Poydras Gaming Finance Corp. Announces 2015 Second Quarter Financial Results

Q2 Revenue Increases 136% over the Prior Year Period; Adjusted EBITDA expected to Increase by $5 to $6 Million annually from the Closing of the Acquisition of the Integrity Companies

VANCOUVER, Aug. 31, 2015 /CNW/ - POYDRAS GAMING FINANCE CORP. (TSX-V: PYD) ("Poydras," "PGFC," or the "Company") has released financial results for the second quarter ended June 30, 2015 (all amounts expressed in U.S. dollars unless otherwise stated).

"In the second quarter of 2015, we delivered on our commitment to deploy over 700 revenue generating machines by quarter end and saw continued momentum in growing our leasing revenue," said Peter Macy, CEO of Poydras. "Our successful capital raise after the quarter end, and the support of our current investors, were instrumental in our closing of the acquisition of the Integrity Companies, a transformational acquisition that is expected to add in excess of $5 million in Adjusted EBITDA annually.  We are already seeing benefits from the deal, including a strong reaction from vendors, better terms from suppliers, and new business development opportunities from Integrity's unmatched breadth and depth in their market.  Moving forward we will focus on integrating Integrity's business with our operations and further realizing the benefits of this acquisition, as well as exploring accretive expansion opportunities with new customers and in new markets."

Second Quarter 2015 Highlights & Financial Results
(Comparisons made between fiscal Q2 2015 and fiscal Q2 2014 results, unless otherwise noted)

  • Leasing revenue increased 136% to $910,465 from $386,540 in Q2 2014.
  • Revenue- and interest-generating machines in operation at quarter end totalled 717, up 247 deployments from 470 at the end of Q1 2015.
  • Adjusted EBITDA decreased by $197,251 from $54,421 in Q1 2015 to an Adjusted EBITDA loss of ($142,830) in Q2 2015 partly due to non-recurring expenses related to the acquisition of the Integrity Companies.
  • Net loss for Q2 2015 was $1,530,182 or $0.01 per share compared to a net loss of $8,229,857, or $0.09 loss per share in the prior year period.
  • Cash and cash equivalents on hand totalled $1,047,528 at quarter end.
  • Gaming industry veteran Robert Miodunski and accounting and finance expert David Danziger joined the Board of Directors.

Highlights Subsequent to Quarter End

  • On July 6, 2015, the Company closed a prospectus offering of 109.5 million subscription receipts at C$0.07 per share.
  • On July 20, 2015, each subscription receipt was converted into one common share of the Company as Poydras completed its acquisition of a 100% equity interest in the Integrity Companies.

Fiscal Q2 2015 Financial Results
During the second quarter ended June 30, 2015, the Company focused on the audit of the Integrity Companies and continuing to execute on the long-term gaming machine placement agreement with the Tonkawa Tribe of Indians of Oklahoma to provide 600 Class III gaming machines under a 6-year and 11-month contract.  At the end of Q2 2015, Poydras was generating revenue from 432 machines under the Tonkawa agreement.  Subsequent to quarter end, an additional 82 machines were placed with the Tonkawa Tribe for a total of 514 machines.  During the six months ended June 30, 2015, the Company advanced a total of $4,623,453 in Tonkawa Placement Fees.  After full deployment the 600 machines under the Tonkawa agreement are expected to generate over $5 million in Adjusted EBITDA on an annualized basis.

Q2 2015 leasing revenue was $910,465 compared with $386,540 in Q2 2014.  The increase in revenue was due to generating revenue from an average of 574 gaming machines in Q2 2015 as compared to 201 gaming machines in Q2 2014.

The Company's Adjusted EBITDA decreased by $197,251 from $54,421 in Q1 2015 to negative ($142,830) in Q2 2015. The decrease in Adjusted EBITDA includes recording in Q2 2015 management and employees bonus accruals for 2014 and the first two quarters of 2015 totaling $344,000 (Q1 2015 - $Nil), a portion of which was contingent upon closing of the acquisition of the Integrity Companies.  Q2 2015 Adjusted EBITDA is negatively impacted by approximately $30,000 of legal, audit and consulting costs incurred in connection with the proposed acquisition of the Integrity Companies.  The Company expects that starting in Q3 2015 its Adjusted EBITDA will be positive due to its acquisition of the Integrity Companies and increased machine deployments subsequent to the end of Q2 2015.

The second quarter results include the consolidated accounts of PGFC, Platform 9 Corporation and Poydras Gaming LLC as well as the accounts of Windy Hill Capital LLC and Poydras Street Finance II LLC for the full quarter.

Machine Deployments
Since the completion of its reverse takeover ("RTO") transaction on May 9, 2014, Poydras has increased the number of its revenue- and interest-generating gaming machines from 217 to 717 as at June 30, 2015.  The Company has placed an additional 82 machines during the third quarter of 2015.  The Company's existing contracts, exclusive of the Integrity Companies acquisition, allow it the opportunity to place an additional 276 gaming machines for a total number of 1,075 deployed and deployable machines. 

Acquisition of Integrity Companies
On July 20, 2015, the Company completed its acquisition of the Integrity Companies.  The Integrity Companies are a leading provider of slot machines to Native American-owned casinos in Oklahoma and Texas and have been in operation since 1997.  They are one of the largest gaming equipment and bingo supply distributors in the tribal gaming market, with over 1,600 revenue producing machines across 21 casinos and 12 tribal nations. Subject to certain purchase price adjustments, the preliminary aggregate purchase price (the "Purchase Price") for the Integrity Companies is currently estimated at $11,299,755.

The acquisition of the Integrity Companies is projected to contribute $5 to $6 million of Adjusted EBITDA on an annualized basis.  With the closing of the acquisition of the Integrity Companies, Poydras generates revenue from approximately 2,300 gaming machines across 24 casinos. 

Conference Call
The company will host hold a conference call to discuss the results of its second quarter ended June 30, 2015.  The call will be hosted by Peter Macy, CEO, and Adam Kniec, CFO, on Tuesday, September 1, 2015 at 8:00 a.m. Pacific Time (11:00 a.m. Eastern Time) followed by a question and answer period.  All interested parties are invited to participate. 

Conference Call Details:

DATE:

Tuesday, September 1, 2015



TIME:

8:00 a.m. Pacific Time / 11:00 a.m. Eastern Time




DIAL IN NUMBER:

North America Toll-Free Dial-In Number:  

1 (888) 231-8191


For Toronto:

(647) 427-7450


For Vancouver:

(778) 371-9827



CONFERENCE ID:

13117462



TAPED REPLAY:

1 (855) 859-2056

Available until 12:00 midnight (ET) Tuesday, September 8, 2015

Reference number: 13117462

About Poydras Gaming Finance Corp.:
Poydras Gaming is focused on leasing and financing gaming machines (such as slot machines) and related capital expenditures for existing casinos, new casino developments and gaming machine suppliers in the United States. It owns and finances slot machines including short- and long-term lease contracts across 24 casinos in Oklahoma and Texas and a financing agreement with a gaming machine supplier based out of California. Additional information about the Company can be found on the SEDAR website at www.sedar.com.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Cautionary Note Regarding Forward-Looking Statements
Certain information in this news release is considered forward-looking within the meaning of certain securities laws and is subject to important risks, uncertainties and assumptions. This forward-looking information includes, among other things, information with respect to the Company's beliefs, plans, expectations, anticipations, estimates and intentions. The words "may", "could", "should", "would", "suspect", "outlook", "believe", "anticipate", "estimate", "expect", "intend", "plan", "target" and similar words and expressions are used to identify forward-looking information. The forward-looking information in this news release, including those statements relating to expected EBITDA, and the placement of additional machines by the Company, describes the Company's expectations as of the date of this news release.

The results or events anticipated or predicted in such forward-looking information may differ materially from actual results or events. Material factors which could cause actual results or events to differ materially from such forward- looking information include, among others, risks arising from general economic conditions and adverse industry events.

The Company cautions that the foregoing list of material factors is not exhaustive. When relying on the Company's forward-looking information to make decisions, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. The Company has assumed a certain progression, which may not be realized. It has also assumed that the material factors referred to in the previous paragraph will not cause such forward-looking information to differ materially from actual results or events. However, the list of these factors is not exhaustive and is subject to change and there can be no assurance that such assumptions will reflect the actual outcome of such items or factors.

THE FORWARD-LOOKING INFORMATION CONTAINED IN THIS NEWS RELEASE REPRESENTS THE EXPECTATIONS OF THE COMPANY AS OF THE DATE OF THIS NEWS RELEASE AND, ACCORDINGLY, IS SUBJECT TO CHANGE AFTER SUCH DATE. READERS SHOULD NOT PLACE UNDUE IMPORTANCE ON FORWARD-LOOKING INFORMATION AND SHOULD NOT RELY UPON THIS INFORMATION AS OF ANY OTHER DATE. WHILE THE COMPANY MAY ELECT TO, IT DOES NOT UNDERTAKE TO UPDATE THIS INFORMATION AT ANY PARTICULAR TIME.

Non-IFRS Measures – Poydras Gaming Finance Corp.
Adjusted EBITDA is a financial measure that does not have a standardized meaning under IFRS. Adjusted EBITDA is defined as earnings before financing costs, income taxes, depreciation, amortization, stock based compensation, unrealized foreign exchange, impairment write-down, gain/loss on disposal of assets, finance lease receivable reduction and non-recurring costs. 

Adjusted EBITDA and reconciliation to net income (loss) is as follows:


Quarter Ended

June 30

2015

Quarter Ended

March 31

2015

Quarter Ended

December 31

2014

Quarter Ended

September 30

2014

Quarter Ended

June 30

2014


($)

($)

($)

($)

($)







Net Income (loss)

(1,530,182)

(1,504,323)

(1,394,003)

(1,302,155)

(8,229,857)

Adjustments:







Depreciation of equipment

217,264

217,262

242,260

194,439

157,753


Amortization of placement fees

190,661

72,355

37,968

73,801

60,345


Amortization of intangible assets

73,533

73,533

73,533

73,533

42,697


Finance lease receivable reduction

185,350

49,624

-

-

-


Financing costs

444,342

386,643

363,026

370,253

222,152


Foreign exchange (gain) loss

(84,444)

660,554

275,816

376,287

(165,178)


Impairment write-down

250,000

-

-

-

-


Loss on valuation of convertible debentures

-

-

-

-

3,079,814


Loss of disposal of assets

-

-

56,882

-

-


Reverse takeover public listing

-

-

-

-

4,511,255


Stock based compensation

110,646

98,773

179,779

243,646

268,431

Adjusted EBITDA

(142,830)

54,421

(164,739)

29,804

(52,588)

Adjusted EBITDA includes:







RTO costs

-

-

24,000

38,000

125,000


Integrity acquisition costs

30,000

161,000

154,000

107,000

-


Total normalization adjustments

30,000

161,000

178,000

145,000

125,000


(112,830)

215,421

13,261

174,804

72,412

For additional information please see the SEDAR website at www.sedar.com.

Non-IFRS Measures – Integrity Companies
Adjusted EBITDA is a financial measure that does not have a standardized meaning under IFRS. Adjusted EBITDA is defined as earnings before financing costs, income taxes, depreciation, amortization, gain/loss on disposal of assets and adjustments to income generated from equity accounted investees.

Adjusted EBITDA and reconciliation to net income (loss) is as follows:


12 Months Ended

December 31

2014


($)



Net Income (loss)

431,850

Adjustments:



Depreciation of equipment

3,091,255


Amortization of equipment placement fees

418,550


Financing costs

353,691


Gain on disposal of assets

(68,030)


Aurora A&W JV adjustments (Note 1)




- Depreciation of equipment (at 50%)

1,196,691



- Amortization of placement fees (at 50%)

41,667



- Financing costs (at 50%)

156,953

Adjusted EBITDA

5,622,627





Note 1 – The Integrity Companies own a 50% interest in the Aurora A&W JV.  Included in Integrity Companies' income from equity accounted investees is 50% of Aurora A&W JV's depreciation of equipment, amortization of placement fees, and financing costs.  These expenses are excluded from Integrity Companies' net income to arrive at Adjusted EBITDA.

As there is no standardized method of calculating Adjusted EBITDA, it may not be directly comparable with similarly titled measures used by other companies.  The Company considers Adjusted EBITDA to be a relevant indicator for measuring trends in performance and its ability to generate funds to service its debt and to meet its future working capital and capital expenditure requirements. Adjusted EBITDA is not a generally accepted earnings measure and should not be considered in isolation or as an alternative to net income (loss), cash flows or other measures of performance prepared in accordance with IFRS.

SOURCE Poydras Gaming Finance Corp.

For further information: Keith Richards, Investor Relations | NATIONAL Equicom, T: 416.815.0700, E: krichards@nationalequicom.ca| Peter Macy, CEO, Poydras Gaming Finance Corp., T: (604) 683-8393, E: info@poydrasgaming.com


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