MTR Gaming Group, Inc. (NasdaqGS:MNTG) today announced financial
results for the fourth quarter and full year ended December 31,
2013.
Fourth Quarter 2013 Results
For the fourth quarter of 2013, the Company’s total net revenues
were $114.8 million, a decrease of 0.8% compared to $115.8 million
in the same period of 2012. Adjusted EBITDA in the fourth quarter
of 2013 was $21.0 million, a decrease of 1.0% from the prior-year
period, and adjusted EBITDA margin was 18.3%, comparable to the
prior-year period.
“We are pleased with our fourth quarter performance, despite
increased competition, soft economic conditions and inclement
weather, especially the performance at our Scioto Downs gaming
facility, which generated double-digit revenue and adjusted EBITDA
growth in the fourth quarter of 2013 and continues to maintain a
significant share of the Columbus slot market,” said Joseph L.
Billhimer, President and Chief Operating Officer of MTR Gaming
Group, Inc. “Although Mountaineer Park’s operations in the fourth
quarter also saw double-digit adjusted EBITDA growth, Mountaineer
and Presque Isle Downs continued to be impacted by competition, in
addition to the unfavorable weather. We remain focused on executing
our strategy of delivering exceptional service to our customers
through balanced and refined marketing initiatives, continuing to
improve our facilities and effectively managing our expense
structure.”
The Company reported a net loss of $7.1 million for the fourth
quarter of 2013, or $0.25 per diluted share, compared to a net loss
of $5.5 million, or $0.20 per diluted share, in the same period of
2012. Excluding $1.6 million in costs associated with MTR Gaming’s
strategic initiatives, the net loss in the fourth quarter of 2013
would have been $5.5 million, or $0.19 per diluted share.
Net revenues at Scioto Downs increased 10.8% to $35.9 million in
the fourth quarter of 2013 compared to $32.4 million in the fourth
quarter of 2012. The property saw adjusted EBITDA increase to $12.2
million from $10.8 million in the comparable quarter of 2012, while
the adjusted EBITDA margin at Scioto Downs increased to 34.1%
compared to 33.3% in the prior-year quarter. The increase in net
revenues and adjusted EBITDA for the fourth quarter of 2013 was
primarily due to Scioto Downs maintaining a significant share of
the Columbus slot market in the face of competition.
Net revenues at Mountaineer Casino, Racetrack & Resort
decreased 2.5% to $45.4 million in the fourth quarter of 2013
compared to $46.5 million in the fourth quarter of 2012. Revenues
from slots decreased by $1.0 million and revenue from table games
was flat compared to the same quarter of 2012. The property saw
adjusted EBITDA increase to $8.0 million from $7.2 million in the
comparable quarter of 2012, while the adjusted EBITDA margin at
Mountaineer increased to 17.6% compared to 15.4% in the prior-year
quarter. The decrease in gaming revenues for the fourth quarter of
2013 was attributable to the combination of unfavorable weather and
increased competition from Ohio, while the increase in adjusted
EBITDA was primarily attributable to operating efficiencies.
Net revenues at Presque Isle Downs & Casino decreased 9.0%
to $33.5 million in the fourth quarter of 2013 compared to $36.8
million in the fourth quarter of 2012. Revenues from slots and
table games decreased by $2.7 million and $0.5 million,
respectively, compared to the same quarter of 2012. The property
generated adjusted EBITDA of $3.5 million compared to $5.8 million
in the same quarter of 2012, while the adjusted EBITDA margin
decreased to 10.4% compared to 15.8% in the prior-year quarter. The
decrease in net revenues and adjusted EBITDA for the fourth quarter
of 2013 was primarily attributable to unfavorable weather and
increased competition from Ohio gaming facilities.
Corporate overhead costs totaled $2.7 million during the fourth
quarter of 2013, exclusive of costs of $1.6 million associated with
strategic initiatives, compared to $2.6 million in the prior-year
period.
Full Year 2013 Results
For the year ended December 31, 2013, MTR Gaming’s total net
revenues increased 2.2% to $497.8 million from $487.0 million in
the prior year. Adjusted EBITDA from continuing operations
increased 2.2% to $98.7 million from $96.5 million in the prior
year. 2013 net loss was $9.1 million, or $0.32 per diluted share,
which included $4.4 million in strategic transaction costs and
approximately $3.5 million of income tax expense primarily
attributable to additional valuation allowances on deferred tax
assets. Results for 2013 reflect the full year of operation of MTR
Gaming’s Scioto Downs gaming facility, which commenced operations
in June 2012, offset in part by the decline in operating results at
Mountaineer and Presque Isle Downs due to expanding Ohio
competition. In the prior year, the Company reported a net loss of
$5.7 million, or $0.20 per diluted share, which included $2.7
million of project-opening costs, a loss of $0.3 million from
discontinued operations and approximately $3.6 million of income
tax expense primarily attributable to additional valuation
allowances on deferred tax assets.
See attached tables, including a reconciliation of net loss, a
GAAP financial measure, to adjusted EBITDA, as well as the
calculation of adjusted EBITDA margin, each of which are non-GAAP
financial measures.
Balance Sheet and Liquidity
As of December 31, 2013, MTR Gaming had $100.1 million in cash
and cash equivalents, $7.3 million in restricted cash and $558.8
million in total debt, net of discount. In addition, the Company
has $20 million available for borrowing under its revolving credit
facility.
MTR Gaming-Eldorado Merger Developments
In connection with the Company’s previously announced strategic
business combination with Eldorado HoldCo LLC (“Eldorado”) pursuant
to which the Company and Eldorado will become wholly-owned
subsidiaries of Eclair Holdings Company (which will be renamed
“Eldorado Resorts, Inc.”) (“NewCo”), the Company has received
each of the following, all of which are required to consummate the
proposed combination:
- an early termination of the
Hart-Scott-Rodino (“HSR”) waiting period;
- the requisite consent from holders of
the Company’s 11.50% Senior Secured Second Lien Notes due 2019 with
respect to proposed amendments to the indenture thereunder
permitting the formation of a new holding company as a result of
the transactions contemplated by this proposed combination;
- a waiver under the Company’s existing
credit facility permitting the closing of the proposed combination;
and
- the initial approval from the
Pennsylvania Gaming Control Board for the transfer of interest in
Presque Isle Downs & Casino, the Company’s gaming
operations in Erie, Pennsylvania, in connection with the proposed
combination.
The proposed transaction remains subject to certain conditions
and approvals, including regulatory approvals from gaming
regulators in Louisiana, Nevada, Ohio, Pennsylvania and West
Virginia, approval by stockholders of MTR Gaming, registration and
listing of NewCo shares and customary closing conditions. The
transaction is expected to close in the second half of 2014. For
more information about these milestones and other conditions and
approvals required, please see the Registration Statement on
Form S-4 initially filed by Eclair Holdings Company with the
Securities and Exchange Commission on November 4, 2013, and as
amended from time to time, as well as other relevant documents
concerning the proposed combination.
Reconciliation of GAAP Measures to Non-GAAP Measures
Adjusted EBITDA represents earnings (losses) before interest
expense (income), income taxes, depreciation and amortization, gain
(loss) on the sale or disposal of property, other regulatory gaming
assessment costs, loss on asset impairment, project-opening costs,
strategic transaction costs, 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 4:30 p.m.
EDT. Interested parties may participate in the call by dialing
(888) 539-3696. Please call in 10 minutes before the call is
scheduled to begin and ask for the MTR Gaming call (conference ID
#1333875).
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 Tuesday, March 18, 2014 at
www.mtrgaming.com and by telephone at (877) 870-5176; passcode
1333875.
About MTR Gaming Group, Inc.
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
successful operation 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, Presque Isle Downs and Scioto Downs (including casino
gaming and video lottery terminals in Ohio), the successful
integration and operation of video lottery terminals at Scioto
Downs, the effectiveness of our marketing programs, the enactment
of future gaming legislation in the jurisdictions in which we
operate, 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
maintain or 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, the impact of our announced combination with
Eldorado, 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 Twelve Months Ended December
31 December 31 2013
2012 2013 2012
Revenues: Gaming $ 105,360 $ 106,184 $ 454,583 $
445,848 Pari-mutuel commissions 2,231 2,021 11,163 10,368 Food,
beverage and lodging 9,080 8,724 40,631 36,489 Other
3,110 3,251
12,692 11,392 Total
revenues 119,781 120,180 519,069 504,097 Less promotional
allowances
(4,957 )
(4,393 ) (21,278
) (17,108 ) Net
revenues
114,824
115,787 497,791
486,989 Operating expenses: Costs
of operating departments: Gaming Operating 62,157 62,816 266,781
266,804 Other regulatory assessments 201 373 (78 ) 391 Pari-mutuel
commissions 2,336 2,337 11,267 11,083 Food, beverage and lodging
7,386 7,442 31,795 28,554 Other 1,790 1,778 8,309 7,374 Marketing
and promotions 4,301 3,601 16,249 13,926 General and administrative
15,871 16,619 64,732 62,738 Strategic transaction costs 1,642 -
4,365 - Project opening costs - (13 ) - 2,705 Depreciation 7,676
7,532 30,458 27,511 (Gain) loss on the sale or disposal of property
(30 ) (48
) 38
(52 ) Total operating expenses
103,330 102,437
433,916 421,034
Operating income 11,494 13,350 63,875 65,955
Other income (expense): Interest income 6 9 32 168 Interest
expense, net of amounts capitalized
(17,395
) (17,351 )
(69,571 ) (67,993
) Loss from continuing operations before income
taxes (5,895 ) (3,992 ) (5,664 ) (1,870 ) Provision for income
taxes
(1,207 )
(1,500 ) (3,467
) (3,577 )
Loss from continuing operations
(7,102 )
(5,492 )
(9,131 )
(5,447 )
Discontinued operations: Income (loss) from discontinued operations
before income taxes - 1 - (277 ) Provision for income taxes
- -
- - Income (loss)
from discontinued operations
-
1 -
(277 ) Net loss
$ (7,102
) $
(5,491 )
$ (9,131
) $
(5,724 ) Net loss
per share - basic: Loss from continuing operations $ (0.25 ) $
(0.20 ) $ (0.32 ) $ (0.19 ) Loss from discontinued operations
$ - $ -
$ - $
(0.01 ) Net loss
$
(0.25 ) $ (0.20
) $ (0.32 )
$ (0.20 ) Net loss
per share - diluted: Loss from continuing operations $ (0.25 )
$ (0.20 ) $ (0.32 ) $ (0.19 ) Loss from discontinued operations
$ - $
0.00 $ -
$ (0.01 ) Net loss
$ (0.25 ) $
(0.20 ) $ (0.32
) $ (0.20 )
Weighted average number of shares outstanding: Basic
28,386,343
28,054,429 28,272,951
28,011,513 Diluted
28,386,343 28,054,429
28,272,951
28,011,513 (a) The classification of
costs related to discretionary coupons previously reported within
marketing and promotions has been revised to report such costs as a
component of promotional allowances for the 2013 and 2012 periods
presented. The revision is not material to our financials
statements, as the net effect of the revision did not impact our
operating income, net income, stockholders' equity, cash flows or
Adjusted EBITDA.
MTR GAMING GROUP, INC. SELECTED
FINANCIAL INFORMATION (dollars in thousands)
(unaudited) Three Months Ended
Twelve Months Ended December 31 December 31
2013 2012 2013 2012 Net
revenues: Mountaineer Casino, Racetrack & Resort $ 45,405 $
46,546 $ 196,912 $ 219,506 Presque Isle Downs & Casino 33,525
36,845 155,231 180,681 Scioto Downs 35,894 32,396 145,648 86,769
Corporate
- -
- 33
Consolidated net revenues $
114,824 $
115,787 $
497,791 $
486,989 Adjusted EBITDA
from continuing operations: Mountaineer Casino, Racetrack &
Resort $ 7,982 $ 7,187 $ 35,840 $ 43,498 Presque Isle Downs &
Casino 3,479 5,808 23,336 35,092 Scioto Downs 12,223 10,801 49,441
29,561 Corporate
(2,701 )
(2,602 ) (9,959
) (11,641 )
Consolidated Adjusted EBITDA from continuing operations
$ 20,983 $ 21,194 $
98,658 $ 96,510 Adjusted EBITDA from
discontinued operations
-
1 -
(277 ) Consolidated Adjusted
EBITDA $ 20,983
$ 21,195
$ 98,658
$ 96,233
__________________________________________________________________
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 Twelve Months Ended
December 31 December 31 2013
2012 2013 2012 Adjusted
EBITDA: Mountaineer Casino, Racetrack &
Resort: Net income $ 5,766 $ 4,819 $ 26,976 $ 32,760 Interest
income (4 ) - (6 ) - Benefit for income taxes (15 ) - (15 ) (13 )
Depreciation 2,224 2,367 8,925 10,755 Loss (gain) on the sale or
disposal of property
11
1 (40 )
(4 ) Adjusted EBITDA
$ 7,982 $
7,187 $ 35,840
$ 43,498 Net revenues
$ 45,405 $
46,546 $ 196,912
$ 219,506 Adjusted
EBITDA margin 17.6
% 15.4
% 18.2
% 19.8
% Presque Isle Downs &
Casino: Net income $ 655 $ 1,928 $ 12,949 $ 22,265 Interest
income and capitalized interest (1 ) (22 ) (3 ) (63 ) Provision for
income taxes 610 1,725 2,472 3,586 Depreciation 2,055 1,853 7,918
8,961 Other regulatory gaming assessments 201 373 (78 ) 391 (Gain)
loss on the sale or disposal of property
(41
) (49 )
78 (48 )
Adjusted EBITDA $ 3,479
$ 5,808 $
23,336 $ 35,092
Net revenues $ 33,525
$ 36,845 $
155,231 $ 180,681
Adjusted EBITDA margin
10.4 %
15.8 %
15.0 %
19.4 % MTR GAMING GROUP,
INC. SELECTED FINANCIAL INFORMATION (continued)
(dollars in thousands) (unaudited)
Three Months Ended Twelve Months Ended
December 31 December 31 2013 2012
2013 2012 Adjusted EBITDA (continued):
Scioto Downs: Net income $ 8,585 $ 7,740 $ 34,553 $ 20,333
Interest expense (capitalized interest) 22 - 83 (1,227 ) Provision
(benefit) for income taxes 227 (227 ) 1,224 - Depreciation 3,389
3,301 13,581 7,750 Project opening costs
-
(13 ) -
2,705 Adjusted EBITDA
$ 12,223 $
10,801 $ 49,441
$ 29,561 Net
revenues $ 35,894
$ 32,396 $
145,648 $ 86,769
Adjusted EBITDA margin
34.1 %
33.3 %
33.9 %
34.1 %
Corporate: Net loss $ (22,108 ) $ (19,979 ) $ (83,609 ) $
(80,805 ) Interest expense, net of interest income 17,372 17,364
69,465 69,115 Provision (benefit) for income taxes 385 2 (214 ) 4
Depreciation 8 11 34 45 Strategic transaction costs
1,642 -
4,365 - Adjusted
EBITDA $ (2,701 )
$ (2,602 ) $
(9,959 ) $
(11,641 ) Discontinued
operations: Net income (loss) $ - $ 1 $ - $ (277 ) Provision
for income taxes
- -
- -
Adjusted EBITDA $ -
$ 1 $ -
$ (277 )
MTR Gaming Group, Inc. (consolidated): Net loss $ (7,102 ) $
(5,491 ) $ (9,131 ) $ (5,724 ) Interest expense, net of interest
income and capitalized interest 17,389 17,342 69,539 67,825
Provision for income taxes 1,207 1,500 3,467 3,577 Depreciation
7,676 7,532 30,458 27,511 Other regulatory gaming assessments 201
373 (78 ) 391 Loss (gain) on the sale or disposal of property (30 )
(48 ) 38 (52 ) Project opening costs - (13 ) - 2,705 Strategic
transaction costs
1,642
- 4,365
- Consolidated Adjusted EBITDA
$ 20,983 $
21,195 $ 98,658
$ 96,233 Net
revenues $ 114,824
$ 115,787 $
497,791 $ 486,989
Adjusted EBITDA margin
18.3 %
18.3 %
19.8 %
19.8 % MTR GAMING GROUP,
INC. CONSOLIDATED BALANCE SHEETS (dollars in
thousands) December 31 December 31
2013 2012 (unaudited) ASSETS
Current assets: Cash and cash equivalents $ 100,124 $ 115,113
Restricted cash 7,255 4,088 Accounts receivable, net of allowance
for doubtful accounts of $151 in 2013 and $350 in 2012 4,853 3,934
Amounts due from West Virginia Lottery Commission - 17 Inventories
4,272 4,305 Deferred financing costs 1,642 1,642 Prepaid expenses
and other current assets
7,850
5,582 Total current assets 125,996 134,681
Property and equipment, net 371,364 387,015 Other intangible
assets 136,080 136,094 Deferred financing costs, net of current
portion 6,766 8,407 Deposits and other 1,801 1,908 Non-operating
real property 10,769 10,789 Assets of discontinued operations
184 181 Total
assets
$ 652,960 $
679,075 LIABILITIES AND STOCKHOLDERS'
EQUITY Current liabilities: Accounts payable $ 2,998 $
3,719 Accounts payable - gaming taxes and assessments 9,947 11,077
Accrued payroll and payroll taxes 5,466 5,776 Accrued interest
27,344 27,369 Accrued income taxes - 743 Other accrued liabilities
17,043 13,579 Construction project and equipment liabilities 788
481 License fee payable - 25,000 Deferred income taxes 837 1,472
Liabilities of discontinued operations
116
123 Total current liabilities
64,539 89,339 Long-term debt 558,834 556,716 Other
regulatory gaming assessments 4,806 5,319 Long-term compensation
871 871 Deferred income taxes 17,412 12,620 Other long-term
liabilities
497 517
Total liabilities
646,959
665,382 Stockholders' equity: Common
stock - - Additional paid-in capital 65,047 63,822 Accumulated
deficit (59,143 ) (50,012 ) Accumulated other comprehensive loss
(127 ) (341
) Total stockholders' equity of MTR Gaming Group, Inc.
5,777 13,469 Non-controlling interest of discontinued operations
224 224 Total
stockholders' equity
6,001
13,693 Total liabilities and stockholders'
equity
$ 652,960 $
679,075
MTR Gaming Group, Inc.www.mtrgaming.comJohn W. Bittner, Jr.Executive
Vice President and Chief Financial
Officer724-933-8122Jbittner@mtrgaming.com
Mtr Gaming (NASDAQ:MNTG)
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