Mountaineer stock tanks

Aug 13, 2002 12:16 PM

Ted Arneault, CEO of MTR Gaming (MNTG), got a jolt on Friday when the share price of his company fell nearly 30% on the news that business hasn’t been as good as expected at the company’s racino, Mountaineer Park in West Virginia.

This is probably the first time in the recent history of racinos that a company has announced that it is installing additional machines and the quarterly income has dropped nearly 50%.

"While we had anticipated raising guidance once the additional 500 slot machines were installed," Arneault said, "We are experiencing lower than anticipated gain from the increased bet limit," he said.

For the quarter ending on June 30, the company said net income totaled $3.9 million or $0.13 a share compared to last year when the net was $5.13 million or $0.22 a share.

In announcing the recent results, the company reduced its guidance for the year, saying the expected revenue for 2002 would be between $265 million to $275 million, or between $0.72 and $0.78 a share. Previously the company had anticipated earnings per share of between $0.93 and $1.00.

Commenting on the second quarter results, Arneault said, "During periods of rapid growth and expansion, a number of variables can affect quarterly financial results. Nevertheless, we are disappointed with the operating results for the second quarter, and are focused on two areas — further ramping up revenues by aggressively marketing Mountaineer, and challenging our cost structure."

However, he said he was pleased with the results achieved at the company’s Ramada Inn and Speedway Casino in North Las Vegas. He said the period marked the third consecutive quarter in which the North Las Vegas property has generated positive cash flow.

On Monday, nearly 1.3 million shares traded with the company’s shares closing at $8.30, an increase of $0.46 for the day.