Great Canadian Gaming Announces Third Quarter 2016 Results

RECENT ACQUISITIONS DRIVE 32% ADJUSTED EBITDA(1) GROWTH

COQUITLAM, BC, Nov. 8, 2016 /CNW/ - Great Canadian Gaming Corporation [TSX:GC] ("Great Canadian," or "the Company") today announced its financial results for the three month period ended September 30, 2016 (the "third quarter").

THIRD QUARTER 2016 HIGHLIGHTS

  • Revenues of $151.2 million, increased by 30% when compared to the same period in the prior year.

  • Adjusted EBITDA(1) of $62.9 million, increased by 32% when compared to the same period in the prior year.

  • Shareholder's net earnings of $26.9 million, increased by 23% when compared to the same period in the prior year.

  • Adjusted shareholders' net earnings(1) of $27.4 million, increased by 21% when compared to the same period in the prior year. Adjusted shareholders' net earnings(1) per common share of $0.45 cents, increased by 32% when compared to the same period in the prior year.

  • Construction of the new Shorelines Casino in Belleville, Ontario targeted to reach completion by the end of 2016.

  • The Company submitted a bid on the Request for Proposal ("RFP") for Ontario Lottery and Gaming Corporation's ("OLG") Gaming Bundle 4 (Southwest) and has recently been pre-qualified to submit an RFP for OLG's Gaming Bundle 6 (West GTA) and Gaming Bundle 1 (Ottawa).

  • The Company has, subject to applicable gaming regulatory registration requirements, engaged Andreas Thompson to the role of Chief Financial Officer. Mr. Thompson's appointment will become effective upon receipt of regulatory approvals which are anticipated to be received by the end of 2016.

_____________________

(1)

Adjusted EBITDA and adjusted shareholders' net earnings are non-IFRS measures as described in the disclaimer section of this press release. A reconciliation of these measures to shareholders' net earnings is included on page 4 of this press release.

 

Great Canadian generated revenues of $151.2 million during the third quarter, an increase of 30% when compared to the same period in the prior year, primarily resulting from recent acquisitions.  The Company acquired Casino New Brunswick in October 2015 and in January 2016 acquired Ontario Lottery and Gaming Corporation's Gaming Bundle 2 (East), which consists of Shorelines Casino Thousand Islands and Shorelines Slots at Kawartha Downs.  Additionally, Great Canadian has seen increases in revenue at the majority of existing properties, with the exception of River Rock Casino Resort ("River Rock").

Adjusted EBITDA during the third quarter was $62.9 million, an increase of 32% when compared to the same period in the prior year.  This improvement was primarily due to the previously mentioned acquisitions.

The Company's adjusted shareholders' net earnings for the third quarter were $27.4 million, an increase of 21% when compared with the same period in the prior year.  The 32% improvement in Adjusted EBITDA was partially offset by increased amortization from the acquisitions and higher share-based compensation.  Adjusted shareholders' net earnings per common share of $0.45 cents, increased by 32% when compared to the same period in the prior year due to both the 21% increase in adjusted shareholders' net earnings and the 9% reduction in weighted average number of shares outstanding following the repurchase of common shares during the twelve months ended September 30, 2016.

"Great Canadian generated improvements to both revenues and Adjusted EBITDA at all of its property groups during the third quarter of 2016, when compared to the same period in the prior year, with the exception of River Rock Casino Resort," stated Rod Baker, the Company's President and Chief Executive Officer.  "River Rock has experienced a decline in high limit table play volume since 2015; however, the property's table drop and hold started to show improvement during the third quarter of 2016, when compared to the previous three quarters.  In addition, River Rock continued to generate encouraging slot machine revenues during the third quarter, generating the highest quarterly slot win in the property's history."

"Great Canadian's revenues during the third quarter of 2016 benefited from the additional revenues attributable to the acquisitions of Casino New Brunswick, Shorelines Casino Thousand Islands and Shorelines Slots at Kawartha Downs.  We are pleased with the performance of these new additions in their initial year and look forward to the addition of the Shorelines Casino Belleville, which is currently under construction and scheduled to be completed by the end of 2016."

"In September 2016, we submitted a bid on OLG's Request for Proposal for the Southwest Gaming Bundle, of which the Company intends to be the majority partner if selected.  In addition to previously being pre-qualified to bid on OLG's Request for Proposal for Gaming Bundle 5 (GTA), we were notified in October 2016 that we are pre-qualified to submit bids on OLG's Request for Proposals for Gaming Bundle 6 (West GTA) and Gaming Bundle 1 (Ottawa)."

"Our business continues to perform well, notably boosted by the successful integration of OLG's East Gaming Bundle and the addition of Casino New Brunswick," concluded Mr. Baker.  "Given our strong financial position, the Company is well-positioned to pursue other potential growth opportunities in Ontario and elsewhere."

Great Canadian will host a conference call for investors and analysts today, November 8, 2016, at 2:00 PM Pacific Time in order to review the financial results for the period ended September 30, 2016.  To participate in the conference call, please dial 416-764-8609, 778-383-7417, or toll free at 1-888-390-0605.  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/financials.  Investors using the website should allow 15 minutes for the registration and installation of any necessary software.  A replay of the call will also be available at www.gcgaming.com/financials.

ABOUT GREAT CANADIAN GAMING CORPORATION
Great Canadian Gaming Corporation is a Canadian based company that operates gaming, entertainment and hospitality facilities in British Columbia, Ontario, New Brunswick, Nova Scotia, and Washington State.  The Company has 20 gaming properties, which consist of twelve casinos, including a four Diamond resort hotel in Richmond, British Columbia and a four star hotel in Moncton, New Brunswick, four horse racetrack casinos, three community gaming centres and one commercial bingo hall.  A key element of Great Canadian's business model is its commitment to social responsibility.  "PROUD of our people, our business, our community" is Great Canadian's brand that unifies the company's community, volunteering and social responsibility efforts.  Under the PROUD program, Great Canadian annually invests over $2.5 million in our communities, and in 2015, over 3,600 charitable organizations were supported by Great Canadian.  In each Canadian gaming jurisdiction, a significant portion of gross gaming revenue from gaming facilities is retained by our crown partners on behalf of their provincial government for the purpose of supporting programs like healthcare, education and social services.

Please refer to the Consolidated Financial Statements and Management's Discussion and Analysis ("MD&A") at www.gcgaming.com (available on November 8, 2016) or www.sedar.com (available on November 9, 2016) for detailed financial information and analysis.

The financial results on the following page are unaudited and prepared by management.  Expressed in millions of Canadian dollars, except for per share information.

GREAT CANADIAN GAMING CORPORATION

Financial Highlights and Adjusted Shareholders' Net Earnings

(Unaudited - Expressed in millions of Canadian dollars, except for per share information)




Three months ended September 30,


Nine months ended September 30,




2016


2015

% Chg



2016


2015

% Chg

Revenues

$

151.2

$

116.3

30%


$

422.3

$

337.4

25%

Human resources


50.7


40.4

25%



151.3


121.7

24%

Property, marketing and administration


37.6


28.4

32%



109.3


80.2

36%




88.3


68.8

28%



260.6


201.9

29%

Adjusted EBITDA(1)

$

62.9

$

47.5

32%


$

161.7

$

135.5

19%














Adjusted EBITDA as a % of Revenues (1)


41.6%


40.8%




38.3%


40.2%















Less













Amortization


13.8


9.8




41.1


28.9



Share-based compensation


2.5


(0.1)




5.1


3.7



Interest and financing costs, net


9.0


8.1




26.3


23.8



Restructuring and other


0.8


2.0




5.1


4.8



Other expenses


0.1


(2.1)




1.2


(3.9)



Income taxes


9.8


8.0




22.8


21.2


Shareholders' net earnings

$

26.9

$

21.8

23%


$

60.1

$

57.0

5%














Shareholders' net earnings per common share













Basic

$

0.45

$

0.33



$

0.96

$

0.83



Diluted

$

0.44

$

0.32



$

0.95

$

0.81















Weighted average shares outstanding













Basic


60,346


66,396




62,281


68,375



Diluted


61,447


67,772




63,267


70,017























September 30,
2016

December 31,
2015

% Chg

Total assets







$

1,037.9

$

998.1

4%

Cash and cash equivalents







$

195.9

$

207.5

(6%)

Long-term debt 







$

478.0

$

443.0

8%

 

The following table reconciles shareholders' net earnings to adjusted shareholders' net earnings.




















Three months ended September 30,


Nine months ended September 30,






2016


2015

% Chg



2016


2015

% Chg

Shareholders' net earnings


$

26.9

$

21.8

23%


$

60.1

$

57.0

5%


Items of note















Pre-opening costs for Ontario East
Gaming Bundle



-


-




0.4


-




Restructuring severance costs



0.7


1.4




2.7


3.1




Other



-


0.3




0.4


0.4




Uneconomic lease provision due to
Kent casino closure 



-


-




-


1.1




Jackpot and marketing fund liabilities















reversed due to Kent casino closure



-


-




-


(0.3)




Non-recurring payment received for
right of way access



-


(0.5)






(0.5)




Income taxes on the above items
of note



(0.2)


(0.4)




(0.9)


(0.9)


Adjusted shareholders' net earnings (1)


$

27.4

$

22.6

21%


$

62.7

$

59.9

5%
















Adjusted shareholders' net earnings per
common share (1)















Basic


$

0.45

$

0.34



$

1.01

$

0.88




Diluted


$

0.45

$

0.33



$

0.99

$

0.86


(1)

Adjusted EBITDA and adjusted shareholders' net earnings are non-IFRS measures as described in the disclaimer section of this press release.

 

After adjusting for the above items of note, the Company's adjusted shareholders' net earnings increased by $4.8 million in the third quarter of 2016, when compared to the same period in the prior year.

DISCLAIMER

This press 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 and objectives (including participation in Ontario's gaming modernization program and possible expansion of gaming in British Columbia), 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 beyond the terms of the signed Ontario Lease Agreements and Ontario Racing Agreements, the impact of new conditions imposed on certain VIP players in British Columbia, the impact of unionization activities, the Company's position on its claim against the British Columbia Lottery Corporation ("BCLC") with respect to the collection of marketing contributions, the Company's beliefs about the outcome of its notices of objection challenging the Canada Revenue Agency's reassessments and its tax position on its facility development commission prevailing, the terms and expected benefits of the normal course issuer bid, and expectations and implications of changes in legislation and government policies.  Forward-looking information may be identified by words such as "anticipate", "believe", "expect", or similar expressions.  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 unknown risks, uncertainties, and 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 services agreements with lottery corporations; changes to gaming laws that may impact the operational services agreements, pending, proposed or unanticipated regulatory or policy changes (including those that impact VIP play); the outcome of restructuring of gaming in Ontario; the Company's ability to obtain and renew required business licenses, leases, and operational services agreements; unanticipated fines, sanctions and suspensions imposed on the Company by its regulators; impact of global liquidity and credit availability; actual and possible reassessments of the Company's prior tax filings by tax authorities; the results of the Company's notices of objection and subsequent appeals challenging reassessments received by the Canada Revenue Agency; the Company's tax position on its facility development commission prevailing; the results of the Company's litigation with BCLC; 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 timing and results of collective bargaining negotiations; adverse changes in the Company's labour relations; the Company's ability to manage its capital projects and its expanding operations; 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 rights with respect to some 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; demand for new products and services; fluctuations in operating results; economic uncertainty and financial market volatility; technology dependence; and privacy breaches or data theft.  The Company cautions that this list of factors is not exhaustive.  Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking information, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended.  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 2015, and as identified in the Company's disclosure record on SEDAR at www.sedar.com.

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 forward-looking information contained herein is made as of the date hereof, is subject to change after such date, and is expressly qualified in its entirety by cautionary statements in this press release.  Forward-looking information is provided for the purpose of providing information about management's current expectations and plans and allowing investors and others to get a better understanding of the Company's operating environment.  The Company undertakes no obligation to publicly revise forward-looking information to reflect subsequent events or circumstances except as required by law.

The Company has included non-International Financial Reporting Standards ("non-IFRS") measures in this press release.  Adjusted EBITDA, as defined by the Company, means earnings before interest and financing costs (net of interest income), income taxes, depreciation and amortization, share-based compensation, restructuring and other, and foreign exchange (gain) loss and other.  Adjusted EBITDA is derived from the condensed interim consolidated statements of earnings, and can be computed as revenues less human resources expenses, and property, marketing and administration expenses.  The Company believes Adjusted EBITDA is a useful measure because it provides information to management about the operating and financial performance of the Company and its ability to generate operating cash flow to fund future working capital needs, service outstanding debt, and fund future capital expenditures.  Adjusted EBITDA is also used by the investors and analysts for the purpose of valuing the Company.  Adjusted shareholders' net earnings, as defined by the Company, means shareholders' net earnings plus or minus items of note that management may reasonably quantify and that it believes will provide the reader with a better understanding of the Company's underlying business performance.  Items of note may vary from time to time and in this press release include pre-opening costs for the Ontario East Gaming Bundle, restructuring severance costs, uneconomic lease provision due to Kent casino closure, jackpot and marketing fund liabilities reversed due to Kent casino closure, non-recurring payment received for right of way access, other and the related income taxes thereon.

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

GREAT CANADIAN GAMING CORPORATION [TSX:GC]
95 Schooner Street
Coquitlam, BC
V3K 7A8
(604) 303-1000
Website: www.gcgaming.com 

SOURCE Great Canadian Gaming Corporation

For further information: For enquiries: ir@gcgaming.com or Ms. Tanya Ruskowski, Executive Assistant to the President and Chief Executive Officer and the Chief Financial Officer, (604) 303-1000; For media enquiries: Mr. Chuck Keeling, Vice-President, Stakeholder Relations and Responsible Gaming, (604) 247-4197

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