MTR Gaming Group, Inc. (NasdaqGS: MNTG) today announced
financial results for the fourth quarter and full year ended
December 31, 2011.
Fourth Quarter 2011 Highlights and Subsequent Events
- Net revenue growth of 9.3%, including
net revenue growth of 15.2% for Mountaineer Casino, Racetrack &
Resort
- Record Adjusted EBITDA from continuing
operations of $20.0 million
- Adjusted EBITDA margin of 19.3%, a 110
basis point increase from the prior-year quarter
- In January 2012, Scioto Downs Casino
& Racetrack received its conditional gaming license to install
and operate video lottery terminals, and construction is
progressing on schedule at the facility
“We are pleased with our fourth quarter 2011 results, which saw
a considerable increase in revenue, record Adjusted EBITDA and
improved Adjusted EBITDA margin, which was the result of our focus
on targeted marketing programs at our facilities, optimizing our
cost structure, improving economic conditions in the region and
favorable weather in the latter part of the fourth quarter,” said
Jeffrey J. Dahl, President and Chief Executive Officer of MTR
Gaming Group, Inc. “Looking forward into 2012, we have already
received our conditional license to install and operate video
lottery terminals (“VLTs”) at our Scioto Downs Casino &
Racetrack and are pleased to note that construction is proceeding
on schedule for an anticipated second quarter 2012 opening. Once
completed, we believe the casino will have a significant beneficial
impact on the Columbus, Ohio area in terms of entertainment, job
opportunities and economic growth, as well as provide long-term
value for our stockholders.”
For the fourth quarter of 2011, the Company’s total net revenues
were $103.6 million, an increase of 9.3% compared to $94.8 million
in the same period of 2010. Adjusted EBITDA from continuing
operations was $20.0 million, up 15.9% compared to $17.2 million in
the fourth quarter of 2010. The fourth quarter 2011 Adjusted EBITDA
margin was 19.3% compared to 18.2% in the prior-year quarter.
The Company reported a net loss of $6.0 million for the quarter,
or $0.21 per diluted share (which included income of $0.8 million
from discontinued operations), compared to a net loss of $2.8
million, or $0.10 per diluted share, in the same period of 2010,
due primarily to increased interest expense associated with the
Company’s debt refinancing in the third quarter of 2011.
Net revenues at Mountaineer Casino, Racetrack & Resort
increased 15.2% to $55.8 million in the fourth quarter of 2011
compared to $48.4 million in the fourth quarter of 2010. Revenues
from slots were $41.9 million compared to $36.4 million in the same
quarter of 2010, while table gaming at Mountaineer generated $7.2
million of revenues compared to $6.1 million in the prior-year
period. The property saw Adjusted EBITDA increase to $11.7 million
from $9.0 million in the comparable quarter of 2010. The Adjusted
EBITDA margin at Mountaineer increased to 21.0% compared to 18.6%
in the prior-year quarter. As previously mentioned, 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 latter part of 2011.
Net revenues at Presque Isle Downs & Casino increased 3.2%
to $47.5 million during the fourth quarter of 2011 compared to
$46.0 million during the fourth quarter of 2010. Table gaming at
Presque Isle Downs generated $5.4 million of revenues compared to
$4.7 million in the prior-year period, while slot revenue increased
by $0.8 million compared to the same quarter of 2010. The property
generated Adjusted EBITDA of $10.9 million compared to $10.4
million in the same quarter of 2010, with the Adjusted EBITDA
margin increasing to 23.0% compared to 22.6% in the prior-year
period. The increase in net revenues and Adjusted EBITDA for the
fourth quarter of 2011 was primarily attributable to the milder
winter weather and operating efficiencies.
Corporate overhead costs increased by 21% to $2.3 million during
the fourth quarter of 2011 compared to $1.9 million in the
prior-year period, due primarily to increases in
compensation-related expenses.
Full Year 2011 Highlights
For the year ended December 31, 2011, MTR’s total net revenues
increased approximately 1% to $428.1 million compared to $424.9
million in the prior year. Adjusted EBITDA from continuing
operations increased 6.7% to $82.6 million (which includes $2.1
million received from a mineral rights lease bonus payment) from
$77.4 million last year (which includes $1.4 million of
project-opening costs and $1.7 million of severance costs). For the
year ended December 31, 2011, net loss was $50.4 million, or $1.81
per diluted share, and includes a $34.4 million pre-tax loss on
debt extinguishment associated with MTR’s refinancing, a pre-tax
charge of $5.9 million representing an estimate of the Company’s
obligations associated with its estimated proportionate assessment
of amounts due under an Administrative Order executed by the
Pennsylvania Gaming Control Board on July 11, 2011 and other
related assessments, income tax expense of approximately $4.0
million attributable to an increase in the valuation allowance on
deferred tax assets and $0.8 million in income from discontinued
operations. Absent these charges and discontinued operations, the
net loss would have been $6.9 million, or $0.25 per diluted share.
In the same period last year, the Company reported net loss of $5.1
million, or $0.19 per diluted share, which included a loss of $0.2
million from discontinued operations.
See attached tables, including reconciliation of income (loss)
from continuing operations and income (loss) from discontinued
operations, GAAP financial measures, to Adjusted EBITDA, as well as
the calculation of Adjusted EBITDA margin, non-GAAP financial
measures.
Balance Sheet and Liquidity
As of December 31, 2011, MTR had $85.6 million in cash and cash
equivalents, $130.1 million of funds that are held for construction
of the video lottery terminal gaming facility at Scioto Downs
Casino & Racetrack, and $548.9 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, loss on asset impairment, loss on
debt modification and extinguishment, other regulatory gaming
assessment costs 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
income (loss) from operations 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 income (loss) from continuing
operations and GAAP income (loss) from discontinued operations 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) 713-3595. Please call in 10 minutes before the call is
scheduled to begin and ask for the MTR Gaming call (conference ID
#3987455).
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 15, 2012 at
www.mtrgaming.com and by telephone at (877) 870-5176; passcode
3987455.
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 Casino
& Racetrack 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 Year
Ended December 31 December 31 2011
2010 2011 2010 (unaudited)
(unaudited) Revenues: Gaming $ 94,122 $ 85,986 $ 385,300 $
382,514 Pari-mutuel commissions 1,929 2,117 10,206 11,181 Food,
beverage and lodging 7,881 7,056 32,617 32,265 Other
2,609 1,961
11,058 8,737 Total
revenues 106,541 97,120 439,181 434,697 Less promotional allowances
(2,951 )
(2,357 ) (11,095
) (9,806 ) Net
revenues
103,590
94,763 428,086
424,891 Operating expenses:
Expenses of operating departments: Gaming: Operating costs 58,266
53,933 238,343 238,594 Other regulatory assessments 167 - 5,925 800
Pari-mutuel commissions 2,252 2,126 11,411 11,276 Food, beverage
and lodging 5,670 5,227 23,701 23,249 Other 1,468 1,321 6,271 6,144
Marketing and promotions 2,931 2,801 12,609 12,788 General and
administrative 12,992 12,114 52,963 54,068 Project opening costs 36
- 197 1,365 Depreciation 6,863 7,162 27,939 28,733 Impairment loss
685 - 685 40 Loss on the sale or disposal of property
682 30
470 75 Total
operating expenses
92,012
84,714 380,514
377,132 Operating income 11,578
10,049 47,572 47,759 Other income (expense): Interest income
75 15 145 37 Interest expense (17,162 ) (13,383 ) (60,159 ) (54,120
) Loss on debt extinguishment
-
- (34,364 )
- Loss from continuing operations
before income taxes (5,509 ) (3,319 ) (46,806 ) (6,324 )
(Provision) benefit for income taxes
(1,256
) 529
(4,347 ) 1,361
Loss from continuing operations
(6,765 )
(2,790 )
(51,153 )
(4,963 )
Discontinued operations:
Income (loss) from discontinued operations
before income taxes and non-controlling interest
787 (41 ) 787 (234 ) Benefit for income taxes
-
14 -
82
Income (loss) from discontinued operations
before non- controlling interest
787 (27 ) 787 (152 ) Non-controlling interest
1
- 1
(1 ) Income (loss) from
discontinued operations
788
(27 ) 788
(153 ) Net loss
$ (5,977
) $
(2,817 )
$ (50,365
) $
(5,116 ) Net loss
per share - basic: Loss from continuing operations $ (0.24 ) $
(0.10 ) $ (1.84 ) $ (0.18 ) Income (loss) from discontinued
operations
0.03 -
0.03 (0.01
) Net loss
$ (0.21
) $ (0.10 )
$ (1.81 ) $
(0.19 ) Net loss per share -
diluted: Loss from continuing operations $ (0.24 ) $ (0.10 ) $
(1.84 ) $ (0.18 ) Income (loss) from discontinued operations
0.03 -
0.03 (0.01 )
Net loss
$ (0.21 )
$ (0.10 ) $
(1.81 ) $ (0.19
) Weighted average number of shares
outstanding: Basic
27,940,702
27,655,526 27,835,649
27,549,546 Diluted
27,940,702 27,655,526
27,835,649
27,549,546 MTR GAMING
GROUP, INC. SELECTED FINANCIAL INFORMATION (dollars
in thousands) (unaudited)
Three Months Ended Year Ended December 31
December 31 2011 2010 2011 2010
Net revenues: Mountaineer Casino, Racetrack &
Resort $ 55,766 $ 48,408 $ 224,103 $ 228,784 Presque Isle Downs
& Casino 47,505 46,048 201,148 193,005 Scioto Downs 298 285
2,750 2,963 Corporate
21
22 85
139 Consolidated net revenues
$ 103,590
$ 94,763
$ 428,086
$ 424,891
Adjusted EBITDA from continuing operations:
Mountaineer Casino, Racetrack & Resort $ 11,718 $ 9,012 $
47,449 $ 48,451 Presque Isle Downs & Casino 10,949 10,413
45,778 41,047 Scioto Downs (402 ) (300 ) (1,476 ) (1,217 )
Corporate
(2,290 )
(1,884 ) (9,160
) (10,874 )
Consolidated Adjusted EBITDA from continuing operations
$ 19,975 $ 17,241 $
82,591 $ 77,407 Adjusted EBITDA from
discontinued operations
626
(41 ) 626
(232 ) Consolidated
Adjusted EBITDA $
20,601 $
17,200 $
83,217 $
77,175
_______________________________________________________________________
The following tables set forth a reconciliation of income (loss)
from continuing operations and income (loss) from discontinued
operations, GAAP financial measures, to Adjusted EBITDA, as well as
the calculation of Adjusted EBITDA margin, non-GAAP financial
measures.
_______________________________________________________________________
Three Months Ended Year Ended December
31 December 31 2011 2010 2011
2010 ADJUSTED EBITDA FROM CONTINUING
OPERATIONS: Mountaineer Casino, Racetrack &
Resort: Income from continuing operations $ 8,732 $ 1,549 $
35,653 $ 22,526 Interest (income) expense, net (2 ) 9 22 142
Provision (benefit) for income taxes - 4,211 (4 ) 12,328
Depreciation 2,786 3,223 11,831 13,383 Impairment loss 204 - 204 -
(Gain) loss on the sale or disposal of property
(2 ) 20
(257 ) 72
Adjusted EBITDA from continuing operations $
11,718 $ 9,012
$ 47,449 $
48,451 Net revenues $
55,766 $ 48,408
$ 224,103 $
228,784 Adjusted EBITDA margin
21.0 %
18.6 %
21.2 %
21.2 % Presque
Isle Downs & Casino: Income from continuing operations $
4,548 $ 1,431 $ 19,491 $ 15,160 Interest (income) expense, net (3 )
7 4 28 Provision for income taxes 1,268 5,240 3,927 10,553 Other
regulatory gaming assessment 167 - 5,925 800 Depreciation 3,873
3,725 15,292 14,503 Impairment loss 412 - 412 - Loss on the sale or
disposal of property
684
10 727
3 Adjusted EBITDA from continuing
operations $ 10,949
$ 10,413 $
45,778 $ 41,047
Net revenues $ 47,505
$ 46,048 $
201,148 $ 193,005
Adjusted EBITDA margin
23.0 %
22.6 %
22.8 %
21.3 % Scioto
Downs: Loss from continuing operations $ (557 ) $ (222 ) $
(2,164 ) $ (1,355 ) (Capitalized interest) interest expense, net
(37 ) 16 (20 ) 70 Benefit for income taxes - (295 ) - (733 )
Depreciation 192 201 767 801 Gain on debt extinguishment
- -
(59 ) -
Adjusted EBITDA from continuing operations $
(402 ) $ (300
) $ (1,476 )
$ (1,217 ) MTR
GAMING GROUP, INC. SELECTED FINANCIAL INFORMATION
(continued) (dollars in thousands) (unaudited)
Three Months Ended Year Ended December
31 December 31 2011 2010 2011
2010 ADJUSTED EBITDA FROM CONTINUING OPERATIONS
(continued): Corporate: Loss from continuing
operations $ (19,488 ) $ (5,548 ) $ (104,133 ) $ (41,294 ) Interest
expense, net of interest income 17,129 13,336 60,008 53,843
(Benefit) provision for income taxes (12 ) (9,685 ) 424 (23,509 )
Depreciation 12 13 49 46 Impairment loss 69 - 69 40 Loss on debt
extinguishment
- -
34,423 -
Adjusted EBITDA from continuing operations
$ (2,290 ) $
(1,884 ) $
(9,160 ) $
(10,874 ) Consolidated:
Loss from continuing operations $ (6,765 ) $ (2,790 ) $ (51,153 ) $
(4,963 ) Interest expense, net of interest income and capitalized
interest 17,087 13,368 60,014 54,083 Provision (benefit) for income
taxes 1,256 (529 ) 4,347 (1,361 ) Other regulatory gaming
assessment 167 - 5,925 800 Depreciation 6,863 7,162 27,939 28,733
Loss on the sale or disposal of property 682 30 470 75 Impairment
loss 685 - 685 40 Loss on debt extinguishment
-
- 34,364
- Adjusted EBITDA from
continuing operations $ 19,975
$ 17,241 $
82,591 $ 77,407
Net revenues $ 103,590
$ 94,763 $
428,086 $ 424,891
Adjusted EBITDA margin
19.3 %
18.2 %
19.3 %
18.2 % ADJUSTED
EBITDA FROM DISCONTINUED OPERATIONS: Income (loss) from
discontinued operations $ 788 $ (27 ) $ 788 $ (153 ) Interest
(income) expense (162 ) - (162 ) 3 (Benefit) provision for income
taxes
- (14
) - (82
) Adjusted EBITDA from discontinued operations
$ 626 $
(41 ) $ 626
$ (232 )
MTR GAMING GROUP, INC. CONSOLIDATED BALANCE
SHEETS (dollars in thousands)
December 31 December 31
2011 2010 (unaudited) ASSETS
Current assets: Cash and cash equivalents $ 85,585 $ 53,820
Restricted cash 1,146 1,143
Accounts receivable, net of allowance for
doubtful accounts of $383 in 2011 and $386 in 2010
4,554 2,790 Amounts due from West Virginia Lottery Commission 122 -
Inventories 3,503 3,476 Deferred financing costs 1,622 4,106
Deferred income taxes 494 - Prepaid expenses and other current
assets
5,366 5,177 Total
current assets 102,392 70,512 Property and equipment, net
299,579 314,484 Funds held for construction project 130,114 -
Goodwill - 494 Other intangibles 85,577 85,529 Deferred financing
costs, net of current portion 9,919 8,113 Deposits and other 1,902
1,984 Non-operating real property 11,207 12,215 Assets of
discontinued operations
181
178 Total assets
$ 640,871
$ 493,509 LIABILITIES AND
STOCKHOLDERS' EQUITY Current liabilities: Accounts
payable $ 1,461 $ 1,887 Accounts payable - gaming taxes and
assessments 8,854 7,968 Accrued payroll and payroll taxes 4,114
3,861 Accrued interest 27,072 16,702 Accrued income taxes 958 546
Other accrued liabilities 10,741 9,052 Construction project and
equipment liabilities 3,732 136 Deferred income taxes - 64 Current
portion of long-term debt and capital lease obligations - 1,255
Liabilities of discontinued operations
223
217 Total current liabilities 57,155 41,688
Long-term debt and capital lease obligations, net of current
portion 548,933 376,830 Other regulatory gaming assessments 5,408 -
Deferred income taxes
11,048
6,756 Total liabilities
622,544
425,274 Stockholders' equity: Common
stock - - Additional paid-in capital 62,804 61,910 (Accumulated
Deficit) retained earnings (44,288) 6,359 Accumulated other
comprehensive loss
(404)
(251) Total stockholders' equity of MTR Gaming Group,
Inc. 18,112 68,018 Non-controlling interest of discontinued
operations
215 217 Total
stockholders' equity
18,327
68,235 Total liabilities and stockholders' equity
$ 640,871 $
493,509
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