Downtown firms see improvements coming

May 16, 2006 4:08 AM

Downtown casinos figured prominently in the quarterly reports of MTR Gaming Group Inc. (MNTG), owner of Binion’s Las Vegas Gambling Hall, and Landry’s Restaurants, Inc. (LNY), owner of the Golden Nugget Hotel/Casino.

MTR Gaming officials said they were pleased with the improvement being shown by Binion’s following the introduction of property improvements and new promotions since the casino was acquired on March 10, 2005.

The property accounted for $6.5 million of net revenues and generated EBITDA (earnings before interest, taxes, depreciation and amortization) of $609,000.

Company-wide, the first quarter revenues, net of promotional allowances, increased 22% to $93 million from last year’s $76.5million. Net income was up 16% to $3.4 million or $0.12 per diluted share from $2.9 million or $0.10 per diluted share in the first quarter of last year.

At Mountaineer Race Tack & Gaming Resort in Chester, West Virginia, the company benefited from the introduction of new game themes and enhanced slots. Net revenues were $71.8 million compared to $68.4 million last year.

Causing a drag on first quarter profits were the results from Scioto Downs harness racing track in Ohio. That facility posted an operating loss of $558,000, or 4% better than a year ago when the loss was $583,000. The company acquired the track in 2003 with the hope that Ohio voters would approve casino or slot machine gambling. That never happened, although a major effort has been rekindled to bring the matter before the voters in November.

Also, company executives have set their sights on Pennsylvania where an $80 million racetrack casino is under construction in Erie. They hope to be operating the track with 1,600 slot machines as soon as gaming licenses are awarded, possibly this fall.

Landry’s Restaurants

For Landry’s Restaurants Inc. (LNY), a fall in profits was caused by the higher interest expense incurred when the company purchased the Golden Nugget Hotel/Casino in September, 2005.

However, revenues increased to $357 million from the prior year’s $281.3 million, all but $12.2 million coming from the downtown Las Vegas casino/hotel. Net income for the first quarter was $7 million, down slightly from last year’s $7.4 million. Earnings per share rose from last year’s $0.29 to $0.32 per share in the current quarter.

Net interest expense, primarily associated with the casino acquisition increased to $14.9 million pre-tax from $8.6 million pre-tax in the comparable quarter of a year ago.

In reviewing the first quarter’s experience, Tilman Fertitta, chairman and CEO, remarked, "We are very pleased with the continued strong results at the Golden Nugget properties, particularly in downtown Las Vegas. We remain extremely optimistic about the Golden Nugget’s potential when our renovations are completed."

Scientific Games

Scientific Games Corp. (SGMS) reported a strong quarter with revenues increasing 13% from $208.1 million over the $184.6 million recorded during the corresponding period of a year ago.

Excluding extraordinary charges, the company earned $26.9 million or $0.29 per share. Analysts had forecast revenue of $205 million and earnings per share of $0.27.

After the charges for severance costs and stock compensation expense, the company had earnings per share of $0.24.

Of the company’s three main business segments, two reported gains, the company said. Printed products revenue rose 5% and lottery systems jumped 35%. Revenues lagged in the third segment, the Diversified Gaming Group.

Just before the closing of the reporting period, said Lorne Weil, chairman and CEO, the company completed a licensing deal with Major League Baseball that will include team-oriented games and prizes.

A Red Sox themed game for the Massachusetts Lottery had "an extremely strong launch early in the second quarter, to be followed shortly by a Subways Series game featuring the Yankees and Mets for the New York Lottery," he said.

Also, it was noted, the company is the successful vendor for a new instant ticket contract for the New Hampshire Lottery and the secondary supplier to the Maryland Lottery. Both lotteries had not previously been an instant ticket customer of Scientific Games.