Entertainment Gaming Asia Inc. (NYSE Amex: EGT) (“Entertainment
Gaming Asia” or “the Company”), a leading gaming company focused on
emerging gaming markets in Pan-Asia, today reported operating
results for the first quarter ended March 31, 2012 and reviewed
recent corporate progress.
Dreamworld Pailin Grand Opening (Photo:
Business Wire)
Highlights:
- New record-high quarterly net income of
$1.0 million for the first quarter of 2012, an increase of 41%
compared to the first quarter of 2011.
- Adjusted EBITDA (earnings before
interest, taxes, depreciation, amortization and non-cash charges)
was $3.2 million, an increase of 6% from the first quarter of
2011.
- Total revenue from gaming operations
was a record $5.0 million for the first quarter of 2012, an
increase of 19% from the first quarter of 2011.
- Average consolidated win per unit per
day (WUD) reached a new high of $154 for the first quarter of 2012,
an increase of 15% from the first quarter of 2011.
- As of March 31, 2012, total installed
electronic gaming machine (EGM) seats in operation were 1,560 in
eight venues, comprised of three venues in Cambodia with a total of
799 seats and five venues in the Philippines with a total of 761
seats.
- Gaming chip and plaque sales were
$532,000, more than double that of the first quarter of 2011.
- Cash balance was $11.7 million as of
March 31, 2012 compared to $12.8 million as of December 31,
2011.
- Total debt was $4.7 million as of March
31, 2012 compared to $6.2 million as of December 31, 2011.
- On May 3, 2012, the Company completed
on target the initial installation of 200 EGM seats on a
participation basis in Sokha Hotels and Resort’s new five-star
Thansur Bokor Resort and Casino in Cambodia.
- On May 9, 2012, the Company
successfully opened Dreamworld Pailin in Cambodia, its first casino
development project.
- On May 10, 2012, the Company held the
groundbreaking ceremony for Dreamworld Poipet in Cambodia, which is
expected to open before the end of 2012.
Clarence Chung, Chairman and Chief Executive Officer of
Entertainment Gaming Asia, commented, “After record-breaking 2011
financial results, I am pleased to report another strong quarter
for the first quarter of 2012. Our gaming operations generated a
record-high $5.0 million in revenue, driven by significant
improvement in both our Cambodia and Philippines operations.
Consolidated average daily net wins reached a new high of $154 per
seat for the quarter. This strong top-line growth combined with
continued focus on cost control resulted in adjusted EBITDA of $3.2
million and a record net profit of nearly $1.0 million for the
first quarter of 2012. We have achieved this growth while investing
in our strategic growth plans to expand our gaming operations and
strengthening our balance sheet. With the successful repositioning
of our operations behind us, we look to the future armed with an
attractive mix of gaming operations including a solid and
growing participation business, exciting casino development plans,
and prospects for continued improvement in our gaming chip and
plaque business.”
Q1 2012 Financial Review
Entertainment Gaming Asia’s first quarter of 2012 consolidated
revenue was $7.1 million, an increase of 14% compared to $6.2
million in the first quarter of 2011. The increase was primarily
due to strong improvements in the Company’s gaming operations.
Revenue from gaming operations was $5.0 million in the first
quarter of 2012, an increase of 19% compared to $4.2 million in the
first quarter of 2011. The increase reflected strong performance
from the Company’s operations in both Cambodia and the Philippines.
In Cambodia, the Company’s performance was driven by significant
growth in average WUD from its operations in NagaWorld, which
reached $260 for the quarter. The Company attributes this to its
proactive management, targeted marketing programs, and quality
customer service. In the Philippines, the Company’s operations
continued to benefit from strategic management of its machine
placements and marketing initiatives focused on its most promising
venues in this market.
WUD
Q1:12 Q1:11 Y/Y ∆
Cambodia $239 $224 7% Philippines $73
$58 26% Consolidated $154 $134
15%
EGM Seats in Operation 3/31/12
3/31/11 Y/Y ∆ Cambodia 799
726 10% Philippines 761 912 -17%
Consolidated 1,560 1,638 -5%
Revenue from other products was $2.1 million in the first
quarter of 2012, an increase of 3% from the first quarter of 2011.
The increase was the result of higher sales of gaming chips and
plaques, which were $532,000 for the first quarter of 2012 compared
to $241,000 in the prior-year period.
With strong revenue and continued focus on cost control,
Entertainment Gaming Asia reported adjusted EBITDA of $3.2 million
for the first quarter of 2012 compared to $3.0 million for the
first quarter of 2011.
Entertainment Gaming Asia reported net income of $1.0 million,
or $0.01 per share, on a weighted average diluted share count of
approximately 120.8 million shares for the first quarter of 2012.
This compared to net income of $692,000, or $0.01 per share, on a
weighted average diluted share count of approximately 119.1 million
shares for the first quarter of 2011.
Successful Installation of 200 EGM Seats at Thansur Bokor in
Cambodia
In November 2011, the Company announced an agreement which
expands its gaming machine participation and management operations
in Cambodia with a strategic and prominent new partner, Sokha
Hotels and Resorts (“Sokha”). Under the terms of the agreement, the
Company will place 250 EGM seats and jointly manage these slot
operations in Sokha’s new Thansur Bokor Resort and Casino in a
tourist area of Cambodia. The Company and Sokha will share the
gross win and certain operating expenses on a 27/73% respective
basis. The casino’s grand opening was held on May 3, 2012 at which
time the Company had its initial planned 200 EGMs in operation. The
Company expects to increase the deployment to reach 250 seats
during this year.
Dreamworld Pailin Opens
On May 9, 2012, the Company held the grand opening for
Dreamworld Pailin located at the Cambodia-Thailand border on a
growing trade route connecting the two countries. This was a
milestone event as it marked the Company’s first casino opening in
Indo-China and begins a new phase in its growth strategy.
The opening was well attended by players visiting from the
surrounding areas who enjoyed the casino’s 30 popular table games
such as baccarat and dice games and attractive suite of 50 slot
machines. With its wide range of gaming offerings, attractive
décor, and professional staff, the Company believes Dreamworld
Pailin has already established itself as the quality leader in this
market.
Future Dreamworld Projects
The Company continues to make progress in its plans to develop
and operate regional casinos and gaming venues under its Dreamworld
brand in the Indo-China region. To this end, last month the Company
announced plans to develop and operate Dreamworld Poipet, a
stand-alone slot hall in an existing popular casino in Poipet,
Cambodia near the Thailand border.
This $7.5 million project will be constructed as a stand-alone
extension of an existing casino owned by a local Cambodian company
and will connect to the main casino’s table game floor. Dreamworld
Poipet will operate under the casino owner’s gaming license. It is
expected to measure approximately 16,000 square feet (1,500 square
meters) and house 300 EGM seats. The Company and casino owner will
share the daily net win generated by the EGMs in the Company’s slot
hall and certain operating costs on a 40%/60% respective basis.
The Company intends to develop Dreamworld Poipet at a rapid
pace. It held the groundbreaking ceremony on May 10, 2012 and is
preparing to begin full construction efforts shortly. Based on the
current timeline, the Company expects to open Dreamworld Poipet
before the end of 2012.
The Company has another casino development project, Dreamworld
Kampot, located in the Kampot Province of Cambodia near the Vietnam
border, which is in the pre-construction development phase. While
the Company considers that Dreamworld Kampot has attractive
long-term return potential, it intends to focus its available
resources on the development of Dreamworld Poipet, which is located
in a more established gaming market and, in the Company’s
estimation, offers higher near-term returns. As a result, the
Company expects to complete the development of Dreamworld Kampot in
2013.
Clarence Chung, Chairman and Chief Executive Officer of
Entertainment Gaming Asia, concluded, “After one year of planning
and significant effort, we have now opened our first casino project
in the Indo-China region. With a strong operational team in place
to manage Dreamworld Pailin, we are quickly shifting development
efforts to our promising Dreamworld Poipet project. With our
professional management, quality gaming products, and superior
customer service, we aim to have our Dreamworld properties set a
new standard for regional gaming in our markets. We are excited
about the future and believe our projects place us firmly on track
toward achieving our long-term goal of becoming a leading developer
and operator of regional style casinos and gaming venues in the
emerging gaming markets of Indo-China.”
Entertainment Gaming Asia is hosting a conference call and
simultaneous webcast at 8:30 a.m. ET today, May 15, 2012, both of
which are open to the general public. The conference call number is
800/679-1701 or 303/223-2699. 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. (NYSE Amex: EGT) is a
leading gaming company in Pan-Asia engaged in the
development and operation of casinos and gaming venues in the
Indo-China region under its “Dreamworld” brand as well as the
leasing of electronic gaming machines on a participation basis to
the gaming industry. The Company also manufactures and sells RFID
and traditional gaming chips and plaques to major casinos through
its wholly-owned subsidiary Dolphin Products in Australia. For more
information please visit www.EGT-Group.com.
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 expansion of the Company’s participation
business model, the timeline and working capital requirements for
the Sokha, Kampot and Poipet gaming projects, the near-term
earnings of the Sokha, Kampot and Poipet gaming projects, growth of
the gaming industry in the Indo-China region, the Company’s ability
to secure new casino and gaming projects and fund those projects
and the prospects for the expanded customer base for the Company’s
Dolphin gaming chips and plaques. 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
Entertainment Gaming Asia’s ability to place gaming machines at
significant levels and generate the expected amount of net win from
the gaming machines placed, obtain the gaming license and building
permits for the casino projects on a timely basis or at all,
complete construction and development of the casino and gaming
projects on budget and in a timely manner, identify and
successfully develop additional such projects in the Indo-China
region, acquire additional capital as and when needed, adverse
weather conditions that cause delays to casino and gaming projects
timelines, obtain and fulfill significant purchase orders from the
new customers for the Company’s gaming chips and plaques and those
other risks set forth in Entertainment Gaming Asia’s annual report
on Form 10-K for the year ended December 31, 2011 filed with the
SEC on March 30, 2012 and subsequently filed quarterly reports on
Form 10-Q. Entertainment Gaming Asia cautions readers not to place
undue reliance on any forward-looking statements. Entertainment
Gaming Asia 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 (Unaudited)
Three Months Ended March 31, (amounts in
thousands, except per share data) 2012
2011 Revenues: Gaming $ 4,956 $ 4,165 Other products 2,126
2,070 Total revenues 7,082 6,235 Operating costs and expenses: Cost
of electronic gaming machine (EGM) participation: EGM depreciation
1,109 1,190 Casino contract amortization 615 619 Other gaming
related intangibles amortization 63 — Other operating costs 524 282
Cost of other products 2,006 1,764 Selling, general and
administrative expenses 1,585 1,198 Stock-based compensation
expenses 265 223 Gain on disposition of assets (12) — Product
development expenses 100 80 Depreciation and amortization 31 30
Total operating costs and expenses 6,286 5,386 Income from
operations 796 849 Other income/(expense): Interest expense
and finance fees (53) (94) Interest income 12 23 Foreign currency
gains/(losses) 189 (7) Other 82 60 Total other income/(expense) 230
(18) Income before income tax 1,026 831 Income tax
expense (54) (139) Net income $ 972 $ 692 Basic and
diluted earnings per share $ 0.01 $ 0.01 Weighted average
common shares outstanding Basic 119,601 116,196 Diluted 120,758
119,138 Other comprehensive income, net of tax Foreign
currency translation adjustments $ 51 $ 103 Comprehensive income $
1,023 $ 795
Entertainment Gaming Asia Inc.
Consolidated Balance Sheets March 31,
December 31, 2012 2011 (amounts in
thousands, except per share data) (Unaudited)
ASSETS Current assets: Cash and cash equivalents $ 11,695 $
12,759 Trade accounts receivable, net 2,051 2,691 Other receivables
266 114 Inventories 2,045 1,894 Assets held for sale 10 30 Prepaid
expenses and other current assets 1,208 811 Total current assets
17,275 18,299 Electronic gaming machines and systems, net
8,084 8,889 Casino contracts 9,763 10,340 Property and equipment,
net 3,855 2,558 Goodwill 357 357 Intangible assets, net 1,158 1,227
Contract amendment fees 423 450 Deferred tax assets 93 91 Prepaids,
deposits and other assets 2,015 1,893 Total assets $ 43,023 $
44,104
LIABILITIES AND STOCKHOLDERS' EQUITY Current
liabilities: Accounts payable $ 1,040 $ 1,316 Amount due to a
related party — 14 Accrued expenses 1,518 2,228 Income tax payable
24 68 Notes payable to a related party 4,687 6,211 Capital lease
obligations 278 322 Customer deposits and other current liabilities
493 357 Total current liabilities 8,040 10,516 Other
liabilities 960 869 Deferred tax liability 207 207 Total
liabilities 9,207 11,592 Stockholders’ equity: Common stock,
$.001 par value, 300,000,000 shares authorized; 119,618,613 and
118,839,393 shares issued and outstanding 119 119 Additional
paid-in-capital 31,472 31,191 Accumulated other comprehensive
income 610 559 Retained earnings since January 1, 2011 ($386.1
million accumulated deficit eliminated upon quasi-reorganization)
1,614 642 Total EGT stockholders’ equity 33,815 32,511
Non-controlling interest 1 1 Total EGT stockholders’ equity 33,816
32,512 Total liabilities and stockholders’ equity $ 43,023 $ 44,104
Entertainment Gaming Asia Inc. Adjusted EBITDA
(Unaudited) Three-Months Ended March 31,
(amounts in thousands) 2012 2011 Net
income – GAAP basis $ 972 $ 692 Interest expense 53 94 Interest
income (12) (23) Income tax expense 54 139 Depreciation and
amortization 1,865 1,889 Stock-based compensation expense 265 223
Gain on disposition of assets (12) — EBITDA, as adjusted $ 3,185 $
3,014
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/(loss) 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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Entertaining Gaming Asia Incorporated (AMEX:EGT)
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