MTR Gaming Group Announces Third Quarter Results

November 4, 2009 5:32 PM EST

CHESTER, W. Va.--(BUSINESS WIRE)-- MTR Gaming Group, Inc. (NasdaqGS: MNTG) today announced financial results for the third quarter and nine months ended September 30, 2009. Current and prior-year results reflect the presentation of Running Aces Harness Park, Jackson Harness Raceway, the Ramada Inn and Speedway Casino and Binion's Gambling Hall & Hotel as discontinued operations. See attached tables (including Reconciliation of GAAP net income (loss) to Non-GAAP EBITDA).

For the third quarter of 2009, the Company's net revenues from continuing operations were $119.5 million, a decline of 9% from $130.8 million in the same period of 2008. EBITDA from continuing operations was $17.2 million, down 24% (after a severance charge of $0.1 million and strategic costs associated with lobbying and gaming efforts in Ohio of $3.7 million) compared to $22.7 million in the third quarter of 2008. The decrease in EBITDA from continuing operations is directly attributable to the strategic costs associated with Ohio, as well as increased marketing costs at MTR's West Virginia property in response to increased competition, primarily from the opening of the Rivers Casino in downtown Pittsburgh, Pennsylvania.

During the third quarter of 2009, corporate operating expenses (exclusive of the $3.7 million of strategic costs associated with Ohio) decreased 35% to $2.2 million compared to $3.5 million in the third quarter of 2008 as a result of cost containment efforts.

The Company reported net income of $577,000 or $0.02 per diluted share, which included a $2.8 million pre-tax loss associated with MTR's debt refinancing and the aforementioned $3.7 million of strategic costs associated with lobbying and gaming efforts in Ohio, or $0.20 per diluted share in the aggregate. Additionally, net income included income from discontinued operations in the amount of $2.7 million or $0.10 per diluted share, resulting from the reversal of a $2.9 million deferred tax asset valuation allowance associated with certain impairment losses that were recorded in the third quarter of 2008. In the same period last year, the Company reported a net loss of $8.2 million or $0.30 per share, of which a loss of $11.7 million or $0.43 per share was from discontinued operations.

Net revenues at Mountaineer Casino, Racetrack & Resort decreased 11% to $68.9 million in the third quarter of 2009 compared to $77.3 million in the third quarter of 2008. Table gaming at Mountaineer generated $11.4 million of revenues compared to $13.2 million in the prior-year period, while revenues from slots decreased by $3.7 million compared to the same quarter in 2008. The decrease in revenue is primarily attributable to competitive pressures and weak economic conditions. The property generated EBITDA of $13.0 million versus $15.5 million in the comparable quarter of 2008.

Net revenues at Presque Isle Downs & Casino decreased 5% to $49.2 million during the third quarter of 2009 compared to $51.5 million during the same period of 2008. The property generated EBITDA of $10.3 million versus $10.8 million in the comparable quarter of 2008. The decrease in EBITDA is attributable to the decline in revenue and $0.4 million of incremental real estate tax expense resulting from an increase in the property's assessed value, partially offset by operational efficiencies.

"The voters of Ohio approved Issue 3 yesterday, which will increase the competition in our regional markets starting around 2013," said Robert Griffin, President and Chief Executive Officer of MTR Gaming Group. "We are considering several different alternatives in order to proactively prepare for the new competition. Although this may appear to be a negative, we believe that it may result in slots at tracks, as the Governor has proposed, with better economic terms than were originally discussed. To that end we are working diligently to have this initiative reintroduced in the state. In terms of our current operations, we are delighted with the results we have seen thus far at Mountaineer since adding free play on September 1, which has enhanced its competitive position in the Ohio Valley."

For the first nine months of 2009, MTR's total net revenues decreased 5% to $350.3 million from $369.5 million in the first nine months of 2008. However, EBITDA from continuing operations decreased less than 1% to $56.6 million (after severance costs of $0.4 million and strategic costs associated with lobbying and gaming efforts in Ohio of $4.1 million) from $57.0 million in the same period last year. Absent these one-time charges, EBITDA from continuing operations was up 7% from the prior-year period.

The 2009 year-to-date net income was $1.7 million or $0.06 per diluted share, of which income of $1.4 million or $0.05 per diluted share was from discontinued operations. In the same period last year, the Company reported a net loss of $13.2 million or $0.48 per share, which included a loss of $13.5 million or $0.49 per share from discontinued operations.

Mr. Griffin further added, "We remain focused on increasing revenue and maximizing profits at our current operations, and we believe the advent of free play at Mountaineer is having a positive effect. Looking into next year, we hope that Ohio voters will approve the referendum allowing for video lottery terminals at racetracks."

Balance Sheet and Liquidity

During the third quarter, MTR successfully completed its offering of $250 million of 12.625% senior secured notes due 2014 at an issue price of 95.248%, with the proceeds used to pay down outstanding debt. On October 13, 2009, MTR completed an additional $10 million offering of the same senior secured notes at an issue price of 96%, and amended its senior secured credit facility to reduce the borrowing capacity from $20 million to $10 million.

Conference Call

Management will conduct a conference call focusing on the financial results and corporate developments at 4:30 PM EST on Thursday, November 5, 2009. Interested parties may participate in the call by dialing (877) 407-4018. Please call in 10 minutes before the call is scheduled to begin and ask for the MTR Gaming call (conference ID #334841).

The conference call will be webcast live via the Investor Relations section of the Company's website at www.mtrgaming.com. To listen to the live webcast please go to the website at least 15 minutes early to register, download and install any necessary audio software. If you are unable to listen to the live call, the conference call will be archived on the Investor Relations section of the Company's website.

Reconciliation of Non-GAAP Measures to GAAP

EBITDA represents earnings (losses) before interest, income taxes, depreciation and amortization, gain (loss) on disposal of property, loss on debt modification and equity in loss of unconsolidated joint venture. EBITDA is not a measure of performance or liquidity calculated in accordance with generally accepted accounting principles ("GAAP"), is unaudited and should not be considered as an alternative to, or more meaningful than, net income or income from operations as an indicator of our operating performance, or cash flows from operating activities, as a measure of liquidity. EBITDA has been presented as a supplemental disclosure because it is a widely used measure of performance and basis for valuation of companies in our industry. Uses of cash flows that are not reflected in EBITDA include capital expenditures, interest payments, income taxes, and debt principal repayments. Moreover, other companies that provide EBITDA information may calculate EBITDA differently than we do. A reconciliation of GAAP income (loss) from continuing operations and income (loss) from discontinued operations to EBITDA is included in the financial tables accompanying this release.

About MTR Gaming Group

MTR Gaming Group, Inc., through subsidiaries, owns and operates Mountaineer Casino, Racetrack & Resort in Chester, West Virginia; Presque Isle Downs & Casino in Erie, Pennsylvania; and Scioto Downs in Columbus, Ohio. For more information, please visit www.mtrgaming.com.

Except for historical information, this press release contains forward-looking statements concerning, among other things the prospects for improving the results of our operations at Mountaineer and Presque Isle Downs and the prospects for video lottery gaming at Scioto Downs. Such statements are subject to a number of risks and uncertainties that could cause the statements made to be incorrect and/or for actual results to differ materially. Those risks and uncertainties include, but are not limited to, the impact of new competition for Mountaineer and Presque Isle Downs, the effectiveness of our marketing programs, the enactment of future gaming legislation in the jurisdictions in which we operate (including the recent referendum to permit casino gaming in Ohio), changes in, or failure to comply with, laws, regulations or the conditions of our gaming licenses, accounting standards or environmental laws, including adverse changes in the gaming tax rates that the Company currently pays in its various jurisdictions, general economic conditions, disruption (occasioned by weather conditions or work stoppages) of our operations, the success and growth of table gaming at Mountaineer, the realization of the expected benefits of non-taxable promotional credits at Mountaineer, our ability to improve our operating margins, our continued suitability to hold and obtain renewals of our gaming and racing licenses, our ability to comply with the covenants of our various debt instruments and/or our ability to obtain additional financing, if and when needed, and other factors described in the Company's periodic reports filed with the Securities and Exchange Commission. The Company does not intend to update publicly any forward-looking statements, except as may be required by law. The cautionary advice in this paragraph is permitted by the Private Securities Litigation Reform Act of 1995.

MTR GAMING GROUP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(dollars in thousands, except per share amounts)

(unaudited)

                  Three Months Ended              Nine Months Ended

                  September 30                    September 30

                    2009            2008            2009            2008

Revenues:

Gaming            $ 106,408       $ 114,135       $ 315,904       $ 327,737

Pari-mutuel         4,574           5,151           10,665          11,900
commissions

Food, beverage      9,181           10,648          25,284          28,610
and lodging

Other               2,285           2,995           6,550           7,343

Total revenues      122,448         132,929         358,403         375,590

Less promotional    (2,970     )    (2,145     )    (8,093     )    (6,076     )
allowances

Net revenues        119,478         130,784         350,310         369,514

Operating
expenses:

Expenses of
operating
departments:

Gaming              66,078          71,427          197,459         207,717

Pari-mutuel         4,160           4,672           10,280          11,498
commissions

Food, beverage      6,323           7,942           18,210          22,666
and lodging

Other revenue       1,698           2,612           4,894           6,888

Marketing and       5,689           4,322           16,637          12,423
promotions

General and         18,291          17,156          46,223          51,301
administrative

Depreciation        7,443           7,396           22,031          22,394

Loss on disposal    31              1               169             1
of property

Total operating     109,713         115,528         315,903         334,888
expenses

Operating income    9,765           15,256          34,407          34,626

Other income
(expense):

Other               (39        )    -               (39        )    -

Interest income     9               53              448             196

Interest expense    (11,849    )    (10,216    )    (31,729    )    (30,891    )

Loss on debt
modification and    (2,773     )    -               (2,773     )    (3,356     )
extinguishment

(Loss) income
from continuing
operations          (4,887     )    5,093           314             575
before income
taxes

Benefit
(provision) for     2,779           (1,622     )    (3         )    (261       )
income taxes

(Loss) income
from continuing     (2,108     )    3,471           311             314
operations

Discontinued
operations:

Loss from
discontinued
operations
before income       (292       )    (12,567    )    (2,294     )    (15,143    )
taxes and
non-controlling
interest

Benefit for         2,983           841             3,664           1,625
income taxes

Income (loss)
from
discontinued
operations          2,691           (11,726    )    1,370           (13,518    )
before
non-controlling
interest

Non-controlling     (6         )    15              -               30
interest

Income (loss)
from                2,685           (11,711    )    1,370           (13,488    )
discontinued
operations

Net income        $ 577           $ (8,240     )  $ 1,681         $ (13,174    )
(loss)

Net income
(loss) per share
- basic:

(Loss) income
from continuing   $ (0.08      )  $ 0.13          $ 0.01          $ 0.01
operations

Income (loss)
from                0.10            (0.43      )    0.05            (0.49      )
discontinued
operations

Net income        $ 0.02          $ (0.30      )  $ 0.06          $ (0.48      )
(loss)

Net income
(loss) per share
- diluted:

(Loss) income
from continuing   $ (0.08      )  $ 0.13          $ 0.01          $ 0.01
operations

Income (loss)
from                0.10            (0.43      )    0.05            (0.49      )
discontinued
operations

Net income        $ 0.02          $ (0.30      )  $ 0.06          $ (0.48      )
(loss)

Weighted average
number of shares
outstanding:

Basic               27,475,260      27,475,260      27,475,260      27,475,260

Diluted             27,475,260      27,475,260      27,475,260      27,475,260

MTR GAMING GROUP, INC.

SELECTED FINANCIAL INFORMATION

(dollars in thousands)

(unaudited)

                              Three Months Ended        Nine Months Ended

                              September 30              September 30

                                2009         2008         2009         2008

Net revenues from continuing
operations:

Mountaineer Casino,           $ 68,882     $ 77,255     $ 207,716    $ 226,663
Racetrack & Resort

Presque Isle Downs & Casino     49,173       51,497       139,985      139,237

Scioto Downs                    1,402        2,029        2,579        3,605

Corporate                       21           3            30           9

Consolidated net revenues     $ 119,478    $ 130,784    $ 350,310    $ 369,514
from continuing operations

EBITDA from continuing
operations:

Mountaineer Casino,           $ 12,987     $ 15,452     $ 37,804     $ 41,279
Racetrack & Resort

Presque Isle Downs & Casino     10,333       10,755       29,443       26,809

Scioto Downs                    (154    )    (87     )    (986    )    (1,074  )

Corporate                       (5,927  )    (3,467  )    (9,654  )    (9,993  )

Consolidated EBITDA from      $ 17,239     $ 22,653     $ 56,607     $ 57,021
continuing operations

EBITDA from discontinued
operations:

Binion's Gambling Hall &        (277    )    (32     )    (937    )    (1,543  )
Hotel

Ramada Inn and Speedway         -            (5      )    43           (755    )
Casino

Jackson Racing / Jackson        480          (213    )    315          (457    )
Harness Raceway

MTR-Harness / Running Aces      (55     )    (11     )    (265    )    (55     )
Harness Park

Consolidated EBITDA           $ 17,387     $ 22,392     $ 55,763     $ 54,211

_______________________________________________________________________

The following tables set forth a reconciliation of income (loss) from continuing
operations and income (loss) from discontinued operations, GAAP financial
measures, to EBITDA, a non-GAAP financial measure.

_______________________________________________________________________

                              Three Months Ended        Nine Months Ended

                              September 30              September 30

                                2009         2008         2009         2008

EBITDA FROM CONTINUING
OPERATIONS:

Mountaineer Casino,
Racetrack & Resort:

Income from continuing        $ 14,314     $ 6,651      $ 20,410     $ 16,093
operations

Interest expense, net of        1,056        2,253        5,522        6,771
interest income

(Benefit) provision for         (6,858  )    2,902        127          7,264
income taxes

Depreciation                    3,672        3,646        10,849       11,151

Loss on disposal of property    30           -            123          -

Loss on debt modification       773          -            773          -
and extinguishment

EBITDA from continuing        $ 12,987     $ 15,452     $ 37,804     $ 41,279
operations

Presque Isle Downs & Casino:

Income from continuing        $ 12,889     $ 4,833      $ 18,476     $ 10,524
operations

Interest expense, net of        170          361          292          1,221
interest income

(Benefit) provision for         (6,287  )    2,122        115          4,751
income taxes

Depreciation                    3,561        3,439        10,560       10,313

EBITDA from continuing        $ 10,333     $ 10,755     $ 29,443     $ 26,809
operations

Scioto Downs:

Loss from continuing          $ (1,093  )  $ (368    )  $ (1,692  )  $ (1,265  )
operations

Interest expense, net of        22           27           70           83
interest income

Provision (benefit) for         675          27           (11     )    (571    )
income taxes

Depreciation                    203          227          608          679

Other                           39           -            39           -

EBITDA from continuing        $ (154    )  $ (87     )  $ (986    )  $ (1,074  )
operations

MTR GAMING GROUP, INC.

SELECTED FINANCIAL INFORMATION (continued)

(dollars in thousands)

(unaudited)

                               Three Months Ended       Nine Months Ended

                               September 30             September 30

                                 2009         2008        2009         2008

EBITDA FROM CONTINUING
OPERATIONS (continued):

Corporate:

Loss from continuing           $ (28,218 )  $ (7,645 )  $ (36,883 )  $ (25,038 )
operations

Interest expense, net of         10,592       7,522       25,397       22,620
interest income

Provision (benefit) for          9,691        (3,429 )    (228    )    (11,183 )
income taxes

Depreciation                     7            84          14           251

Loss on disposal of property     1            1           46           1

Loss on debt modification and    2,000        -           2,000        3,356
extinguishment

EBITDA from continuing         $ (5,927  )  $ (3,467 )  $ (9,654  )  $ (9,993  )
operations

Consolidated:

(Loss) income from continuing  $ (2,108  )  $ 3,471     $ 311        $ 314
operations

Interest expense, net of         11,840       10,163      31,281       30,695
interest income

(Benefit) provision for          (2,779  )    1,622       3            261
income taxes

Depreciation                     7,443        7,396       22,031       22,394

Loss on disposal of property     31           1           169          1

Other                            39           -           39           -

Loss on debt modification and    2,773        -           2,773        3,356
extinguishment

EBITDA from continuing         $ 17,239     $ 22,653    $ 56,607     $ 57,021
operations

EBITDA from discontinued
operations:

Binion's Gambling Hall &
Hotel:

(Loss) from discontinued       $ (181    )  $ (21    )  $ (616    )  $ (1,308  )
operations

Interest income, net of          -            -           -            (29     )
interest expense

Benefit for income taxes         (96     )    -           (321    )    (879    )

(Gain) loss on disposal of       -            (11    )    -            673
property

EBITDA from discontinued       $ (277    )  $ (32    )  $ (937    )  $ (1,543  )
operations

Ramada Inn and Speedway
Casino:

(Loss) Income from             $ (1      )  $ (11    )  $ 29         $ 1,477
discontinued operations

Interest (income) expense        -            -           (1      )    163

Provision (benefit) for          1            (7     )    15           1,009
income taxes

Depreciation                     -            -           -            199

Loss (gain) on disposal of       -            13          -            (3,603  )
property

EBITDA from discontinued       $ -          $ (5     )  $ 43         $ (755    )
operations

Jackson Racing / Jackson
Harness Raceway:

Income (loss) from             $ 24         $ (1,937 )  $ (85     )  $ (2,225  )
discontinued operations

Interest expense, net of
interest income and              -            1           -            3
non-controlling interest

Provision (benefit) for
income taxes, net of             12           (872   )    (44     )    (1,005  )
non-controlling interest

Depreciation, net of             -            9           -            25
non-controlling interest

Loss on disposal of property,
net of non-controlling           115          -           115          159
interest

Other                            153          -           153          -

Impairment loss                  176          2,586       176          2,586

EBITDA from discontinued       $ 480        $ (213   )  $ 315        $ (457    )
operations

MTR-Harness / Running Aces
Harness Park:

Income (loss) from             $ 2,843      $ (9,742 )  $ 2,042      $ (11,432 )
discontinued operations

Interest expense, net of         2            6           7            8
interest income

(Benefit) provision for          (2,900  )    43          (3,314  )    (738    )
income taxes

Equity in loss of North Metro    -            9,682       1,000        12,107
Harness Initiative, LLC

EBITDA from discontinued       $ (55     )  $ (11    )  $ (265    )  $ (55     )
operations

MTR GAMING GROUP, INC.

CONSOLIDATED BALANCE SHEETS

(dollars in thousands)

                                                      September 30  December 31

                                                        2009          2008

                                                      (unaudited)

ASSETS

Current assets:

Cash and cash equivalents                             $ 35,895      $ 29,011

Restricted cash                                         373           929

Accounts receivable, net of allowance for doubtful      3,713         7,717
accounts of $302 in 2009 and $125 in 2008

Accounts receivable - West Virginia Lottery             1,210         -
Commission

Inventories                                             3,929         4,445

Deferred financing costs                                4,027         4,444

Prepaid income taxes                                    1,702         7,059

Deferred income taxes                                   346           1,397

Prepaid expenses and other current assets               5,578         4,528

Assets held for deferred compensation                   -             11,529

Assets of discontinued operations                       -             36

Total current assets                                    56,773        71,095

Property and equipment, net                             356,054       367,769

Goodwill                                                1,985         1,985

Other intangibles                                       68,923        68,819

Deferred financing costs, net of current portion        11,036        2,499

Deposits and other                                      14,638        14,815

Assets of discontinued operations                       234           728

Total assets                                          $ 509,643     $ 527,710

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

Accounts payable                                      $ 4,953       $ 6,869

Accounts payable - gaming taxes and assessments         4,549         6,848

Accrued payroll and payroll taxes                       3,433         3,220

Accrued interest                                        8,693         4,932

Other accrued liabilities                               11,404        14,486

Construction project and equipment liabilities          2,852         1,048

Deferred compensation                                   -             11,547

Current portion of long-term debt and capital lease     8,685         20,498
obligations

Liabilities of discontinued operations                  414           1,240

Total current liabilities                               44,983        70,688

Long-term debt and capital lease obligations, net of    365,628       357,112
current portion

Long-term deferred compensation                         339           663

Deferred income taxes                                   1,324         3,644

Total liabilities                                       412,274       432,107

Shareholders' equity:

Common stock                                            -             -

Additional paid-in capital                              61,859        61,774

Retained earnings                                       35,694        34,013

Accumulated other comprehensive loss                    (386    )     (386    )

Total shareholders' equity of MTR Gaming Group, Inc.    97,167        95,401

Non-controlling interest of discontinued operations     202           202

Total shareholders' equity                              97,369        95,603

Total liabilities and shareholders' equity            $ 509,643     $ 527,710

    Source: MTR Gaming Group, Inc.

Related Categories

Press Releases

Stocks Mentioned

Related Entities

• Life, Style and Real Estate

Add Your Comment

Name

Subject

Body

Verification can't see the text?
click here to refresh the image.
what's this?