Great Canadian Gaming announces first quarter 2013 results
RICHMOND, BC, May 8, 2013 /CNW/ - Great Canadian Gaming Corporation [TSX:GC] ("Great Canadian" or "the Company") today announced its financial results for the three month period ended March 31, 2013 ("first quarter of 2013").
FIRST QUARTER 2013 HIGHLIGHTS
(Amounts presented in millions of Canadian dollars, except for per share information)
- Revenues of $100.5 million and EBITDA(1) of $38.3 million in the first quarter, both a 2% decrease when compared to the first quarter of 2012
- Net earnings of $31.3 million in the first quarter, primarily due to long-lived asset impairment reversals totalling $28.5 million
- Adjusted net earnings(2) of $11.1 million, an 8% decrease when compared to the prior year
- Repurchased and cancelled 2.5 million common shares at an average price of $9.32 during March and early April 2013
| First Quarter | |||||||
| 2013 | 2012 | % Chg | |||||
| Revenues | $ | 100.5 | $ | 102.8 | (2%) | ||
| EBITDA (1) | $ | 38.3 | $ | 39.0 | (2%) | ||
| EBITDA as a % of Revenues | 38.1% | 37.9% | |||||
| Net earnings (loss) | $ | 31.3 | $ | (31.9) | |||
| Net earnings (loss) per common share | |||||||
| Basic | $ | 0.44 | $ | (0.39) | |||
| Diluted | $ | 0.44 | $ | (0.39) | |||
| Adjusted net earnings (1), (2) | $ | 11.1 | $ | 12.0 | (8%) | ||
| Total assets | $ | 892.8 | $ | 917.1 | (3%) | ||
| Long-term debt & Derivative liabilities, excluding current portion | $ | 440.2 | $ | 395.0 | 11% | ||
| (1) EBITDA and Adjusted net earnings are non-IFRS measures as described in the Disclaimer section of this press release. |
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| (2) A reconciliation between Net earnings (loss) and Adjusted net earnings is included on page 6 of this press release. | |||||||
For the first quarter of 2013, Great Canadian Gaming Corporation recorded revenues of $100.5 million, a $2.3 million, or 2%, decrease from the first quarter of 2012. EBITDA was $38.3 million, a $0.7 million, or 2%, decrease from the first quarter of 2012.
The decrease in consolidated revenues was primarily due to declines at the Boulevard Casino ("Boulevard"), the BC Racinos, and the Nova Scotia Casinos. The performance of these properties continues to reflect a prolonged period of weakness in their local economies. Declines at these properties were partially offset by both increased revenues at the Other BC Casinos and the continued strong performance of the River Rock Casino Resort ("River Rock").
The $0.7 million decrease in EBITDA in the first quarter of 2013 was primarily due to the decline in the Company's consolidated revenues. This decline was partially offset by improvements in the Company's property, marketing and administration expenses. EBITDA as a percentage of revenues for the first quarter of 2013 was 38.1%, a 0.2 percentage point increase from the first quarter of 2012.
Net earnings increased by $63.2 million in the first quarter of 2013, when compared to the first quarter of 2012. This increase was due to the reversal of $28.5 million in non-cash impairment charges in the first quarter of 2013 associated with Georgian Downs and Flamboro Downs. These reversals were originally part of the $57.4 million non-cash impairment charges that the Company recorded during the first quarter of 2012. The original impairments were triggered by the Ontario Lottery and Gaming Corporation ("OLG") providing notice that it was terminating the site holder agreements for the slot machine facilities at these two properties, effective March 31, 2013. Subsequent to March 31, 2013, Georgian Downs Limited received from OLG a one-time settlement payment of $31.5 million in connection with the Georgian Downs facility, and the Company and Georgian Downs Limited provided OLG with a release of claims. On March 9, 2013, the Company signed letters of intent for five-year leases with OLG, which, if approved, would allow for OLG's operation of the slot facilities at both Georgian Downs and Flamboro Downs. The combination of signing the letters of intent for these leases and the subsequent receipt of the settlement payment resulted in this quarter's impairment reversals.
"We are pleased to have come to terms with the OLG on proposed lease arrangements for our Georgian Downs and Flamboro Downs properties," stated Rod N. Baker, Great Canadian's President and Chief Executive Officer. "We are also pleased to have reached an arrangement with the Ontario government to receive the transitional funding necessary for live racing to continue at these two properties on an interim basis. While definitive lease agreements remain to be signed, we have been operating as though the key provisions of such agreements came into effect on April 1, 2013. Based on the terms of these lease arrangements and the anticipated racing schedules, both of which remain subject to government approvals, as well as our current internal assumptions regarding operating costs, our preliminary estimate of these properties' combined EBITDA for the twelve month period ending March 31, 2014 is approximately $10.0 million to $11.0 million. This compares to a combined EBITDA of $17.3 million recognized for the twelve months ended March 31, 2013.
"Our financial results for the first quarter of 2013 reflect positive contributions from both River Rock and our recently opened Chances Chilliwack. River Rock had yet another strong quarter, experiencing meaningful increases in both table drop and slot coin-in. While the property's table hold percentage was above-average for the first quarter of 2013, it was 0.6 percentage points below the level recorded in the same period last year.
"Despite these encouraging performances, the majority of Great Canadian's properties continue to witness the impact of challenging local economies. During the first quarter of 2013, Boulevard witnessed declines in table drop, slot coin-in, and food and beverage revenues as a result of both weakened local economic conditions and disruption caused by a heightened level of proximate highway construction including intermittent weekday and multiple weekend evening road closures affecting access to the property. We continue to focus on providing our most loyal guests exceptional service and memorable entertainment experiences during this construction. We anticipate that construction on the highway will conclude in the fourth quarter of 2013.
"Great Canadian is financially prepared to take advantage of new value-added growth opportunities, including those arising in Ontario. The Company's financial flexibility is evident in both its cash balance and undrawn revolving credit facility. During March and early April of 2013, the Company devoted $23.5 million of its cash resources toward repurchasing and cancelling 2.5 million common shares at an average price of $9.32, thereby increasing the ownership percentage of our existing shareholders by 3.6%."
Great Canadian will host a conference call for investors and analysts today, May 8, 2013, at 2:00 PM Pacific Time to review the financial results for the period ended March 31, 2013. To participate in the conference call, please dial 416-764-8688, or toll free at 888-390-0546 (Passcode: 38196411). 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; please allow 15 minutes to register and install any necessary software. A replay of the call will also be available at www.gcgaming.com.
ABOUT GREAT CANADIAN GAMING CORPORATION
Great Canadian Gaming Corporation operates gaming, entertainment and hospitality facilities in British Columbia, Ontario, Nova Scotia and Washington State. The Company's 17 gaming properties consist of ten casinos, including one with a Four Diamond hotel resort, four horse racetrack casinos, and three community gaming centres. As of March 31, 2013, the Company had approximately 3,900 employees in Canada and 600 in Washington State. Further information is available on the Company's website, www.gcgaming.com.
Please refer to the Condensed Interim Consolidated Financial Statements and Management's Discussion and Analysis ("MD&A") at www.gcgaming.com (available on May 8, 2013) or www.sedar.com (available on May 9, 2013) for detailed financial information and analysis.
The financial results on the following pages are unaudited and prepared by management. Expressed in millions of Canadian dollars, except for per share information.
GREAT CANADIAN GAMING CORPORATION
| Consolidated Results of Operations | |||||||
| (Unaudited - Expressed in millions of Canadian dollars, except for per share information) | |||||||
| First Quarter | |||||||
| 2013 | 2012 | % Chg | |||||
| Gaming revenues | $ | 74.9 | $ | 76.8 | (2%) | ||
| Facility Development Commission | 8.8 | 8.9 | (1%) | ||||
| Hospitality and other revenues | 18.2 | 18.0 | 1% | ||||
| Racetrack revenues | 3.2 | 3.8 | (16%) | ||||
| 105.1 | 107.5 | (2%) | |||||
| Less: Promotional allowances | (4.6) | (4.7) | (2%) | ||||
| Revenues | 100.5 | 102.8 | (2%) | ||||
| Human resources | 39.1 | 39.1 | 0% | ||||
| Property, marketing and administration | 23.1 | 24.7 | (6%) | ||||
| 62.2 | 63.8 | (3%) | |||||
| EBITDA | 38.3 | 39.0 | (2%) | ||||
| Human resources as a % of Revenues before Promotional allowances | 37.2% | 36.4% | |||||
| EBITDA as a % of Revenues | 38.1% | 37.9% | |||||
| Amortization | 13.0 | 12.8 | |||||
| Share-based compensation | 2.1 | 2.1 | |||||
| (Reversal of) impairment of long-lived assets | (28.5) | 54.2 | |||||
| Impairment of goodwill | - | 3.2 | |||||
| Interest and financing costs, net | 8.2 | 7.1 | |||||
| Restructuring and other | 1.1 | - | |||||
| Foreign exchange gain and other | (0.2) | (0.3) | |||||
| Income taxes | 11.3 | (8.2) | |||||
| Net earnings (loss) | $ | 31.3 | $ | (31.9) | |||
| Net earnings (loss) per common share | |||||||
| Basic | $ | 0.44 | $ | (0.39) | |||
| Diluted | $ | 0.44 | $ | (0.39) | |||
| Weighted average number of common shares (in thousands) | |||||||
| Basic | 70,432 | 82,364 | |||||
| Diluted | 71,489 | 82,364 | |||||
GREAT CANADIAN GAMING CORPORATION
| Condensed Interim Consolidated Statements of Financial Position | ||||||||
| (Unaudited - Expressed in millions of Canadian dollars) | ||||||||
| March 31, | December 31, | |||||||
| 2013 | 2012 | |||||||
| Assets | ||||||||
| Current | ||||||||
| Cash and cash equivalents | $ | 120.9 | $ | 116.2 | ||||
| Restricted cash | 7.3 | 4.9 | ||||||
| Accounts receivable | 7.0 | 7.7 | ||||||
| Income taxes receivable | 2.1 | - | ||||||
| Prepaids, deposits and other assets | 5.7 | 6.1 | ||||||
| 143.0 | 134.9 | |||||||
| Property, plant and equipment | 632.3 | 621.3 | ||||||
| Intangible assets | 85.1 | 73.3 | ||||||
| Goodwill | 20.3 | 20.1 | ||||||
| Deferred tax assets | 9.1 | 9.9 | ||||||
| Other assets | 3.0 | 3.2 | ||||||
| $ | 892.8 | $ | 862.7 | |||||
| Liabilities | ||||||||
| Current | ||||||||
| Accounts payable and accrued liabilities | $ | 55.0 | $ | 60.4 | ||||
| Income taxes payable | - | 0.5 | ||||||
| Other liabilities | 2.9 | 2.9 | ||||||
| 57.9 | 63.8 | |||||||
| Long-term debt | 440.2 | 439.9 | ||||||
| Deferred credits, provisions and other liabilities | 25.9 | 25.4 | ||||||
| Deferred tax liabilities | 61.6 | 53.3 | ||||||
| 585.6 | 582.4 | |||||||
| Shareholders' equity | ||||||||
| Share capital and contributed surplus | 312.7 | 313.5 | ||||||
| Accumulated other comprehensive loss | (0.6) | (1.0) | ||||||
| Deficit | (4.9) | (32.2) | ||||||
| 307.2 | 280.3 | |||||||
| $ | 892.8 | $ | 862.7 | |||||
GREAT CANADIAN GAMING CORPORATION
| Adjusted Net Earnings | ||||||||
| (Unaudited - Expressed in millions of Canadian dollars) | ||||||||
| The current and prior periods' net earnings (loss) included some items of note, which are summarized in the following adjusted net earnings table: |
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| First Quarter | ||||||||
| 2013 | 2012 | % Chg | ||||||
| Net earnings (loss) | $ | 31.3 | $ | (31.9) | ||||
| Items of note | ||||||||
| (Reversal of) impairment of long-lived assets | (28.5) | 54.2 | ||||||
| Impairment of goodwill | - | 3.2 | ||||||
| Non-recurring restructuring costs | 1.0 | - | ||||||
| Income taxes on the above items of note | 7.3 | (13.5) | ||||||
| Adjusted net earnings (1) | $ | 11.1 | $ | 12.0 | (8%) | |||
| (1) Adjusted net earnings is a non-IFRS measure as described in the Disclaimer section of this press release. | ||||||||
After adjusting for the above items of note, the Company's adjusted net earnings decreased by 8% in the first quarter of 2013, when compared to the first quarter of 2012. This decrease was primarily due to the decline in EBITDA and higher interest and financing costs, net.
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 terms and expected benefits of the normal course issuer bid, the Company's strategy for growth, 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 and their profitability, and the ability of the Company to enter into new agreements for the operation of gaming facilities at Georgian Downs and Flamboro Downs. 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; pending, proposed or unanticipated regulatory or policy changes; 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; 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 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; non-realization of cost reductions and synergies; demand for new products and services; fluctuations in operating results; and economic uncertainty and financial market volatility. 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 2012, 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. 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, (reversal of) impairment of long-lived assets, impairment of goodwill, restructuring and other, and foreign exchange loss and other. EBITDA is derived from the condensed interim consolidated statements of earnings (loss), and can be computed as revenues less human resources expenses and property, marketing and administration expenses. Adjusted net earnings, as defined by the Company, means net earnings (loss) 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 (reversal of) impairment of long-lived assets, impairment of goodwill, non-recurring restructuring costs, and income taxes on the above items of note.
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
SOURCE: Great Canadian Gaming Corporation
GREAT CANADIAN GAMING CORPORATION [TSX:GC]
Suite #350 - 13775 Commerce Parkway
Richmond, BC
V6V 2V4
(604) 303-1000
Website: www.gcgaming.com
For investor enquiries:
[email protected]
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. Howard Blank
Vice-President, Communications, Entertainment & Responsible Gaming
(604) 512-6066
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