Great Canadian Gaming Announces Fourth Quarter and Annual 2014 Results

RICHMOND, BC, March 4, 2015 /CNW/ - Great Canadian Gaming Corporation [TSX:GC] ("Great Canadian," or "the Company") today announced its financial results for both the three month period (the "fourth quarter") and twelve month period ("2014") ended December 31, 2014.

FOURTH QUARTER AND 2014 HIGHLIGHTS

• Revenues of $115.7 million in the fourth quarter and $446.5 million for the full year, increases of 14% and 10%, respectively, when compared to same periods in the prior year.
  
  
• EBITDA⁽¹⁾ of $47.0 million in the fourth quarter and $180.1 million for the year, increases of 34% and 20%, respectively, when compared to the same periods in the prior year.
  
  
• Net earnings of $21.6 million in the fourth quarter and $78.4 million for the year.
  
  
• Adjusted net earnings⁽¹⁾ of $22.0 million in the fourth quarter and $75.2 million for the year.
  
  
• Revenues and EBITDA at River Rock Casino Resort in the fourth quarter increased by 26% and 40%, respectively, to $54.3 million and $31.3 million. 
  
  
• Revenues and EBITDA at Hard Rock Casino Vancouver in the fourth quarter increased by 2% and 50%, respectively, to $13.3 million and $3.9 million.

(Amounts presented in millions of Canadian dollars, except for per share information)

				Fourth Quarter								Twelve Months of
					2014			2013		% Chg			2014			2013		% Chg
Revenues				$	115.7		$	101.6		14%		$	446.5		$	407.3		10%
EBITDA ^(1)				$	47.0		$	35.2		34%		$	180.1		$	150.6		20%
EBITDA as a % of Revenues					40.6%			34.6%					40.3%			37.0%
Net earnings				$	21.6		$	7.2		200%		$	78.4		$	63.1		24%
Net earnings per common share
	Basic			$	0.32		$	0.11		191%		$	1.16		$	0.92		26%
	Diluted			$	0.31		$	0.10		210%		$	1.12		$	0.90		25%
Adjusted net earnings ^(1)				$	22.0		$	11.7		88%		$	75.2		$	46.9		60%
												December 31, 2014			December 31, 2013			% Chg
Total assets												$	1,014.1		$	915.7		11%
Long-term debt												$	442.0		$	441.0		0%

^(1)							EBITDA and adjusted net earnings are non-IFRS measures as described in the disclaimer section of this press release. A reconciliation between net earnings and adjusted net earnings is included on page 6 of this press release.

Great Canadian generated revenues of $115.7 million during the fourth quarter, a 14% increase from the fourth quarter of 2013. EBITDA during the fourth quarter was $47.0 million, a 34% increase from the fourth quarter of 2013. EBITDA as a percentage of revenues for the fourth quarter was 40.6%, a 6.0 percentage point increase from the fourth quarter of 2013. Both the revenues and EBITDA increases were primarily due to continued strong performance at River Rock Casino Resort ("River Rock") and improvements at Hard Rock Casino Vancouver, Great American Casinos, and our Other BC Casinos.

Great Canadian generated net earnings of $20.0 million during the fourth quarter and $76.8 million during 2014, increases of $12.8 million and $13.7 million, respectively, when compared to the same periods in 2013. These increases were primarily due to the growth in the Company's EBITDA, the annual impact of which was partly offset by reduced non-cash long-lived asset impairment reversals in 2014 as compared to those recognised in the prior year.

"River Rock Casino Resort continued to lead Great Canadian's financial results throughout 2014," stated Rod Baker, Great Canadian's President and Chief Executive Officer. "River Rock generated significant growth in both gaming revenues and EBITDA throughout each quarter of 2014. We are pleased with these results, and are very proud of our River Rock colleagues who continue to deliver exceptional entertainment and service to our guests.

"Hard Rock Casino Vancouver has consistently improved both its revenues and operating performance since its re-launch in December 2013. We are continuing our efforts to increase the property's visitation as it further establishes itself as one of Vancouver's premier entertainment destinations. On February 17, 2015 we opened a new VIP table area and created a more exclusive VIP slot area at the property, which we expect will better service our guests.

"Great Canadian concluded 2014 with a strong cash balance and an undrawn revolving credit facility. The Company remains financially prepared to take advantage of new opportunities for value creation," concluded Mr. Baker. "This includes any opportunities that may arise from Ontario's plans to modernize gaming. While we pursue these potential opportunities, we will also continue to both efficiently manage our operations and explore other options to further grow our business."

Great Canadian will host a conference call for investors and analysts today, March 4, 2015, at 2:00 PM Pacific Time in order to review the financial results for the period ended December 31, 2014. To participate in the conference call, please dial 416-764-8688, 778-383-7413, or toll free at 888-390-0546 (Passcode: 07600994). 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/financials. Investors using the website should allow 15 minutes for the registration and installation of any necessary software. A replay of the call will also be available at www.gcgaming.com/financials.

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 three community gaming centres, four racetracks, and ten casinos, including one with a Four Diamond resort hotel. As of December 31, 2014, 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 Consolidated Financial Statements and Management's Discussion and Analysis ("MD&A") at www.gcgaming.com (available on March 4, 2015) or www.sedar.com (available on March 5, 2015) 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 Statements of Earnings
(Unaudited - Expressed in millions of Canadian dollars, except for per share information)
			Fourth Quarter								Twelve Months of
				2014			2013		% Chg			2014			2013		% Chg
Gaming revenues			$	79.9		$	67.7		18%		$	308.4		$	274.2		12%
Facility Development Commission				9.7			8.2		18%			37.7			34.1		11%
Hospitality, lease and other revenues ^(1)				28.6			27.1		6%			108.4			103.2		5%
Racetrack revenues				3.6			3.4		6%			14.6			14.3		2%
				121.8			106.4		14%			469.1			425.8		10%
Less: Promotional allowances				(6.1)			(4.8)		(27%)			(22.6)			(18.5)		22%
Revenues				115.7			101.6		14%			446.5			407.3		10%
Human resources				42.3			40.8		4%			164.8			160.5		3%
Property, marketing and administration				26.4			25.6		3%			101.6			96.2		6%
				68.7			66.4		3%			266.4			256.7		4%
EBITDA				47.0			35.2		34%			180.1			150.6		20%
Human resources as a % of Revenues before
Promotional allowances				34.7%			38.3%					35.1%			37.7%
EBITDA as a % of Revenues				40.6%			34.6%					40.3%			37.0%
Amortization				10.3			11.6					45.3			48.5
Share-based compensation				1.4			6.1					4.8			9.7
Impairment (reversal) of long-lived assets and goodwill, net				0.5			-					(4.7)			(28.5)
Interest and financing costs, net				7.7			8.0					31.6			32.8
Restructuring and other				0.2			0.6					0.8			2.0
Foreign exchange gain and other				(1.5)			(0.3)					(2.4)			(0.9)
Income taxes				6.8			2.0					26.3			23.9
Net earnings			$	21.6		$	7.2		200%		$	78.4		$	63.1		24%
Net earnings per common share
	Basic		$	0.32		$	0.11				$	1.16		$	0.92
	Diluted		$	0.31		$	0.10				$	1.12		$	0.90
Weighted average number of common shares (in thousands)
	Basic			68,421			67,327					67,864			68,560
	Diluted			70,598			69,208					69,789			69,934

(1) For the twelve months of 2013, the Company has reclassified its Ontario gaming revenues of $6.4 that related to its prior Ontario Racetrack site holder agreements as "Hospitality, lease and other revenues".  Management believes this presentation improves the comparability with the current year's revenues from OLG for their lease of the slot machine areas at the Ontario Racetracks.  The prior site holder agreements were terminated by OLG effective March 31, 2013 and replaced by 5-year lease agreements effective April 1, 2013, as described in the "Major Developments" section of the MD&A for the year ended December 31, 2014.

GREAT CANADIAN GAMING CORPORATION
Consolidated Statements of Financial Position
(Unaudited - Expressed in millions of Canadian dollars)
						December 31,				December 31,
						2014				2013
Assets
Current
	Cash and cash equivalents					$	324.4			$	192.6
	Accounts receivable						6.3				7.2
	Income taxes receivable						-				3.7
	Prepaids, deposits and other assets						7.4				8.0
							338.1				211.5
Property, plant and equipment							574.0				596.3
Intangible assets							69.8				75.8
Goodwill							21.1				20.6
Deferred tax assets							8.9				8.8
Other assets							2.2				2.7
						$	1,014.1			$	915.7
Liabilities
Current
	Accounts payable and accrued liabilities					$	60.3			$	67.9
	Income taxes payable						7.2				-
	Other liabilities						2.6				2.6
							70.1				70.5
Long-term debt							442.0				441.0
Deferred credits, provisions and other liabilities							27.4				26.4
Deferred tax liabilities							74.3				70.3
							613.8				608.2
Shareholders' equity
Share capital and reserves							318.8				305.1
Accumulated other comprehensive income							1.1				0.4
Retained earnings							80.4				2.0
							400.3				307.5
						$	1,014.1			$	915.7

GREAT CANADIAN GAMING CORPORATION
Adjusted Net Earnings
(Unaudited - Expressed in millions of Canadian dollars)
The current and prior periods' net earnings included some items of note, which are summarized in the following adjusted net earnings table:
				Fourth Quarter								Twelve Months of
					2014			2013		% Chg			2014			2013		% Chg
Net earnings				$	21.6		$	7.2		200%		$	78.4		$	63.1		24%
	Items of note
		Impairment (reversal) of long-lived assets and
		goodwill, net			0.5			-					(4.7)			(28.5)
		Special share-based award to employees			-			4.8					-			4.8
		Rebranding and pre-opening costs for Hard Rock  Casino Vancouver and Chances Maple Ridge			-			1.1					-			1.7
		FDC revenues previously deferred at Fraser Downs			-			-					(0.2)			(0.7)
		Without prejudice dispute resolution payments received from OLG			-			-					-			(0.7)
		Restructuring severance costs			-			0.2					0.4			1.3
		Income taxes on the above items of note			(0.1)			(1.6)					1.3			5.9
Adjusted net earnings ^(1)				$	22.0		$	11.7		88%		$	75.2		$	46.9		60%
^(1)Adjusted net earnings is a non-IFRS measure as described in the disclaimer section of this press release.
Adjusted net earnings per common share
		Basic		$	0.32		$	0.17				$	1.11		$	0.68
		Diluted		$	0.31		$	0.17				$	1.08		$	0.67
Weighted average shares outstanding
	Basic				68,421			67,327					67,864			68,560
	Diluted				70,598			69,208					69,789			69,934

After adjusting for the above items of note, the Company's adjusted net earnings increased by $10.3 million in the fourth quarter and $28.3 million in 2014, when compared to the same periods in 2013.

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 Company's strategy for growth and objectives, 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 beyond the terms of the signed Ontario Lease Agreements and Ontario Racing Agreements, the terms and expected benefits of the normal course issuer bid, and expectations and implications of changes in legislation and government policies.  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 with lottery corporations; changes to gaming laws that may impact the operational services agreements, pending, proposed or unanticipated regulatory or policy changes; the outcome of restructuring of gaming in Ontario; the Company's ability to obtain and renew required business licenses, leases, and operational services agreements; the future of horse racing in Ontario, unanticipated fines, sanctions and suspensions imposed on the Company by its regulators; impact of global liquidity and credit availability; possible reassessments of the Company's prior tax filings by tax authorities; 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; economic uncertainty and financial market volatility; technology dependence; and privacy breaches or data theft.  The Company cautions that this list of factors is not exhaustive.  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 2014, 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, impairment (reversal) of long-lived assets and goodwill, net, restructuring and other, and foreign exchange gain and other.  EBITDA is derived from the consolidated statements of earnings, and can be computed as revenues less human resources expenses, and property, marketing and administration expenses.  The Company believes EBITDA is a useful measure because it provides information to management about the operating and financial performance of the Company and its ability to generate operating cash flow to fund future working capital needs, service outstanding debt, and fund future capital expenditures.  EBITDA is also used by the investors and analysts for the purpose of valuing the Company.  Adjusted net earnings, as defined by the Company, means net earnings 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 impairment (reversal) of long-lived assets and goodwill, net, special share-based award to employees, rebranding and pre-opening costs for Hard Rock Casino Vancouver and Chances Maple Ridge, FDC revenues previously deferred at Fraser Downs, without prejudice dispute resolution payments received from Ontario Lottery and Gaming Corporation ("OLG"), restructuring severance costs, and the related income taxes thereon.

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, [phone], Website: www.gcgaming.com; For enquiries: [email protected] or Ms. Tanya Ruskowski, Executive Assistant to the President and Chief Executive Officer and the Chief Financial Officer, [phone]; For media enquiries: Mr. Chuck Keeling, Vice-President, Stakeholder Relations and Responsible Gaming, [phone]