HONG KONG, Nov. 6, 2014 /PRNewswire/ -- Entertainment
Gaming Asia Inc. (NASDAQ: EGT) ("Entertainment Gaming Asia" or "the
Company"), a gaming company focused on emerging gaming markets in
Pan-Asia, today reported operating results for the third quarter
ended September 30, 2014 and reviewed
recent corporate progress.
Key Financial Metrics:
- Consolidated revenue of $4.4
million for the third quarter of 2014
- Adjusted EBITDA (earnings from continuing operations before
interest, taxes, depreciation, amortization and non-cash charges)
of $1.6 million for the third quarter
of 2014
- Net loss from continuing operations of $261,000 for the third quarter of 2014
- Cash balance of $4.5 million and
zero debt as of September 30,
2014
Gaming operations revenue was comprised solely of slot
participation as the Company ceased operations of its Dreamworld
Pailin casino on June 1, 2014 and, as
such, all the related historical revenues and expenses have been
reclassified as discontinued operations for the presented
periods.
The Company's third quarter of 2014 consolidated revenue was
$4.4 million, a decrease of 19%
compared to $5.4 million in the third
quarter of 2013 due to a decline in both gaming operations and
gaming products revenue.
Gaming operations revenue was $4.0
million for the third quarter of 2014, down 9% from
$4.3 million in the third quarter of
2013. Average consolidated daily net win per unit was $100, a decrease of 7% compared to $108 in the third quarter of 2013. The declines
were primarily due to lower average daily net win per unit from
NagaWorld. NagaWorld average daily net win per unit declined
to $181 for the third quarter of 2014
compared to $201 in the prior year
period primarily due to fluctuations in player traffic as a result
of NagaWorld renovations of the casino floor that impacted certain
areas of the Company's slot operations as well as higher jackpot
payouts in the third quarter of 2014.
Revenue from gaming products was $437,000 in the third quarter of 2014 compared to
$1.1 million in the third quarter of
2013. The decrease was due to lower sales deliveries compared to
the prior year period primarily as a result of normal quarterly
uneven order flow for this business and given production efforts in
the third quarter of 2014 were largely focused on fulfilling two
large gaming chip and plaque orders expected to be delivered in the
fourth quarter of 2014.
Entertainment Gaming Asia reported adjusted EBITDA of
$1.6 million in the third quarter of
2014 compared to $2.1 million in the
prior year period.
The Company reported a net loss of $261,000, or $0.01
per share, for the third quarter of 2014. This compared to a net
loss of $309,000, or $0.01 per share, for the third quarter of 2013.
The third quarter of 2013 net loss included a net loss of
$411,000 from discontinued operations
related to Dreamworld Pailin. Excluding the discontinued
operations, the Company reported net income from continuing
operations of $102,000, or breakeven
per share, for the third quarter of 2013.
The increase in net loss from continuing operations was
primarily a result of lower gaming operations revenue from
NagaWorld as well as a higher gross margin loss from the gaming
products operations for the three-month period ended September 30, 2014 compared to the prior year
period. This increase in net loss from continuing operations was
partially offset by a higher gross profit from the Philippines gaming operations mainly due
to an increase in fully depreciated gaming assets and lower
operating expenses in the third quarter of 2014 compared to the
prior year period.
Clarence Chung, Chairman and
Chief Executive Officer of Entertainment Gaming Asia, commented,
"The decrease in gaming operations revenue for the third quarter of
2014 was largely due to a decline in revenue from NagaWorld. In
addition to increased player jackpot payouts for our NagaWorld
operations, we experienced some business disruption and a temporary
reduction in installed machines during the quarter due to
NagaWorld's renovation of certain parts of its casino floor. With
this floor renovation now complete, our installed machine base and
player traffic levels have returned to more normalized levels.
"In our gaming products division, we experienced a gross margin
loss for the third quarter. This was a result of lower sales to
existing customers, under-absorption of fixed costs stemming from
the lower sales volumes and certain production inefficiencies.
During the quarter, we also focused production efforts on
fulfilling two previously announced gaming chip and plaque orders
for the Philippines totaling over
$4.0 million in revenue. These orders
are scheduled to be delivered in the fourth quarter of 2014. We are
presently implementing initiatives to both expand and enhance our
production operations with a goal to improve efficiencies and
capacity in preparation for large potential order flow in the years
ahead.
"We are focused on improving our operating performance and
building our financial resources in an effort to better position us
to secure new projects that will drive long-term growth for the
Company. By leveraging our established presence and relationships,
we selectively seek both slot participation and casino development
projects in more established markets in Indo-China and other growing gaming markets in
Asia, which offer the potential
for greater operational scale and returns."
About Entertainment Gaming Asia Inc.
Entertainment Gaming Asia Inc. (NASDAQ: EGT) is a gaming company
in Pan-Asia engaged in the leasing of electronic gaming
machines on a revenue-sharing basis to the gaming industry and the
development and operation of gaming venues in the Indo-China region
under its "Dreamworld". The Company also manufactures
and sells RFID and traditional gaming chips and plaques to major
casinos under its "Dolphin" brand. For more information
please visit www.EGT-Group.com.
Forward Looking Statements
This press release contains forward-looking statements
concerning Entertainment Gaming Asia within the meaning of Section
27A of the Securities Act of 1933, as amended, and Section 21E of
the Securities Exchange Act of 1934, as amended. Those
forward-looking statements include statements regarding
expectations for the Company's slot operations business model,
growth of the gaming industry in Asia, the Company's ability to secure new
casino and gaming projects and fund those projects and expectations
for the Company's gaming chips and plaques operations. Such
statements are subject to certain risks and uncertainties, and
actual circumstances, events or results may differ materially from
those projected in such forward-looking statements. Factors that
could cause or contribute to differences include, but are not
limited to, risks related to the Company's ability to place gaming
machines at significant levels and generate the expected
amount of net win from the gaming machines placed, identify and
implement successful marketing and promotional strategies at the
Company's gaming projects and identify and successfully develop
additional projects, acquire additional capital as and when needed,
ability to obtain the needed approval by certain customers from
local gaming authorities to continue their purchase of gaming chips
and plaques from the Hong Kong
facility on a timely basis or at all, identify and implement
successful marketing and promotional strategies and obtain and
fulfill significant purchase orders from the customers for the
Company's gaming chips and plaques, adapt to potential changes in
gaming policies and political stability in the countries in which
the Company operates and those other risks set forth in the
Company's annual report on Form 10-K for the year ended
December 31, 2013 filed with the SEC
on March 31, 2014 and subsequently
filed quarterly reports on Form 10-Q. The Company cautions readers
not to place undue reliance on any forward-looking statements. The
Company does not undertake, and specifically disclaims any
obligation to update or revise such statements to reflect new
circumstances or unanticipated events as they occur.
|
Entertainment
Gaming Asia Inc.
|
|
Consolidated
Statements of Comprehensive Income
|
|
(Unaudited)
|
|
|
|
Three-Month
Periods
Ended September
30,
|
|
|
Nine-Month
Periods
Ended September
30,
|
|
(amounts in
thousands, except per share data)
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
2013
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
Gaming
operations
|
$
|
3,965
|
|
$
|
4,333
|
|
$
|
12,267
|
|
$
|
13,765
|
|
Gaming
products
|
|
437
|
|
|
1,106
|
|
|
1,772
|
|
|
2,695
|
|
Total
revenues
|
|
4,402
|
|
|
5,439
|
|
|
14,039
|
|
|
16,460
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating costs and
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
gaming operations
|
|
|
|
|
|
|
|
|
|
|
|
|
Gaming property and equipment depreciation
|
|
892
|
|
|
1,064
|
|
|
2,681
|
|
|
3,249
|
|
Casino contract amortization
|
|
613
|
|
|
613
|
|
|
1,835
|
|
|
1,851
|
|
Other gaming related intangibles
|
|
|
|
|
|
|
|
|
|
|
|
|
amortization
|
|
63
|
|
|
63
|
|
|
189
|
|
|
189
|
|
Other operating costs
|
|
877
|
|
|
813
|
|
|
2,617
|
|
|
2,482
|
|
Cost of gaming
products
|
|
571
|
|
|
1,130
|
|
|
2,985
|
|
|
3,172
|
|
Selling, general and
administrative expenses
|
|
1,364
|
|
|
1,437
|
|
|
3,942
|
|
|
4,260
|
|
Stock-based
compensation expenses
|
|
19
|
|
|
109
|
|
|
160
|
|
|
554
|
|
Gain on
disposition
|
|
(15)
|
|
|
—
|
|
|
(23)
|
|
|
—
|
|
Product development
expenses
|
|
156
|
|
|
51
|
|
|
311
|
|
|
206
|
|
Depreciation and
amortization
|
|
59
|
|
|
50
|
|
|
158
|
|
|
125
|
|
Total operating costs
and expenses
|
|
4,599
|
|
|
5,330
|
|
|
14,855
|
|
|
16,088
|
|
(Loss)/income from
operations
|
|
(197)
|
|
|
109
|
|
|
(816)
|
|
|
372
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense and
finance fees
|
|
—
|
|
|
—
|
|
|
(2)
|
|
|
(5)
|
|
Interest
income
|
|
—
|
|
|
—
|
|
|
1
|
|
|
4
|
|
Foreign currency
losses
|
|
(53)
|
|
|
(18)
|
|
|
(53)
|
|
|
(189)
|
|
Other
|
|
4
|
|
|
—
|
|
|
16
|
|
|
10
|
|
Total other
expenses
|
|
(49)
|
|
|
(18)
|
|
|
(38)
|
|
|
(180)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss)/income from
continuing operations before income tax
|
|
(246)
|
|
|
91
|
|
|
(854)
|
|
|
192
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax
(expenses)/benefit
|
|
(15)
|
|
|
11
|
|
|
(45)
|
|
|
(38)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss)/income
from continuing operations
|
|
(261)
|
|
|
102
|
|
|
(899)
|
|
|
154
|
|
Net loss from
discontinued operations, net of tax
|
|
—
|
|
|
(411)
|
|
|
(414)
|
|
|
(3,256)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
$
|
(261)
|
|
$
|
(309)
|
|
$
|
(1,313)
|
|
$
|
(3,102)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
|
$
|
(0.01)
|
|
$
|
(0.01)
|
|
$
|
(0.04)
|
|
$
|
(0.10)
|
|
Loss
from continuing operations
|
$
|
(0.01)
|
|
$
|
—
|
|
$
|
(0.03)
|
|
$
|
0.01
|
|
Loss
from discontinued operations, net of tax
|
$
|
—
|
|
$
|
(0.01)
|
|
$
|
(0.01)
|
|
$
|
(0.11)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
30,022
|
|
|
29,975
|
|
|
30,018
|
|
|
29,975
|
|
Diluted
|
|
30,022
|
|
|
30,508
|
|
|
30,018
|
|
|
30,552
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Entertainment
Gaming Asia Inc.
|
|
Consolidated
Balance Sheets
|
|
|
|
September
30,
2014
|
|
December
31,
2013
|
|
(amounts in
thousands, except per share data)
|
|
(Unaudited)
|
|
|
|
ASSETS
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
4,492
|
$
|
5,301
|
|
Accounts receivable,
net
|
|
761
|
|
922
|
|
Amount due from a
related party
|
|
22
|
|
108
|
|
Other
receivables
|
|
136
|
|
453
|
|
Inventories
|
|
4,750
|
|
1,663
|
|
Assets held for
sale
|
|
273
|
|
—
|
|
Prepaid expenses and
other current assets
|
|
983
|
|
443
|
|
Total current
assets
|
|
11,417
|
|
8,890
|
|
|
|
|
|
|
Gaming equipment,
net
|
|
6,194
|
|
8,171
|
|
Casino
contracts
|
|
3,587
|
|
5,429
|
|
Property and
equipment, net
|
|
8,881
|
|
7,857
|
|
Goodwill
|
|
349
|
|
353
|
|
Intangible assets,
net
|
|
667
|
|
899
|
|
Contract amendment
fees
|
|
153
|
|
234
|
|
Prepaids, deposits
and other assets
|
|
1,980
|
|
1,797
|
|
Total
assets
|
$
|
33,228
|
$
|
33,630
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Accounts
payable
|
$
|
882
|
$
|
840
|
|
Amount due to a
related party
|
|
40
|
|
19
|
|
Accrued
expenses
|
|
1,510
|
|
2,366
|
|
Customer deposits and
other current liabilities
|
|
2,048
|
|
457
|
|
Total current
liabilities
|
|
4,480
|
|
3,682
|
|
|
|
|
|
|
Other
liabilities
|
|
731
|
|
742
|
|
Deferred tax
liability
|
|
198
|
|
199
|
|
Total
liabilities
|
|
5,409
|
|
4,623
|
|
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
|
Common stock, $.001
par value, 75,000,000 shares
authorized; 30,102,162 and 30,022,162
shares issued and
outstanding, respectively
|
|
30
|
|
30
|
|
Additional
paid-in-capital
|
|
33,316
|
|
33,156
|
|
Accumulated other
comprehensive income
|
|
707
|
|
742
|
|
Accumulated
losses
|
|
(6,235)
|
|
(4,922)
|
|
Total EGT
stockholders' equity
|
|
27,818
|
|
29,006
|
|
Non-controlling
interest
|
|
1
|
|
1
|
|
Total stockholders'
equity
|
|
27,819
|
|
29,007
|
|
Total liabilities and
stockholders' equity
|
$
|
33,228
|
$
|
33,630
|
|
Entertainment
Gaming Asia Inc.
|
|
Adjusted EBITDA
from Continuing Operations
|
|
(Unaudited)
|
|
|
|
Three-Month
Periods
Ended September
30,
|
|
Nine-Month
Periods
Ended September
30,
|
|
(amounts in
thousands)
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
Net (loss)/income
from continuing operations – GAAP
|
$
|
(261)
|
|
$
|
102
|
|
$
|
(899)
|
|
$
|
154
|
|
Interest
expense
|
|
—
|
|
|
—
|
|
|
2
|
|
|
5
|
|
Interest
income
|
|
—
|
|
|
—
|
|
|
(1)
|
|
|
(4)
|
|
Income tax
expenses
|
|
15
|
|
|
(11)
|
|
|
45
|
|
|
38
|
|
Depreciation and
amortization
|
|
1,858
|
|
|
1,897
|
|
|
5,428
|
|
|
5,641
|
|
Stock-based
compensation expenses
|
|
19
|
|
|
109
|
|
|
160
|
|
|
554
|
|
Gain on
disposition
|
|
(15)
|
|
|
—
|
|
|
(23)
|
|
|
—
|
|
Adjusted EBITDA from
continuing operations
|
$
|
1,616
|
|
$
|
2,097
|
|
$
|
4,712
|
|
$
|
6,388
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA is earnings from continuing operations before
interest, taxes, depreciation, amortization, stock-based
compensation, and other non-cash operating income and expenses.
Adjusted EBITDA is presented exclusively as a supplemental
disclosure because management believes that it is widely used to
measure the performance, and as a basis for valuation, of gaming
companies. Management uses Adjusted EBITDA as a measure of the
operating performance of its segments and to compare the operating
performance of its operations with those of its competitors. The
Company also presents Adjusted EBITDA because it is used by some
investors as a way to measure a company's ability to incur and
service debt, make capital expenditures and meet working capital
requirements. Gaming companies have historically reported EBITDA as
a supplement to financial measures in accordance with generally
accepted accounting principles in the
United States ("GAAP"). Adjusted EBITDA should not be
considered as an alternative to operating income as an indicator of
the Company's performance, as an alternative to cash flows from
operating activities as a measure of liquidity, or as an
alternative to any other measure determined in accordance with
GAAP. Unlike net income/(loss), Adjusted EBITDA does not include
depreciation or interest expense and, therefore, does not
reflect current or future capital expenditures or the cost of
capital. The Company compensates for these limitations by using
Adjusted EBITDA as only one of several comparative tools, together
with GAAP measurements, to assist in the evaluation of operating
performance. Such GAAP measurements include operating income, net
income/(loss), cash flows from operations and cash flow data. The
Company has significant uses of cash flows, including capital
expenditures, interest payments, debt principal repayments, taxes
and other non-recurring charges, which are not reflected in
Adjusted EBITDA. Entertainment Gaming Asia's calculation of
Adjusted EBITDA may be different from the calculation methods used
by other companies and, therefore, comparability may be
limited.
|
Gaming
Operations
|
|
Net Revenue to EGT
(in thousands)
|
|
Q3:14
|
Q3:13
|
Y/Y
∆
|
|
Cambodia
|
|
$2,958
|
$3,327
|
-11%
|
|
Philippines
|
|
$749
|
$787
|
-5%
|
|
Service revenue
(1)
|
|
$258
|
$219
|
18%
|
|
Consolidated
|
|
$3,965
|
$4,333
|
-9%
|
|
|
|
|
|
|
Average Daily Net
Win per Unit (2)
|
|
Q3:14
|
Q3:13
|
Y/Y
∆
|
|
Cambodia
|
|
$114
|
$126
|
-10%
|
|
Philippines
|
|
$72
|
$73
|
-1%
|
|
Consolidated
|
|
$100
|
$108
|
-7%
|
|
|
|
|
|
EGM Seats in
Operation
|
|
9/30/14
|
9/30/13
|
Y/Y
∆
|
|
Cambodia
|
|
1,007
|
1,133
|
-11%
|
|
Philippines
|
|
556
|
565
|
-1%
|
|
Consolidated
|
|
1,563
|
1,698
|
-8%
|
|
|
|
|
|
|
|
|
(1) Service revenue represents a reimbursement of certain casino
expenses, which for accounting purposes, is included in the revenue
and grossed up in the costs of sales.
(2) Excludes electronic gaming machine (EGM) seats in operation
during venue soft launch opening periods and includes cash payments
for venues for which revenue is recognized on a cash basis. No EGM
seats were excluded from the net win calculations for the third
quarters of 2014 and 2013.
SOURCE Entertainment Gaming Asia Inc.