LAS VEGAS, Nov. 4, 2014 (GLOBE NEWSWIRE) -- Global Cash Access Holdings, Inc. (the "Company") (NYSE:GCA) announced today financial results for the third quarter ended September 30, 2014.
Third quarter Highlights
-
Total revenues increased by 8%, 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 less than 1%
-
Diluted earnings per share (EPS) remained unchanged at $0.09 for both the third quarter 2014 and 2013
-
Cash EPS, as defined below, increased 21% to $0.23 for the quarter
-
On September 8, 2014, the Company entered into a merger agreement to acquire all the outstanding stock of Multimedia Games Holding Company, Inc. ("MGAM") for $36.50 per share, for an aggregate purchase price of approximately $1.2 billion in cash
"Our recent, major client commitments continue to demonstrate the success of our integrated solutions in the market. We look forward to carrying this momentum into our pending acquisition of Multimedia Games," said Ram V. Chary, President and Chief Executive Officer.
Third quarter 2014 Results
Revenues decreased by $0.6 million, or less than 1%, to $145.5 million for the third quarter 2014, as compared to the same period last year. Operating income decreased by $0.6 million, or 6%, to $10.8 million for the third quarter 2014, as compared to the same period last year. Adjusted EBITDA (see Non-GAAP Financial Information below) increased by $2.1 million, or 12%, to $19.1 million for the third quarter 2014, as compared to the same period last year.
Income from operations before income tax provision decreased by $0.4 million, or 4%, to $8.8 million for the third quarter 2014, as compared to the same period last year. Diluted earnings per share from continuing operations remained consistent at $0.09 for the third quarter 2014 (on 66.7 million diluted shares), as compared to the same period last year. Cash earnings per share ("Cash EPS"), (see Non-GAAP Financial Information below) increased by $0.04, or 21%, to $0.23 for the third quarter 2014, as compared to the same period last year.
2014 Outlook and Update on MGAM Acquisition
The Company reaffirmed its guidance estimates for Cash EPS and Adjusted EBITDA for the year ending December 31, 2014.
The Company anticipates the closing of the MGAM acquisition to occur in late December 2014 or early 2015, subject to obtaining all necessary regulatory approvals.
Investor Conference Call and Webcast
The Company will host an investor conference call to discuss its third quarter 2014 results today at 5:00 p.m. Eastern Time ("ET"). The conference call may be accessed live over the phone by dialing (800) 289-0508 or for international callers by dialing (913) 312-0396. 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 6907012. The replay will be available until November 11, 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 define EBITDA as earnings before interest, taxes, depreciation and amortization; Adjusted EBITDA as EBITDA as adjusted for non-cash compensation expense and MGAM related acquisition costs; Cash Earnings as net income as adjusted for non-cash compensation expense, deferred taxes, amortization and MGAM related acquisition costs; and Cash EPS as Cash Earnings divided by our diluted weighted average number of common shares outstanding. 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) the projected closing date of the MGAM acquisition; (b) our estimates of 2014 Cash EPS and Adjusted EBITDA and the assumptions and factors upon which they are based; and (c) our belief that Cash EPS 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.
GCA 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 September 30, |
Nine Months Ended September 30, |
|
|
2014 |
2013 |
2014 |
2013 |
|
|
|
|
|
|
|
Revenues |
$ 145,481 |
$ 146,101 |
$ 440,998 |
$ 441,987 |
|
|
|
|
|
|
|
Costs and expenses |
|
|
|
|
|
Cost of revenues (exclusive of depreciation and amortization) |
108,568 |
111,106 |
331,181 |
333,928 |
|
Operating expenses |
20,934 |
19,248 |
62,233 |
57,710 |
|
Depreciation |
1,856 |
1,908 |
5,702 |
5,421 |
|
Amortization |
3,352 |
2,419 |
8,476 |
6,974 |
|
Total costs and expenses |
134,710 |
134,681 |
407,592 |
404,033 |
|
|
|
|
|
|
|
Operating income |
10,771 |
11,420 |
33,406 |
37,954 |
|
|
|
|
|
|
|
Other expenses |
|
|
|
|
|
Interest expense, net of interest income |
1,996 |
2,255 |
5,625 |
8,151 |
|
Total other expenses |
1,996 |
2,255 |
5,625 |
8,151 |
|
|
|
|
|
|
|
Income from operations before tax |
8,775 |
9,165 |
27,781 |
29,803 |
|
|
|
|
|
|
|
Income tax provision |
3,099 |
3,383 |
9,892 |
11,109 |
|
|
|
|
|
|
|
Net income |
5,676 |
5,782 |
17,889 |
18,694 |
|
|
|
|
|
|
|
Foreign currency translation |
(839) |
591 |
(457) |
79 |
|
|
|
|
|
|
|
Comprehensive income |
$ 4,837 |
$ 6,373 |
$ 17,432 |
$ 18,773 |
|
|
|
|
|
|
|
Earnings per share |
|
|
|
|
|
Basic |
$ 0.09 |
$ 0.09 |
$ 0.27 |
$ 0.28 |
|
Diluted |
$ 0.09 |
$ 0.09 |
$ 0.27 |
$ 0.28 |
|
|
|
|
|
|
|
Weighted average common shares outstanding |
|
|
|
|
|
Basic |
65,589 |
65,525 |
65,853 |
66,108 |
|
Diluted |
66,747 |
66,630 |
67,051 |
67,158 |
|
|
|
|
|
GLOBAL CASH ACCESS HOLDINGS, INC. AND SUBSIDIARIES |
|
CONDENSED CONSOLIDATED BALANCE SHEETS |
|
(Amounts in thousands, except par value amounts) |
|
(Unaudited) |
|
|
|
|
|
|
|
|
At September 30,
2014 |
At December 31,
2013 |
|
ASSETS |
|
|
|
|
|
|
|
Cash and cash equivalents |
$ 106,499 |
$ 114,254 |
|
Restricted cash and cash equivalents |
367 |
290 |
|
Settlement receivables |
27,372 |
38,265 |
|
Other receivables, net of allowances for doubtful accounts of $2.8 million for both periods |
17,223 |
16,962 |
|
Inventory |
10,905 |
9,413 |
|
Prepaid expenses and other assets |
28,404 |
26,770 |
|
Property, equipment and leasehold improvements, net |
19,707 |
18,710 |
|
Goodwill |
188,491 |
180,084 |
|
Other intangible assets, net |
39,314 |
31,535 |
|
Deferred income taxes, net |
79,828 |
91,044 |
|
Total assets |
$ 518,110 |
$ 527,327 |
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
Liabilities |
|
|
|
Settlement liabilities |
$ 116,711 |
$ 145,022 |
|
Accounts payable and accrued expenses |
69,005 |
60,701 |
|
Borrowings |
95,743 |
103,000 |
|
Total liabilities |
281,459 |
308,723 |
|
|
|
|
|
Stockholders' Equity |
|
|
|
Common stock, $0.001 par value, 500,000 shares authorized and 90,350 and 89,233 shares issued at September 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 September 30, 2014 and December 31, 2013 |
-- |
-- |
|
Additional paid-in capital |
244,247 |
231,516 |
|
Retained earnings |
165,901 |
148,012 |
|
Accumulated other comprehensive income |
2,370 |
2,827 |
|
Treasury stock, at cost, 24,807 and 23,303 shares at September 30, 2014 and December 31, 2013, respectively |
(175,957) |
(163,840) |
|
Total stockholders' equity |
236,651 |
218,604 |
|
|
|
|
|
Total liabilities and stockholders' equity |
$ 518,110 |
$ 527,327 |
|
|
|
|
|
GLOBAL CASH ACCESS HOLDINGS, INC. AND SUBSIDIARIES |
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW |
|
(Amounts in thousands) |
|
(Unaudited) |
|
|
|
|
|
Nine Months Ended September 30, |
|
|
2014 |
2013 |
|
|
|
|
|
Cash flows from operating activities |
|
|
|
Net income |
$ 17,889 |
$ 18,694 |
|
Adjustments to reconcile net income to cash provided by operating activities: |
|
|
|
Depreciation |
5,702 |
5,421 |
|
Amortization of intangibles |
8,476 |
6,974 |
|
Amortization of financing costs |
1,412 |
1,323 |
|
Loss on sale or disposal of assets |
79 |
158 |
|
Provision for bad debts |
6,770 |
5,882 |
|
Stock-based compensation |
7,533 |
3,702 |
|
Changes in operating assets and liabilities: |
|
|
|
Settlement receivables |
10,828 |
5,050 |
|
Other receivables, net |
(6,547) |
(8,264) |
|
Inventory |
(1,430) |
(1,847) |
|
Prepaid and other assets |
(2,927) |
(1,726) |
|
Deferred income taxes |
8,554 |
10,335 |
|
Settlement liabilities |
(28,125) |
(20,127) |
|
Accounts payable and accrued expenses |
1,226 |
188 |
|
|
|
|
|
Net cash provided by operating activities |
29,440 |
25,763 |
|
|
|
|
|
Cash flows from investing activities |
|
|
|
Acquisitions, net of cash acquired |
(11,845) |
-- |
|
Capital expenditures |
(11,035) |
(9,165) |
|
Proceeds from sale of fixed assets |
298 |
83 |
|
Changes in restricted cash and cash equivalents |
(77) |
(91) |
|
|
|
|
|
Net cash used in investing activities |
(22,659) |
(9,173) |
|
|
|
|
|
Cash flows from financing activities |
|
|
|
Issuance costs of amended credit facility |
-- |
(764) |
|
Repayments against credit facility |
(7,258) |
(15,000) |
|
Proceeds from exercise of stock options |
5,251 |
3,776 |
|
Purchase of treasury stock |
(12,117) |
(14,631) |
|
|
|
|
|
Net cash used in financing activities |
(14,124) |
(26,619) |
|
|
|
|
|
Effect of exchange rates on cash |
(412) |
(1) |
|
|
|
|
|
Cash and cash equivalents |
|
|
|
Net decrease for the period |
(7,755) |
(10,030) |
|
Balance, beginning of the period |
114,254 |
153,020 |
|
|
|
|
|
Balance, end of the period |
$ 106,499 |
$ 142,990 |
|
|
|
|
|
Supplemental cash flow disclosures |
|
|
|
Cash paid for interest |
$ 5,154 |
$ 6,978 |
|
Cash paid for income tax, net of refunds |
$ 874 |
$ 538 |
|
Non-cash tenant improvements paid by landlord |
$ -- |
$ 2,930 |
|
Accrued and unpaid capital expenditures |
$ 2,260 |
$ 2,339 |
|
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
September 30, |
Nine months ended
September 30, |
|
|
2014 |
2013 |
2014 |
2013 |
|
Reconciliation of net income to cash earnings (amounts in thousands, except earnings per share amounts) |
|
|
|
|
|
Net income |
$ 5,676 |
$ 5,782 |
$ 17,889 |
$ 18,694 |
|
Equity compensation expense |
2,124 |
1,247 |
7,533 |
3,702 |
|
Deferred income tax |
2,943 |
3,124 |
8,554 |
10,335 |
|
Amortization |
3,352 |
2,419 |
8,476 |
6,974 |
|
MGAM acquisition related expenses |
953 |
-- |
953 |
-- |
|
|
|
|
|
|
|
Cash earnings |
$ 15,048 |
$ 12,572 |
$ 43,405 |
$ 39,705 |
|
|
|
|
|
|
|
Diluted weighted average number of common shares outstanding |
66,747 |
66,630 |
67,051 |
67,158 |
|
|
|
|
|
|
|
Diluted cash earnings per share ("Cash EPS") |
$ 0.23 |
$ 0.19 |
$ 0.65 |
$ 0.59 |
|
|
|
|
|
|
|
Reconciliation of operating income to EBITDA and Adjusted EBITDA |
|
|
|
|
|
Operating income |
$ 10,771 |
$ 11,420 |
$ 33,406 |
$ 37,954 |
|
Plus: depreciation and amortization |
5,208 |
4,327 |
14,178 |
12,395 |
|
|
|
|
|
|
|
EBITDA |
$ 15,979 |
$ 15,747 |
$ 47,584 |
$ 50,349 |
|
|
|
|
|
|
|
Equity compensation expense |
2,124 |
1,247 |
7,533 |
3,702 |
|
MGAM acquisition related expenses |
953 |
-- |
953 |
-- |
|
|
|
|
|
|
|
Adjusted EBITDA |
$ 19,056 |
$ 16,994 |
$ 56,070 |
$ 54,051 |
|
|
|
|
|
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 |
$ 23,000 |
$ 24,800 |
|
Projected equity compensation expense |
9,800 |
9,800 |
|
Projected deferred income tax |
11,700 |
12,800 |
|
Projected amortization |
10,600 |
10,600 |
|
Projected MGAM acquisition related costs2 |
3,000 |
3,000 |
|
|
|
|
|
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 |
$ 44,200 |
$ 47,200 |
|
Plus: projected depreciation and projected amortization |
19,000 |
19,000 |
|
|
|
|
|
Projected EBITDA |
$ 63,200 |
$ 66,200 |
|
|
|
|
|
Projected equity compensation expense |
9,800 |
9,800 |
|
Projected MGAM acquisition related costs2 |
3,000 |
3,000 |
|
|
|
|
|
Projected Adjusted EBITDA |
$ 76,000 |
$ 79,000 |
|
|
|
|
|
Note: |
|
|
|
1. All figures presented are projected estimates for the year ending December 31, 2014. |
|
2. Assumes MGAM acquisition will occur in early 2015. |
|
|
|
|
|
GLOBAL CASH ACCESS HOLDINGS, INC. AND SUBSIDIARIES |
|
OTHER INFORMATION AND DATA |
|
(Amounts in thousands, unless otherwise noted) |
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended September 30, |
For the Nine Months Ended September 30, |
|
|
2014 |
2013 |
2014 |
2013 |
|
|
|
|
|
|
|
Revenues |
|
|
|
|
|
Cash Advance |
$ 57,544 |
$ 58,305 |
$ 177,185 |
$ 174,292 |
|
ATM |
70,151 |
71,634 |
213,172 |
219,881 |
|
Check Services |
5,518 |
5,385 |
16,146 |
16,786 |
|
Other |
12,268 |
10,777 |
34,495 |
31,028 |
|
Total revenues |
$ 145,481 |
$ 146,101 |
$ 440,998 |
$ 441,987 |
|
|
|
|
|
|
|
Operating income |
|
|
|
|
|
Cash Advance |
$ 15,196 |
$ 15,190 |
$ 48,980 |
$ 46,503 |
|
ATM |
6,488 |
6,114 |
18,834 |
19,323 |
|
Check Services |
2,560 |
3,074 |
8,220 |
9,874 |
|
Other |
6,314 |
4,399 |
14,786 |
14,031 |
|
Corporate |
(19,787) |
(17,357) |
(57,414) |
(51,777) |
|
Total operating income |
$ 10,771 |
$ 11,420 |
$ 33,406 |
$ 37,954 |
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
Nine months ended September 30, |
|
|
2014 |
2013 |
2014 |
2013 |
|
|
|
|
|
|
|
Other data |
|
|
|
|
|
Aggregate dollar amount processed (in billions) |
|
|
|
|
|
Cash advance |
$ 1.23 |
$ 1.24 |
$ 3.78 |
$ 3.67 |
|
ATM |
$ 3.17 |
$ 3.22 |
$ 9.66 |
$ 9.88 |
|
Check warranty |
$ 0.28 |
$ 0.27 |
$ 0.83 |
$ 0.83 |
|
|
|
|
|
|
|
Number of transactions completed (in millions) |
|
|
|
|
|
Cash advance |
2.17 |
2.22 |
6.69 |
6.68 |
|
ATM |
16.23 |
16.48 |
49.15 |
50.79 |
|
Check warranty |
0.91 |
0.93 |
2.71 |
2.87 |
CONTACT: Investor Relations
ir@gcamail.com
Source:
Global Cash Access, Inc.