- Revenue Growth Drives Record 4Q EBITDA of
$25.3 Million -
- Deploys 1,084 New Revenue Units in Fourth
Quarter, Including 807 For-Sale Units and 277 Net Additions to
Installed Base -
- Reports Record Fiscal 2013 Financial
Results Including Revenue of $189.4 Million, EBITDA of $95.7
Million and Diluted EPS of $1.14 -
Multimedia Games Holding Company, Inc. (Nasdaq: MGAM)
(“Multimedia Games” or the “Company”) today reported record
operating results for its fiscal 2013 fourth quarter and full year
ended September 30, 2013, as summarized below:
Summary of 2013 Q4 and Fiscal Year
Results(In millions, except per-share and player terminal
data)
Three Months Ended September
30,
Twelve Months Ended September
30,
2013
2012 2013
2012 Revenue $ 50.4 $ 41.4 $
189.4 $ 156.2 Operating income(1) $ 13.0 $ 5.9 $ 52.4 $ 24.1 Net
income(2) $ 10.0 $ 8.3 $ 34.9 $ 28.2 Diluted earnings per share(2)
$ 0.32 $ 0.28 $ 1.14 $ 0.96 EBITDA(3) $ 25.3 $ 17.4 $ 95.7 $
71.1 Units sold 807 538 2,678 1,961 Domestic
participation installed units: Average 12,154 10,420 11,631 9,896
Quarter-end 12,440 10,670 (1) Operating income
for the three and twelve month periods ended September 30, 2012
includes a non-recurring pre-tax charge of $1.2 million. (2) Net
income and diluted earnings per share for the three and twelve
month periods ended September 30, 2013 include a non-recurring net
tax benefit of $1.1 million, or $0.04 per diluted share for the
release of an income tax reserve related to the Company’s 2007
income tax audit in Mexico. Net income and diluted earnings per
share for the three and twelve month periods ended September 30,
2012 include a net benefit of $1.3 million, or $0.04 per diluted
share, and $2.8 million, or $0.09 per diluted share, respectively.
(3) EBITDA is defined as net income before net interest expense,
income taxes, depreciation, amortization and accretion of contract
rights. A reconciliation of EBITDA to net income, the most
comparable Generally Accepted Accounting Principles (“GAAP”)
financial measure, can be found attached to this release.
Patrick Ramsey, President and Chief Executive Officer of
Multimedia Games, commented, “We generated record financial and
operating results in fiscal 2013 based on the growing acceptance of
our expanding portfolio of for-sale and participation games as well
as our further success in increasing the markets we can address.
Revenue eclipsed $50 million for the first time in the fiscal 2013
fourth quarter as we again deployed over 1,000 new revenue units,
while full-year revenue neared $190 million driven by a 37%
increase in our total new revenue units deployed to over 4,400
units. Year-over-year growth in EBITDA of 45% and 35% in the fiscal
2013 fourth quarter and full year periods, respectively, outpaced
the year over year revenue growth, again reflecting the strong
operating leverage in our business. Overall, the strong fiscal
fourth quarter and full year performance demonstrates our team’s
continued successful execution of our strategies for growth.
“Fiscal 2013 represented an important milestone for the Company
as we began sales and placements in the country’s single largest
gaming market. Our entry into Nevada significantly expands our
total addressable market and initial results highlight the
excellent entertainment value of our unique, award winning
products. In addition, we recently completed technical trials in
Nevada for our High Rise Games® series and are moving forward with
placements of this exciting product.
“Gaming operations revenue grew approximately 18% year over year
in both the fiscal 2013 fourth quarter and full year, marking a
distinct contrast to regional gaming revenue trends. This strong
performance reflects full year growth in our installed base of
nearly 1,800 units, as well as a 3.6% rise in yield as the increase
in geographic diversity for our products is exposing the Company to
what we believe are higher yielding markets. Additionally, our
premium participation games represented approximately 21% of our
total non-Oklahoma installed base at year end, growing from 198
units at the start of the year to 878 units at September 30,
2013.”
Ramsey concluded, “While our fiscal 2013 results demonstrate the
successful execution of our strategy, we are excited about the
long-term opportunity to further expand the number of Multimedia
Games slot machines on casino floors. We are just getting started
in Nevada, Illinois and New Jersey and expect to generate revenues
from Pennsylvania in early fiscal 2014. In addition, our focus on
developing new games that deliver higher player satisfaction and
generate solid returns on our customers’ investment should help us
grow our floor share in existing markets. As such, we expect to
extend our momentum in fiscal 2014 and achieve another year of
solid financial results.”
Summary of Fiscal 2013 Fourth Quarter and Full Year Operating
Results
Multimedia Games’ fiscal 2013 fourth quarter revenue rose 21.8%,
or $9.0 million, to $50.4 million, compared to revenue of $41.4
million in the fiscal 2012 fourth quarter. Fiscal 2013 fourth
quarter revenue included approximately $34.9 million from gaming
operations and approximately $14.3 million from gaming equipment
and system sales, compared with $29.6 million from gaming
operations and $11.4 million from gaming equipment and system sales
in the fiscal 2012 fourth quarter.
Gaming operations revenue in the fiscal 2013 fourth quarter grew
17.9% to $34.9 million, primarily reflecting solid growth across
the Company’s installed base of participation units. Multimedia
Games’ fiscal 2013 fourth quarter-end installed base increased by
1,770 units, or 16.6%, from the fiscal 2012 fourth quarter and by
277 units, or 2.3%, on a quarterly sequential basis. Included in
the fiscal 2013 fourth quarter-end participation base were 878
premium participation units deployed outside of Oklahoma, an
increase of 165 units, or 23.1%, on a quarterly sequential basis.
Fiscal 2013 fourth quarter gaming operations revenue also benefited
from a $0.2 million, or 5.8%, year-over-year rise in revenues
related to the Company’s operation of the central determinant
system for the New York Lottery.
Gaming equipment and system sales in the fiscal 2013 fourth
quarter increased 25.2% to $14.3 million from $11.4 million in the
fiscal 2012 fourth quarter. During the fiscal 2013 fourth quarter,
the Company recorded revenue of $13.1 million related to the sale
of 807 units into 17 markets and $1.1 million in revenue related to
parts and equipment sales, compared to $9.9 million in revenue
related to the sale of 538 new units and $844,000 related to parts
and equipment sales in the fiscal 2012 fourth quarter. There was
$64,000 and $664,000 of deferred revenues for the sale of player
stations and a system in a prior-year period recognized in the
fiscal 2013 and fiscal 2012 fourth quarter periods,
respectively.
Other revenue of $1.1 million in the fiscal 2013 fourth quarter
is primarily comprised of service revenue as well as the net profit
from the Company’s inaugural National TournEvent of Champions® held
in September 2013. Other revenue of $0.3 million in the fiscal 2012
fourth quarter was comprised primarily of service revenue.
Total operating costs and expenses for the fiscal 2013 fourth
quarter rose $1.9 million, or 5.2%, to $37.3 million, compared to
$35.5 million in the fiscal 2012 fourth quarter, driven primarily
by the shift in timing of the industry’s annual trade show, the
Global Gaming Expo, which fell in late September compared to early
October last year. Total cost of goods sold increased by $1.1
million year over year reflecting the higher number of units sold
and the hiring of additional field service personnel to maintain
the installed base of participation games. SG&A expenses in the
fiscal 2013 fourth quarter increased 10.7% year over year, or $1.3
million, to $13.4 million, primarily reflecting the timing of the
industry’s annual trade show. SG&A for the fiscal 2013 and
fiscal 2012 fourth quarter periods includes non-cash stock
compensation costs of approximately $1.1 million and $0.8 million,
respectively. Depreciation and amortization was $9.8 million in the
fiscal 2013 fourth quarter compared to $9.6 million in the fiscal
2012 fourth quarter, reflecting continued increases in the
installed base and higher amortization expense for capitalized
labor, partially offset by the previously disclosed change in the
depreciable lives for gaming operations equipment from 36 months to
48 months, effective as of October 1, 2012. Research and
development expenses were $4.3 million in the fiscal 2013 fourth
quarter compared to $3.9 million in the fiscal 2012 fourth
quarter.
Operating income rose to $13.0 million and operating margins
improved to 25.9% in the fiscal 2013 fourth quarter from 14.2% in
the fiscal 2012 fourth quarter, as the rise in revenue outpaced the
increase in total operating expenses. For the fiscal 2013 fourth
quarter, Multimedia Games reported net income of $10.0 million, or
$0.32 per diluted share, compared to net income of $8.3 million, or
$0.28 per diluted share, in the fiscal 2012 fourth quarter. Net
income and diluted earnings per share for the fiscal 2013 fourth
quarter reflect a benefit of $1.1 million, or $0.04 per diluted
share, related to the reversal of a previously incurred reserve for
the recently settled 2007 income tax assessment related to the
Company’s former operations in Mexico, while net income and diluted
earnings per share in the fiscal 2012 fourth quarter reflect a net
benefit of $1.3 million, or $0.04 per diluted share. The effective
tax rate in the fiscal 2013 fourth quarter was 22%, compared to a
tax benefit of 44% in the fiscal 2012 fourth quarter.
Total revenue in fiscal 2013 rose $33.2 million, or 21.3%, to
$189.4 million and is comprised of $132.6 million in revenue from
gaming operations, $54.5 million in revenue from gaming equipment
and system sales and $2.2 million in other revenue. Gaming
operations revenues increased by $20.6 million, or 18.4%, from
fiscal 2012 driven by a 1,770 unit increase in the domestic
installed base and a 3.6% increase in average daily win per unit.
The Company generated $48.5 million in revenue related to the sale
of 2,678 units in fiscal 2013, compared to revenue of $36.2 million
for the sale of 1,961 units in fiscal 2012. Deferred revenues
recognized in fiscal 2013 and fiscal 2012 were $1.4 million and
$2.7 million, respectively.
Total operating costs and expenses in fiscal 2013 rose $4.9
million year over year, or 3.7%, to $137.0 million. SG&A
expenses grew $1.9 million to $48.4 million in fiscal 2013 while
total cost of goods sold increased by $5.8 million. Fiscal 2013 and
2012 SG&A expenses included non-cash stock compensation costs
of $3.9 million and $3.4 million, respectively. Depreciation and
amortization expense in fiscal 2013 declined $3.4 million year over
year from while research and development expense rose $1.8 million
compared to fiscal 2012.
In fiscal 2013, Multimedia Games reported net income of $34.9
million, or $1.14 per diluted share, compared to net income of
$28.2 million, or $0.96 per diluted share, in fiscal 2012. Net
income and diluted earnings per share for fiscal 2013 reflect a
benefit of $1.1 million, or $0.04 per diluted share, related to the
reversal of a previously incurred charge for the recently settled
2007 income tax assessment related to the Company’s former
operations in Mexico, while net income and diluted earnings per
share in fiscal 2012 reflect a net benefit of $2.8 million, or
$0.09 per diluted share. Net income and diluted earnings per share
reflect an income tax rate of 32.5% for fiscal 2013 and a tax
benefit of 11.4% for fiscal 2012.
Balance Sheet Review
Multimedia Games ended fiscal 2013 with $102.6 million in cash
and net cash (a non-GAAP measure, which we define as total cash in
excess of total debt) of $73.0 million, versus net cash of $40.5
million at September 30, 2012. Capital expenditures in fiscal 2013
rose to $48.6 million, compared to $45.2 million in fiscal 2012.
The Company generated free cash flow (a non-GAAP measure) of $27.9
million in the fiscal year ended September 30, 2013, compared to
$29.3 million at September 30, 2012. Please see the reconciliations
of net cash and free cash flow attached to this release.
In fiscal 2013, the Company repurchased approximately 304,000
shares of its common stock at an average price of $15.92 per share,
excluding commissions, for total consideration of approximately
$4.8 million. As of September 30, 2013, the Company had
approximately $35.2 million remaining under its existing $40.0
million share repurchase authorization which was announced in
November 2012. Since December 2010, the Company has repurchased
approximately 2.5 million shares of its common stock.
Fiscal 2014 Outlook
Multimedia Games expects to generate revenue of $217.0-$223.0
million in fiscal 2014, representing year-over-year growth of
approximately 15%-18%, which reflects an expected increase in unit
sales of approximately 38%-49% and a more modest increase in the
installed base compared to fiscal 2013. The current unit sales
forecast contemplates average selling prices of $16,500-$17,500 in
fiscal 2014, compared to an average selling price of $18,121 in
fiscal 2013. This change reflects the Company’s expectation that
sales of higher priced TournEvent® units will comprise a lower
percentage of units sold while lower priced volume orders will
increase in fiscal 2014.
Multimedia Games expects SG&A and research and development
costs to increase modestly from fiscal 2013 levels as the Company
continues to add headcount to support sales and services as well as
its ongoing research and development efforts. The Company expects
depreciation and amortization for fiscal 2014 of $42.0-$44.0
million, reflecting an expectation for a continued increase in its
installed base in both existing and new markets as well as higher
amortization expense for capitalized labor. Operating margins are
expected to improve slightly in fiscal 2014 from 27.7% in fiscal
2013.
The Company expects to generate EBITDA, a non-GAAP financial
measure defined below, of $110.0-$114.5 million in fiscal 2014,
representing growth of approximately 15%-20% over fiscal 2013
EBITDA of $95.7 million.
In addition, the Company expects free cash flow to improve
40%-50% from the $27.9 million in free cash flow generated in
fiscal 2013.
Finally, Multimedia Games expects its fiscal 2014 tax rate to be
in the range of 36%-38%, compared with its fiscal 2013 tax rate of
32.5%. As a result, the Company expects to report fiscal 2014
diluted EPS of $1.23-$1.27, representing year-over-year growth of
approximately 8%-11% from reported fiscal 2013 EPS of $1.14.
Comparison of Fiscal 2014 Guidance to
Fiscal 2013 and Fiscal 2012 Results(In millions, except
per-share and unit sales)
Twelve Months Ended September
30, 2014
Guidance(1)
2013
2012 Revenue $ 217.0 – 223.0 $ 189.4 $ 156.2
EBITDA $ 110.0 – 114.5 $ 95.7 $ 71.1 Depreciation and Amortization
$ 42.0 – 44.0 $ 34.8 $ 38.3 Diluted earnings per share $
1.23 – 1.27 $ 1.14 $ 0.96 Pro-forma diluted earnings per share(2) $
1.23 – 1.27 $ 1.06 $ 0.54 Unit sales 3,700 – 4,000 2,678
1,961 (1) Represents Company guidance for
fiscal 2014 as provided today, November 14, 2013, with the
forecasted diluted EPS range reflecting an expected full year tax
rate of 36%-38%, versus a 32.5% tax rate in fiscal 2013 and a tax
benefit of 11.4% in fiscal 2012. (2) Pro-forma diluted earnings per
share for the fiscal 2013 and fiscal 2012 periods reflect a 37% tax
rate applied to the reported income before income taxes for both
periods.
Fiscal 2014
Guidance Fiscal
2013 Fiscal
2012 EPS Reconciliation:
Low
High
As reported $ 1.14 $ 0.96 Pro-forma at 37% tax rate
(0.08 ) (0.42
) Adjusted, Pro-forma EPS $
1.23 $
1.27 $
1.06 $
0.54
Adam Chibib, Chief Financial Officer, commented, “We expect to
build on the momentum established over the last few years in fiscal
2014 as our growing portfolio of products gains further traction in
existing markets and provides the foundation for our entry into new
jurisdictions. Continued efforts to enter new markets and grow our
market share in existing jurisdictions, driven primarily by the
development of innovative new games and products, is expected to
result in strong year-over-year growth in unit sales, and continued
growth in our installed base although at a slower pace than
achieved in fiscal 2013. We believe the ongoing penetration of our
games and products will drive further increases in revenue,
operating income, EBITDA, diluted EPS and free cash flow.”
Multimedia Games cautions that market dynamics are constantly
changing and as such, actual results could vary materially from the
expectations noted above based on various factors, such as changes
in the Company’s markets, operations, regulatory requirements, and
its estimates and assumptions. See the risk factors in our
publicly-filed Form 10-K’s and Form 10-Q’s and other items as more
fully described in the section below titled “Cautionary
Language.”
2013 Fourth Quarter and Full Year Conference Call and
Webcast
Multimedia Games is hosting a conference call and webcast today,
November 14, 2013, beginning at 9:00 a.m. ET
(8:00 a.m. CT). Both the call and the webcast are open to
the general public. The conference call number is 720-545-0001
(domestic or international). Please call five minutes prior to the
presentation to ensure that you are connected.
Interested parties may also access the conference call live on
the Internet at http://ir.multimediagames.com/events.cfm.
Approximately two hours after the call has concluded, an archived
version of the webcast will be available for replay at the same
location.
Non-GAAP Financial Measures
See definitions of EBITDA, net cash, free cash flow, and
pro-forma diluted earnings per share included in the discussion of
Non-GAAP financial measures below.
About Multimedia Games Holding Company,
Inc.
Through its wholly owned subsidiary, Multimedia Games, Inc.,
Multimedia Games Holding Company, Inc. (“Multimedia Games”)
develops and distributes gaming technology. The company is a
creator and supplier of comprehensive systems, content and
electronic gaming units for Native American and commercial casinos.
Revenue is primarily derived from gaming units in operation on
revenue-sharing arrangements. The company also offers and generates
revenue from the sale of gaming units and systems that feature
proprietary game content and game themes licensed from others.
Multimedia Games also supplies the central determinant system for
the video lottery terminals (“VLTs”) installed at racetracks in the
State of New York. The company is focused on pursuing market
expansion and new product development for commercial and tribal
casinos and VLT markets. Please visit www.multimediagames.com,
twitter.com/MultimediaGames or facebook.com/MultimediaGames, where
Multimedia Games discloses important information about the company,
its sales, and its business.
Cautionary Language
This press release contains forward-looking statements based on
Multimedia Games' current expectations and projections, which are
intended to qualify for the safe harbor from liability established
by the Private Securities Litigation Reform Act of 1995. The words
“believe”, “expect”, “continue”, “intend”, “plan”, “seek”,
“estimate", “project”, “may”, “should”, or the negative or other
variations thereof or comparable terminology as they relate to
Multimedia Games and its products, plans, and markets are intended
to identify such forward-looking statements. These forward-looking
statements include, but are not limited to, expectations regarding
financial performance; expectations regarding entry into new
markets and expansion in our existing markets; beliefs regarding
market yields; opportunities for future expansion and expected
growth in our floor share in existing markets; expectations
regarding our future installed base of participation units;
expected liquidity and capitalization; expectations regarding tax
rates; expectations regarding the share repurchase program; drivers
of revenue growth; management’s plans and objectives for future
operations; expectations regarding future investments; expenditures
and product development; business prospects; expectations regarding
recent and potential future products; anticipated sales
performance; industry trends; market conditions; and other
statements that are not historical facts. All forward-looking
statements are based on current expectations and projections of
future events.
These forward-looking statements reflect the current views,
models, and assumptions of Multimedia Games, and are subject to
various risks and uncertainties that cannot be predicted or
qualified and could cause actual results in Multimedia Games’
performance to differ materially from those expressed or implied by
such forward looking statements. These risks and uncertainties
include, but are not limited to, the ability of Multimedia Games to
expand and maintain its addressable markets; maintain strategic
alliances; increase unit placements, installations or its
installed-base; grow its revenue, gaming operations or game sales
businesses; garner new market share; secure new licenses and game
approvals in new and current jurisdictions, including Nevada and
New Jersey; successfully develop or place proprietary product such
as premium games; comply with regulations; have its games met with
approval by customers or players; or reinvest capital. Please refer
to the Company’s most recent Form 10-K and subsequent filings with
the Securities and Exchange Commission for a further discussion of
risks and uncertainties. All forward-looking statements made herein
are qualified by these cautionary statements and there can be no
assurance that the actual results, events or developments
referenced herein will occur or be realized. Readers are cautioned
that all forward-looking statements speak only to the facts and
circumstances present as of the date of this press release.
Multimedia Games expressly disclaims any obligation to update or
revise any forward-looking statements, whether as a result of new
information, future events or otherwise.
CONSOLIDATED BALANCE SHEETSAs of
September 30, 2013 and 2012(In thousands, except share and
per-share amounts)
ASSETS
2013
2012 CURRENT ASSETS: Cash and cash
equivalents $ 102,632 $ 73,755
Accounts receivable, net of allowance for
doubtful accounts
of $342 and $266, respectively 26,566 17,503
Inventory
12,429 7,083 Current portion of notes receivable, net 2,093 8,024
Prepaid expenses and other 2,423 6,593 Deferred tax asset 7,818
8,248 Federal and state income tax receivable
2,855 244 Total
current assets 156,816 121,450 Property and
equipment and leased gaming equipment, net 77,458 57,924 Intangible
assets, net 34,723 37,664 Long-term portion of notes receivable,
net 4,841 733 Deferred tax asset, less current portion 2,690
2,418
Value added tax receivable, net of
allowance of $707 and $722,
respectively
2,862 3,511 Other assets
2,135
2,275 Total assets $
281,525 $
225,975 LIABILITIES AND
STOCKHOLDERS’ EQUITY CURRENT LIABILITIES: Current portion of
long-term debt $ 3,700 $ 3,700 Accounts payable and accrued
liabilities 29,129 30,192 Deferred revenue
520
483 Total current
liabilities 33,349 34,375 Long-term debt, less
current portion 25,900 29,600 Long term deferred tax liability
12,824 6,320 Other long-term liabilities
511
660 Total liabilities
72,584
70,955 Commitments and contingencies
Stockholders’ equity: Preferred stock: Series A, $0.01 par value,
1,800,000 shares authorized, no shares issued and outstanding — —
Series B, $0.01 par value, 200,000 shares authorized, no shares
issued and outstanding — —
Common stock, $0.01 par value, 75,000,000
shares authorized,
37,802,950 and 36,296,027 shares issued,
and 29,386,870
and 28,183,549 shares outstanding,
respectively
378 363 Additional paid-in capital 131,232 107,751
Treasury stock, 8,416,080 and 8,112,478
respectively, common
shares at cost
(66,886 ) (62,048 ) Retained earnings 144,217 109,283 Accumulated
other comprehensive loss, net
—
(329 ) Total stockholders’ equity
208,941
155,020 Total liabilities and
stockholders’ equity $ 281,525
$ 225,975
CONSOLIDATED STATEMENTS OF
OPERATIONS For the Three and Twelve Months Ended September
30, 2013 and 2012(In thousands, except per-share amounts)
Three Months EndedSeptember
30,
Full Year EndedSeptember
30,
2013
2012 2013
2012
REVENUES: Gaming operations $ 34,946 $ 29,647 $ 132,640 $ 112,010
Gaming equipment and system sales 14,297 11,421 54,539 42,793 Other
1,145 317
2,187 1,373
Total revenues 50,388
41,385
189,366
156,176 OPERATING COSTS AND
EXPENSES: Cost of gaming operations revenue (1) 3,650 3,384 13,803
12,547 Cost of equipment and system sales 6,116 5,321 23,143 18,548
Selling, general and administrative expenses 13,420 12,120 48,350
46,451 Write-off, reserve, impairment & settlement charges —
1,187 — 1,187 Research and development 4,320 3,920 16,842 15,082
Amortization and depreciation
9,839
9,558 34,846
38,270 Total operating costs and
expenses 37,345
35,490
136,984
132,085 Operating income
13,043 5,895 52,382 24,091 OTHER
INCOME (EXPENSE): Interest income 92 233 491 1,553 Interest expense
(273 ) (333 ) (1,139 ) (1,392 ) Other income (expense)
— 7
33 1,045 Income
before income taxes 12,862 5,802 51,767
25,297 Income tax (expense) benefit
(2,833 ) 2,523
(16,833 )
2,887 Net income $
10,029 $
8,325 $
34,934 $
28,174 Basic earnings per common share $
0.35 $
0.30 $
1.21 $
1.01 Diluted
earnings per common share $
0.32 $
0.28 $
1.14 $
0.96 Shares used in earnings per common share:
Basic 29,065 27,968 28,929 27,807 Diluted 30,936 29,828 30,677
29,261 (1) Cost of gaming operations revenue
excludes depreciation and amortization of gaming equipment, content
license rights and other depreciable assets, which are included
separately in the amortization and depreciation line item.
CONSOLIDATED STATEMENTS OF CASH
FLOWSFor the Years Ended September 30, 2013 and 2012
2013
2012 CASH
FLOWS FROM OPERATING ACTIVITIES: (In thousands) Net income $
34,934 $ 28,174 Adjustments to reconcile net income to cash
provided by operating activities: Amortization and depreciation
34,846 38,270
Accretion of contract rights
8,468 7,700 Share-based compensation 3,926 3,418 Other non-cash
items 1,501 1,405 Interest income from imputed interest (376 )
(1,292 ) Deferred income taxes 6,662 (4,346 ) Changes in operating
assets and liabilities Total accounts and notes receivable (8,463 )
(59 ) Federal and state income tax receivable 6,688 (102 )
Inventory (5,386 ) (86 ) Current liabilities 126 4,544 Other
current and long-term assets and long-term liabilities 3,983 (2,529
) Tax benefit from exercise of stock options
(10,396 ) (554
) NET CASH PROVIDED BY OPERATING ACTIVITIES
76,513
74,543 CASH FLOWS FROM INVESTING
ACTIVITIES:
Acquisitions of property and equipment and
leased gaming equipment
(48,624 ) (45,220 ) Acquisition of intangible assets (9,260 )
(6,102 ) Advances under development and placement fee agreements
(8,535 ) (15,575 ) Repayments under development agreements
7,749 15,846 NET
CASH USED IN INVESTING ACTIVITIES
(58,670 )
(51,051 ) CASH FLOWS
FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options,
warrants and related tax benefit
9,176 8,733 Tax benefit from exercise of stock options 10,396 554
Principal payments of long-term debt (3,700 ) (3,700 ) Proceeds
from capital lease — 894 Principal payments of capital lease — (894
) Purchase of treasury stock
(4,838
) (1,884 )
NET CASH PROVIDED BY FINANCING
ACTIVITIES
11,034
3,703
EFFECT OF EXCHANGE RATES ON CASH AND CASH EQUIVALENTS
— (150 ) Net
increase in cash and cash equivalents 28,877 27,045 Cash and cash
equivalents, beginning of period
73,755
46,710 Cash and cash equivalents, end of
period $
102,632 $
73,755
Reconciliation of GAAP to Non-GAAP measures:
This press release and accompanying schedules provide certain
information regarding (i) EBITDA, (ii) net cash, (iii) free cash
flow, and (iv) pro-forma diluted earnings per share, all of which
may be considered non-GAAP financial measures under the rules of
the Securities and Exchange Commission. The non-GAAP financial
measures included in the press release are reconciled to the
corresponding GAAP financial measures below, or above in this
release for pro-forma diluted earnings per share, as required under
the rules of the Securities and Exchange Commission regarding the
use of non-GAAP financial measures. We define (i) EBITDA as net
income before net interest expense, income taxes, depreciation,
amortization and accretion of contract rights, (ii) net cash as
cash and cash equivalents less long-term debt, (iii) free cash flow
as cash flow from operating activities less the acquisition of
property and equipment and leased gaming equipment, and (iv)
pro-forma diluted earnings per share reflects a tax expense rate
adjustment and an estimate for a change in depreciable lives of
gaming operations equipment. EBITDA, net cash, free cash flow and
pro-forma diluted earnings per share are not recognized financial
measures under GAAP, but we believe that each is useful in
measuring our operating performance. We believe that the use of the
non-GAAP financial measure EBITDA enhances an overall understanding
of the Company’s past financial performance, and provides useful
information to the investor by comparing our performance across
reporting periods on a consistent basis and the use of EBITDA by
other companies in the gaming equipment sector as a measure of
performance. We believe that the non-GAAP measures of net cash,
free cash flow and pro-forma diluted earnings per share provide
useful information to investors as each enhances the overall
understanding of our operating performance.
Investors should not consider these measures in isolation or as
a substitute for net income, operating income, or any other measure
for determining the Company’s operating performance that is
calculated in accordance with GAAP. In addition, because these
measures are not calculated in accordance with GAAP, they may not
necessarily be comparable to similarly titled measures employed by
other companies.
For the Three Months Ended
September 30,
For the Twelve Months Ended
September 30,
2013
2012 2013
2012 (in
thousands) Net income $ 10,029 $ 8,325 $ 34,934 $ 28,174 Add back:
Amortization and depreciation 9,839 9,558 34,846 38,270 Accretion
of contract rights(1) 2,435 1,948 8,470 7,700 Interest expense
(income), net 181 100 648 (161 ) Income tax expense (benefit)
2,833 (2,523 )
16,833 (2,877
) EBITDA $
25,317 $
17,408
$
95,731 $
71,106 1)
“Accretion of contract rights” relates to the
amortization of intangible assets for development projects. These
amounts are recorded net of revenues in the Consolidated Statements
of Operations.
Net Cash
As of September 30,
2013 September 30,
2012 (in thousands) Cash and cash equivalents $ 102,632
$ 73,755 Less: Total debt
(29,600
) (33,300 ) Net cash
$
73,032 $
40,455
Free Cash Flow
For the Three Months Ended
September 30,
For the Twelve Months Ended
September 30,
2013
2012 2013
2012
(in thousands) (in thousands) Net cash provided by operating
activities $ 16,271 $ 17,347 $ 76,513 $ 74,543 Less: Net capital
expenditures
(12,001 )
(13,409 ) (48,624
) (45,220 ) Free cash
flow $
4,270 $
3,938 $
27,889 $
29,323
Multimedia Games Holding Company, Inc.Adam Chibib,
512-334-7500Chief Financial OfficerorJCIRRichard Land / James
Leahy212-835-8500mgam@jcir.com
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