MTR Gaming Group, Inc. (NasdaqGS: MNTG) today announced
financial results for the first quarter ended March 31, 2012.
First Quarter 2012 Highlights and Subsequent Events
- Net revenue growth of 9.8%, including
net revenue growth of 14.7% for Mountaineer Casino, Racetrack &
Resort
- Record Adjusted EBITDA of $20.5
million
- Adjusted EBITDA margin of 19.0%, a 250
basis point increase from the prior-year quarter
- Scioto Downs received its conditional
gaming license to install and operate video lottery terminals, and
construction of the new facility is nearing completion
“We are very pleased with our first quarter 2012 results, which
saw a second consecutive quarter of increasing revenue, record
Adjusted EBITDA and improved Adjusted EBITDA margin, primarily due
to our successful targeted marketing programs, further optimization
of our cost structure, improving economic conditions in the region
and favorable weather compared to last year,” said Jeffrey J. Dahl,
President and Chief Executive Officer of MTR Gaming Group, Inc. “In
addition, we are excited about nearing the completion of
construction at our VLT gaming facility at Scioto Downs and we are
looking forward to its anticipated opening in June. Scioto Downs is
shaping up to be a first-class facility and we firmly believe the
new venue will have a significant beneficial impact on the
Columbus, Ohio area as well as provide long-term value for our
stockholders.”
For the first quarter of 2012, the Company’s total net revenues
were $108.0 million, an increase of 9.8% compared to $98.3 million
in the same period of 2011. Adjusted EBITDA was $20.5 million, up
26.2% compared to $16.2 million in the first quarter of 2011. The
first quarter 2012 Adjusted EBITDA margin was 19.0% compared to
16.5% in the prior-year quarter.
The Company reported a net loss of $3.2 million for the quarter,
or $0.11 per diluted share, compared to a net loss of $5.1 million,
or $0.19 per diluted share, in the same period of 2011. An increase
in interest expense during the first quarter of 2012 (associated
with the Company’s debt refinancing in the third quarter of 2011)
was offset by the increase in operating income for the period.
Net revenues at Mountaineer Casino, Racetrack & Resort
increased 14.7% to $59.0 million in the first quarter of 2012
compared to $51.4 million in the first quarter of 2011. Revenues
from slots were $46.3 million compared to $39.3 million in the same
quarter of 2011, while table gaming at Mountaineer generated $7.4
million of revenues compared to $7.3 million in the prior-year
period. The property saw Adjusted EBITDA increase to $12.8 million
from $9.3 million in the comparable quarter of 2011. The Adjusted
EBITDA margin at Mountaineer increased to 21.6% compared to 18.0%
in the prior-year quarter. The increase in net revenues and
Adjusted EBITDA was attributable to targeted marketing programs and
operating efficiencies at Mountaineer, as well as improving
economic conditions and milder winter weather in the first quarter
of 2012.
Net revenues at Presque Isle Downs & Casino increased 4.4%
to $48.9 million during the first quarter of 2012 compared to $46.8
million during the first quarter of 2011. Table gaming at Presque
Isle Downs generated $5.8 million of revenues compared to $5.0
million in the prior-year period, while slot revenue increased by
$1.3 million compared to the same quarter of 2011. The property
generated Adjusted EBITDA of $10.8 million compared to $9.9 million
in the same quarter of 2011, with the Adjusted EBITDA margin
increasing to 22.2% compared to 21.2% in the prior-year period. The
increase in net revenues and Adjusted EBITDA for the first quarter
of 2012 was primarily attributable to the milder winter weather and
operating efficiencies.
Corporate overhead costs decreased by 4% to $2.4 million during
the first quarter of 2012 compared to $2.5 million in the
prior-year period.
See attached tables, including a reconciliation of net income
(loss), a GAAP financial measure, to Adjusted EBITDA, as well as
the calculation of Adjusted EBITDA margin, non-GAAP financial
measures.
Balance Sheet and Liquidity
As of March 31, 2012, MTR had $52.9 million in cash and cash
equivalents, $117.0 million of funds that are held for construction
of the video lottery terminal gaming facility at Scioto Downs, and
$552.3 million in total debt, net of discount. In addition, the
Company has $20 million available for borrowing under its revolving
credit facility.
Reconciliation of GAAP Measures to Non-GAAP Measures
Adjusted EBITDA represents earnings (losses) before interest,
income taxes, depreciation and amortization, gain (loss) on the
sale or disposal of property, other regulatory gaming assessment
costs, loss on asset impairment, loss on debt modification and
extinguishments and equity in loss of unconsolidated joint venture,
to the extent that such items existed in the periods presented.
Adjusted EBITDA margin represents the calculation of Adjusted
EBITDA divided by net revenues. Adjusted EBITDA and Adjusted EBITDA
margin are not measures of performance or liquidity calculated in
accordance with generally accepted accounting principles (“GAAP”),
are unaudited and should not be considered as an alternative to, or
more meaningful than, net income (loss) or operating margin as
indicators of our operating performance, or cash flows from
operating activities, as a measure of liquidity. Adjusted EBITDA
and Adjusted EBITDA margin have been presented as supplemental
disclosures because they are widely used measures of performance
and basis’ for valuation of companies in our industry. Management
of the Company uses Adjusted EBITDA and Adjusted EBITDA margin as
primary measures of the Company’s operating performance and as
components in evaluating the performance of operating personnel.
Uses of cash flows that are not reflected in Adjusted EBITDA
include capital expenditures, interest payments, income taxes, debt
principal repayments, and certain regulatory gaming assessments
which can be significant. Moreover, other companies that provide
EBITDA and/or Adjusted EBITDA information may calculate EBITDA
and/or Adjusted EBITDA differently than we do. A reconciliation of
GAAP net income (loss) to Adjusted EBITDA, as well as the
calculation of Adjusted EBITDA margin, is included in the financial
tables accompanying this release.
Conference Call
Management will conduct a conference call focusing on the
financial results and corporate developments today at 10:00 a.m.
EDT. Interested parties may participate in the call by dialing
(888) 708-5705. Please call in 10 minutes before the call is
scheduled to begin and ask for the MTR Gaming call (conference ID
#4050397).
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.
A replay of the call will be available two hours following the
end of the call through midnight EDT on Wednesday, May 16, 2012 at
www.mtrgaming.com and by telephone at (877) 870-5176; passcode
4050397.
About MTR Gaming Group
MTR Gaming Group, Inc. is a hospitality and gaming company that
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.
Forward-Looking Statements
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, Presque Isle Downs and Scioto Downs, including the
success and growth of table gaming at Presque Isle Downs and
Mountaineer and the successful implementation of video lottery
terminals 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
(including casino gaming and video lottery terminals in Ohio), the
establishment of video lottery terminals at Scioto Downs, pending
the receipt of required regulatory approval, the effectiveness of
our marketing programs, the enactment of future gaming legislation
in the jurisdictions in which we operate (including the
implementation of casino gaming in Cleveland and Columbus, Ohio and
the implementation of video lottery terminals at racetracks 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, our ability to
improve our operating margins, our continued suitability to hold
and obtain renewals of our gaming and racing licenses, our ability
to fulfill our obligations and comply with the covenants associated
with our various debt instruments and/or our ability to obtain
additional debt and/or equity 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) Three Months Ended March 31
2012 2011 (unaudited) Revenues: Gaming $
100,141 $ 90,946 Pari-mutuel commissions 1,159 1,086 Food, beverage
and lodging 7,874 7,153 Other
1,946
1,539 Total revenues 111,120 100,724
Less promotional allowances
(3,170
) (2,386 ) Net
revenues
107,950
98,338 Operating expenses: Expenses of
operating departments: Gaming 62,126 57,001 Pari-mutuel commissions
1,564 1,790 Food, beverage and lodging 5,774 5,443 Other 1,345
1,255 Marketing and promotions 3,073 3,322 General and
administrative 13,197 13,295 Project opening costs 259 -
Depreciation 6,238 7,073 (Gain) loss on the sale or disposal of
property
(5 )
1 Total operating expenses
93,571 89,180
Operating income 14,379 9,158 Other income (expense):
Interest income 80 8 Interest expense
(17,020
) (13,368 )
Loss before income taxes (2,561 ) (4,202 ) Provision for income
taxes
(630 )
(931 ) Net loss
$ (3,191
) $
(5,133 )
Net loss per share: Basic
$ (0.11
) $ (0.19 )
Diluted
$ (0.11 )
$ (0.19 ) Weighted
average number of shares outstanding: Basic
27,960,030 27,717,041
Diluted
27,960,030
27,717,041 MTR GAMING GROUP, INC.
SELECTED FINANCIAL INFORMATION (dollars in thousands)
(unaudited) Three Months Ended March
31 2012 2011 Net revenues:
Mountaineer Casino, Racetrack & Resort $ 58,975 $ 51,411
Presque Isle Downs & Casino 48,876 46,815 Scioto Downs 78 91
Corporate
21 21
Consolidated net revenues $
107,950 $
98,338 Adjusted
EBITDA: Mountaineer Casino, Racetrack & Resort $ 12,760 $
9,275 Presque Isle Downs & Casino 10,835 9,935 Scioto Downs
(732 ) (482 ) Corporate
(2,384 )
(2,496 ) Consolidated Adjusted
EBITDA $ 20,479
$ 16,232
_______________________________________________________________________
The following tables set forth a
reconciliation of net income (loss), a GAAP financial measure, to
Adjusted EBITDA, as well as the calculation of Adjusted EBITDA
margin, non-GAAP financial measures.
_______________________________________________________________________
Three Months Ended March 31 2012
2011 Adjusted EBITDA: Mountaineer
Casino, Racetrack & Resort: Net income $ 9,960 $ 6,148
Interest expense - 10 Depreciation 2,805 3,116 (Gain) loss on the
sale or disposal of property
(5 )
1 Adjusted EBITDA $
12,760 $ 9,275
Net revenues $ 58,975
$ 51,411 Adjusted EBITDA
margin 21.6 %
18.0 %
Presque Isle Downs & Casino: Net income $ 7,146 $ 5,254
Interest (income) expense, net (24 ) 4 Provision for income taxes
627 924 Other regulatory gaming assessments (133 ) - Depreciation
3,219 3,753
Adjusted EBITDA $ 10,835
$ 9,935 Net revenues
$ 48,876 $
46,815 Adjusted EBITDA margin
22.2 %
21.2 % Scioto
Downs: Net loss $ (705 ) $ (682 ) (Capitalized interest)
interest expense (228 ) 8 Depreciation
201
192 Adjusted EBITDA
$ (732 ) $
(482 ) MTR GAMING GROUP,
INC. SELECTED FINANCIAL INFORMATION (continued)
(dollars in thousands) (unaudited) Three
Months Ended March 31 2012 2011
Adjusted EBITDA (continued): Corporate: Net
loss $ (19,592 ) $ (15,853 ) Interest expense, net of interest
income 17,192 13,338 Provision for income taxes 3 7 Depreciation
13 12
Adjusted EBITDA $ (2,384
) $ (2,496 )
Consolidated: Net loss $ (3,191 ) $ (5,133 ) Interest
expense, net of interest income and capitalized interest 16,940
13,360 Provision for income taxes 630 931 Other regulatory gaming
assessments (133 ) - Depreciation 6,238 7,073 (Gain) loss on the
sale or disposal of property
(5 )
1 Adjusted EBITDA $
20,479 $ 16,232
Net revenues $ 107,950
$ 98,338 Adjusted EBITDA
margin 19.0 %
16.5 % MTR
GAMING GROUP, INC. CONSOLIDATED BALANCE SHEETS
(dollars in thousands) March 31
December 31 2012 2011 (unaudited)
ASSETS Current assets: Cash and cash equivalents $
52,872 $ 85,585 Restricted cash 2,209 1,146 Accounts receivable,
net of allowance for doubtful accounts of $375 in 2012 and $383 in
2011 2,797 4,554 Amounts due from West Virginia Lottery Commission
- 122 Inventories 3,417 3,503 Deferred financing costs 1,641 1,622
Deferred income taxes 495 494 Prepaid expenses and other current
assets
5,419 5,366
Total current assets 68,850 102,392 Property and
equipment, net 321,415 299,579 Funds held for construction project
116,970 130,114 Other intangible assets 95,577 85,577 Deferred
financing costs, net of current portion 9,639 9,919 Deposits and
other 1,902 1,902 Non-operating real property 11,207 11,207 Assets
of discontinued operations
181
181 Total assets
$
625,741 $ 640,871
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities: Accounts payable $ 1,124 $ 1,461 Accounts
payable - gaming taxes and assessments 4,619 8,854 Accrued payroll
and payroll taxes 3,511 3,872 Accrued interest 10,908 27,072
Accrued income taxes 648 958 Other accrued liabilities 11,302
10,741 Construction project and equipment liabilities 8,639 3,732
Liabilities of discontinued operations
216
223 Total current liabilities
40,967 56,913 Long-term debt 552,288 548,933 Other
regulatory gaming assessments 5,154 5,408 Long-term compensation
357 242 Deferred income taxes
11,675
11,048 Total liabilities
610,441 622,544
Stockholders' equity: Common stock - - Additional paid-in
capital 62,960 62,804 Accumulated deficit (47,479 ) (44,288 )
Accumulated other comprehensive loss
(396
) (404 ) Total
stockholders' equity of MTR Gaming Group, Inc. 15,085 18,112
Non-controlling interest of discontinued operations
215 215 Total
stockholders' equity
15,300
18,327 Total liabilities and stockholders'
equity
$ 625,741 $
640,871
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