FOR IMMEDIATE RELEASE
MTR GAMING GROUP ANNOUNCES PRELIMINARY FOURTH QUARTER 2001
RESULTS
COMPANY PROVIDES FINANCIAL GUIDANCE FOR 2002
CHESTER,
WV – February 25, 2002 – MTR Gaming Group,
Inc. (Nasdaq National Market:MNTG) today announced preliminary
financial results for the fourth quarter ended December 31,
2001 and provided first quarter and full year guidance for
2002. Fourth Quarter 2001
Revenues for the fourth quarter are expected to be $54.2 million,
up 31% over last year’s final quarter. The revenue
increase was aided by good weather, but somewhat mitigated
by ongoing supplier delays in converting slot machines at
the Company’s Mountaineer Casino Racetrack and Resort
to accept the increased maximum wager of $5.00 and the corresponding
delay in the Company’s ability to promote and thus
realize the benefits of this new bet limit.
Management expects to report EBITDA (earnings before interest,
taxes, depreciation and amortization) for the fourth quarter
of 2001 of $8.2 - 8.5 million, up from $6.1 million in last
year’s fourth quarter. Net income is expected to be $2.9
- $3.1 million or $.10 - $.11 per diluted share, up from $2.4
million or $.09 per diluted share. Diluted earnings per share
will be calculated on approximately 10% more shares in the
fourth quarter of 2001 compared to the fourth quarter of 2000.
These estimates exclude any non-cash pre-tax charges related
to a write-down of the value of the Company’s Reno assets,
the amount of which has not been determined, pending the conclusion
of the audit of the Company’s financial statements for
the year ended December 31, 2001.
For the fiscal year ended December 31, 2001, revenues are
expected to be $218.5 million, representing a 28% increase
over the fiscal 2000 level. EBITDA is expected to be $42.1
- 42.4 million, up at least 31% from $32.1 million in fiscal
2000. Net income before any non-cash charges is expected to
be $19.2 - 19.4 million or $.70 - .71 per diluted share, compared
to $15.1 million or $.59 per diluted share in fiscal 2000.
Diluted earnings per share will be calculated on approximately
8% more shares in fiscal 2001 compared to fiscal 2000.
These results are preliminary and subject to the finalization
of the Company’s year-end audit.
Edson R. (Ted) Arneault, President and CEO of MTR Gaming Group,
commented, “Despite our record revenues, we can sum up
the factors that impacted profit margins in the fourth quarter
in a single word: growth. To elaborate, the pursuit of our
long-range plans for internal and external growth, which we
continue to embrace, resulted in increased general & administrative
expenses, increased depreciation expense, and higher costs
of gaming as a percentage of revenue, as follows:
- The increase from prior quarters in general & administrative
expenses was in large part related to additional compensation,
including several senior level positions added in preparation
for the opening of the new hotel in the second quarter of 2002
and its anticipated impact on the utilization of Mountaineer’s
other offerings. We also incurred professional fees and expenses
related to other aspects of the Company’s corporate development
activities.
- Beginning in the middle of the third quarter, additional
depreciation expense was incurred from the new facilities,
including the convention center and the new gaming room, which
should be more fully utilized when the new hotel opens. In
fact, our capital expenditures in 2001 were approximately $58
million, and net property and equipment increased to approximately
$140.7 million as of December 31, 2001 from $127.3 million
as of September 30, 2001.
- In addition, the direct costs associated with gaming activities
as a proportion of gaming revenues was approximately one percentage
point greater than in the third quarter of 2001 due to additional
staffing required for the new gaming room, which opened in
mid-August and enabled the addition of 595 slot machines. Also,
as previously announced, effective July 1, 2001, the State
of West Virginia increased our video lottery administrative
fees and taxes.”
Mr. Arneault continued, “While we cannot control third
party equipment suppliers or increases in taxes and fees, and
must incur additional expenses as we prepare to expand our
facilities, we are taking the following steps to improve our
profitability:
- We are working diligently with the manufacturers and the
Lottery Commission to fully implement the new bet limit as
soon as possible, but we do not have a firm commitment for
the timing. Approximately 828 of Mountaineer’s 2,500
slots now accept the new maximum bet.
- We are moving 80 slot machines from the racetrack grandstand
to the Speakeasy Casino, where we realize a significantly higher
win-per-day-per-machine.
- We are rearranging key machines to achieve a better product
mix.
- We have applied to add 500 more slot machines at Mountaineer,
which is subject to regulatory approval.
“As we reported in our Quarterly Report for the three
and nine months ended September 30, 2001, ‘Finally, and
most significant, management does not expect optimum efficiency
or performance from the existing operations at Mountaineer
Park until the remainder of Phase II of the expansion (i.e.
the convention center, the new game room and the 260-room Hotel)
is completed and absorbed. For example, management does not
expect to maximize the performance of the Harv, the Spa or
the new Riverside Buffet until Mountaineer Park develops a
steady convention business. Likewise, the convention center
is not expected to achieve its potential until completion of
the hotel. All of these amenities are designed to drive parimutuel
and slot wagering, particularly during what have traditionally
been off-peak operating hours.’ We continue to believe
that a greater percentage of revenue growth will be realized
as operating income and net income when Phase II is completed
in the second quarter of 2002 with the opening of the new hotel.
As we grow into a full-service destination resort, we also
further distinguish Mountaineer from existing racinos as well
as any new competition that could emerge in neighboring states
in the future.”
2002 Outlook
Because of the number of variables that can affect financial
results during periods of rapid growth and expansion, the
Company has been reluctant to provide projections. However,
due to
the variance between the preliminary fourth quarter results
and estimates published by securities analysts, management
is providing guidance for the current quarter and year.
For the 2002 first quarter ending March 31, 2002, the Company
expects to report revenues of $56 - 59 million, EBITDA of $10.5
- 12 million and net income of $4.5 - 5 million or $.16 - .18
per diluted share (based on 28 million diluted shares). This
compares to revenues of $48.6 million, EBITDA of $9.7 million
and net income of $4.3 million or $.17 per diluted share (based
on 26 million diluted shares) in the first quarter of 2001.
For the fiscal year ending December 31, 2002, the Company
expects to achieve revenue growth of at least 25%, resulting
in revenues of approximately $275 million. MTR anticipates
EBITDA increasing to $60 - 63 million and net income reaching
$27 - 29 million or $.96 - 1.03 per diluted share in 2002 based
on 28 million diluted shares.
Mr. Arneault concluded, “We continue to be confident
in our business plan and optimistic about our long-term prospects.
We look forward to reporting our progress.”
About MTR Gaming Group
MTR Gaming Group owns and operates the Mountaineer Casino Racetrack and 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 the Ramada Inn and Speedway Casino in North
Las Vegas, and holds a license to build a new thoroughbred
racetrack with parimutuel wagering in Erie, Pennsylvania. MTR
is included on the Russell 2000® and Russell® 3000
Indexes. For more information, please visit www.mtrgaming.com. About Scioto Downs
Scioto Downs owns and operates a harness horse racing facility in Columbus,
OH. Major racing programs conducted at Scioto’s facilities include
the Little Brown Jug Preview, the Scarlet O’Hara, the Pink Bonnet,
the Ohio Sires Stakes events and Ohio Fair stakes events.
Except for historical information, this
press release contains forward-looking statements concerning,
among other things, the acquisition of Scioto Downs, Inc.
Such statements are based on MTR’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 are described in the Company’s
periodic reports filed with the Securities and Exchange Commission,
and with respect to the Scioto Downs acquisition are described
in the Merger Agreement, as amended, which is attached as
exhibits to the Company’s reports on Forms 8-K filed
December 24, 2002, March 5, 2003, and May 7, 2003. MTR’s
plans to build a racetrack in Erie, Pennsylvania remain subject
to the possibility of 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. The Company
does not intend to update publicly any forward-looking statements,
except as may be required by law. |
