HONG KONG, Aug. 6, 2015 /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 second quarter
ended June 30, 2015 and reviewed
recent corporate progress.
Key Financial Metrics
- Consolidated revenues of $7.6
million for the second quarter of 2015
- Adjusted EBITDA (earnings from continuing operations before
interest, taxes, depreciation, amortization and non-cash charges)
of $3.3 million for the second
quarter of 2015
- Net income of $1.5 million for
the second quarter of 2015
- Cash balance of $24.6 million and
zero debt as of June 30, 2015
Second Quarter of 2015 Financial Performance
All historical revenues and expenses associated with
Dreamworld Pailin, which ceased operation in June 2014, have been reclassified as discontinued
operations for the presented periods. Historical share amounts have
been proportionally adjusted to reflect the impact of the Company's
1:4 reverse stock split effected on February
26, 2015 for the presented periods.
The Company's second quarter of 2015 consolidated revenue was
$7.6 million, an increase of 54%
compared to $4.9 million in the
second quarter of 2014 due to increases in both the gaming
operations and gaming products business divisions.
Gaming operations revenue was $4.9
million for the second quarter of 2015, an increase of 11%
compared to $4.4 million in the
second quarter of 2014 due to improvement in the Cambodia operations partially offset by a
decline in the Philippines
operations. Average consolidated daily net win per unit was
$131 for the second quarter of 2015,
an increase of 17% compared to $112
in the second quarter of 2014 due to the higher revenue and a
slight reduction of machine seats in operation during the second
quarter of 2015.
Cambodia average daily net win
per unit was $165 for the second
quarter of 2015, an increase of 27% compared to $130 in the prior year period primarily due to
improved performance at NagaWorld. NagaWorld average daily net win
per unit increased to $248 for the
second quarter of 2015 compared to $203 in the prior year period primarily due to an
increase in VIP player traffic.
Philippines average daily net
win per unit was $65 for the second
quarter of 2015, a decrease of 14% compared to $76 in the prior year period. The decrease was
primarily due to increased competition from new integrated casino
resorts in Manila, one of which
opened in March 2013 and another
which soft opened in December 2014.
While Philippines average daily
net win per unit declined on a year-over-year basis, it has
remained relatively stable in recent quarters as the Company
continues its proactive marketing strategies in efforts to
stabilize performance in the increasingly competitive
landscape.
Revenue from gaming products was $2.7
million for the second quarter of 2015 compared to
$524,000 in the second quarter of
2014. The increase was primarily a result of higher sales of gaming
chips and plaques due to strong reorder levels from existing
customers. The Company achieved a gross profit of $395,000 for this division for the second quarter
of 2015 compared to a gross margin loss of $401,000 in the prior year period. The gross
margin increase was primarily due to higher production volumes and
continued efforts to improve production efficiencies.
Selling, general and administrative, or SG&A, expenses
were $1.3 million for the second
quarter of 2015 compared to $1.1
million in the second quarter of 2014. The lower expenses in
the second quarter of 2014 were mainly due to a reversal of a
previously accrued one-time other tax liability of $485,000 related to the
Philippines operations. Excluding this benefit to the
second quarter of 2014, SG&A expenses for the second quarter of
2015 declined $280,000 compared to
the prior year period, which was primarily due to cost control
efforts.
Entertainment Gaming Asia reported adjusted EBITDA of
$3.3 million in the second quarter of
2015 compared to $2.1 million in the
second quarter of 2014.
The Company reported net income of $1.5
million, or $0.10 per share,
on a weighted average diluted share count of 14.5 million shares
for the second quarter of 2015. This compared to a net loss of
$22,000, or breakeven per share, on a
weighted average diluted share count of 7.5 million shares for the
second quarter of 2014. The second quarter of 2014 net loss
included a net loss of $239,000 from
discontinued operations related to Dreamworld Pailin. Excluding the
discontinued operations, the Company reported net income from
continuing operations of $217,000, or
$0.03 per share, for the second
quarter of 2014.
Clarence Chung, Chairman and
Chief Executive Officer of Entertainment Gaming Asia, commented,
"We are pleased to report that the strong top and bottom-line
year-over-year improvement achieved in the first quarter continued
in the second quarter of 2015. The primary drivers of our
performance were the significant improvements in gaming products
sales and gross margin as well as the growth in gaming operations
revenue. Gaming products benefitted from an attractive reorder
pipeline from existing customers and our efforts to improve
profitability while growth in gaming operations was largely due to
strong performance from NagaWorld.
"We are focused on continuing to improve our operating
performance. Through proactive marketing and machine management, we
aim to maximize performance and return potential for our slot
operations. For gaming products, we continue efforts to expand our
market presence and build on our present confirmed order pipeline
of $4.5 million for the second half
of 2015.
"In addition, we are actively pursuing new projects that would
drive long-term growth for the Company. With over $24.0 million in net cash and the benefits of
being an indirect, majority-owned subsidiary of Melco International
Development Limited, we believe we have greatly improved our
ability to secure new projects that could enhance our existing
operations and provide the opportunity to expand into new
businesses and markets."
Entertainment Gaming Asia is hosting a conference call and
simultaneous webcast at 8:30 a.m. ET today, August 6, 2015, both of which are open to the
general public. The conference call number is 800/734-8582 or
212/231-2906. Questions and answers will be reserved for call-in
analysts and investors. Interested parties may also access the live
call on the Internet at www.EGT-Group.com. Please allow 15
minutes to register and download and install any necessary
software. Following its completion, a replay of the call can
be accessed for thirty days on the Internet at
www.EGT-Group.com.
About Entertainment Gaming Asia Inc.
Entertainment
Gaming Asia Inc. (NASDAQ: EGT), an indirect, majority-owned
subsidiary of Melco International Development Limited, is
a gaming company in Pan-Asia engaged in the leasing of
electronic gaming machines on a revenue sharing basis to the gaming
industry in Cambodia and
the Philippines and the
development and operation of gaming venues in Asia under its "Dreamworld"
brand. The Company also manufactures and sells RFID and
traditional gaming chips and plaques to major casinos under its
"Dolphin" brand.
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
gaming projects and fund those projects, expectations for the
increasing profitability of the Company's gaming chips and plaques
operations and expectations for expanding its business model to new
gaming platforms and markets. 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 for the Company's gaming projects and
identify and successfully develop additional projects; acquire
additional capital as and when needed; 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; successfully improve
manufacturing processes and enhance production efficiencies 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, 2014 filed with the SEC
on March 26, 2015 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.
- financial tables follow -
|
Entertainment
Gaming Asia Inc.
Consolidated Statements of Comprehensive Income/Loss
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three-Month Periods
Ended June
30,
|
|
|
Six-Month
Periods
Ended June 30,
|
|
(amounts in
thousands, except per share data)
|
2015
|
|
|
2014
|
|
|
2015
|
|
2014
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
Gaming
operations
|
|
4,914
|
|
|
4,420
|
|
|
8,924
|
|
|
8,303
|
|
Gaming
products
|
|
2,723
|
|
|
524
|
|
|
6,995
|
|
|
1,335
|
|
Total
revenues
|
|
7,637
|
|
|
4,944
|
|
|
15,919
|
|
|
9,638
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating costs and
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
gaming operations
|
|
|
|
|
|
|
|
|
|
|
|
|
Gaming property and equipment depreciation
|
|
782
|
|
|
908
|
|
|
1,601
|
|
|
1,789
|
|
Casino contract amortization
|
|
611
|
|
|
612
|
|
|
1,222
|
|
|
1,222
|
|
Other gaming related intangibles amortization
|
|
63
|
|
|
63
|
|
|
126
|
|
|
126
|
|
Other operating costs
|
|
969
|
|
|
895
|
|
|
1,791
|
|
|
1,740
|
|
Cost of gaming
products
|
|
2,328
|
|
|
925
|
|
|
5,990
|
|
|
2,413
|
|
Selling, general and
administrative expenses
|
|
1,323
|
|
|
1,167
|
|
|
2,935
|
|
|
2,720
|
|
Gain on disposition of
assets
|
|
(17)
|
|
|
(8)
|
|
|
(22)
|
|
|
(8)
|
|
Impairment of
assets
|
|
—
|
|
|
19
|
|
|
—
|
|
|
19
|
|
Product development
expenses
|
|
34
|
|
|
101
|
|
|
69
|
|
|
156
|
|
Depreciation and
amortization
|
|
52
|
|
|
50
|
|
|
106
|
|
|
99
|
|
Total operating costs
and expenses
|
|
6,145
|
|
|
4,732
|
|
|
13,818
|
|
|
10,276
|
|
Income/(loss) from
operations
|
|
1,492
|
|
|
212
|
|
|
2,101
|
|
|
(638)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
(expenses)/income:
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense and
finance fees
|
|
(2)
|
|
|
—
|
|
|
(3)
|
|
|
(2)
|
|
Interest
income
|
|
3
|
|
|
—
|
|
|
6
|
|
|
—
|
|
Foreign currency
(losses)/gains
|
|
(25)
|
|
|
16
|
|
|
(54)
|
|
|
1
|
|
Other
|
|
10
|
|
|
4
|
|
|
19
|
|
|
12
|
|
Total other
(expenses)/income
|
|
(14)
|
|
|
20
|
|
|
(32)
|
|
|
11
|
|
Income/(loss) from
continuing operations before income tax
|
|
1,478
|
|
|
232
|
|
|
2,069
|
|
|
(627)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax
expenses
|
|
(17)
|
|
|
(15)
|
|
|
(37)
|
|
|
(30)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income/(loss)
from continuing operations
|
|
1,461
|
|
|
217
|
|
|
2,032
|
|
|
(657)
|
|
Net loss from
discontinued operations, net of tax
|
|
—
|
|
|
(239)
|
|
|
—
|
|
|
(395)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income/(loss)
attributable to EGT stockholders
|
$
|
1,461
|
|
$
|
(22)
|
|
$
|
2,032
|
|
$
|
(1,052)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive
(loss)/income:
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign
currency translation
|
|
(16)
|
|
|
99
|
|
|
(15)
|
|
|
58
|
|
Total other
comprehensive (loss)/income, net of tax
|
|
(16)
|
|
|
99
|
|
|
(15)
|
|
|
58
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive
income/(loss) attributable to EGT stockholders
|
$
|
1,445
|
|
$
|
77
|
|
$
|
2,017
|
|
$
|
(994)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per share data (basic
and diluted):
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings/(loss)
|
$
|
0.10
|
|
$
|
—
|
|
$
|
0.14
|
|
$
|
(0.14)
|
|
Earnings/(loss) from continuing operations
|
$
|
0.10
|
|
$
|
0.03
|
|
$
|
0.14
|
|
$
|
(0.09)
|
|
Loss
from discontinued operations, net of tax
|
$
|
—
|
|
$
|
(0.03)
|
|
$
|
—
|
|
$
|
(0.05)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
14,458
|
|
|
7,503
|
|
|
14,454
|
|
|
7,500
|
|
Diluted
|
|
14,477
|
|
|
7,537
|
|
|
14,474
|
|
|
7,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Entertainment
Gaming Asia Inc.
Consolidated Balance Sheets
|
|
|
|
|
|
|
|
|
|
|
|
|
June
30,
2015
|
|
December 31,
2014
|
|
(amounts in
thousands, except per share data)
|
|
(Unaudited)
|
|
|
|
ASSETS
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
24,638
|
$
|
17,301
|
|
Accounts receivable,
net
|
|
493
|
|
830
|
|
Amounts due from
related parties
|
|
1,686
|
|
2,112
|
|
Other
receivables
|
|
128
|
|
316
|
|
Inventories
|
|
3,731
|
|
2,617
|
|
Prepaid expenses and
other current assets
|
|
592
|
|
1,447
|
|
Total current
assets
|
|
31,268
|
|
24,623
|
|
|
|
|
|
|
Gaming equipment,
net
|
|
4,872
|
|
5,624
|
|
Casino
contracts
|
|
1,755
|
|
2,982
|
|
Property and
equipment, net
|
|
8,782
|
|
8,895
|
|
Goodwill
|
|
346
|
|
351
|
|
Intangible assets,
net
|
|
441
|
|
595
|
|
Contract amendment
fees
|
|
72
|
|
126
|
|
Deferred tax
asset
|
|
140
|
|
142
|
|
Prepaids, deposits
and other assets
|
|
1,061
|
|
1,316
|
|
Total
assets
|
$
|
48,737
|
$
|
44,654
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Accounts
payable
|
$
|
1,282
|
$
|
645
|
|
Amounts due to related
parties
|
|
108
|
|
47
|
|
Accrued
expenses
|
|
1,378
|
|
2,009
|
|
Income tax
payable
|
|
8
|
|
—
|
|
Customer deposits and
other current liabilities
|
|
2,229
|
|
306
|
|
Total current
liabilities
|
|
5,005
|
|
3,007
|
|
|
|
|
|
|
Other
liabilities
|
|
863
|
|
845
|
|
Deferred tax
liability
|
|
107
|
|
107
|
|
Total
liabilities
|
|
5,975
|
|
3,959
|
|
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
|
Common stock, $.001
par value, 18,750,000 shares authorized;14,464,220 and 14,471,095
shares issued and outstanding, respectively
|
|
14
|
|
14
|
|
Additional
paid-in-capital
|
|
47,730
|
|
47,680
|
|
Accumulated other
comprehensive income
|
|
738
|
|
753
|
|
Accumulated
losses
|
|
(5,721)
|
|
(7,753)
|
|
Total EGT
stockholders' equity
|
|
42,761
|
|
40,694
|
|
Non-controlling
interest
|
|
1
|
|
1
|
|
Total stockholders'
equity
|
|
42,762
|
|
40,695
|
|
Total liabilities and
stockholders' equity
|
$
|
48,737
|
$
|
44,654
|
|
Entertainment
Gaming Asia Inc.
Adjusted EBITDA from Continuing Operations
(Unaudited)
|
|
|
|
|
|
|
|
|
Three-Month
Periods
Ended June 30,
|
|
|
Six-Month
Periods
Ended June 30,
|
|
(amounts in
thousands)
|
|
2015
|
|
|
2014
|
|
|
2015
|
|
|
2014
|
|
Net income/(loss)
from continuing operations – GAAP basis
|
$
|
1,461
|
|
$
|
217
|
|
$
|
2,032
|
|
$
|
(657)
|
|
Interest expense and
finance fees
|
|
2
|
|
|
—
|
|
|
3
|
|
|
2
|
|
Interest
income
|
|
(3)
|
|
|
—
|
|
|
(6)
|
|
|
—
|
|
Income tax
expenses
|
|
17
|
|
|
15
|
|
|
37
|
|
|
30
|
|
Depreciation and
amortization
|
|
1,796
|
|
|
1,824
|
|
|
3,605
|
|
|
3,570
|
|
Stock-based
compensation expenses
|
|
20
|
|
|
69
|
|
|
50
|
|
|
141
|
|
Impairment of
assets
|
|
—
|
|
|
19
|
|
|
—
|
|
|
19
|
|
Gain on dispositions
of assets
|
|
(17)
|
|
|
(8)
|
|
|
(22)
|
|
|
(8)
|
|
Adjusted EBITDA from
continuing operations
|
$
|
3,276
|
|
$
|
2,136
|
|
$
|
5,699
|
|
$
|
3,097
|
Adjusted EBITDA is earnings 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.
|
Entertainment
Gaming Asia Inc.
Gaming Operations Performance Metrics
|
|
Slot
Operations
|
|
Net Revenue to EGT
(in thousands)
|
|
|
|
|
|
|
Q2:15
|
Q2:14
|
Y/Y
∆
|
|
1H:15
|
1H:14
|
Y/Y
∆
|
|
Cambodia
|
$3,992
|
$3,350
|
19%
|
|
$7,110
|
$6,280
|
13%
|
|
Philippines
|
$650
|
$787
|
-17%
|
|
$1,320
|
$1,515
|
-13%
|
|
Service
revenue(1)
|
$272
|
$283
|
-4%
|
|
$494
|
$508
|
-3%
|
|
Consolidated
|
$4,914
|
$4,420
|
11%
|
|
$8,924
|
$8,303
|
7%
|
|
Average Daily Net
Win Per Unit
|
|
|
|
|
|
|
Q2:15
|
Q2:14
|
Y/Y
∆
|
|
1H:15
|
1H:14
|
Y/Y
∆
|
|
Cambodia
|
$165
|
$130
|
27%
|
|
$147
|
$124
|
19%
|
|
Philippines
|
$65
|
$76
|
-14%
|
|
$67
|
$73
|
-8%
|
|
Consolidated
|
$131
|
$112
|
17%
|
|
$120
|
$107
|
12%
|
|
EGM Seats in
Operation
|
|
|
|
|
|
|
|
|
|
|
6/30/15
|
6/30/14
|
Y/Y
∆
|
|
Cambodia
|
|
|
|
|
1,018
|
1,126
|
-10%
|
|
Philippines
|
|
|
|
|
540
|
568
|
-5%
|
|
Consolidated
|
|
|
|
|
1,558
|
1,694
|
-8%
|
|
|
(1) Service revenue
represents reimbursements of certain expenses, which for accounting
purposes, are included in the revenue and grossed up in the cost of
gaming operations.
|
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SOURCE Entertainment Gaming Asia Inc.