MTR Gaming, the public company that owns Mountaineer Race Track, took a 28.6% hit to its stock Friday morning. Poor second quarter results released after the market closed Thursday sparked the sell-off.
Net income for the quarter ending June 30 was $3.9 million, or 13 cents per diluted share, compared with $5.13 million in net income, 22 cents per share, reported for the same period of 2001. The company attributed the shortfall to lower than expected gaming revenue at its West Virginia racetrack and casino, sharp increases in health and property insurance, and higher than expected pre-opening expenses for its new luxury hotel that opened May 1.
Ted Arneault, president and chief executive officers, said he doesn't expect to make up the second quarter losses during the next six months.
"While we had anticipated raising guidance once the additional 500 slot machines were installed, we are experiencing lower than anticipated gain from the increased bet limit," he said.
MTR Gaming now expects 2002 revenues of $265 million to $275 million, earnings before interest, taxes, depreciation, and amortization of $50 million to $54 million, net income between $21 million and $22.5 million, and earnings around 72-78 cents per share. The company had anticipated earnings per share of 93 cents to $1 per share at the beginning of the year.
Sellers were ready when the market opened Friday and the bottom fell out from underneath MTR Gaming's stock. The price immediately dropped 31% from $11.35 to $7.88. By mid-morning, the stock has recovered some ground but was still off by nearly $3 per share with more than 1.4 million shares having changed hands compared with the company's average daily volume of 175,681