Exhibit 99.1
FOR IMMEDIATE RELEASE
MTR GAMING GROUP ANNOUNCES FIRST QUARTER RESULTS
CHESTER, WV – May 12, 2008 – MTR Gaming Group, Inc. (NasdaqGS:MNTG) today announced financial results for the first quarter ended March 31, 2008. See attached tables (including Reconciliation of Non-GAAP Measures to GAAP).
For the first quarter, net revenues increased to $116.3 million, up 26% from $92.0 million in the same period of 2007. EBITDA from continuing operations was $16.2 million, up 24% compared to $13.1 million in the first quarter of 2007. In both cases, the increases were due largely to the inclusion of Presque Isle for the entire first quarter in 2008, compared to only 32 days in the first quarter of 2007, and of table games and poker at Mountaineer. The Company reported a net loss of $2.6 million or $0.10 per diluted share, of which $1.4 million or $0.05 per diluted share was from discontinued operations. The net loss includes the following items on a pre-tax basis: a $2.8 million gain from the sale of the Speedway Casino real property, a $3.4 million loss on debt modification associated with the amendment of our revolving credit facility and $0.4 million in strategic development expenses. In the same period last year, the Company reported net income of $559,000 or $0.02 per diluted share.
Net revenues at the Mountaineer Casino, Racetrack & Resort increased 11% to $74.0 million, compared to $66.5 million in the first quarter of 2007, primarily due to the introduction of poker and table gaming in the fourth quarter of 2007. Poker and table games generated $2.2 million and $10.1 million of revenues, respectively, during the first quarter of 2008. Mountaineer’s revenue from slots decreased by $5.7 million, or 9.5% year-over-year primarily due to the continuing impact on the market from competing gaming operations in Pennsylvania. The property generated EBITDA of $14.1 million, versus $13.7 million in the comparable quarter of 2007.
For the first quarter of 2008, Presque Isle Downs contributed net revenues of $38.8 million and EBITDA of $6.4 million. Presque Isle Downs opened on February 28, 2007, and for the 32 days included in the first quarter of 2007, generated gaming revenues of $21.1 million and EBITDA of $2.4 million, after $2.9 million in project opening expenses.
On March 7, 2008, MTR completed the sale of Binion’s Gambling Hall & Hotel in Las Vegas, Nevada to TLC Casino Enterprises, Inc. resulting in cash to the Company of approximately $28.5 million, of which $27.6 million was utilized to reduce amounts outstanding under MTR’s credit facility. Reclassifications have been made to the prior period presentation to reflect the assets and liabilities of Binion’s as held for sale and the operating results and cash flows as discontinued operations.
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Also in the first quarter of 2008, MTR sold the Speedway Casino’s real property to Ganaste, LLC for $11.4 million in cash, resulting in a gain on the sale of approximately $2.8 million. The second phase of the transaction, which is subject to approval by the Nevada Gaming Commission and the City of North Las Vegas, calls for the sale of the gaming assets to Lucky Lucy D, LLC, for a total of $6.775 million, comprised of $2 million in cash to be paid at closing and the balance of up to $4.775 million in an earn-out based on the property’s gross revenues over the next four years. Pending regulatory approval and closing of the Lucky Lucy transaction, MTR will continue to operate the property under a short-term lease. The transaction is expected to close next month.
Edson R. (Ted) Arneault, President and CEO of MTR Gaming Group, stated, “We were extremely pleased with the revenue contribution from table games at Mountaineer in the first quarter. We believe table games at Mountaineer will continue to enhance the property’s competitive position by drawing new customers and driving increased play from our existing customers, which we believe will contribute to Mountaineer’s gaming revenue growth and further establishment as a destination resort. We also saw ancillary revenues from food, beverage and lodging increase by approximately $1.3 million, up 28.4%, in the first quarter, due primarily to the opening of table games at Mountaineer.”
“Presque Isle is performing very well, as evidenced by revenues of nearly $39 million for the first quarter. As we move into our seasonally stronger quarters, coupled with the commencement of our cross marketing initiatives, we expect revenue to continue to meet or exceed our expectations.”
Mr. Arneault continued, “We are also excited to report that Running Aces Harness Park, of which we own 50%, opened on April 11, 2008. The track conducts races Friday through Monday, and will add an additional night of racing beginning in mid-June. We are on schedule to open a 50-table card room, with casino card games and poker, in July ‘08.”
Outlook
Mr. Arneault concluded, “We remain focused on growing and optimizing MTR’s core assets in 2008, and at the same time, are working toward reducing debt and associated interest expense. We are on-track to achieve our previously stated 2008 revenue and EBITDA guidance.”
As a result of the expected closing of the Speedway Casino sale next month, which will result in the reclassification of the Speedway results to discontinued operations, and the impact of the loss on debt modification associated with the amendment of the Company’s revolving credit facility, our 2008 guidance has been amended to account for these events as follows:
· Total revenues of at least $504 million (unchanged);
· EBITDA of at least $72 million (unchanged); and
· Net loss of no more than $2.0 million.
Reconciliation of Non-GAAP Measures to GAAP
EBITDA represents earnings (losses) before interest, income tax expense (benefit), depreciation and amortization, equity in loss of unconsolidated joint venture and gain (loss) on disposal of property. EBITDA is not a measure of performance or liquidity calculated in
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accordance with generally accepted accounting principles (“GAAP”), is unaudited and should not be considered as an alternative to, or more meaningful than, net income or income from operations as an indicator of our operating performance, or cash flows from operating activities, as a measure of liquidity. 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. Uses of cash flows that are not reflected in EBITDA include capital expenditures (which are significant given our expansion), interest payments, income taxes, and debt principal repayments. Moreover, other companies that provide EBITDA information may calculate EBITDA differently than we do. A reconciliation of GAAP net income (loss) to EBITDA 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 at 10:00 a.m. EDT on Monday, May 12, 2008. Interested parties may participate in the call by dialing (706) 679-0882. Please call in 10 minutes before the call is scheduled to begin and ask for the MTR Gaming call (conference ID #45912122).
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 live, conference call will be archived on the Investor Relations section of the Company’s web site.
About MTR Gaming Group
MTR Gaming Group, Inc., through subsidiaries, owns and operates Mountaineer Casino, Racetrack & Resort in Chester, WV; Presque Isle Downs & Casino in Erie, PA; Scioto Downs in Columbus, OH; and the gaming assets and operations located in the Ramada Inn and Speedway Casino in North Las Vegas, NV (under contract for sale). The Company also owns a 90% interest in Jackson Trotting Association, LLC, which operates Jackson Harness Raceway in Jackson, MI, and a 50% interest in the North Metro Harness Initiative, LLC, which operates Running Aces Harness Park in Minneapolis, MN and expects to launch a card room in July 2008 with 50 tables offering non-banked games (casino card games & poker). MTR is included on the Russell 2000® and Russell® 3000 Indexes. For more information, please visit www.mtrgaming.com.
Except for historical information, this press release contains forward-looking statements concerning, among other things, financial performance for 2008, the opening of the Running Aces Harness Park card room in Minnesota, and the prospects for improving the results of our operations at Mountaineer and Presque Isle 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 absence of any new competition for Mountaineer and Presque Isle Downs in 2008, no increase in the gaming tax rates that the Company currently pays in its various jurisdictions, the completion of the sale of the Speedway Casino’s gaming assets in 2008, general economic conditions, disruption (occasioned by weather conditions or work stoppages) of our operations and the success of the table gaming at Mountaineer (including the anticipated continued positive impact of table gaming on slot operations and resort operations), our ability to improve our operating margins, the timely completion of the required 50 days of racing at Running Aces Harness Park and the opening of card room operations by July, our continued suitability to hold and obtain renewals of our gaming and racing licenses,
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our compliance with environmental laws and potential exposure to environmental liabilities, 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.
For Additional Information, Please Contact: | |
MTR Gaming Group, Inc. | Investor Relations Counsel: |
www.mtrgaming.com | The Equity Group Inc. |
Steven D. Overly, VP, Business and Legal Affairs | www.theequitygroup.com |
(304) 387-8558 | Melissa Dixon (212) 836-9613 |
soverly@mtrgaming.com | MDixon@equityny.com |
| Linda Latman (212) 836-9609 |
| LLatman@equityny.com |
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MTR GAMING GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands, except per share amounts)
(unaudited)
| | Three Months Ended
March 31 | |
| | 2008 | | 2007 | |
Revenues: | | | | | |
Gaming | | $ | 105,025 | | $ | 82,217 | |
Parimutuel commissions | | 2,588 | | 2,759 | |
Food, beverage and lodging | | 8,908 | | 6,824 | |
Other | | 1,669 | | 1,507 | |
| | | | | |
Total revenues | | 118,190 | | 93,307 | |
Less promotional allowances | | (1,866 | ) | (1,317 | ) |
| | | | | |
Net revenues | | 116,324 | | 91,990 | |
| | | | | |
Operating expenses: | | | | | |
Expenses of operating departments: | | | | | |
Gaming | | 65,507 | | 49,322 | |
Parimutuel commissions | | 3,032 | | 2,532 | |
Food, beverage and lodging | | 7,676 | | 5,489 | |
Other revenue | | 1,823 | | 1,592 | |
Marketing and promotions | | 3,888 | | 3,123 | |
General and administrative | | 18,224 | | 13,979 | |
Depreciation | | 7,658 | | 5,731 | |
(Gain) loss on disposal of property | | (2,643 | ) | 67 | |
Project opening costs | | — | | 2,941 | |
| | | | | |
Total operating expenses | | 105,165 | | 84,776 | |
| | | | | |
Operating income | | 11,159 | | 7,214 | |
| | | | | |
Other (expense) income: | | | | | |
Equity in loss of unconsolidated joint venture | | (342 | ) | — | |
Interest income | | 93 | | 154 | |
Interest expense | | (10,352 | ) | (6,328 | ) |
Loss on debt modification | | (3,356 | ) | — | |
| | | | | |
(Loss) income from continuing operations before income taxes and minority interest | | (2,798 | ) | 1,040 | |
| | | | | |
Benefit (provision) for income taxes | | 1,533 | | (556 | ) |
| | | | | |
(Loss) income from continuing operations before minority interest | | (1,265 | ) | 484 | |
| | | | | |
Minority interest | | 5 | | 72 | |
| | | | | |
(Loss) income from continuing operations | | (1,260 | ) | 556 | |
| | | | | |
Discontinued operations: | | | | | |
(Loss) income from discontinued operations before income taxes | | (2,166 | ) | 5 | |
Benefit (provision) for income taxes | | 800 | | (2 | ) |
(Loss) income from discontinued operations | | (1,366 | ) | 3 | |
| | | | | |
Net (loss) income | | $ | (2,626 | ) | $ | 559 | |
| | | | | |
Net (loss) income per share - basic: | | | | | |
(Loss) income from continuing operations | | $ | (0.05 | ) | $ | 0.02 | |
Loss from discontinued operations | | (0.05 | ) | 0.00 | |
Net (loss) income | | $ | (0.10 | ) | $ | 0.02 | |
| | | | | |
Net (loss) income per share - diluted: | | | | | |
(Loss) income from continuing operations | | $ | (0.05 | ) | $ | 0.02 | |
Loss from discontinued operations | | (0.05 | ) | 0.00 | |
Net (loss) income | | $ | (0.10 | ) | $ | 0.02 | |
| | | | | |
Weighted average number of shares outstanding: | | | | | |
Basic | | 27,475,260 | | 27,523,289 | |
Diluted | | 27,475,260 | | 27,864,146 | |
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MTR GAMING GROUP, INC.
SELECTED FINANCIAL INFORMATION
(dollars in thousands)
(unaudited)
| | Three Months Ended
March 31 | |
| | 2008 | | 2007 | |
| | | | | |
Net revenues from continuing operations: | | | | | |
Mountaineer | | $ | 74,046 | | $ | 66,549 | |
Presque Isle Downs | | 38,812 | | 21,059 | |
Las Vegas Speedway | | 2,734 | | 3,052 | |
Scioto Downs | | 126 | | 636 | |
Jackson Racing | | 603 | | 669 | |
North Metro | | — | | 22 | |
Corporate | | 3 | | 3 | |
Consolidated net revenues from continuing operations | | $ | 116,324 | | $ | 91,990 | |
| | | | | |
EBITDA from continuing operations: | | | | | |
Mountaineer | | $ | 14,099 | | $ | 13,697 | |
Presque Isle Downs | | 6,435 | | 2,356 | |
Las Vegas Speedway | | (38 | ) | 569 | |
Scioto Downs | | (651 | ) | (457 | ) |
Jackson Racing | | (97 | ) | (34 | ) |
North Metro | | (21 | ) | (127 | ) |
Corporate | | (3,546 | ) | (2,872 | ) |
Consolidated EBITDA from continuing operations | | $ | 16,181 | | $ | 13,132 | |
| | | | | |
EBITDA from discontinued operations | | (1,511 | ) | (682 | ) |
Consolidated EBITDA | | $ | 14,670 | | $ | 12,450 | |
The following tables set forth a reconciliation of net income (loss), a GAAP financial measure,
to EBITDA, non-GAAP financial measures.
EBITDA FROM CONTINUING OPERATIONS: | | | | | |
Mountaineer: | | | | | |
Income from continuing operations | | $ | 4,840 | | $ | 4,228 | |
Interest expense, net of interest income | | 2,265 | | 2,078 | |
Provision for income taxes | | 3,227 | | 3,061 | |
Depreciation | | 3,767 | | 4,253 | |
Loss on disposal of property | | — | | 77 | |
EBITDA from continuing operations | | $ | 14,099 | | $ | 13,697 | |
| | | | | |
Presque Isle Downs: | | | | | |
Income from continuing operations | | $ | 1,519 | | $ | 476 | |
Interest expense | | 454 | | 459 | |
Provision for income taxes | | 1,012 | | 449 | |
Depreciation | | 3,450 | | 972 | |
EBITDA from continuing operations | | $ | 6,435 | | $ | 2,356 | |
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MTR GAMING GROUP, INC.
SELECTED FINANCIAL INFORMATION (continued)
(dollars in thousands)
(unaudited)
| | Three Months Ended
March 31 | |
| | 2008 | | 2007 | |
EBITDA FROM CONTINUING OPERATIONS (continued): | | | | | |
| | | | | |
Las Vegas Speedway: | | | | | |
Income from continuing operations | | $ | 1,525 | | $ | 151 | |
Interest expense | | 97 | | 97 | |
Provision for income taxes | | 1,017 | | 110 | |
Depreciation | | 126 | | 211 | |
Gain on disposal of property | | (2,803 | ) | — | |
EBITDA from continuing operations | | $ | (38 | ) | $ | 569 | |
| | | | | |
Scioto Downs: | | | | | |
Loss from continuing operations | | $ | (542 | ) | $ | (407 | ) |
Interest expense, net of interest income | | 29 | | 32 | |
Benefit for income taxes | | (362 | ) | (295 | ) |
Depreciation | | 224 | | 213 | |
EBITDA from continuing operations | | $ | (651 | ) | $ | (457 | ) |
| | | | | |
Jackson Racing: | | | | | |
Loss from continuing operations | | $ | (158 | ) | $ | (23 | ) |
Interest expense, net of income expense and minority interest | | 1 | | 1 | |
Benefit for income taxes, net of minority interest | | (106 | ) | (17 | ) |
Depreciation, net of minority interest | | 6 | | 5 | |
Loss on disposal of property, net of minority interest | | 160 | | — | |
EBITDA from continuing operations | | $ | (97 | ) | $ | (34 | ) |
| | | | | |
MTR-Harness / North Metro: | | | | | |
Loss from continuing operations | | $ | (218 | ) | $ | (76 | ) |
Interest expense, net of interest income and minority interest | | — | | 4 | |
Benefit for income taxes, net of minority interest | | (145 | ) | (55 | ) |
Equity in loss of North Metro Harness Initiative, LLC | | 342 | | — | |
EBITDA from continuing operations | | $ | (21 | ) | $ | (127 | ) |
| | | | | |
Corporate: | | | | | |
Loss from continuing operations | | $ | (8,226 | ) | $ | (3,793 | ) |
Interest expense, net of interest income | | 7,413 | | 3,499 | |
Benefit for income taxes | | (6,173 | ) | (2,645 | ) |
Depreciation | | 84 | | 77 | |
Gain on disposal of property | | — | | (10 | ) |
Loss on debt modification | | 3,356 | | — | |
EBITDA from continuing operations | | $ | (3,546 | ) | $ | (2,872 | ) |
| | | | | |
Consolidated: | | | | | |
(Loss) income from continuing operations | | $ | (1,260 | ) | $ | 556 | |
Interest expense, net of interest income and minority interest | | 10,259 | | 6,170 | |
(Benefit) provision for income taxes, net of minority interest | | (1,530 | ) | 608 | |
Depreciation, net of minority interest | | 7,657 | | 5,731 | |
(Gain) loss on disposal of property | | (2,643 | ) | 67 | |
Loss on debt modification | | 3,356 | | — | |
Equity in loss of North Metro Harness Initiative, LLC | | 342 | | — | |
EBITDA from continuing operations | | $ | 16,181 | | $ | 13,132 | |
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MTR GAMING GROUP, INC.
SELECTED FINANCIAL INFORMATION (continued)
(dollars in thousands)
(unaudited)
| | Three Months Ended
March 31 | |
| | 2008 | | 2007 | |
| | | | | |
EBITDA from discontinued operations: | | | | | |
| | | | | |
Binion’s Gambling Hall & Hotel: | | | | | |
Loss (income) from discontinued operations | | $ | (1,366 | ) | $ | 3 | |
Interest income, net of interest expense | | (29 | ) | (26 | ) |
(Benefit) provision for income taxes | | (800 | ) | 2 | |
Depreciation | | — | | 607 | |
Other income | | — | | (1,268 | ) |
Loss on disposal of property | | 684 | | — | |
EBITDA from discontinued operations | | $ | (1,511 | ) | $ | (682 | ) |
2008 FINANCIAL GUIDANCE
| | Year Ending | |
| | December 31, 2008 | |
EBITDA from continuing operations: | | | |
Net loss (consolidated) | | $ | (2,000 | ) |
Add back net loss of Binion’s | | 1,400 | |
Interest expense, net of interest income and minority interest | | 41,400 | |
Benefit for income taxes, net of minority interest | | (700 | ) |
Depreciation, net of minority interest | | 30,700 | |
Gain on disposal of property | | (2,600 | ) |
Loss on debt modification | | 3,400 | |
Equity in loss of unconsolidated joint venture | | 400 | |
EBITDA from continuing operations | | $ | 72,000 | |
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MTR GAMING GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
| | March 31 | | December 31 | |
| | 2008 | | 2007 | |
| | (unaudited) | | | |
ASSETS | | | | | |
| | | | | |
Current assets: | | | | | |
Cash and cash equivalents | | $ | 36,709 | | $ | 31,045 | |
Restricted cash | | 1,247 | | 560 | |
Accounts receivable, net of allowance for doubtful accounts
of $178 in 2008 and $92 in 2007 | | 10,001 | | 10,062 | |
Inventories | | 4,656 | | 4,546 | |
Deferred financing costs | | 2,778 | | 3,203 | |
Prepaid income taxes | | 3,163 | | 851 | |
Deferred income taxes | | 1,492 | | 1,428 | |
Other current assets | | 4,492 | | 5,130 | |
Assets held for sale | | — | | 3,115 | |
Total current assets | | 64,538 | | 59,940 | |
| | | | | |
Property and equipment, net | | 386,729 | | 399,288 | |
Goodwill | | 2,145 | | 2,145 | |
Other intangibles | | 71,827 | | 71,827 | |
Deferred financing costs, net of current portion | | 5,016 | | 8,123 | |
Equity method investment | | 11,332 | | 11,609 | |
Deposits and other | | 26,119 | | 26,053 | |
Assets held for sale | | — | | 31,977 | |
Total assets | | $ | 567,706 | | $ | 610,962 | |
| | | | | |
LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | |
| | | | | |
Current liabilities: | | | | | |
Accounts payable | | $ | 7,339 | | $ | 9,064 | |
Accounts payable - gaming taxes and assessments | | 4,354 | | 9,446 | |
Accrued payroll and payroll taxes | | 5,486 | | 4,728 | |
Accrued interest | | 12,263 | | 6,456 | |
Other accrued liabilities | | 13,591 | | 11,735 | |
Construction project liabilities | | 1,944 | | 4,225 | |
Current portion of long-term debt and capital lease obligations | | 11,354 | | 11,108 | |
Liabilities held for sale | | — | | 4,829 | |
Total current liabilities | | 56,331 | | 61,591 | |
| | | | | |
Long-term debt and capital lease obligations, net of current portion | | 390,269 | | 420,520 | |
Long-term deferred compensation | | 10,709 | | 10,545 | |
Deferred income taxes | | 210 | | 940 | |
Liabilities held for sale | | — | | 4,914 | |
Total liabilities | | 457,519 | | 498,510 | |
| | | | | |
Minority interest | | 300 | | 305 | |
| | | | | |
Shareholders’ equity: | | | | | |
Common stock | | — | | — | |
Paid-in capital | | 60,844 | | 60,478 | |
Retained earnings | | 49,098 | | 51,724 | |
Accumulated other comprehensive loss | | (55 | ) | (55 | ) |
Total shareholders’ equity | | 109,887 | | 112,147 | |
Total liabilities and shareholders’ equity | | $ | 567,706 | | $ | 610,962 | |
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