MTR Gaming profits slip in second quarter

Gavin McCormick

Thursday, July 31, 2003 | 9:21 a.m.

CHARLESTON, W.Va. -- MTR Gaming Group reported today that second-quarter profits fell 10 percent from the same period last year despite a 24 percent increase in revenue.

MTR attributed the decline to higher interest payments on a $130 million financing package completed in March and higher depreciation costs for expanded facilities at Mountaineer Race Track & Gaming Resort in Chester.

Net income totaled $3.5 million, or 12 cents per diluted share, on revenue of $75.5 million. In the 2002 second quarter MTR made $3.9 million, or 13 cents per diluted share, on revenue of $67.1 million.

CEO Ted Arneault said in a news release that he was pleased with the results, citing both revenue growth and 24 percent growth in earnings before interest and depreciation costs were accounted for.

After similarly weak first-quarter results, including a profit of $3.32 million, investors frustrated with the delay of larger returns from the company's West Virginia racetrack asked Arneault to step down.

Mountaineer's net win from slot machines rose 13 percent to $63.5 million, up from $55.25 million for the same period last year.

Daily revenue from the slot machines fell to an average $224 compared to $252 in the 2002 second quarter, but the company added 658 machines and now has 3,114.

Arneault said expansion plans at three sites remain on schedule: a $19 million purchase of Scioto Downs near Columbus, Ohio, scheduled to close today; construction of a $56 million track near Erie, Pa.; and an application to build Keystone Downs, a $100 million track in Harmar Township, Pa., about 11 miles northeast of Pittsburgh.

Six other groups have applied for a license at the Harmar Township site, which will be Pennsylvania's sixth and final licensed thoroughbred racetrack.

"All three plans for external growth fit well with our strategy to diversify, leverage our expertise and hedge our market position in the event of enhanced gaming legislation in either Pennsylvania or Ohio," Arneault said.

In North Las Vegas, MTR owns the Speedway casino.