Great Canadian Gaming announces first quarter 2012 results
RICHMOND, BC, May 9, 2012 /CNW/ - Great Canadian Gaming Corporation [TSX:GC] ("Great Canadian" or "the Company") today announced its financial results for the three month period ended March 31, 2012 ("first quarter of 2012").
FIRST QUARTER 2012 HIGHLIGHTS
(Amounts presented in millions of Canadian dollars, except for per share information)
12% increase in revenues
25% increase in EBITDA(1)
Recorded non-cash asset impairment charges of $57.4 million related to
Flamboro Downs and Georgian Downs
- Repurchased 3.7 million common shares at an average price of $8.15 during March and April 2012
|EBITDA as a % of Revenues||37.9%||34.0%|
|Net (loss) earnings||$||(31.9)||$||5.7|
|Net (loss) earnings per common share|
|Long-term debt & Derivative liabilities, excluding current portion||$||395.0||$||390.9|
(1) EBITDA is a non-IFRS measure as defined in the Disclaimer section of this press release.
For the first quarter of 2012, Great Canadian Gaming Corporation recorded revenues of $102.8 million, a $10.8 million, or 12%, increase from the first quarter of 2011. EBITDA was $39.0 million, a $7.7 million, or 25%, increase from the first quarter of 2011.
The increase in consolidated revenues was primarily due to increases at River Rock Casino Resort ("River Rock"), the Other BC Casinos, the Nova Scotia Casinos, and Boulevard Casino ("Boulevard") compared to the prior year. These improvements were partially offset by decreased racetrack revenues at the Company's BC Racinos.
The $7.7 million improvement in EBITDA in the first quarter of 2012 was primarily due to the increase in the Company's consolidated revenues. EBITDA as a percentage of revenues for the first quarter of 2012 was 37.9%, a 3.9 percentage point increase from the first quarter of 2011.
Despite the improved EBITDA, net earnings decreased by $37.6 million in the first quarter of 2012, when compared to the first quarter of 2011. This decrease was due to non-cash impairment charges of $57.4 million associated with Georgian Downs and Flamboro Downs. These charges were a result of the Ontario Lottery and Gaming Corporation ("OLG") terminating the site holder agreements for the slot machines at these two properties, effective March 31, 2013, as it did for all other racetracks in the province.
"Great Canadian's financial results for the first quarter of 2012 reflect improvements within several of the Company's local markets," stated Rod N. Baker, Great Canadian's President and Chief Executive Officer. "River Rock had a strong quarter, witnessing increases in table drop, slot coin-in and table hold percentage. The above-average table hold percentage contributed approximately $5.2 million of the property's $9.7 million total quarterly revenues increase compared to the prior year. This percentage will likely revert toward its trailing average over time. The table drop and slot coin-in improvements, by contrast, were aided by the recently completed enhancements to River Rock's offerings.
"Boulevard's modest increase in table drop and food and beverage revenues during the first quarter of 2012 resulted in the first year-over-year revenue increase at the property since the second quarter of 2008. This is an encouraging sign for the property, and we continue to focus on improving its guest experience as we prepare for its redevelopment. This redevelopment, which will both add new amenities to the property and enhance its gaming offerings, will commence during the second quarter of 2012, and is anticipated to conclude by the fourth quarter of 2013.
"In March of 2012, the provincial government in Ontario directed the OLG to end the 'Slots at Racetracks' program in that province. As a result, on March 29, 2012, the OLG provided notice that the site holder agreements for the slot machines at our two Ontario racetracks will terminate on March 31, 2013. Together, these two properties generated approximately 10% of Great Canadian's consolidated EBITDA during the first quarter of 2012, and approximately 13% during the twelve months of 2011. As the future cash flows associated with Georgian Downs and Flamboro Downs are uncertain, the Company recognized goodwill and long-lived asset impairments associated with these businesses during the quarter, as required under IFRS. We remain in discussions with the OLG regarding both our existing Ontario operations and the potential for new opportunities that may arise from the province's efforts to modernize its gaming offerings.
"Great Canadian is financially prepared for any new opportunities that may arise in Ontario or elsewhere. The Company's secure financial position, evident in both our cash balance and undrawn $350 million revolving credit facility, provide us with the flexibility to take advantage of these and other potential opportunities for value creation. During March and April of 2012, the Company devoted $29.8 million of these cash resources toward repurchasing 3.7 million of its common shares at an average price of $8.15, thereby increasing the ownership percentage of our existing shareholders by 4.6%.
"Finally, I am pleased to announce that the Board of Directors has appointed Mr. William A. Dimma to the position of Chairman of the Board and Mr. Kiran S. Rao to the position of Chief Financial Officer. Mr. Dimma, who joined Great Canadian's Board in November of 2011, has a wealth of experience as both a corporate and charitable Director and is the author of two books on corporate governance. Mr. Rao has held the position of Chief Financial Officer in an interim capacity since August of 2010. He is a Chartered Accountant who has been with the Company since February of 2006, serving as Vice President, Corporate Finance and Controller since May of 2006. I would like to congratulate both Mr. Dimma and Mr. Rao on their appointments by the Board. We look forward to the benefit of their contributions."
Great Canadian will host a conference call for investors and analysts today, May 9, 2012, at 2:00 PM Pacific Time to review the financial results for the period ended March 31, 2012. To participate in the conference call, please dial 647-427-7450, or toll free at 888-231-8191 (Passcode: 72887517). Questions will be reserved for institutional investors and analysts. Interested parties may also access the call via the Investor Relations section of the Company's website, www.gcgaming.com; please allow 15 minutes to register and install any necessary software. A replay of the call will also be available at www.gcgaming.com.
ABOUT GREAT CANADIAN GAMING CORPORATION
Great Canadian Gaming Corporation is a multi-jurisdictional gaming, entertainment and hospitality operator with operations in British Columbia, Ontario and Nova Scotia, and Washington State. The Company operates ten casinos, a thoroughbred racetrack that offers slot machines, three standardbred racetracks (two offer slot machines and one offers both slot machines and table games), two community gaming centres, a bingo hall, a resort with two hotels, a conference centre and a marina, two show theatres and various associated food and beverage and entertainment facilities. As of March 31, 2012, the Company had approximately 4,000 employees in Canada and 600 in Washington State. Further information is available on the Company's website, www.gcgaming.com.
Please refer to the Condensed Consolidated Financial Statements and Management's Discussion and Analysis ("MD&A") at www.gcgaming.com available on May 9, 2012 or www.sedar.com (available on May 10, 2012) for detailed financial information and analysis.
The financial results on the following pages are unaudited and prepared by management. Expressed in millions of Canadian dollars, except for per share information.
GREAT CANADIAN GAMING CORPORATION
Consolidated Results of Operations
(Unaudited - Expressed in millions of Canadian dollars, except for per share information)
|Facility Development Commission||8.9||7.5||19%|
|Hospitality and other revenues||18.0||15.7||15%|
|Less: Promotional allowances||(4.7)||(3.3)||42%|
|Property, marketing and administration||24.7||23.3||6%|
|Human resources as a % of Revenues before Promotional allowances||36.4%||39.2%|
|EBITDA as a % of Revenues||37.9%||34.0%|
|Impairment of long-lived assets||54.2||-|
|Impairment of goodwill||3.2||-|
|Interest and financing costs, net||7.1||6.7|
|Net (loss) earnings||$||(31.9)||5.7|
|Net (loss) earnings per common share|
|Weighted average number of common shares (in thousands)|
GREAT CANADIAN GAMING CORPORATION
Condensed Consolidated Statements of Financial Position
(Unaudited - Expressed in millions of Canadian dollars)
|Cash and cash equivalents||$||138.8||$||134.7|
|Prepaids, deposits and other assets||6.1||6.6|
|Property, plant and equipment||638.1||663.6|
|Deferred tax assets||10.1||9.1|
|Accounts payable and accrued liabilities||$||62.7||$||59.0|
|Income taxes payable||0.5||0.8|
|Deferred credits, provisions and other liabilities||24.5||23.7|
|Deferred tax liabilities||55.5||66.2|
|Share capital and contributed surplus||348.0||356.5|
|Accumulated other comprehensive loss||(4.2)||(6.5)|
This news release contains certain "forward-looking information" or statements within the meaning of applicable securities legislation. Forward-looking information is based on the Company's current expectations, estimates, projections and assumptions that were made by the Company in light of its historical trends and other factors. All information or statements, other than statements of historical fact, are forward-looking information including statements that address expectations, estimates or projections about the future, the Company's strategy for growth, expected future expenditures, costs, operating and financial results, expected impact of future commitments, the future ability of the Company to operate the Georgian Downs and Flamboro Downs facilities and their profitability, and the ability of the Company to enter into new agreements for the operation of gaming facilities at Georgian Downs and Flamboro Downs. Such forward-looking information is not a guarantee of future performance and may involve a number of risks and uncertainties. Although forward-looking information is based on information and assumptions that the Company believes are current, reasonable and complete, they are subject to a number of factors that could cause actual results to vary materially from those expressed or implied by such forward-looking information. Such factors may include, but are not limited to: terms of operational service agreements with lottery corporations; changes to gaming laws that may impact our operational service agreements; pending, proposed or unanticipated regulatory or policy changes; unanticipated fines, sanctions and suspensions imposed on the Company by its regulators; impact of global liquidity and credit availability; adverse tourism trends and further decreases in levels of travel, leisure and consumer spending; competition from established competitors and new entrants in the gaming business; dependence on key personnel; the risk that systems, procedures and controls may not be adequate to meet regulatory requirements or to support current and expanding operations; potential undisclosed liabilities and capital expenditures associated with acquisitions; negative connotations linked to the gaming industry; First Nations claims with respect to some Crown land on which we conduct our operations; future or current legal proceedings; construction disruptions; financial covenants associated with credit facilities and long-term debt; credit, liquidity and market risks associated with our financial instruments; interest and exchange rate fluctuations; non-realization of cost reductions and synergies; demand for new products and services; fluctuations in operating results; and economic uncertainty and financial market volatility. These factors and other risks and uncertainties are discussed in the Company's continuous disclosure documents filed with the Canadian securities regulatory authorities from time to time, including in the "Risk Factors" section of the Company's Annual Information Form for fiscal 2011, and as identified in the Company's disclosure record on SEDAR at www.sedar.com. The forward-looking information in documents incorporated by reference speak only as of the date of those documents. Readers are cautioned not to place undue reliance on the forward-looking information, as there can be no assurance that the plans, intentions, or expectations upon which they are based will occur. The Company undertakes no obligation to publicly revise forward-looking information to reflect subsequent events or circumstances except as required by law. The forward-looking information contained herein is made as of the date hereof and is expressly qualified in its entirety by cautionary statements in this news release.
The Company has included non-International Financial Reporting Standards ("non-IFRS") measures in this news release. EBITDA as defined by the Company means Earnings Before Interest and financing costs (net of interest income), Income Taxes, Depreciation and Amortization, stock-based compensation, impairment of long-lived assets and goodwill, and foreign exchange gain and other. EBITDA is derived from the condensed consolidated statements of earnings (loss), and can be computed as revenues less human resources expenses and property, marketing and administration expenses.
Readers are cautioned that these non-IFRS definitions are not recognized measures under International Financial Reporting Standards ("IFRS"), do not have standardized meanings prescribed by IFRS, and should not be construed to be alternatives to net earnings determined in accordance with IFRS or as indicators of performance or liquidity or cash flows. The Company's method of calculating these measures may differ from methods used by other entities and accordingly our measures may not be comparable to similarly titled measures used by other entities or in other jurisdictions. The Company uses these measures because it believes they provide useful information to both management and investors with respect to the operating and financial performance of the Company.
ON BEHALF OF
GREAT CANADIAN GAMING CORPORATION
"Original Signed By Rod N. Baker"
Rod N. Baker
President and Chief Executive Officer
For further information:
GREAT CANADIAN GAMING CORPORATION [TSX:GC]
Suite #350 - 13775 Commerce Parkway
For investor enquiries:
Ms. Tanya Ruskowski
Executive Assistant to the President and Chief Executive Officer and the Chief Financial Officer
For media enquiries:
Mr. Howard Blank
Vice-President, Communications, Entertainment & Responsible Gaming