EFTA01385362.pdf

3 January 2018 HY Corporate Credit HY Multi Sector.Media, Cable & Satellite Higher Yield for Higher Leverage Boyd Gaming We continue to expect Boyd will be able to generate significant free cash flow which will allow the company to reach its target leverage goal (between 4.0x and 5.0x) in 2018. At this juncture, we are maintaining our Buy rating on Boyd 6.375% Senior Unsecured Notes 2026 ($108.4, 4.5% YEW, 234bps STW). For 2017, we are projecting Boyd Gaming will generate Adjusted EBITDA of $596 million (+110/0 versus $536 million) on revenues of $2.37 billion (+8.5% versus $2.18 billion). Of importance, our projection includes the incremental contribution from Aliante and Cannery. Factoring capital expenditures of $245 million, cash interest of $165 million, cash taxes of $6 million, dividends of $11 million, $1 million towards acquisitions, $22 million of share repurchases and $36 million from a tax settlement related to Borgata, we project free cash flow of $182 million in 2017. Using our projected total debt of $3.08 billion and cash interest of S165 million, we estimate Boyd Gaming will end the year with leverage of 5.2x and coverage of 3.6x. Factoring consolidated cash of $159 million, we estimate net leverage at 4.9x. For 2018, we are projecting Boyd Gaming will generate Adjusted EBITDA of $628 million (+5.5% versus 5596 million) on revenues of $2.41 billion (+1.5% versus $2.37 billion). Factoring capital expenditures of $110 million, cash interest of S150 million, cash taxes of S5 million, dividends of $22 million, share repurchases of $70 million, and $35 million from dispositions, we project free cash flow of $306 million in 2018. Using our projected total debt of $2.77 billion and cash interest of $150 million, we estimate Boyd Gaming will end the year with leverage of 4.4x and coverage of 4.2x. Factoring consolidated cash of $159 million, we estimate net leverage at 4.2x. Exhibit I: Boyd Gaming ($Millions) 2015 CA) 2018(A) LTM 2017(E) 2018(E) Consolidated BUDA $527 3536 $568 $696 $828 Loss. Capital Expenditures 131 160 239 245 110 Less: Cash interest 178 197 160 165 150 Lass: Cash taxes II) 34 7 6 5 Less: Acquisitions 0 593 222 1 0 Less: Drvidends 0 0 6 11 22 Less: Share Repurchase 0 0 22 22 70 Plus: Tax Settlement 0 0 36 36 0 Plus: Dispositions 0 594 0 0 35 Fres Pt Flaw $219 $148 ($341 $182 5900 Total Debt $3,322 $3,283 $3,118 $3,079 $2,773 Cash 159 194 159 159 159 Lamm. 0.3x 0.1x 5.3x 5.2x 4.41 Net leverage 8.0x 5.13x 5.0x 4.9x 4. Carew* 3.0x 2.7x 3.7x 3.0x 4.2 sex.ece Convwv /40/714x1 0. 0114w 6411 Downside risks to our call include a deterioration of industry fundamentals and incremental competitive pressure in the Midwest & South regions. Eldorado liesoi is Going forward the primary focus for ERI is the completion of the Isle of Capri integration, which had a solid start as depicted by O3'17 results. Further, this momentum continued into October 2017 as per Deutsche Bank Securities Inc. Page 87 CONFIDENTIAL - PURSUANT TO FED. R. CRIM. P. 6(e) DB-SDNY-0086646 CONFIDENTIAL SDNY_GM_00232830 EFTA01385362