Exhibit 99.1
FOR IMMEDIATE RELEASE
MTR GAMING GROUP THIRD QUARTER EBITDA RISES 20% ON
9% REVENUE INCREASE
CHESTER, WV – November7, 2003 – MTR Gaming Group, Inc. (Nasdaq National Market:MNTG) today announced financial results for the third quarter and nine-month period ended September 30, 2003. See attached tables (including Reconciliation of Non-GAAP Measures to GAAP).
Total revenues for the third quarter increased 9% to $84.1 million from $77.2 million in the third quarter of 2002, while EBITDA grew at a faster rate, by 20% to $17.6 million from $14.7 million. Net income was $6.0 million or $.21 per diluted share compared to $6.2 million or $.22 per diluted share in last year’s period. Third quarter results included higher interest expense and increased depreciation from additional facilities and equipment and the acquisition of Scioto Downs during the quarter.
Gaming revenues (“net win”) at Mountaineer rose 6.2% to $68.7 million during the third quarter, producing net win-per-day-per-machine of $232 based on an average of 3,220 machines for the current quarter, compared to $237 with an average of 2,995 machines in the third quarter of 2002. EBITDA at Mountaineer increased 22% from $16.1 million to $19.7 million.
Revenues at MTR’s Speedway Property in North Las Vegas were $2.3 million in the third quarter and the property incurred an EBITDA loss of $78,000 due largely to new competition in the North Las Vegas market. Revenues at Scioto Downs, which MTR acquired on July 31, 2003, were $1.5 million in the third quarter (from the date of acquisition), and the property incurred an EBITDA loss of $115,000.
For the first nine months of 2003, total revenues rose 9% to $223.2 million from $203.7 million, EBITDA increased 13% from $36.5 million to $41.2 million, and, as a result of the aforementioned increase in depreciation and interest expense, net income was $12.9 million or $.45 per diluted share compared to $15.2 million or $.52 per diluted share in the 2002 period. Gaming revenues (“net win”) at Mountaineer rose 14.3% to $186.7 million during the first nine months of 2003, producing net win-per-day-per-machine of $220 based on an average of 3,112 machines for the current period, compared to $241 with an average of 2,625 machines in the 2002 period.
Edson R. (Ted) Arneault, President and CEO of MTR Gaming Group, stated, “We are pleased with the operating results for the quarter, especially with regard to revenue increases in every category and overall margin improvement. EBITDA increased to 21% of total revenues from 19% in the third quarter of last year. We continued to focus on overall cost containment efforts, and in this regard marketing expenses declined despite the aggressive marketing awareness campaign we initiated in order to increase Mountaineer’s population penetration.”
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Average hotel occupancy at Mountaineer was 77% for the quarter, including 93% on the weekends, and the average daily rate was $83.
Mr. Arneault further stated, “We completed our acquisition of Scioto Downs during the quarter and the integration of this strategic property is proceeding as planned. With regard to our external growth plans in Pennsylvania, on July 17 the Pennsylvania Racing Commission voted unanimously to reinstate our license to build Presque Isle Downs in Erie after an adverse court decision in June. An applicant for the remaining racing license has challenged the Racing Commission’s reinstatement order. The Racing Commission and we have filed motions for summary relief, which the Commonwealth Court has agreed to hear in conjunction with the appeal on December 10. We believe the Racing Commission acted in accordance with all applicable laws and the directives of the court’s June decision and expect to move forward with our plans as soon as possible in the event the appeal is concluded favorably. Additionally, during the quarter, Keystone Downs, LLC, an entity in which we will have an interest, filed an application for a license to build a thoroughbred track near Pittsburgh.
Mr. Arneault concluded, “Based on recent operating results at Mountaineer and our prospects for growth at Scioto and in Pennsylvania, we remain enthusiastic about the Company’s short and long-term outlook.”
Financial Guidance
The Company raised its fiscal 2003 financial guidance from total revenues, EBITDA and net income of approximately $292 million, $50 million and $12.5 million, respectively, to approximately $293 million, $52 million, and $14.0 million, respectively.
The Company’s guidance assumes that (i) the Company’s investment in Presque Isle Downs will not be impaired; (ii) no other acquisitions or dispositions; and (iii) no material changes in economic conditions, West Virginia gaming laws or world events.
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Reconciliation of Non-GAAP Measures to GAAP
EBITDA or earnings before interest, taxes, depreciation and amortization is not a measure of performance or liquidity calculated in accordance with generally accepted accounting principles (“GAAP”). We have presented EBITDA as a supplemental disclosure because it is a widely used measure of performance and basis for valuation of companies in our industry. You should not consider EBITDA an alternative to operating income or cash flows from operating activities as measures of operating performance or liquidity respectively. Uses of our cash flows that are not reflected in EBITDA include capital expenditures (which are significant given our expansion), interest payments (which will increase in light of the increased borrowing and higher interest rate resulting from our recent senior notes offering), income taxes, and debt principal repayments. Moreover, other companies that provide EBITDA information may calculate EBITDA differently than we do. A reconciliation of GAAP income from operations to EBITDA is included in the financial tables accompanying this release.
Conference Call
Management will conduct a conference call and webcast focusing on the financial results and recent corporate developments at 10:00 a.m. ET on Friday, November 7, 2003. Interested parties may participate in the call by dialing 973-935-8504 — please call in 10 minutes before the call is scheduled to begin, and ask for the MTR Gaming call. The conference call will be broadcast live over the Internet via the Investor Relations section of the Company’s web site at www.mtrgaming.com. To listen to the live call 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 live, the conference call will be archived on the Company’s web site.
About MTR Gaming Group
MTR Gaming Group owns and operates the Mountaineer Race Track & Gaming Resort in Chester, West Virginia, which currently encompasses a thoroughbred racetrack with off-track betting and export simulcasting, 3,200 slot machines, 359 hotel rooms, golf course, spa & fitness center, theater and events center, convention center and fine dining and entertainment. The Company also owns and operates Scioto Downs harness horse racing facility in Columbus, Ohio, the Ramada Inn and Speedway Casino in North Las Vegas, and holds a license (judicial review pending) to build a new thoroughbred racetrack with parimutuel wagering in Erie, Pennsylvania. MTR is included in the Russell 2000® and Russell® 3000 Indexes. For more information, please visit www.mtrgaming.com.
For Additional Information, Please Contact: | | |
MTR Gaming Group, Inc. | | Investor Relations Counsel: |
Edson R. (Ted) Arneault, President & CEO | | The Equity Group Inc. |
(304) 387-8300 | | www.theequitygroup.com |
www.mtrgaming.com | | Lauren Barbera | (212) 836-9610 |
| | lbarbera@equityny.com |
| | Loren G. Mortman | (212) 836-9604 |
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Except for historical information, this press release contains forward-looking statements concerning, among other things, future plans and operating results, and specifically guidance concerning the results for 2003, the Company’s planned racetrack in Erie, Pennsylvania (subject to a legal challenge to the July 17, 2003 decision of the Pennsylvania State Horse Racing Commission reinstating the license, which was originally granted in late 2002, and the risks associated with land acquisition, development, construction and integration of new operations), and the Company’s participation in a planned racetrack in Allegheny County, Pennsylvania). Such statements are based on the Company’s current plans and expectations. 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 weather conditions or road conditions impeding access to Mountaineer, adverse changes in West Virginia video lottery laws or the rates of taxation of video lottery operations, market acceptance of the Company’s new hotel and related amenities at Mountaineer, which involve higher price points than the Company’s prior offerings, legalization of new forms of gaming in the Company’s target markets, which would lead to increased competition, competition, general economic conditions affecting the resort business, dependence upon key personnel and the ability to attract new personnel, changes in the number of diluted shares, leverage and debt service, expiration or non-renewal of gaming licenses, costs associated with maintenance and expansion of Mountaineer Park’s infrastructure to meet the demands attending increased patronage, costs and risks attending construction, expansion of operations, continued dependence on Mountaineer for the vast majority of our revenues, disruption in developing and integrating our Ohio and planned Pennsylvania operations and other facilities we may expand and/or acquire, extensive regulation by gaming and racing authorities, regulatory approval of our building plans for Presque Isle Downs and closing on the real property currently under option for the project, environmental laws and potential exposure to environmental liabilities, limited public market and liquidity, shares eligible for future sale, and successful cross-marketing of the Company’s Ohio and planned Pennsylvania operations with Mountaineer, and other factors described in the Company’s periodic reports filed with the Securities and Exchange Commission. With respect to our participation in Keystone Downs, execution of our plans is subject to a number of risks and uncertainties, including but not limited to licensing by the Pennsylvania State Horse Racing Commission, which we anticipate will be highly competitive, closing on the real property upon exercise of the various option contracts, feasibility studies, and other customary due diligence. Accordingly, there can be no assurance that the Company’s plans to build the track in Allegheny County will be executed. The Company does not intend to update publicly any forward-looking statements, except as may be required by law.
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MTR GAMING GROUP, INC.
CONDENSED AND CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
| | Three months ended
September 30, | | Nine months ended
September 30, | |
| | 2003 | | 2002 | | 2003 | | 2002 | |
Revenues | | | | | | | | | |
Gaming | | $ | 70,312,000 | | $ | 66,401,000 | | $ | 191,819,000 | | $ | 177,580,000 | |
Parimutuel commissions | | 3,762,000 | | 2,238,000 | | 8,194,000 | | 6,747,000 | |
Food, beverage and lodging | | 7,210,000 | | 6,424,000 | | 17,631,000 | | 14,593,000 | |
Other | | 2,779,000 | | 2,131,000 | | 5,528,000 | | 4,805,000 | |
| | | | | | | | | |
Total revenues | | 84,063,000 | | 77,194,000 | | 223,172,000 | | 203,725,000 | |
Less promotional allowances | | (1,415,000 | ) | (1,586,000 | ) | (3,760,000 | ) | (4,333,000 | ) |
Net revenues | | 82,648,000 | | 75,608,000 | | 219,412,000 | | 199,392,000 | |
| | | | | | | | | |
Costs of revenue | | | | | | | | | |
Cost of gaming | | 41,889,000 | | 39,758,000 | | 117,684,000 | | 107,925,000 | |
Cost of parimutuel commissions | | 2,560,000 | | 1,934,000 | | 6,086,000 | | 5,620,000 | |
Cost of food,beverage and lodging | | 5,195,000 | | 4,696,000 | | 13,117,000 | | 12,289,000 | |
Cost of other revenue | | 2,357,000 | | 2,855,000 | | 5,619,000 | | 6,218,000 | |
| | | | | | | | | |
Total cost of revenues | | 52,001,000 | | 49,243,000 | | 142,506,000 | | 132,052,000 | |
| | | | | | | | | |
Gross Profit | | 30,647,000 | | 26,365,000 | | 76,906,000 | | 67,340,000 | |
| | | | | | | | | |
Selling, general and administrative expenses: | | | | | | | | | |
Marketing and promotions | | 2,082,000 | | 2,778,000 | | 5,751,000 | | 6,692,000 | |
General and administrative | | 10,981,000 | | 8,922,000 | | 29,906,000 | | 24,125,000 | |
Depreciation and amortization | | 4,783,000 | | 3,825,000 | | 13,376,000 | | 10,212,000 | |
| | | | | | | | | |
Total selling, general and administrative expenses | | 17,846,000 | | 15,525,000 | | 49,033,000 | | 41,029,000 | |
| | | | | | | | | |
Operating income | | 12,801,000 | | 10,840,000 | | 27,873,000 | | 26,311,000 | |
| | | | | | | | | |
Loss on disposal of property | | (11,000 | ) | — | | (18,000 | ) | — | |
Gain on sale of property | | — | | — | | 450,000 | | — | |
Interest income | | 94,000 | | 8,000 | | 231,000 | | 126,000 | |
Interest expense | | (3,457,000 | ) | (1,249,000 | ) | (8,347,000 | ) | (3,069,000 | ) |
| | | | | | | | | |
Income before benefit/(provision) for income taxes | | 9,427,000 | | 9,599,000 | | 20,189,000 | | 23,368,000 | |
Benefit/(Provision) for income taxes | | (3,438,000 | ) | (3,375,000 | ) | (7,329,000 | ) | (8,195,000 | ) |
| | | | | | | | | |
Net Income | | $ | 5,989,000 | | $ | 6,224,000 | | $ | 12,860,000 | | $ | 15,173,000 | |
| | | | | | | | | |
Net income per share: | | | | | | | | | |
EPS Basic | | 0.22 | | 0.23 | | 0.46 | | 0.56 | |
EPS fully diluted | | 0.21 | | 0.22 | | 0.45 | | 0.52 | |
| | | | | | | | | |
Weighted average number of shares outstanding: | | | | | | | | | |
Basic Shares | | 27,798,876 | | 27,102,859 | | 27,809,212 | | 27,037,446 | |
Fully diluted shares | | 28,364,874 | | 28,801,910 | | 28,630,987 | | 28,944,501 | |
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MTR GAMING GROUP, INC.
SELECTED FINANCIAL INFORMATION
(unaudited)
| | Three Months Ended | | Nine Months Ended | |
| | September 30,
2003 | | September 30,
2002 | | September 30,
2003 | | September 30,
2002 | |
| | | | | | | | | |
Net Revenues: | | | | | | | | | |
Mountaineer Park | | $ | 78,748,000 | | $ | 72,868,000 | | $ | 210,690,000 | | $ | 191,485,000 | |
Speakeasy-Las Vegas | | 2,305,000 | | 2,412,000 | | 7,030,000 | | 7,052,000 | |
Scioto Downs | | 1,481,000 | | — | | 1,481,000 | | — | |
Speakeasy-Reno | | — | | 328,000 | | 47,000 | | 848,000 | |
Corporate | | 114,000 | | — | | 164,000 | | 7,000 | |
Consolidated | | $ | 82,648,000 | | $ | 75,608,000 | | $ | 219,412,000 | | 199,392,000 | |
| | | | | | | | | |
EBITDA: | | | | | | | | | |
Mountaineer Park | | $ | 19,688,000 | | $ | 16,112,000 | | $ | 46,691,000 | | $ | 40,578,000 | |
Speakeasy-Las Vegas | | (78,000 | ) | 3,000 | | 1,000 | | 323,000 | |
Scioto Downs | | (115,000 | ) | — | | (115,000 | ) | — | |
Speakeasy-Reno | | — | | (189,000 | ) | (293,000 | ) | (951,000 | ) |
Corporate | | (1,911,000 | ) | (1,261,000 | ) | (5,035,000 | ) | (3,427,000 | ) |
Consolidated | | $ | 17,584,000 | | $ | 14,665,000 | | $ | 41,249,000 | | $ | 36,523,000 | |
MTR GAMING GROUP, INC.
SELECTED FINANCIAL INFORMATION
RECONCILIATION OF OPERATING INCOME TO EBITDA
(unaudited)
The following tables set forth a reconciliation of operating income (loss), a GAAP financial measure, to EBITDA a non-GAAP financial measure.
| | | | | | Financial Guidance
Year Ending
December 31,
2003 | |
Three Months Ended | | Nine Months Ended |
September 30,
2003 | | September 30,
2002 | | September 30,
2003 | | September 30,
2002 |
Mountaineer Park: | | | | | | | | | | | |
Operating income | | $ | 15,702,000 | | $ | 12,769,000 | | $ | 35,204,000 | | $ | 31,951,000 | | | |
Depreciation and amortization | | 3,986,000 | | 3,343,000 | | 11,487,000 | | 8,627,000 | | | |
EBITDA | | 19,688,000 | | 16,112,000 | | 46,691,000 | | 40,578,000 | | | |
| | | | | | | | | | | |
Speakeasy-Las Vegas: | | | | | | | | | | | |
Operating income | | $ | (399,000 | ) | $ | (308,000 | ) | $ | (960,000 | ) | $ | (602,000 | ) | | |
Depreciation and amortization | | 321,000 | | 311,000 | | 961,000 | | 925,000 | | | |
EBITDA | | (78,000 | ) | 3,000 | | 1,000 | | 323,000 | | | |
| | | | | | | | | | | |
Scioto Downs: | | | | | | | | | | | |
Operating income | | $ | (259,000 | ) | — | | $ | (259,000 | ) | — | | | |
Depreciation and amortization | | 144,000 | | — | | 144,000 | | — | | | |
EBITDA | | (115,000 | ) | — | | (115,000 | ) | — | | | |
| | | | | | | | | | | |
Speakeasy-Reno: | | | | | | | | | | | |
Operating income | | — | | $ | (222,000 | ) | $ | (312,000 | ) | $ | (1,280,000 | ) | | |
Depreciation and amortization | | — | | 33,000 | | 19,000 | | 329,000 | | | |
EBITDA | | — | | (189,000 | ) | (293,000 | ) | (951,000 | ) | | |
| | | | | | | | | | | |
Corporate: | | | | | | | | | | | |
Operating income | | $ | (2,243,000 | ) | $ | (1,399,000 | ) | $ | (5,800,000 | ) | $ | (3,758,000 | ) | | |
Depreciation and amortization | | 332,000 | | 138,000 | | 765,000 | | 331,000 | | | |
EBITDA | | (1,911,000 | ) | (1,261,000 | ) | (5,035,000 | ) | (3,427,000 | ) | | |
| | | | | | | | | | | |
Consolidated: | | | | | | | | | | | |
Operating income | | $ | 12,801,000 | | $ | 10,840,000 | | $ | 27,873,000 | | $ | 26,311,000 | | $ | 33,600,000 | |
Depreciation and amortization | | 4,783,000 | | 3,825,000 | | 13,376,000 | | 10,212,000 | | 18,400,000 | |
EBITDA | | 17,584,000 | | 14,665,000 | | 41,249,000 | | 36,523,000 | | 52,000,000 | |
| | | | | | | | | | | | | | | | |
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MTR GAMING GROUP, INC.
CONDENSED AND CONSOLIDATED BALANCE SHEET
| | September 30
2003 | | December 31
2002 | |
| | (unaudited) | | | |
ASSETS | | | | | |
| | | | | |
Current Assets | | | | | |
Cash and cash equivalents | | $ | 29,828,000 | | $ | 14,398,000 | |
Restricted cash | | 1,074,000 | | 860,000 | |
Accounts receivable, net of allowance for doubtful accounts of $101,000,and $98,000 | | 5,969,000 | | 4,522,000 | |
Accounts receivable - Lottery Commission | | 2,793,000 | | — | |
Inventory | | 2,654,000 | | 2,414,000 | |
Deferred financing costs | | 1,784,000 | | 902,000 | |
Prepaid taxes | | 5,000 | | 4,360,000 | |
Deferred income taxes | | 823,000 | | 823,000 | |
Other current assets | | 2,855,000 | | 1,531,000 | |
Total current assets | | 47,785,000 | | 29,810,000 | |
| | | | | |
Property: | | | | | |
Land | | 11,851,000 | | 12,087,000 | |
Building | | 147,860,000 | | 137,422,000 | |
Equipment and automobiles | | 65,939,000 | | 59,929,000 | |
Furniture and fixtures | | 15,042,000 | | 17,870,000 | |
Construction in progress | | 2,227,000 | | 248,000 | |
| | 242,919,000 | | 227,556,000 | |
Less accumulated depreciation | | (50,545,000 | ) | (46,981,000 | ) |
| | 192,374,000 | | 180,575,000 | |
| | | | | |
Other assets: | | | | | |
| | | | | |
Goodwill | | 1,492,000 | | 1,492,000 | |
Other intangibles | | 14,187,000 | | — | |
Note receivable | | 2,220,000 | | — | |
Deferred income taxes | | 3,863,000 | | 2,213,000 | |
Deferred financing costs,net of current portion | | 5,999,000 | | 1,452,000 | |
Deposits and other | | 10,461,000 | | 6,375,000 | |
| | 38,222,000 | | 11,532,000 | |
| | $ | 278,381,000 | | $ | 221,917,000 | |
| | | | | |
LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | |
| | | | | |
Current liablities: | | | | | |
Accounts payable | | $ | 2,744,000 | | $ | 5,259,000 | |
West Virginia state lottery commission payable | | 792,000 | | 1,576,000 | |
Accrued payroll and payroll taxes | | 2,192,000 | | 2,542,000 | |
Accrued tax liability | | 3,919,000 | | — | |
Accrued liabilities | | 4,708,000 | | 2,847,000 | |
Accrued interest payable | | 6,612,000 | | 244,000 | |
Current portion of capital leases | | 5,347,000 | | 6,532,000 | |
Current portion of long-term and other debt | | 949,000 | | 312,000 | |
Total current liabilites | | 27,263,000 | | 19,312,000 | |
| | | | | |
Long-term and other debt, less current portion | | 133,356,000 | | 96,279,000 | |
Capital lease obligations, net of current portion | | 3,110,000 | | 6,945,000 | |
Long-term deferred compensation | | 2,817,000 | | 915,000 | |
Deferred income taxes | | 11,299,000 | | 7,977,000 | |
| | 177,845,000 | | 131,428,000 | |
| | | | | |
Shareholders’ equity: | | | | | |
Common stock | | — | | — | |
Paid in capital | | 55,644,000 | | 53,236,000 | |
Retained earnings | | 44,892,000 | | 37,253,000 | |
Total shareholders’ equity | | 100,536,000 | | 90,489,000 | |
| | $ | 278,381,000 | | $ | 221,917,000 | |
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