MONTREAL, May 12, 2017 /CNW/ - Amaya Inc. (NASDAQ:
AYA; TSX: AYA) today reported its financial results for the first
quarter ended March 31, 2017,
announced that it will ask shareholders to approve, among other
things, certain matters relating to the proposed corporate name
change and related matters, reconfirmed full year 2017 financial
guidance ranges and provided certain additional highlights and
updates. Unless otherwise noted, all dollar ($) amounts are in U.S.
dollars.
"We continued our momentum in the first quarter as we execute on
our strategy and reinforce the foundation for sustainable and
diversified revenue growth, including through the strengthening of
our core management team and operations," said Rafi Ashkenazi,
Chief Executive Officer. "Our company also continues to evolve
through corporate initiatives to deliver the greatest value for our
shareholders."
First Quarter 2017 Financial Summary(1)
|
|
Three Months Ended
March 31,
|
|
Year-over-Year
Change
|
$000's, except
percentages and per share amounts
|
|
2017
|
|
2016
|
|
|
Total
Revenue
|
|
317,320
|
|
288,518
|
|
10.0%
|
Adjusted
EBITDA
|
|
151,001
|
|
123,434
|
|
22.3%
|
Net
earnings
|
|
65,753
|
|
55,491
|
|
18.5%
|
Adjusted Net
Earnings
|
|
113,367
|
|
84,967
|
|
33.4%
|
Diluted earnings per
common share
|
|
$ 0.33
|
|
$ 0.28
|
|
16.4%
|
Adjusted Net Earnings
per Diluted Share
|
|
$ 0.56
|
|
$ 0.43
|
|
31.0%
|
__________________________________________________
|
(1)
|
For important
information on Amaya's non-IFRS measures, see below under "Non-IFRS
and Non-U.S. GAAP Measures" and the tables under "Reconciliation of
Non-IFRS Measures to Nearest IFRS Measures".
|
First Quarter 2017 and Subsequent Financial
Highlights
- Revenues - Total revenues for the quarter increased
approximately 10.0% year-over-year. Excluding the impact of
year-over-year changes in foreign exchange rates, total revenues
for the quarter would have increased by approximately 9.9%.
Real-money online poker revenues and real-money online casino and
sportsbook combined revenues represented approximately 68.9% and
27.3% of total revenues for the quarter, respectively, as compared
to approximately 75.0% and 20.8% for the prior year period.
- Poker Revenues – Real-money online poker revenues for
the quarter were $218.7 million, or
an increase of approximately 1.1% year-over-year. Excluding the
impact of year-over-year changes in foreign exchange rates,
real-money online poker revenues would have increased by
approximately 0.3% for the quarter.
- Debt – Total long term debt outstanding at the end of
the quarter was $2.53 billion with a
weighted average interest rate of 4.5%. In March 2017, Amaya announced the successful
repricing and retranching of its U.S. dollar and Euro denominated
first lien term loans resulting in the reduction of the applicable
interest rate margins by 50 basis points, removing the Euribor
floor on the Euro denominated first lien term loans, and raising
€100 million of incremental Euro denominated first lien debt and
using the same to reduce its U.S. denominated first lien debt. As a
result, the weighted average interest rate on the long term debt
decreased approximately 0.4% and Amaya currently expects to save
approximately 13%, or $15.4 million,
of interest expense annually. Amaya and the lenders also amended
the credit agreement for its first lien term loans to, among other
things, reflect the repricing, retranching, and waive the required
2016 and 2017 excess cash flow repayments (as defined and described
in the credit agreement) previously due on March 31, 2017 and March
31, 2018, respectively.
- Rational Group Deferred Payment – Amaya paid
$75 million in January 2017 and an additional $75 million in April
2017 on the outstanding balance of the deferred purchase
price for its acquisition of the Rational Group and continues to
anticipate paying the remaining $47.5
million by the end of June
2017 using cash on its balance sheet and cash flow from
operations.
First Quarter 2017 and Subsequent Operational
Highlights
- Quarterly Real-Money Active Uniques (QAUs) – Total
combined QAUs were approximately 2.7 million, an increase of
approximately 5% year-over-year primarily led by customer
acquisition, engagement and reactivation initiatives. Approximately
2.5 million of such QAUs played online poker during the quarter, an
increase of approximately 2% year-over-year, while Amaya's online
casino offerings had approximately 664,000 QAUs, an increase of
approximately 42% year-over-year, which Amaya continues to estimate
is one of the largest casino player bases among its competitors.
Amaya's emerging online sportsbook offerings had approximately
277,000 QAUs, a 64% increase year-over-year.
- Quarterly Net Yield (QNY) – Total QNY and QNY excluding
the impact of year-over-year changes in foreign exchanges rates
were both $115, an increase of 5.4%
year-over-year in each case. QNY is a non-IFRS measure.
- Customer Registrations – Customer Registrations
increased by 3.0 million during the quarter to approximately 111
million.
- Chief Financial Officer Update – In January 2017, Amaya announced that its CFO,
Daniel Sebag, advised it that he
will retire as CFO later this year once his successor is identified
and appointed, and will assist Amaya in ensuring an orderly
transition of his duties. The Board and leading executive
recruiting firm Spencer Stuart commenced a global CFO search and
Amaya is in the final stages of the hiring process with respect to
a potential candidate.
- Appointment of Chief Corporate Development Officer – On
May 11, 2017, Amaya announced the
appointment of Robin Chhabra to the
newly created position of Chief Corporate Development Officer. Mr.
Chhabra is an experienced online gaming executive who most recently
served as Group Director of Strategy and Corporate Development for
William Hill plc (LSE: WMH). Amaya
anticipates Mr. Chhabra will join the company in September 2017 following a brief garden leave
from William Hill.
Corporate Name Change and Continuance
Amaya currently intends to include in its management information
circular for its upcoming 2017 annual and special meeting of
shareholders, among other things, the following special
matters:
- Corporate Name Change –Amaya intends to change its
corporate name to "The Stars Group Inc."
- Continuance – To more effectively manage its business
and affairs, Amaya also intends to effect a continuance under the
Business Corporations Act (Ontario) such that it will become an
Ontario corporation and subject to
such act. Following the continuance and appointment of its new CFO,
Amaya intends to move its corporate head office to Toronto, Ontario.
Additional information regarding the business of the meeting and
the matters to be considered and voted on by the shareholders at
the meeting will be provided in the management information
circular.
Full Year Guidance
- Full Year Guidance – Amaya reconfirms its previously
announced 2017 full year financial guidance ranges and continues to
expect the following:
-
- Revenues of $1,200 to
$1,260 million;
- Adjusted EBITDA of $560 to $580
million;
- Adjusted Net Earnings of $400 to $430
million; and
- Adjusted Net Earnings per Diluted Share of $1.94 to $2.13.
These estimates reflect
management's view of current and future market and business
conditions, including assumptions of (i) the cessation of
real-money online poker offering in Australia by the end of June 2017 (previously believed to be April 2017), (ii) the introduction of Amaya's
previously disclosed cross-vertical customer loyalty program, (iii)
no other material adverse regulatory events and (iv) no material
foreign currency exchange rate fluctuations, particularly against
the Euro which is the primary depositing currency of Amaya's
customers, that could negatively impact customer purchasing power
as it relates to Amaya's U.S. dollar denominated product offerings.
Such guidance is also based on a Euro to U.S. dollar exchange rate
of 1.06 to 1.00, unaudited expected results and certain accounting
assumptions.
Financial Statements, Management's Discussion and Analysis
and Additional Information; Internal Control Over Financial
Reporting
As previously disclosed, management identified internal control
deficiencies that constitute individually, or in the aggregate,
material weaknesses in Amaya's internal control over financial
reporting as of December 31,
2016. These deficiencies relate to the operating
effectiveness of controls over derivative valuations and hedge
accounting, and the design of controls over foreign exchange rate
information. Amaya continues to take steps to remediate these
deficiencies and currently expects such remediation to be complete
by the end of the second quarter of 2017. There were no
restatements or adjusting entries required in Amaya's unaudited
condensed consolidated financial statements for the three months
ended March 31, 2017 (the "Q1 2017
Financial Statements") or otherwise as a result of the
foregoing. For additional information, see "Disclosure
Controls and Procedures and Internal Control Over Financial
Reporting" in Amaya's management's discussion and analysis for the
year ended December 31, 2016 (the
"2016 MD&A") and in Amaya's management's discussion and
analysis for the three months ended March
31, 2017 (the "Q1 2017 MD&A").
The Q1 2017 Financial Statements, Q1 2017 MD&A and 2016
MD&A, as well as additional information relating to Amaya and
its business, can be found on SEDAR at www.sedar.com, Edgar at
www.sec.gov and Amaya's website at www.amaya.com.
In addition to press releases, securities filings and public
conference calls and webcasts, Amaya intends to use its investor
relations page on its website as a means of disclosing material
information to its investors and others and for complying with its
disclosure obligations under applicable securities laws.
Accordingly, investors and others should monitor the website in
addition to following Amaya's press releases, securities filings
and public conference calls and webcasts. This list may be updated
from time to time.
Conference Call and Webcast
Amaya will host a conference call today, May 12, 2017 at 8:30 a.m.
ET to discuss its financial results for the first quarter
2017 and related matters. Rafi Ashkenazi, Chief Executive Officer
of Amaya, will chair the call. To access via tele-conference,
please dial +1 877-407-0789 or +1 201-689-8562 ten minutes prior to
the scheduled start of the call. The playback will be made
available two hours after the event at +1 844-512-2921 or +1
412-317-6671. The Conference ID number is 13661536. To access the
webcast please use the following link:
http://public.viavid.com/index.php?id=124280
Reconciliation of Non-IFRS Measures to Nearest IFRS
Measures
The table below presents reconciliations of Adjusted EBITDA,
Adjusted Net Earnings and Adjusted Net Earnings per Diluted Share
to the nearest IFRS measures:
|
|
Three Months Ended
March 31,
|
|
$000's, except per
share amounts
|
|
2017
|
|
|
2016
|
|
Net
earnings
|
|
|
65,753
|
|
|
|
55,491
|
|
Financial
expenses
|
|
|
40,589
|
|
|
|
24,913
|
|
Income
taxes
|
|
|
2,688
|
|
|
|
1,962
|
|
Depreciation of
property and equipment
|
|
|
2,161
|
|
|
|
1,957
|
|
Amortization of
intangible and deferred development costs
|
|
|
33,574
|
|
|
|
31,326
|
|
EBITDA
|
|
|
144,765
|
|
|
|
115,649
|
|
Stock-based
compensation
|
|
|
2,164
|
|
|
|
3,066
|
|
Termination of
employment agreements
|
|
|
2,126
|
|
|
|
1,108
|
|
Termination of
affiliate agreements
|
|
|
407
|
|
|
|
1,137
|
|
Loss on disposal of
assets
|
|
|
59
|
|
|
|
222
|
|
Income from
investments and loss from associates
|
|
|
(435)
|
|
|
|
(9,625)
|
|
Acquisition-related
costs
|
|
|
—
|
|
|
|
184
|
|
Reversal of
impairment on investment in associates
|
|
|
(6,684)
|
|
|
|
—
|
|
Other
costs
|
|
|
8,599
|
|
|
|
11,693
|
|
Adjusted
EBITDA
|
|
|
151,001
|
|
|
|
123,434
|
|
Current income tax
expense
|
|
|
(3,322)
|
|
|
|
(1,872)
|
|
Depreciation and
amortization (excluding amortization of purchase price allocation
intangibles)
|
|
|
(4,660)
|
|
|
|
(3,913)
|
|
Interest (excluding
interest accretion and non-refundable late payment fees related to
the unpaid balance of the deferred purchase price)
|
|
|
(29,652)
|
|
|
|
(32,682)
|
|
Adjusted Net
Earnings
|
|
|
113,367
|
|
|
|
84,967
|
|
Diluted
Shares
|
|
|
200,656,549
|
|
|
|
197,041,822
|
|
Adjusted Net
Earnings per Diluted Share
|
|
$
|
0.56
|
|
|
$
|
0.43
|
|
The table below presents certain items comprising "Other costs"
in the reconciliation table above:
|
|
Three Months Ended
March 31,
|
|
|
|
2017
|
|
|
2016
|
|
|
|
$000's
|
|
|
$000's
|
|
Non-U.S. lobbying and
legal expenses
|
|
|
741
|
|
|
|
808
|
|
U.S. lobbying and
legal expenses
|
|
|
3,978
|
|
|
|
3,353
|
|
Strategic review
professional fees
|
|
|
125
|
|
|
|
3,721
|
|
Retention
bonuses
|
|
|
615
|
|
|
|
1,110
|
|
Non recurring
professional fees
|
|
|
662
|
|
|
|
1,442
|
|
AMF and other
investigation professional fees
|
|
|
2,390
|
|
|
|
1,001
|
|
Office restructuring
and legacy business unit shutdown
costs
|
|
|
88
|
|
|
|
258
|
|
Other
costs
|
|
|
8,599
|
|
|
|
11,693
|
|
The table below presents a reconciliation of the numerator of
QNY (i.e., real-money online poker revenue and real-money online
casino and sportsbook combined revenue) to the nearest IFRS measure
(i.e., total revenue) as reported for the applicable period. Unless
otherwise noted, any deviation in the reconciliation below to
measures presented herein may be the result of immaterial
adjustments made in later periods due to certain accounting
reallocations.
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
|
2017
|
|
|
2016
|
|
|
|
$000's
|
|
|
$000's
|
|
Total
revenue
|
|
|
317,320
|
|
|
|
288,518
|
|
Corporate
revenue
|
|
|
(22)
|
|
|
|
(59)
|
|
Other
business-to-consumer revenue
|
|
|
(11,854)
|
|
|
|
(11,971)
|
|
Real-money online
poker revenue and real-money online casino
and
sportsbook combined revenue
|
|
|
305,444
|
|
|
|
276,488
|
|
Amaya has not provided a reconciliation of the non-IFRS measures
to the nearest IFRS measures included in its full year 2017
financial guidance provided in this release, including Adjusted
EBITDA, Adjusted Net Earnings and Adjusted Net Earnings per Diluted
Share, because certain reconciling items necessary to accurately
project such IFRS measures, particularly net earnings (loss),
cannot be reasonably projected due to a number of factors,
including variability from potential foreign exchange fluctuations
impacting financial expenses, and the nature of other non-recurring
or one-time costs (which are excluded from non-IFRS measures but
included in net earnings (loss)), as well as the typical
variability arising from the audit of annual financial statements,
including, without limitation, certain income tax provision
accounting, and related accounting matters.
For additional information on Amaya's non-IFRS measures, see
below and the Q1 2017 MD&A, including under the headings
"Management's Discussion and Analysis" and "Selected Financial
Information—Other Financial Information".
About Amaya
Amaya is a leading provider of technology-based products and
services in the global gaming and interactive entertainment
industries. Amaya ultimately owns gaming and related consumer
businesses and brands including PokerStars, PokerStars Casino,
BetStars, Full Tilt, StarsDraft, and the PokerStars Championship
and PokerStars Festival live poker tour brands (incorporating
aspects of the European Poker Tour, PokerStars Caribbean Adventure,
Latin American Poker Tour and the Asia Pacific Poker Tour). These
brands have more than 111 million cumulative registered
customers globally and collectively form the largest poker business
in the world, comprising online poker games and tournaments,
sponsored live poker competitions, marketing arrangements for
branded poker rooms in popular casinos in major cities around the
world, and poker programming and content created for television and
online audiences. Amaya, through certain of these brands, also
offers non-poker gaming products, including casino, sportsbook and
daily fantasy sports. Amaya, through certain of its subsidiaries,
is licensed or approved to offer, or offers under third party
licenses or approvals, its products and services in various
jurisdictions throughout the world, including in Europe, both within and outside of the
European Union, the Americas and elsewhere. In particular,
PokerStars is the world's most licensed online gaming brand,
holding licenses or related operating approvals in 17
jurisdictions.
Cautionary Note Regarding Forward Looking Statements
This news release contains forward-looking statements and
information within the meaning of the Private Securities Litigation
Reform Act of 1995 and applicable securities laws, including,
without limitation, certain financial and operational expectations
and projections, such as full year 2017 financial guidance, certain
future operational and growth plans and strategies, including,
without limitation, the payment of the deferred purchase price for
the acquisition of the Rational Group, and CFO succession plans,
including the timing thereof. Forward-looking statements and
information can, but may not always, be identified by the use of
words such as "anticipate", "plan", "continue", "estimate",
"expect", "may", "will", "project", "predict", "potential",
"targeting", "intend", "could", "might", "would", "should",
"believe", "objective", "ongoing" and similar references to future
periods or the negatives of these words and expressions. These
statements and information, other than statements of historical
fact, are based on management's current expectations and are
subject to a number of risks, uncertainties, and assumptions,
including market and economic conditions, business prospects or
opportunities, future plans and strategies, projections,
technological developments, anticipated events and trends and
regulatory changes that affect us, our customers and our
industries. Although Amaya and management believe the expectations
reflected in such forward-looking statements and information are
reasonable and are based on reasonable assumptions and estimates,
there can be no assurance that these assumptions or estimates are
accurate or that any of these expectations will prove accurate.
Forward-looking statements and information are inherently subject
to significant business, regulatory, economic and competitive
risks, uncertainties and contingencies that could cause actual
events to differ materially from those expressed or implied in such
statements. Specific risks and uncertainties include, but are not
limited to: the heavily regulated industry in which Amaya carries
on business; interactive entertainment and online and mobile gaming
generally; current and future laws or regulations and new
interpretations of existing laws or regulations with respect to
online and mobile gaming; potential changes to the gaming
regulatory scheme; legal and regulatory requirements; ability to
obtain, maintain and comply with all applicable and required
licenses, permits and certifications to distribute and market its
products and services, including difficulties or delays in the
same; significant barriers to entry; competition and the
competitive environment within Amaya's addressable markets and
industries; impact of inability to complete future acquisitions or
to integrate businesses successfully; ability to develop and
enhance existing products and services and new commercially viable
products and services; ability to mitigate foreign exchange and
currency risks; ability to mitigate tax risks and adverse tax
consequences, including, without limitation, the imposition of new
or additional taxes, such as value-added and point of consumption
taxes, and gaming duties; risks of foreign operations generally;
protection of proprietary technology and intellectual property
rights; ability to recruit and retain management and other
qualified personnel, including key technical, sales and marketing
personnel; defects in Amaya's products or services; losses due to
fraudulent activities; management of growth; contract awards;
potential financial opportunities in addressable markets and with
respect to individual contracts; ability of technology
infrastructure to meet applicable demand; systems, networks,
telecommunications or service disruptions or failures or
cyber-attacks; regulations and laws that may be adopted with
respect to the Internet and electronic commerce and that may
otherwise impact Amaya in the jurisdictions where it is currently
doing business or intends to do business; ability to obtain
additional financing on reasonable terms or at all; refinancing
risks; customer and operator preferences and changes in the
economy; dependency on customers' acceptance of its products and
services; consolidation within the gaming industry; litigation
costs and outcomes; expansion within existing and into new markets;
relationships with vendors and distributors; and natural events.
Other applicable risks and uncertainties include, but are not
limited to, those identified in Amaya's Annual Information Form for
the year ended December 31, 2016,
including under the heading "Risk Factors and Uncertainties", and
in the Q1 2017 MD&A, including under the headings "Risk Factors
and Uncertainties", "Limitations of Key Metrics and Other Data" and
"Key Metrics", each available on SEDAR at www.sedar.com, EDGAR at
www.sec.gov and Amaya's website at www.amaya.com, and in other
filings that Amaya has made and may make with applicable securities
authorities in the future. Investors are cautioned not to put undue
reliance on forward-looking statements or information. Any
forward-looking statement or information speaks only as of the date
hereof, and Amaya undertakes no obligation to correct or update any
forward-looking statement, whether as a result of new information,
future events or otherwise, except as required by applicable
law.
Non-IFRS and Non-U.S. GAAP Measures
This news release references non-IFRS and non-U.S. GAAP
financial measures, including QNY, Adjusted EBITDA, Adjusted Net
Earnings, Adjusted Net Earnings per Diluted Share, and the foreign
exchange impact on revenues (i.e., constant currency). Amaya
believes these non-IFRS and non-U.S. GAAP financial measures will
provide investors with useful supplemental information about the
financial performance of its business, enable comparison of
financial results between periods where certain items may vary
independent of business performance, and allow for greater
transparency with respect to key metrics used by management in
operating its business. Although management believes these
financial measures are important in evaluating Amaya, they are not
intended to be considered in isolation or as a substitute for, or
superior to, financial information prepared and presented in
accordance with IFRS or U.S. GAAP. They are not recognized measures
under IFRS or U.S. GAAP and do not have standardized meanings
prescribed by IFRS or U.S. GAAP. These measures may be different
from non-IFRS and non-U.S. GAAP financial measures used by other
companies, limiting its usefulness for comparison purposes.
Moreover, presentation of certain of these measures is provided for
year-over-year comparison purposes, and investors should be
cautioned that the effect of the adjustments thereto provided
herein have an actual effect on Amaya's operating results. In
addition to QNY, which is defined below under "Key Metrics and
Other Data", Amaya uses the following non-IFRS and non-U.S. GAAP
measures in this release:
Adjusted EBITDA means net earnings (loss) before interest and
financing costs, income taxes, depreciation and amortization,
stock-based compensation, restructuring and certain other
items.
Adjusted Net Earnings means net earnings (loss) before interest
accretion, amortization of intangible assets resulting from
purchase price allocation following acquisitions, deferred income
taxes, stock-based compensation, restructuring, foreign exchange,
and certain other items. Adjusted Net Earnings per Diluted Share
means Adjusted Net Earnings divided by Diluted Shares. Diluted
Shares means the weighted average number of common shares on a
fully diluted basis, including options, warrants and Amaya's
convertible preferred shares. The effects of anti-dilutive
potential common shares are ignored in calculating Diluted Shares.
See note 7 to the Q1 2017 Financial Statements. For the three
months ended March 31, 2017, Diluted
Shares equaled 200,656,549. For the purposes of the full year 2017
financial guidance provided in this release, Diluted Shares equals
between 202,000,000 and 206,000,000 for the high and low ends of
the Adjusted Net Earnings per Diluted Share range,
respectively.
To calculate revenue on a constant currency basis, Amaya
translated revenue for the three months ended March 31, 2017 using the prior year's monthly
exchange rates for its local currencies other than the U.S. dollar,
which Amaya believes is a useful metric that facilitates comparison
to its historical performance.
For additional information on Amaya's non-IFRS measures, see the
Q1 2017 MD&A, including under the headings "Management's
Discussion and Analysis" and "Selected Financial Information—Other
Financial Information".
Key Metrics and Other Data
Amaya defines QAUs as active unique customers (online,
mobile and desktop client) who generated rake, placed a bet or
otherwise wagered (excluding free play, bonuses or other
promotions) on or through an Amaya poker, casino or sportsbook
offering during the applicable quarterly period. Amaya defines
unique as a customer who played at least once on one of Amaya's
real-money offerings during the period, and excludes duplicate
counting, even if that customer is active across multiple verticals
(e.g., both poker and casino). For further clarity, the
exclusions from QAUs noted as "free play, bonuses or other
promotions" include, without limitation, low-stakes and/or
non-raked poker games, but do not include non-cash promotions or
poker tournament fees covered by Amaya as incentives for customers
who ultimately make or place real-money wagers or bets on or
through an Amaya poker, casino or sportsbook offering.
Amaya defines QNY as combined real-money online gaming and
related revenue (excluding certain other revenues, such as revenues
from play-money offerings, live events and branded poker rooms) for
its two business lines (i.e., real-money online poker and
real-money online casino and sportsbook) as reported during the
applicable quarterly period (or as adjusted to the extent any
accounting reallocations are made in later periods) divided by the
total QAUs during the same period. Amaya provides QNY on a U.S.
dollar and constant currency basis. QNY is a non-IFRS measure.
Amaya defines Customer Registrations as the cumulative number of
online real-money and play-money customer registrations on
PokerStars, Full Tilt and related brands.
For additional information on Amaya's key metrics and other
data, see the Q1 2017 MD&A, including under the headings
"Limitations on Key Metrics and Other Data" and "Key Metrics".
SOURCE Amaya Inc.