MTR Gaming Group, Inc. (NasdaqGS: MNTG) today announced
financial results for the fourth quarter and full year ended
December 31, 2012.
Fourth Quarter 2012 Highlights
- Net revenue growth of 12.2%, including
revenue of $32.4 million for the second quarter of operations at
Scioto Downs.
- Adjusted EBITDA from continuing
operations for the fourth quarter of 2012 was $21.2 million, an
increase of 6.2% from the prior-year period.
“We continue to be pleased with the ramp-up of operations at our
new Scioto Downs gaming facility which generally exceeded our fair
share of the Columbus slot market,” said Jeffrey J. Dahl, President
and Chief Executive Officer of MTR Gaming Group, Inc. “The new
facility generated solid revenue and adjusted EBITDA in its second
quarter contributing to our record fourth quarter adjusted EBITDA.
Although our other regional gaming facilities continue to perform
within our expectations, competition, weather and overall weakness
in consumer spending has had an effect on them.”
“Looking forward to 2013, we will continue our efforts to
improve our guests’ gaming and entertainment experience through
thoughtful spending on capital improvements –including commencing
renovation of hotel rooms at Mountaineer Park, redefining the
gaming floors at our properties to improve efficiencies and guest
interaction, and making other facility improvements,” continued Mr.
Dahl. “In addition, we will remain focused on maintaining our
margins and generating operating efficiencies across our
properties.”
For the fourth quarter of 2012, the Company’s total net revenues
were $116.3 million, an increase of 12.2% compared to $103.6
million in the same period of 2011. Adjusted EBITDA from continuing
operations in the fourth quarter of 2012 was $21.2 million, an
increase of 6.2% from the prior-year period, and adjusted EBITDA
margin from continuing operations was 18.2%, a decrease of 110
basis points from the prior-year period.
The Company reported loss from continuing operations of $5.5
million for the quarter, or $0.20 per diluted share, compared to
loss from continuing operations of $6.8 million, or $0.24 per
diluted share, in the same period of 2011. Excluding a $0.7 million
impairment charge in the fourth quarter of 2011, loss from
continuing operations in the fourth quarter of 2011 would have been
$6.1 million, or $0.22 per diluted share.
Net revenues at Scioto Downs were $32.4 million during the
fourth quarter of 2012 compared to $0.3 million during the fourth
quarter of 2011. The property generated adjusted EBITDA of $10.8
million, compared to an EBITDA loss of $0.4 million in the same
quarter of 2011. The adjusted EBITDA margin for the fourth quarter
of 2012 was 33.4%. The increase in net revenues and adjusted EBITDA
for the fourth quarter of 2012 was attributable to the opening of
the VLT gaming facility on June 1, 2012.
Net revenues at Mountaineer Casino, Racetrack & Resort
decreased 15.8% to $47.0 million in the fourth quarter of 2012
compared to $55.8 million in the fourth quarter of 2011. Revenues
from slots and table games decreased by $5.5 million and $2.1
million, respectively, compared to the same quarter of 2011. The
property saw adjusted EBITDA decrease to $7.2 million from $11.7
million in the comparable quarter of 2011, while the adjusted
EBITDA margin at Mountaineer decreased to 15.3% compared to 21.0%
in the prior-year quarter. The decrease in gaming revenues and
adjusted EBITDA for the fourth quarter of 2012 was primarily
attributable to increased competition from Ohio.
Net revenues at Presque Isle Downs & Casino decreased 22.3%
to $36.9 million during the fourth quarter of 2012 compared to
$47.5 million during the fourth quarter of 2011. Revenues from
slots and table games decreased by $8.2 million and $1.7 million,
respectively, compared to the same quarter of 2011. The property
generated adjusted EBITDA of $5.8 million compared to $10.9 million
in the same quarter of 2011, with the adjusted EBITDA margin
decreasing to 15.7% compared to 23.0% in the prior-year quarter.
The decrease in net revenues and adjusted EBITDA for the fourth
quarter of 2012 was primarily attributable to increased competition
from Ohio.
Corporate overhead costs totaled $2.6 million during the fourth
quarter of 2012 compared to $2.3 million in the prior-year period,
with the increase due primarily to corporate marketing costs and
insurance-related expenses.
Full Year 2012 Highlights
For the year ended December 31, 2012, MTR’s total net revenues
increased 14.5% to $490.0 million from $428.1 million in the prior
year. Adjusted EBITDA from continuing operations increased 13.6% to
$93.8 million (including $2.7 million of project-opening costs)
during 2012 from $82.6 million (including $2.1 million received
from a mineral rights lease bonus payment and $0.2 million of
project-opening costs) last year. For the year ended December 31,
2012, loss from continuing operations was $5.4 million, or $0.19
per diluted share, and included $2.7 million of project-opening
costs, $7.8 million of incremental interest expense primarily
associated with the Company’s debt refinancing in the third quarter
of 2011 (net of $1.3 million of capitalized interest), and
approximately $3.6 million of income tax expense primarily
attributable to additional valuation allowances on deferred tax
assets. In the prior year, the Company reported a loss from
continuing operations of $51.2 million, or $1.84 per diluted share,
which included income tax expense of approximately $4.3 million
attributable to an increase in the valuation allowance on deferred
tax assets, a $34.4 million pre-tax loss on debt extinguishment
associated with MTR’s refinancing and $5.9 million of gaming
assessment costs. Absent these charges, prior year loss from
continuing operations would have been $6.5 million, or $0.23 per
diluted share.
See attached tables, including a reconciliation of net loss, a
GAAP financial measure, to adjusted EBITDA, as well as the
calculation of adjusted EBITDA margin, each of which are non-GAAP
financial measures.
Balance Sheet and Liquidity
As of December 31, 2012, MTR had $115.1 million in cash and cash
equivalents and $556.7 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 4:30 p.m.
EST. Interested parties may participate in the call by dialing
(888) 505-4375. Please call in 10 minutes before the call is
scheduled to begin and ask for the MTR Gaming call (conference ID
#4371457).
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 Thursday, March 14, 2013 at
www.mtrgaming.com and by telephone at (877) 870-5176; passcode
4371457.
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
successful operation 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, Presque Isle Downs and Scioto Downs (including casino
gaming and video lottery terminals in Ohio), the successful
integration and operation of video lottery terminals at Scioto
Downs, the effectiveness of our marketing programs, the enactment
of future gaming legislation in the jurisdictions in which we
operate, 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
maintain or 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) (unaudited)
Three Months Ended Twelve Months Ended December
31 December 31 2012 2011 2012
2011 Revenues: Gaming $ 106,184 $ 94,122 $ 445,848 $
385,300 Pari-mutuel commissions 2,021 1,929 10,368 10,206 Food,
beverage and lodging 8,724 7,879 36,489 32,604 Other
3,251 2,610
11,392 11,067 Total
revenues 120,180 106,540 504,097 439,177 Less promotional
allowances
(3,904 )
(2,951 ) (14,098
) (11,095 ) Net
revenues
116,276
103,589 489,999
428,082 Operating expenses:
Expenses of operating departments: Gaming 63,189 58,433 267,195
244,268 Pari-mutuel commissions 2,337 2,251 11,083 11,410 Food,
beverage and lodging 7,442 5,669 28,554 23,697 Other 1,778 1,468
7,374 6,271 Marketing and promotions 4,090 2,932 16,936 12,610
General and administrative 16,619 12,992 62,738 52,963 Project
opening costs (13 ) 36 2,705 197 Depreciation 7,532 6,863 27,511
27,939 Impairment loss - 685 - 685 (Gain) loss on the sale or
disposal of property
(48 )
682 (52 )
470 Total operating expenses
102,926 92,011
424,044 380,510
Operating income 13,350 11,578 65,955 47,572
Other income (expense): Interest income 9 75 168 145 Interest
expense (17,351 ) (17,162 ) (67,993 ) (60,159 ) Loss on debt
extinguishment
- -
- (34,364
) Loss from continuing operations before income
taxes (3,992 ) (5,509 ) (1,870 ) (46,806 ) Provision for income
taxes
(1,500 )
(1,256 ) (3,577
) (4,347 )
Loss from continuing operations
(5,492 )
(6,765 )
(5,447 )
(51,153 )
Discontinued operations: Income (loss) from discontinued operations
before income taxes - 787 (278 ) 787 Provision for income taxes
- -
- - Income (loss)
from discontinued operations before non- - 787 (278 ) 787
controlling interest
Non-controlling interest
1
1 1
1 Income (loss) from discontinued operations
1 788
(277 ) 788
Net loss $
(5,491 )
$ (5,977
) $
(5,724 )
$ (50,365
) Net (loss) income per share -
basic: Loss from continuing operations $ (0.20 ) $ (0.24 ) $
(0.19 ) $ (1.84 ) Income (loss) from discontinued operations
- 0.03
(0.01 ) 0.03
Net loss
$ (0.20 )
$ (0.21 ) $
(0.20 ) $ (1.81
) Net (loss) income per share - diluted:
Loss from continuing operations $ (0.20 ) $ (0.24 ) $ (0.19 ) $
(1.84 ) Income (loss) from discontinued operations
- 0.03
(0.01 ) 0.03
Net loss
$ (0.20 )
$ (0.21 ) $
(0.20 ) $ (1.81
) Weighted average number of shares
outstanding: Basic
28,054,429
27,940,702 28,011,513
27,835,649 Diluted
28,054,429 27,940,702
28,011,513
27,835,649 MTR GAMING GROUP, INC.
SELECTED FINANCIAL INFORMATION (dollars in thousands)
(unaudited) Three Months
Ended Twelve Months Ended December 31 December
31 2012 2011 2012 2011
Net revenues: Mountaineer Casino, Racetrack & Resort $
46,983 $ 55,766 $ 222,025 $ 224,103 Presque Isle Downs & Casino
36,897 47,505 181,172 201,148 Scioto Downs 32,396 297 86,769 2,746
Corporate
- 21
33 85
Consolidated net revenues $
116,276 $
103,589 $
489,999 $
428,082 Adjusted EBITDA
from continuing operations: Mountaineer Casino, Racetrack &
Resort $ 7,187 $ 11,718 $ 43,498 $ 47,449 Presque Isle Downs &
Casino 5,808 10,949 35,092 45,778 Scioto Downs 10,814 (402 ) 26,856
(1,476 ) Corporate
(2,602 )
(2,290 ) (11,641
) (9,160 )
Consolidated Adjusted EBITDA from continuing operations
$ 21,207 $ 19,975 $
93,805 $ 82,591 Adjusted EBITDA from
discontinued operations
1
626 (277 )
626 Consolidated Adjusted
EBITDA $ 21,208
$ 20,601
$ 93,528
$ 83,217 The
following tables set forth a reconciliation of income (loss) from
continuing operations and income (loss) from discontinued
operations, each of which are GAAP financial measures, to adjusted
EBITDA, as well as the calculation of adjusted EBITDA margin, each
of which are non-GAAP financial measures.
Three Months
Ended Twelve Months Ended December 31
December 31 2012 2011 2012
2011 Adjusted EBITDA from continuing
operations: Mountaineer Casino, Racetrack &
Resort: Income from continuing operations $ 4,819 $ 8,732 $
32,760 $ 35,653 Interest (income) expense, net - (2 ) - 22 Benefit
for income taxes - - (13 ) (4 ) Depreciation 2,367 2,786 10,755
11,831 (Gain) loss on the sale or disposal of property 1 (2 ) (4 )
(257 ) Impairment loss
-
204 -
204 Adjusted EBITDA from continuing
operations $ 7,187
$ 11,718 $
43,498 $ 47,449
Net revenues $ 46,983
$ 55,766 $
222,025 $ 224,103
Adjusted EBITDA margin
15.3 %
21.0 %
19.6 %
21.2 % Presque
Isle Downs & Casino: Income from continuing operations $
1,928 $ 4,548 $ 22,265 $ 19,491 (Capitalized interest) interest
expense, net (22 ) (3 ) (63 ) 4 Provision for income taxes 1,725
1,268 3,586 3,927 Depreciation 1,853 3,873 8,961 15,292 Other
regulatory gaming assessments 373 167 391 5,925 (Gain) loss on the
sale or disposal of property (49 ) 684 (48 ) 727 Impairment loss
- 412
- 412 Adjusted
EBITDA from continuing operations $
5,808 $ 10,949
$ 35,092 $
45,778 Net revenues $
36,897 $ 47,505
$ 181,172 $
201,148 Adjusted EBITDA margin
15.7 %
23.0 %
19.4 %
22.8 % MTR GAMING GROUP,
INC. SELECTED FINANCIAL INFORMATION (continued)
(dollars in thousands) (unaudited)
Three Months Ended Twelve Months Ended
December 31 December 31 2012 2011
2012 2011 Adjusted EBITDA from continuing
operations (continued): Scioto Downs: Income
(loss) from continuing operations $ 7,741 $ (557 ) $ 20,334 $
(2,164 ) Capitalized interest - (37 ) (1,227 ) (20 ) (Provision)
Benefit for income taxes (228 ) - (1 ) - Depreciation 3,301 192
7,750 767 Gain on debt extinguishment
-
- -
(59 ) Adjusted EBITDA from continuing
operations [1] $ 10,814
$ (402 ) $
26,856 $ (1,476
) Net revenues $
32,396 $ 297
$ 86,769 $
2,746 Adjusted EBITDA margin
33.4 %
N/A 31.0
% N/A
Corporate: Loss from continuing operations $ (19,979 ) $
(19,488 ) $ (80,805 ) $ (104,133 ) Interest expense, net of
interest income 17,364 17,129 69,115 60,008 Provision (benefit) for
income taxes 2 (12 ) 4 424 Depreciation 11 12 45 49 Loss on debt
extinguishment - - - 34,423 Impairment loss
-
69 -
69 Adjusted EBITDA from continuing
operations $ (2,602 )
$ (2,290 ) $
(11,641 ) $
(9,160 ) Consolidated: Loss
from continuing operations $ (5,491 ) $ (6,765 ) $ (5,446 ) $
(51,153 ) Interest expense, net of interest income and capitalized
interest 17,342 17,087 67,825 60,014 Provision for income taxes
1,499 1,256 3,576 4,347 Depreciation 7,532 6,863 27,511 27,939
Other regulatory gaming assessments 373 167 391 5,925 Gain (loss)
on the sale or disposal of property (48 ) 682 (52 ) 470 Loss on
debt extinguishment - - - 34,364 Impairment Loss
- 685
- 685 Adjusted
EBITDA from continuing operations [1] $
21,207 $ 19,975
$ 93,805 $
82,591 Net revenues $
116,276 $ 103,589
$ 489,999 $
428,082 Adjusted EBITDA margin
18.2 %
19.3 %
19.1 %
19.3 %
Adjusted EBITDA from discontinued operations: Income
(loss) from discontinued operations $ 1 $ 788 $ (277 ) $ 788
Interest income
-
(162 ) -
(162 ) Adjusted EBITDA from
discontinued operations $ 1
$ 626 $
(277 ) $ 626
[1] Adjusted EBITDA from continuing operations
for the three and twelve months ended December 31, 2012, included
project-opening costs of ($13,000) and $2,705,000, respectively,
related to video lottery gaming operations at Scioto Downs which
commenced June 1, 2012. Additionally, adjusted EBITDA from
continuing operations for the twelve months ended December 31,
2011, included a mineral rights lease bonus payment that was
received by Mountaineer in the amount of $2,100,000.
MTR GAMING
GROUP, INC. CONSOLIDATED BALANCE SHEETS (dollars in
thousands) December 31 December 31
2012 2011 (unaudited) ASSETS
Current assets: Cash and cash equivalents $ 115,113 $ 85,585
Restricted cash 4,088 1,146 Accounts receivable, net of allowance
for doubtful accounts of $350 in 2012 and $383 in 2011 3,934 4,554
Amounts due from West Virginia Lottery Commission 17 122
Inventories 4,305 3,503 Deferred financing costs 1,642 1,622
Deferred income taxes - 494 Prepaid expenses and other current
assets
5,582 5,366
Total current assets 134,681 102,392 Property and
equipment, net 387,015 299,579 Funds held for construction project
- 130,114 Other intangible assets 136,094 85,577 Deferred financing
costs, net of current portion 8,407 9,919 Deposits and other 1,908
1,902 Non-operating real property 10,789 11,207 Assets of
discontinued operations
181
181 Total assets
$
679,075 $ 640,871
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities: Accounts payable $ 3,719 $ 1,461 Accounts
payable - gaming taxes and assessments 11,077 8,854 Accrued payroll
and payroll taxes 5,776 3,872 Accrued interest 27,369 27,072
Accrued income taxes 743 958 Other accrued liabilities 13,579
10,741 Construction project and equipment liabilities 481 3,732
License fee payable 25,000 - Deferred income taxes 1,472 -
Liabilities of discontinued operations
123
223 Total current liabilities
89,339 56,913 Long-term debt 556,716 548,933 Other
regulatory gaming assessments 5,319 5,408 Long-term compensation
871 242 Deferred income taxes 12,620 11,048 Other long-term
liabilities
517 -
Total liabilities
665,382
622,544 Stockholders' equity: Common
stock - - Additional paid-in capital 63,822 62,804 Accumulated
deficit (50,012 ) (44,288 ) Accumulated other comprehensive loss
(341 ) (404
) Total stockholders' equity of MTR Gaming Group, Inc.
13,469 18,112 Non-controlling interest of discontinued operations
224 215 Total
stockholders' equity
13,693
18,327 Total liabilities and stockholders'
equity
$ 679,075 $
640,871
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