Amid declines, Mohegan focuses on efficiencies
Mohegan - Economic uncertainty in the Northeast and throughout the country in the last three months of 2012 contributed to falling revenues at the Mohegan Tribal Gaming Authority's casinos in Uncasville and Wilkes-Barre, Pa., authority officials said Tuesday during a conference call with gaming industry analysts.
But, they said, the attendant decline in quarterly earnings was limited by the authority's focus on operating as efficiently as possible - a message that seemed to sit well with the analysts.
"I think we exceeded a lot of their expectations," Mitchell Etess, the authority's chief executive officer, said later in an interview. "Our efforts at containing costs and the way we're managing what's going on were very well received."
Although net revenue at Mohegan Sun in Uncasville was down 7.6 percent for the October-December quarter compared to the same period a year earlier, the casino's adjusted EBITDA - earnings before interest, income taxes, depreciation, amortization and other expenses - was up 2 percent, Etess noted.
(The last three months of 2012 constitute the first quarter of the authority's 2013 fiscal year.)
In Pennsylvania, Mohegan Sun at Pocono Downs, a racetrack casino, suffered from the effects of plans to increase local property taxes and disruptions caused by ongoing construction of a new hotel at the facility, authority officials said.
Adjusted EBITDA at Pocono Downs fell 11.6 percent in the quarter.
Overall, the authority reported net revenues of $324.8 million during the quarter, a 7.7 percent decrease over the same three months in fiscal 2012. Gaming revenues at the authority's two properties were down 8.8 percent while nongaming revenues were down 3.5 percent.
The authority's overall adjusted EBITDA was down 2.4 percent to $73.2 million, while its net income, or profit, of $9.1 million decreased 62.1 percent, partially a result of higher interest expenses in the wake of the authority's March 2012 refinancing of its long-term debt, the authority said.
While casinos in some parts of the country have been experiencing an increase in revenues, the trend has not occurred in parts of the Northeast, Etess said.
The region's economy was hampered in the last quarter of 2012 by "the uncertainties surrounding the national presidential election and the 'fiscal cliff' negotiations in Congress," the authority said.
In addition, calls for hefty property-tax hikes in many Pennsylvania communities put a damper on business at Mohegan Sun at Pocono Downs. While the tax hikes didn't take effect until the first of the year, many consumers curtailed their spending in anticipation of the increases, according to authority officials.
During the last three months of 2012, Mohegan Sun benefited from reduced labor costs associated with the September layoff of about 330 employees and the deployment of more effective marketing strategies, Etess said.
Mohegan officials said business appears to have rebounded somewhat in January.
"We're not seeing increases (year-over-year)," Etess said, "but the decreases are decreasing."
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