CHESTER, W.Va.--(BUSINESS WIRE)--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. |
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| _______________________________________________________________________ | ||||||||
| 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 | ||||