your generation to disagree f you so wish. The average "Joe" knows the difference.
There is so much fear everywhere in life that we need to make the sour taste of it taste better every chance we get.
This sort of deception goes on every every facet of life, I don't see why this situation is any different. It was (probably) advantageous to take the write-down last year, when everyone was hurting, and have a false-boom for a headline this year... just business.
Quote: ahiromu
This sort of deception goes on every every facet of life, I don't see why this situation is any different. It was (probably) advantageous to take the write-down last year, when everyone was hurting, and have a false-boom for a headline this year... just business.
Well the company took the write-down last year because the property they acquired was overvalued by the previous by the assignment of too much good will by the previous owner. There is no lying, it is all corporate spin.
Let me repeat a quote a comment made by an astute reader on the Las Vegas Sun article.
Quote: FromBellevilleCanadaThe numbers given are confusing, however. Perhaps the Las Vegas Sun can amend the article a bit to explain what overhead Boyd was able to slash in order to show a profit despite declining revenue at all of its casinos as compared to the first quarter of 2009.
Partly I fault the SEC for not requiring that the reports have a simple summary accounting. The news reporters are too easily drawn in by corporate spin. Compare the opening paragraphs of the Sun Article with my slightly more sobering summary of the quarter.
Quote: Amanda Finnegan/Las Vegas Sun
Boyd Gaming returns to profit, notes improving economy
Updated Tuesday, May 4, 2010 | 10:06 a.m.
Boyd Gaming swung to a profit during the first quarter of 2010, citing improving business trends in some of its markets.
The Las Vegas-based casino operator reported net income of $8.4 million, or 10 cents per share, during the first quarter of 2010 compared to a loss of $13.8 million, or 16 cents per share, in the same period last year. Tuesday’s quarterly report shows the company cut costs and expenses across several parts of its business.
Quote: Myspin
Boyd Gaming returns to profit
Boyd's fist quarter revenue dropped 4.5% compared to the same quarter last year, while income less write-downs dropped 18.8%. However, last year Boyd Gaming wrote off $28.963 million worth of goodwill associated with a recently acquired Jai Lai facility, while this year they only wrote off $1.601 million.
Other than the writeoffs the company made expense cuts of $13.452 million which deflected the damage from the $19.710 million drop in revenue.
As a result Boyd reported net income of $8.4 million, or 10 cents per share, during the first quarter of 2010 compared to a loss of $13.8 million, or 16 cents per share, in the same period last year.
I did talk to Arnold about his report on the Stratosphere where he quoted me. Most of the article was about SkyJump. He basically said he doesn't want to be too depressing, but he admitted that he probably should have included a comment about potential revenue from the ride. I said that the profit from the ride was going to be small change compared to the blood-loss they were experiencing.
The press release is a little clearer, but only if you can follow jargon.
Quote: Boyd Gaming Press Release
For the quarter, we reported net income of $8.4 million, or $0.10 per share,
compared to a loss of $13.8 million, or $0.16 per share, in the same period last year.
Adjusted Earnings(1) for the first quarter 2010 were $8.9 million, or $0.10 per share,
compared to $13.0 million, or $0.15 per share, for the same period in 2009.
The first quarter 2009 included certain pre-tax adjustments resulting in a net reduction of income by $41.5 million ($26.8 million, net of tax, or $0.31 per share). Pre-tax adjustments in the first quarter 2010 and 2009 are listed in a table at the end of this press release.
Net revenues(1) were $398.4 million for the first quarter 2010,
compared to $434.8 million for the same quarter in 2009, a decrease of 8.4%.
Total Adjusted EBITDA(1) was $87.4 million for the quarter, down 20.2% from $109.6 million in the prior year.
It seemed appropriate to add this tidbit to this thread on accountant's terminology.
The word jargon is familiar to all of us, but there is a less commonly used older term called argot.
Victor Hugo describes argot in his novel, Les Misérables, as the language of the dark; at one point, he says, What is argot; properly speaking? Argot is the language of misery.
Even if you don't know the word, everyone is familiar with the concept. It's the language of the underworld, often meant to confuse the mark as they conspire to rob him. It's a secretive lingo that people use partly to affirm that they are all part of the same club, and partly so that they can talk in front of uninitiated and they don't know what you are saying. But modern argots often end up in the media and in popular songs.
Link to Galang by Maya Arulpragasam (a.k.a. M.I.A.) in the multicultural London English (or Jafaican) that is the fastest growing dialect of English in London. It's a combination of Jamaican, Sri Lankan, Nigerian and several other dialects.
London Calling
Speak the Slang now
Boys say Wha-Gwan
Girls say Wha-What
Slam Galang galang galang
Ga la ga la ga la Land ga Lang ga Lang
Shotgun get you down
Get down get down get down
Ge-d Ge-d Ge-d Down G-down G-down
Too late you down D-down D-down D-down
Ta na ta na ta na Ta na ta na ta
In Hamlet one of the jokes is from the gravedigger who unearths the skull of Yorick. In trying to sound like a lawyer he is trying to use the word ergo or Latin for therefore. But it keeps coming out argot or sometimes argal. So in trying to sound like a lawyer he accidentally uses a word about the underground language of the criminal class. The language is used to give signals to communicate with each other as they rob unwitting people. Of course, it is the ultimate joke, because the lawyers are doing the same thing on a loftier scale.
Quote: gravedigger from HamletIt must be se offendendo; it cannot be else. For here lies
the point: if I drown myself wittingly, it argues an act; and an
act hath three branches-it is to act, to do, and to perform;
argot, she drown'd herself wittingly.
Quote:Total Adjusted EBITDA(1) was $87.4 million for the quarter, down 20.2% from $109.6 million in the prior year.
EBITDA being down 20% shows they're in trouble. If that number keeps dropping, that net income figure isn't going to last long.
Quote: bluefireLooking at that post, I think this is huge:
Total Adjusted EBITDA(1) was $87.4 million for the quarter, down 20.2% from $109.6 million in the prior year.
EBITDA being down 20% shows they're in trouble. If that number keeps dropping, that net income figure isn't going to last long.
And the EBITDA for the first quarter was $127.7 in 2008 and $155.4 in 2007. Hence my complaint. The news was pretty bad to give it such a rosy headline and lead paragraph. If you reread the article again you realize how much of it is the executive saying good times will return soon.
Boyd is a well respected and well run company. I am not trying to crap all over them. Part of it is that people can barely keep up with these accounting maneuvers particularly writing off all the goodwill that has accumulated to every company's balance sheets over the last ten years.
Quote: pacomartinAnd the EBITDA for the first quarter was $127.7 in 2008 and $155.4 in 2007. Hence my complaint. The news was pretty bad to give it such a rosy headline and lead paragraph. If you reread the article again you realize how much of it is the executive saying good times will return soon.
Boyd is a well respected and well run company. I am not trying to crap all over them. Part of it is that people can barely keep up with these accounting maneuvers particularly writing off all the goodwill that has accumulated to every company's balance sheets over the last ten years.
I hear ya, which is why EBITDA is so useful. It helps you filter out all the crap. ;) Of course, when I first learned about it, it was used as a measure to determine profitability on a startup. If you're EBITDA is progressing nicely, you're books will soon overcome the startup costs.
How times have changed. =p
Quote: bluefireI hear ya, which is why EBITDA is so useful. It helps you filter out all the crap. ;)
Watch Steve Wynn on EBITDA .
Quote: pacomartinWatch Steve Wynn on EBITDA .
That's.... interesting. I like how he confuses cash flow with EBITDA, lol.
Although, I'd like to think that even Steve would know that if EBITDA was trending down, you've got problems.
Quote: bluefireAlthough, I'd like to think that even Steve would know that if EBITDA was trending down, you've got problems.
I think he does now that EBITDA is not a measure of cash flow. He is very sensitive since people keep pointing to his huge losses in Vegas. He keeps claiming that he is in a better position than Sands because his financing is in much better shape. There is a separate section on Wynn business, maybe we should move this off the Boyd thread.
Quote: Wynn press release"Adjusted property EBITDA" is earnings before interest, taxes, depreciation, amortization, pre-opening costs, property charges and other, corporate expenses, stock-based compensation, and other non-operating income and expenses, and includes equity in income from unconsolidated affiliates.
Adjusted property EBITDA is presented exclusively as a supplemental disclosure because management believes that it is widely used to measure the performance, and as a basis for valuation, of gaming companies.
Management uses adjusted property EBITDA as a measure of the operating performance of its segments and to compare the operating performance of its properties with those of its competitors.
The Company also presents adjusted property EBITDA because it is used by some investors as a way to measure a company's ability to incur and service debt, make capital expenditures and meet working capital requirements.
Gaming companies have historically reported EBITDA as a supplement to financial measures in accordance with U.S. generally accepted accounting principles ("GAAP").
In order to view the operations of their casinos on a more stand-alone basis, gaming companies, including Wynn Resorts, Limited, have historically excluded from their EBITDA calculations pre-opening expenses, property charges, corporate expenses and stock-based compensation, that do not relate to the management of specific casino properties.
However, adjusted property EBITDA should not be considered
as an alternative to operating income,
as an indicator of the Company's performance,
as an alternative to cash flows from operating activities
as a measure of liquidity, or
as an alternative to any other measure determined in accordance with GAAP.
Unlike net income, adjusted property EBITDA does not include depreciation or interest expense and therefore does not reflect current or future capital expenditures or the cost of capital.
The Company has significant uses of cash flows, including capital expenditures, interest payments, debt principal repayments, taxes and other non-recurring charges, which are not reflected in adjusted property EBITDA.
Also, Wynn Resorts' calculation of adjusted property EBITDA may be different from the calculation methods used by other companies and, therefore, comparability may be limited.
Wynn, for example, has been taking huge depreciation expenses since they have two huge, expensive new resorts, and the MACRS tax code allows companies to take big depreciation write-downs early on in an asset's life. This reduces the company's taxable income, and hence lowers their corporate tax bill, allowing them to hold onto more cash.
Boyd's continued top-line and EBITDA decreases are much more troubling though.
