HONG KONG, May 14, 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 first quarter
ended March 31, 2015 and reviewed
recent corporate progress.
Key Financial Metrics:
- Consolidated revenues of $8.3
million for the first quarter of 2015
- Adjusted EBITDA (earnings from continuing operations before
interest, taxes, depreciation, amortization and non-cash charges)
of $2.4 million for the first quarter
of 2015
- Net income of $570,000 for the
first quarter of 2015
- Cash balance of $20.8 million and
zero debt as of March 31, 2015
First 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 first quarter of 2015 consolidated revenue was
$8.3 million, an increase of 76%
compared to $4.7 million in the first
quarter of 2014 due to increases in both the gaming operations and
gaming products business divisions.
Gaming operations revenue was $4.0
million for the first quarter of 2015, an increase of 3%
compared to $3.9 million in the first
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
$108 for the first quarter of 2015,
an increase of 7% compared to $101 in
the first quarter of 2014 due to the higher revenue and a 4%
reduction in the total operating machine base.
Cambodia average daily net win
per unit was $128 for the first
quarter of 2015, an increase of 9% compared to $117 in the prior year period primarily due to
improved performance at NagaWorld. NagaWorld average daily net win
per unit increased to $198 for the
first quarter of 2015 compared to $175 in the prior year period primarily due to an
increase in VIP player traffic partially offset by higher jackpots
in the first quarter of 2015.
Philippines average daily net
win per unit was $68 for the first
quarter of 2015, a decrease of 4% compared to $71 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 improved
from $65 in the prior sequential
quarter as the Company continued its proactive marketing strategies
to stabilize performance in an increasingly competitive
landscape.
Revenue from gaming products was $4.3
million for the first quarter of 2015 compared to
$811,000 in the first 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 for this division
for the first quarter of 2015 compared to a gross margin loss in
the prior year period. The gross margin increase was primarily due
to substantially higher production volumes, continuing efforts to
improve production efficiencies and the outsourcing of certain
production processes for two orders with short lead times as demand
exceeded the Company's existing capacity during the period.
Entertainment Gaming Asia reported adjusted EBITDA of
$2.4 million in the first quarter of
2015 compared to $960,000 in the
first quarter of 2014.
The Company reported 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. This compared to a
net loss of $1.0 million, or
$0.14 per share, on a weighted
average diluted share count of 7.5 million shares for the first
quarter of 2014. The first quarter of 2014 net loss included a net
loss of $157,000 from discontinued
operations related to Dreamworld Pailin. Excluding the discontinued
operations, the Company reported a net loss from continuing
operations of $873,000, or
$0.12 per share, for the first
quarter of 2014.
Clarence Chung, Chairman and
Chief Executive Officer of Entertainment Gaming Asia, commented,
"We are pleased to report a positive net profit for the first
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 continuing efforts to improve profitability while
growth in gaming operations was largely due to solid performance
from NagaWorld.
We are focused on continuing to improve our operating
performance and securing new projects that will drive long-term
growth and earnings visibility for the Company. With a cash
position of over $20.0 million and as
an indirect, majority-owned subsidiary of Melco International
Development Limited, a leader in Asian gaming, we believe we have
greatly enhanced our financial flexibility and improved our access
to a broader pool of potential growth opportunities in growing
gaming markets in Asia. We are
actively seeking new projects that would further enhance our
existing business lines and provide the opportunity to add new
ones."
Entertainment Gaming Asia is hosting a conference call and
simultaneous webcast at 8:30 a.m. ET
today, May 14, 2015, both of which
are open to the general public. The conference call number is
800/732-6870 or 212/231-2901. 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 -
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|
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Entertainment
Gaming Asia Inc.
|
|
Consolidated
Statements of Comprehensive Income
|
|
(Unaudited)
|
|
|
|
Three-Month
Periods Ended
March
31,
|
|
(amounts in
thousands, except per share data)
|
|
2015
|
|
2014
|
|
Revenues:
|
|
|
|
|
|
|
Gaming
operations
|
$
|
4,010
|
|
$
|
3,883
|
|
Gaming
products
|
|
4,272
|
|
|
811
|
|
Total
revenues
|
|
8,282
|
|
|
4,694
|
|
|
|
|
|
|
|
Operating costs and
expenses:
|
|
|
|
|
|
|
Cost of
gaming operations
|
|
|
|
|
|
|
Gaming property and equipment depreciation
|
|
819
|
|
|
881
|
|
Casino contract
amortization
|
|
611
|
|
|
610
|
|
Other gaming related intangibles amortization
|
|
63
|
|
|
63
|
|
Other operating costs
|
|
822
|
|
|
845
|
|
Cost of gaming
products
|
|
3,662
|
|
|
1,488
|
|
Selling, general and
administrative expenses
|
|
1,612
|
|
|
1,554
|
|
Gain on disposition of
assets
|
|
(5)
|
|
|
—
|
|
Product development
expenses
|
|
35
|
|
|
54
|
|
Depreciation and
amortization
|
|
54
|
|
|
49
|
|
Total operating costs
and expenses
|
|
7,673
|
|
|
5,544
|
|
|
|
|
|
|
|
Income/(loss) from
continuing operations
|
|
609
|
|
|
(850)
|
|
|
|
|
|
|
|
Other
(expenses)/income:
|
|
|
|
|
|
|
Interest expense and
finance fees
|
|
(1)
|
|
|
(1)
|
|
Interest
income
|
|
3
|
|
|
—
|
|
Foreign currency
losses
|
|
(30)
|
|
|
(15)
|
|
Other
|
|
9
|
|
|
8
|
|
Total other
(expenses)/income
|
|
(19)
|
|
|
(8)
|
|
|
|
|
|
|
|
Income/(loss) from
continuing operations before income tax
|
|
590
|
|
|
(858)
|
|
|
|
|
|
|
|
Income tax
expenses
|
|
(20)
|
|
|
(15)
|
|
|
|
|
|
|
|
Net income/(loss)
from continuing operations
|
|
570
|
|
|
(873)
|
|
Net loss from
discontinued operations, net of tax
|
|
—
|
|
|
(157)
|
|
|
|
|
|
|
|
Net income/(loss)
attributable to EGT stockholders
|
$
|
570
|
|
$
|
(1,030)
|
|
Other comprehensive
income/(loss):
|
|
|
|
|
|
|
Foreign
currency translation
|
|
1
|
|
|
(41)
|
|
Total other
comprehensive income/(loss), net of tax
|
|
1
|
|
|
(41)
|
|
|
|
|
|
|
|
Comprehensive
income/(loss) attributable to EGT stockholders
|
$
|
571
|
|
$
|
(1,071)
|
|
|
|
|
|
|
|
Basic and diluted
earnings per share:
|
|
|
|
|
|
|
Earnings/(loss)
|
$
|
0.04
|
|
$
|
(0.14)
|
|
Earnings/(loss) from continuing operations
|
$
|
0.04
|
|
$
|
(0.12)
|
|
Loss
from discontinued operations, net of tax
|
$
|
—
|
|
$
|
(0.02)
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding
|
|
|
|
|
|
|
Basic
|
|
14,450
|
|
|
7,496
|
|
Diluted
|
|
14,467
|
|
|
7,496
|
|
|
|
Entertainment
Gaming Asia Inc.
|
|
Consolidated
Balance Sheets
|
|
|
|
March
31,
2015
|
|
December 31,
2014
|
|
(amounts in
thousands, except per share data)
|
|
(Unaudited)
|
|
|
|
ASSETS
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
20,820
|
$
|
17,301
|
|
Accounts receivable,
net
|
|
666
|
|
830
|
|
Amounts due from
related parties
|
|
1,849
|
|
2,112
|
|
Other
receivables
|
|
122
|
|
316
|
|
Inventories
|
|
3,265
|
|
2,617
|
|
Prepaid expenses and
other current assets
|
|
681
|
|
1,447
|
|
Total current
assets
|
|
27,403
|
|
24,623
|
|
|
|
|
|
|
Gaming equipment,
net
|
|
5,127
|
|
5,624
|
|
Casino
contracts
|
|
2,369
|
|
2,982
|
|
Property and
equipment, net
|
|
9,238
|
|
8,895
|
|
Goodwill
|
|
350
|
|
351
|
|
Intangible assets,
net
|
|
519
|
|
595
|
|
Contract amendment
fees
|
|
99
|
|
126
|
|
Deferred tax
asset
|
|
141
|
|
142
|
|
Prepaids, deposits
and other assets
|
|
1,142
|
|
1,316
|
|
Total
assets
|
$
|
46,388
|
$
|
44,654
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Accounts
payable
|
$
|
1,803
|
$
|
645
|
|
Amounts due to related
parties
|
|
111
|
|
47
|
|
Accrued
expenses
|
|
1,941
|
|
2,009
|
|
Income tax
payable
|
|
5
|
|
—
|
|
Customer deposits and
other current liabilities
|
|
270
|
|
306
|
|
Total current
liabilities
|
|
4,130
|
|
3,007
|
|
|
|
|
|
|
Other
liabilities
|
|
855
|
|
845
|
|
Deferred tax
liability
|
|
107
|
|
107
|
|
Total
liabilities
|
|
5,092
|
|
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
|
|
47,710
|
|
47,680
|
|
Accumulated other
comprehensive income
|
|
754
|
|
753
|
|
Accumulated
losses
|
|
(7,183)
|
|
(7,753)
|
|
Total EGT
stockholders' equity
|
|
41,295
|
|
40,694
|
|
Non-controlling
interest
|
|
1
|
|
1
|
|
Total stockholders'
equity
|
|
41,296
|
|
40,695
|
|
Total liabilities and
stockholders' equity
|
$
|
46,388
|
$
|
44,654
|
|
|
|
Entertainment
Gaming Asia Inc.
|
|
Adjusted EBITDA
from Continuing Operations
|
|
(Unaudited)
|
|
|
Three-Month
Periods Ended
March 31,
|
|
(amounts in
thousands)
|
|
2015
|
|
|
2014
|
|
Net income/(loss)
from continuing operations – GAAP
|
$
|
570
|
|
$
|
(873)
|
|
Interest expense and
finance fees
|
|
1
|
|
|
1
|
|
Interest
income
|
|
(3)
|
|
|
—
|
|
Income tax
expenses
|
|
20
|
|
|
15
|
|
Depreciation and
amortization
|
|
1,810
|
|
|
1,746
|
|
Stock-based
compensation expenses
|
|
30
|
|
|
71
|
|
Gain on disposition
of assets
|
|
(5)
|
|
|
—
|
|
Adjusted EBITDA from
continuing operations
|
$
|
2,423
|
|
$
|
960
|
|
|
|
|
|
|
|
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.
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Entertainment
Gaming Asia Inc.
|
|
Gaming Operations
Performance Metrics
|
|
|
|
Net Revenue to EGT
(in thousands)
|
Y/Y
|
|
Q1:15
|
Q1:14
|
%
change
|
|
Cambodia
|
$3,118
|
$2,931
|
6%
|
|
Philippines
|
$670
|
$728
|
-8%
|
|
Service
revenue(1)
|
$222
|
$224
|
-1%
|
|
Consolidated
|
$4,010
|
$3,883
|
3%
|
|
|
Average Daily Net
Win Per Unit
|
Y/Y
|
|
Q1:15
|
Q1:14
|
%
change
|
|
Cambodia
|
$128
|
$117
|
9%
|
|
Philippines
|
$68
|
$71
|
-4%
|
|
Consolidated
|
$108
|
$101
|
7%
|
|
|
EGM Seats in
Operation
|
Y/Y
|
|
3/31/15
|
3/31/14
|
%
change
|
|
Cambodia
|
1,045
|
1,086
|
-4%
|
|
Philippines
|
546
|
566
|
-4%
|
|
Consolidated
|
1,591
|
1,652
|
-4%
|
|
|
|
|
|
(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.