Mohegan Gaming & Entertainment Announces Third Quarter Fiscal 2019 Operating Results

UNCASVILLE, Conn., Aug. 8, 2019 /PRNewswire/ -- Mohegan Gaming & Entertainment ("MGE" or the "Company"), a master developer and operator of premier global integrated entertainment resorts, including Mohegan Sun in Uncasville, Connecticut, Fallsview Casino Resort in Niagara Falls, Ontario and Inspire Korea in Incheon, South Korea, announced today operating results for its third fiscal quarter ended June 30, 2019.

"The June quarter was an important one in the evolution of MGE, as we closed on the acquisition of the Niagara casino bundle on June 11th, including the impressive Fallsview Casino Resort – representing MGE's latest international expansion and further earnings diversification," said Mario Kontomerkos, President & Chief Executive Officer. "Continuing the trend, construction activity continues in Incheon, South Korea, setting ourselves up for our next landmark integrated resort opening in early 2022. Both markets will transform the earnings profile of the Company. Domestically, volume trends across our portfolio remain inline to better than expected as overall gaming volumes at our flagship property, Mohegan Sun, remain robust despite the increased competitive pressure in the Northeast. Adjusting for unusually low table hold, overall MGE EBITDA would have been largely in line with our expectations, slightly up from last year's comparable period, and well ahead of recent fiscal year 1Q19 and 2Q19 performance.  Outside of Connecticut, EBITDA from Pocono grew, while Corporate EBITDA turned positive given continued growth from our managed portfolio, including the first contribution from the Niagara assets and continued strong financial performance from ilani."

Selected consolidated operating results for the third quarter ended June 30, 2019, and prior year period (unaudited):

• Net revenues of $347.6 million vs. $344.9 million in the prior year period, a 0.8% increase;
• Income from operations of $55.2 million vs. $63.9 million in the prior year period, a 13.6% decrease; and
• Adjusted EBITDA of $81.6 million vs. $88.2 million in the prior year period, a 7.5% decrease.

Consolidated net revenues were generally flat and Adjusted EBITDA declined during the quarter, largely driven by temporary unfavorable hold in the quarter at Mohegan Sun.  These declines were partially offset by improved non-gaming revenue growth, including entertainment and hotel revenues at Mohegan Sun, as well as stronger Corporate Adjusted EBITDA, driven by the inclusion of Niagara in the period, tighter expense management and improved financial performance at ilani Casino Resort.

On October 1, 2018, the Company adopted Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606), on a modified retrospective basis.  As such, results for the three months and nine months ended June 30, 2019 in this release are presented under this new guidance, while results for the three months and nine months ended June 30, 2018 remain presented under prior guidance.  For comparative results for all periods as reported under the new guidance, please see our supplemental earnings deck, available on our website (https://mohegangaming.com/financial-information/).

Net revenues and Adjusted EBITDA declined during the quarter, driven by lower overall gaming revenues and unfavorable table hold during the period, which was partially offset by stronger non-gaming results.  Slot volumes declined 7.2%, while table volumes increased 0.6%, remaining in line with internal expectations.  Had table hold percentage fallen into the historically normal range, Net revenues and Adjusted EBITDA would have declined less than 2.7% and 6.9% respectively, on a 606 to 606 basis.  Non-gaming revenues increased during the quarter, driven by improvement in nearly all segments of the business.  

Net revenues declined during the quarter driven by lower gaming revenues, reflecting lower table and slot revenues, offset marginally by better table hold in the period. The year-over-year increase in Adjusted EBITDA was due to a strong focus on expense management, including lower payroll costs and certain casino marketing and promotional expenses. Importantly, overall promotional trends in the market have continued to improve sequentially since the beginning of second quarter of 2019.

The increase in net revenues and Adjusted EBITDA was primarily due to 20 days of operations from the recently acquired Niagara Bundle along with higher management fees from ilani Casino Resort driven by continued improvement in performance at the property.

Other Information

LiquidityAs of June 30, 2019 and September 30, 2018, MGE held cash and cash equivalents of $162.1 million and $103.9 million, respectively. As of June 30, 2019, $114.0 million was drawn on MGE's $250.0 million revolving credit facility, while no amounts were drawn on MGE's $25.0 million line of credit. Inclusive of letters of credit, which reduce borrowing availability under MGE's senior secured revolving facility, MGE had $133.7 million of borrowing capacity under its senior secured revolving facility and line of credit as of June 30, 2019. In addition, MGE Niagara had $118.1 million of borrowing capacity under the Niagara revolving facility as of June 30, 2019.

Conference CallMGE will host a conference call and simultaneous webcast regarding its third quarter of fiscal 2019 operating results on August 8, 2019 at 11:00 a.m. (Eastern Daylight Time).

Those interested in participating in the call should dial as follows:

(877) 756-4274(508) 637-5458 (International)

Conference ID: 3924199

Please call five minutes in advance to ensure that you are connected prior to the initiation of the call. Questions and answers will be reserved for call-in analysts and investors.

Parties who want to listen to the live conference call on the Internet may do so through a web link on MGE's website at www.mohegangaming.com, under the "Financial Information/Financial Updates" section.  Interested parties also may listen to a taped replay of the entire conference call commencing two hours after the call's completion on August 8, 2019.  This replay will run through August 22, 2019.

The access number for a taped replay of the conference call is as follows:

(855) 859-2056(404) 537-3406 (International)

Conference ID: 3924199

About Mohegan Gaming & Entertainment"Mohegan Gaming & Entertainment (MGE) is a master developer and operator of premier global integrated entertainment resorts, including Mohegan Sun in Uncasville, Connecticut, Inspire in Incheon, South Korea and Fallsview Casino Resort in Niagara Falls Ontario. MGE is owner, developer, and/or manager of integrated entertainment resorts throughout the United States, including Connecticut, New Jersey, Washington, Pennsylvania, Louisiana, Northern Asia, and Niagara Falls, Canada. MGE is owner and operator of Connecticut Sun, a professional basketball team in the WNBA and New England Black Wolves, a professional lacrosse team in the National Lacrosse League. For more information on MGE and our properties, visit www.mohegangaming.com."

Special Note Regarding Forward-Looking StatementsSome information included in this press release may contain forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements can sometimes be identified by the use of forward-looking words such as "may," "will," "anticipate," "estimate," "expect" or "intend" and similar expressions. Such forward-looking information may involve important risks and uncertainties that could significantly affect anticipated results in the future and, accordingly, such results may differ materially from those expressed in any forward-looking statements made by or on behalf of MGE. Information concerning potential factors that could affect MGE's financial results is included in its Annual Report on Form 10-K for the fiscal year ended September 30, 2018, as well as in MGE's other reports and filings with the Securities and Exchange Commission. Any forward-looking statements included in this press release are made only as of the date of this release. MGE does not undertake any obligation to update or supplement any forward-looking statements to reflect subsequent events or circumstances. MGE cannot assure that projected results or events will be achieved or will occur.

Adjusted EBITDA Explanation:Net income before interest, income taxes, depreciation and amortization, or EBITDA, is a commonly used measure of performance in the casino and hospitality industry.  EBITDA is not a measure of performance calculated in accordance with GAAP. MGE historically has evaluated its operating performance with the non-GAAP measure, Adjusted EBITDA, which as used in this press release, represents net income before interest, depreciation and amortization, acquisition related costs, gain and loss on disposition of assets, workforce reduction severance, pre-opening costs and expenses, accretion of discounts, income from unconsolidated affiliates, other non-operating income and expense and Adjusted EBITDA attributable to non-controlling interests.

Adjusted EBITDA provides an additional way to evaluate MGE's operations and, when viewed with both MGE's GAAP results and the reconciliations provided, MGE believes that it provides a more complete understanding of its business than could be otherwise obtained absent this disclosure.  Adjusted EBITDA is presented solely as a supplemental disclosure because: (1) MGE believes it enhances an overall understanding of MGE's past and current financial performance; (2) MGE believes it is a useful tool for investors to assess the operating performance of the business in comparison to other operators within the casino and hospitality industry since Adjusted EBITDA excludes certain items that may not be indicative of MGE's operating results; (3) measures that are comparable to Adjusted EBITDA are often used as an important basis for the valuation of casino and hospitality companies; and (4) MGE uses Adjusted EBITDA internally to evaluate the performance of its operating personnel and management and as a benchmark to evaluate its operating performance in comparison to its competitors.

The use of Adjusted EBITDA has certain limitations.  Adjusted EBITDA should be considered in addition to, not as a substitute for or superior to, any GAAP financial measure including net income (as an indicator of MGE's performance) or cash flows provided by operating activities (as an indicator of MGE's liquidity), nor should it be considered as an indicator of MGE's overall financial performance.  MGE's calculation of Adjusted EBITDA is likely to be different from the calculation of Adjusted EBITDA or other similarly titled measurements used by other casino and hospitality companies, and therefore, comparability may be limited.  Adjusted EBITDA eliminates certain items from net income, such as interest and depreciation and amortization.  Each of these items has been incurred in the past, will continue to be incurred in the future and should be considered in the overall evaluation of MGE's results.  MGE compensates for these limitations by providing relevant disclosures of items excluded in the calculation of Adjusted EBITDA, both in its reconciliations to the GAAP financial measure of net income and in its consolidated financial statements, all of which should be considered when evaluating its results.  MGE strongly encourages investors to review its financial information in its entirety and not to rely on a single financial measure.

Contact:Christopher JonesVP Corporate FinanceMohegan Gaming & Entertainment(860) 862-8000

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SOURCE Mohegan Gaming & Entertainment