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MTR Gaming Group, Inc. (MNTG)

Q1 2013 Earnings Call

May 7, 2013 04:30 pm ET


William R. Schmitt – Managing Director

Jeffrey J. Dahl – President and Chief Executive Officer

Joseph L. Billhimer, Jr. – Executive Vice President and Chief Operation Officer

John W. Bittner, Jr. – Executive Vice President and Chief Financial Officer


David Farber – Credit Suisse

James Kayler – BofA Merrill Lynch, Research Division

Douglas Pardon – Brigade Capital Management, LLC

John Maxwell – Jefferies

Andrew Berg – Post Advisory Group LLC

Dennis M. Farrell – Wells Fargo Securities LLC

Wade M. Pontius – JPMorgan



Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to the MTR Gaming Group First Quarter 2013 Earnings Conference. Just a reminder, that today's call is being recorded. (Operator Instructions) At this time all participants line are in a listen-only mode. Following the presentation, we will conduct the question-and-answer session and instructions will be provided at that time.

I would now like to turn the conference over to William Schmitt of ICR. Please go ahead, sir.

William R. Schmitt

Thank you Laurie and good afternoon everyone. Welcome to the MTR Gaming Group First Quarter 2013 Conference Call. Before we get started, I just want to remind you that the company's remarks may include forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 as amended and Section 21E of the Securities Exchange Act of 1934 as amended concerning the company's prospects. Actual results could differ materially from those projected or suggested in any forward-looking statements as a result of a variety of factors, which are described in the company's periodic reports filed with the Securities and Exchange Commission and in the company's news releases.

Additionally, the company may discuss EBITDA, or earnings before interest, taxes, depreciation and amortization, which is a non-GAAP financial measure. Such information and any disclosure required by the SEC Regulation G can be found in MTR's May 7, 2013 news release, which is reproduced on the company's website under Investor Relations.

Finally, under certain circumstances, the federal securities laws may require the company to file a transcript of this call, including your questions, with the SEC. Accordingly, if you ask a question, the company will assume that you have consented to the inclusion of your question and identity in any such required filing.

It is now my pleasure to introduce your host, Mr. Jeff Dahl, President and CEO for MTR Gaming. Jeff?

Jeffrey J. Dahl

Thanks, Bill. Good afternoon, everyone and thank you for your interest in MTR Gaming. Joining me on the call today are several members of our senior leadership team; John Bittner, our CFO; Joe Billhimer, Chief Operating Officer; Nick Rodriguez-Cayro, our General Counsel; and Fred Buro, our Chief Marketing Officer.

As you know I tendered my resignation as CEO and President of MTR Gaming Group on March 27, and have agreed to continue in that capacity for a reasonable period of time, while the board conducts it’s interview process for a new CEO.

It has been an honor to have led MTR for the last several years and I am pleased with what we have accomplished. The team we have in place is among the best I have worked with and I am fully confident that they will be able to continue the progress we have made.

I would now like to hand the call over to Joe Billhimer, our COO.

Joseph L. Billhimer, Jr.

Thank you, Jeff. First I would like to thank Jeff for his commitment to MTR over the last two and half years and I know I speak for the entire MTR family when I say we are going to miss his leadership. Just a few words on the first quarter of 2013 and I will turn it over to John Bittner to discuss the financials in more detail.

In the first quarter we had record adjusted EBITDA of $25 million on a increase 14.3% in net revenues to $123.3 million. We continue to be very pleased with the performance of Scioto Downs, which has exceeded our expectations to date. Adjusted EBITDA at Scioto Downs improved by $2 million on net revenue increases of $2.5 million over the fourth quarter 2012 representing a 60% flow through margin highlighting the efficiency of this property.

The property continues to enjoy a premium of market share on the VLT in the Columbus market. Despite this success we have faced some headwinds at Presque Isle Downs and Mountaineer Park due to increased competition and new supply in these markets as well as continued consumer weakness and what we would describe has a very difficult weather comparison to 2012 when we experienced unusually mild weather.

These contributing factors led to suppress margin in January and February, however we saw positive trends in March that we expec will continue through the reminder of 2013.

Looking forward, we will continue to focus on our marketing programs at all three facilities. At Scioto Downs, we continue to see new member sign-ups increasing nicely and at the end of April, we had over 213,000 players in our in-club database.

At Presque Isle Downs, we will continue to focus on direct mail enhancements along with updating our slot machines, while refreshing the gaming floor and buffet. The Mountaineer Park management team has been focused on numerous projects including room renovation plans for more than half of the 354 hotel rooms along with new slot machines. All of our management teams are focused on cost controls and are working together with the corporate team to find efficiencies for the organization.

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