Annual revenue more than doubles on a year-over-year
basis
MONTREAL, March 31, 2014 /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 year ended
December 31, 2013. All amounts are
stated in Canadian dollars unless otherwise noted.
Financial Highlights
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FOR THE THREE AND TWELVE MONTH
PERIODS ENDED DECEMBER 31 |
|
Q4 2013
$ |
|
Q4 2012
$ |
|
2013
$ |
|
2012
$ |
Revenues |
|
39,008,593 |
|
37,194,312 |
|
154,529,443 |
|
76,435,009 |
Adjusted EBITDA1 |
|
15,369,604 |
|
16,132,104 |
|
57,857,871 |
|
18,870,426 |
Adjusted EBITDA1 margin
(as % of revenue) |
|
39% |
|
43% |
|
37% |
|
43% |
Adjusted net earnings
(loss)2 |
|
3,709,609 |
|
11,916,425 |
|
15,228,609 |
|
10,595,061 |
Basic and diluted adjusted net
earnings (loss)2 per share |
|
0.04 |
|
0.18 |
|
0.17 |
|
0.16 |
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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.
Reconciliation to Net Income is included in this release. |
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. Reconciliation to Net Income is included in
this release. |
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Recent Highlights
- On February 14, 2014, Amaya
announced that it had closed its previously announced acquisition
of 100% of the issued and outstanding securities of the private,
arms-length company Diamond Game Enterprises ("Diamond Game"), a
designer and manufacturer of gaming related products for the global
casino gaming and lottery industries. The purchase price was
US$25 million, subject to customary
post-closing purchase price adjustments, to acquire 100% of the
equity of Diamond Game and retire
its debt. Amaya paid US$18 million on
closing of the Transaction from cash on hand with a US$7 million holdback for certain contingent
liabilities and other items. Diamond
Game has two primary business units: its Casino Products
division develops products for the VLT, Class II bingo, Class III
commercial casino and racetrack markets; its Lottery Products
division creates innovative products for the public gaming and
charity markets, most notably its LT-3 instant ticket vending
machine (ITVM), which dispenses pull tab/break open or scratch
tickets while simultaneously displaying the results of each ticket
on a touchscreen video monitor in an entertaining fashion.
- On February 19, 2014, Amaya
announced that Diamond Game had been
awarded a 5-year contract with the Maryland Lottery and Gaming
Control Agency (the "Lottery"), with the Lottery holding a five
year renewal option, to provide Veterans' Organizations (VOs) in
the state with Instant Ticket Lottery Machines (ITLM) and related
services. The Contract allows for the placement of up to five ITLMs
at each qualified VO meeting hall in Maryland. The Lottery estimates there are
currently 150 qualified organizations that may apply for the ITLMs.
Diamond Game anticipates deployment
of ITLMs to commence by the end of 2014 throughout the state. Under
the Contract, Diamond Game will
receive a firm-fixed percentage of the ITLM proceeds. The Contract
amount is estimated by the Lottery at up to US$57 million over the original five year term
and an additional amount of up to US$60
million for the renewal option based upon its projected
number of ITLMs placed at VO meeting halls and the projected win
for those ITLMs
- During the fourth quarter, the Corporation classified certain
of its assets and liabilities as held for sale, including (i)
interest in proprietary trademarks and other intellectual property
and (ii) its subsidiary WagerLogic Malta Holdings Ltd.
("WagerLogic"). Regarding the former, the Corporation anticipates
their sale by the end of 2014. Regarding the latter, Amaya
announced on February 11, 2014 that
it had completed the previously announced sale of all of the issued
and outstanding shares of WagerLogic to Goldstar Acquisitionco Inc.
("Goldstar") for $70 million (the
"Purchase Price"), less a closing working capital adjustment of
$7.5 million, satisfied through cash
consideration of $52.5 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 Purchase Price is subject to customary
post-closing adjustments. WagerLogic, through a subsidiary, is an
online casino operator through its "Inter" brand consisting of
InterCasino™, InterPoker™ and InterBingo™, amongst other online
names (the "InterCasino Business"). Subsidiaries of Amaya (the
"Service Providers") will continue to supply WagerLogic with
software, services and content to power the InterCasino Business
pursuant to services agreements.
- On March 7, 2014, Amaya announced
that it has acquired in aggregate beneficial ownership and control
of 1.9 million common shares of WagerLogic's parent company The
Intertain Group Ltd. (TSX: IT) ("Intertain") (the outstanding
securities of Goldstar were exchanged for securities of Intertain
in February, 2014) representing 13.97% of the issued and
outstanding Intertain common shares. Amaya also owns $3.85 million aggregate principal amount of 5.0%
unsecured subordinate convertible debentures of Intertain maturing
on December 31, 2018 (TSX: IT.DB),
which are convertible at the option of the holder into common
shares of Intertain at a price of $6.00 per common share, as well as 353,000
Intertain common share purchase warrants, with each whole warrant
being exercisable by the holder for one Intertain common share at
an exercise price of $5.00 per share
until December 31, 2015. The
securities were acquired for investment purposes. Amaya has no
current plan or proposal, which relates to, or would result in,
acquiring additional ownership or control over the securities of
IT.
- Amaya and various subsidiaries received transactional waivers
from the New Jersey Division of Gaming Enforcement in 2013 to
supply technology for real money online gaming websites operated by
licensed permit holders in New
Jersey. In late November 2013,
real money online gaming went live in New
Jersey, the third and thus far most populous U.S. state to
have approved it, following Nevada
and Delaware. Amaya has to date
announced agreements to supply four of the permit holders licensed
to operate real money online gaming websites within the state of
New Jersey.
- On December 20, Amaya announced
that its subsidiary Cadillac Jack Inc. ("Cadillac Jack") had
entered into an agreement for the refinancing of its credit
facilities. Under this agreement, Cadillac
Jack will have access to term loans in an aggregate
principal amount of up to $160
million (the "Credit Facilities"). The Credit Facilities
have replaced the existing $110
million non-convertible senior term loan secured by
Cadillac Jack's assets that was made
available to Amaya to finance the acquisition of Cadillac Jack by Amaya, as of November 5, 2012 (the "2012 Loan"). The Credit
Facilities will be used to fully repay the outstanding balance on
the 2012 Loan, as well as related fees and expenses and to fund the
ongoing working capital and other general corporate purposes of
Cadillac Jack.
- During the quarter, Amaya announced agreements to aggregate
high quality third party games on its Casino Gaming System from
Leander Games and Betsoft Gaming.
The move will allow operators powered by Amaya's CGS to access
Betsoft's games along with the portfolio of content on Leander's
LeGa Platform including games from Blueprint, Genesis and
Quickspin, without the need for any additional integration.
- On October 1, Amaya's common
shares, common share purchase warrants and unsecured
non-convertible subordinated debentures were listed for trading on
the Toronto Stock Exchange (TSX). Amaya had previously announced
its graduation to the TSX from the TSX Venture Exchange.
"We're pleased with the development of our
business in 2013, specifically the growth of our land-based gaming
solutions, the launch of our interactive gaming solutions into the
emerging U.S. market, and the bolstering of our lottery solutions
through the acquisition of Diamond
Game," said David Baazov,
President and CEO of Amaya.
"Specific to land-based solutions, we were
already a leader in the provision of gaming machines to the Class
II Tribal and Mexican gaming markets and we maintained that strong
position," continued Mr. Baazov. "During the year, we also began
executing on our strategy to expand into the much larger Class III
gaming market and placed machines in various jurisdictions. Looking
ahead, we intend to expand our addressable Class III market by
securing licenses in more jurisdictions, and we will continue to
invest in technology to enhance the competitiveness of our Class
III solutions."
"Regarding our interactive gaming solutions, we
increased the number of licensing agreements we have to supply
online gaming operators in 2013," Mr. Baazov said. "In 2014, we
will continue to look to expand the reach of customers using our
Casino Gaming System as well as increase revenues from existing
licensees through a strong focus on providing operators with new
and innovative gaming content, mobile versions of popular games
from our extensive library, and online and mobile versions of top
performing games already on our land-based gaming machines. We will
also examine potential transactions that will improve our solutions
offering and position us to be a leader in the growing global
iGaming market."
"Finally, we anticipate our lottery solutions
will be a more significant revenue generator for us following the
acquisition of Diamond Game, which
is a leader in providing lotteries with innovative products that
enhance the entertainment value of traditional games. The company
already has agreements in place to supply four jurisdictions with
its instant ticket vending machines, notably Maryland and Ontario, and we intend to market these
solutions to lottery operators in other jurisdictions," concluded
Mr. Baazov.
Financial Results
Revenue for the three month period ended
December 31, 2013 was $39.01 million compared to $37.19 million for the three month period ended
December 31, 2012, representing an
increase of 5%. The increase is primarily attributable to
consolidating a full period of revenue from Cadillac Jack, which was acquired in November,
2012. Revenue for the year ended December
31, 2013 was $154.53 million
compared to $76.44 million for 2012,
representing an increase of 102%. The increase is primarily
attributable to consolidating a full period of revenues from
CryptoLogic Limited ("CryptoLogic"), Ongame Network Limited
("Ongame"), and Cadillac Jack, which
were acquired in 2012. On a regional basis, revenue in 2013 was
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 $45.97 million for the three month period ended
December 31, 2013, compared to
$40.77 million for the three month
period ended December 31, 2012, an
increase of 13%. The percentage increase was driven by higher cost
of goods related primarily to increased sales of gaming machines in
Q4 2013 vs Q4 2012; increased interest and bank charges;
consolidating a full period of expenses related to Ongame and
Cadillac Jack; as well as
investments to prepare the Corporation for entry into the newly
regulated real money online gaming market in the United States in the fourth quarter of
2013. Total expenses for the year ended December 31, 2013 were $176.04 million compared to $87.43 million for 2012, an increase of 101%. The
percentage increase was driven by higher expenses primarily due to
consolidating a full period of expenses related to CryptoLogic,
Ongame and Cadillac Jack as well as
investments to prepare the Corporation for entry into the newly
regulated real money online gaming market in the United States.
Net loss was $7.28
million, or $(0.08) per basic
and diluted common share, in the fourth quarter of 2013 versus net
loss of $0.71 million, or
$(0.00) per basic and diluted common
share, in the same quarter of 2012. The increased loss in the
fourth quarter of 2013 is primarily due to the provision recorded
in income taxes. Net loss for the year ended December 31, 2013 was $29.62 million, or $(0.33) per basic and diluted common share,
compared to $7.11 million, or
$ (0.11) per basic and diluted common
share, in 2012. The increased loss was driven by the provision
recorded in income taxes along with general and administrative
expenses growing at a faster pace than revenues.
Adjusted EBITDA Reconciliation $
|
|
Q4 2013 |
|
Q4 2012 |
|
FY 2013 |
|
FY 2012 |
Net Income |
|
(6,824,428) |
|
(711,309) |
|
(29,172,857) |
|
(7,112,352) |
Financial expenses |
|
6,043,961 |
|
3,639,516 |
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21,071,523 |
|
6,816,527 |
Current income taxes |
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(1,097,098) |
|
194,220 |
|
10,198,947 |
|
807,336 |
Deferred income taxes |
|
3,119,247 |
|
(3,058,590) |
|
(552,890) |
|
(3,776,730) |
Depreciation of property and equipment |
|
3,283,046 |
|
1,985,518 |
|
12,733,851 |
|
3,486,934 |
Amortization of deferred development costs |
|
909,980 |
|
85,189 |
|
1,724,816 |
|
314,967 |
Amortization of intangible assets |
|
5,350,019 |
|
2,954,221 |
|
19,360,784 |
|
6,156,877 |
Stock-based compensation |
|
594,124 |
|
353,438 |
|
2,029,835 |
|
880,825 |
EBITDA |
|
11,378,846 |
|
5,442,203 |
|
37,394,009 |
|
7,574,384 |
Termination of employment agreements |
|
91,157 |
|
1,804,959 |
|
2,810,389 |
|
3,367,001 |
Termination of Lease Agreement |
|
- |
|
442,000 |
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- |
|
442,000 |
Termination of agency agreements |
|
- |
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- |
|
100,834 |
|
749,000 |
Non-recurring gain |
|
(1,502,292) |
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- |
|
(1,502,292) |
|
(913,352) |
Office shut down costs |
|
1,224,911 |
|
- |
|
1,224,911 |
|
- |
Loss on settlement of finance lease
receivable |
|
361,321 |
|
- |
|
2,492,716 |
|
- |
Acquisition-related costs |
|
155,028 |
|
3,196,856 |
|
1,332,047 |
|
6,028,339 |
Receivables related to terminated operations |
|
716 |
|
- |
|
79,145 |
|
- |
Retention Bonuses |
|
- |
|
5,367,280 |
|
- |
|
5,367,280 |
Net Adjusted EBITDA loss (gain) from assets &
liabilities classified as held for sale |
|
2,833,388 |
|
(613,194) |
|
9,551,586 |
|
(4,236,226) |
Other one-time costs |
|
826,529 |
|
492,000 |
|
4,374,526 |
|
492,000 |
Adjusted EBITDA |
|
15,369,604 |
|
16,132,104 |
|
57,857,871 |
|
18,870,426 |
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Adjusted Net Income Reconciliation $ |
|
Q4 2013 |
|
Q4 2012 |
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2013 |
|
2012 |
Net Income |
|
(7,276,374) |
|
(711,308) |
|
(29,624,803) |
|
(7,112,352) |
One-time costs |
|
102,702 |
|
12,216,447 |
|
9,857,609 |
|
16,445,620 |
Foreign exchange |
|
(1,996,766) |
|
(1,039,276) |
|
(1,691,994) |
|
(979,195) |
Net adjusted income (loss) of assets &
liabilities classified as held for sale |
|
3,482,130 |
|
(190,344) |
|
11,413,815 |
|
(3,632,225) |
Amortization of purchase price allocation
Intangibles |
|
4,260,793 |
|
1,987,035 |
|
14,957,377 |
|
3,532,232 |
Interest accretion |
|
4,543,000 |
|
(699,567) |
|
8,286,770 |
|
1,460,156 |
Stock-based compensation |
|
594,124 |
|
353,438 |
|
2,029,835 |
|
880,825 |
Adjusted net income |
|
3,709,609 |
|
11,916,425 |
|
15,228,609 |
|
10,595,061 |
2013 FULL YEAR FINANCIAL GUIDANCE
Below is a review of how the Corporation
performed relative to its full year 2013 guidance, which was first
provided in its Q1 2013 quarterly results press release on
May 28, 2013 and subsequently
reaffirmed, most recently in the Q3 2013 quarterly results press
release on November 28, 2013:
2013 Full Year Guidance
|
Actual |
Guidance |
Revenue |
$154.5 million |
$156-167 million |
Adjusted EBITDA |
$58.0 million |
$55-64 million |
"The Corporation's revenue was slightly below
guidance primarily due to the decline in our hosted casino revenues
from WagerLogic, which we sold subsequent to year end. Adjusted
EBITDA from our current business, excluding assets and liabilities
held for sale, was in line with our expectations," commented Mr.
Baazov.
The Corporation intends to provide its 2014 full
year financial guidance in its Q1 2014 quarterly results release,
consistent with the timeline it used for 2013.
2013 FINANCIAL STATEMENTS AND MANAGEMENT'S DISCUSSION AND
ANALYSIS
The financial statements, notes to financial
statements and Management's Discussion and Analysis for the year
ended December 31, 2013, will be
available on the SEDAR website at www.sedar.com.
CONFERENCE CALL
Amaya will host a conference call on
Tuesday, April 1, 2014 at
9:00 a.m. ET to discuss its 2013
financial results. David Baazov, CEO
of Amaya Gaming Group Inc., will chair the call. To participate in
the call, please dial 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 Tuesday, April 8, 2014 by calling 1-416-849-0833
or 1-855-859-2056, reference number 19707175. The conference call
will be webcast live at http://bit.ly/1ivgqJD.
ABOUT AMAYA
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.
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.