Global Cash Access Reports Second Quarter 2014 Results

08/05/14

LAS VEGAS, Aug. 5, 2014 (GLOBE NEWSWIRE) -- Global Cash Access Holdings, Inc. (the "Company") (NYSE:GCA) announced today financial results for the second quarter ended June 30, 2014.

Second Quarter Highlights

  • Total revenues increased by 5.3%, excluding the $11.3 million revenue loss attributable to the Caesars Entertainment ("CET") contract
  • Total revenues, including the loss of the CET contract, decreased by 3%
  • GCA completed the NEWave acquisition in April 2014

"We continue to execute upon our strategy of offering integrated solutions to our clients to position us well for the second half of the year," said Ram V. Chary, President and Chief Executive Officer.

Second Quarter 2014 Results

Revenues decreased by $4.1 million, or 3%, to $144.9 million for the second quarter 2014, as compared to the same period last year. Operating income decreased by $4.0 million, or 29%, to $9.6 million for the second quarter 2014, as compared to 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) decreased by $1.4 million, or 7%, to $17.7 million for the second quarter 2014, as compared to the same period last year.

Income from operations before income tax provision decreased by $3.4 million, or 31%, to $7.5 million for the second quarter 2014, as compared to the same period last year. Diluted earnings per share from continuing operations decreased by $0.03, or 30%, to $0.07 for the second quarter 2014 (on 67.1 million diluted shares), as compared to the same period last year. Cash earnings per share ("Cash EPS"), (see Non-GAAP Financial Information below) decreased by $0.01, or 5%, to $0.20 for the second quarter 2014, as compared to the same period last year.

2014 Outlook

The Company's 2014 guidance remains unchanged in that Cash EPS will be between approximately $0.87 and $0.91 (on diluted shares of approximately 67.1 million) and Adjusted EBITDA will be between $76.0 million and $79.0 million.

Investor Conference Call and Webcast

The Company will host an investor conference call to discuss its second quarter 2014 results today at 5:00 p.m. Eastern Time ("ET"). The conference call may be accessed live over the phone by dialing (888) 599-8693 or for international callers by dialing (913) 312-1450. A replay will be available at 8:00 p.m. ET and may be accessed by dialing (877) 870-5176 or (858) 384-5517 for international callers; the pin number is 2537835. The replay will be available until August 12, 2014. 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. We present Adjusted EBITDA and Cash EPS as we consider these measures to be supplemental to our operating performance. We also make certain compensation decisions based, in part, on our operating performance, as measured by Adjusted EBITDA; and our credit facility requires us to comply with covenants that include performance metrics substantially similar to Adjusted EBITDA. 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 2014 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: the overall growth of the gaming industry, if any; our ability to replace revenue associated with terminated contracts; margin degradation from contract renewals; our ability to introduce new products and services; our ability to execute on mergers, acquisitions and/or strategic alliances; our ability to integrate and operate such acquisitions consistent with our forecasts; 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 11, 2014, 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 fully integrated cash access solutions and related services to the gaming industry. GCA's products and services provide: (a) gaming establishment patrons access to cash through a variety of methods, including Automated Teller Machine ("ATM") cash withdrawals, credit card cash access transactions, point-of-sale ("POS") debit card transactions, check verification and warranty services and money transfers; (b) integrated cash access devices and related services, such as slot machine ticket redemption and jackpot kiosks to the gaming industry; (c) products and services that improve credit decision making, automate cashier operations and enhance patron marketing activities for gaming establishments; (d) compliance, audit and data solutions; and (e) online payment processing solutions for gaming operators in States that offer intra-state, Internet-based gaming and lottery activities. More information is available at GCA's website at www.gcainc.com.

GLOBAL CASH ACCESS HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Amounts in thousands, except per share amounts)
(Unaudited)
         
   Three Months Ended June 30,   Six Months Ended June 30, 
  2014 2013 2014 2013
         
Revenues  $ 144,946  $ 149,066  $ 295,517  $ 295,887
         
Costs and expenses        
Cost of revenues (exclusive of depreciation and amortization)  109,375  111,724  222,614  222,822
Operating expenses  21,261  19,479  41,299  38,463
Depreciation  1,919  1,945  3,846  3,513
Amortization  2,769  2,285  5,123  4,555
Total costs and expenses  135,324  135,433  272,882  269,353
         
Operating income  9,622  13,633  22,635  26,534
         
Other expenses        
Interest expense, net of interest income  2,083  2,733  3,629  5,896
Total other expenses  2,083  2,733  3,629  5,896
         
Income from operations before tax  7,539  10,900  19,006  20,638
         
Income tax provision  2,815  4,124  6,793  7,726
         
Net income  4,724  6,776  12,213  12,912
         
Foreign currency translation  381  (97)  382  (512)
         
Comprehensive income  $ 5,105  $ 6,679  $ 12,595  $ 12,400
         
Earnings per share        
Basic  $ 0.07  $ 0.10  $ 0.19  $ 0.19
Diluted  $ 0.07  $ 0.10  $ 0.18  $ 0.19
         
Weighted average common shares outstanding        
Basic  65,970  66,116  65,940  66,401
Diluted  67,087  66,993  67,206  67,425
 
GLOBAL CASH ACCESS HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except par value amounts)
(Unaudited)
     
  At June 30, At December 31,
  2014 2013
ASSETS    
     
Cash and cash equivalents  $ 161,998  $ 114,254
Restricted cash and cash equivalents  335  290
Settlement receivables  25,033  38,265
Other receivables, net of allowances for doubtful accounts of $2.7 million and $2.8 million, respectively  16,761  16,962
Inventory  11,744  9,413
Prepaid expenses and other assets  26,373  26,770
Property, equipment and leasehold improvements, net  18,716  18,710
Goodwill  188,525  180,084
Other intangible assets, net  41,149  31,535
Deferred income taxes, net  82,771  91,044
     
Total assets  $ 573,405  $ 527,327
     
LIABILITIES AND STOCKHOLDERS' EQUITY    
     
Liabilities    
Settlement liabilities  $ 174,585  $ 145,022
Accounts payable and accrued expenses  68,233  60,701
Borrowings  96,000  103,000
     
Total liabilities  338,818  308,723
     
Stockholders' Equity    
Common stock, $0.001 par value, 500,000 shares authorized and 90,211 and  89,233 shares issued at June 30, 2014 and December 31, 2013, respectively  90  89
Convertible preferred stock, $0.001 par value, 50,000 shares authorized and 0 shares outstanding at June 30, 2014 and December 31, 2013  --  --
Additional paid-in capital  241,507  231,516
Retained earnings  160,225  148,012
Accumulated other comprehensive income  3,209  2,827
Treasury stock, at cost, 24,149 and 23,303 shares at June 30, 2014 and December 31, 2013, respectively  (170,444)  (163,840)
     
Total stockholders' equity  234,587  218,604
     
Total liabilities and stockholders' equity  $ 573,405  $ 527,327
 
 GLOBAL CASH ACCESS HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(Amounts in thousands)
(Unaudited)
   
   Six Months Ended June 30, 
  2014 2013
     
Cash flows from operating activities    
Net income  $ 12,213  $ 12,912
Adjustments to reconcile net income to cash provided by/(used in) operating activities:    
Depreciation  3,846  3,513
Amortization of intangibles  5,123  4,555
Amortization of financing costs  942  852
(Gain)/loss on sale or disposal of assets  (21)  115
Provision for bad debts  4,229  3,971
Stock-based compensation  5,409  2,455
Changes in operating assets and liabilities:    
Settlement receivables  13,257  (93,902)
Other receivables, net  (3,772)  (6,286)
Inventory  (2,269)  (441)
Prepaid and other assets  (117)  (1,238)
Deferred income taxes  5,611  7,211
Settlement liabilities  29,553  4,396
Accounts payable and accrued expenses  1,425  1,665
     
Net cash provided by/(used in) operating activities  75,429  (60,222)
     
Cash flows from investing activities    
Acquisitions, net of cash acquired  (11,845)  -- 
Capital expenditures  (7,493)  (7,194)
Proceeds from sale of fixed assets  213  35
Changes in restricted cash and cash equivalents  (45)  -- 
     
Net cash used in investing activities  (19,170)  (7,159)
     
Cash flows from financing activities    
Issuance costs of amended credit facility  --   (764)
Repayments against credit facility  (7,000)  (9,500)
Proceeds from exercise of stock options  4,613  2,382
Purchase of treasury stock  (6,604)  (11,654)
     
Net cash used in financing activities  (8,991)  (19,536)
     
Effect of exchange rates on cash  476  (655)
     
Cash and cash equivalents    
Net increase/(decrease) for the period  47,744  (87,572)
Balance, beginning of the period  114,254  153,020
     
Balance, end of the period  $ 161,998  $ 65,448
     
Supplemental cash flow disclosures    
Cash paid for interest  $ 3,504  $ 5,184
Cash paid for income tax, net of refunds  $ 508  $ 181
Non-cash tenant improvements paid by landlord  $ --   $ 2,930
Accrued and unpaid capital expenditures  $ 1,253  $ -- 
Accrued and unpaid contingent liability for NEWave acquisition  $ 2,463  $ -- 
 
GLOBAL CASH ACCESS HOLDINGS, INC. AND SUBSIDIARIES
RECONCILIATION OF NET INCOME TO CASH EARNINGS
AND OPERATING INCOME TO EBITDA AND ADJUSTED EBITDA
 (Amounts in thousands, except per share amounts)
(Unaudited)
         
  Three Months Ended June 30, Six months ended June 30,
  2014 2013 2014 2013
Reconciliation of net income to cash earnings (amounts in thousands, except earnings per share amounts)        
Net income  $ 4,724  $ 6,776  $ 12,213  $ 12,912
Equity compensation expense  3,353  1,284  5,409  2,455
Deferred income tax  2,578  3,812  5,611  7,211
Amortization  2,769  2,285  5,123  4,555
         
Cash earnings  $ 13,424  $ 14,157  $ 28,356  $ 27,133
         
Diluted weighted average number of common shares outstanding  67,087  66,993  67,206  67,425
         
Diluted cash earnings per share ("Cash EPS")  $ 0.20  $ 0.21  $ 0.42  $ 0.40
         
Reconciliation of operating income to EBITDA and Adjusted EBITDA        
Operating income  $ 9,622  $ 13,633  $ 22,635  $ 26,534
Plus: depreciation and amortization   4,688  4,230  8,969  8,068
         
EBITDA  $ 14,310  $ 17,863  $ 31,604  $ 34,602
         
Equity compensation expense  3,353  1,284  5,409  2,455
         
Adjusted EBITDA  $ 17,663  $ 19,147  $ 37,013  $ 37,057
 
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 YEAR ENDING DECEMBER 31, 2014
(Amounts in thousands, except per share amounts)
     
  2014 Guidance Range1
  Low High
Reconciliation of projected net income to projected cash earnings (amounts in thousands, except earnings per share amounts)    
Projected net income  $ 25,000  $ 26,800
Projected equity compensation expense  9,800  9,800
Projected deferred income tax  12,700  13,800
Projected amortization  10,600  10,600
     
Projected cash earnings  $ 58,100  $ 61,000
     
Projected diluted weighted average number of common shares outstanding  67,100  67,100
     
Projected diluted cash earnings per share ("Cash EPS")  $ 0.87  $ 0.91
     
Reconciliation of projected operating income to projected EBITDA and projected Adjusted EBITDA    
Projected operating income  $ 47,200  $ 50,200
Plus: projected depreciation and projected amortization   19,000  19,000
     
Projected EBITDA  $ 66,200  $ 69,200
     
Projected equity compensation expense  9,800  9,800
     
Projected Adjusted EBITDA  $ 76,000  $ 79,000
     
Note:    
1. All figures presented are projected estimates for the year ending December 31, 2014.
 
GLOBAL CASH ACCESS HOLDINGS, INC. AND SUBSIDIARIES
OTHER INFORMATION AND DATA
 (Amounts in thousands, unless otherwise noted)
(Unaudited)
         
  For the Three Months Ended June 30, For the Six Months Ended June 30,
  2014 2013 2014 2013
         
Revenues        
Cash Advance  $ 57,612  $ 57,292  $ 119,642  $ 115,987
ATM  69,691  72,972  143,020  148,247
Check Services  5,364  5,530  10,628  11,401
Other  12,279  13,272  22,227  20,252
         
Total revenues  $ 144,946  $ 149,066  $ 295,517  $ 295,887
         
Operating income        
Cash Advance  $ 15,671  $ 15,568  $ 33,783  $ 31,313
ATM  6,082  6,230  12,346  13,211
Check Services  2,787  3,403  5,659  6,799
Other  4,476  6,350  8,472  9,796
Corporate  (19,394)  (17,918)  (37,625)  (34,585)
         
Total operating income  $ 9,622  $ 13,633  $ 22,635  $ 26,534
     
  Three Months Ended June 30, Six months ended June 30,
  2014 2013 2014 2013
         
Other data        
Aggregate dollar amount processed (in billions)        
Cash advance  $ 1.24  $ 1.20  $ 2.55  $ 2.40
ATM  $ 3.16  $ 3.30  $ 6.49  $ 6.70
Check warranty  $ 0.28  $ 0.30  $ 0.55  $ 0.60
         
Number of transactions completed (in millions)        
Cash advance  2.19  2.20  $ 4.52  $ 4.50
ATM  16.16  16.80  $ 32.92  $ 34.30
Check warranty  0.92  1.00  $ 1.80  $ 1.90
CONTACT: Investor Relations
         (702) 262-5068
         ir@gcamail.com

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