Great Canadian Gaming Announces Fourth Quarter and Annual 2016 Results
2016 ADJUSTED EBITDA INCREASED 16% TO $209 MILLION. 1% INCREASE IN 2016 SHAREHOLDERS' NET EARNINGS
COQUITLAM, BC, March. 7, 2017 /CNW/ - Great Canadian Gaming Corporation [TSX:GC] ("Great Canadian," or "the Company") today announced its financial results for the three month period (the "fourth quarter") and twelve month period ("2016", or "the full year") ended December 31, 2016.
FOURTH QUARTER AND 2016 HIGHLIGHTS
- Great Canadian generated revenues of $566 million for the full year and $143 million in the fourth quarter, increases of 22% and 15% respectively, when compared to the same periods in the prior year.
- Adjusted EBITDA(1) of $209 million for the full year and $47 million for the fourth quarter, increases of 16% and 5% respectively, when compared to the same periods in the prior year.
2016 shareholders' net earnings of $76 million a 1% increase from the prior year. Fourth quarter shareholders' net earnings, $16 million, declined 11% compared with the fourth quarter 2015. Amortization of $55 million for the full year and $14 million for the fourth quarter, increases of $15 million and $2,million respectively, when compared to the same periods in the prior year. - Shareholders basic net earnings per share $1.22 for the full year and $0.26 cents for the fourth quarter, an increase of $0.12 cents and decrease of $0.01 cent, respectively, when compared to the same periods in 2015.
2017 MAJOR DEVELOPMENTS
- Opening of Shorelines Casino in Belleville, Ontario on January 11, 2017, exactly one year after Great Canadian acquired the Ontario Lottery and Gaming Corporation's ("OLG") East Gaming Bundle. Shorelines Casino Belleville is the first such property opened in Ontario since 2006.
- The Company submitted a bid on the Request for Proposal ("RFP") for Ontario Lottery and Gaming Corporation's ("OLG") Gaming Bundle 1 (Ottawa) in February 2017.
Great Canadian generated revenues of $566 million during 2016, the 22% increase, when compared to 2015, primarily due to the addition of revenues from the two Shorelines Casinos that the Company acquired from the OLG in January 2016, together with an additional nine months of results from Casino New Brunswick, which was acquired on October 1, 2015. Revenues from the other properties increased $20 million in aggregate across property groups, but was offset by a $19 million decline in River Rock Casino Resort's ("River Rock") revenue. River Rock continued to experience reduced high limit table play.
Fourth quarter revenue increased by 15%, to $143 million, compared with the corresponding quarter in the previous year. The majority of Great Canadian's property groups generated increased revenue in the fourth quarter, when compared to the prior year, however these gains were fully offset by a decline in River Rock's revenue, resulting in the Company's fourth quarter growth being attributed wholly to the revenues from the acquired Shorelines Casinos. River Rock grew table drop but table hold was impacted by a notably low table hold percentage in the quarter, when compared to the same period in the prior year. Late in third quarter of 2015, BCLC introduced conditions for players to demonstrate the source of their funds and this change resulted in lower buy ins, reduced average bets, and shorter durations of play. These dynamics led to the average hold rate declining from 20% in 2015 to 17% in 2016.
Driven by the aforementioned acquisitions, the Company achieved a 16% increase in full year Adjusted EBITDA to $209 million. Adjusted EBITDA grew at all of the Company's property groups with the exception of River Rock.
Adjusted EBITDA during the fourth quarter was $47 million, an increase of 5% when compared to the same period in the prior year. The increase resulted from the acquired Shorelines Casinos as well as improvements in Adjusted EBITDA at the majority of the Company's properties, with the exception of River Rock.
The Company's 2016 shareholders' net earnings increased 1% to $76 million. The 16% improvement in Adjusted EBITDA was offset by increased amortization and financing costs from the acquisitions and higher share-based compensation. Fourth quarter shareholders' net earnings decreased to $16 million, as the 5% improvement in Adjusted EBITDA was insufficient to offset the increased amortization.
Shareholders net earnings per share of $1.22 during 2016 increased by $0.12 cents when compared to 2015. $0.02 cents of this increase is due to higher shareholders net earnings and the remaining $0.10 cents is due to a lower average number of shares outstanding during 2016 following the Company's repurchase of 5.5 million common shares during 2015 and 4.8 million common shares during 2016.
"Great Canadian generated increases in revenues of 22% for the full year and 15% for the quarter when compared to the same period in the prior year," stated Rod Baker, the Company's President and Chief Executive Officer. "Both the full year and fourth quarter reflect the contributions from Shorelines Casino Thousand Islands and Shorelines Slots at Kawartha Downs. Additionally, 2016 includes a full year of revenues from Casino New Brunswick, compared to just three months of results in the prior year. Great Canadian generated notable improvements to both revenues and Adjusted EBITDA during the fourth quarter and full year of 2016 at all of its property groups, with the exception of River Rock. This property has experienced challenges in its high limit table play since the third quarter of 2015. In the most recent quarter, table drop increased by 5%, when compared to the fourth quarter of 2015; however, the table hold percentage decreased by 5.4 percentage points, resulting in a 24% decrease in table hold. The slots side of the business at River Rock continued to trend positively with a 2% increase in slot win during the fourth quarter, when compared to the same period in the prior year."
"In Ontario, we are extremely pleased to have opened our newest property, Shorelines Casino Belleville, on the first anniversary of Great Canadian's acquisition of the East Gaming Bundle from OLG. This casino is the first gaming facility to open in Ontario in over 10 years and marks Great Canadian's 21st property."
"The pace of Ontario's gaming modernization is increasing. On February 9, 2017, the Company submitted its bid on OLG's Request for Proposal for Gaming Bundle 1 (Ottawa). In addition, the Company is currently assessing OLG's Requests for Proposals for Gaming Bundle 5 (GTA), which is due April 20, 2017, and Gaming Bundle 6 (West GTA), which is due July 13, 2017. We anticipate OLG to announce the successful proponents for these three bundles in the Spring, late Summer and Fall of 2017, respectively. We anticipate the bidding process for these bundles will be competitive and there is no certainty that the Company will be selected for additional bundles."
"Our business continued its solid performance and maintained a robust financial position. 2016 cash generated from operations of $178 million increased by 30% when compared with 2015, closing 2016 with $229 million of cash and cash equivalents, a 10% increase when compared with the end of 2015. At the end of 2016, the company had available an undrawn senior secured revolving credit facility of $323 million, net of outstanding letters of credit. Given our strong financial position, the Company is ready to take on new growth opportunities in Ontario and elsewhere," concluded Mr. Baker.
Great Canadian will host a conference call for investors and analysts today, March 7, 2017, at 2:00 PM Pacific Time in order to review the financial results for the quarter and year ended December 31, 2016. To participate in the conference call, please dial 416-764-8609, 778-383-7417, or toll free at 1-888-390-0605. 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 is a Canadian based company that operates gaming, entertainment and hospitality facilities in British Columbia, Ontario, New Brunswick, Nova Scotia, and Washington State. The Company has 21 gaming properties, which consist of thirteen casinos, including a four Diamond resort hotel in Richmond, British Columbia and a four star hotel in Moncton, New Brunswick, four horse racetrack casinos, three community gaming centres and one commercial bingo hall. A key element of Great Canadian's business model is its commitment to social responsibility. "PROUD of our people, our business, our community" is Great Canadian's brand that unifies the company's community, volunteering and social responsibility efforts. Under the PROUD program, Great Canadian annually invests over $2.5 million in our communities, and in 2016, over 1,500 charitable organizations were supported by Great Canadian. In each Canadian gaming jurisdiction, a significant portion of gross gaming revenue from gaming facilities is retained by our crown partners on behalf of their provincial government for the purpose of supporting programs like healthcare, education and social services.
Please refer to the Consolidated Financial Statements and Management's Discussion and Analysis ("MD&A") at www.gcgaming.com (available on March 7, 2017) or www.sedar.com (available on March 8, 2017) for detailed financial information and analysis.
The financial results on the following page are unaudited and prepared by management. Expressed in millions of Canadian dollars, except for per share information.
| GREAT CANADIAN GAMING CORPORATION |
|||||||||||||
| Financial Highlights and Adjusted Shareholders' Net Earnings |
|||||||||||||
| (Unaudited - Expressed in millions of Canadian dollars, except for per share information) |
|||||||||||||
| Three months ended December 31, |
Twelve months ended December 31, |
||||||||||||
| 2016 |
2015 |
% Chg |
2016 |
2015 |
% Chg |
||||||||
| Revenues |
$ |
143.0 |
$ |
124.7 |
15% |
$ |
566.4 |
$ |
462.9 |
22% |
|||
| Human resources |
51.1 |
43.3 |
18% |
202.4 |
165.0 |
23% |
|||||||
| Property, marketing and administration |
45.3 |
36.9 |
23% |
157.7 |
119.8 |
32% |
|||||||
| Share of profit of equity investment |
(0.6) |
(0.6) |
0% |
(2.6) |
(2.5) |
(4%) |
|||||||
| 95.8 |
79.6 |
20% |
357.5 |
282.3 |
27% |
||||||||
| Adjusted EBITDA (1) |
$ |
47.2 |
$ |
45.1 |
5% |
$ |
208.9 |
$ |
180.6 |
16% |
|||
| Adjusted EBITDA as a % of Revenues (1) |
33.0% |
36.2% |
36.9% |
39.0% |
|||||||||
| Less |
|||||||||||||
| Amortization |
13.6 |
11.2 |
21% |
54.7 |
40.1 |
36% |
|||||||
| Share-based compensation |
1.6 |
0.6 |
167% |
6.7 |
4.3 |
56% |
|||||||
| Interest and financing costs, net |
8.6 |
7.8 |
10% |
34.9 |
31.6 |
10% |
|||||||
| Business acquisition, restructuring and other |
2.2 |
2.1 |
5% |
7.3 |
6.9 |
6% |
|||||||
| Foreign exchange gain and other |
(0.5) |
(0.7) |
29% |
(0.3) |
(4.6) |
93% |
|||||||
| Income taxes |
6.2 |
6.6 |
(6%) |
29.0 |
27.8 |
4% |
|||||||
| Non-controlling interests |
(0.1) |
(0.1) |
0% |
0.9 |
(0.1) |
||||||||
| Shareholders' net earnings |
$ |
15.6 |
$ |
17.6 |
(11%) |
$ |
75.7 |
$ |
74.6 |
1% |
|||
| Shareholders' net earnings per common share |
|||||||||||||
| Basic |
$ |
0.26 |
$ |
0.27 |
$ |
1.22 |
$ |
1.10 |
|||||
| Diluted |
$ |
0.25 |
$ |
0.26 |
$ |
1.20 |
$ |
1.08 |
|||||
| Weighted average shares outstanding |
|||||||||||||
| Basic |
60,747 |
65,553 |
61,895 |
67,664 |
|||||||||
| Diluted |
62,049 |
66,553 |
62,963 |
69,151 |
|||||||||
| December 31, |
December 31, |
% Chg |
|||||||||||
| Cash and cash equivalents |
$ |
228.7 |
$ |
207.5 |
10% |
||||||||
| Total assets |
$ |
1,083.7 |
$ |
998.1 |
9% |
||||||||
| Long-term debt |
$ |
478.3 |
$ |
443.0 |
8% |
||||||||
The following table reconciles shareholders' net earnings to adjusted shareholders' net earnings.
| Three months ended December 31, |
Twelve months ended December 31, |
||||||||||||
| 2016 |
2015 |
% Chg |
2016 |
2015 |
% Chg |
||||||||
| Shareholders' net earnings |
$ |
15.6 |
$ |
17.6 |
(11%) |
$ |
75.7 |
$ |
74.6 |
1% |
|||
| Items of note |
|||||||||||||
| Pre-opening costs for Ontario East Gaming Bundle |
1.0 |
- |
1.4 |
- |
|||||||||
| Restructuring severance costs |
- |
- |
2.6 |
3.1 |
|||||||||
| Rebranding and pre-opening costs for Elements Casino, |
|||||||||||||
| Hard Rock Casino Vancouver and Chances Maple Ridge |
- |
0.5 |
- |
0.7 |
|||||||||
| Uneconomic lease provision due to Kent casino closure |
- |
- |
- |
0.8 |
|||||||||
| Jackpot and marketing fund liabilities reversed due to |
|||||||||||||
| Kent casino closure |
- |
- |
- |
(0.3) |
|||||||||
| Non-recurring payment received for right of way access |
- |
- |
- |
(0.5) |
|||||||||
| Other |
- |
0.2 |
0.5 |
0.6 |
|||||||||
| Income taxes on the above items of note |
(0.4) |
(0.2) |
(1.2) |
(1.2) |
|||||||||
| Adjusted shareholders' net earnings (1) |
$ |
16.2 |
$ |
18.1 |
(10%) |
$ |
78.9 |
$ |
77.8 |
1% |
|||
| Adjusted shareholders' net earnings per common share (1) |
|||||||||||||
| Basic |
$ |
0.27 |
$ |
0.28 |
$ |
1.28 |
$ |
1.15 |
|||||
| Diluted |
$ |
0.26 |
$ |
0.27 |
$ |
1.25 |
$ |
1.13 |
|||||
| (1) Adjusted EBITDA and adjusted shareholders' net earnings are non-IFRS measures as described in the disclaimer section of this press release. |
|||||||||||||
After adjusting for the above items of note, the Company's adjusted shareholders' net earnings increased by $1 million in 2016 and decreased by $2 million in the fourth quarter of 2016, when compared to the same period in the prior year. These changes are primarily due to increases in Adjusted EBITDA, which are offset by higher amortization, share-based compensation and interest and financing costs, net of interest income.
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 (including participation in Ontario's gaming modernization program and possible expansion of gaming in British Columbia), 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 impact of new conditions imposed on certain VIP players in British Columbia, the impact of unionization activities, the Company's position on its claim against the British Columbia Lottery Corporation ("BCLC") with respect to the collection of marketing contributions, the Company's beliefs about the outcome of its notices of objection challenging the Canada Revenue Agency's reassessments and its tax position on its facility development commission prevailing, the terms and expected benefits of the normal course issuer bid, the Company's expected share of BC horse racing industry revenue in future years, 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 (including those that impact VIP play); the outcome of modernization of gaming in Ontario; 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; actual and possible reassessments of the Company's prior tax filings by tax authorities; the results of the Company's notices of objection and subsequent appeals challenging reassessments received by the Canada Revenue Agency; the Company's tax position on its facility development commission prevailing; the results of the Company's litigation with BCLC; the interpretation of the Company's rights under the Mayfair casino operating agreement and the BCLC relocation policy; 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 timing and results of collective bargaining negotiations; adverse changes in the Company's labour relations; 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; 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 2016, 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.
In addition to results reported in accordance with International Financial Reporting Standards ("IFRS"), the Company has included certain non-IFRS financial measures in this press release. Adjusted 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, business acquisition, restructuring and other, and foreign exchange gain and other. Adjusted EBITDA is derived from the consolidated statements of earnings and other comprehensive income, and can be computed as revenues less human resources expenses, and property, marketing and administration expenses plus share of profit of equity investment. The Company believes Adjusted EBITDA is a useful measure because it provides information to management about the ongoing 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. Adjusted EBITDA is also used by the investors and analysts for the purpose of valuing the Company. Adjusted shareholders' net earnings, as defined by the Company, means shareholders' 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 pre-opening costs for the Ontario East Gaming Bundle, restructuring severance costs, rebranding and pre-opening costs for Elements Casino, Hard Rock Casino Vancouver and Chances Maple Ridge, uneconomic lease provision due to Kent casino closure, jackpot and marketing fund liabilities reversed due to Kent casino closure, non-recurring payment received for right of way access, other, and the related income taxes thereon. Adjusted shareholders' net earnings per common share is defined as adjusted shareholders' net earnings divided by the weighted average number of common shares outstanding.
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. The Company cautions readers to consider these non-IFRS financial measures in addition to, and not as an alternative for, measures calculated in accordance with IFRS.
ON BEHALF OF
GREAT CANADIAN GAMING CORPORATION
"Original Signed By Rod N. Baker"
_____________________
Rod N. Baker
President and Chief Executive Officer
GREAT CANADIAN GAMING CORPORATION [TSX:GC]
95 Schooner Street
Coquitlam, BC
V3K 7A8
(604) 303-1000
Website: www.gcgaming.com
SOURCE Great Canadian Gaming Corporation
For 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. Chuck Keeling, Vice-President, Stakeholder Relations and Responsible Gaming, (604) 247-4197
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