Great Canadian Gaming Announces Second Quarter 2013 Results

RICHMOND, BC, Aug. 14, 2013 /CNW/ - Great Canadian Gaming Corporation [TSX:GC] ("Great Canadian" or "the Company") today announced its financial results for the three month period ended June 30, 2013 ("second quarter 2013").

SECOND QUARTER 2013 HIGHLIGHTS
(Amounts presented in millions of Canadian dollars, except for per share information)

• Revenues of $102.1 million in the second quarter, a 1% increase when compared to the prior year
• EBITDA⁽¹⁾ of $38.0 million, an 8% increase when compared to the prior year
• Net earnings of $11.3 million, compared to $2.7 million in the prior year
• Adjusted net earnings⁽²⁾ of $10.4 million, compared to $11.9 million in the prior year
• Subsequent to the conclusion of the quarter, announced upcoming re-launch of the Boulevard Casino as the Hard Rock Casino Vancouver

	Second Quarter				First Half
	2013	2012	% Chg		2013	2012	% Chg
Revenues	$ 102.1	$ 101.3	1%		$ 202.6	$ 204.1	(1%)
EBITDA ^(1)	$ 38.0	$ 35.3	8%		$ 76.3	$ 74.3	3%
EBITDA as a % of Revenues	37.2%	34.8%			37.7%	36.4%
Net earnings (loss)	$ 11.3	$ 2.7	319%		$ 42.6	$ (29.2)
Net earnings (loss) per common share
Basic	$ 0.17	$ 0.03			$ 0.61	$ (0.36)
Diluted	$ 0.16	$ 0.03			$ 0.60	$ (0.36)
Adjusted net earnings ^(1), (2)	$ 10.4	$ 11.9	(13%)		$ 21.6	$ 24.1	(10%)
					June 30, 2013	December 31, 2012	% Chg
Total assets					$ 905.5	$ 862.7	5%
Long-term debt, excluding current portion					$ 440.4	$ 439.9	0%
^(1) EBITDA and Adjusted net earnings are non-IFRS measures as described in the Disclaimer section of this press release.
^(2)A reconciliation between Net earnings (loss) and Adjusted net earnings is included on page 6 of this press release.

For the second quarter of 2013, Great Canadian recorded revenues of $102.1 million, a $0.8 million, or 1%, increase from the second quarter of 2012.  EBITDA was $38.0 million, a $2.7 million, or 8%, increase from the second quarter of 2012.  The increases in consolidated revenues and EBITDA were primarily due to revenue growth at the River Rock Casino Resort ("River Rock") and the recently opened Chances Chilliwack, as well as improvements at Great American Casinos.  These increases were substantially offset by declines at both the Boulevard Casino ("Boulevard") and the Company`s Ontario Racetracks. EBITDA as a percentage of revenues for the second quarter of 2013 was 37.2%, a 2.4 percentage point increase from the second quarter of 2012.

Net earnings increased by $8.6 million in the second quarter of 2013, when compared to the second quarter of 2012.  This increase was primarily due to a non-recurring expense of $11.0 million associated with the settlement of a legal dispute in the second quarter of 2012. Net earnings were also impacted by both the increased EBITDA and a reduction in amortization expense. These increases were partially offset by both higher net interest and financing costs due to a higher amount of long-term debt, as well as an increase in income taxes that related to the higher earnings before income taxes in the second quarter of 2013, when compared to the second quarter of 2012.

"Great Canadian's financial results for the second quarter of 2013 reflect positive contributions from River Rock, our recently opened Chances Chilliwack, and the Great American Casinos," stated Rod Baker, Great Canadian's President and Chief Executive Officer. "Despite these encouraging performances, our Boulevard casino once again witnessed declines in slot coin-in, table drop, and food and beverage revenues. Boulevard remains challenged by both local economic conditions and ongoing disruption caused by proximate highway construction.

"We continue to focus upon providing Boulevard's loyal guests with exceptional service as we work towards the re-launch of the property under the Hard Rock Casino Vancouver brand later this year. The introduction of this exciting brand, which we announced at the beginning of July, will coincide with the conclusion of the nearby highway construction.

"Since April 1, 2013, Great Canadian's Ontario racetracks have operated under interim lease arrangements with the Ontario Lottery and Gaming Corporation.  Despite the receipt of both lease revenues from the OLG and horse racing transition funding from the Government of Ontario, there was an overall decline in revenues at these two facilities, which no longer receive a fixed percentage of the OLG's slot revenues nor directly share in the horse racing pari-mutuel wagering revenues that the tracks generate.  We are pleased to continue our relationship with the OLG, and look forward to developing this relationship further as the gaming industry in Ontario continues its evolution.

"Great Canadian is financially prepared to take advantage of new value-added growth opportunities, including those in Ontario. The Company's financial flexibility is evident in both our strong cash balance and our undrawn revolving credit facility. While we await greater clarity surrounding these opportunities, we continue to pursue other avenues for the creation of shareholder value. The Company devoted $6.9 million of its cash resources during March 2013 and $16.6 million during April 2013 toward repurchasing and cancelling 2.5 million common shares at an average price of $9.32. As a result of these cancellations, we increased the ownership percentage of our existing shareholders by 3.6%."

Great Canadian will host a conference call for investors and analysts today, August 14, 2013, at 2:00 PM Pacific Time to review the financial results for the period ended June 30, 2013. To participate in the conference call, please dial 416-764-8688, or toll free at 888-390-0546 (Passcode: 94682617). 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 June 30, 2013, the Company had approximately 4,000 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 August 14, 2013) or www.sedar.com (available on August 15, 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)
	Second Quarter				First Half
	2013	2012	% Chg		2013	2012	% Chg
Gaming revenues	$ 68.4	$ 72.9	(6%)		$ 143.4	$ 149.7	(4%)
Facility Development Commission	8.9	7.9	13%		17.6	16.8	5%
Hospitality, lease and other revenues	25.2	21.2	19%		43.5	39.2	11%
Racetrack revenues	4.0	4.3	(7%)		7.1	8.1	(12%)
	106.5	106.3	0%		211.6	213.8	(1%)
Less: Promotional allowances	(4.4)	(5.0)	(12%)		(9.0)	(9.7)	(7%)
Revenues	102.1	101.3	1%		202.6	204.1	(1%)
Human resources	40.4	41.6	(3%)		79.5	80.7	(1%)
Property, marketing and administration	23.7	24.4	(3%)		46.8	49.1	(5%)
	64.1	66.0	(3%)		126.3	129.8	(3%)
EBITDA	38.0	35.3	8%		76.3	74.3	3%
Human resources as a % of Revenues before
Promotional allowances	37.9%	39.1%			37.6%	37.7%
EBITDA as a % of Revenues	37.2%	34.8%			37.7%	36.4%
Amortization	11.7	13.1			24.7	25.9
Share-based compensation	0.6	0.7			2.7	2.8
(Reversals of) impairments of long-lived assets	-	-			(28.5)	54.2
Impairment of goodwill	-	-			-	3.2
Interest and financing costs, net	8.2	7.4			16.4	14.5
Litigation settlement	-	11.0			-	11.0
Restructuring and other	0.2	0.6			1.3	0.6
Foreign exchange gain and other	(0.2)	(0.8)			(0.4)	(1.1)
Income taxes	6.2	0.6			17.5	(7.6)
Net earnings (loss)	$ 11.3	$ 2.7	319%		$ 42.6	$ (29.2)
Net earnings (loss) per common share
Basic	$ 0.17	$ 0.03			$ 0.61	$ (0.36)
Diluted	$ 0.16	$ 0.03			$ 0.60	$ (0.36)
Weighted average number of common shares (in thousands)
Basic	68,329	79,075			69,375	80,720
Diluted	69,471	80,488			70,475	80,720

 

GREAT CANADIAN GAMING CORPORATION  Condensed Interim Consolidated Statements of Financial Position (Expressed in millions of Canadian dollars)
				June 30, 2013		December 31, 2012
Assets
Current
Cash and cash equivalents			$	169.7	$	116.2
Restricted cash				7.2		4.9
Accounts receivable				5.4		7.7
Income taxes receivable				2.6		-
Prepaids, deposits and other assets				7.4		6.1
				192.3		134.9
Property, plant and equipment				598.7		621.3
Intangible assets				81.8		73.3
Goodwill				20.5		20.1
Deferred tax assets				9.3		9.9
Other assets				2.9		3.2
			$	905.5	$	862.7
Liabilities
Current
Accounts payable and accrued liabilities			$	65.6	$	60.4
Income taxes payable				-		0.5
Other liabilities				2.9		2.9
				68.5		63.8
Long-term debt				440.4		439.9
Deferred credits, provisions and other liabilities				25.8		25.4
Deferred tax liabilities				66.1		53.3
				600.8		582.4
Shareholders' equity
Share capital and contributed surplus				307.7		313.5
Accumulated other comprehensive loss				0.2		(1.0)
Deficit				(3.2)		(32.2)
				304.7		280.3
			$	905.5	$	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:
			Second Quarter				First Half
			2013	2012	% Chg		2013	2012	% Chg
Net earnings (loss)			$ 11.3	$ 2.7			$ 42.6	$ (29.2)
	Items of note
		(Reversals of) impairments of long-lived assets	-	-			(28.5)	54.2
		Impairment of goodwill	-	-			-	3.2
		Litigation settlement	-	11.0			-	11.0
		Equity investment loss	-	0.6			-	0.6
		FDC revenues previously deferred	(0.7)	-			(0.7)	-
		Without prejudice dispute resolution payments received from OLG	(0.7)	-			(0.7)	-
		Human resources severance costs	-	0.5			-	0.7
		Restructuring severance costs	0.2	-			1.2	-
		Income taxes on the above items of note	0.3	(2.9)			7.7	(16.4)
Adjusted net earnings ^(1)			$ 10.4	$ 11.9	(13%)		$ 21.6	$ 24.1	(10%)
^(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 $1.5 million, or 13%, in the second quarter of 2013, when compared to the second quarter of 2012.  This decrease was primarily due to the increases in net interest and financing costs and income taxes, which were partially offset by the decreases in amortization.

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, (reversals of) impairments of long-lived assets, impairment of goodwill, litigation settlement, 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 (reversals of) impairments of long-lived assets, impairment of goodwill, litigation settlement, equity investment loss, FDC revenues previously deferred, without prejudice dispute resolution payments received from the Ontario Lottery and Gaming Corporation ("OLG"), severance 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

GREAT CANADIAN GAMING CORPORATION [TSX:GC]
Suite #350 - 13775 Commerce Parkway
Richmond, BC
V6V 2V4
[phone]
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
[phone]