HONG KONG, Nov. 9, 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 third quarter
ended September 30, 2015 and reviewed
recent corporate progress.
Key Financial Metrics
- Consolidated revenues of $8.3
million for the third quarter of 2015
- Adjusted EBITDA (earnings from continuing operations before
interest, taxes, depreciation, amortization and non-cash charges)
of $3.4 million for the third quarter
of 2015
- Net income of $1.4 million for
the third quarter of 2015
- Cash balance of $25.3 million and
zero debt as of September 30,
2015
Third Quarter of 2015 Financial Performance
The Company's third quarter of 2015 consolidated revenue was
$8.3 million, an increase of 88%
compared to $4.4 million in the third
quarter of 2014 due to increases in both the gaming operations and
gaming products business divisions.
Gaming operations revenue was $4.5
million for the third quarter of 2015, an increase of 13%
compared to $4.0 million in the third
quarter of 2014. Average consolidated daily net win per unit was
$120 for the third quarter of 2015,
an increase of 20% compared to $100
in the third quarter of 2014. The increases were primarily
due to improvements in the Cambodia operations partially offset by a
decline in the Philippines
operations.
Cambodia average daily net win
per unit was $152 for the third
quarter of 2015, an increase of 33% compared to $114 in the prior year period primarily due to
improved performance at NagaWorld. NagaWorld average daily
net win per unit increased to $218
for the third quarter of 2015 compared to $181 in the prior year period mainly as a result
of an increase in VIP player traffic compared to the prior year
period when NagaWorld casino floor renovations were taking
place.
Philippines average daily net
win per unit was $59 for the third
quarter of 2015, a decrease of 18% compared to $72 in the prior year period. The decrease was
primarily the result of lower player traffic 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. The Company continues
its proactive marketing strategies in efforts to stabilize
performance in the increasingly competitive landscape.
Revenue from gaming products was $3.8
million for the third quarter of 2015 compared to
$437,000 in the third quarter of
2014. The increase was primarily a result of higher product sales
from new and existing customers, including a $2.2 million order for a new casino opening in
Macau, in the third quarter of
2015. The Company achieved a gross profit of $954,000 for this division for the third quarter
of 2015 compared to a gross margin loss of $134,000 in the prior year period. The gross
margin increase was primarily due to higher production volumes and
improved production efficiencies for gaming chips and plaques, and
to a lesser degree, increased sales of third-party gaming products
sales.
Selling, general and administrative, or SG&A, expenses
were $1.3 million for the third
quarter of 2015 compared to $1.4
million in the third quarter of 2014.
Entertainment Gaming Asia reported adjusted EBITDA of
$3.4 million in the third quarter of
2015 compared to $1.6 million in the
third quarter of 2014.
The Company reported net income of $1.4
million, or $0.10 per share,
on a weighted average diluted share count of 14.5 million shares
for the third quarter of 2015. This compared to a net loss of
$261,000, or $0.04 per share, on a weighted average diluted
share count of 7.5 million shares for the third 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 improvements achieved in the first two quarters
continued in the third quarter of 2015. The primary drivers of our
performance in the quarter and year-to-date were the significant
improvements in gaming products sales and gross margin as well as
the growth in gaming operations revenue.
"Our gaming products business benefitted from strong sales and
production volumes for gaming chips and plaques for both a new
casino opening and from existing customers, as well as increased
sales of other high-margin third-party gaming products. With an
attractive fourth quarter order pipeline, the gaming products
division is on target to achieve record performance of over
$13 million in revenue for 2015.
However, looking further ahead, we expect to experience sales
fluctuations due to the natural uneven order flow for this business
driven by the timing of orders for new casino openings.
"Gaming operations posted solid year-over-year gains for the
third quarter of 2015 primarily driven by the Cambodia operations and, particularly,
NagaWorld. Increased player traffic and proactive marketing
initiatives have resulted in continued improvement in average net
wins in NagaWorld in the fourth quarter. Thansur Bokor and
Dreamworld Poipet made small, yet positive, contributions to
overall revenue growth and EBITDA in the third quarter of 2015. In
the Philippines, the competitive
landscape remains a challenge however, we continue efforts to
improve returns on these assets and have seen average net wins
return to the mid-$60 range in the
month of October.
"With the benefits of the proceeds from our November 2014 equity rights offering and strong
operating performance so far in 2015, we have accumulated a net
cash position of over $27 million as
of the end of October. It is our mission to responsibly invest
these resources in ways that will drive long-term earnings growth
and enhance shareholder value. To this end, we have been active in
our efforts to secure new projects, in existing and new businesses,
that would enable us to best capitalize on growth opportunities in
gaming markets in Asia and,
ultimately, replace cash flow from NagaWorld in the event we do not
renew this contract by March 2016. We
are in the early stages for one potential new project that we
believe could provide an exciting opportunity for the Company. We
look forward to sharing more about this project as plans
materialize in the coming months."
Entertainment Gaming Asia is hosting a conference call and
simultaneous webcast at 8:30 a.m. ET today, November 9, 2015, both of which are open to the
general public. The conference call number is 800/759-0876 or
303/223-0118. 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
growth and profitability of the Company's gaming chips and plaques
operations and expectations for expanding its business model to new
businesses that will provide growth for the Company. 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
|
|
Nine-Month
Periods
|
|
|
|
Ended September 30,
|
|
Ended September 30,
|
|
|
|
|
|
|
|
|
|
|
|
(amounts in thousands, except per share
data)
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
Gaming operations
|
|
4,483
|
|
3,965
|
|
13,407
|
|
12,267
|
|
Gaming products
|
|
3,788
|
|
437
|
|
10,783
|
|
1,772
|
|
Total revenues
|
|
8,271
|
|
4,402
|
|
24,190
|
|
14,039
|
|
|
|
|
|
|
|
|
|
|
|
Operating costs and expenses:
|
|
|
|
|
|
|
|
|
|
Cost of gaming operations
|
|
|
|
|
|
|
|
|
|
Gaming property and equipment depreciation
|
|
751
|
|
892
|
|
2,352
|
|
2,681
|
|
Casino contract amortization
|
|
608
|
|
613
|
|
1,830
|
|
1,835
|
|
Other gaming related intangibles
amortization
|
|
63
|
|
63
|
|
189
|
|
189
|
|
Other operating costs
|
|
927
|
|
877
|
|
2,718
|
|
2,617
|
|
Cost of gaming products
|
|
2,834
|
|
571
|
|
8,824
|
|
2,985
|
|
Selling, general and administrative
expenses
|
|
1,270
|
|
1,383
|
|
4,205
|
|
4,102
|
|
Gain on disposition of assets
|
|
—
|
|
(15)
|
|
(22)
|
|
(23)
|
|
Research and development expenses
|
|
46
|
|
156
|
|
115
|
|
311
|
|
Depreciation and amortization
|
|
53
|
|
59
|
|
159
|
|
158
|
|
Total operating costs and expenses
|
|
6,552
|
|
4,599
|
|
20,370
|
|
14,855
|
|
Income/(loss) from operations
|
|
1,719
|
|
(197)
|
|
3,820
|
|
(816)
|
|
|
|
|
|
|
|
|
|
|
|
Other (expenses)/income:
|
|
|
|
|
|
|
|
|
|
Interest expense and finance fees
|
|
—
|
|
—
|
|
(3)
|
|
(2)
|
|
Interest income
|
|
4
|
|
—
|
|
10
|
|
1
|
|
Foreign currency losses
|
|
(157)
|
|
(53)
|
|
(211)
|
|
(53)
|
|
Other
|
|
9
|
|
4
|
|
28
|
|
16
|
|
Total other expenses
|
|
(144)
|
|
(49)
|
|
(176)
|
|
(38)
|
|
Income/(loss) from continuing operations before
income tax
|
|
1,575
|
|
(246)
|
|
3,644
|
|
(854)
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expenses
|
|
(129)
|
|
(15)
|
|
(166)
|
|
(45)
|
|
|
|
|
|
|
|
|
|
|
|
Net income/(loss) from continuing
operations
|
|
1,446
|
|
(261)
|
|
3,478
|
|
(899)
|
|
Net loss from discontinued operations, net of
tax
|
|
—
|
|
—
|
|
—
|
|
(414)
|
|
|
|
|
|
|
|
|
|
|
|
Net income/(loss) attributable to EGT
stockholders
|
$
|
1,446
|
$
|
(261)
|
$
|
3,478
|
$
|
(1,313)
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive loss:
|
|
|
|
|
|
|
|
|
|
Foreign currency translation
|
|
(64)
|
|
(93)
|
|
(79)
|
|
(35)
|
|
Total other comprehensive loss, net of
tax
|
|
(64)
|
|
(93)
|
|
(79)
|
|
(35)
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income/(loss) attributable to EGT
stockholders
|
$
|
1,382
|
$
|
(354)
|
$
|
3,399
|
$
|
(1,348)
|
|
|
|
|
|
|
|
|
|
|
|
Per share data (basic and diluted):
|
|
|
|
|
|
|
|
|
|
Earnings/(loss)
|
$
|
0.10
|
$
|
(0.04)
|
$
|
0.24
|
$
|
(0.18)
|
|
Earnings/(loss) from continuing
operations
|
$
|
0.10
|
$
|
(0.04)
|
$
|
0.24
|
$
|
(0.12)
|
|
Loss from discontinued operations, net of
tax
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
(0.06)
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares
outstanding:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
14,460
|
|
7,506
|
|
14,456
|
|
7,502
|
|
Diluted
|
|
14,477
|
|
7,506
|
|
14,483
|
|
7,502
|
|
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.
Entertainment Gaming Asia
Inc. Consolidated Balance Sheets
|
|
|
|
|
|
|
|
September 30,
|
|
December
31,
|
|
|
2015
|
|
2014
|
(amounts in thousands, except per share
data)
|
|
(Unaudited)
|
|
|
ASSETS
|
|
|
|
|
Current assets:
|
|
|
|
|
Cash and cash equivalents
|
$
|
25,310
|
$
|
17,301
|
Accounts receivable, net
|
|
585
|
|
830
|
Amounts due from related parties
|
|
2,437
|
|
2,112
|
Other receivables
|
|
235
|
|
316
|
Inventories
|
|
3,019
|
|
2,617
|
Prepaid expenses and other current
assets
|
|
339
|
|
1,447
|
Contract amendment fees
|
|
45
|
|
—
|
Total current assets
|
|
31,970
|
|
24,623
|
|
|
|
|
|
Gaming equipment, net
|
|
4,258
|
|
5,624
|
Casino contracts
|
|
1,135
|
|
2,982
|
Property and equipment, net
|
|
8,307
|
|
8,895
|
Goodwill
|
|
334
|
|
351
|
Intangible assets, net
|
|
359
|
|
595
|
Contract amendment fees
|
|
—
|
|
126
|
Deferred tax asset
|
|
135
|
|
142
|
Prepaids, deposits and other assets
|
|
1,071
|
|
1,316
|
Total assets
|
$
|
47,569
|
$
|
44,654
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS'
EQUITY
|
|
|
|
|
Current liabilities:
|
|
|
|
|
Accounts payable
|
$
|
437
|
$
|
645
|
Amounts due to related parties
|
|
47
|
|
47
|
Accrued expenses
|
|
1,482
|
|
2,009
|
Income tax payable
|
|
121
|
|
—
|
Deferred revenues, current portion
|
|
23
|
|
—
|
Customer deposits and other current
liabilities
|
|
319
|
|
306
|
Total current liabilities
|
|
2,429
|
|
3,007
|
|
|
|
|
|
Other liabilities
|
|
872
|
|
845
|
Deferred tax liability
|
|
107
|
|
107
|
Total liabilities
|
|
3,408
|
|
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
|
|
47,747
|
|
47,680
|
Accumulated other comprehensive
income
|
|
674
|
|
753
|
Accumulated losses
|
|
(4,275)
|
|
(7,753)
|
Total EGT stockholders' equity
|
|
44,160
|
|
40,694
|
Non-controlling interest
|
|
1
|
|
1
|
Total stockholders' equity
|
|
44,161
|
|
40,695
|
Total liabilities and stockholders'
equity
|
$
|
47,569
|
$
|
44,654
|
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)
|
|
2015
|
|
|
2014
|
|
|
2015
|
|
|
2014
|
Net income/(loss) from continuing operations – GAAP
basis
|
$
|
1,446
|
|
$
|
(261)
|
|
$
|
3,478
|
|
$
|
(899)
|
Interest expense and finance fees
|
|
—
|
|
|
—
|
|
|
3
|
|
|
2
|
Interest income
|
|
(4)
|
|
|
—
|
|
|
(10)
|
|
|
(1)
|
Income tax expenses
|
|
129
|
|
|
15
|
|
|
166
|
|
|
45
|
Depreciation and amortization
|
|
1,764
|
|
|
1,858
|
|
|
5,369
|
|
|
5,428
|
Stock-based compensation expenses
|
|
17
|
|
|
19
|
|
|
67
|
|
|
160
|
Gain on disposition of assets
|
|
—
|
|
|
(15)
|
|
|
(22)
|
|
|
(23)
|
Adjusted EBITDA from continuing
operations
|
$
|
3,352
|
|
$
|
1,616
|
|
$
|
9,051
|
|
$
|
4,712
|
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, 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 (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three-Month Periods
Ended September 30,
|
|
|
Nine-Month Periods
Ended September 30,
|
|
|
2015
|
|
|
2014
|
|
|
2015
|
|
|
2014
|
Net Revenue to EGT (in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
Cambodia
|
$
|
3,617
|
|
$
|
2,959
|
|
$
|
10,727
|
|
$
|
9,238
|
Philippines
|
|
597
|
|
|
748
|
|
|
1,917
|
|
|
2,264
|
Service revenue(1)
|
|
269
|
|
|
258
|
|
|
763
|
|
|
765
|
Consolidated
|
$
|
4,483
|
|
$
|
3,965
|
|
$
|
13,407
|
|
$
|
12,267
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Daily Net Win (per unit)
|
|
|
|
|
|
|
|
|
|
|
|
Cambodia
|
$
|
152
|
|
$
|
114
|
|
$
|
148
|
|
$
|
120
|
Philippines
|
|
59
|
|
|
72
|
|
|
64
|
|
|
73
|
Consolidated
|
|
120
|
|
|
100
|
|
|
120
|
|
|
104
|
|
|
|
|
|
|
|
|
|
|
|
|
EGM Seats in Operation (period end)
|
|
|
|
|
|
|
|
|
|
|
|
Cambodia
|
|
|
|
|
|
|
|
1,008
|
|
|
1,007
|
Philippines
|
|
|
|
|
|
|
|
556
|
|
|
556
|
Consolidated
|
|
|
|
|
|
|
|
1,564
|
|
|
1,563
|
|
(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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To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/entertainment-gaming-asia-inc-reports-third-quarter-2015-results-300174644.html
SOURCE Entertainment Gaming Asia Inc.