For Ted Arnault, president and CEO of MTR Gaming Group (MNTG), the announced financial results for the first quarter that ended on March 31, were threatening to his career.
Frustrated investors during a conference all, unhappy with the quarterly results, urged Arnault to move over to let other people try to run the company. That was not part of Arnault’s immediate plans and he begged the gathering for a little patience.
For the quarter, the company reported revenues of $63.6 million and net income of $3.32 million or $0.12 a diluted share. During the same period a year ago, the company had revenues of $59.4 million and net income of $5.05 million, or $0.19 a share.
Despite the higher revenues, including an increase of 6% in net win from the Mountaineer Race Track & Gaming Resort to $54.6 million, the company’s earnings were too weak for the people whose investments were at risk. They wanted more than the excuses Arnault offered.
He cited bad weather in January and February at the Chester, West Virginia, racetrack, as well as the costs of several expansion projects last year. These included a 258-room luxury hotel that reported a 52% occupancy rate in the quarter that just ended.
The 52% occupancy rate revelation was pounced on by an investor who suggested that few casino hotels have such a low rate. Arnault rebutted that the property is in its first year and that the future looks brighter with weekends sold out and a major mid-week sales program growing.
He said the company was strongly focused on taking advantage of developing areas such as Pennsylvania and Ohio where the prospects of track slots legislation have been improving. He noted that the company is building a track near Erie, Penn., and has an agreement to acquire a harness racing facility in Ohio should a slots referendum pass this November.
"We’re looking at a short-term decline for major long-term increase," he said, adding that a positive impact on revenues probably won’t be seen for another 12 to 18 months.
Rising revenues and a close focus on expenses helped Churchill Downs Inc. (CHDN) reduce its expected net loss to $11.5 million or $0.87 a share during the last quarter compared to a net loss of $12 million or $0.92 a share in the first quarter of 2002.
The first quarter loss happens annually since the company does not have a live racing track to boost its revenues.
"While regulatory decisions had an impact on our business, our racing calendar remains the greatest single influence on our first quarter financial results. With the absence of significant live racing events and revenues during this period, we continued to focus on ”˜best practices’ efforts in expense management to curtail our loss for the quarter," said Tom Meeker, president and CEO.
However, Meeker added, there were some positive developments that would encourage the company to increase its guidance for the second quarter.
"At present, we anticipate earnings for the second quarter will range from $2.00 to $2.07 per diluted share. That range exceeds the $1.73 per diluted share earnings in previous guidance and is largely a result of the shift of Arlington Park’s 2003 racing calendar from the fourth quarter to the second quarter, which will add 19 days of racing in the second quarter of 2003 versus the same period in 2002. Our guidance for earnings for the full year remains at approximately $1.80 per diluted share, compared to $1.57 per share in 2002 after the asset impairment loss at Ellis Park that reduced earnings by $0.21," Meeker said.
Reporting revenues that increased 70%, Acres Gaming Inc. (AGAM) officials said the income for the third quarter of the fiscal year was $3.1 million or $0.67 per diluted share compared to the net loss before taxes of $259,000 or $0.03 a share in the comparable period of a year ago. However, the income included a tax benefit of $4.2 million from the elimination of deferred tax asset valuation reserves.
Revenues for the quarter increased to $9.5 million from last year’s $5.6 million while the gross profit margin jumped to 76% from last year’s 49%.
During the current quarter, the company said it expects to recognize revenues of approximately $8.6 million in connection with the previously announced patent license and litigation settlement agreements with International Game Technology (IGT).
Also, the company said that approximately $4 million of revenue from Station Casinos Inc. (STN) that the company had expected to recognize in fiscal 2003 it now expects to recognize in fiscal 2004.