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8-K - 8-K - Everi Holdings Inc.a13-23380_18k.htm

Exhibit 99.1

 

GRAPHIC

 

Global Cash Access Reports Third Quarter 2013 Results

 

Las Vegas, NV — November 5, 2013 — Global Cash Access Holdings, Inc. (the “Company”) (NYSE:GCA) announced today financial results for the third quarter ended September 30, 2013.

 

Key Highlights

 

·                  Other Revenue increased 16% year-over-year as Kiosk Sales and Service Revenues increased 23% year-over-year

·                  Cash Advance Revenue increased 1% year-over-year primarily due to stronger international revenues

·                  GCA to provide cash access services and kiosks to MGM Resorts International’s ARIA Resort & Casino

·                  GCA to provide kiosks to Alberta Liquor and Gaming Commission

 

“We are pleased that our strategy of providing integrated kiosk and cash access solutions continues to gain momentum in the marketplace, which is evidenced by the ARIA and Alberta contracts. Our redemption kiosk contract with Alberta Liquor and Gaming Commission, subject to regulatory approval, will be the largest international kiosk sale in the Company’s history. Additionally, we were awarded the cash access and kiosk contract at the ARIA Las Vegas, an MGM Resorts property. These contracts represent the achievement of two important goals we set at the start of 2013 when we originally saw the potential to expand our relationships with these significant customers. Although results for the third quarter were affected by the timing of Kiosk sales, we are pleased to confirm that we remain on target to meet our full year 2013 Adjusted EBITDA guidance of $70 million to $74 million, and at this time are narrowing our Cash EPS guidance from a range between $0.74 and $0.83 to $0.77 and $0.83,” explained David Lopez, President and CEO of GCA.

 

Fiscal Third Quarter 2013 Results

 

Revenues were $146.1 million for the third quarter 2013, as compared to $149.8 million for the same period last year.  Operating income was $11.4 million for the third quarter 2013, as compared to $14.6 million for the same period last year.  Adjusted earnings before interest, taxes, depreciation and amortization and non-cash compensation expense (“Adjusted EBITDA”) (see Non-GAAP Financial Information below) were $17.0 million for the third quarter 2013, as compared to $20.8 million for the same period last year.  The decreases in operating income and Adjusted EBITDA were primarily due to lower operating income in our ATM and Check Services segments as a result of lost business and a decrease in the number of transactions processed.

 

Income from operations before income tax provision was $9.2 million for the third quarter 2013, as compared to $11.1 million for the same period last year.  Diluted earnings per share from continuing operations were $0.09 for the third quarter 2013 (on 66.6 million diluted shares), as compared to $0.10 for the same period last year (on 67.6 million diluted shares).  Diluted shares outstanding for the quarter ended September 30, 2013 included the impact of our stock repurchase program. We repurchased approximately 0.4 million and 2.1 million shares of common stock for cash of $2.8 million and $14.5 million, respectively, during the three and nine months ended September 30, 2013.  Cash earnings per share (“Cash EPS”) (see Non-GAAP Financial Information below) were $0.19 for the third quarter 2013, as compared to $0.23 for the same period last year.

 

2013 Outlook

 

The Company reaffirms its Adjusted EBITDA estimates that will be between $70 million and $74 million for the fiscal year ending December 31, 2013. The Company is narrowing the range of its estimate for Cash EPS from a range between $0.74 and $0.83 to $0.77 and $0.83 (with the same diluted shares of approximately 67.2 million). This estimated outlook is based primarily upon the combination of the following assumptions: (a) the anticipated impact of less favorable pricing terms associated with several customer contract renewals in 2013; (b) the anticipated impact of certain large customers not renewing their contracts; (c) flat to low growth in the domestic gaming industry; (d) limited new casino openings in 2013; (e) an increase in our kiosk sales and services business in 2013; (f) continued investment with respect to the Company’s technology infrastructure and personnel; and (g) the Company’s reduced interest rates paid on its credit facility.

 

1



 

Investor Conference Call and Webcast

 

The Company will host an investor conference call to discuss its third quarter 2013 results today at 5:00 p.m. ET. The conference call can be accessed live over the phone by dialing (888) 846-5003 or for international callers by dialing (480) 629-9856.  A replay will be available at 8:00 p.m. ET and can be accessed by dialing (877) 870-5176 or (858) 384-5517 for international callers; the pin number is 4646995.  The replay will be available until November 12, 2013 at 11:59pm ET. The call will be webcast live from the Company’s website at www.gcainc.com under the Investor Relations section.

 

Non-GAAP Financial Information

 

In order to enhance investor understanding of the underlying trends in our business and to provide for better comparability between periods in different years, the Company is providing EBITDA, Adjusted EBITDA, Cash Earnings and Cash EPS on a supplemental basis. Reconciliations between GAAP measures and Non-GAAP measures and between actual results and adjusted results are provided at the end of this press release. EBITDA, Adjusted EBITDA, Cash Earnings and Cash EPS are not measures of financial performance under United States Generally Accepted Accounting Principles (“GAAP”). Accordingly, they should not be considered a substitute for net income, operating income, basic or diluted earnings per share or cash flow data prepared in accordance with GAAP.

 

Cautionary Note Regarding Forward-Looking Statements

 

This press release contains forward-looking statements within the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. All statements included in this press release, other than statements that are purely historical, are forward-looking statements. Words such as “going forward,” “believes,” “intends,” “expects,” “forecasts,” “anticipate,” “plan,” “seek,” “estimate” and similar expressions also identify forward-looking statements. Forward-looking statements in this press release include, without limitation: (a) our estimates of 2013 cash earnings per share and Adjusted EBITDA and the assumptions and factors upon which they are based; and (b) our belief that cash earnings per share and Adjusted EBITDA are widely-referenced financial measures in the financial markets and that references to the foregoing are helpful to investors.

 

These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected or assumed, including but not limited to the following: obtaining the necessary regulatory approvals and licenses from the Alberta Liquor and Gaming Commission for the pending sale of our kiosks, the timing and the extent of a recovery in the gaming industry, if any; our ability to replace revenue associated with terminated contracts; our ability to introduce new products and services; gaming establishment and patron preferences; national and international economic conditions; changes in gaming regulatory, card association and statutory requirements; regulatory and licensing difficulties; competitive pressures; operational limitations; gaming market contraction; changes to tax laws; uncertainty of litigation outcomes; interest rate fluctuations; inaccuracies in underlying operating assumptions; unanticipated expenses or capital needs; technological obsolescence; and employee turnover.  If any of these assumptions prove to be incorrect, the results contemplated by the forward-looking statements regarding our future results of operations are unlikely to be realized.

 

The forward-looking statements in this press release are subject to additional risks and uncertainties set forth under the heading “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our filings with the Securities and Exchange Commission, including, without limitation, our Annual Report filed on Form 10-K on March 12, 2013, and subsequent periodic reports and are based on information available to us on the date hereof. We do not intend, and assume no obligation, to update any forward-looking statements. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this press release.

 

About Global Cash Access Holdings, Inc.

 

Las Vegas-based Global Cash Access, Inc. (“GCA”), a wholly owned subsidiary of Global Cash Access Holdings, Inc., is a leading provider of cash access products and related services to approximately 1,000 casinos and other gaming properties in the United States, Europe, Canada, the Caribbean, Central America and Asia. GCA’s products and services provide gaming patrons access to cash through a variety of methods, including ATM cash withdrawals, point-of-sale debit card transactions, credit card transactions, check verification and warranty services, and Western Union money transfers. GCA is a leading manufacturer and distributor of cash handling devices and related software. GCA also provides products and services that improve credit decision-making, automate cashier operations and enhance patron marketing activities for gaming establishments. With its proprietary database of gaming patron credit history and transaction data on millions of gaming patrons worldwide, GCA is recognized for successfully developing and deploying technological innovations that increase client profitability, operational efficiency and customer loyalty. More information is available at GCA’s website at www.gcainc.com.

 

Contacts

 

Investor Relations

702-855-3006

ir@gcamail.com

 

 

SOURCE: Global Cash Access Holdings, Inc.

 

2



 

GLOBAL CASH ACCESS HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(In thousands, except earnings per share amounts)

(Unaudited)

 

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

 

2013

 

 

2012

 

 

2013

 

 

2012

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

 

$

146,101

 

 

$

149,824

 

 

$

441,987

 

 

$

448,354

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Costs and expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenues (exclusive of depreciation and amortization)

 

 

111,106

 

 

111,373

 

 

333,928

 

 

333,566

 

Operating expenses

 

 

19,248

 

 

19,463

 

 

57,710

 

 

55,910

 

Depreciation

 

 

1,908

 

 

1,695

 

 

5,421

 

 

5,260

 

Amortization

 

 

2,419

 

 

2,650

 

 

6,974

 

 

7,317

 

Total costs and expenses

 

 

134,681

 

 

135,181

 

 

404,033

 

 

402,053

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

 

11,420

 

 

14,643

 

 

37,954

 

 

46,301

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net of interest income

 

 

2,255

 

 

3,586

 

 

8,151

 

 

12,133

 

Total other expenses

 

 

2,255

 

 

3,586

 

 

8,151

 

 

12,133

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from operations before tax

 

 

9,165

 

 

11,057

 

 

29,803

 

 

34,168

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax provision

 

 

3,383

 

 

3,977

 

 

11,109

 

 

12,878

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

5,782

 

 

7,080

 

 

18,694

 

 

21,290

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation

 

 

591

 

 

236

 

 

79

 

 

164

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive income

 

 

$

6,373

 

 

$

7,316

 

 

$

18,773

 

 

$

21,454

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

$

0.09

 

 

$

0.11

 

 

$

0.28

 

 

$

0.32

 

Diluted

 

 

$

0.09

 

 

$

0.10

 

 

$

0.28

 

 

$

0.32

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

65,525

 

 

66,108

 

 

66,108

 

 

65,673

 

Diluted

 

 

66,630

 

 

67,601

 

 

67,158

 

 

67,031

 

 

3



 

GLOBAL CASH ACCESS HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except par value amounts)

(Unaudited)

 

 

 

At September 30,

 

At December 31,

 

 

 

2013

 

2012

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

142,990

 

$

153,020

 

Restricted cash and cash equivalents

 

 

291

 

 

200

 

Settlement receivables

 

 

24,418

 

 

29,484

 

Other receivables, net of allowances for doubtful accounts of $4.3 million and $6.9 million, respectively

 

 

13,929

 

 

11,571

 

Inventory

 

 

8,974

 

 

7,126

 

Prepaid expenses and other assets

 

 

19,413

 

 

18,254

 

Property, equipment and leasehold improvements, net

 

 

19,132

 

 

15,441

 

Goodwill

 

 

180,113

 

 

180,141

 

Other intangible assets, net

 

 

32,094

 

 

33,994

 

Deferred income taxes, net

 

 

94,328

 

 

104,664

 

Total assets

 

$

535,682

 

$

553,895

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

Settlement liabilities

 

$

162,197

 

$

182,446

 

Accounts payable and accrued expenses

 

 

56,635

 

 

51,190

 

Borrowings

 

 

106,500

 

 

121,500

 

Total liabilities

 

 

325,332

 

 

355,136

 

 

 

 

 

 

 

 

 

Stockholders’ Equity

 

 

 

 

 

 

 

Common stock, $0.001 par value, 500,000 shares authorized and 88,420 and 87,545 shares issued at September 30, 2013 and December 31, 2012, respectively

 

 

88

 

 

87

 

Convertible preferred stock, $0.001 par value, 50,000 shares authorized and 0 shares outstanding at September 30, 2013 and December 31, 2012, respectively

 

 

 

 

 

Additional paid-in capital

 

 

225,438

 

 

217,990

 

Retained earnings

 

 

142,308

 

 

123,614

 

Accumulated other comprehensive income

 

 

2,637

 

 

2,558

 

Treasury stock, at cost, 22,857 and 20,724 shares at September 30, 2013 and December 31, 2012, respectively

 

 

(160,121)

 

 

(145,490)

 

Total stockholders’ equity

 

 

210,350

 

 

198,759

 

 

 

 

 

 

 

 

 

Total liabilities and stockholders’ equity

 

$

535,682

 

$

553,895

 

 

4



 

GLOBAL CASH ACCESS HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

 

Nine Months Ended September 30,

 

 

2013

 

2012

 

 

 

 

 

 

 

Cash flows from operating activities

 

 

 

 

 

 

Net income

 

$

18,694

 

$

21,290

Adjustments to reconcile net income to cash provided by operating activities:

 

 

 

 

 

 

Depreciation

 

 

5,421

 

 

5,260

Amortization of intangibles

 

 

6,974

 

 

7,317

Amortization of financing costs

 

 

1,323

 

 

1,081

Loss on sale or disposal of assets

 

 

158

 

 

112

Provision for bad debts

 

 

5,882

 

 

2,586

Stock-based compensation

 

 

3,702

 

 

3,951

Changes in operating assets and liabilities:

 

 

 

 

 

 

Settlement receivables

 

 

5,050

 

 

(33,676)

Other receivables, net

 

 

(8,264)

 

 

5,682

Inventory

 

 

(1,847)

 

 

(6)

Prepaid and other assets

 

 

(1,726)

 

 

(1,329)

Deferred income taxes

 

 

10,335

 

 

12,556

Settlement liabilities

 

 

(20,127)

 

 

16,509

Accounts payable and accrued expenses

 

 

188

 

 

86

Net cash provided by operating activities

 

 

25,763

 

 

 

41,419

 

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

 

Capital expenditures

 

 

(9,165)

 

 

(7,353)

Proceeds from sale of fixed assets

 

 

83

 

 

448

Changes in restricted cash and cash equivalents

 

 

(91)

 

 

255

Net cash used in investing activities

 

 

(9,173)

 

 

 

(6,650)

 

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

 

Issuance costs of amended credit facility

 

 

(764)

 

 

(676)

Repayments against credit facility

 

 

(15,000)

 

 

(47,500)

Proceeds from exercise of stock options

 

 

3,776

 

 

5,946

Purchase of treasury stock

 

 

(14,631)

 

 

 

(191)

 

Net cash used in financing activities

 

 

(26,619)

 

 

(42,421)

 

 

 

 

 

 

 

Effect of exchange rates on cash

 

 

(1)

 

 

(943)

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

 

 

 

 

Net decrease for the period

 

 

(10,030)

 

 

(8,595)

Balance, beginning of the period

 

 

153,020

 

 

55,535

 

 

 

 

 

 

 

Balance, end of the period

 

$

142,990

 

$

46,940

 

 

 

 

 

 

 

Supplemental cash flow disclosures

 

 

 

 

 

 

Cash paid for interest

 

$

6,978

 

$

11,402

Cash paid for income tax, net of refunds

 

$

538

 

$

267

Non-cash tenant improvements paid by landlord

 

$

2,930

 

$

Accrued and unpaid capital expenditures

 

$

2,339

 

$

 

5



 

GLOBAL CASH ACCESS HOLDINGS, INC. AND SUBSIDIARIES

RECONCILIATION OF NET INCOME TO CASH EARNINGS

AND OPERATING INCOME TO EBITDA AND ADJUSTED EBITDA

(Unaudited)

 

 

 

Three Months Ended September 30,

 

Nine months ended September 30,

 

 

2013

 

2012

 

2013

 

2012

Reconciliation of net income to cash earnings (amounts in thousands, except earnings per share amounts)

 

 

 

 

 

 

 

 

 

 

Net income

 

$

5,782

 

$

7,080

 

$

18,694

 

$

21,290

Equity compensation expense

 

 

1,247

 

 

1,842

 

 

3,702

 

 

3,951

Deferred income tax

 

 

3,124

 

 

3,878

 

 

10,335

 

 

12,556

Amortization

 

 

2,419

 

 

2,650

 

 

6,974

 

 

7,317

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash earnings

 

$

12,572

 

$

15,450

 

$

39,705

 

$

45,114

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted weighted average number of common shares outstanding

 

 

66,630

 

 

67,601

 

 

67,158

 

 

67,031

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted cash earnings per share (“Cash EPS”)

 

$

0.19

 

$

0.23

 

$

0.59

 

$

0.67

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of operating income to EBITDA and Adjusted EBITDA

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

$

11,420

 

$

14,643

 

$

37,954

 

$

46,301

Plus: depreciation and amortization

 

 

4,327

 

 

4,345

 

 

12,395

 

 

12,577

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA

 

$

15,747

 

$

18,988

 

$

50,349

 

$

58,878

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity compensation expense

 

 

1,247

 

 

1,842

 

 

3,702

 

 

3,951

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

$

16,994

 

$

20,830

 

$

54,051

 

$

62,829

 

6



 

GLOBAL CASH ACCESS HOLDINGS, INC. AND SUBSIDIARIES

RECONCILIATION OF PROJECTED NET INCOME TO PROJECTED CASH EARNINGS

AND PROJECTED OPERATING INCOME TO PROJECTED EBITDA AND PROJECTED ADJUSTED EBITDA

FOR THE PROJECTED YEAR ENDING DECEMBER 31, 2013

(Unaudited)

 

 

 

2013 Guidance Range1

 

 

 

Low

 

High

 

Reconciliation of projected net income to projected cash earnings (amounts in thousands, except earnings per share amounts)

 

 

 

 

 

Projected net income

 

$

24,300

 

$

27,000

 

Projected equity compensation expense

 

5,000

 

5,000

 

Projected deferred income tax

 

13,700

 

15,000

 

Projected amortization

 

9,000

 

9,000

 

 

 

 

 

 

 

Projected cash earnings

 

$

52,000

 

$

56,000

 

 

 

 

 

 

 

Projected diluted weighted average number of common shares outstanding

 

67,200

 

67,200

 

 

 

 

 

 

 

Projected diluted cash earnings per share (“Cash EPS”)

 

$

0.77

 

$

0.83

 

 

 

 

 

 

 

Reconciliation of projected operating income to projected EBITDA and projected Adjusted EBITDA

 

 

 

 

 

Projected operating income

 

$

48,000

 

$

52,000

 

Plus: projected depreciation and projected amortization

 

17,000

 

17,000

 

 

 

 

 

 

 

Projected EBITDA

 

$

65,000

 

$

69,000

 

 

 

 

 

 

 

Projected equity compensation expense

 

5,000

 

5,000

 

 

 

 

 

 

 

Projected Adjusted EBITDA

 

$

70,000

 

$

74,000

 

 

Note:

1.  All figures presented are estimates for the year ending December 31, 2013.

 

7



 

GLOBAL CASH ACCESS HOLDINGS, INC. AND SUBSIDIARIES

SELECTED SEGMENT INFORMATION AND OTHER DATA

(Amounts in thousands, unless otherwise noted)

(Unaudited)

 

 

 

For the Three Months Ended September 30,

 

For the Nine Months Ended September 30,

 

 

 

2013

 

2012

 

2013

 

2012

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

 

 

 

 

 

 

 

 

Cash advance

 

$

58,305

 

$

57,520

 

$

174,292

 

$

172,557

 

ATM

 

71,634

 

76,411

 

219,881

 

233,361

 

Check services

 

5,385

 

6,611

 

16,786

 

19,731

 

Other

 

10,777

 

9,282

 

31,028

 

22,705

 

Corporate

 

-

 

-

 

-

 

-

 

Total revenues

 

$

146,101

 

$

149,824

 

$

441,987

 

$

448,354

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

 

 

 

 

 

 

 

 

Cash advance

 

$

15,190

 

$

15,785

 

$

46,503

 

$

48,388

 

ATM

 

6,114

 

7,951

 

19,323

 

25,620

 

Check services

 

3,074

 

3,822

 

9,874

 

11,017

 

Other

 

4,399

 

4,673

 

14,031

 

11,563

 

Corporate

 

(17,357)

 

(17,588)

 

(51,777)

 

(50,287)

 

Total operating income

 

$

11,420

 

$

14,643

 

$

37,954

 

$

46,301

 

 

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

 

 

 

 

 

 

 

 

 

 

 

2013

 

2012

 

2013

 

2012

 

 

 

 

 

 

 

 

 

 

 

Other data

 

 

 

 

 

 

 

 

 

Aggregate dollar amount processed (in billions)

 

 

 

 

 

 

 

 

 

Cash advance

 

$

1.2

 

$

1.2

 

$

3.7

 

$

3.6

 

ATM

 

$

3.2

 

$

3.4

 

$

9.9

 

$

10.5

 

Check warranty

 

$

0.3

 

$

0.3

 

$

0.8

 

$

0.9

 

 

 

 

 

 

 

 

 

 

 

Number of transactions completed (in millions)

 

 

 

 

 

 

 

 

 

Cash advance

 

2.2

 

2.3

 

$

6.7

 

6.9

 

ATM

 

16.5

 

18.1

 

$

50.8

 

56.0

 

Check warranty

 

0.9

 

1.1

 

$

2.9

 

3.3

 

 

8