Magna Entertainment Corp. announced its third quarter earnings and the resignation of another top executive Nov. 10.
The racetrack conglomerate controlled by Frank Stronach reported a $29.2 million increase in revenue, but a $5.1 million loss in net income. A weak third quarter was expected.
"The company's horse track business is seasonal," said Mark Feldman, MEC's president and chief executive officer, during a conference call Monday. "Because of our premier tracks Santa Anita Park and Gulfstream Park, our performance is better during the first and second quarters than in the third and fourth quarters."
Still, Feldman said the third quarter results outperformed the company's expectations. Total racetrack revenue increased to nearly $18 million for the quarter, up from $4.7 million at this time a year ago when MEC owned only Santa Anita Park and Gulfstream. MEC now owns or is near closing on seven tracks including Golden Gate Fields, Thistledown, Remington Park, Great Lake Downs, and Bay Meadows. The company is expected to close on the purchase of Bay Meadows before the end of the year. Earnings before interest, taxes, depreciation and amortization (EBITDA) decreased to a loss of $4.1 million, down from $6.3 million during the third quarter of 1999. Earnings per diluted share remained steady at a loss of 6 cents per share compared with a year ago.
For the nine months ending Sept. 30, revenue increased to $174.2 million, up from $71.1 million a year ago. Net income rose to $9.6 million up from $3 million during the first nine months of 1999, and earnings per share rose to 12 cents per diluted share compared with 4 cents per diluted share for the same period a year ago.
MEC also announced the resignation of David Mitchell who was the company's executive vice president and chief financial officer since the company went public last March. Mitchell said he could not discuss the details behind his resignation, he would only confirm he left Nov. 6. The resignation came about a month after Lonny Powell resigned as vice president of racing operations and president of Santa Anita Park. Powell reportedly has been retained as an adviser.
Graham Orr replaced Mitchell immediately. Orr is the former executive vice president of corporate development for Magna International, a Canadian automotive parts manufacturer founded by Stronach. He has served in a number of senior financial positions within Magna.
Feldman also announced during the teleconference that MEC intends to launch an entertainment-only Internet wagering site by the end of the year. He said the real account wagering service is still a year away.
"We continue to pursue account wagering legislation on the federal level," Feldman said. "We also believe opportunities still exit in California." California legislators passed an account wagering law, but Gov. Gray Davis vetoed the new law.