Mohegan Tribal Gaming ends Q2 with $1.7 billion of debt, $87 million of cash after storm impact

By Lisa Kerner

Charlotte, N.C., May 2 - Mohegan Tribal Gaming Authority's second fiscal quarter was impacted by a historic snowstorm in February, or the "Blizzard of 2013," said chairman of the Mohegan Tribal Council Bruce "Two Dogs" Bozsum during MTGA's earnings call on Thursday.

Bozsum said that while the quarterly information discussed on the call "may initially seem disappointing" since a number of key operating results declined in comparison to last year, "when you peel back the onion, you get a much different perspective on our results."

Overall trends are improving with gaming revenues stabilizing, he said. The authority just needs a quarter "without snowstorms or a hurricane."

Mitchell Grossinger Etess, chief executive officer of MTGA, called the quarter "interesting" and reiterated the impact of the severe weather on MTGA's business.

Debt and liquidity

"Total debt was $1.69 billion (and) no amounts were drawn on our $75 million revolver as of March 31, 2013," said chief financial officer Mario Kontomerkos during the call.

MTGA was in compliance with all covenants at March 31.

"Total leverage was 5.2 times. For purposes of the bank credit facility, which subtracts relinquishment payments from adjusted EBITDA, total leverage was 6.21 times against a covenant of 7.00 times," Kontomerkos said.

After factoring in outstanding letters of credit and restrictive covenants, MTGA had about $60.2 million available for borrowing under its bank credit facility at quarter-end.

"Cash and cash equivalents at the end of the quarter totaled $87.1 million," said Kontomerkos.

"Liquidity totaled approximately $80.5 million, net of bank roll and restricted cash."

Consolidated results

MTGA reported net revenues of $325.7 million, a 7.3% decline from the prior-year period.

Gaming revenues were down 7.8% from the same quarter last year at $291.4 million.

Gross slot revenues for the second quarter were $206.1 million, a 9.6% decrease from the second quarter of fiscal 2012.

Table game revenues were $83.1 million, a 3% decrease from the prior-year period.

Non-gaming revenues fell 4.3% to $55.2 million.

Adjusted EBITDA declined 8.4% to $77.9 million, and adjusted EBITDA margin was 23.9% for the quarter, a 30-basis-point decrease from the second quarter of fiscal 2012.

Income from operations was down 11.2% at $56 million.

Net income attributable to the Authority was $14.1 million, a 6.8% decrease from the second quarter of fiscal 2012. The Authority estimates that consolidated net revenues were negatively impacted by about $11 million due to unfavorable weather conditions, according to the earnings release.

Interest expense increased by $9.9 million, or 30.3%, to $42.6 million for the quarter ended March 31. Weighted average interest rate was 10.1%, compared to 7.9% in the second quarter of fiscal 2012. The increases in interest expense and weighted average interest rate were primarily driven by March 2012, refinancing transactions.

Mohegan Tribal Gaming is an Uncasville, Conn., operator of gaming and entertainment enterprises.

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