MTR Gaming Group Provides Guidance for 2008 and Discusses Fourth Quarter and Year-End Results

MTR Gaming Group, Inc. (NasdaqGS:MNTG) today provided financial guidance for the year ending December 31, 2008 and discusses fourth quarter and year ended December 31, 2007, financial results. See attached tables (including Reconciliation of Non-GAAP Measures to GAAP). 2008 Guidance Management is projecting the following for 2008: Total revenues of at least $504 million, an increase of at least 15% over continuing operations in 2007; EBITDA of at least $72 million, an increase of at least 30% over continuing operations in 2007; and Income from continuing operations of at least $5 million, an increase of at least 179% over continuing operations in 2007. Fourth Quarter and Year-End 2007 Results For the fourth quarter of 2007, net revenues were $102.0 million, up 40% from $72.7 million in the same period of 2006. EBITDA from continuing operations was $8.0 million compared to $11.7 million in the fourth quarter of 2006. MTR reported a loss from continuing operations of $8.0 million or $0.29 per diluted share, versus income from continuing operations of $1.8 million or $0.07 per diluted share in the prior year’s fourth quarter. The decrease in EBITDA is attributable to a decline in Mountaineer EBITDA of approximately $9.1 million that reflects a decline in net revenues of approximately $8.1 million, increased marketing and general administrative expenses and preopening expenses related to the commencement of table games operations of approximately $1.5 million, offset in part by Presque Isle Down’s EBITDA contribution of $6.4 million. The decline in income from continuing operations reflects the factors impacting EBITDA and increased interest expense of approximately $6.3 million. As was the case in the third quarter of 2007, Binion’s is reflected as discontinued operations and incurred a loss from discontinued operations of $0.6 million or $0.02 per diluted share, versus $1.3 million or $0.05 per diluted share in the fourth quarter of 2006. The sale of Binion’s closed on March 7, 2008. MTR’s overall net loss was $8.6 million or $0.31 per diluted share for the fourth quarter of 2007 compared to net income of $518,000 or $0.02 per diluted share in the fourth quarter of 2006. Fourth quarter net revenues at Mountaineer Casino, Racetrack & Resort were $59.9 million compared to $68.0 million in the fourth quarter of 2006, and the property generated EBITDA of $6.3 million, compared to $15.4 million in the same period of 2006. The Company attributes the revenue decrease to the opening of gaming operations in Pennsylvania in 2007, however, since December 20, 2007, with the opening of table games at Mountaineer, attendance has improved, as have Mountaineer’s slot revenues. From December 20, 2007 through March 31, 2008, table games have generated approximately $10.9 million in revenues, and from October 19, 2007 through March 31, 2008, poker games have generated approximately $4.0 million in revenues. Mountaineer’s ancillary revenues from its restaurants, hotel, stores, and other amenities have likewise increased since the commencement of poker and table games. Presque Isle Downs, which opened on February 28, 2007, contributed net revenues of $38.1 million and EBITDA of $5.0 million in the 2007 fourth quarter. The Speedway Casino in North Las Vegas accounted for net revenues of $2.6 million and an EBITDA contribution of $0.1 million for the fourth quarter, compared to $3.0 million in net revenues and an EBITDA contribution of $558,000 for the 2006 fourth quarter. As announced on January 14, 2008, MTR’s subsidiary, Speakeasy Gaming of Las Vegas, Inc., completed the sale of Speedway Casino’s real property in North Las Vegas, NV to Ganaste, LLC for $11.4 million in cash. The second phase of the transaction, which is subject to regulatory approval, calls for the sale of the gaming assets to Lucky Lucy D, LLC, for a total of $6.775 million, comprised of $2.0 million in cash at closing and the balance of up to $4.775 million in an earn-out based on the property’s gross revenues over the next four years. Pending regulatory approval and closing of the Lucky Lucy transaction, Speakeasy Gaming of Las Vegas will continue to operate the property pursuant to a short-term lease. As previously reported, MTR Gaming completed the sale of Binion’s Gambling Hall & Hotel to TLC Casino Enterprises, Inc. on March 10th. The transaction was subject to purchase price adjustments based on changes in net working capital, certain capital expenditures between execution and closing, and, due to market conditions, a $3.5 million working capital adjustment which remained with Binion’s upon closing. Net cash to the Company at closing was approximately $28.5 million of which $27.6 million was utilized to reduce amounts outstanding under our credit facility. For the year ended December 31, 2007, MTR’s net revenues were $429.9 million, a 37% increase from $313.0 million in 2006, reflecting the addition of Presque Isle Downs. EBITDA was $55.4 million versus $51.7 million in the prior year, similarly due in large part to the contribution of Presque Isle Downs. Net loss from continuing operations was $6.3 million or $0.23 per diluted share, while discontinued operations produced a net loss of $5.1 million or $0.18 per diluted share, resulting in an overall net loss of $11.4 million or $0.41 per diluted share compared to net income of $4.4 million or $0.16 per diluted share in 2006, which included a $3.4 million or $0.12 per diluted share loss from discontinued operations. The factors contributing to the decline in operating results for continuing operations were the decline in margins at Mountaineer stemming from new competition in Pennsylvania, preopening expenses related to Presque Isle Downs and the commencement of poker and table gaming at Mountaineer, operating inefficiencies at Presque Isle Downs that are inherent in the commencement of a new operation, and increased interest expense. Edson R. (Ted) Arneault, President and CEO of MTR Gaming Group, stated, "In 2007, we focused on building and strengthening MTR and its core properties. The completion of the sale of Binion’s, as well as the expected sale of the Speedway Casino, will allow us to focus on growing and optimizing MTR’s core assets in 2008. The opening of table games at Mountaineer has provided the Company with an exciting competitive advantage over its Pennsylvania competition. Since the commencement of table games, setting aside the extremely bad weather that Mountaineer had to contend with during March, we are seeing a significant positive trend in Mountaineer’s slot machine revenue.” "With regard to Presque Isle Downs, slot win per day per machine of $231 in 2007 exceeded our expectations. As for margins, after our first full year of operation, we expect EBITDA margins going forward to average in the 17 to 20 percent range.” Regarding the Company’s new property in Minnesota, Mr. Arneault stated, "We are pleased to report that the Running Aces Harness Park is on schedule to open later this month 30 miles north of downtown Minneapolis. This project is also set to open a 50 table card room in July. In June 2004, we acquired a 50% interest in the North Metro Harness Initiative, LLC, which is developing the harness racetrack and card room, and look forward to reporting on the performance of this property later this year.” Reconciliation of Non-GAAP Measures to GAAP EBITDA represents earnings (losses) before interest, income tax expense (benefit), depreciation and amortization, equity in loss of unconsolidated joint venture and gain (loss) on disposal of property. EBITDA is not a measure of performance or liquidity calculated in accordance with generally accepted accounting principles ("GAAP”), is unaudited and should not be considered as an alternative to, or more meaningful than, net income or income from operations as an indicator of our operating performance, or cash flows from operating activities, as measures of liquidity. EBITDA has been presented as a supplemental disclosure because it is a widely used measure of performance and basis’ for valuation of companies in our industry. Uses of cash flows that are not reflected in EBITDA include capital expenditures (which are significant given our expansion), interest payments, income taxes, and debt principal repayments. Moreover, other companies that provide EBITDA information may calculate EBITDA differently than we do. A reconciliation of GAAP net income (loss) to EBITDA is included in the financial tables accompanying this release. Conference Call Management will conduct a conference call focusing on the financial results and recent corporate developments on Monday, April 7, 2008 at 4:30 pm ET. Interested parties may participate in the call by dialing (706) 679-0882 – please call in 10 minutes before the call is scheduled to begin and ask for the MTR Gaming call (conference ID# 32806582). The conference call will be webcast live via the Investor Relations section of the Company’s website at www.mtrgaming.com. To listen to the live webcast please go to the website at least 15 minutes early to register, download and install any necessary audio software. If you are unable to listen live, the conference call, as well as this press release, will be archived on the Investor Relations section of the Company’s web site. About MTR Gaming Group MTR Gaming Group, Inc., through subsidiaries, owns and operates the Mountaineer Casino, Racetrack & Resort in Chester, WV; Presque Isle Downs & Casino in Erie, PA; Scioto Downs in Columbus, OH; and the gaming assets and operations located in the Ramada Inn and Speedway Casino in North Las Vegas, NV (under contract for sale). The Company also owns a 90% interest in Jackson Trotting Association, LLC, which operates Jackson Harness Raceway in Jackson, MI, and a 50% interest in the North Metro Harness Initiative, LLC, which is developing a harness racetrack and card room 30 miles north of downtown Minneapolis. MTR is included on the Russell 2000® and Russell® 3000 Indexes. For more information, please visit www.mtrgaming.com. Except for historical information, this press release contains forward-looking statements concerning, among other things, financial performance for 2008, the opening of the Running Aces Harness Park and card room in Minnesota, and the prospects for improving the results of our operations at Mountaineer and Presque Isle Downs. Such statements are subject to a number of risks and uncertainties that could cause the statements made to be incorrect and/or for actual results to differ materially. Those risks and uncertainties include, but are not limited to, the absence of any new competition for Mountaineer and Presque Isle Downs in 2008, no increase in the gaming tax rates that the Company currently pays in its various jurisdictions, the completion of the sale of the Speedway Casino’s gaming assets in 2008, general economic conditions, disruption (occasioned by weather conditions or work stoppages) of our operations and the success of the table gaming at Mountaineer (including the anticipated continued positive impact of table gaming on slot operations and resort operations), our ability to improve our operating margins, the timely opening of racing operations at Running Aces Harness Park in April and the opening of card room operations by July, our continued suitability to hold and obtain renewals of our gaming and racing licenses, our compliance with environmental laws and potential exposure to environmental liabilities, and other factors described in the Company’s periodic reports filed with the Securities and Exchange Commission. The Company does not intend to update publicly any forward-looking statements, except as may be required by law. The cautionary advice in this paragraph is permitted by the Private Securities Litigation Reform Act of 1995. MTR GAMING GROUP, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (dollars in thousands, except per share amounts)         Three Months Ended Year Ended December 31 December 31 2007 2006 2007 2006 (unaudited) Revenues: Gaming $ 90,233 $ 62,732 $ 379,313 $ 268,322 Parimutuel commissions 3,646 3,353 15,964 15,827 Food, beverage and lodging 7,724 5,782 33,044 26,047 Other   2,205     2,100     8,217     7,981   Total revenues 103,808 73,967 436,538 318,177 Less promotional allowances   (1,828 )   (1,286 )   (6,646 )   (5,143 ) Net revenues   101,980     72,681     429,892     313,034     Operating expenses: Expenses of operating departments: Gaming 56,953 36,423 235,496 159,654 Parimutuel commissions 3,534 2,937 14,142 12,613 Food, beverage and lodging 7,146 4,360 28,321 18,516 Other revenue 1,830 1,705 7,234 7,330 Marketing and promotions 4,987 2,125 18,760 9,718 General and administrative 18,088 12,193 65,178 51,510 Depreciation 8,111 5,093 28,640 20,986 Loss (gain) on disposal of property 22 (29 ) 128 245 Project opening costs   1,460     1,300     5,578     2,268   Total operating expenses   102,131     66,107     403,477     282,840     Operating (loss) income (151 ) 6,574 26,415 30,194   Other (expense) income: Equity in loss of unconsolidated joint venture (124 ) - (234 ) - Interest income 66 477 401 1,967 Interest expense   (10,548 )   (4,257 )   (35,171 )   (17,462 )     (Loss) income from continuing operations before income taxes and minority interest   (10,757 ) 2,794 (8,589 ) 14,699   Benefit (provision) for income taxes   2,730     (1,045 )   2,115     (7,058 )   (Loss) income from continuing operations before minority interest (8,027 ) 1,749 (6,474 ) 7,641   Minority interest   59     74     196     195     (Loss) income from continuing operations   (7,968 )   1,823     (6,278 )   7,836     Discontinued operations: Loss from discontinued operations before income taxes (2,083 ) (1,941 ) (7,972 ) (5,359 ) Benefit for income taxes   1,478     636     2,891     1,969   Loss from discontinued operations   (605 )   (1,305 )   (5,081 )   (3,390 )   Net (loss) income $ (8,573 ) $ 518   $ (11,359 ) $ 4,446     Net (loss) income per share - basic: (Loss) income from continuing operations $ (0.29 ) $ 0.07 $ (0.23 ) $ 0.28 Loss from discontinued operations   (0.02 )   (0.05 )   (0.18 )   (0.12 ) Net (loss) income $ (0.31 ) $ 0.02   $ (0.41 ) $ 0.16     Net (loss) income per share - diluted: (Loss) income from continuing operations $ (0.29 ) $ 0.07 $ (0.23 ) $ 0.28 Loss from discontinued operations   (0.02 )   (0.05 )   (0.18 )   (0.12 ) Net (loss) income $ (0.31 ) $ 0.02   $ (0.41 ) $ 0.16     Weighted average number of shares outstanding: Basic   27,523,584     27,500,050     27,537,785     27,483,392   Diluted   27,523,584     27,807,840     27,537,785     27,764,688   MTR GAMING GROUP, INC. SELECTED FINANCIAL INFORMATION (dollars in thousands) (unaudited)         Three Months Ended Year Ended December 31 December 31 2007 2006 2007 2006   Net revenues from continuing operations: Mountaineer $ 59,903 $ 68,018 $ 261,385 $ 292,313 Presque Isle Downs 38,149 - 149,858 - Las Vegas Speedway 2,551 2,955 10,988 12,010 Scioto Downs 820 1,033 4,562 5,455 Jackson Racing 554 672 3,059 3,244 North Metro - - 28 - Corporate   3     3     12     12   Consolidated net revenues from continuing operations $ 101,980   $ 72,681   $ 429,892   $ 313,034       EBITDA from continuing operations: Mountaineer $ 6,265 $ 15,396 $ 44,774 $ 67,667 Presque Isle Downs 4,976 (1,443 ) 23,732 (2,410 ) Las Vegas Speedway 105 558 1,260 2,463 Scioto Downs (285 ) (750 ) (1,712 ) (4,125 ) Jackson Racing (126 ) (227 ) (523 ) (328 ) North Metro (13 ) (70 ) (193 ) (263 ) Corporate   (2,926 )   (1,742 )   (11,939 )   (11,291 ) Consolidated EBITDA from continuing operations $ 7,996 $ 11,722 $ 55,399 $ 51,713   EBITDA from discontinued operations   (1,710 )   (1,515 )   (5,355 )   (3,160 ) Consolidated EBITDA $ 6,286   $ 10,207   $ 50,044   $ 48,553   MTR GAMING GROUP, INC. SELECTED FINANCIAL INFORMATION (continued) RECONCILIATION OF NET INCOME (LOSS) TO EBITDA (dollars in thousands) (unaudited)         The following tables set forth a reconciliation of net income (loss), a GAAP financial measure, to EBITDA, non-GAAP financial measures.   Three Months Ended Year Ended December 31 December 31 2007 2006 2007 2006   EBITDA FROM CONTINUING OPERATIONS:   Mountaineer: (Loss) income from continuing operations $ (2,380 ) $ 6,743 $ 12,962 $ 25,917 Interest expense, net of interest income 2,398 2,070 8,739 8,519 Provision for income taxes 2,313 2,038 7,158 14,296 Depreciation 3,911 4,574 15,772 18,958 Loss (gain) on disposal of property   23     (29 )   143     (23 ) EBITDA from continuing operations $ 6,265   $ 15,396   $ 44,774   $ 67,667     Presque Isle Downs: Income (loss) from continuing operations $ 224 $ (1,088 ) $ 8,478 $ (1,678 ) Interest expense, net of interest income 504 - 1,260 - Provision (benefit) provision for income taxes 847 (359 ) 3,453 (736 ) Depreciation   3,401     4     10,541     4   EBITDA from continuing operations $ 4,976   $ (1,443 ) $ 23,732   $ (2,410 )   Las Vegas Speedway: (Loss) income from continuing operations $ (150 ) $ 194 $ 32 $ 772 Interest expense 97 102 389 408 (Benefit) provision for income taxes (44 ) 49 13 419 Depreciation   202     213     826     864   EBITDA from continuing operations $ 105   $ 558   $ 1,260   $ 2,463     Scioto Downs: Loss from continuing operations $ (290 ) $ (1,906 ) $ (1,937 ) $ (4,417 ) Interest expense, net of interest income 30 34 124 139 (Benefit) provision for income taxes (533 ) 911 (1,053 ) (694 ) Depreciation   508     211     1,154     847   EBITDA from continuing operations $ (285 ) $ (750 ) $ (1,712 ) $ (4,125 )   Jackson Racing: Loss from continuing operations $ (39 ) $ (162 ) $ (353 ) $ (226 ) Interest expense, net of income expense and minority interest - 2 5 - Benefit for income taxes, net of minority interest (91 ) (80 ) (190 ) (121 ) Depreciation, net of minority interest 5 13 20 19 Gain on disposal of property, net of minority interest   (1 )   -     (5 )   -   EBITDA from continuing operations $ (126 ) $ (227 ) $ (523 ) $ (328 )   North Metro: Loss from continuing operations $ (174 ) $ (63 ) $ (378 ) $ (176 ) Interest (income) expense, net of interest expense (income) and minority interest - (1 ) 42 (8 ) Provision (benefit) for income taxes, net of minority interest 37 (6 ) (94 ) (79 ) Depreciation, net of minority interest - - 3 - Equity in loss of unconsolidated joint venture   124     -     234     -   EBITDA from continuing operations $ (13 ) $ (70 ) $ (193 ) $ (263 )   Corporate: Loss from continuing operations $ (5,159 ) $ (1,895 ) $ (25,082 ) $ (12,356 ) Interest expense, net of interest income 7,454 1,573 24,169 6,444 Benefit for income taxes (5,304 ) (1,497 ) (11,337 ) (5,939 ) Depreciation 83 77 321 292 (Gain) loss on disposal of property   -     -     (10 )   268   EBITDA from continuing operations $ (2,926 ) $ (1,742 ) $ (11,939 ) $ (11,291 ) MTR GAMING GROUP, INC. SELECTED FINANCIAL INFORMATION (continued) RECONCILIATION OF NET INCOME (LOSS) TO EBITDA (continued) (dollars in thousands) (unaudited)         Three Months Ended Year Ended December 31 December 31 2007 2006 2007 2006   EBITDA FROM CONTINUING OPERATIONS (continued):   Consolidated: (Loss) income from continuing operations $ (7,968 ) $ 1,823 $ (6,278 ) $ 7,836 Interest expense, net of interest income and minority interest 10,483 3,780 34,728 15,502 (Benefit) provision for income taxes, net of minority interest (2,775 ) 1,056 (2,050 ) 7,146 Depreciation, net of minority interest 8,110 5,092 28,637 20,984 Loss (gain) on disposal of property 22 (29 ) 128 245 Equity in loss of unconsolidated joint venture   124     -     234     -   EBITDA from continuing operations $ 7,996   $ 11,722   $ 55,399   $ 51,713       EBITDA (including discontinued operations):   Binion's Gambling Hall & Hotel: Loss from discontinued operations $ (605 ) $ (1,305 ) $ (5,081 ) $ (3,390 ) Interest expense (income), net of interest (income) expense 2 19 (26 ) (11 ) Benefit for income taxes (1,478 ) (636 ) (2,891 ) (1,969 ) Depreciation (129 ) 372 1,916 2,242 Other income - - (1,268 ) - Gain on disposal of property   500     35     1,995     (32 ) EBITDA from discontinued operations $ (1,710 ) $ (1,515 ) $ (5,355 ) $ (3,160 )       2008 FINANCIAL GUIDANCE: Year Ending December 31, 2008   EBITDA from continuing operations Income from continuing operations $ 5,000 Interest expense, net of interest income and minority interest 37,000 Provision for income taxes, net of minority interest 3,400 Depreciation, net of minority interest 29,000 Gain on disposal of property   (2,800) Equity in loss of unconsolidated joint venture 400 EBITDA from continuing operations $ 72,000 MTR GAMING GROUP, INC. CONSOLIDATED BALANCE SHEETS (dollars in thousands)     December 31 December 31 2007 2006   ASSETS   Current assets: Cash and cash equivalents $ 31,045 $ 21,431 Short-term investments - 12,657 Restricted cash 560 898 Accounts receivable, net of allowance for doubtful accounts of $92 in 2007 and $89 in 2006 10,062 7,165 Inventories 4,546 2,776 Deferred financing costs 3,203 2,054 Prepaid income taxes 851 - Deferred income taxes 1,428 899 Other current assets 5,130 3,237 Assets held for sale   3,115     3,284   Total current assets 59,940 54,401   Property and equipment, net 399,288 342,480 Goodwill 2,145 1,492 Other intangibles 71,827 21,206 Deferred financing costs, net of current portion 8,123 7,143 Equity method investment 11,609 - Deposits and other 26,053 15,802 Assets held for sale   31,977     36,683   Total assets $ 610,962   $ 479,207     LIABILITIES AND SHAREHOLDERS' EQUITY   Current liabilities: Accounts payable $ 9,064 $ 9,454 Accounts payable - gaming taxes and assessments 9,446 1,094 Accrued payroll and payroll taxes 4,728 2,475 Accrued income tax liability - 3,866 Accrued interest 6,456 4,182 Other accrued liabilities 11,735 11,202 Construction project liabilities 4,225 15,418 Current portion of long-term debt and capital lease obligations 11,108 6,000 Liabilities held for sale   4,829     6,690   Total current liabilities 61,591 60,381   Long-term debt and capital lease obligations, net of current portion 420,520 271,908 Long-term deferred compensation 10,545 9,684 Deferred income taxes 940 3,849 Liabilities held for sale   4,914     5,021   Total liabilities 498,510 350,843   Minority interest 305 5,380   Shareholders' equity: Common stock - - Paid-in capital 60,478 58,985 Retained earnings 51,724 64,046 Accumulated other comprehensive loss   (55 )   (47 ) Total shareholders' equity   112,147     122,984   Total liabilities and shareholders' equity $ 610,962   $ 479,207