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 fourth quarter and fiscal year ended December 31,
2014 and reviewed recent corporate progress.
Key Financial Metrics:
- Consolidated revenues of $8.3 million
for the fourth quarter and $22.4 million for the 2014 fiscal
year
- Adjusted EBITDA (earnings from
continuing operations before interest, taxes, depreciation,
amortization and non-cash charges) of $369,000 for the fourth
quarter and $5.1 million for the 2014 fiscal year
- Net loss from continuing operations of
$1.6 million for the fourth quarter and $2.5 million for the 2014
fiscal year
- Cash balance of $17.3 million and zero
debt as of December 31, 2014
All historical revenues and expenses associated with Dreamworld
Pailin, which ceased operation on June 1, 2014, and the Dolphin
non-gaming plastic products operations, which were sold on March
28, 2013, have been reclassified as discontinued operations. As
such, all the related historical revenues and expenses have been
reclassified as discontinued operations for the presented periods.
While the Company effected a 1:4 reverse stock split on February
26, 2015, historical share amounts have not been proportionally
adjusted to reflect the impact of the reverse stock split given it
occurred subsequent to the presented periods.
Fourth Quarter of 2014 Financial Performance:
The Company’s fourth quarter of 2014 consolidated revenue was
$8.3 million, an increase of 63% compared to $5.1 million in the
fourth quarter of 2013 due to higher gaming products sales
partially offset by lower gaming operations revenue.
Gaming operations revenue was $4.1 million for the fourth
quarter of 2014, a decrease of 7% compared to $4.4 million in the
fourth quarter of 2013 due to declines in both the Cambodia and
Philippines operations. Average consolidated daily net win per unit
was $107 for the fourth quarter of 2014, a decrease of 3% compared
to $110 in the fourth quarter of 2013. Cambodia average net win per
unit was up modestly to $129 for the fourth quarter of 2014
compared to $127 in the prior year period primarily due to improved
performance at NagaWorld. NagaWorld average daily net win per unit
increased to $197 for the fourth quarter of 2014 compared to $185
in the prior year period primarily due to an increase in VIP player
traffic and machine hold percentages. Philippines average daily net
win per unit declined to $65 for the fourth quarter of 2014
compared to $76 in the prior year period primarily due to increased
competition from new integrated casino resorts in Manila.
Revenue from gaming products was $4.2 million for the fourth
quarter of 2014 compared to $729,000 in the fourth quarter of 2013.
The fourth quarter of 2014 benefitted from the delivery of two
significant gaming chip and plaque orders from the Philippines
totaling $4.0 million, which included an initial order for a new
casino opening and a reorder from an existing casino customer. In
the fourth quarter of 2013, gaming product revenues were comprised
solely of normal reorders from existing customers. The Company
recorded a higher gross margin loss for the gaming products
division for the fourth quarter of 2014 mainly due to production
inefficiencies related to the plaque operations.
Entertainment Gaming Asia reported adjusted EBITDA of $369,000
in the fourth quarter of 2014 compared to $739,000 in the fourth
quarter of 2013.
The Company reported a net loss of $1.5 million, or $0.04 per
share, on a weighted average diluted share count of 40.9 million
shares for the fourth quarter of 2014. The fourth quarter of 2014
net loss included net income of $90,000 from discontinued
operations related to a gain on disposal of Dreamworld Pailin.
Excluding the discontinued operations, the Company reported a net
loss from continuing operations of $1.6 million, or $0.04 per
share, for the fourth quarter of 2014. This compared to a net loss
of $4.2 million, or $0.14 per share, on a weighted average diluted
share count of 30.0 million shares for the fourth quarter of 2013.
The fourth quarter of 2013 net loss included a net loss of $2.7
million from discontinued operations primarily related to
Dreamworld Pailin. Excluding the discontinued operations, the
Company reported a net loss from continuing operations of $1.5
million, or $0.05 per share, for the fourth quarter of 2013.
The increase in net loss from continuing operations was
primarily a result of lower gaming operations revenue and higher
gross margin loss for gaming products for the fourth quarter of
2014 compared to the prior year period. This was partly offset by
lower stock-based compensation expenses and an income tax benefit
for the fourth quarter of 2014 as compared with an income tax
expense for the prior year period.
2014 Fiscal Year Financial Performance:
Consolidated revenue was $22.4 million for the 2014 fiscal year,
an increase of 4% compared to $21.6 million for the 2013 fiscal
year due to higher gaming products sales partially offset by lower
gaming operations revenue.
Gaming operations revenue was $16.4 million for the 2014 fiscal
year, a decrease of 9% compared to $18.1 million in the 2013 fiscal
year. The decline was primarily due to lower average daily net wins
per unit for both NagaWorld and the Philippines operations
partially offset by higher revenue from Dreamworld Poipet, which
was in full operation for the entire 2014 fiscal year compared to
less than eight months in the 2013 fiscal year. Average
consolidated daily net win per unit was $105 for the 2014 fiscal
year, a decrease of 13% compared to $121 in the 2013 fiscal year.
NagaWorld average daily net win per unit declined to $189 for the
2014 fiscal year compared to $214 in the prior year primarily due
to fluctuations in player traffic as a result of political and
labor unrest in the first half of 2014 and NagaWorld renovations of
the casino floor that impacted certain areas of the Company’s slot
operations in the second half of 2014 as well as higher jackpot
payouts in the 2014 fiscal year. Philippines average daily net win
per unit declined to $71 for the 2014 fiscal year compared to $77
for the prior year primarily due to increased competition from the
opening of new integrated casino resorts in Manila.
Revenue from gaming products was $6.0 million for the 2014
fiscal year compared to $3.4 million for the 2013 fiscal year. As
discussed above, the 2014 fiscal year included two significant
gaming chip and plaque orders totaling $4.0 million while the 2013
fiscal year sales were comprised solely from typical reorders from
existing customers. The Company recorded a higher gross margin loss
on gaming products for the 2014 fiscal year mainly due to certain
production inefficiencies related to the plaque operations and
temporary machinery issues compared to the prior year period.
Adjusted EBITDA was $5.1 million for the 2014 fiscal year
compared to $7.1 million for the 2013 fiscal year.
The Company reported a net loss of $2.8 million, or $0.09 per
share, on a weighted average diluted share count of 32.8 million
shares for the 2014 fiscal year. The 2014 fiscal year net loss
included a net loss of $325,000 from discontinued operations
related to Dreamworld Pailin. Excluding the discontinued
operations, the Company reported a net loss from continuing
operations of $2.5 million, or $0.08 per share, for the 2014 fiscal
year. This compared to a net loss of $7.3 million, or $0.25 per
share, on a weighted average diluted share count of 30.0 million
shares for the 2013 fiscal year. The 2013 fiscal year net loss
included a net loss of $6.0 million from discontinued operations
related to the non-gaming Dolphin products business and Dreamworld
Pailin. Excluding the discontinued operations, the Company reported
a net loss from continuing operations of $1.4 million, or $0.05,
for the 2013 fiscal year.
The increase in net loss from continuing operations was
primarily a result of lower gaming operations revenue and a higher
gross margin loss for gaming products for the 2014 fiscal year
compared to the prior year. This was partly offset by lower
stock-based compensation expenses and an income tax benefit for the
fourth quarter of 2014 as compared with an income tax expense for
the prior year period. In addition, the increase in net loss from
continuing operations was partially offset by a higher gross profit
from the Philippines gaming operations due to an increase in fully
depreciated gaming assets and lower foreign currency losses for the
2014 fiscal year compared to the prior year period due to the
weakening of the U.S. dollar compared to foreign currencies in the
markets in which the Company operates.
Clarence Chung, Chairman and Chief Executive Officer of
Entertainment Gaming Asia, commented, “We are focused on improving
our operating performance and securing new projects that will drive
long-term growth and earnings visibility for the Company. We
believe we have significantly improved our positioning to secure
new gaming projects following the successful completion of our
recent rights offering. With a cash position of approximately $20.0
million as of February 28, 2015 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 deepened our credibility in our markets. We are
actively seeking new projects and believe that we are better
positioned than ever to capitalize on the opportunities in emerging
gaming markets of Southeast Asia.
“In addition, we believe that our gaming products division has
the potential to be a meaningful contributor to future earnings and
that our efforts to improve performance of this division are
beginning to pay off in 2015. We recently completed a plant
expansion and are implementing efforts to enhance and further
automate certain production processes. We believe that these
efforts better positions us to secure large new orders and to
improve the earnings potential for this division. For the first
quarter of 2015, we have a confirmed order pipeline of $5.4
million, of which we have delivered $3.8 million in sales as of
February 28, 2015 with a gross profit. Also, we are in negotiations
to secure a large order for a new casino opening in Macau later
this year.”
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 casinos and gaming venues in the
Indo-China region 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 casino and gaming projects and fund those projects and
expectations for the increasing profitability of the Company’s
gaming chips and plaques operations. 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 at 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, 2013 filed with the SEC on March 31, 2014 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.
Entertainment Gaming Asia Inc. Consolidated
Statements of Comprehensive Income (Unaudited)
Three-Month Periods Years Ended Ended December
31, December 31, (amounts in thousands, except per
share data) 2014 2013 2014
2013 Revenues: Gaming operations 4,096 4,367 16,364
18,131 Gaming products 4,226 729 5,998 3,424 Total revenues 8,322
5,096 22,362 21,555 Operating costs and expenses: Cost of
gaming operations Gaming equipment depreciation 857 918 3,538 4,167
Casino contract amortization 610 613 2,445 2,464 Other gaming
related intangibles amortization 63 63 252 252 Other operating
costs 926 894 3,543 3,377 Cost of gaming products 4,796 1,023 7,781
4,195 Selling, general and administrative expenses 2,425 2,672
6,528 7,485 Loss on dispositions of assets 79 88 55 88 Impairment
of assets 121 75 121 75 Product development expenses 76 55 387 261
Depreciation and amortization 60 50 219 174 Total operating costs
and expenses 10,013 6,451 24,869 22,538 Loss from continuing
operations (1,691) (1,355) (2,507) (983) Other
(expenses)/incomes: Interest expense and finance fees (2) (2) (4)
(7) Interest income 1 — 2 4 Foreign currency losses (6) (67) (60)
(257) Other income/(expense) 5 (3) 22 8 Total other
(expenses)/incomes (2) (72) (40) (252) Loss from continuing
operations before income tax expense (1,693) (1,427) (2,547)
(1,235) Income tax benefit/(expense) 85 (103) 41 (141)
Net loss from continuing operations (1,608) (1,530) (2,506)
(1,376) Net income/(loss) from discontinued operations, net of tax
90 (2,697) (325) (5,954) Net loss $ (1,518) $ (4,227) $
(2,831) $ (7,330) Basic and diluted earnings per share: Loss
$ (0.04) $ (0.14) $ (0.09) $ (0.25) Loss from continuing operations
$ (0.04) $ (0.05) $ (0.08)
$
(0.05) Loss from discontinued operations, net of tax $ — $ (0.09) $
(0.01)
$
(0.20) Weighted average common shares outstanding Basic and
diluted 40,892 29,975 32,750 29,975
Entertainment Gaming Asia Inc. Consolidated Balance
Sheets December 31, December 31,
2014 2013 (amounts in thousands, except per share
data) (Unaudited) ASSETS Current assets: Cash and
cash equivalents $ 17,301 $ 5,301 Accounts receivable, net 830 922
Amounts due from related parties 2,112 108 Other receivables 316
453 Inventories 2,617 1,663 Prepaid expenses and other current
assets 1,447 443 Total current assets 24,623 8,890 Gaming
equipment, net 5,624 8,171 Casino contracts 2,982 5,429 Property
and equipment, net 8,895 7,857 Goodwill 351 353 Intangible assets,
net 595 899 Contract amendment fees 126 234 Deferred tax assets 142
- Prepaids, deposits and other assets 1,316 1,797 Total assets $
44,654 $ 33,630
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities: Accounts payable $ 645 $ 840 Amount due to a
related party 47 19 Accrued expenses 2,009 2,366 Customer deposits
and other current liabilities 306 457 Total current liabilities
3,007 3,682 Other liabilities 845 742 Deferred tax liability
107 199 Total liabilities 3,959 4,623 Stockholders’ equity:
Common stock, $.001 par value, 75,000,000 shares authorized;
57,879,835 and 30,024,662 shares issued and outstanding,
respectively 58 30 Additional paid-in-capital 47,637 33,156
Accumulated other comprehensive income 752 742 Accumulated losses
(7,753) (4,922) Total EGT stockholders’ equity 40,694 29,006
Non-controlling interest 1 1 Total stockholders’ equity 40,695
29,007 Total liabilities and stockholders’ equity $ 44,654 $ 33,630
Entertainment Gaming Asia Inc. Adjusted
EBITDA from Continuing Operations (Unaudited)
Three-Month Periods
Years Ended
Ended December 31,
December 31, (amounts in thousands) 2014
2013 2014 2013 Net loss
from continuing operations – GAAP $ (1,608) $ (1,530) $ (2,506) $
(1,376) Interest expense and finance fees 2 2 4 7 Interest income
(1) — (2) (4) Income tax (benefit)/expense (85) 103 (41) 141
Depreciation and amortization 1,860 1,766 7,289 7,407 Stock-based
compensation expense 1 235 160 789 Impairment of assets 121 75 121
75 Loss on dispositions of assets 79 88 55 88 Adjusted EBITDA from
continuing operations
$
369
$
739
$
5,080
$
7,127
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.
Slot Operations Net Revenue to EGT (in
millions) Q4:14 Q4:13
Y/Y ∆ FY14 FY13 Y/Y
∆ Cambodia $3.2 $3.3 -3% $12.5
$13.9 -10% Philippines $0.7 $0.8
-16% $2.9 $3.3 -12%
Service revenue(1)
$0.2 $0.3 -33% $1.0 $0.9
11% Consolidated $4.1 $4.4 -7% $16.4
$18.1 -9%
Average Daily Net Win Per
Unit Q4:14 Q4:13
Y/Y ∆ FY14 FY13 Y/Y
∆ Cambodia $129 $127 2% $123
$144 -15% Philippines $65 $76 -14%
$71 $77 -8% Consolidated $107
$110 -3% $105 $121 -13%
EGM Seats in
Operation
12/31/14 12/31/13 Y/Y ∆
Cambodia 1,062
1,109 -4% Philippines
557 563 -1% Consolidated
1,619 1,672
-3%
(1) Service revenue represents a reimbursement of certain casino
expenses, which for accounting purposes, is included in the revenue
and grossed up in the costs of sales.
Entertainment Gaming Asia Inc.Traci Mangini,
872-802-4227tracimangini@EGT-Group.com
Entertainment Gaming Asia Incorporated (NASDAQ:EGT)
Historical Stock Chart
From Apr 2024 to May 2024
Entertainment Gaming Asia Incorporated (NASDAQ:EGT)
Historical Stock Chart
From May 2023 to May 2024