MTR Gaming Group, Inc. (NasdaqGS: MNTG) today announced financial results for the second quarter and six months ended June 30, 2011. 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.

For the second quarter of 2011, the Company’s total net revenues were $110.5 million, a decline of 1% compared to $111.6 million in the same period of 2010. Adjusted EBITDA from continuing operations was $23.1 million, an increase of 16% compared to $20.0 million in the second quarter of 2010. The Adjusted EBITDA margin was 20.9% compared to 17.9% in the prior-year quarter. Included in Adjusted EBITDA was $1.8 million received by Mountaineer Casino, Racetrack and Resort from a mineral rights lease bonus payment in the second quarter of 2011 and $1.0 million of project-opening costs related to the implementation of table games at Presque Isle Downs & Casino in the second quarter of 2010.

The Company reported net income of $2.3 million for the quarter, or $0.08 per diluted share, compared to a net loss of $0.5 million, or $0.02 per diluted share, in the same quarter last year.

Net revenues at Presque Isle Downs & Casino increased 7% to $52.1 million during the second quarter of 2011 compared to $48.6 million during the second quarter of 2010. Net revenues for the second quarter of 2011 included $5.2 million in revenue from table games, which were implemented in July 2010; however, slot revenue declined by $1.6 million compared to the same quarter of 2010. The property generated Adjusted EBITDA of $12.2 million compared to $9.0 million in the same quarter of 2010, with the Adjusted EBITDA margin increasing to 23.3% compared to 18.5% in the prior-year period. Excluding $1.0 million in project-opening costs related to the implementation of table games, the Adjusted EBITDA margin for the second quarter of 2010 would have been 20.6%.

Net revenues at Mountaineer Casino, Racetrack & Resort decreased 7% to $57.5 million in the second quarter of 2011 compared to $61.9 million in the second quarter of 2010. Table gaming at Mountaineer generated $8.5 million of revenues compared to $12.0 million in the prior-year period, while revenues from slots were $40.5 million compared to $42.8 million in the same quarter of 2010. The decrease in revenue was primarily attributable to competitive pressures from the introduction of table games in Pennsylvania in July 2010 and weak economic conditions, partially offset by a $1.8 million mineral rights lease bonus payment received in the second quarter of 2011 associated with the lease of mineral rights underlying certain of Mountaineer’s land holdings. The property saw Adjusted EBITDA decline to $13.6 million from $14.1 million in the comparable quarter of 2010, primarily caused by the decline in revenue and partially offset by the mineral rights payment. The Adjusted EBITDA margin at Mountaineer increased to 23.6% compared to 22.7% in the prior-year quarter.

Corporate overhead costs decreased 22% to $2.2 million during the second quarter of 2011 compared to $2.8 million in the prior-year period.

“We are pleased with our second quarter results, as we were able to carefully control our costs in a continued weak operating environment, resulting in improved Adjusted EBITDA figures and margins,” said Jeffrey J. Dahl, President and Chief Executive Officer of MTR Gaming Group, Inc. “More importantly, the future looks very bright for MTR Gaming as we successfully completed the refinancing of our debt earlier this week, which provides necessary funding for our new video lottery gaming facility at Scioto Downs which we plan to open in 2012. We are excited to bring VLT gaming to the Columbus metro area and believe it will be a major driver of stockholder value upon the facility’s opening. In addition, we remain cognizant of our cost structure and the current operating environment, and will continue to focus on streamlining our expenses at our existing properties.”

For the first half of 2011, MTR’s total net revenues decreased 1% to $208.9 million from $211.0 million in the first half of 2010. Adjusted EBITDA from continuing operations increased 7% to $39.4 million (including $1.8 million received from a mineral rights lease bonus payment) from $36.7 million (including $1.1 million of project-opening costs) in the same period last year. The 2011 year-to-date net loss was $2.9 million, or $0.10 per diluted share, and includes income tax expense of approximately $1.4 million attributable to an increase in the valuation allowance on deferred tax assets. In the same period last year, the Company reported net loss of $3.8 million, or $0.14 per diluted share, which included a loss of $0.2 million, or $0.01 per diluted share, from discontinued operations.

Balance Sheet and Liquidity

As of June 30, 2011, MTR had $59.5 million in cash and cash equivalents and $378.7 million in total debt, net of discounts.

On August 1, 2011, the Company successfully completed its previously announced offering of $565.0 million in aggregate principal amount of 11.50% Senior Secured Second Lien Notes due 2019 (the “Notes”) at an issue price of 97% of the aggregate principal amount. The net proceeds from the sale of the Notes were used to purchase the Company’s outstanding 9% Senior Subordinated Notes and 12.625% Senior Secured Notes (the “Existing Notes”) that were tendered in connection with the previously announced tender offers and consent solicitations, fund the redemption of the Existing Notes that remained outstanding following the consummation of the tender offers and consent solicitations, pay fees and expenses in connection with these transactions, and provide necessary funding to establish a video lottery gaming facility at Scioto Downs. In addition, the Company entered into a new senior secured revolving credit facility with a borrowing capacity of $20.0 million and a maturity date of August 1, 2016. No amounts have been drawn under the 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 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 is not a measure of performance or liquidity calculated in accordance with generally accepted accounting principles (“GAAP”), is unaudited and should not be considered as an alternative to, or more meaningful than, net income (loss) or income (loss) from operations as an indicator of our operating performance, or cash flows from operating activities, as a measure of liquidity. Adjusted EBITDA has been presented as a supplemental disclosure because it is a widely used measure of performance and basis for valuation of companies in our industry. Management of the Company uses Adjusted EBITDA as the primary measure of the Company’s operating performance and as a component 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, and debt principal repayments, 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 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 later today at 4:30 p.m. EDT. Interested parties may participate in the call by dialing (877) 545-1409. Please call in 10 minutes before the call is scheduled to begin and ask for the MTR Gaming call (conference ID #8454966).

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.

About MTR Gaming Group

MTR Gaming Group, Inc., 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 (including table gaming in Pennsylvania) and Presque Isle Downs, 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)
(unaudited)
       
Three Months Ended Six Months Ended
June 30 June 30
2011 2010 2011 2010
Revenues:
Gaming $ 97,634 $ 99,732 $ 188,580 $ 191,591
Pari-mutuel commissions 3,293 3,634 4,379 4,947
Food, beverage and lodging 8,167 8,514 15,320 15,487
Other 4,221 2,256 5,760 3,865
Total revenues 113,315 114,136 214,039 215,890
Less promotional allowances (2,796) (2,514) (5,182) (4,909)
Net revenues 110,519 111,622 208,857 210,981
 
Operating expenses:
Expenses of operating departments:
Gaming 60,153 62,167 117,154 119,607
Pari-mutuel commissions 3,404 3,488 5,194 5,288
Food, beverage and lodging 5,900 6,135 11,343 11,583
Other 1,734 1,740 2,989 3,131
Marketing and promotions 2,916 3,514 6,238 6,399
General and administrative 13,287 13,547 26,582 27,219
Project opening costs 7 1,023 7 1,098
Depreciation 6,981 7,073 14,054 14,365
(Gain) loss on the sale or disposal of property (197) 57 (196) 123
Total operating expenses 94,185 98,744 183,365 188,813
 
Operating income 16,334 12,878 25,492 22,168
 
Other income (expense):
Interest income 8 8 16 12
Interest expense (13,364) (13,528) (26,732) (27,070)
 
Income (loss) from continuing operations before income taxes 2,978 (642) (1,224) (4,890)
(Provision) benefit for income taxes (716) 132 (1,647) 1,243
 
Income (loss) from continuing operations 2,262 (510) (2,871) (3,647)
 
Discontinued operations:

Loss from discontinued operations before income taxes and non-controlling interest
- (10) - (229)
Benefit for income taxes - 3 - 80
Loss from discontinued operations before non-controlling interest - (7) - (149)
Non-controlling interest - - - (1)
Loss from discontinued operations - (7) - (150)
 
Net income (loss) $ 2,262 $ (517) $ (2,871) $ (3,797)
 
Net income (loss) per share - basic:
Income (loss) from continuing operations $ 0.08 $ (0.02) $ (0.10) $ (0.13)
Loss from discontinued operations - - - (0.01)
Net income (loss) $ 0.08 $ (0.02) $ (0.10) $ (0.14)
 
Net income (loss) per share - diluted:
Income (loss) from continuing operations $ 0.08 $ (0.02) $ (0.10) $ (0.13)
Loss from discontinued operations - - - (0.01)
Net income (loss) $ 0.08 $ (0.02) $ (0.10) $ (0.14)
 
Weighted average number of shares outstanding:
Basic 27,800,392 27,475,260 27,759,050 27,475,260
Diluted 27,800,392 27,475,260 27,759,050 27,475,260
MTR GAMING GROUP, INC.
SELECTED FINANCIAL INFORMATION
(dollars in thousands)
(unaudited)
       
Three Months Ended Six Months Ended
June 30 June 30
2011 2010 2011 2010
 
Net revenues:
Mountaineer Casino, Racetrack & Resort $ 57,493 $ 61,916 $ 108,904 $ 120,496
Presque Isle Downs & Casino 52,089 48,614 98,904 89,235
Scioto Downs 915 1,070 1,006 1,153
Corporate 22 22 43 97
Consolidated net revenues $ 110,519 $ 111,622 $ 208,857 $ 210,981
 
 
Adjusted EBITDA from continuing operations:
Mountaineer Casino, Racetrack & Resort $ 13,573 $ 14,078 $ 22,848 $ 26,167
Presque Isle Downs & Casino 12,150 9,001 22,085 16,865
Scioto Downs (435) (295) (917) (792)
Corporate (2,170) (2,776) (4,666) (5,584)
Consolidated Adjusted EBITDA from continuing operations $ 23,118 $ 20,008 $ 39,350 $ 36,656
 
Adjusted EBITDA from discontinued operations - (8) - (227)
 
Consolidated Adjusted EBITDA $ 23,118 $ 20,000 $ 39,350 $ 36,429

 
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 Six Months Ended
June 30 June 30
2011 2010 2011 2010
ADJUSTED EBITDA FROM CONTINUING OPERATIONS:
 
Mountaineer Casino, Racetrack & Resort:
Income from continuing operations $ 10,790 $ 7,987 $ 16,938 $ 14,202
Interest expense 8 47 18 101
Provision for income taxes - 2,670 - 4,882
Depreciation 2,974 3,334 6,090 6,852
(Gain) loss on the sale or disposal of property (199) 40 (198) 130
Adjusted EBITDA from continuing operations $ 13,573 $ 14,078 $ 22,848 $ 26,167
Net revenues $ 57,493 $ 61,916 $ 108,904 $ 120,496
Adjusted EBITDA margin 23.6% 22.7% 21.0% 21.7%
 
Presque Isle Downs & Casino:
Income from continuing operations $ 7,631 $ 4,132 $ 12,885 $ 7,267
Interest expense, net of interest income 2 (57) 6 15
Provision for income taxes 713 1,381 1,637 2,497
Depreciation 3,802 3,528 7,555 7,093
Loss on the sale or disposal of property 2 17 2 (7)
Adjusted EBITDA from continuing operations $ 12,150 $ 9,001 $ 22,085 $ 16,865
Net revenues $ 52,089 $ 48,614 $ 98,904 $ 89,235
Adjusted EBITDA margin 23.3% 18.5% 22.3% 18.9%
 
Scioto Downs:
Loss from continuing operations $ (634) $ (388) $ (1,316) $ (915)
Interest expense 7 19 15 37
Benefit for income taxes - (126) - (314)
Depreciation 192 200 384 400
Adjusted EBITDA from continuing operations $ (435) $ (295) $ (917) $ (792)
Net revenues $ 915 $ 1,070 $ 1,006 $ 1,153
Adjusted EBITDA margin (47.5)% (27.6)% (91.2)% (68.7)%
 
MTR GAMING GROUP, INC.
SELECTED FINANCIAL INFORMATION (continued)
(dollars in thousands)
(unaudited)
 
Three Months Ended Six Months Ended
June 30 June 30
2011 2010 2011 2010
ADJUSTED EBITDA FROM CONTINUING OPERATIONS (continued):
 
Corporate:
Loss from continuing operations $ (15,525) $ (12,241) $ (31,378) $ (24,201)
Interest expense, net of interest income 13,339 13,511 26,677 26,905
Provision (benefit) for income taxes 3 (4,057) 10 (8,308)
Depreciation 13 11 25 20
Adjusted EBITDA from continuing operations $ (2,170) $ (2,776) $ (4,666) $ (5,584)
 
Consolidated:
Income (loss) from continuing operations $ 2,262 $ (510) $ (2,871) $ (3,647)
Interest expense, net of interest income 13,356 13,520 26,716 27,058
Provision (benefit) for income taxes 716 (132) 1,647 (1,243)
Depreciation 6,981 7,073 14,054 14,365
(Gain) loss on the sale or disposal of property (197) 57 (196) 123
Adjusted EBITDA from continuing operations $ 23,118 $ 20,008 $ 39,350 $ 36,656
Net revenues $ 110,519 $ 111,622 $ 208,857 $ 210,981
Adjusted EBITDA margin 20.9% 17.9% 18.8% 17.4%
 
ADJUSTED EBITDA FROM DISCONTINUED OPERATIONS:
 
Loss from discontinued operations $ - $ (7) $ - $ (150)
Interest expense - 2 - 3
Benefit for income taxes - (3) - (80)
Adjusted EBITDA from discontinued operations $ - $ (8) $ - $ (227)
MTR GAMING GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
  June 30   December 31
2011 2010
(unaudited)
ASSETS
 
Current assets:
Cash and cash equivalents $ 59,515 $ 53,820
Restricted cash 1,389 1,143

Accounts receivable, net of allowance for doubtful accounts of $372 in 2011 and $386 in 2010
3,180 2,790
Inventories 3,452 3,476
Deferred financing costs 4,051 4,106
Prepaid expenses and other current assets 6,918 5,177
Total current assets 78,505 70,512
 
Property and equipment, net 304,181 314,484
Goodwill - 494
Other intangibles 85,577 85,529
Deferred financing costs, net of current portion 6,185 8,113
Deposits and other 1,903 1,984
Non-operating real property 11,986 12,215
Assets of discontinued operations 178 178
Total assets $ 488,515 $ 493,509
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
Current liabilities:
Accounts payable $ 2,019 $ 1,887
Accounts payable - gaming taxes and assessments 2,653 7,968
Accrued payroll and payroll taxes 3,934 3,861
Accrued interest 16,701 16,702
Accrued income taxes 2,199 546
Other accrued liabilities 9,569 9,052
Construction project and equipment liabilities 388 136
Deferred income taxes 119 64
Current portion of long-term debt and capital lease obligations 1,325 1,255
Liabilities of discontinued operations 216 217
Total current liabilities 39,123 41,688
 
Long-term debt and capital lease obligations, net of current portion 377,394 376,830
Deferred income taxes 6,551 6,756
Total liabilities 423,068 425,274
 
Stockholders' equity:
Common stock - -
Additional paid-in capital 62,275 61,910
Retained earnings 3,206 6,359
Accumulated other comprehensive loss (251) (251)
Total stockholders' equity of MTR Gaming Group, Inc. 65,230 68,018
Non-controlling interest of discontinued operations 217 217
Total stockholders' equity 65,447 68,235
Total liabilities and stockholders' equity $ 488,515 $ 493,509

Copyright Business Wire 2010

If you liked this article you might like

3 Stocks Pushing The Leisure Industry Lower

3 Stocks Pushing The Leisure Industry Lower

3 Stocks Pushing The Leisure Industry Lower

3 Stocks Pushing The Leisure Industry Lower

3 Leisure Stocks Driving The Industry Higher

3 Leisure Stocks Driving The Industry Higher

3 Stocks Pushing The Leisure Industry Lower

3 Stocks Pushing The Leisure Industry Lower

3 Stocks Raising The Leisure Industry Higher

3 Stocks Raising The Leisure Industry Higher