Record revenues and five-fold sequential increase in adjusted EBITDA; Cadillac Jack and Ongame acquisitions close subsequent to quarter; Corporation provides Q4 2012 financial guidance
MONTRÉAL, Nov. 27, 2012 /CNW/ - Amaya Gaming Group Inc. ("Amaya" or the "Corporation) (TSX.V: AYA), an entertainment solutions provider for the regulated gaming industry, today announced its financial results for the three and nine months ended September 30, 2012 and provided revenue and adjusted EBITDA guidance for the fourth quarter of 2012. All amounts are stated in Canadian dollars unless otherwise noted.
FINANCIAL HIGHLIGHTS
| FOR THE THREE AND NINE-MONTH PERIODS ENDED SEPTEMBER 30 | Q3 2012 $ |
Q3 2011 $ |
YTD 2012 $ |
YTD 2011 $ |
| Revenues | 18,317,141 | 3,973,552 | 39,240,697 | 8,885,168 |
| Adjusted EBITDA1 | 5,910,383 | (900,107) | 6,361,351 | (3,464,918) |
| Net earnings (loss) | 881,451 | (1,815,016) | (6,401,044) | (4,744,337) |
| Basic earnings (loss) per share | 0.01 | (0.04) | (0.11) | (0.11) |
OTHER RECENT HIGHLIGHTS
- On November 27, 2012, Amaya announced that Mohegan Sun, located in Connecticut and one of the largest entertainment and gaming destinations in the United States, has chosen Amaya's subsidiary Ongame Network Ltd. ("Ongame") to power its online poker offering. Mohegan Sun will enter the online gambling market in early 2013 by launching play money poker at www.mohegansun.com for PCs, Macs, smart phones and tablets. This marks the first move by an East Coast casino operation into the world of online gaming and poker, enabling Mohegan Sun to be at the head of the line when legalized real money poker is available to American customers.
- On November 5, 2012, the Corporation completed the purchase of Cadillac Jack Inc. ("Cadillac Jack"), a leading supplier of products and technologies for the global gaming market with gaming machine placements in more than 200 venues in the United States and Mexico. Amaya will pay approximately $177.0 million to acquire 100 per-cent of the equity of Cadillac Jack, to retire its debt, pay for transaction costs and fund working capital. Amaya will finance the transaction through a combination of cash on hand and a US$110.0 million non-convertible senior secured term loan secured by Cadillac Jack's assets. Macquarie Capital Markets Canada Ltd. acted as financial advisor to Amaya in connection with the acquisition, and as sole lead arranger and sole book runner in connection with the non-convertible senior debt financing.
- On November 1, 2012, the Corporation completed the purchase of Ongame, a leading business-to-business (B2B) online poker network.
- On August 1, 2012, Amaya announced a three-year licensing agreement with Betfair Group plc that calls for Amaya to supply a selection of its unique proprietary and branded games via an Openbet integration onto the Betfair Arcade to complement existing Arcade content.
- On July 26, 2012, Amaya announced a three-year licensing agreement with Circus Services SPRL of Belgium, a wholly owned subsidiary of Circus Group, that calls for Amaya to supply its proprietary and branded games on the Amaya platform to Circus Group's online gaming brand in Belgium, Casino777.
- On July 12, 2012, the Corporation announced the final closing under its private placement financing announced May 29, 2012 issuing 952,200 additional common shares at $4.05 per Common Share, for additional gross proceeds of $3,856,410.
- On July 3, 2012, CryptoLogic Limited ("CryptoLogic"), an Amaya subsidiary acquired in April, 2012, announced the launch of three new internet wagering games, Fire Flies, Captain Nemo, and Monte Cristo, the industry's first slot games combining the features of a casino and casual game.
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.
"We were very pleased with the organic growth of our revenues in the third quarter over the second quarter, which was primarily due to the growth of the licensee bases in Europe of our subsidiaries CryptoLogic and Chartwell," said Mr. David Baazov, President and Chief Executive Officer of Amaya Gaming Group.
"We're also extremely excited about our recent acquisitions of Cadillac Jack and Ongame," Mr. Baazov added. "Cadillac Jack provides Amaya with an important presence in the United States and the ability to offer physical, virtual, and mobile gaming solutions to our customer base, which addresses a growing trend toward convergence in our industry. Additionally, we expect to leverage Amaya's existing customer base in Europe as well as our sales and support staff to place Cadillac Jack's top quality gaming machines in that region. Our acquisition of Ongame provides us with a global online poker network reaching 20 million customers that includes 25 of the e-gaming industry's strongest brands. Having a top quality poker engine also positions us to participate in the U.S. market as the regulation of online poker evolves. We expect to capitalize on revenue and cost synergies from both acquisitions early in the new year."
FINANCIAL RESULTS
Amaya reported revenues of $18.32 million for the third quarter of 2012, an increase of $14.35 million or 360% compared to $3.97 million of revenues in the third quarter of 2011. This revenue growth is primarily due to the Corporation's consolidation of a full period of software licensing revenue of Amaya (Alberta), formerly Chartwell Technology Ltd. ("Chartwell"), which was acquired in July, 2011, as well as consolidating CryptoLogic's software licensing revenue, hosted casino revenue and licensing of the Corporation's proprietary interactive gaming platform technology. For the nine month period ended September 30, 2012, revenues were $39.24 million, an increase of $30.35 million or 341% compared to $8.89 million in the first nine months of fiscal 2011. The increase was primarily attributable to Amaya's sales of its proprietary Mosino gaming stations and consolidating Chartwell's and CryptoLogic's revenues. On a regional basis, revenue growth in the first nine months of 2012 was concentrated in the Caribbean and Europe, as the customer base of Chartwell and CryptoLogic are predominantly European. Revenues decreased in Africa as Amaya has shifted away from Africa to more profitable markets in North America, Europe and the Caribbean.
Gross profit was $18.26 million in the third quarter of 2012, representing 99% of revenues, compared to $3.80 million or 96% of revenues in the third quarter of 2011. For the year-to-date period, gross profit was 98% for the first nine months of 2012, compared to 95% in the same period of 2011.
Selling and marketing expenses were $2.64 million in Q3 2012, an increase of 106% from $1.28 million in Q3 2011. On a year-to-date basis, selling and marketing expenses were $7.98 million in 2012 compared to $5.52 million in 2011. The increase is primarily due to the inclusion this year of expenses associated with the Chartwell and CryptoLogic businesses.
General and administrative expenses were $11.8 million in Q3 2012, an increase of 172% from $4.34 million in Q3 2011. The increase was driven by a growing employee base due to the Chartwell and CryptoLogic acquisitions, fully staffed operations in Moldova, Armenia, and the Dominican Republic, consulting fees, amortization costs, and communications expense in connection with generating CryptoLogic's hosted casino revenue. For the nine-month period, general and administrative expenses were $31.90 million in 2012 compared to $8.14 million in 2011.
Financial expenses were $1.41 million in the third quarter of 2012, compared to $0.23 million in Q3 2011. The increase is primarily attributable to interest on the convertible debentures in connection with the purchase of CryptoLogic's shares. For the nine-month period, financial expenses were $3.18 million in 2012 compared to $0.54 million in 2011, with the increase primarily attributable to interest on the convertible debentures and bridge financing in connection with the purchase of CryptoLogic's shares.
Adjusted EBITDA was $5.91 million in the third quarter of 2012, a $6.81 million improvement compared to an adjusted EBITDA loss of $(0.90) million in Q3 2011, and a $4.74 million improvement from $1.17 million in the second quarter of 2012. Q3 2012 adjusted EBITDA excludes $0.36 million of acquisition-related costs and $0.14 million of costs to terminate certain employment agreements. Adjusted EBITDA was $6.36 million in the first nine months of 2012, an improvement of $9.82 million from a $(3.46) million adjusted EBITDA loss in the first nine months of 2011. Adjusted EBITDA in the first three quarters of 2012 excludes the impact of $2.83 million of acquisition-related costs and $2.31 million of costs incurred to terminate certain agency and employment agreements.
2012 FOURTH QUARTER FINANCIAL GUIDANCE
As noted above, the Cadillac Jack and OnGame acquisitions both closed in November 2012. As a result, the financial impact of these acquisitions will be reflected for the first time in Amaya's fourth quarter, though it will not include a full quarter of contributions from the two companies. Based on these significant acquisitions and Amaya's continued strong organic growth, the Corporation is expecting for the fourth quarter of 2012:
- Revenue is expected to be in the range of $36 to $40 million
- Adjusted EBITDA is expected to be in the range of $13.5 to $15 million
These forecasts do not reflect material cost and revenue synergies that Amaya's management expects to derive from the acquisitions, beginning in 2013.
2012 THIRD QUARTER FINANCIAL STATEMENTS AND MANAGEMENT'S DISCUSSION AND ANALYSIS
The complete financial statements, notes to financial statements and Management's Discussion and Analysis for the three and nine-month periods ending September 30, 2012, will be available on the SEDAR website at www.sedar.com.
CONFERENCE CALL
A conference call for analysts and interested listeners will be held on Wednesday, November 28, 2012, at 9:00 a.m. (ET). 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 Wednesday, December 5, 2012 by calling 416-849-0833 or 1-855-859-2056, reference number 74616387. The conference call will be webcast live at www.newswire.ca.
ABOUT AMAYA GAMING GROUP INC.
Founded in 2004, Amaya Gaming Group Inc. is a technology based gaming provider for the regulated gaming industry. An expansive global organization, present in North America, Latin America, Europe, and Asia, Amaya is an innovator in the gaming world.
Headquartered in Montreal, Canada, Amaya provides a host of services and solutions that range from: online and mobile gaming casino games and platforms, traditional and mobile lotteries, networked electronic gaming systems, hospitality in-room entertainment systems, management systems, content suites, advisory and management services, and integrity monitoring and auditing systems for the regulated gaming markets. For more information please visit www.amayagaming.com or www.amayaonline.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.
"Neither 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."
SOURCE: AMAYA GAMING GROUP INC.
For investor inquiries, please contact:
Mr. David Baazov
President and Chief Executive Officer
Amaya Gaming Group Inc.
North America: 1-866-744-3122
Worldwide: 1-514-744-3122
http://www.amayagaming.com
For media inquiries, please contact:
Tim Foran
The Equicom Group
416-815-0700 ext. 251
[email protected]
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