Boyd Gaming Corp (BYD) 2009 Q2 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the second quarter Boyd Gaming earning conference call. My name is Geri and I'll be your coordinator today. At this time, all participants are in a listen-only mode. We will facilitate a question-and-answer session towards the end of the conference. (Operator Instructions) As a reminder, this conference is being recorded for replay purposes.

I would like to turn the presentation over to Mr. Josh Hirshberg, Senior Vice President and Chief Financial Officer of Boyd Gaming. Sir, you may proceed.

Thank you, Geri. Good morning, everyone, and welcome to our second quarter earnings conference call. Joining me on the call this morning is Keith Smith, our President and Chief Executive Officer, and Paul Chakmak, our Executive Vice President and Chief Operating Officer. Our comments will include statements relating to our future results, including among others, the financial outlook of the company, our expansion and development projects and other market, business and property trends that are forward-looking statements within the Private Securities Litigation Reform Act. All forward-looking statements and our comments are as of today's date and we take no obligation to update or revise our forward-looking statements, whether it's a result of new information, future events or otherwise. Actual results may in fact differ materially from those projected in any forward-looking statements as a result of certain risks and uncertainties, including, but not limited to, those noted in our earnings release, our periodic reports, and our other filings with the SEC.

During our call today, we will make reference to non-GAAP financial measures. For a complete reconciliation of historical non-GAAP to GAAP financial measures, please refer to our earnings press release and our form 8K furnished to the SEC today and both of which are available in the investor section of our website at www.boydgaming.com. Finally as a reminder, we are broadcasting this call on our website at boydgaming.com and streetevents.com. I would like to turn the call over to Keith Smith, our CEO. Keith?

Thanks, Josh. And good morning, everyone. Thank you for joining us this morning. Earlier today we released our results for the second quarter. And beyond meeting our expectations for the quarter, our results reflect the fact that the positive trends we noted in our first quarter conference call continued into the second quarter. Business trends across each of our regions continue to stabilize and the work we have done to improve margins appears to have taken a firm hold. We believe we have reached the low point in the economic cycle and that the precipitous declines that began in the second half of 2008 are behind us. We are now at a new base to build from. However, whole the business trends may have stabilized, we're not currently see anything indications that point to a meaningful recovery in the short term. While we believe the worst is clearly over, challenging times still lay ahead.

In the Las Vegas Valley, unemployment has surpassed 12% and home prices are nearly 50% below their peak as foreclosures continue to weigh on the market. These factors are having a significant impact on consumer spending in Las Vegas. But these challenges that Las Vegas faces will not last forever. We have tremendous confidence in the long-term viability of the Las Vegas locals market and Las Vegas generally and believe that growth will resume as economic conditions improve. The Boyd Gaming is not just a Las Vegas local operators, we are a geographically-diversified company and our results in other markets are stronger. Our downtown Las Vegas and midwest and south regions showed continued resilience during the second quarter. And in Atlantic City, while revenues declined at Borgata, cost containment initiatives led to increases in both the adjusted EBITDA and operating income during the quarter.

Before I turn the call over to Paul to provide more color on our operating results, I want to briefly touch on a few other topics of interest. First, with regard to our Echelon development, we continue to review our options for this site and are investigating alternative design approaches for the project. In the meantime, construction remains suspended. As I said earlier, we have tremendous confidence in the future of Las Vegas and while the new projects coming online in the next year will certainly present challenges for the Las Vegas strip, we continue to view our site on the strip as an important long-term strategic asset for the company. Next, I would like to turn to our ongoing efforts to acquire some or all of the assets of Stations Casinos. As all of you know, Stations filed for bankruptcy last week. This filing doesn't change the fact that we remain extremely interested in pursuing a transaction that makes sense for us.

Bankruptcy can be a lengthy and complex process. The constraints, expenses and distraction associated with this process can take an unfortunate toll on the company, its employees, vendors and customers. We believe that we can play a key role in helping to resolve the situation. To that end, we remain actively engaged with various parties. As the bankruptcy process continues and the creditors consider their obligations, they know Boyd Gaming remains serious and committed in being an active participant. They also know we have the ability and the financial resources to swiftly execute a transaction and we have more than 35 years of experience in the Las Vegas market. Both of these factors will allow us to provide a smooth transition for Stations employees and customer. We'll keep you updated as the situation develops.

Lastly, before I turn the call over to Paul, I would like to leave you with a few thoughts. First, as I have said in the past, Boyd Gaming is not interested in merely surviving these difficult times. We will learn from them, take advantage of opportunities that may present themselves and emerge from these challenges times a leaner, smarter and stronger company. Second, we view acquisitions as an option not a requirement. As we look to grow the company, we will do it thoughtfully, strategically, with a goal of creating greater shareholder value as we have done in the past. Third, our management team remains committed and focused. Focused on providing the performance, focused on providing improved results and focused on providing improved shareholder value. And the last, maybe more importantly, we believe that our existing business franchise is of a sufficient size and scope to provide significant stock price appreciation in the future once a recovery takes hold. Thank you for your time this morning. And now I would like to turn the call over to Paul Chakmak. Paul?

Thanks, Keith. Hello, everybody. Business conditions remain difficult in the second quarter, but overall, our results met expectations. The dramatic steps we have taken to remove costs from across the enterprise have helped us maintain our operating margins. Business trends were similar to the first quarter. Our Las Vegas locals region remains the most challenged; however, the rate of decline has continued to slow and provided us with more visibility than we had six months ago. And we're encouraged by continued solid performances in the balance of our business. These trends are continuing in the third quarter.

And now I would like to take a more detailed look at our business by region. We'll start with the Las Vegas locals region. During this recession, Las Vegas has returned to its historical roots as a value-oriented destination that is driving visitors back to the city, but they're spending less than in years past. We're seeing this dynamic at our Las Vegas locals properties. Customers are still visiting our properties in large numbers, but spending per visit remains below the levels we saw over the last several years. As we have noted previously, we're also being impacted by softness and room rates, a trend that is aggravated by the historically slow summer season. Rooms are being filled in Las Vegas but only through significant discounting. The resulting decline in cash ADR reduced our EBITDA by nearly $5 million compared to the second quarter of 2008.

The competition we face in Las Vegas is not limited to hotel rooms. As tourism spending continues to decline, Las Vegas Strip operators have embarked on a short-term strategy of promoting that their nongaming amenities to local residents. More significantly, we're seeing extremely aggressive broad-based promotional offers from our local competitors. Despite the heightened marketing environment, we taking a disciplined approach to our business and focusing on rewarding the loyalty of our customers. While times are difficult in Las Vegas, we have lessened the impact on our bottom line through improved efficiencies throughout our operations. That helped us hold operating margins steady in the Las Vegas locals region, compared to the first quarter, even as revenues declined. This is an encouraging development and will benefit us in the future as the economy recovers. We're also encouraged by continuing deceleration in the rate of decline. EBITDA declined roughly 30% year-over-year in the first and second quarters down significantly from the 40% decline posted in the fourth quarter of 2008. And we expect the comparison to continue to narrow.

Things are brighter in downtown Las Vegas, as EBITDA rose for the second consecutive quarter. Discipline cost control measures and reduced fuel costs have helped improve our operating margins and effective yield management is filling our Hawaiian charter flights with valued customers. While the downtown Las Vegas market is declining, our targeted market has been effective and our market share continues to grow. We now have a 29.2% share of the downtown market, up from 27.7% in the comparable period last year. The midwest and south region continues to be resilient, reporting stable EBITDA in revenue year-over-year. Once again, Delta Downs was the star of the quarter.

Though competitors tried to imitate, the property still grew EBITDA by more than 16%, setting an all-time second quarter record. Innovative marketing campaigns and an emphasis on creating a memorable customer experience have helped Delta Downs grow its share of the market's gaming revenue by over 300 basis points during the quarter compared to the same period last year. All of this occurred while the property was boosting its EBITDA margin by about 200 basis points. Delta Downs second quarter was an impressive achievement, especially during these times. I also want to highlight Par-A-Dice, which posted solid year-over-year growth. Revenues were up slightly and EBITDA increased by 12%, reflecting a more focussed operation.

At Blue Chip, we continue to see increased business levels from the expansion we opened in January. As with any expansion of this magnitude, operating costs have been high during its initial opening phase. However, we spent the last several months refining costs of the property, bringing expenses back into line with business levels. I do want to note that yet another competitor is opening in southern Michigan about 90 minutes from Blue Chip. While it's always a concern when new gaming capacity comes online, we have gained substantial experience in responding to the competition over the last few years and we're prepared to deal with any challenges that arise. Blue Chip's full-service product also gives us a sizable competitive advantage against an operation that will have only limited amendments.

In Atlantic City, Borgata once again outperformed an extremely challenged market. Although revenues fell, EBITDA and operating income both increased year-over-year during the quarter as we benefited from cost-control measures implemented over the last several quarters. The quality of the Borgata experience clearly separates us from our regional competition as demonstrated by our continued growth in market share. In the second quarter, Borgata posted a 17.7% share of the Atlantic City market, up from 15.6% in the year-ago quarter. Atlantic City faces numerous challenges going forward; however, our results demonstrate that Borgata is a entertainment destination without rival in the tristate area. To summarize, it was more of the same in the second quarter as we continue to deal with the challenges created by the worst economic conditions since the 1930s. As we have noted on previous calls, we removed significant costs from our business and improved the efficiency of our operations across the country.

I want to emphasize that those savings will not be temporary. While we remove significant costs from our business model, we haven't sacrificed the exceptional service customers have come to expect from us. In fact, our most recent surveys show that customer satisfaction with our service is extremely high and continuing to improve. This speaks to the strength and potential of our new business model as the economy recovers and business rebounds, we will be vigilant in making sure that costs are not necessarily added back into our business. At that this point, I would like to turn the call to Josh to update you on our financials. Josh?

Thanks, Paul. I have a few comments to make with respect to the finances of the company. In terms of the balance sheet, our debt balance at the end of the second quarter remained relatively unchanged from the first quarter at $2.7 billion, of which approximately $2 billion was outstanding under our $4 billion revolving credit facility. At the end of the quarter, we were in compliance with our covenants and expect to remain in compliance. Our leverage calculated in accordance with our credit facility was 6.05 times versus a covenant of 6.5 times. Our covenant remained at 6.5 times for the remainder of the year before increasing further in 2010.

A few other items that I want to point out from the quarter, corporate expense in the quarter was $3.5 million, below the prior-year second quarter, demonstrating the focus we have on managing expenses across the board. Reopening expense recorded in the quarter was related to Echelon. Interest expense was slightly more than $36 million in the quarter. As a reminder, we're no longer capitalizing interest expense associated with Echelon, and therefore, have not recorded any significant capitalized interest since the beginning of this year. Last year in the second quarter, we had approximately $8 million of capitalized interest. We received a tax distribution in the quarter from Borgata of $2.9 million and we expect to receive distributions approximating $19 million in total for this year, of which we have already received $12.6 million. And finally our tax rate in the second quarter was 40.5%. Based on what we know today, we expect the tax rate to be approximately 40% to 43% for each of the remaining quarters. So with that, Operator, we are now ready for questions.

(Operator Instructions) Your questions will be taken as time permits. And your first question comes from the line of Joe Greff with JPMorgan. Please proceed.

Good morning, everyone.

Morning, Joe.

Paul, your comments about the Las Vegas locals market aggressive promotions by competitors, was that a backwards statement, or is that a statement also talking about what you experienced so far in the third quarter? And along those lines, can you give us a sense of how either revenues or EBITDA has trended so far in the Las Vegas local market in the third quarter here? Thank you.

Well, the last one first is I mentioned we have continued to see the same trends really across the country as we saw in the second quarter and I also made the comment that we expect the GAAP from the comparable period in the Las Vegas locals regions specifically continue to narrow. As it relates to marketing in Las Vegas, really it's generally been more of the same, our largest competitor had a promotion expire over the weekend and has not come back out with anything specific in similar form. So we'll have to wait and see if they continue on that path or choose to spend marketing dollars in a different way. But I would say it's clearly been heightened, certainly, over the last couple of quarters and we'll see how that trends since, as you know, July and August are really the low points, so to speak, of the cycle and seasonality in the Las Vegas locals market, just given the summer here.

And then with regard to your comments about still being interested in Stations assets, since they have filed, you have had recent conversation with Stations management and/or their debt holders?

Well, I don't think we'll comment on specific conversations that we're having, but we're having ongoing conversations. I think we'll leave it at that. We remain interested. We think they are a good fit for the company. It would be a good acquisition for us and we continue to have conversations.

Thank you, gentlemen.

And your next question comes from the line of David Katz with Oppenheimer. Please proceed.

Hi, good morning or afternoon, depending on where you are. So you mentioned that you're all looking at a range of options for Echelon. And if you could may be dust off the edges of that and talk about, how broad a range of opportunities you're talking about or JVs in consideration what could possibly be on that list?

David, this is Keith. I think when we suspended the project just about a year ago, we talked about the fact that we would be looking at a number of options, including phasing opportunities for the project and including what the equity may look like, joint ventures, other partners, whether -- what the size and scope of the future project may look like, and we continue to investigate all of those things. We haven't drawn any conclusions. We certainly continue to look at all of those as we go forward.

Right. With respect to the Stations conversations, when I step back and look at your company and how it's concentrated and where you make your living, are there not some potential opportunities that might be on the cheap, so to speak, in Atlantic City, that might balance out your revenue and profit streams a little bit geographically? And why not favor some of those potentially over a greater concentration in Las Vegas?

I think we have looked at a lot of opportunities over the last year and in many cases, pricing has not come down to levels that we think is appropriate to purchase an asset in this market. In some cases, we didn't think it was a good fit for the company and as we look at the Stations assets, we think it's a good fit. Clearly today, the local's market is under pressure and we have a lot of faith in the market and the future. So as we look to what would be a good strategic fit, we think that those assets are a good fit. We're not willing ourselves to those assets. We continue to look around to see if there are other assets and other parts of the country that would fit where the price would be right and quite frankly we just haven't seen anything yet.

David, it's Paul. I would also say it's obvious that Atlantic City is the most susceptible to competitive threats from surrounding states. And obviously, the population base, the customer base, specifically, will continue to see more and more alternatives. We love our positioning at Borgata at the top of the market there, but that doesn't necessarily imply that moving down further in the market in Atlantic City would make the best sense.

Alright. And does that include the prospect of owning a greater percentage if not all of Borgata?

I think we will not kind of speculate on what may or may not happen in Atlantic City. MGM has been a great partner over the years and continues to be a great partner. If an opportunity comes up in the future, we'll address it then. But we're not going to speculate today on what may occur.

Got it. Okay. Thank you very much.

You're welcome.

The next question comes from the line of Lawrence Klatzkin with [Jefferies]. You may proceed.

Hi, guys, I guess everything is worth buying at the right price, right?

Not everything but the right price is certainly a key.

Yes. Capitalized interest in the second quarter? Housekeeping?

Zero.

Zero. You said it was fraction. Okay, it was zero. And Paul, with AC with an aqueduct and two in downtown Philly, table games possible in Pennsylvania, you're definitely gaming share and might be the only property opening there. Do you see any prospects for Atlantic City recovering in the next decade or it that just -- it is what it is?

A decade is an awful long time, Larry. I'm just trying to figure out next quarter, but I think, obviously, some positive economic developments in the northeast relative to certainly the financial community and then just generally much more broad based than that will be helpful. My point clearly related to there is a relatively long list of potential supply that is going be entering the market and to satisfy that supply clearly you need to see some significant push in demand.

All right, now you did a great job of doing cost cutting around the country. Are you starting to get to the limit of how much you can cut, or do you think there is more you can cut to the bone and we could see more margin improvement?

Well it's never over. Although there might be a few more pieces of fruit on the tree but,on, we have spent a significant amount of time and effort. We continue to look on as we look at it the breakevens for each of our properties. Make modifications, think about doing business differently. But we certainly captured a huge chunk of what is practical.

All right, that is fair. And then would you be willing to sell the whole Echelon project, or is the gain from the Harrah's swap just so much it will make it difficult to do an outright sale of the whole thing?

We're not looking at that option, Larry. We're look at what the future of the project may look look and whether it's a different size or scope or phasing or different partners, so we haven't contemplated that at this point.

All right, thanks, guys.

And your next question comes from the line of Steve Kent with Goldman Sachs. Please proceed.

Hi, just two questions. Just on the Echelon issue. Can you just review with us what the gating issues are, how that decision tree is going to be worked out the next 12 to 18 months and what specifically you're waiting for or any of the other issues? Certainly the credit markets seem like they're more hospitable. And then second, on the Borgata and some of MGMs legal problems, can you just talk about what the original agreement has in there for exiting that property or if someone had to exit the property, are there agreements as to how it would work? If somebody loses their license what happens, are there appraisals involved, are there buyout scenarios, just maybe you should walk through that with us.

Sure. With respect to the first question, Echelon, the decision tree is related and we said this in the past focused on both the economy and recovering the economy and the reviews of the Las Vegas strip as well as the credit markets, and we have got to have a clearer picture of when those come back, when they will be healthy so that we go forward with the project. In the meantime, we continue to study the project, we continue to look at options for the project. Whether it's in building phases, whether it's continuing to build at once, whether it's to change the look of the property to go after a different market, whether it's additional partners or different partners. And so we continue to spend a lot of time looking at it, and watching the economy and watching the credit markets. When we have more visibility there, some more clarity there, we will certainly report back. We just don't have anything else to say right now.

Steve, there is one obvious thing is the amount of new supply that will be coming on the strip between now and say the end of the year, and that is certainly not lost on us, and I think to understand factually as opposed on a speculative basis how that supply impacts the dynamic on the strip is another important factor in decisions on the timing and scope of Echelon.

I think at the end of the day, time is our friend on this. Time is not our enemy as we get to continue to see how the market plays out. So we'll continue to look at it and understand it and watch it closely. With respect to Borgata and the MGM situation, once again we're certainly not going to speculate on what may or may not occur. MGM has been a great partner and continues to be a great partner. The JV agreement is not a public document and many of the questions you asked while they're addressed in the JV agreement is not something that we're going to get into on the call, but all the question are addressed in the agreement itself. So I hate to provide such a short answer on that but that is the answer.

Okay, thank you.

Your next question comes from the line of Jane Pedreira with [ClearSights] Research. Please proceed.

Hi, there has been some recent news out of Hawaii that they're going to start taxing differently on gaming winnings and I guess you don't get too net off the losses. Just wondering if you can comment on that at all and if you have heard any anecdotal data from your customers, if you expect that to impact the downtown properties.

Well, yes, the state of Hawaii did pass modification to their tax law that is actually effective January 1st of this year. It's effectively retroactive, that no longer allows for state income tax purposes. Obviously, not federal income tax purpose but just state income tax purposes. The deducibility of losses subject to typical maximums that are outlined by each individual state on the deducibility of the losses. The state has quantified the amount they expect in additional revenue from this at $300,000, so not a hugely meaningful number overall. Obviously not a positive relative to our customer base and at the same time, we think we have got some great customers that come out of the state of Hawaii and don't necessarily see anything like that impacting their patterns.

Okay, great, and then just a question on The Water Club. You were closing The Water Club as I understand it midweek Can you tell us now whether -- are all the rooms open 24/7 or are you still closing some of the rooms midweek?

Generally The Water Club is fully opened during the summer. It's demand-based. When it was closed, it was simply based on the overall demand for the total rooms at the property. when you look at Borgata, it's a 2,800-room property. So as we in the spring season, we don't have that much demand, whereas in the summer season, we have that much demand, so the rooms are open and we'll look at it again in the fall.

Okay, thanks. The last question in Illinois, my understanding is that there were VLTs approved at the pub, do anticipate that having any significant impact at all on Par-A-Dice?

No, we really don't see it having a significant impact. There are various gaming devices already at the bars and taverns that are not necessarily part of the law today, and this would affectively regulate, if you will, something that has been out in the market in the state of Illinois for some time.

Okay, very good. Thank you very much.

And your next question comes from the line of Larry Haverty with GAMCO. Please proceed.

Hi, guys, a couple of quick questions. One, what in heaven's name are you doing in Louisiana from a marketing standpoint? Those numbers are pretty extraordinary. That is the first one.

Well, thanks, Larry, I will just take it as a compliment.

Well, it is what it. I would like to know what is in the secret sauce.

Wouldn't be secret if we sold you, Larry.

You're not going to be forthright on that?

Well, Larry, in all honestly, I think one of our competitors made some comments on their call. Obviously, from a marketing perspective, what we have out there some of which is a little more visible, obviously direct mail is not. At the end of the day, I think we have created a great product at Delta Downs with the super team that runs it from a day-to-day perspective. We always hold customer service very, very high, and I think being 30 minutes closer to the Texas border given the population base, obviously, also helps us significantly as we can match up with our slot-only product, keep in mind. We have no table games at Delta Downs. Very, very competitively with the other alternatives in the Lake Charles market.

Okay, then I want to just move west. This Station deal is fascinating and there are on two aspects and potential deal that I'd love you comment on. The first is that you guys, to my knowledge, although I don't know what the numbers are, have spent a fair amount of monthly to customer loyalty programs as did Station when it was a public company, and it would seem that combining these customer loyalty programs and creating basically one card locally would be a mind-boggling markets locally would be a mind-boggling markets advantage. And I'm just interested if that's giving you any traction. The second thing is you have a fairly unique situation where the individual in charge is also in charge of basically this gold mine called the UFC where he seems to be thoroughly engaged, and I'm kind of wondering whether he would like to get disengaged from the business that started him up, because it's no problem at all for him to be fully occupied on the latter. So you have two kind of unique things wandering around there in this negotiation and if you could comment to them, that would be very helpful.

Yes, Larry, this is Keith. I'm not sure we can provide any commentary and I wouldn't speculate on your second question regarding the principle and UFC and those types of issues. I'm not going provide anymore direction on that. With respect to the customer loyalty card, I think you're absolutely right. There are tremendous benefits to combining those under one heading, under the coast brand and there are a lot of benefits, and that's one of the reasons we're interested in the assets. We think there are many synergies that come into play, there are a lot of marketing opportunities we think we can integrate them quickly and that is why we're interested in the assets. That is one of the reasons.

And then last, you guys are probably the most interested observer or the success or lack of it on city center, and I'm seeing stuff on the street all over the place. I am just kind of curious off the record what your opinion is going to mean for the town?

We certainly wish MGM great success with city center. I think it's important for the city, the city of Las Vegas for it to be successful. And so we're rooting for them. The city of Las Vegas, or Las Vegas in general has grown quite dramatically over the years by building new product, by building very compelling product that visitors have to come and see. Over the last 20 years that has provided a great deal of success for the city and for the operators and developers. The question is in this market will that hold true going forward and I guess we will see come later in this year, but we're certainly rooting for them and we certainly wish them the best. We're going to need quite an increase in the number of visitors in Las Vegas to absorb that capacity and it's probably a little bit of a challenge in today's market and to see that many more visitor coming to town, but we're rooting for them.

If I were go to give you an ETF with UCC for upcenter center and DCC for downtown center, which would you buy?

Is this like a quiz, Larry?

Oh, yes. You can do that on houses now on [K Shiller], so why not on City Center at least theoretically.

I think I will talk about my views on how City Center will impact the company, our company specifically. I think overall it's a net positive. I say that from the standpoint that the negative side is certainly Keith's real concern about the impact of so many more hotel rooms in this town at a time where obviously, we don't need more hotel rooms, on the flip-side of that is City Center will bring a substantial amount. I think their number is about 10,000 new permanent jobs and there was a time when construction jobs in this town were viewed as permanent, because folks just moved to the the next construction site that obviously is not the case any longer, and so I think the spending patterns of folks in that business probably have changed as they're concerned about where the next project will be and certainly the jobs associated with city center specifically are permanent jobs for the local community and we know that those local folks are customers.

Great, thanks an awful lot.

You're welcome.

And your next question comes from the line of Justin Sebastiano with Morgan Joseph. Please proceed.

Hi, guys. You talked about Par-A-Dice and Delta downs and specifically about their EBITDA gains year-to-year being up double digits. But the midwest and south region EBITDA was down over 2% as a whole. So if you could maybe give us more color on the other properties, what property specifically may be dragged down the EBITDA?

I think we've talked about our challenges at Blue Chip and more capacity and obviously, a continued focus on the cost side, I think the implications and I'll just directly say that obviously Blue Chip on a comparable basis to last year was down. And that certainly had an impact on the region overall. With that said, the summer is the strongest time for Blue Chip and we have certainly very positive expectations out of the refinements to the business that we have made, and ultimately what that means as we get into the back half of the year and, frankly, the comparison to the disruptions we had prior to opening the new hotel in 2008. Also note that that kind of northern Indiana, southern Michigan geographic region all told is one that is probably suffering amongst the most because of its focus on manufacturing and automotive businesses than really any in the country. There is an macroeconomic issues in the region overall.

So you're telling us then that Blue Chip is solely responsible for the dragdown of that entire region, so Treasure Chest was fine, Sam's town was fine? So that is what we're supposed to take from this?

No. That is not what I said at all. I was just specifically commenting on Blue Chip. Other properties were up and down a bit and not of any sort of magnitude, but certainly contributed to the down of the other properties generally speaking for the region.

Okay, and I'm sorry if you were specifically on Par-A-Dice. What led to the good gains? What was that?

As we said, revenues which were recorded were flat, EBITDA was up, so it really comes down to a focus by that team on overall profitability, and frankly, ultimately a focus on the customer and getting just frankly a greater share from the customer base that may also frequent the other properties in the region overall.

Okay, it was not necessarily cutting out costs but just providing better service for your customer and maybe having some more profitable marketing programs?

That would be the best way to look at it.

Okay, alright, thanks a lot guys.

And your next question comes from the line of Felicia Hendrix with Barclays Capital. Please proceed.

Hi, good morning, guys. Just on your balance sheet I'm just wondering, have you guys continued to buy back bonds in the open market and if so what are your plans going forward?

We did buy about $35 million of bonds in the second quarter, largely the [7 3/4], Felicia and as we said historically, we will continue to be interested given the opportunities that come our way. Now I will say that the bonds have rallies tremendously in conjunction with the high-yield rally over the last couple of weeks. So I think it would be -- the prices have gotten significantly higher than where we have bonds historically.

Okay and therefore it's fair the if there was some kind of pullback in price, you would be back in the market.

Well, I will stick with my statement.

Opportunistic.

Exactly.

Okay. All right. Thanks.

Sure.

We have time for one more question. And your last question comes from the line of John Maxwell with Jefferies. Please proceed.

Hey, guys. Paul, just wondering with Delta Downs, it looks like Pinnacle is moving ahead with Sugar Cane Bay and obviously it's going to be in the future. But any comments on terms of how you view that competitor or additional competition coming in down the road?

Well, I think we saw that the Lake Charles market in the last month reported which was June was actually down quite a bit. That's the first real downward pressure you saw in the market and ultimately it's a result of, one, some pretty significant growth even during a time where the overall country was not doing well. But why I comes to roost that oil prices when we saw the boom in that part of the world at $140 a barrel, leading to a lot more oil speculation and exploration, have waned a bit as the price has basically been cut in half. So, doesn't appear that the market in all honesty needs any additional capacity, but obviously some folks may have a different view on that. That I think there are reasonable returns being gained on all the investments folks have that in that market, but it just doesn't appear that there is additional demand or need for more capacity.

Okay. But, obviously if it's come -- how do you -- with it coming or it seems like it is, does that -- I mean you had a great improvement in the second quarter. Do you just keep doing what you're doing or think or do something differently when that gets added?

I think, John, we always said that being the first casino as you cross the Texas border into Louisiana puts us in a great position. we have a great product allowing us to grow revenue and earnings in the second quarter. So putting more people on I-10 heading from Texas to Louisiana is going to serve to benefit us. So I think in the long run, we'll be fine. I like our position, I like our product. We have done a great job with it, and once again, more traffic on I-10 heading into Louisiana is a good thing for Delta Downs and Boyd Gaming.

Okay. And then just lastly, I guess since you guys do have the ability to do -- you have options that obviously your competitors don't, how do you balance that with your balance sheet? Are you looking to do something that is no worse than leverage neutral, or when the opportunity comes around and you need to increase leverage to go ahead, you're willing to do that?

If you look at the history of the company, we have grown very carefully and very thoughtfully with the right acquisitions at the right time for the right price. And we will continue to look at that and it has to be the right opportunity, the price has to be right and it has to be a strategic fit for the company, and so there is a lot of dynamics that come into play. There is a lot of parts and pieces on that decision tree when you go to make the decision, so they all have to be right.

Okay, all right. I appreciate the comments. Thanks.

You're welcome.

And this does conclude the question-and-answer portion of your conference. I would now like to turn the conference over to Mr. Josh Hirshberg for his closing remarks. Please proceed, sir.

Thanks, Geri, and thanks for everyone joining the call today. Should you have any other questions, feel free to reach out to the company. We'll be available for any follow-up questions. Thanks again.

And we thank you for your participation in today's conference. This concludes the presentation, you may now disconnect, and have a great day.