Boyd Gaming on Tuesday posted its seventh consecutive quarter of revenue growth, as the Las Vegas-based company continues to expand, spending $610m to acquire three local casinos which cater to residents of southern Nevada.

Boyd expects those three investments — Aliante, Cannery and Eastside Cannery casinos — to add millions of dollars to the bottom line.

On a conference call Tuesday, Keith Smith, Boyd’s president and CEO, assured analysts the prices the company paid “for the three assets were very fair … given the future opportunities.”

Meanwhile, the Las Vegas-based gaming company reported net revenue of $33.1m, or 29 cents per share, a slight decline from $35.1m, or 31 cents per share, in the same period last year. Analysts surveyed by Yahoo Finance had expected earnings of 25 cents per share.

Boyd reported net revenues of $552.4m, up from $550.6m in the first quarter of 2015.

“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,” said Smith.

Smith said a “strengthening southern Nevada economy” helped Boyd’s Las Vegas business achieve its best year-over-year revenue comparison in more than a decade.

Revenues in Las Vegas were $158.4m, a 5.4 percent increase from the $150.3m reported in the first quarter of 2015. Smith reiterated that the company has experienced “broad based growth” throughout its entire locals business.

Borgata Rebounds

Smith said first-quarter net revenues at Borgata were $190.3m, an increase from $182.6m in the same period last year. The company attributed the increase to the Atlantic City casino being able to capture new customers since the closure of four of 12 casinos in 2014.

The Atlantic Club, Showboat, Revel and Trump Plaza all closed in 2014.

Smith said PokerStars, which went live in March, did have some impact on their poker businesses in New Jersey.

“But it also expanded the market,” Smith told analysts.

Analysts interviewed by GamblingCompliance in late March expected PokerStars to help push April Internet poker revenue up to an estimated $2.5m.

Boyd Acquisitions

Boyd’s quarterly earnings release was held one day after it announced the acquisition of Cannery Casino Resorts’ Las Vegas operations for $230m, strengthening its position in the Las Vegas locals market.

The deal for two casinos comes less than a week after the company agreed to buy Aliante Casino Hotel and Spa for $380m. As with the Aliante deal, Boyd said it would fund the transaction with cash in hand.

The Cannery deal is expected to close in the third quarter, pending approval from Nevada gaming regulators and the Federal Trade Commission.

As for future acquisitions, Smith said the company’s “focus in the near term is closing these two deal deals and integrating them into the company.” Beyond that, Smith said, the company looks at a lot of opportunities.

“We’ll keep our eyes open,” Smith told analysts on Tuesday.

Boyd expects the Cannery acquisition will add $32m in earnings before interest, tax, depreciation and amortization (EBITDA) during the company’s first full year of ownership. Both deals are also expected to bring “$16m in year one synergies.”

“This transaction is a great tuck-in acquisition that further expands our presence in the Las Vegas locals market at an attractive price,” Smith said.

“Our southern Nevada assets have delivered the strongest revenue growth in our company over the last two years, and this acquisition will broaden our portfolio in this promising market.”

Boyd’s Las Vegas properties accounted for 28 percent of its net revenue in 2015, up from 22 percent in 2014. Las Vegas generated $610.1m of Boyd’s $2.19bn net revenues in 2015, compared with $592m of $2.7bn in 2014, according to an SEC filing.

Once the Aliante and Cannery acquisitions close, Boyd will own 12 casinos in Las Vegas in southern Nevada. The company also owns other properties in Illinois, Indiana, Iowa, Kansa, Louisiana Mississippi and New Jersey.

Gaming industry analysts said they remained “bullish” on the Las Vegas locals market and believed there was value in Boyd’s acquisition of Cannery.

“We believe the Cannery assets are complementary to Boyd’s portfolio, including the pending acquisition of Aliante,” John DeCree, an analyst with Union Gaming in Las Vegas, said in a research report Tuesday.

DeCree expected the “bulk of the value in the acquisition” lies with the Cannery casino in North Las Vegas, especially when coupled with the Aliante customer base.

The deal will give Boyd control of the Cannery casino, near its Aliante casino, and Eastside Cannery, next to Sam’s Town, which Boyd already owns on the eastside of Las Vegas.

“We think the deal makes sense, given Las Vegas’ revenue growth and opportunities to leverage economies of scale,” said Cameron McKnight, a senior analyst with Wells Fargo Securities.

“More Las Vegas locals exposure makes sense. Boyd currently generates roughly 33 percent of EBITDA in Las Vegas. Pro-forma, exposure will be just under 40 percent.”

McKnight was also sold on the stability of the Las Vegas economy.

“Key Clark county economic indicators such as wage growth, taxable sales and home electric grid installations remain positive.”

Before Cannery sold its Las Vegas properties to Boyd, the privately-held company sold its Pittsburgh-area Meadows Racetrack and Casino to Gaming and Leisure Properties Inc. (GLPI).

The $465m deal is expected to close in the second half of the year. GLPI is Penn National Gaming’s real-estate investment trust spin-off.

Once both deals close, Cannery will have sold off its portfolio of properties. Messages left Tuesday with Bill Wortman, a principal with Cannery Casino Resorts in Las Vegas, to discuss what is next for the company were not returned.


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