HONG KONG, May 12, 2016 /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 first quarter
ended March 31, 2016 and reviewed
recent corporate progress.
Key Financial Metrics
- Consolidated revenue of $5.2
million for the first quarter of 2016
- Adjusted LBITDA (loss before interest, taxes, depreciation,
amortization and non-cash charges) of $38,000 for the first quarter of 2016
- Net loss of $1.5 million for the
first quarter of 2016
- Cash balance of $30.7 million and
debt free as of March 31, 2016
First Quarter of 2016 Financial Performance
The Company's first quarter of 2016 consolidated revenue was
$5.2 million, a decrease of 38%
compared to $8.3 million in the first
quarter of 2015 due primarily to a decrease in the gaming products
business.
Gaming operations revenue was $3.9
million for the first quarter of 2016, a decrease of 4%
compared to $4.0 million in the first
quarter of 2015. Gaming operations revenue comprised $3.4 million from slot participation operations
and $457,000 from fixed lease
operations. Fixed lease operations commenced March 1, 2016 in NagaWorld following the
expiration of the Company's participation contract on February 29, 2016.
Average consolidated daily net win per unit for the
participation operations was $108 for
the first quarter of 2016, unchanged with the first quarter of 2015
as improvements in Cambodia were
offset by declines in the
Philippines.
Cambodia average daily net win
per unit was $142 for the first
quarter of 2016, an increase of 11% compared to $128 in the prior year period primarily due to
improved participation performance from NagaWorld and Thansur
Bokor. NagaWorld average daily net win per unit increased to
$232 for January and February of 2016
compared to $198 in the first quarter
of 2015 mainly as a result of an increase in VIP player
traffic.
Philippines average daily net
win per unit was $60 for the first
quarter of 2016, a decrease of 12% compared to $68 in the prior year period. The decrease was
primarily a result of lower player traffic due to increased
competition from new integrated casino resorts in Manila. The Company continues its proactive
marketing strategies in efforts to stabilize performance in the
increasingly competitive landscape.
Revenue from gaming products was $1.3
million for the first quarter of 2016 compared to
$4.3 million in the first quarter of
2015. The decrease was primarily a result of lower product sales to
existing customers. The Company recorded a gross margin loss of
$456,000 for this division for the
first quarter of 2016 compared to a gross profit of $610,000 in the prior year period. The increase
in gross margin loss was primarily due to lower production volumes,
which led to higher production inefficiencies and under-absorption
of overhead costs for gaming chips and plaques.
Selling, general and administrative and research and development
expenses totaled $2.4 million for the
first quarter of 2016 compared to $1.6
million in the first quarter of 2015. The increases were
primarily due to $397,000 in expenses
associated with the development of the social gaming casino
platform and higher legal expenses related to the Dolphin
litigation in the first quarter of 2016.
Entertainment Gaming Asia reported adjusted LBITDA of
$38,000 in the first quarter of 2016
compared to EBITDA of $2.4 million in
the first quarter of 2015.
The Company reported a net loss of $1.5
million, or $0.10 per share,
on a weighted average diluted share count of 14.5 million shares
for the first quarter of 2016. This compared to net income of
$570,000, or $0.04 per share, on a weighted average diluted
share count of 14.5 million shares for the first quarter of 2015.
The increase in net loss was primarily a result of lower revenue
and increased gross margin loss for the gaming products operations,
lower gaming operations revenue and higher operating expenses in
the current year period.
Clarence Chung, Chairman and
Chief Executive Officer of Entertainment Gaming Asia, commented,
"We had a challenging first quarter primarily due to operating
losses from the gaming products business and incremental costs
associated with the development of the new social casino gaming
platform. Despite this, our cash position of $30.7 million as of March
31, 2016 was essentially unchanged from December 31, 2015.
The 2016 year is one of transition for the Company. In April, we
made the strategic decision to sell our Dolphin assets and exit the
gaming products business. The transaction closed on May 11, 2016. We believe this strategic move will
enable us to focus our resources on new projects that will drive
long-term growth for the Company. We are actively seeking and/or
pursuing opportunities to enter new markets. This includes, but is
not limited to, efforts to develop an online social casino
platform."
Entertainment Gaming Asia is hosting a conference call and
simultaneous webcast at 8:30 a.m. ET today, Mary 12,
2016, both of which are open to the general public. The conference
call number is 877/256-3294 or 415/226-5359. 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 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 is also developing a
free to play online social casino gaming platform for certain Asian
markets.
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
projects and fund those projects, the Company' ability to develop
and successfully launch a social casino gaming platform and fund
this initiative, expectations for the intended strategic benefits
to the Company due to the sale of the Dolphin assets, 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; adapt to potential
changes in gaming policies and political stability in the countries
in which the Company operates, the ability to operate and compete
in the social casino gaming market and those other risks set forth
in the Company's annual report on Form 10-K for the year ended
December 31, 2015 filed with the SEC
on March 30, 2016 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 Loss/Income
|
|
(Unaudited)
|
|
|
|
|
|
Three-Month
Periods Ended
March
31,
|
|
(amounts in
thousands, except per share data)
|
|
|
|
2016
|
|
2015
|
|
Revenues:
|
|
|
|
|
|
|
|
|
Gaming
operations
|
|
|
$
|
3,851
|
|
$
|
4,010
|
|
Gaming
products
|
|
|
|
1,305
|
|
|
4,272
|
|
Total
revenues
|
|
|
|
5,156
|
|
|
8,282
|
|
|
|
|
|
|
|
|
|
Operating costs and
expenses:
|
|
|
|
|
|
|
|
|
Cost of
gaming operations
|
|
|
|
|
|
|
|
|
Gaming property and equipment depreciation
|
|
|
|
482
|
|
|
819
|
|
Casino contract amortization
|
|
|
|
434
|
|
|
611
|
|
Other gaming related intangibles amortization
|
|
|
|
63
|
|
|
63
|
|
Other operating costs
|
|
|
|
1,396
|
|
|
822
|
|
Cost of gaming
products
|
|
|
|
1,761
|
|
|
3,662
|
|
Selling, general and
administrative expenses
|
|
|
|
1,960
|
|
|
1,612
|
|
Gain on disposition of
assets
|
|
|
|
—
|
|
|
(5)
|
|
Research and
development expenses
|
|
|
|
448
|
|
|
35
|
|
Depreciation and
amortization
|
|
|
|
52
|
|
|
54
|
|
Total operating costs
and expenses
|
|
|
|
6,596
|
|
|
7,673
|
|
|
|
|
|
|
|
|
|
(Loss)/income from
operations
|
|
|
|
(1,440)
|
|
|
609
|
|
|
|
|
|
|
|
|
|
Other
income/(expenses):
|
|
|
|
|
|
|
|
|
Interest expense and
finance fees
|
|
|
|
—
|
|
|
(1)
|
|
Interest
income
|
|
|
|
3
|
|
|
3
|
|
Foreign currency
gains/(losses)
|
|
|
|
72
|
|
|
(30)
|
|
Other
|
|
|
|
9
|
|
|
9
|
|
Total other
income/(expenses)
|
|
|
|
84
|
|
|
(19)
|
|
|
|
|
|
|
|
|
|
(Loss)/income before
income tax
|
|
|
|
(1,356)
|
|
|
590
|
|
|
|
|
|
|
|
|
|
Income tax
expenses
|
|
|
|
(119)
|
|
|
(20)
|
|
|
|
|
|
|
|
|
|
Net (loss)/income
attributable to EGT stockholders
|
|
|
$
|
(1,475)
|
|
$
|
570
|
|
Other comprehensive
income:
|
|
|
|
|
|
|
|
|
Foreign
currency translation
|
|
|
|
29
|
|
|
1
|
|
Total other
comprehensive income, net of tax
|
|
|
|
29
|
|
|
1
|
|
|
|
|
|
|
|
|
|
Comprehensive
(loss)/income attributable to EGT stockholders
|
|
|
$
|
(1,446)
|
|
$
|
571
|
|
|
|
|
|
|
|
|
|
Basic and diluted
earnings per share:
|
|
|
|
|
|
|
|
|
(Loss)/earnings
|
|
|
$
|
(0.10)
|
|
$
|
0.04
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
14,460
|
|
|
14,450
|
|
Diluted
|
|
|
|
14,460
|
|
|
14,467
|
|
Entertainment
Gaming Asia Inc.
|
|
Consolidated
Balance Sheets
|
|
|
|
March
31,
2016
|
|
December 31,
2015
|
|
(amounts in
thousands, except per share data)
|
|
(Unaudited)
|
|
|
|
ASSETS
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
30,685
|
$
|
30,681
|
|
Accounts receivable,
net
|
|
1,084
|
|
724
|
|
Amounts due from
related parties
|
|
2
|
|
257
|
|
Other
receivables
|
|
63
|
|
78
|
|
Inventories
|
|
1,856
|
|
2,378
|
|
Prepaid expenses and
other current assets
|
|
468
|
|
295
|
|
Contract amendment
fees
|
|
—
|
|
18
|
|
Total current
assets
|
|
34,158
|
|
34,431
|
|
|
|
|
|
|
Gaming equipment,
net
|
|
2,583
|
|
2,985
|
|
Casino
contracts
|
|
95
|
|
528
|
|
Property and
equipment, net
|
|
5,589
|
|
5,919
|
|
Goodwill
|
|
340
|
|
332
|
|
Intangible assets,
net
|
|
650
|
|
391
|
|
Deferred tax
assets
|
|
280
|
|
274
|
|
Prepaids, deposits
and other assets
|
|
434
|
|
425
|
|
Total
assets
|
$
|
44,129
|
$
|
45,285
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Accounts
payable
|
$
|
900
|
$
|
288
|
|
Amounts due to related
parties
|
|
48
|
|
239
|
|
Accrued
expenses
|
|
1,843
|
|
1,755
|
|
Income tax
payable
|
|
106
|
|
2
|
|
Deferred
revenue
|
|
—
|
|
9
|
|
Customer deposits and
other current liabilities
|
|
188
|
|
529
|
|
Total current
liabilities
|
|
3,085
|
|
2,822
|
|
|
|
|
|
|
Other
liabilities
|
|
892
|
|
880
|
|
Deferred tax
liability
|
|
29
|
|
29
|
|
Total
liabilities
|
|
4,006
|
|
3,731
|
|
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
|
Common stock, $.001
par value, 38,000,000 shares authorized;14,464,220 shares issued
and outstanding
|
|
14
|
|
14
|
|
Additional
paid-in-capital
|
|
47,778
|
|
47,763
|
|
Accumulated other
comprehensive income
|
|
738
|
|
709
|
|
Accumulated
losses
|
|
(8,408)
|
|
(6,933)
|
|
Total EGT
stockholders' equity
|
|
40,122
|
|
41,553
|
|
Non-controlling
interest
|
|
1
|
|
1
|
|
Total stockholders'
equity
|
|
40,123
|
|
40,554
|
|
Total liabilities and
stockholders' equity
|
$
|
44,129
|
$
|
45,285
|
|
Entertainment
Gaming Asia Inc.
|
|
Adjusted
(LBITDA)/EBITDA
|
|
(Unaudited)
|
|
|
|
Three-Month
Periods Ended
March 31,
|
|
(amounts in
thousands)
|
|
|
2016
|
|
|
2015
|
|
Net(loss)/income –
GAAP
|
|
$
|
(1,475)
|
|
$
|
570
|
|
Interest expense and
finance fees
|
|
|
—
|
|
|
1
|
|
Interest
income
|
|
|
(3)
|
|
|
(3)
|
|
Income tax
expenses
|
|
|
119
|
|
|
20
|
|
Depreciation and
amortization
|
|
|
1,307
|
|
|
1,810
|
|
Stock-based
compensation expenses
|
|
|
14
|
|
|
30
|
|
Gain on disposition
of assets
|
|
|
—
|
|
|
(5)
|
|
Adjusted
(LBITDA)/EBITDA
|
|
$
|
(38)
|
|
$
|
2,423
|
|
|
|
|
|
|
|
|
Adjusted (LBITDA)/EBITDA is (loss)/earnings before interest,
taxes, depreciation, amortization, stock-based compensation, and
other non-cash operating income and expenses. Adjusted
(LBITDA)/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 (LBITDA)/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 (LBITDA)/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 (LBITDA)/EBITDA as a
supplement to financial measures in accordance with generally
accepted accounting principles in the
United States ("GAAP"). Adjusted (LBITDA)/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 (LBITDA)/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 (LBITDA)/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 (LBITDA)/EBITDA. Entertainment Gaming
Asia's calculation of Adjusted (LBITDA)/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
March 31,
|
|
|
|
2016
|
|
|
2015
|
|
|
|
Net revenue to EGT
(in thousands)
|
|
|
|
|
|
|
|
|
Participation operations
|
|
|
|
|
|
|
|
|
Cambodia
|
$
|
2,575
|
|
$
|
3,118
|
|
|
|
Philippines
|
|
595
|
|
|
670
|
|
|
|
Service revenue(1)
|
|
224
|
|
|
222
|
|
|
|
Consolidated participation total
|
|
3,394
|
|
|
4,010
|
|
|
|
Fixed
fee operations
|
|
457
|
|
|
—
|
|
|
|
Consolidated total
|
$
|
3,851
|
|
$
|
4,010
|
|
|
|
|
|
|
|
|
|
|
|
Average daily revenue
(per unit)
|
|
|
|
|
|
|
|
|
Participation operations
|
|
|
|
|
|
|
|
|
Cambodia
|
$
|
142
|
|
$
|
128
|
|
|
|
Philippines
|
|
60
|
|
|
68
|
|
|
|
Consolidated participation total
|
|
108
|
|
|
108
|
|
|
|
Fixed
fee operations
|
|
22
|
|
|
—
|
|
|
|
Consolidated total
|
$
|
108
|
|
$
|
108
|
|
|
|
|
|
|
|
|
|
|
|
EGM seats in
operation (period end)
|
|
|
|
|
|
|
|
|
Participation operations
|
|
|
|
|
|
|
|
|
Cambodia
|
|
329
|
|
|
1,045
|
|
|
|
Philippines
|
|
547
|
|
|
546
|
|
|
|
Consolidated participation total
|
|
876
|
|
|
1,591
|
|
|
|
Fixed
fee operations
|
|
670
|
|
|
—
|
|
|
|
Consolidated total
|
|
1,546
|
|
|
1,591
|
|
|
|
|
(1) Service revenue
represents reimbursements of certain expenses, which for accounting
purposes, are included in the participation revenue and grossed up
in the cost of gaming operations.
|
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SOURCE Entertainment Gaming Asia Inc.