Revenue grows 120% on a year-over-year basis; Corporation reaffirms 2013 full year revenue and adjusted EBITDA guidance
MONTREAL, Nov. 28, 2013 /CNW/ - Amaya Gaming Group Inc. ("Amaya" or the "Corporation") (TSX: AYA), an entertainment solutions provider for the regulated gaming industry, today announced its financial results for the three and nine months ended September 30, 2013. All amounts are stated in Canadian dollars unless otherwise noted.
|FOR THE THREE AND NINE MONTH PERIODS ENDED SEPTEMBER 30|| Q3 2013
| Q3 2012
| YTD 2013
| YTD 2012
|Adjusted EBITDA1 margin (as % of revenue)||36%||33%||31%||16%|
|Adjusted net earnings (loss)2||3,010,266||3,316,397||3,587,315||2,120,517|
|Basic and diluted adjusted net earnings (loss)2 per share||0.03||0.04||0.04||0.04|
|1||Adjusted EBITDA as defined by the Corporation means earnings before interest and financing costs (net of interest income), income taxes, depreciation and amortization, stock-based compensation, restructuring and other non-recurring costs, and non-controlling interests. Adjusted EBITDA is a non-IFRS measure.|
|2||Adjusted Net Earnings (loss) as defined by the Corporation means Net earnings (loss) before interest accretion, amortization of Intangible assets resulting from purchase price allocation following acquisitions, stock-based compensation, foreign exchange, and other non-recurring costs. Adjusted Net Earnings (loss) is a non-IFRS measure.|
Q3 2013 AND SUBSEQUENT HIGHLIGHTS
- On September 4, Amaya announced that one of its wholly owned subsidiaries Cadillac Jack executed a 10-year definitive agreement with a large customer in Mexico pursuant to which it will place 2,000 Class II gaming units in the customer's locations over the next 12 to 24 months.
- On September 24, the Corporation announced that it had entered into an agreement with a subsidiary of Caesars Interactive Entertainment, Inc. ("CIE") to provide both its Amaya Game Office online gaming platform and extensive suite of online casino gaming content for both web and mobile applications of the website portal caesarscasino.com in New Jersey, subject to all applicable licensing and regulatory approvals. Under the terms of the agreement, Amaya anticipates receiving a share of the revenue generated by the website portal in New Jersey and a percentage of the revenue generated by the online casino games licensed by Amaya to CIE for use in the portal in New Jersey.
- On September 30, Amaya announced that it had received final approval from Toronto Stock Exchange ("TSX") to graduate from TSX Venture Exchange and list its common shares, common share purchase warrants and unsecured non-convertible subordinated debentures on the TSX.
- On October 21, Amaya announced that it entered into a share purchase agreement with Goldstar Acquisitionco Inc. for the purchase of one of its subsidiaries, WagerLogic Malta Holdings Ltd. ("Wagerlogic") for cash consideration of $70 million (the "Purchase Price"). Following the closing of the purchase (the "Closing Date"), Amaya would not hold any ownership interest in WagerLogic but would continue to supply WagerLogic with software, services and content to power its online casino operations pursuant to a services agreement. On November 28, the Corporation filed on SEDAR an amended and restated share purchase agreement (the "Amended Agreement") with Goldstar Acquisitionco Inc. for the purchase of WagerLogic, pursuant to which the Purchase Price will remain $70 million, to be satisified through cash consideration of $60 million and a vendor take-back in the form of a promissory note of $10 million, bearing interest at 6.0% per annum payable semi-annually in arrears starting in the second year following the Closing Date and due on the fourth anniversary of the Closing Date. The Amended Agreement also includes an increase in the agreed working capital for WagerLogic. The Purchase Price is subject to customary post closing adjustments. Closing of the purchase is still anticipated on or about December 31, 2013 as originally announced.
- On October 22, the Corporation announced that it entered into an agreement to provide technology, including a poker platform, casino content and poker services for goldennuggetpoker.com and goldennuggetcasino.com (the "Brands"), the online gaming brands of Golden Nugget Hotel & Casino, subject to all applicable licensing and regulatory approvals. Under the terms of the agreement, Amaya would receive a share of the revenue generated from the Brands, subject to necessary regulatory requirements.
- On November 7, the Corporation announced that it entered into a licensing agreement with bwin.party digital entertainment plc ("bwin.party") to provide a wide selection of online casino gaming content in New Jersey, subject to all applicable jurisdictional licensing requirements and regulatory approvals. Under the agreement, online gaming websites provided by bwin.party to its licensed gaming operator partner Borgata Hotel Casino & Spa in New Jersey including borgatacasino.com and nj.partypoker.com, will be integrated with Amaya's Casino Gaming System. The integration will provide players with access to an extensive selection of Amaya's proprietary and third-party online casino games.
- During the quarter, Amaya entered into an agreement for its poker platform, which is distributed in the U.S. by SHFL entertainment, to power online poker for the website portal betfaircasino.com (to which letsplaynj.com also redirects) in New Jersey. Betfair is the platform provider for Trump Plaza Hotel and Casino.
- During the quarter, Amaya completed the sale under finance lease of a significant quantity of refurbished gaming machines, which have been placed through a distributor into various countries in Latin America.
"The third quarter and subsequent period has been immense for Amaya and our partners as we took our first steps into the U.S. real money gaming market, our next major opportunity for growth in our online business," said David Baazov, President and CEO of Amaya. "Our technology, content and services are supporting the launch of multiple web and mobile gaming portals operated by gaming operators with strong brands in New Jersey, which officially launched real money online gaming this week. We believe we are currently delivering the most extensive offering of all gaming suppliers to operators in the market. Our Casino Gaming System is providing operators with access to our extensive library of proprietary casino games as well as high quality third party content, and we have officially launched our new Amaya Game Office gaming platform in North America as part of our partnership with CIE.
"New Jersey is a once in a lifetime opportunity and we have positioned ourselves to be a market leader in the state through acquisitions we made in 2011 and 2012 to build out our online gaming offering as well as subsequent investments we have made, notably to our technology, to ensure we were prepared for our entry into the U.s. market," continued Mr. Baazov. "Our footprint and partnerships with leading gaming operators and brands also presents us with the opportunity to grow quickly in the U.S. as regulation evolves in other states."
"Our interactive revenues declined in Europe in the third quarter, primarily due to a shift in resources towards completing our preparations for entry into New Jersey, which carried strict timelines," continued Mr. Baazov. "However, we are currently addressing the backlog of platform launches and we therefore anticipate revenues to increase in Europe.
"As for our land based solutions, during the third quarter we continued to increase our installed base of gaming machines in Latin America and the United States, including in new states where we have received licensing approvals, and we continue to apply for more state licenses in order to expand our footprint within the Class III gaming machine market.
"Finally, the transactions we announced earlier this year, the acquisition of Diamond Game and the sale of WagerLogic, are progressing according to our expectations and we continue to anticipate both transactions will be completed within the fourth quarter," Mr. Baazov concluded.
Revenue for the three month period ended September 30, 2013 was $40.21 million compared to $18.32 million for the three month period ended September 30, 2012, representing an increase of 120%. The increase is primarily attributable to sales under finance lease of refurbished gaming machines placed in Latin America and the addition of revenues through the acquisition of Cadillac Jack Inc. ("Cadillac Jack") on November 5, 2012. Revenue for the nine month period ended September 30, 2013 was $115.52 million compared to $39.24 million for the nine month period ended September 30, 2012, representing an increase of 194%. The increase is primarily attributable to the acquisitions of CryptoLogic Limited ("CryptoLogic") on April 2, 2012, Ongame Network Limited ("Ongame") on November 1, 2012, and Cadillac Jack as well as the abovenoted sales under finance lease of gaming machines. On a regional basis, revenue in 2013 has been primarily concentrated in North America, Europe, and Latin America and the Caribbean.
Total expenses, comprised of cost of goods sold, sales and marketing, general and administrative, and financial expenses as well as acquisition-related costs, were $40.34 million for the three month period ended September 30, 2013, compared to $16.27 million for the three month period ended September 30, 2012, an increase of 148%. The percentage increase was driven by higher expenses primarily due to the acquisitions of CryptoLogic, Ongame and Cadillac Jack and investments to prepare the Corporation for entry into the newly regulated real money online gaming market in the United States, partially offset by a positive impact from foreign exchange versus a negative impact in the third quarter of 2012. Total expenses for the nine month period ended September 30, 2012 were $46.66 million compared to $130.25 million for the nine month period ended September 30, 2013, an increase of 179%. The percentage increase was driven by higher expenses primarily due to the acquisitions of CryptoLogic, Ongame and Cadillac Jack and investments to prepare the Corporation for entry into the newly regulated real money online gaming market in the United States, partially offset by lower acquisition related costs than in 2012.
Net loss was $3.47 million, or $(0.04) per basic and diluted common share, in the third quarter of 2013 versus net income of $0.88 million, or $0.01 per basic and diluted common share, in the same quarter of 2012. The loss in the third quarter of 2013 is primarily due to the provision recorded in income taxes. Net loss for the nine months ended September 30, 2013 was $22.35 million, or $(0.25) per basic and diluted common share, compared to $6.40 million, or $ (0.11) per basic and diluted common share, in the same period in 2012. The increased loss was driven by higher expenses primarily due to the acquisitions of CryptoLogic, Ongame and Cadillac Jack, investments to prepare the Corporation for entry into the newly regulated real money online gaming market in the United States, and income tax provision, partially offset by higher revenues and lower acquisition related costs.
Adjusted EBITDA was $14.64 million in the third quarter of 2013, or 36% of total revenue, compared to $6.06 million, or 33% of total revenue, in the third quarter of 2012, and $10.36 million, or 28% of total revenue, in the second quarter of 2013.
|Adjusted EBITDA Reconciliation||Q3 2013||Q3 2012||YTD Q3 2013||YTD Q3 2012|
|Current income taxes||$||7,573,872||$||549,382||$||11,296,045||$||613,116|
|Deferred income taxes||$||(4,237,356)||$||614,508||$||(3,672,137)||$||(718,140)|
|Depreciation of property and equipment||$||2,935,680||$||562,234||$||9,450,805||$||1,501,416|
|Amortization of deferred development costs||$||395,551||$||75,719||$||814,839||$||229,778|
|Amortization of intangible assets||$||5,057,513||$||1,126,250||$||13,500,669||$||3,202,656|
|Termination of employment agreements||$||868,485||$||137,269||$||2,719,232||$||1,562,042|
|Termination of agency agreements||$||-||$||-||$||100,834||$||749,000|
|Receivables related to terminated operations||$||-||$||78,429||$||-|
|Other one-time costs||$||991,375||$||-||$||3,547,998||$||-|
|Adjusted Net Income Reconciliation $||Q3 2013||Q3 2012||YTD 2013||YTD 2012|
|Amortization of purchase price allocation Intangibles||3,757,432||509,677||10,696,584||1,545,197|
|Adjusted Net income||3,010,266||3,316,397||20,221,987||2,120,517|
2013 FULL YEAR FINANCIAL GUIDANCE
The Corporation reaffirmed its full year 2013 guidance of revenue in the range of $156 to $167 million and adjusted EBITDA in the range of $55 to $64 million.
"We foresee growth in revenue in the last quarter of this year, including from the deployment of gaming machines in North America and Latin America and higher revenues in Europe as we handle some of the backlog in our software licensing business," said Mr. Baazov. "Additionally, our expenses, excluding foreign exchange, as a percentage of our revenues have been trending downward throughout 2013 as we realize on synergies from the integration of the acquisitions we made in 2012, a trend we expect to continue."
2013 THIRD QUARTER FINANCIAL STATEMENTS AND MANAGEMENT'S DISCUSSION AND ANALYSIS
The financial statements, notes to financial statements and Management's Discussion and Analysis for the three and nine months ended September 30, 2013, will be available on the SEDAR website at www.sedar.com.
Amaya will host a conference call on Friday, November 29, 2013 at 9:00 a.m. ET to discuss its 2013 third quarter financial results. David Baazov, CEO of Amaya Gaming Group Inc., will chair the call. To participate in the call, please dial 1- 647-427-7450 or 1-888-231-8191 ten minutes prior to the scheduled start of the call. A replay of the conference call will be available until Friday, December 6, 2013 by calling 1-416-849-0833 or 1-855-859-2056, reference number 14354591. The conference call will be webcast live at http://bit.ly/1aPl9P8.
ABOUT AMAYA GAMING GROUP INC.
Amaya provides a full suite of gaming products and services including casino, poker, sportsbook, platform, lotteries and slot machines. Some of the world's largest gaming operators and casinos are powered by Amaya's online, mobile, and land-based products. Amaya is present in all major gaming markets in the world with offices in North America, Latin America and Europe. Amaya recently acquired Cryptologic, a pioneer within online casino, Ongame, a leader within online poker, and Cadillac Jack, a successful slot machine manufacturer. For more information please visit www.amayagaming.com.
DISCLAIMER IN REGARDS TO FORWARD-LOOKING STATEMENTS
Certain statements included herein, including those that express management's expectations or estimates of our future performance constitute "forward-looking statements" within the meaning of applicable securities laws. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by management at this time, are inherently subject to significant business, economic and competitive uncertainties and contingencies. Investors are cautioned not to put undue reliance on forward looking statements. Except as required by law, the Corporation does not intend, and undertakes no obligation, to update any forward-looking statements to reflect, in particular, new information or future events.
SOURCE: Amaya Gaming Group Inc.
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